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Combine lots of languages with lots of regulatory areas and you end up with numerous smaller communities. Add this to Metcalfe's Law and you have disproportiona

Combine lots of languages with lots of regulatory areas and you end up with numerous smaller communities. Add this to Metcalfe's Law and you have disproportionately smaller opportunities for company size when social effects are important (as they are to most Internet-based unicorns, though not to companies Europe does do well at - like car companies and manufacturing, say). Mathematically, say one network with size 100 has opportunity of 10,000. Ten networks of 10 have opportunity of 100 each - totaling a far lower 1,000. Note how several of the top "unicorns" are from China (Xiaomi, Lufax, Didi Kuaidi, DJI, Zhong An, Dianping) or India (Flipkart, Snapdeal) - other countries with (mostly) unified languages (formally, if not in practice) and vast middle class populations (due to their overall gigantic populations). Other unicorns outside of big territories are Atlassian and Spotify - but they're valued so highly because they work in the US market almost as if they were US companies.

ThomPete 11y ago
Yes but historically Europe have had much more success with creating large companies so the question is what changed? Historically the EU used to be much more divided which is exactly why the harmonization process seems to have such a paradoxial result.
- petercooper 11y ago
  I might be wrong but I think it's because the sorts of companies that become "unicorns" nowadays are more dependent on cultural, language or social network aspects (Snapchat, Facebook, Airbnb, Pinterest) than manufacturing, drug, or oil companies ever were (all areas Europe has excelled in). If biotech or robotics ever take off in a huge bubbly way, I imagine we'll see a much larger of Europe unicorns coming to the table as those areas play to European strengths again.
  - ThomPete 11y ago
    I think that is a great point. So is it that because of the market in the US it's easier to establish enough momentum what when you move into Europe you have the power to establish yourself there despite the different languages?
    - petercooper 11y ago
      Without being able to prove it, I think that's likely. I think that explains how Airbnb and Uber have managed to spread into non-Western cultures - enough people there can speak English and watch the trends of the English speaking world so that when they turn up locally, they're relatively well trusted.
shas3 11y ago
I think you are overstating the importance of languages. As a counter example, one has to only look at large European companies, like Seimens, Airbus, Philips, Volkswagen, etc. Their multinational spread transcends language barriers. Why would this be a problem for start ups? India has several languages and is insanely diverse. In this way it is different from China. But what works for companies trying to scale up in India is that most people have a functional knowledge of English. But I think you are right on the money about regulation. For better and for worse, the regulatory framework is far more liberal in the US compared to Europe. Even though Indian regulations are much worse than Europe and often more draconian, the Indian unicorns have flourished in niches where regulation doesn't matter or are more rational because they came about more recently.
- kazinator 11y ago
  Volkswagen doesn't need to speak Chinese in order to have a plant cranking out parts in China for approximatelythe same reason why a computer user doesn't have to know a programming language to read their e-mail. A small management team at the top of the org chart above the workers just has to be able to communicate with the parent company and "program" the organization below in their native language, to produce the required results.
- petercooper 11y ago
  As a counter example, one has to only look at large European companies, like Seimens, Airbus, Philips, Volkswagen, etc. Their multinational spread transcends language barriers. Why would this be a problem for start ups? Because these companies are all based around companies communicating with customers, which can be localized and has no real network effect. Many current "unicorns" are social companies or companies with inbuilt network effects where customer-to-customer communication or cultural familiarity is important.

ThomPete 11y ago

Yes but historically Europe have had much more success with creating large companies so the question is what changed? Historically the EU used to be much more divided which is exactly why the harmonization process seems to have such a paradoxial result.

petercooper 11y ago
I might be wrong but I think it's because the sorts of companies that become "unicorns" nowadays are more dependent on cultural, language or social network aspects (Snapchat, Facebook, Airbnb, Pinterest) than manufacturing, drug, or oil companies ever were (all areas Europe has excelled in). If biotech or robotics ever take off in a huge bubbly way, I imagine we'll see a much larger of Europe unicorns coming to the table as those areas play to European strengths again.
- ThomPete 11y ago
  I think that is a great point. So is it that because of the market in the US it's easier to establish enough momentum what when you move into Europe you have the power to establish yourself there despite the different languages?
  - petercooper 11y ago
    Without being able to prove it, I think that's likely. I think that explains how Airbnb and Uber have managed to spread into non-Western cultures - enough people there can speak English and watch the trends of the English speaking world so that when they turn up locally, they're relatively well trusted.

shas3 11y ago

I think you are overstating the importance of languages. As a counter example, one has to only look at large European companies, like Seimens, Airbus, Philips, Volkswagen, etc. Their multinational spread transcends language barriers. Why would this be a problem for start ups? India has several languages and is insanely diverse. In this way it is different from China. But what works for companies trying to scale up in India is that most people have a functional knowledge of English. But I think you are right on the money about regulation. For better and for worse, the regulatory framework is far more liberal in the US compared to Europe. Even though Indian regulations are much worse than Europe and often more draconian, the Indian unicorns have flourished in niches where regulation doesn't matter or are more rational because they came about more recently.

kazinator 11y ago
Volkswagen doesn't need to speak Chinese in order to have a plant cranking out parts in China for approximatelythe same reason why a computer user doesn't have to know a programming language to read their e-mail. A small management team at the top of the org chart above the workers just has to be able to communicate with the parent company and "program" the organization below in their native language, to produce the required results.
petercooper 11y ago
As a counter example, one has to only look at large European companies, like Seimens, Airbus, Philips, Volkswagen, etc. Their multinational spread transcends language barriers. Why would this be a problem for start ups? Because these companies are all based around companies communicating with customers, which can be localized and has no real network effect. Many current "unicorns" are social companies or companies with inbuilt network effects where customer-to-customer communication or cultural familiarity is important.