Why Silicon Valley Can’t Find Europe
techcrunch.com
techcrunch.com
1 - Europeans, though are certainly enthusiastic, are not going to go for 80h/week workloads, not even as founders.
2 - Some sense of Naiveté in the European site, in part because of the less restrictive laws and stronger regulations (beats me how Soundcloud started in Germany, anyone who has tried to use Youtube there can relate - at the same time Soundcloud is "the exception that proves the rule")
3 - Less "hacking" spirit.
4 - A more stable social foundation "discouraging" entrepreneurship (debatable)
On the other hand, here's what I think Europe has to offer
1 - More opportunities to fill niches and offer new services
2 - Good education and people with a strong theoretical foundation
3 - Smaller costs than SV (and more affordable salaries, smaller healthcare costs)
4 - Easier to find talent amongst the whole EU, and easier to bring talent from outside (like Eastern Europe)
5 - Shorter distances between tech centers in Europe
This assumes that to be successful startups need to be working 80h/weeks. There are plenty of successful tech companies working much less than that. Treehouse for example works a 4 day week. Long hours are important when building the MVP and getting it out but after that I think you can work normal hours.
>> "4 - A more stable social foundation "discouraging" entrepreneurship (debatable)"
Doesn't this encourage entrepreneurship? It enables you to take the risk without fear of ending up homeless. For example if I were to start a new company there are programs I can sign up for which would give me £60 per week for 6 months + I believe I would still qualify for housing assistance (basically my rent would be paid for me). So as a single guy I could easily bootstrap a company with little-no risk.
You are correct, and I don't assume it. But several people do.
"Doesn't this encourage entrepreneurship? It enables you to take the risk without fear of ending up homeless"
Yes, there are two sides to it.
Edit: I'll reply here why does this discourage entrepreneurship and my fault for not making this obvious
The sentiment of "failing at business" as a failure is much stronger. Yes, you won't end up homeless, but it doesn't mean the society (and the people close to you) "accepts" what happened.
Because you went for "computer stuff nonsense" instead of going for a traditional job.
The way this relates to the welfare structure is in their "origin" of having everything nice and square and predictable.
What's the other side? I don't see how it could discourage entrepreneurship at all.
It's about social/peer pressure.
Having lived in many countries across Europe, I can attest. Some countries are worse than others of course (the worst being the ex-commie/socialist ones).
" They feel and act much more as a part of Silicon Valley than the economy and local culture their parents and non-tech friends share."
True
But maybe my experience living, working and studying in 3 different countries in the EU is worth nothing.
I'm not really impressed, given how wide strokes you painted. I just think it's more constructive to at least state the countries you're talking about rather than just the continent that they share.
If we're talking about startups, there's a limited set of places this can be about. I can assure you it's not the countryside of Spain.
I mentioned the common aspects I've noticed, because the discussion is about Europe and not a specific city or a comparison between them.
But I'm basing this on experiences in Ireland, France and Germany. Sure, they are not all exactly the same, but they end up having a lot in common.
Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Estonia
Finland
Greece
Hungary
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United KingdomBut you can't find a Silicon Valley or a similar economic and/or cultural spot. He's trying to explain why.
>Stop generalizing
Generalizing is the (literal and historical) start of science -- putting things in general categories and taxonomies is essential in understanding them.
There are categories of things -- and different places have different characteristics in aggregate, not just because "there are various kinds of people in general".
Taken into average VC spirit is pretty dead in most places on Earth. Can VC in Africa, India and China be compared to USA?
USA shares common history, language, state system. Europe is waaay more diverse. Treating it like a singular entity is much like treating all human states on Earth as a single entity.
I think it's more abstract. Europeans are much, much less likely to find understanding among friends and family for the idea of making sacrifice of any kind (of which long hours is only one kind) for "work".
Europeans are much less likely to understand the idea that a startup isn't "a job" and that starting your own business isn't just something you do to work from home, have less hours and (especially) not have a boss.
It's all on average and stereotyped, but it's definitely my feeling.
Also, it's just very, very suspect to want to get ahead. It's impolite to admit, but I can't help but think it's a damper om ambition, and with no ambition, there can be no Silicon Valley scale startups.
