
Why Silicon Valley Can’t Find Europe - panarky
http://techcrunch.com/2014/01/18/why-silicon-valley-cant-find-europe/
======
raverbashing
Well, I'm more used to the European side of things, so this is how I see it:

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

~~~
mseebach
> Europeans, though are certainly enthusiastic, are not going to go for
> 80h/week workloads, not even as founders.

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.

~~~
philwelch
Ambition is a big part of it, and European attitudes can be incomprehensible
to Americans. I remember one discussion that ended with the statement, "the
Belgians had ambition once and the Congo is still suffering for it".

~~~
001sky
While I understand this, remember that there are entrpreneurs, and then there
is the subset of 'tech'. You won't find Richard Branson to fit the 'tech-
startup' mold, but he's certainly an entrepreneur. And a pretty good one at
that. Many, many people in europe privately fund all sorts of high-end
businesses. They just don't use VC money and nor do they always go public. So
the data have some variation of "survivorship bias", but in the sense that
these data (ie, true survivors) are invisible if you are using a tech/ipo
screen.

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.

~~~
hugofirth
"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)." ... LHC? That is all.

~~~
001sky
While I don't disagree with this by any means, you are talking an incredibly
specialized asset in the LHC. The difference is that Silicon Valley was not
built to play with <particular> specialized assets, so much as it was built to
<develop specialized assets> to play with in general. In that regards, it was
built to make toys to put in 'the sandbox'. In this view, having a sandbox to
play in is quite useful. Not only is it motivating, but its "open plan"
facilitates a broad imagination for useful experiments. Rather than a single-
framework of experiment designed for a singular and very specialized asset.

~~~
hugofirth
I was merely being tongue in cheek in pointing out that Europe has experience
in massive science/industry as well.

------
jd
As a EU founder I think the article misses the two primary reasons Europe
isn't doing well with startups.

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.

~~~
Hermel
Yes, but the main point he makes is an excellent one that is normally missed
everywhere else: namely the _cultural one-way street_ that exists between the
US and Europe. Europeans watch American TV, listen to American music, read
American blogs, etc. But does that also work the other way around? No. This
already fails at the language level, as most Europeans speak English, but not
many Americans speak another European language. I would even go as far as
saying that most European journalists read more US sources than they read
sources from their neighbour countries. This is also mostly caused by language
skills.

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.

~~~
danmaz74
Agreed, and this is really a sore point.

------
pinaceae
"Europe" as an entity does not exist in the sense the USA does.

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

------
tinbad
Ambitious entrepreneurs don't move to SV because they just want to raise money
or have access to a bigger market. It's because they can be among like minded
individuals in a competitive and inspiring environment.

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.

~~~
mjn
My impression of Scandinavian startups (though I could be wrong) is that those
who move to the U.S. really are mostly concerned about the business side of
things (investment, customers, vendor/partner relationships, and at strategic
times, capital-gains taxes). You can see that in the fact that they often do a
half-move, where they move everything _except_ the technical part of the
company. Unity3d is one prominent example: the headquarters officially moved
from Copenhagen to San Francisco, and any kind of announcement that makes
headlines comes out of the SF office, but the core engine devs are all still
in Copenhagen. If it were about the technical culture, you'd expect them to
want to move the actual technology work to Silicon Valley too, but it was
mainly the business side.

------
memossy
I find the UK a particular anomaly from the fund-raising perspective as:

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.

~~~
vvvVVVvvv
Truth is, the UK is certainly the most liberal country of Western Europe.

Good luck trying to get your business (startup or else) in France for example.

~~~
ama729
Actually, Denmark, Ireland and Estonia have more economic freedom than the UK,
according to the Heritage Foundation:

[http://en.wikipedia.org/wiki/Index_of_Economic_Freedom](http://en.wikipedia.org/wiki/Index_of_Economic_Freedom)

~~~
vvvVVVvvv
Hmm I'm actually experiencing Ireland as well and totally concur with that.

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).

------
cmarschner
If a startup wants to reach a similar customer base as a startup in the US it
will always have to deal with 50 different markets with 50 different legal
systems, 50 different marketing channels, and 50 different social networks.
Starting a complete web-based company like Spotify or Soundcloud may still be
possible because itunes has paved the way to organize media rights
efficiently, but as soon as you touch the bricks and mortar world it becomes a
different story. The startups I know were first of all focused on their home
country and became international only much later, after building local
representations in the different countries, and then they had to deal with the
local competitors and became successful in only a subset of these countries.

~~~
adamt
"If a startup wants to reach a similar customer base as a startup in the US it
will always have to deal with 50 different markets with 50 different legal
systems, 50 different marketing channels, and 50 different social networks."

* 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.

~~~
adventured
Your GDP per capita numbers do not appear to be accurate. There is a
substantial difference in the per capita incomes; off the top of my head I
think the countries you list are about 1/3 lower (or their per capita has to
climb 50% to match the US). This by itself is a big deal when sizing up a
market.

