4 ms·

Europe’s lack of competitiveness in tech has been true pretty much since the birth of Silicon Valley. It was the same with the PC business back in the 80s and

Europe’s lack of competitiveness in tech has been true pretty much since the birth of Silicon Valley. It was the same with the PC business back in the 80s and 90s. Here’s an article from the New York Times in 1996, struggling to understand why European PC manufacturers were all failing to expand outside their home markets: https://www.nytimes.com/1996/10/07/business/why-european-computer-makers-flop.html https://www.nytimes.com/1996/10/07/business/why-european-com... 25 years later, the story is the same. Europe missed out on most of the big business opportunities of the internet, fell behind and lost the smartphone revolution, is largely missing from the top names in the app store, failed to create an internationally relevant social media company, etc. etc. However, I wonder if this could be an inflection point. Covid has dragged everyone into the future kicking and screaming. Meanwhile Europe is looking grossly undervalued due to a lack of tech exposure. European stock markets have been essentially flat since 2009 while American stock markets have 3X’d (pre-2009, European returns basically tracked American ones). Tech salaries in Europe are now just 1/5th of what they are in Silicon Valley. It seems like the pendulum has swung a little too far in the American direction. It took Europe 40+ years to become internationally competitive with Detroit in auto manufacturing during the 1900s. Maybe this is the natural cycle (of course, this time there’s no wars to use as an excuse). If I were ever going to place a bet on Europe in the last 40 years, now would be the time.

IdiocyInAction 5y ago
> European stock markets have been essentially flat since 2009 while American stock markets have 3X’d. The DAX30 (German Index) tripled since 2009. The British and French indices did pretty much move sideways though. The growth of the S&P 500 is pretty amazing though.
- spaniard89277 5y ago
  Go and watch Spanish indices. It's a sad history.
tester34 5y ago
>failed to create an internationally relevant social media company Those are pros or cons? >Tech salaries in Europe are now just 1/5th of what they are in Silicon Valley. Are SV salaries 5 times higher than in Zurich or London? seriously? or you're talking about peak of peak of peak?
- pembrook 5y ago
  If we’re talking Zurich specifically, the difference would probably only be 2-3X less than FANMAG/ETC. London salaries are high too (not Zurich levels from what I’ve seen), but that market is now separate from the EU. But most places in Europe with tech scenes and outsized VC investment, eg. helsinki, stockholm, berlin, amsterdam, etc you’re talking 5X less salary than in Silicon Valley. Given the tech talent in those cities, there must be some arbitrage opportunity there.
  - raverbashing 5y ago
    > helsinki, stockholm, berlin, amsterdam, etc you’re talking 5X less salary than in Silicon Valley. Certainly not for the same seniority level (and not considering stocks, which people in those places do get) Or you're telling me that someone making 60kEUR in Berlin could be transferred to SV and their salary would immediately flip to $300k on the payslip? (no promotions/stock/etc) Realistically, more like 2x, 2.5x, 3x if we're stretching it for the mentioned cities > Given the tech talent in those cities, there must be some arbitrage opportunity there. Absolutely ;) Though on SV salaries you're getting paid for the less PTO, the stretched hours, etc so probably not such a big arbitrage
    - pembrook 5y ago
      > you're telling me that someone making 60kEUR in Berlin could be transferred to SV and their salary would immediately flip to $300k Yes. And it’s not just FAANG anymore. That’s a totally reasonable comp at about 30-50 different companies in the US right now (and the number of companies paying this comp is increasing along with the size of fundraising rounds). Also, in my experience nobody is working 60+ hour weeks at these companies (the bigger the company, the easier the job), so it’s not like anybody is being overworked to get this money.
Mvandenbergh 5y ago
The challenge with any argument about SV vs Europe is that SV is so sui generis that it's actually SV vs more or less everywhere else including the rest of the US. Really, including the rest of California. What's the startup ecosystem look like in Fresno? SV is so atypical that it's almost impossible to draw any kind of conclusions from particular factors and anyway is now probably self sustaining - VCs go there because tech talent goes there and tech talent goes there because VCs do. Very hard for anywhere else to break out in that scenario in the absence of substantial barriers to either talent or money. Barriers to employment are just high enough (not just visas, but leaving friends and family behind etc) to prevent a lot of European developers from moving for the higher salaries but not so high that a lot of top founding talent goes there. I do wonder if the temporary barriers of Covid might have triggered something, we'll see.
- martin_a 5y ago
  > and anyway is now probably self sustaining As a German this is an interesting point. While I'm no big fan of the big cities (Berlin, Munich, Hamburg) we see lots of successful* startups happening and gaining track there and in smaller towns. University cities are often doing fine, too and are slowly but surely developing startup structures and everything else. To me this looks more promising than concentrating all startups and money in one place and measuring everything against that.
  - SuoDuanDao 5y ago
    I've also heard that the German banking system is much more geographically diverse, with many smaller banks giving business loans to businesses in their immediate geographic area. If that's still the case, it would make sense that there would be less concentration of capital and therefore entrepreneurship.
    - martin_a 5y ago
      That's true, too. There are lots of so called "Volksbanken" ("peoples' banks") and "Sparkasse" ("savings bank", see this: https://en.wikipedia.org/wiki/Savings_bank https://en.wikipedia.org/wiki/Savings_bank) which act very local and are sometimes rather small especially in the more rural areas. Nevertheless those banks are often the biggest lenders to local businesses and startups in need of credit (my brothers' wife is working in such a department) although that is not VC like in "burn it if you need to". German banks are more risk averse, at least the most of them.
dgudkov 5y ago
That's exactly my thoughts recently. As it appears, American venture capital simply can't build a big social media company that doesn't end up being a surveillance-driven, ad-ladden, privacy-hostile, user-despising, fake virtue-signalling behemoth. So maybe it's time for Europe to shine.
- missedthecue 5y ago
  Maybe what Americans have built is exactly what people who aren't HN users want. The numbers would seem to say that.
  - tohmasu 5y ago
    This is why social media ToS are typically concise and clear: "License agreement: We spy on you and sell your information to anyone that's interested, press accept to continue".
    - missedthecue 5y ago
      Say I want to buy information about you. How would I go about doing that? Where to I put in my credit card details? Facebook doesn't sell data. They sell advertising space. They're a billboard company.
      - filoleg 5y ago
        Agreed. "Selling user data" is just a nice catchphrase thrown around by people who didn't look into how FB ads really makes money and how they really work. Just at a cursory evaluation, it makes no sense, because if Facebook sold the data directly, why would advertisers even need Facebook after that? All of those questions can be answered by simply playing around with FB Advertising UI for less than an hour. But hating on FB is fashionable now, regardless of whether the reasons are justified or not. Given how there are plenty of legitimate issues with Faceebook, it really annoys me when people throw around these types of questionable accusations against FB without even looking into the subject matter first, because it just weakens legitimate criticism of FB. Back to the topic at hand, you are totally on point about the billboard analogy. If you are a business, you don't go to Facebook and say "give me the data of these users", you say, for example, "here is my ad, show it to users who are in this geographic area Z between ages X and Y who are into surfing and indie music". And then you get to see stats about interaction of those users with your ad, like "users who are closer to age X than age Y are more likely to click on your ad", so you draw a conclusion that your ad doesn't seem to appeal as much to the upper boundary of your target age range, maybe you need to tweak the ad or split it into 2 separate ads (one for users between ages X and (X+Y)/2, and another for ages between (X+Y)/2 and Y). At no point you get any additional info on the users, and neither do you get any individual user info, just anonymized aggregates.