About the ambition aspect, it's not so much as "dampened" but also a dose of "they don't see a point in too much ambition" or of "doing it just to be n. 1", and they certainly want to reach the top, but enjoying the ride as well.
Neglecting work/life balance is looked down upon, too.
I'm sure some European founders have interesting stories to tell about that time when they "came out" as ambitious :)
EDIT: I just realised the difference is probably in the "forward thinking" culture of the USA vs. the "living in the now" culture here. If you aren't successful now, why worry about success?
Europeans are much less likely to understand the idea that a startup isn't "a job" and that starting your own business isn't just something you do to work from home, have less hours and (especially) not have a boss.
So, in essense, European don't believe in the gold-rush kind of startup culture. Seeing that only 1 in 100 or less companies ever make it, that's quite smart of them (well, us).
For the "less hacking spirit" somebody else said, I disagree. Heck, tons of hackers are from and in Europe (from Guido to the core KDE guys, and from projects like VLC and Haskell to OcamL).
True, maybe they trade quantity for quality. Also, Fabrice Bellard.
Depends on your definition of smart. I think we (again, on average and stereotyped) prefer the comfort of a stable and secure job, rather than taking a shot at a one in a hundred startup.
That's "smart" for the individual, but if no-one takes the shot, the hundred startups needed to get to the one that gets big doesn't get started.
The essence is that the modern western European culture isn't very conductive to risk-taking. This is great for stability and comfort, but it doesn't get us much progress and we will suffer in the long term for it.
True, but so what? What exactly have we gotten by those kind of startups that we couldn't have gotten better from stabler, long term, businesses?
I mean, consider, as I do, things like Instagram and Twitter as essentially BS.
The most valuable things I can think of is stuff like Google, Skype, PayPal et al. But those are not the kind of startups people pursue these days.
> The most valuable things I can think of is stuff like Google, Skype, PayPal et al. But those are not the kind of startups people pursue these days.
Sounds like you suffer from a severe case of confirmation bias.
This is where I suspected that you were Scandinavian... and surely enough your profile's email is Danish.
Meanwhile in the US people are happy to use yearly income as the scale to compare people. Which is certainly wrong: any nurse should be higher on the scale than Columbian mafia bosses, right?
The only reason I mention this, is that its all-together quite likely that there are some very talented people out there, in europe, who will undoubtedly have what it takes to do what needs to be done.
The better explanation as to why silicon valley does not exist in europe, however, is just cultural. The US has NASA, Los Alamos, White Sands, Area-51, and all kinds of massive experience with science/industry and the types of invention and "productisation" of technology that comes from having huge deserts to play with expensive toys (rockets, weapons). That does not exist in europe, neither the culture, the money, nor the geography. And as a point of history, that to me is a better explanation of why silicon valley is where it is in terms of leading the commoditization of technology, and being the lynchpin a broader market.[#]
Tech entre-preneurialism is a sub-set of this market (ie, many SV firms are huge, or government centric). And thats why for tech-startups, you will always over-represent in SV, because of the larger ecosystem to which VC is a subset (of funding, to wall-street and the government...which underwirite BigCo tech still).
The other thing that is relevant is culture. But in a different way than it is often portrayed here. The ambition of many middle-class people is to strike it rich... "to live like a european". Obviously, this won't motivate europeans...for two reasons. The less obvious reason is lack of social mobility; the more obvious reason is the obvious one (ie, they are more worried about keeping a good thing going, than rebuilding a good thing from scratch).
This might not be a perfect explanation, but even as a straw man its worth considering that there is some truth in it.
[#] While the wealth and brains exist in europe, the critical-density of (capital, expertise, experimental sandbox) does not.
I live in Sweden now, the organisation I work for is in the Netherlands, I have relatives in Switzerland and in Spain. The way society is structured in all of the EU countries I have visited or lived in are way closer to each other than to the US, including Britain IMHO.
When you tally up the science and cost, both programs are probably very comparable, but the US program is much more approachable, because of a strong self-promotion mindset and a complete lack of self-awareness. Loud and proud. The ESA programs are much more low key, what pride there is must be carefully weened from between people's modesty.
