Comment by bontoJR | Hacker News Reader

Comment by bontoJR | Hacker News Reader

In Europe we have this hope to find/create a Silicon Valley to compete against US. The problem is, we simply can't. We don't have, as well said before, the "Siliconvallish" investor. We can keep trying, but it's a culture problem, we need to change that, then maybe we can try to compete.

Silicon Valley is not about ideas or just tech-companies, is about investors and culture. In Europe experimenting is very very difficult, I worked on a project involving big data, predictions and very advanced live stuff that at the moment are hot in SV, but in Europe investors look not interested or ready to support this field. Another huge problem is the poor ability of European investors in following the tech-trend. 6 months ago I did a presentation about a product I was working on, looking for fundings, it was for one of the biggest VC/Incubator (focusing on medtech, green energy and hi-tech) in Switzerland and at the of the presentation I have been asked by the president what "a phone notification is" and "what is bluetooth LE", so I spent my QA time answering basic questions about the current technology instead about the product I was working on. I know not all European VCs have a similar mindset, but the general importance order for an European VC is: intellectual property protection, amount of money required to release, high market barriers looking for no short-term competition and, lastly, shipping time.

An American investor doesn't care too much about competition, as long as the company provides a far better service (with a clear real advantage) this is not an issue, IP is important, but only if the product gains traction and goes mainstream (so it means $ that mean patents), the amount of money as well is not an issue, with so many VCs you can manage to get all necessary fundings if the product is valid, so what really matter is entering in the market as soon as possible with something that is good enough. These are just few examples I faced, but there are many other differences...

The problem with investment culture is twofold.

1) A lot of European money is Old Money, as in really old. You don't get to hold on that much money for hundreds of years without being on the conservative side when it comes to overly-risky investments.

2) Effective redistributive policies in the richest Northern countries have historically reduced the concentration of money to the benefit of society as a whole, but they kept low the number of people with "money to burn", a requirement for bootstrapping a healthy VC ecosystem. As a "leftie" myself, I honestly wouldn't know how to fix this without screwing up a lot of other (arguably more important) elements. Southern countries didn't redistribute as much but their elites tend to "run with the till" as soon as they can, which obviously does not help investments at any level.

Overall, I think trying to ape SV is a waste of time; each country or district should try to leverage its own cultural elements that can bring success, which might not include the requirement for VC backing.

> Overall, I think trying to ape SV is a waste of time; each country or district should try to leverage its own cultural elements that can bring success

This way of thinking is so terribly wrong. Early-stage investment is absolutely crucial to tech startups. It is not "copying silicon valley" to say that early stage investors are crucial, any more than saying that having snow or mountains is crucial to creating a ski resort. Same for many other factors.

No more excuses. No more "not invented here syndrome" of cities saying that they shouldn't copy successful parts of silicon valley, just because they don't want to feel like imitators. This attitude that every city can be special in their own way while ignoring what really matters is hurting founders.

> Early-stage investment is absolutely crucial

Yeah but it's not written in stone that such backing should come from VC companies similar to the ones operating in SV. If capital is not distributed in the same way as in SV, there is no point trying to aggregate and invest it the way SV does.

VCs don't do first stage funding, almost never. What you're saying is not at all how it works in SV. The early stage investment typically comes from private angel investors who previously got rich from startups themselves, and invest their own money.

1st stage investment sources are absolutely needed. It's not optional just because it's not easy to accomplish. Trying to compensate in some other way that ignores early funding is total nonsense. There's no valid substitute. There's no way around it that doesn't hurt entrepreneurs.

Yes, and what I'm saying is that other cities will likely lack "investors who previously got rich from startups themselves" with an angel attitude, so there is no point in trying to hunt them down.

The beauty of SV is that you can find capital at pretty much any level: from bootstrapping angel to big-time VC to exit deal. Other districts will likely lack some or most of that, at some or most levels, and will have to compensate some other way.

Yes, the second most common source of investiment is government.

But while VCs look at (potential) earnings, governments usually look at utility (if they're not favouring their friends, of course)

A government would never invest in 80% of SV companies today. There might be financing options though.

So, while left-leaning governments make sure everybody has their needs attended, they also make pretty much sure that nobody can have too much money to invest

Beg to disagree, for two reasons.

* No two places can be silicon valley, just because of the twofold effects of concentration and competition. I.e. SV is what it is not only because of culture, but also because all big IT corps have their headquarters their, and they simply can't have two headquarters.

* Not all places are best of as clones of SV. In particular, if you don't have a widespread educational and technological infrastructure, but rather any other form of assets, then it may well be better just to try to be something else than SV (e.g. a mining/industrial/financial/cultural centre, or just a place people go to sleep). The real world makes money, too.

There already are many silicon valleys though:

- NYC is the silicon valley of certain types of finance companies.

- LA is the silicon valley of movie production companies.

- When the space race was at full speed, there was a silicon valley of aerospace technology companies. Perhaps there were several.

- You might say NYC used to be the silicon valley of theater, news paper companies, advertising and media companies.

- Silicon valleys of painting and sculpture used to exist.

But, do you see any examples where access to 1st stage investment funding was optional? No, that's nonsense. The availability of 1st stage funding is the absolutely non-negotiable primary factor for any of these to exist. This is the secret to all of these "silicon valleys". People go there because those cities give you the best chance at immediately raising money for the type of work that city specializes in. This factor dominates everything else. I could possibly see Silicon Valley being divided up into more specialized sub-areas, and other cities taking the lead on those areas. But it will never happen unless the city is also leading in access to 1st stage capital for that industry. This has proven to be the case 1000 times over, across many industries.