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...](http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita)

[https://www.cia.gov/library/publications/the-world-
factbook/](https://www.cia.gov/library/publications/the-world-factbook/)

~~~
adamt
The numbers you cite are PPP (Purchasing Power Parity) which is not really
relevant to this discussion about the size of a market as it weights GDP by
cost of items/living etc.

Mine were straight from Google
(e.g.[https://www.google.co.uk/search?q=uk+gdp+per+capita+&oq=uK+G...](https://www.google.co.uk/search?q=uk+gdp+per+capita+&oq=uK+GDP+per&aqs=chrome.0.69i59l3j69i57j0l2.1424j0j7&sourceid=chrome&espv=210&es_sm=91&ie=UTF-8))
)

For the relevant Wikipedia link, see:

[http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomin...](http://en.wikipedia.org/wiki/List_of_countries_by_GDP_\(nominal\)_per_capita)

------
kroger
You may find the book "European Founders at Work" interesting:
[http://www.amazon.com/European-Founders-Pedro-Gairifo-
Santos...](http://www.amazon.com/European-Founders-Pedro-Gairifo-
Santos/dp/1430239069)

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")

------
1rs
I agree with Sten that it's a pitty that Europe doesn't receive more attention
from SV. But most Europeans don't care. Most people don't want to be like SV.
We don't care that there isn't as many startups. We're happy about living a
balanced life and that most people here can do that (Most think it's ok to be
taxed hard so that so many don't have to suffer and at least get healthcare
and shelter...). People just don't strive to be financially hugely successful.
Doing good is enough so that you can focus on what's important for you, which
for most europeans isn't work. The ones that love to push their intellectual
boundaries all the time and devote themself to work find their niche in Europe
or move to the Valley. That's ok. I've heard from friends in SF that a lot of
people there are "depressed" because of their high ambitions that they're not
reaching. Europeans are often considered a bit boring. We don't have the same
highs as in SF of pushing something amazing forward every day. There are good
and bad sides to both of these places.

------
shitgoose
Startups are essentially a high risk casino, that collects cash from muppets
(individual investors and funds with more money than brains) and redistributes
it with ratio about 100:1. Like musical chairs - 100 people and one chair.
Most of these 100 people don't even know where the chair is and can barely
hear the music. One person close to the chair collects the payout and shares
it with few others who helped him to push the muppets away.

It seems that Europe either doesn't like this game, or just doesn't know to
play it.

------
jmspring
It is interesting to read this from Sten having heard him speak a few times
about improving work relations between the US and Europe (ostensibly Estonia)
while at Skype. Having spent significant time working at Nokia (and
interacting with Finns, Estonians, and Germans) as well as living in Helsinki
and Germany for a period of time, I usually found his prior discussions
missing something -- but maybe I was coming at it from a different perspective
than the typical Silicon Valley engineer. I will need to reread this.

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.

------
midas007
With Europe, at least on the enterprise and VC/IB side, you still have to deal
with people that will only do business with their official business friends
and so lose out on deals because of their own inability to get out of their
comfort zone. Sure it's smart to have a long relationship with financiers, but
being too hard to get a meeting with is stupid.

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.

------
eonil
U.S. itself is a big huge startup from Europe. Maybe that's why startup people
are all in U.S.

------
ExpiredLink
The EU is the world's largest economy (
[http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nom...](http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29)
). Reason enough to invest there.

------
The_Double
I think one of the largest things holding back startups in europe is the fact
that there still isn´t one Europe. You still can´t offer your service to all
400.000.000 people from one office, rules are different across borders,
languages, etc.

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.

------
mschuster91
I believe the biggest problem by far is a lack of VC money in Europe. In the
US, it seems like you can show up at a VC with nothing more than an idea
written on a bar tab and a pot-smoking coder and you get tens of thousands of
VC money (obviously exaggerated).

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...

------
mgreschke
I've written a pretty long blog post on the entire topic some time ago. It's
about my experience as a founder and entrepreneurial student in the US, Asia
and Europe and the cultural differences..

Here's the link
[http://www.mgreschke.com/view/entry/1?locale=en#disqus_threa...](http://www.mgreschke.com/view/entry/1?locale=en#disqus_thread)

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.

------
kyro
People should keep an eye on the middle east. I think it's a part of the world
that's going to explode with innovation. There's a ton of money and western
influence there, and the people running the show are very
business/entrepreneurial-minded, like the Sheikhs leading the development of
the UAE. And the markets there are significantly less saturated than they are
here in the US.

------
midhem
Bcause also americain companies think UK is Europe and install HQ in UK
instead of Western Europe which is the European main homogeneous market.

------
ahomescu1
Silicon Valley has the following three:

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).

~~~
werner34
London and Berlin have 3).

~~~
ahomescu1
London and Berlin have a lot of people in general, from different fields
(finance and government as much as tech). Is the number of programmers/capita
higher in those two cities than average? I think Silicon Valley is the highest
you can get (that's my guess at least).

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.

~~~
justincormack
Zurich is a tenth the size of silicon valley by population though, and it is a
big financial centre too. There are other comparable tech-specific places,
like Sophia Antipolis, Toulouse.

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...](http://www.itworld.com/cloud-computing/376551/where-world-are-github-
users)

------
b0rsuk
Maybe it's just a sign of something in the big picture - of America turning
inward, like the falling Roman empire and isolationist China ?

------
LBarret
Didn't read the article but so there are so much clichés in the comments that
it makes me sad...

------
novaleaf
show me a payment system able to accept any form of currency, payable to any
person/entity anywhere in the world, then SV will find the rest of the world
pretty quickly.

Or more accurately, the rest of the world will finally be on an equal
financial footing.

------
squirejons
europeans are more homogeneous and more united, with a solid culture to back
them up, which gives them some leverage against the corporations. The corps
thus know it is harder to exploit them. Also, because western europe is more
united against Capital, western europe does not allow as much cheap 3rd world
labor into their nations. Thus, capital prefers to exploit american workers
via mass immigration and H1Bs etc

~~~
davidw
> more homogeneous and more united

Uh... errr... how do you figure? Do you know how many languages are spoken in
the European Union alone?