I think the difference in the space programs is a reflection of the cultural difference caused by how the US was formed. The european culture has always valued knowing your place, and people who didn't want to stay in that place moved to the US. The US as a consequence values people who try to shout from the rooftops and reach for the sky.
On the extreme end, there was a survey mentioned in Norwegian papers before christmas which stated that the majority of Norwegians believed they earned the equivalent of about $16,000/year more than they need.
That doesn't mean many wouldn't love to have more. But if you feel you're making $16,000/year more than you need, then it takes something other than money before you start taking big risks.
Of course Norway is an extreme given the income levels, but I feel that the general attitude of "having enough" or even more than you need is more prevalent in Europe - across income classes - than it seems to be in the US.
It's different from lack of ambition: Many of the same people who feel they have enough money, still want very much to reach some hard to reach goal. But choices can get very different if money isn't an important part of setting those goals.
What attitude are you referring too? do you have any objective fact that would prove that europeans are less ambitious than americans?
If you go to any selective European school or university, students are certainly as ambitious as their american counterparts and aren't afraid of working hard to achieve their goals.
However, they are probably more interested in an executive position in the finance industry than founding a company, which doesn't sound unreasonable.
I read some studies about that. Maybe I believe them cause I am European. Or maybe cause I did worked a lot in the past and my experience confirmed studies.
Many go into these roles from graduate school and I can't think of any that match Stanford etc in entrepreneurial spirit. Intriguingly enough, although grad school is a fraction of the cost of the US, expectations that one should go into an "established" firm after are, if anything, even higher
2. In the UK at least laws and regulations are in many cases better than the US, certainly from a tax perspective
2. I'm not sure you even made an argument there. Less restrictive laws and stronger regulations? What?
3. Linux?
4. Are you using 'debatable' in a new and exciting way here to mean 'not'?
SoundCloud actually started in Stockholm and moved to Berlin. Maybe because of the music scene there.
> 3 - Less "hacking" spirit.
I can only talk about Sweden, and I certainly think there's a culture like that here. Lots of old demo coders, etc. Probably one reason why there are quite a few game companies.
As I see it, the startup scene is real and has the same kind of "glorification" here, maybe because of the country's past with entrepreneurs and large companies. Or maybe because of success stories like Minecraft, Spotify, Skype, etc. People will certainly not look down on you for going your own path. What's lacking though are VCs willing to spend money, I think it's harder to get funding.
First of all, yes, we do. Been there, done that. That said, I don't think it is/was beneficial - I've had to send people home to rest because they became a net drain on the team.
I think your points are highly dependent on where in Europe - I don't recognize myself in any of your top four points.
It proves (tests) the rule and the rule doesn't hold for them, which is an argument against the general validity of the rule. I don't understand why you write "at the same time..." because then it looks like the fact that it proves a rule is in fact an argument for the general validity of the rule.
1) Target market
USA: natural target market of 320 million people with a very high level of (disposable) income. Established businesses are happy to buy products from startups. There is a positive feedback loop where businesses try to grow fast and therefore want to outsource the stuff they're not good at so they can focus on their core skills. This means startups can pop up to take care of everything else (HR/Invoicing/Data crunching/etc-as-a-service).
EUROPE: you have to deal with dozens of languages and cultures. Although the and Germanic countries are OK with English-only products, the rest of Europe wants their products translated. Salaries are much lower here and businesses are much more conservative. Businesses that grow slowly have to care much more about operating expenses, which means they will try to do everything in-house to cut costs.
As a consequence we get the vast majority of our revenue from the US, even though people all across the world try our software.
2) Culture
A lot of people talk about starting a startup, but nobody seems to want it badly enough. Perhaps this is because there are so few success stories over here in the Netherlands. People tend to focus on the negative (what if you fail? what about work-life balance? what if you get sued?), but it's hard to say if that matters.
The US has only one Silicon Valley. There is nothing comparable on the east coast, even though the east and west coast have a lot in common. If we figure out why Silicon Valley works and other places fail to really take off we should be able to create startup hubs all across the world.
Culture is changed through the media and other social proof. An increase in money might make people feel comfortable enough to take some new risks, and some of those risks might pay off and spawn some companies that the European general and tech media can report on.