IdiocyInAction 5y ago

> European stock markets have been essentially flat since 2009 while American stock markets have 3X’d. The DAX30 (German Index) tripled since 2009. The British and French indices did pretty much move sideways though. The growth of the S&P 500 is pretty amazing though.

spaniard89277 5y ago
Go and watch Spanish indices. It's a sad history.

tester34 5y ago

>failed to create an internationally relevant social media company Those are pros or cons? >Tech salaries in Europe are now just 1/5th of what they are in Silicon Valley. Are SV salaries 5 times higher than in Zurich or London? seriously? or you're talking about peak of peak of peak?

pembrook 5y ago
If we’re talking Zurich specifically, the difference would probably only be 2-3X less than FANMAG/ETC. London salaries are high too (not Zurich levels from what I’ve seen), but that market is now separate from the EU. But most places in Europe with tech scenes and outsized VC investment, eg. helsinki, stockholm, berlin, amsterdam, etc you’re talking 5X less salary than in Silicon Valley. Given the tech talent in those cities, there must be some arbitrage opportunity there.
- raverbashing 5y ago
  > helsinki, stockholm, berlin, amsterdam, etc you’re talking 5X less salary than in Silicon Valley. Certainly not for the same seniority level (and not considering stocks, which people in those places do get) Or you're telling me that someone making 60kEUR in Berlin could be transferred to SV and their salary would immediately flip to $300k on the payslip? (no promotions/stock/etc) Realistically, more like 2x, 2.5x, 3x if we're stretching it for the mentioned cities > Given the tech talent in those cities, there must be some arbitrage opportunity there. Absolutely ;) Though on SV salaries you're getting paid for the less PTO, the stretched hours, etc so probably not such a big arbitrage
  - pembrook 5y ago
    > you're telling me that someone making 60kEUR in Berlin could be transferred to SV and their salary would immediately flip to $300k Yes. And it’s not just FAANG anymore. That’s a totally reasonable comp at about 30-50 different companies in the US right now (and the number of companies paying this comp is increasing along with the size of fundraising rounds). Also, in my experience nobody is working 60+ hour weeks at these companies (the bigger the company, the easier the job), so it’s not like anybody is being overworked to get this money.

