The big news from the (startup) newsletter you're reading📰 🎉
Issue 042 - WTF is going on with the Economy?!
Photo by Markus Winkler on Unsplash
Hey there, and welcome to issue #042 of WTF is going on with the Economy?! This week, we're looking at news surrounding startups, remote workers, and how they impact you and the economy. Plus, there's some really exciting news at the end. Don't miss it!
The Fed meeting and inflation🏦📈
Before jumping into the main topic, we wanted to touch on a key theme sweeping the financial world. Each month, central banks brief policymakers on the state of the economy. Last week, US Federal Reserve chairman Jerome Powell spoke to the US Senate on the American economy. Chief among their concerns? Inflation!
In short, there's concern among economists, politicians, and pundits that we might be entering a period of high inflation. Their reasoning? In the wake of the great recession, central banks spent the last decade pumping trillions of dollars into the global economy, trying to get it to grow. From last March, governments poured even more trillions of dollars into backstopping the fallout of the pandemic. The result? the world is awash in cash.
Normally, when money is abundant, inflation comes into play since the more there is of something, the less it's worth. Now, with banks, companies, and consumers flooded with money, there are fears that inflation could take off. Too much inflation or inflation at the wrong time could spell bad news for the economy, which worries investors, politicians, and consumers alike.
Currently, central bankers aren't too concerned. Until the pandemic ends, consumers and companies aren't going to start spending. Instead, they (we) prefer to keep cash safe in banks while waiting for normal to occur. We tend to agree with Chairman Powell and other central bankers here. However, it's interesting that these conversations are already starting, even if we're still in a pandemic economy.
Startups leaving hubs🛫
On to the good stuff! As you're absolutely expecting, startups and other companies that there's a much weaker correlation between success and office location. Of course, hunches and data often come into conflict with each other. Thankfully, some analytics-driven VCs in the US decided to dig deeper.
According to this recent report from Initialized(), Silicon Valley is losing its hegemon status in the startup world. While the trend started a few years back (thanks in no small part to the Bay Area's high cost of living), the pandemic made startups realize that they can hire anywhere and work remotely.
We like this report because:
It confirms what many of us remote workers have known for a looong time and
Many bigger companies want to appear "cool" and emulate startups.
Could this VC validation embolden more firms to hire remote? Potentially. In either case, studies like this one are encouraging for international remote workers, digital nomads, and expats alike.
Companies are starting to realize the roadblocks of nomad visas. 🙅❌
If the previous topic was uplifting, this next one might provide a downdraft. Travel news gurus Skift reported last week that many firms flirting with international remote working are coming to realize the absolute tax nightmare that is...international remote working.
Again, most of you living abroad already knew about this ugly reality. You're well aware that to work abroad, you either need to be a freelancer, start your own (local) company, or hope that your employer opens up a domestic subsidiary. Still, many employers have never asked themselves these sorts of legal and logistical questions.
Will the flattening of the global talent pool be enough for them to overcome these regulatory hurdles? Or will the intimidating (but easier than they think) paperwork give them cold feet? We'll see how it plays out in the coming months.
Spain's new Startup Law 🇪🇸👨💻️
The Spanish government recently announced its intention to pass a legislative package to transform the country into a startup powerhouse. We're excited by this news for a couple of reasons.
First, it's no secret that Europe generally lags behind the US when it comes to startups. Americans simply have an easier innovation system between a more risk-averse culture and a financial and legal system geared towards big companies. Despite kind words from Brussels, the EU hasn't signaled its intentions to provide bloc-wide startup reform. Here, Spain sees an opportunity. By addressing some serious pain points for local tech entrepreneurs, the government is banking to make the country the leading startup hub on this side of the Atlantic. If all goes to plan, the Iberian country could transform its economy into a competitive force for the 21st century. In turn, good jobs could come about for expats and locals alike.
Second, we're a Spanish startup, so we obviously have some skin in seeing changes in making our lives easier. Speaking of which...
The big reveal! 🍾
As we've teased over the past month, we have some amazing news we want to share with you. Yesterday, we at abroaden started in the Spring batch of the F10 FinTech incubator.
This program, run in collaboration with the Swiss and Spanish stock exchange companies, aimed to grow promising financial services startups. We're beyond thrilled to be a part of Spain's first-ever Fintech incubator, where we'll be able to realize our vision: providing people living and working abroad like yourselves with low-cost and transparent investment advice made specifically for you! Many of you are already on our early access list (and you're awesome for that!).
If you aren't and would like to be, or if you know someone who does, here is the sign-up form. We're currently working on overdrive to be ready to help you.
In the meantime, we're going to be making some changes you'll start to see in the coming weeks (including a rebranding of this newsletter. As it turns out, people don't like sharing a newsletter named "WTF" on their LinkedIn. Deep down, we knew that, but still - no regrets).
Above all, I want to thank you for your support and readership (we have a 53% open rate!). Your feedback and following mean the world to us; keep it coming.