So the BIG question - does having talent in a city attract 1st stage capital to a city? The answer is a clear NO, it does not. This has been proven so many times. Other factors do attract 1st stage capital to a city though.

Thats exactly how it is. I wish Europe had more "ok lets try it"-money and the funny thing, every politician is complaining about why we don't build the next Google/Facebook etc.

Because you have to fund 50-100 companies and let them grow to achieve that without a valid business model of "how will you earn money?"

This "how will you earn money" and its follow up "You honestly think people would spend hours upon hours of their free time infront of a keyboard and screen and doing what was it you said building boxes and stuff with lego like pieces!? Why would anyone play games thats not productive".

In general, entertainment, never passes these nay-sayers.

It's not just that. Europe has a more "private" culture... While some American companies puts "everything" in the open, Europe discusses and gets clients more "privately"...

We have a lot of big companies, but almost none of them contributes to opensource for example. Some SMB's do this (adapting the american way?), but no big businesess.

This is a current trend, I don't see a problem to have closed source, Microsoft built an empire with closed source-code and solutions, nobody complained with it. Now we are in the sharing economy era, so it makes sense to open when possible.

The big 3 problems in Europe are the lack of investors a "Siliconvallish" mind, the lack of a certain amount of money for so called "experimental" technologies and REAL exit-strategies opportunities.

Why I pointed these 3 factors? Having a right investor believing in hi-tech and experimental products, you get the money to start is also someone that bring the right kind of network. With the second factor you can scale, scaling in Europe is VERY expensive (different languages, VAT, cultures, etc...) and the amount of money required is very high. The third factor is required to get the first and the second one, we don't have a working acquisition schema. Investors are too scare to put money on hi-tech in Europe just because exits are REALLY difficult. In the Valley, if your company has a great product, you can end up bought after just 6 months, in Europe this is extremely rare.

That's point of view, I would real like to get some statistics about it and write an article, if you know a good and reliable place where I can find some valid data, they are welcomed.

Every area in the US that isn't the Valley tries to claim it has, or is working on, an equivalent. They are mostly where you are in terms of replicating the valley.

I always say, if you want to replicate the Valley you need to steal Valley's investors, but I don't see any valid reason for them to leave... :)

Agreed. You need the people to take the risks.

Now, please excuse me while I fashion coconut husks into headphones and wait for my planes to land.

"Something of something" is never really that.

With rare exceptions, Germany is like 5-10 years behind US in tech. Imagine how bad is it in other countries... It's not even funny, Europe is completely losing it.

You really can't make such sweeping statements, though, they don't make sense, thanks to the internet. I've met people doing plenty of advanced stuff here in Italy. And plenty of others who are not really doing interesting things. Same in the US, though.

They are unfortunately exceptions and will never reach proportions of US corps due to not having access to "free money" like in the US via VCs (and also crazy tax rules in EU). When you talk to actual German entrepreneurs, many of them say that "first I raised all the money myself and then the bank was willing to lend me a similar amount with the money I raised as a collateral". So either you get money by political connections (which means you will be operating a China-style buddy company and not a competitive one), or you'd have to bootstrap it yourself with slow growth and high probability somebody in a more agile country with a better access to capital will copy your idea and squeeze you out etc.

ORLY?

In what field?

People can pay stuff online directly with their bank details in Germany, no middle man (read, paypal) needed, and cheques are pretty much history.

How fast are the quickest trains in Germany compared to the USA?

Yes, some traditional companies are way behind in technology, but newsflash, there are a lot of companies like that in the USA as well

On the other hand when you see those ridiculous spreadsheets that Deutsche Bank uses for 2-step authentication to the e-banking you feel like in a shite 60s spy movie. When you actually log in it feels like the 90s though. And 80% of German people seem to go with tradition/history even when it is not really rational. Really makes me wonder how the two core components of the German value system - Tradition and Pragmatism - conflict each other in such situations and how they are becoming less and less compatible with every passing day.

On the other hand they sometimes play very very well together - you cannot have a great technological advancement such as ICE - unique in world scale - without both pragmatism and the stability to plan centrally for 30-50 years ahead.

"Deutsche Bank uses for 2-step authentication to the e-banking you feel like in a shite 60s spy movie"

I agree 200%. Germans love that and it's DB after all, I assume other banks have something more modern (other banks in Europe use electronic tokens)

I was writing about software. Of course everyone knows German cars are much better than US ones (even the dumbed down ones sold in the US that don't need to handle speeds over 100mph). Obviously, US doesn't care about trains, Silicon Valley has like one line comparable to average S-Bahn line and nobody cares anyway. As for your lack of a middle man in paying online via 'Bankeinzug', instead of merchant bearing the cost of payment, you're depending on how many free transfers your bank gives you until it starts charging you fees for any additional transfer (and Amazon often splits your charges per item so you are likely to run over your limit easily).

I think you are talking about technology adoption, especially in business. That's a different issue, and something that I don't see as a problem.

But in terms of companies, there is no version of 2005-2010 Google, Amazon or Microsoft in Germany. Not even a 1995-era Microsoft.

I think SAP would beg to disagree.

In terms of revenue or workforce, maybe, but I don't think SAP will ever have the worldwide impact of a Windows 1995 launch, or anything that happened after that.

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