5 ms·

Personally, I'd say this point is the biggest factor to why Silicon Valley style innovation is rare here: > For better or worse, here in Europe we are fond of

by CM30 4y ago

Personally, I'd say this point is the biggest factor to why Silicon Valley style innovation is rare here: > For better or worse, here in Europe we are fond of business plans that somehow make sense. Blue sky “let’s launch this and I’m sure we’ll eventually find sufficient rent seeking or surveillance possibilities to one day make money” things don’t fly too well here. As someone who once looked for investment in London, going to VCs and asking for money for consumer facing, million to one businesses aimed at 'revolutionising' the world will get the same reaction as having 3 heads. They do not have an interest in going for crazy moonshots at all, and are very unwilling to just give millions of dollars in funding to a startup in the hopes it could become the next Google or Facebook. What they are willing to back on the other hand are 'boring' SaaS businesses usually aimed at the B2B market. Some sort of business inventory system or tax management one is more their speed/style, and something they'll probably back with tens of thousands of pounds instead. So anyone who wants to make a world changing business or product will probably go to the US, or lose out to US based companies that can afford to pay millions in software engineer salaries and perks and marketing. Of course, that's not to say the other factors aren't issues. People are very skeptical of those that go solo and try to setup their own business in Europe, especially if it doesn't involve some 'well known' field like a trade or retail establishment. And I guess there's probably a bit more ruthlessness in the states too, likely in part due to 'traditional' jobs not offering as much of a future as crazy moonshots. But it's the funding that's generally to blame. VCs are way more conservative in Europe, and seem terrified of backing ambitious consumer focused businesses and products in the same way they are in the states.

