Europe’s Plan to Compete with Silicon Valley
blogs.wsj.com
blogs.wsj.com
Sorry I don't see it.
Combined with the gloomy pessimism and fear of failure even in Europe's brightest areas (London and Berlin) and the absolute, spineless pathetic nature of European VC's (no not bitter at all ;) Europe will NEVER compete on any meaningful level with Silicon Valley.
edit: spelling
Contrast this with the coding bootcamps and "everyone can learn to code" culture in the US and you can see why innovation is so slow here in Denmark.
I am a CS student genuinely interested in compiler construction, distributed systems and programming language design so I don't feel I'm being forced to take a CS degree to get an IT job.
But I still think it's sad that you need an advanced degree to get CRUD web/business app development jobs.
I think the difference between Denmark and Silicon valley is investment money and the size of the domestic market. If the EU wants to recreate Silicon Valley, it's not tech they need to stimulate, but money.
I think trying to recreate silicon valley is like trying to recreate Hollywood or Mecca.
But I agree with the parent that it shouldn't be a discrimination, especially if you can demonstrate relevant experience in the field.
The US is also now producing twice the number of masters graduates per capita it was 25 years ago.
One thing that US isn't lacking for, is college degrees.
And when it comes to the free aspect - if that's so great, how come 3/4 of European countries have vastly lower college graduation rates versus the US?
But the attitudes of investors is lacking massively: Aaron Harris tweeted that "When reading YC apps, the most important question isn't "Why could this fail?" but "How could this be incredible?"" -- this sentiment needs to seep into the minds here, who seem more focused on risk aversion than optimising for upside.
I hope this is the 'easy' bit to change (I'm not sure). My gut says it's an old guard that will eventually be replaced.
Best description of them is a bunch of used car salesmen who would rather make their money by extracting value through tricking and hurting entrepreneurs, than by working hard to add value and make great bets. Sad, but that's been my experience over the years.
You could make a long list of specific differences, but that's the general situation.
Some things in the US corporate world are extremely reckless and pray on the many to profit the few.
If you're an engineer in a startup you known you're making somewhat of a gamble. But even if you lose, you're not exactly going to be poor. If you're a founder, my impression at least is that the US culture is much more tolerant of people whose business went bankrupt. In Europe you're just one step up from a criminal.
But what you say about startups in the EU is true. In many EU countries insolvency can have drastic consequences for the founder(s). In some of them it's also much harder to incorporate than in the US (e.g. in Germany you need to raise € 25k to form a "GmbH"; there is now also a transitional form called "UG (haftungsbeschränkt)" (yes, always unabbreviated or you can be sued) but you still need to follow all the legal and tax requirements and everyone will think you're poor and/or a scam).
Additionally VCs seem to focus more on traditional requirements and metrics, like business plans or profit estimates, rather than growth or traction. For example it seems to be nearly impossible to get funding for open source companies ("So let me get this right: you're giving it away for free and you expect us to fund you?").
True though, serious stuff seems to be happening with Israel. I even know of a growing number of US-based startups who've been raising parts of their rounds from Israel-based investors in the past few years.
Correct me if I'm wrong, my impression is that they don't have the anti-American nationalism and not invented here syndrome mentalities that countries in Europe seem to have. Big advantage.
Israeli philo-Americanism is its own can of worms. But in general: Israel is a very young country, often only a couple of steps up from the developing world, and is thus lacking in an "establishment" to "disrupt". This makes it a very good place to experiment, simply because, what the hell, nobody's going to try to stop you, and the masses and government feel more bolstered by your experimentation than threatened.
But this comes with a distinct downside for the country: that big, serious stuff is assumed to either be "kmo ba'hul" (like [it is] abroad), or to eventually necessitate a move abroad. Successful Israeli entrepreneurs and engineers hope to move to Silicon Valley or New York, with the unfortunate result that Israel stays a very young country with comparatively less-developed infrastructure.
Perhaps the difference is that 10% who aren't spineless. We may have a critical mass that Europe doesn't: a small percentage of non-spineless VCs that is just enough to get a few things off the ground. Unfortunately, the not-spineless VCs who actually show leadership and think for themselves are also inaccessible without a social advantage: you have to get that introduction first. You can't just call up Sequoia and get an afternoon with a senior partner.