Mvandenbergh 5y ago

The challenge with any argument about SV vs Europe is that SV is so sui generis that it's actually SV vs more or less everywhere else including the rest of the US. Really, including the rest of California. What's the startup ecosystem look like in Fresno? SV is so atypical that it's almost impossible to draw any kind of conclusions from particular factors and anyway is now probably self sustaining - VCs go there because tech talent goes there and tech talent goes there because VCs do. Very hard for anywhere else to break out in that scenario in the absence of substantial barriers to either talent or money. Barriers to employment are just high enough (not just visas, but leaving friends and family behind etc) to prevent a lot of European developers from moving for the higher salaries but not so high that a lot of top founding talent goes there. I do wonder if the temporary barriers of Covid might have triggered something, we'll see.

martin_a 5y ago
> and anyway is now probably self sustaining As a German this is an interesting point. While I'm no big fan of the big cities (Berlin, Munich, Hamburg) we see lots of successful* startups happening and gaining track there and in smaller towns. University cities are often doing fine, too and are slowly but surely developing startup structures and everything else. To me this looks more promising than concentrating all startups and money in one place and measuring everything against that.
- SuoDuanDao 5y ago
  I've also heard that the German banking system is much more geographically diverse, with many smaller banks giving business loans to businesses in their immediate geographic area. If that's still the case, it would make sense that there would be less concentration of capital and therefore entrepreneurship.
  - martin_a 5y ago
    That's true, too. There are lots of so called "Volksbanken" ("peoples' banks") and "Sparkasse" ("savings bank", see this: https://en.wikipedia.org/wiki/Savings_bank https://en.wikipedia.org/wiki/Savings_bank) which act very local and are sometimes rather small especially in the more rural areas. Nevertheless those banks are often the biggest lenders to local businesses and startups in need of credit (my brothers' wife is working in such a department) although that is not VC like in "burn it if you need to". German banks are more risk averse, at least the most of them.

dgudkov 5y ago

That's exactly my thoughts recently. As it appears, American venture capital simply can't build a big social media company that doesn't end up being a surveillance-driven, ad-ladden, privacy-hostile, user-despising, fake virtue-signalling behemoth. So maybe it's time for Europe to shine.

missedthecue 5y ago
Maybe what Americans have built is exactly what people who aren't HN users want. The numbers would seem to say that.
- tohmasu 5y ago
  This is why social media ToS are typically concise and clear: "License agreement: We spy on you and sell your information to anyone that's interested, press accept to continue".
  - missedthecue 5y ago
    Say I want to buy information about you. How would I go about doing that? Where to I put in my credit card details? Facebook doesn't sell data. They sell advertising space. They're a billboard company.
    - filoleg 5y ago
      Agreed. "Selling user data" is just a nice catchphrase thrown around by people who didn't look into how FB ads really makes money and how they really work. Just at a cursory evaluation, it makes no sense, because if Facebook sold the data directly, why would advertisers even need Facebook after that? All of those questions can be answered by simply playing around with FB Advertising UI for less than an hour. But hating on FB is fashionable now, regardless of whether the reasons are justified or not. Given how there are plenty of legitimate issues with Faceebook, it really annoys me when people throw around these types of questionable accusations against FB without even looking into the subject matter first, because it just weakens legitimate criticism of FB. Back to the topic at hand, you are totally on point about the billboard analogy. If you are a business, you don't go to Facebook and say "give me the data of these users", you say, for example, "here is my ad, show it to users who are in this geographic area Z between ages X and Y who are into surfing and indie music". And then you get to see stats about interaction of those users with your ad, like "users who are closer to age X than age Y are more likely to click on your ad", so you draw a conclusion that your ad doesn't seem to appeal as much to the upper boundary of your target age range, maybe you need to tweak the ad or split it into 2 separate ads (one for users between ages X and (X+Y)/2, and another for ages between (X+Y)/2 and Y). At no point you get any additional info on the users, and neither do you get any individual user info, just anonymized aggregates.