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The problem with European software plays is a monetary problem. EU capital is much more expensive than US capital (ultimately due to the latter's status as the

The problem with European software plays is a monetary problem. EU capital is much more expensive than US capital (ultimately due to the latter's status as the 'world reserve' currency due to the enforced petro-dollar regime). This is why Europe's IT sector is much more focused on B2B servuces/bespoke developments (low risk business models) and hardware/infrastructure (historic manufacturing/telecoms legacy). in terms of software products/B2C/SaaS high risk/hit businessmodels the US can relax and cherrypick from the European R&D knowing they can buy out any local player due to cheaper money. The EU has in the past always declared IT and the Knowledge Economy as 'strategic', but has never protected the sector from US appropriation.

antpls 6y ago
That looks like a good analysis to me. There are so many regulations in EU that if something happens, even organically, it has to be in order with EU regulations and priorities. The USA appropriation was never out of EU control, it was rather an accepted strategic choice. (At least, that's how I like to think about it...)
- cdavid 6y ago
  The US are not exactly regulation-free. Actually, I remember seeing people in HN who mentioned legal costs for companies tend to be much higher than in (continental) Europe. The cost of capital is indeed one of the core issue. In Europe, almost your only way to get funding is through banks, the whole concept of VC is near absent. In terms of innovation, etc. I think a lot of it is cultural essentialist BS. Just look at OSS: lots of core projects have a strong root in Europe, or even originated from there. But the culture of VC + university that is one core of innovation post WW2 in the US is completely absent in Europe. Intuitively, the fact that the market is more fragmented feels like an issue, but I don't know of any serious study on that.
jdm2212 6y ago
Why wouldn't an entrepreneur just borrow dollars in the US and exchange them for Euros? Or just take equity investments instead of debt and not bother with interest rates in the first place?
pas 6y ago
There's no European software in the pragmatic sense. Because anyone with two bits of brain buys the first ticket to SF and tries their luck in the valley. Because that's where the magic happens. If you have correctly identified the market niche, you have a great idea, you have a team, the opportunity, chances, timing, business plan, etc... you won't waste time anywhere, you go and apply to YCombinator or whatever. As long as the biggest consumer market is there, there's no point in trying to start here.

antpls 6y ago

That looks like a good analysis to me. There are so many regulations in EU that if something happens, even organically, it has to be in order with EU regulations and priorities. The USA appropriation was never out of EU control, it was rather an accepted strategic choice. (At least, that's how I like to think about it...)

cdavid 6y ago
The US are not exactly regulation-free. Actually, I remember seeing people in HN who mentioned legal costs for companies tend to be much higher than in (continental) Europe. The cost of capital is indeed one of the core issue. In Europe, almost your only way to get funding is through banks, the whole concept of VC is near absent. In terms of innovation, etc. I think a lot of it is cultural essentialist BS. Just look at OSS: lots of core projects have a strong root in Europe, or even originated from there. But the culture of VC + university that is one core of innovation post WW2 in the US is completely absent in Europe. Intuitively, the fact that the market is more fragmented feels like an issue, but I don't know of any serious study on that.

jdm2212 6y ago

Why wouldn't an entrepreneur just borrow dollars in the US and exchange them for Euros? Or just take equity investments instead of debt and not bother with interest rates in the first place?

pas 6y ago

There's no European software in the pragmatic sense. Because anyone with two bits of brain buys the first ticket to SF and tries their luck in the valley. Because that's where the magic happens. If you have correctly identified the market niche, you have a great idea, you have a team, the opportunity, chances, timing, business plan, etc... you won't waste time anywhere, you go and apply to YCombinator or whatever. As long as the biggest consumer market is there, there's no point in trying to start here.