"Europe" (speaking broadly, because it's a huge (sub)continent) has advantages on the ground. It's not a horrible place to live. Europe has a lot of problems, but they have universal healthcare, a culture of substance, and attractive architecture. Silicon Valley, on the other hand, is soulless, ugly, expensive, and detached from reality. I'd live in Budapest or London before Palo Alto or Mountain View and it's not even close. (This isn't an America vs. Europe comparison. I like New York and Chicago quite a lot.)
All of that said, Europe does need, if it wants to be significant in the technology game, to overcome the McKinsey/Rocket mentality that seems to exist in the upper reaches. SV's upper tier (investors) is bad but theirs is even more stifling, elitist, and detrimental (although probably less immature and obnoxious).
Talk about living in a bubble...
This is just an US article about Europe, which falls in the same spectrum of English telling History or Silvia Saint praising virginity.
much of Europe lags behind, with countries in the south
and east in particular struggling with slower, less
reliable 3G and even 2G
Jesus! https://www.youtube.com/watch?v=y3kcnm2THXI
Just relax :)
p.s: the IT industry here in Ireland is basically a giant money laundering / tax avoidance operation for multinationals... definitely does not have the same spirit as Silicon Valley (or the weather for that matter)
Then somehow, large established companies turn out to be the ones who end up profiting because they have the legal/administrative staff to file out a few tons of paperwork.
It's truly maddening.
I worked for a European startup once, and one of the founders left to create a consultancy that did nothing else than to help other companies fill out the relevant forms.
Yes one can pay accountants but that means increasing your costs and complicating your business from day 1
If they want more startups, they could for example exempt companies lets say with under half a million in turnover from having to waste so much time and energy on everything VAT related
Instead of focusing on making a profitable product/service and then worrying about taxation, startups have to worry about taxes from day 1.
Hell the EU are even now trying to get companies/people from outside the EU who do not live or work here be captured into the beuracratic pit via VAT MOSS
The EU plan was to exempt small businesses. But for god-only-knows what reason - I'm not ruling out petulance because they'd be losing tax breaks - some of the member states vetoed this.
Of course, the details should be public, and it's no one's credit that they're either hidden or hard to find.
No worries there !
The European strategy is always to have more and complicated rules (VAT got far more complex by Jan 1st 2015, net-neutrality is discussed, data roaming is under attack, etc).
European politicians do not understand that all the big companies once started as very small companies.
By complicating things (again: VAT, data roaming, etc) the entry levels are raised.
By the time successful US companies (soon to be Chinese companies ?!) reach Europe they have enough muscle to adapt to the rules.
Small local companies hardly ever grow that big. And it will only get more difficult.
What exactly do you think the problem is with abolishing data roaming charges? As it is, the telcos are screwing everyone, the plan to limit the data roaming charges is good from everyone else's perspective!
Automation was never about creating jobs. In my experience it's mainly about two things:
- Doing the same or more work with fewer people
- Doing things a person cannot safely or accurate or affordably (or at all) do in person
Compare the number of people employed by a major software company compared to a major oil company with a similar market cap. We are not in the business of creating jobs, our job is to save customers money by making jobs redundant.
> Geo-blocking of online content – the geographical fencing in of video services like Netflix NFLX -1.24%, for instance – across the EU should be abolished, the strategy paper says. Copyright law should be updated and harmonized.
That sounds good to me, but the content that's blocked to me is almost never from inside the EU, it's content from American IP owners I'm not allowed to watch / listen to. I don't think this is because of copyright laws, but simply because the content owners insist on selling their IP on a per country basis.
The only thing that stops me from accessing European content are the 23 different official languages.
Spoiler: it won't be anything like the present system.
If the current systems are in place going forward, we will have a dystopian future where a tiny percentage of the world population owns everything, and everyone else is a useless meatbag. Farming, manufacturing, defence, sanitation and other critical infrastructure will be highly automated. Consumer products will no longer be lucrative because the majority of consumers will have zero disposable income. Luxury goods will be the new consumer market [1].
The unholy trinity of capitalism, globalisation and automation is proving far too effective. Off-shore labor minimizes costs in the short term, while automation eliminates them in the long term. As capital increasingly substitutes for labor (in the form of technology) as the sole factor of production, it becomes impossible to participate in the market without large capital reserves. Thus, the rich get richer, and the poor get poorer. Piketty has already documented this phenomenon occurring across the board.
We live in interesting times.
1. http://store.apple.com/ca/buy-watch/apple-watch-edition?prod...