mach1ne 4y ago
I think the difference in innovation financing between Europe and the US fits quite well the image of European Old Towns versus the Empire State Building. Europeans are just very conservative when it comes to financial decisions. If something does not fit the mold which you know is accepted by peers, it is not given serious thought.
- pablok2 4y ago
  To your point about the "mold" which society creates/accepts, this social aspect alone is likely the biggest factor. People aren't and can't break out of these social "holds" and what's ironic is that there's almost a financial/social/system level safety net built into most countries. It's socially irresponsible there?
KptMarchewa 4y ago
Also if that happens, success rate is way lower. You actually have to break into several markets with different languages, customer behaviors etc. US likes to pretend it's states are equal to different EU countries, but "osmosis" of people in different states is way higher. Also, in contrast to US, in EU mostly lower and highest class of people migrates - the middle class usually stays in home country.
- urthor 4y ago
  Absolutely. This is the key point. The market is rational. European investors don't target global scale because of language/cultural barriers. And because the US specialises, Europe competes in industries where it has a specialisation. Basic economics is at play. The US doesn't have a particularly unique or useful culture for founding businesses. It's actually an extremely poor place to do business. The US has a lingua franca, and economies of scale. That's it.
  - tnel77 4y ago
    >>It's actually an extremely poor place to do business. Yet businesses find a way. It would seem like your statement could use further elaboration.
    - yunwal 4y ago
      > The US has a lingua franca, and economies of scale. That's it. Seems like the elaboration is right there
      - tnel77 4y ago
        Doesn’t seem like a bad place to do business to me. Those sound like good reasons to do business. It’s as if the original comment is jealous more than anything else.
      - therealdrag0 4y ago
        Spotify is scaling just fine dispute not being US made. So not sure the argument works as far as tech goes.
asiachick 4y ago
I am curious how much regulation plays a part. I had a friend in Belgium running a 2 person indie game dev company. They needed to hire an artist and mentioned all the regulations in place making is very hard to actually hire. Basically, it seemed like they were on the hook forever (very long) regardless of how well their company was doing. I don't know all the details and I'm not suggesting in any way that they should have tried to take advantage of anyone. Only that it would seem to me that they should be able to be up front with the artist (we're a small company, we have no income but some funding, there's no guarantee our product will be successful, we can pay you a reasonable and legal salary, but we can't guarantee your employment for more than 3 months. Do you except?) But AFAIK that was not a option. If it was more like, if they couldn't guarantee employment forever then they were not allowed to hire. That's an exaggeration as I don't know all the regulation. My only point was it sounded like it made it very hard to run a startup.
- crote 4y ago
  There are definitely options around that, though. For example, hire the artist as a freelancer. Alternatively, hire them through an employment agency. Or just give them a short-term contract. That could even be a zero-hour contract, meaning basically zero liabilities. A company going bankrupt of course voids any employment contract. In general, the regulations make it harder for a company to screw over their employees at any moment they wish to do so. The employer is expected to assume certain risks and burdens in case of long-term employment. But there's not a lot you need to commit to for short-term work.
  - zx8080 4y ago
    Not sure about zero-hour or short contracts in EU, but > hire the artist as a freelancer. this probably could be an issue due to investor's funding conditions (I've obly heard things like this, not experienced myself, so not sure). > Alternatively, hire them through an employment agency. This is super expensive, especially for the short contract like 3-6 months, easily could be around x2.5 comparing to hiring fulltime. So for a startup this is usually not an option, just because of the price.
underbrush 4y ago
> People are very skeptical of those that go solo and try to setup their own business in Europe, especially if it doesn't involve some 'well known' field like a trade or retail establishment. In my experience that is a very European viewpoint. Some Europeans think that Americans are more free because society doesn't care what they do. In reality, as you probably can tell by US politics, that often isn't really the case. To the extent that Americans are more free it is more because they themselves don't care about what others think. Europeans that think American society is more supportive are mostly just saying that they themselves need more support. This might seem like a weird distinction but it takes it from being a "hard problem" that is forced on you, to a "soft problem" that you can potentially change yourself.
nine_k 4y ago
> They do not have an interest in going for crazy moonshots at all, and are very unwilling to just give millions of dollars in funding to a startup in the hopes it could become the next Google or Facebook. What they are willing to back on the other hand are 'boring' SaaS businesses usually aimed at the B2B market. That is, they are not venture investors, they are just normal, low-risk-stable-reward investors. This neatly explains why runaway successes in risky areas do not normally happen in Europe: not enough risk appetite, and the size of the market is initially smaller because of language barriers. (Also, likely just not enough money.)
yunwal 4y ago
This feels like it just moves my question 1 step up the ladder. Why would European VCs be more conservative?
sylware 4y ago
big tech is driven by vanguard/blackrock ppl (= apple/msft/google(alphabet)/mozilla(via google)/starbucks!/etc) We are talking about tens of thousands of billions of $. They can sustain significant businesses without "making money" for decades (often for free), then extinguish/buy any competition on economics grounds: patience is virtue... which they can afford easily. Namely, there is no competition on economics grounds here. It is like with China and manufacturing: China does decides on the value of its money on the international markets, and has a "strongely driven" labor force, namely you cannot "beat" them on "honest and sane" economic and social grounds. EU is mostly based on economics: they already "lost" unless they start to define strategic areas (for instance, leading-edge chip manufacturing, with the netherlands and germany at its core, similar to the mostly french-german driven airbus), and make it happen knowing perfectly that very probably, it won't "make money".

by CM30 4y ago

mach1ne 4y ago

I think the difference in innovation financing between Europe and the US fits quite well the image of European Old Towns versus the Empire State Building. Europeans are just very conservative when it comes to financial decisions. If something does not fit the mold which you know is accepted by peers, it is not given serious thought.

pablok2 4y ago
To your point about the "mold" which society creates/accepts, this social aspect alone is likely the biggest factor. People aren't and can't break out of these social "holds" and what's ironic is that there's almost a financial/social/system level safety net built into most countries. It's socially irresponsible there?

KptMarchewa 4y ago

Also if that happens, success rate is way lower. You actually have to break into several markets with different languages, customer behaviors etc. US likes to pretend it's states are equal to different EU countries, but "osmosis" of people in different states is way higher. Also, in contrast to US, in EU mostly lower and highest class of people migrates - the middle class usually stays in home country.