It might be true that Europe isn't doing well with web startups reaching stratospheric valuations in no-time, but Europe is full of startups doing well, and starting companies in Europe is not particularly hard (co-founded several; been one of the early employees in a couple more). And in many countries you can practically get government grants thrown after you if you put in a minimum of effort into applying.
You have some points with translation, but where you see problems, I see opportunities: Translations can be done cheaply enough that being aware of internationalization issues and cultural issues can create enormous benefits in the form of erecting barriers exactly against US companies. I've worked with a number of US companies on i18n issues, and I've yet to find a single one where the US team understood the European concerns (I still shudder to think of the one multinational who thought that it didn't matter if all their past invoices changed if they changed their invoice template, to, e.g., change their VAT registration number).
I also don't agree with about culture. Well, sort of: What you say is true about the US too. Most people don't want to start companies badly enough. Or they would have. At least a huge number. Lots of people do though, we just don't have a single geographical area as small as the valley where it's all concentrated.
There are hundreds of internet startups in London alone, for example.
And I don't buy that you have so few success stories in the Netherlands, though perhaps you're not aware of them as they're not in "as hot" sectors. E.g. consider Bibit - a payment processor funded in Bunnik, that was acquired by RBS and merged with (London founded) Streamline/WorldPay (who has also acquired half a dozen other European startups in the payment space over the years), just to take one of the top of my head that I've personally dealt with. (And a bunch of the people from Bibit are now behind Adyen - another Netherlands based payment processor startup)
Though there is definitively cultural differences. The "fail fast" approach that many in SV takes is definitively less popular, not least because in many countries here for many types of jobs, having a failed company on your CV, at least as a founder, is seen in a more negative light. And this probably explains a lot of the perception too: Many European startups takes longer to grow big and may never even aim to grow as big as an equivalent Valley startup, and so may often be seen as a medium to big established company by the time mergers and acquisitions happens - it's easy to fly below the radar for the entire lifecycle of the company as an independent entity.
We really don't. We (barely) share a language and are held hostage together in a room by dead white male slaveholders who a vocal minority have turned into a new American Pantheon.
The west coast has some political common ground with the northeast, but there are still huge cultural gaps, and the "east coast" extends a long way south of Maryland and DC. This isn't some big mystery, just a big continent.
Think about how many cultures you would encounter walking from Paris to Moscow. Now compare that with walking from New York to LA. Even though Paris is much closer to Moscow than NY is to LA, you'd experience much more cultural diversity along the european walk.
Just like Europeans have difficulty mentally grasping the physical size of the US, Americans seem to have great difficulty grasping the internal cultural diversity of Europe.
But something tells me you draw your own entirely subjective cultural lines in vastly different places than I do mine.
What is true though is that Americans tend to underestimate the homogenizing effect a shared language, border, government and media apparatus has and the degree to which it helps in facilitating cross-country trade.
Present reality is that anywhere east of the Rockies may as well be a foreign nation. I am far more comfortable with many foreigners, even non-Western foreigners, than with most people in the eastern US. Present reality thus leaves me utterly unsurprised that Silicon Valley remains relatively unique in the US.
Edit: Incidentally, I'm amused by the strongly negative reaction I'm getting from Europeans who wish to tell me, an American, what America is really like. What would be your reaction, exactly, if I started telling you what Europe is really like?
My brief description of the northeast would hardly be "bizarre", but probably "traditionalist", or "old world". Of course, New England and the mid-Atlantic are themselves quite distinguishable.
I didn't say we had "nothing" in common, any more than I would say I had nothing in common with a European, but it's hardly one culture.
Technically your argument didn't necessarily show any signs of such ignorance, but statistically speaking it would have been quite likely.