Starting a tech company in Europe is, usually, easy enough. The paperwork is more complex and expensive than in the US, but easy enough to navigate.
Looking at the startup hubs in Europe (London, Berlin, Amsterdam, Dublin...), getting early stage or seed money is also relatively easy. But we find the first difference with the US here.
Getting a bit of money is easy enough, maybe something below 500K€ is feasible. But there's no way you are going to get the valuations and the money raised by similar startups in the valley.
Most VCs here are pretty risk-averse, so that's an extra hurdle, but there's a lot of other VC operating on both sides of the ocean that are sometimes more approachable and the networks of angel investors work really well.
For me, the real problem is growth. Converting a startup into a big company requires a lot of changes. Sometimes the founders are able to step up their game and continue to run the big company, but more often than not you need senior executives, people that have done this before and have the set of skills, knowledge and contacts to manage a big monster.
There's plenty of people with those skills in Europe, but the mentality is totally different from the US. In the US you can find one of these guys that is bored, contemplating retirement and sees this process as an exciting opportunity. In Europe is more common for these people to be afraid of losing their position.
All this IMHO, of course and based of my experiences.
By the way, I find it funny that the article talks about simplifying tax structures just after they've approved MOSS, which is a headache for most companies selling virtual goods.
> A single digital market could bring in €340 billion to European GDP
Not trying to help startups, trying to get more money by taxation. Way to continue to screw over tiny startups who are trying to compete with the US, EU!
UPD: And VAT is smaller than e.g. 30% iTunes cut, which they can now regulate with a wave of hand.
For the Europeans, consider that Amazon & other US web companies got to charge 0% sales tax for almost their entire customer-base in the US, until they were far beyond the startup stage. For many of their US customers, they still get to charge 0%. That's what promoting small businesses looks like.
VAT adds tons of problems, especially for service or purely digital products. It's very regressive against smaller companies vs larger companies. Best thing that EU could do for small businesses is copy the US sales tax model and get rid of the VAT.
As the article says, this is about worshiping huge, old, post-IPO companies like "Google" and "Facebook", not small startups.
It's not so important to me whether they worship small or big companies, I prefer medium sized ones anyway :)
> I prefer medium sized ones anyway
Infuriating, short sighted, but typical line of thinking.
I honestly think that a change in mindset is needed for attracting entrepreneurs or making them stay. This goes from the said entrepreneurs themselves to VCs and whatnot.
If they don't change their methods, I'm afraid in some time, things will start to go downhill for the entrepreneurial environment here.
Also, the next time someone says 'X is the next Silicon Valley' or 'X is Y's Silicon Valley' I'm going to throw myself off a cliff. How about instead of trying to emulate something successful and original, try to create something successful and original yourself?
Can Paris build something that could create their own domestic tech juggernauts? Absolutely, and it'll be nothing like Silicon Valley, it'll be unique to that locality in how it grows and behaves; it'll have a different approach to risk, or to funding, or to term sheets, or to exit opportunities et al.
Decent, reasonable, comfortable - hardly the sales pitch you'll want to use if you want to attract or retain highly ambitious people. Do you?
Not trying to offend anyone, just consider that some people have much different desires than others.
If you are thinking of starting something and need investment, London is hard to beat, with Berlin coming up second.
It's already booming compared to a few years ago, it is seeing some significant successful startups (Criteo, Blaclacar...), and the ecosystem is clearly growing at an accelerated pace, with new companies, new spaces, new schools, new events appearing all over the place.
In 2016-2017 a few really large incubators are to open. Like the one championed by Xavier Niel which will host 1000 startups in a gigantic railway warehouse converted to startup offices (I bet that neighborhood is going to feel that change!), or another one opened by the City that will host 300 startups.
All in all I expect a frantic activity in the next few years. Now with so many startups (and hopefully a few great ones in the lot!) the scramble for financing is bound to be pretty harsh.
- I did not talk about the government, but I don't think it's that bad in France compared to most places in the world. Sure, some places like the Nordics seem to have pretty decent governments but at the end of the day in almost every country in the world the government is going to suck and you'll have to succeed despite them.
- Paris is "expensive" but it's still a LOT cheaper than other comparables cities, eg. London. I won't even talk about NYC or Silicon Valley.
- The ecosystem is blooming right now, and if it keeps up as I think it will, that means a tremendous number of opportunities for an ambitious person willing to start a business or work with startups.