urthor 4y ago
Absolutely. This is the key point. The market is rational. European investors don't target global scale because of language/cultural barriers. And because the US specialises, Europe competes in industries where it has a specialisation. Basic economics is at play. The US doesn't have a particularly unique or useful culture for founding businesses. It's actually an extremely poor place to do business. The US has a lingua franca, and economies of scale. That's it.
- tnel77 4y ago
  >>It's actually an extremely poor place to do business. Yet businesses find a way. It would seem like your statement could use further elaboration.
  - yunwal 4y ago
    > The US has a lingua franca, and economies of scale. That's it. Seems like the elaboration is right there
    - tnel77 4y ago
      Doesn’t seem like a bad place to do business to me. Those sound like good reasons to do business. It’s as if the original comment is jealous more than anything else.
    - therealdrag0 4y ago
      Spotify is scaling just fine dispute not being US made. So not sure the argument works as far as tech goes.

asiachick 4y ago

I am curious how much regulation plays a part. I had a friend in Belgium running a 2 person indie game dev company. They needed to hire an artist and mentioned all the regulations in place making is very hard to actually hire. Basically, it seemed like they were on the hook forever (very long) regardless of how well their company was doing. I don't know all the details and I'm not suggesting in any way that they should have tried to take advantage of anyone. Only that it would seem to me that they should be able to be up front with the artist (we're a small company, we have no income but some funding, there's no guarantee our product will be successful, we can pay you a reasonable and legal salary, but we can't guarantee your employment for more than 3 months. Do you except?) But AFAIK that was not a option. If it was more like, if they couldn't guarantee employment forever then they were not allowed to hire. That's an exaggeration as I don't know all the regulation. My only point was it sounded like it made it very hard to run a startup.

crote 4y ago
There are definitely options around that, though. For example, hire the artist as a freelancer. Alternatively, hire them through an employment agency. Or just give them a short-term contract. That could even be a zero-hour contract, meaning basically zero liabilities. A company going bankrupt of course voids any employment contract. In general, the regulations make it harder for a company to screw over their employees at any moment they wish to do so. The employer is expected to assume certain risks and burdens in case of long-term employment. But there's not a lot you need to commit to for short-term work.
- zx8080 4y ago
  Not sure about zero-hour or short contracts in EU, but > hire the artist as a freelancer. this probably could be an issue due to investor's funding conditions (I've obly heard things like this, not experienced myself, so not sure). > Alternatively, hire them through an employment agency. This is super expensive, especially for the short contract like 3-6 months, easily could be around x2.5 comparing to hiring fulltime. So for a startup this is usually not an option, just because of the price.

underbrush 4y ago

> People are very skeptical of those that go solo and try to setup their own business in Europe, especially if it doesn't involve some 'well known' field like a trade or retail establishment. In my experience that is a very European viewpoint. Some Europeans think that Americans are more free because society doesn't care what they do. In reality, as you probably can tell by US politics, that often isn't really the case. To the extent that Americans are more free it is more because they themselves don't care about what others think. Europeans that think American society is more supportive are mostly just saying that they themselves need more support. This might seem like a weird distinction but it takes it from being a "hard problem" that is forced on you, to a "soft problem" that you can potentially change yourself.

nine_k 4y ago

> They do not have an interest in going for crazy moonshots at all, and are very unwilling to just give millions of dollars in funding to a startup in the hopes it could become the next Google or Facebook. What they are willing to back on the other hand are 'boring' SaaS businesses usually aimed at the B2B market. That is, they are not venture investors, they are just normal, low-risk-stable-reward investors. This neatly explains why runaway successes in risky areas do not normally happen in Europe: not enough risk appetite, and the size of the market is initially smaller because of language barriers. (Also, likely just not enough money.)

yunwal 4y ago

This feels like it just moves my question 1 step up the ladder. Why would European VCs be more conservative?

sylware 4y ago

big tech is driven by vanguard/blackrock ppl (= apple/msft/google(alphabet)/mozilla(via google)/starbucks!/etc) We are talking about tens of thousands of billions of $. They can sustain significant businesses without "making money" for decades (often for free), then extinguish/buy any competition on economics grounds: patience is virtue... which they can afford easily. Namely, there is no competition on economics grounds here. It is like with China and manufacturing: China does decides on the value of its money on the international markets, and has a "strongely driven" labor force, namely you cannot "beat" them on "honest and sane" economic and social grounds. EU is mostly based on economics: they already "lost" unless they start to define strategic areas (for instance, leading-edge chip manufacturing, with the netherlands and germany at its core, similar to the mostly french-german driven airbus), and make it happen knowing perfectly that very probably, it won't "make money".