As an American who lives in the central region of the United States, I call baloney on that statement. My HN user profile discloses that I have been to all fifty states of the United States and some of the other territories of my country. The United States really is startlingly homogeneous, all over the country. One illustration of this is the role of English as a national interlanguage unifying all ethnic groups. Only about one-fourth of Americans have ancestors who were speakers of English before arriving in North America. (Sure enough, strictly less than one-fourth of my ancestors were English speakers, even though my family name is English.) Two of my four grandparents (all of whom were born in the United States) received the entirety of their schooling in German rather than in English, but both were perfectly able to communicate with me in English. (Another grandparent grew up in a Norwegian-speaking household, although all of her school lessons were in English.) The United States has a great deal of cultural, ethnic, and even today linguistic diversity, which is a blessing to the country, but the United States also has a great deal of shared culture and ability to communicate in one language from east to west and from north to south that is quite amazing in other countries. Only a little more than half of the people in China even have a common language for conversation.[1] By contrast, people in the United States can use a common language that takes them not only all over their own country, but increasingly all over the world.
[1] http://www.bbc.co.uk/news/world-asia-china-23975037
http://news.xinhuanet.com/english/2007-03/07/content_5812838...
As a consequence, when trying to gain attention as a European startup, you can either try to conquer the European countries one by one - or you can try to get American attention (e.g. techcrunch) and let the European tech journalists copy from there. This is a though choice US entrepreneuers don't have and its caused by the cultural one-way street.
There's still a lot of conservatism. You can make a physical product in the US and people (early adopters) will try it out. In Europe they will want it to be certified and proven and above all know that the founders are properly credentialed. This is probably one reason why all these companies have been formed in domains where credentials don't matter and people are willing to take a chance
As a European entrepreneur that moved to Silicon Valley I can only say culture, culture, culture. You can look at VC activity, amount of startups, even bring on Skype all you want but this is the one thing you can't change and unfortunately The European culture is not as flexible nor open to new ideas, innovation, risk taking, etc.
I do agree with the author that Nordic and new European states have a much better environment for successful tech startups to flourish.
1. High net worth angels can invest up to £100,000 into a startup and the UK government will offer capital protection of up to 86.5%.
86.5%! Startups can take £150,000 that way, then there is another scheme that allows them to take up to £5,000,000 and the UK government offers up to 61.5% capital protection. Crazy. If you look at pre-money valuations in this light for angel-funded rounds, UK startups tend to raise at a 10-20x lower valuation than Silicon Valley startups..
2. Startups that make money of their patents only need to pay 10% tax on that money
3. Companies can get back 25% of their R&D costs from the government
4. Government grants of up to £250,000 (matched funding) for proof of concept, development of prototype etc on original, innovative products
If you had the above in the US, things would be far, far crazier than they are now.
That about half of European venture capital funds are from local governments despite tailwinds like this certainly points to a deeper cultural issue.
Good luck trying to get your business (startup or else) in France for example.
I don't know about Denmark or Estonia though but I guess you'd be hard pressed to find more red tape than in France (in the EU context).
The EU mitigates this somewhat, but you do have a point. You can run into the same problems with US states too though; obtaining a license to become a money transmitter is one example that I can think of.
You can manufacture a car in Austria and sell it in Portugal without there being ANY barriers, except those imposed in Austria... which is the same legal framework as in Portugal and the rest of EU countries.
The EU economic and trade integration is in many cases more homogenous than that in the US between states.
In the US, when Google got sued for tracking Safari users when they had opted out, Google didn't have to settle in all US states but only some. This "Germany example" is no different.
* You don't need 50 markets to get to the same size, you need 5. The population of the just the 5 main Western European economies: UK (63m), German (82m), France (66m), Italy (61m) and Spain (47m) totals (317m) which is more than the US (314m). The GDP per capita in the US is slightly higher ($49k in US versus $41k in Germany, $39k UK, $40k France) but at roughly the same level.
* Under EU laws, you have free movement of goods and mostly (almost) a single legal system covering things like e-commerce.
* Language is not really a barrier. For B2B stuff, depending upon your industry, then English alone is probably sufficient. Translating a product or marketing material is hardly a difficult task these days.
* Assuming by social networks you mean things like Facebook/Linkedin/Twitter, then they are the same across the EU.
US: $51,700; Germany: $38,666; UK: $36,569; France: $35,295; Spain: $30,058; Italy: $29,812
The EU is $31,571 (40% lower)
It's also worth noting that you can relatively easily reach into the wealthy Canadian market if you're targeting the US; Canada's economy is larger than Spain's.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP...
https://www.cia.gov/library/publications/the-world-factbook/
Mine were straight from Google (e.g.https://www.google.co.uk/search?q=uk+gdp+per+capita+&oq=uK+G...) )
For the relevant Wikipedia link, see:
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomin...