- Funding sucks. But then again it sucks everywhere on the planet apart from SV so that's that. At least people who have worked in France can live on pretty decent unemployment checks for up to two years while they bootstrap the business so that's helpful enough.
Besides, politics in the area is very much still living in the past (to the extent it's largely driven by nostalgia rather than by what's reasonable), when mining, steel and big state-run companies dominated the economic landscape. Politics being run by largely anti-business socialists for decades now doesn't help exactly either.
Corruption is rampant, there's no vision and in general people there don't seem to care as long as their favourite football club's still playing. It's a shame really. There's a lot of potential there that simply goes unused.
[edit: grammar]
They usually just fade :-/
It hosts Philips, ASML, TomTom, Shapeways, NXP Semiconductors, DAF Trucks and quite a few other high tech startups.
Technologies for these industries are everywhere, if they don't want them, will a digital European market change this? I don't think so...
> The first pillar of the plan: breaking down barriers in cross-border online activity. Differences between contract law, taxes, consumer protection and copyright laws among member states inhibit trade, the strategy says.
This is a good move, but still there are barriers in scaling: different languages and cultures.
> The commission also says it will work to remove the technical and legislative barriers that hinder the free flow of data within the EU.
This is interesting, I would really see how they will manage to achieve this without annoying France and other countries with mass-surveillance systems.
> Another pillar of the strategy: regulate a level playing field for companies and services in the same market.
In a nutshell: instead of promote European startups offering similar services, they want to fight AirBnB, Google, Apple, Uber and Facebook. We need step forwards, not fights.
It's a kind of half-baked program, still no better opportunities for investments, no better regulations for acquisitions (best exit strategy possible driving to more investors) and no program to motivate investors in putting money in the Hi-Tech market, but instead, EU will fight American companies.
But with our current EU system, only the state hosting this tech hub would really benefit from it: We don't have federal taxes as in the US, each country has its own "social security" and pension system to which the new jobs would contribute, and this naturally brings more competition than cooperation.
For example, Applebees is well known restaurant chain here. Their corporate headquarters is near the border of Kansas and Missouri. Every few years they physically move back and forth across the border depending on which state gives them the best tax break.
Europe (at least northern) is probably the easiest place in the world to start an Internet company. And we're also quite privileged in our opportunities in the US. If you're not doing one or the other (and want to of course) it's likely mostly your own fault.
Cost of living. SF is far more expensive than anywhere in Europe, including London. This immediately ratchets up the burn rate.
Red tape. Whether it's a Delaware off-the-shelf incorporation or something else, sooner or later you're going to have to deal with the IRS. From previous experience that's a world of pain.
Health care. I don't pay for it here. I'd have to pay for it there - and pay a lot.
There are advantages too - immediate access to a huge market, mostly speaking a single language; lower sales taxes; networking and culture; weather (although cities like Barcelona which are comparable).
Access to talent is roughly equal. Certainly there are areas in Europe where developer standards are reassuringly high.
The real difference is that SV has a strong start-up tradition, while Europe has an industrial tradition of bigger and more established concerns, and start-ups seem to happen more by accident, often in waves - like the home computing wave of the early 80s, and the current tail end of the app+game wave.
Europe could certainly do more to improve that, but it's not so impossible to make things work here - it's just the challenges are different.
Resulting in a ton of cringe-worthy YouTube videos and managed twitter accounts and Facebook pages for politicians who think the Internet is "new" and still print out their e-mails.
For some reason European politicians talking about technology is often a lot like parents trying to come across as "cool" to their teenage kids. It just doesn't work and is a humiliating and disturbing experience for everyone involved.
There are some who get it right, mind you, but generally those in charge simply don't care about technology and see no reason to educate themselves (other than by listening to lobbyists who offer them shrink-wrapped opinions and soundbites).
Although startups have a great culture, big tech companies are being filled with executives and acquiring any disruptive micro-startup.
Analogously, many employees often feel like 'factory workers'(sorry for overstatement) being pressured by employers to produce X as fast as possible.
What Europe is missing is a strong vc industry and a better startup culture. Here in Switzerland there are of course vcs but most funding for startups comes from angel investors. And there is no incentive for working in a startup as they almost never offer options/ownership in the company. And so you get people developers in startups that are doing it for the experience and so at the low tier of programmers here.
If there was a stronger and more experienced vc culture I would think that they would improve startups by making them more like in the u.s. with options, stock grants, etc.
My second reaction to this headline.... HAHAHAHAHAHHAHAHA!!!