I've read "Founders at Work" but I didn't know about this one until a few months ago.
(and now I see they have "VCs at Work", "CTOs at Work", "Gamers at Work", and "CIOs at Work")
It seems that Europe either doesn't like this game, or just doesn't know to play it.
Personally, I would like to hear more from entrepreneurs in Berlin, London, and Helsinki on how they view the interaction. Berlin is a current hotbed, Helsinki has a few more international startups, and London is english speaking and a tech center as well.
I'd like to see more interaction between the Valley and Europe with startups originating cross culturally. Build on the strengths of both regions and less of things like the Samwer brothers that basically copycat things.
Locally, there is certainly an echo chamber in the Valley. Lots of press/blog inches dedicated to social and the hip/popular startups in San Francisco. In other parts of the Valley (Fremont down to Almaden Valley) you have many startups working more internationally with components in Asia and Europe depending on their focus -- hardware, etc.
With SV, a similar thing is happening. It's basically like going to an event and only talking to your friends... and not meeting new people. This translates into missing opportunities. The other signal is that people in the valley aren't non-tourist living abroad enough to understand elsewhere. That's a fail-at-life in so many ways.
If you have a service you expect 1 in a million people to use, you can have a userbase of 300 in the US, but to get the same number of users in Europe you will need multiple translations, manuals in multiple languages, knowledge of the regulations in multiple countries, etc. Even if on paper Europe is a larger and richer market.
In the EU "startup scene", if such a thing exists, the only chance to get meaningful amounts of money is if you take loans on something (your house, car, whatever) or clone a US-proved concept/site/technology.
THIS is what needs to change. Europe badly needs VC firms/banks which can readily supply capital!
Edit: also, we (ESPECIALLY Germans, badly burned by the Deutsche Telekom IPO desaster, and now the Prokon scandal) do not have a large stock market. Stock trading here is for the dead rich and banks only, I believe. And without private (stock) capital, no VCs...
Here's the link http://www.mgreschke.com/view/entry/1?locale=en#disqus_threa...
Getting easy capital (even from private angels, its already hard to get more than 25-50k Euros from a German business angel) is one side of the deal, but at least in Europe I cant help but think that the social environment has been holding entrepreneurship back for the last decades. Although that seems to be changing slowly.
1) Stanford (a top research university, with world-class students and professors)
2) Money (investment money, from a lot of people who got rich from tech)
3) A high concentration of geeks/techies/developers/whatever you want to call them
No place I know of in Europe has all three of these (in fact, I don't think any place in Europe has 3) alone).
EDIT: IMHO, the closest thing Europe has to these is actually Zurich: it has top universities, money and big companies all in a small geographical area.
By github usage, which seems a decent proxy [1], London is second after San Francisco, followed by Paris, and Berlin is only 7 (much smaller city though, so density could be higher).
[1] http://www.itworld.com/cloud-computing/376551/where-world-ar...
National capitals have defence contracts and government IT, which so lucrative it sucks a lot of talent away from industry. London is also a financial centre, so that's even more competition.
Or more accurately, the rest of the world will finally be on an equal financial footing.
The EU is trying, but from a company perspective, there is not single market when it comes to marketing and selling a product. It's all individual target groups, with big differences in language, culture, etc. They do not share a common cultural background.
Simple example: In the US, you can make a pop cultural reference and everyone will get it. Take a German reference/joke and try it anywhere else. At best people won't get it, at worst they'll be deeply offended.
There are big French software vendors that do not bother to post job listings on their careers page in any other language than French.
Europe consists of individual markets, some a single country, some a group. DACH, Nordics, UK+Eire, but then Spain, Italy, France,...
Universities are not European. There is no European MIT. Each country has their own elite tech uni, some truly good, some mediocre. ETH Zurich? Awesome. TU Vienna? Meh. etc etc etc
Uh... errr... how do you figure? Do you know how many languages are spoken in the European Union alone?