1. European laws are too restrictive. It's especially notable with stuff like the hilariously stupid online tax laws the area has (having to apply different tax rates based on the location of the user rather than the business makes it hugely more complex than it has to be) or the right to be forgotten, but it just feels we're too restrictive here in general.
2. Culture. People in the US seem more ambitious and more willing to risk everyone for the small chance of becoming a millionaire/billionaire at the end of it. People in European countries on the other hand seem to be encouraged to avoid risk and avoid anything that might lead to less job security in the short term. Probably because failure in the US is seen as a minor bump in the road, whereas failure in Europe is seen as the worst possible thing imaginable.
3. Money. Not just in the form of venture capital (though that's a huge reason), but also because US startups tend to pay their employees more, whereas their European equivalents stick to the average local wages. Hence the best programmers, designers and other such people usually either find employment in a more stable company (read, one where there's a work/life balance) or move to the US to work in Silicon Valley.
If we want a 'European Google' or European startups in general, we need to become less risk averse, more willing to reward the types of people needed to work in those companies and less obsessed about regulations.
Oh, and fix the issues certain areas have with internet connection speeds. The fact that a lot of areas in large cities like London can't get fibre internet and the likes is not helping our tech businesses compete with their US counterparts.
The examples you provide for European laws being too restrictive are correct imo, and there are more examples of laws that were, in my mind, the poor execution of a good idea (take the EU privacy directive that forces the opt-in for cookie tracking. This has in its execution by Google etc. generally become more of an annoyance than a privacy feature).
However, I think the decisions the European Court of Justice makes on these issues could be a chance for Europe. The 'right to be forgotten' and the recent safe harbor decision show--in my opinion--that the ECJ wants to establish a more privacy-focused jurisdiction in Europe. That could be a chance for, say a Google competitor that does not track you through AdWords but, instead, relies on a monthly subscription model (this might not be a very good idea, but you get my point). And when Angela Merkel says that 'too much privacy is bad for business', I disagree, because Europe cannot come to the table one decade late and copy what worked in the Bay Area.
If Europe establishes a reputation for a different sort of service that relies on strong encryption, user privacy and the absence of ad-support but rather subscription, I think the European startup world could thrive in serving a market that is currently emerging rather than one that has been there for the better part of a decade.
That's because Google rather have these annoying notices than make it easy to disable tracking. The EU did the right thing in leaving it up to the industry how to solve these problems, it's just that the industry doesn't want to.
Most Europeans prefer a stable life with some luxuries instead of a lottery type life where you may get fired at any point.
A lot of people in Europe who say we should be like Silicon Valley only see the money these companies make but not what it took to get there and the toll it takes on the work force.
The spirit of Silicon Valley generally goes along the lines of "all or nothing".
Europe generally sees more value in a sane and balanced life style, where physical/mental health, family, stability, etc. play an important role and living itself is more important than what you will have achieved at the end of your life (in terms of money or material things).
And the taxes in US are lower.
I think we don't. Europe just isn't setup for breakaway successes in the way that the US is. And we wouldn't be able to stomach the societal cost even if we were to try.
Europe is built to enable a Mittelstand [1] though which also allows for lots of diversity and innovation and is why Germany is still an industrial powerhouse.
If Europe wants to compete it should do so on its own terms; except doing so is virtually impossible when companies can claim ownership of their users data because that inevitably leads to the massive centralized monopolies we're seeing now.
One thing Europe is good at though is pushing through laws which prevent companies from establishing harmful monopolies though and that is what Europe needs to do.
If in addition to "the right to be forgotten" Europe would push through "the right to own your data" and forced companies operating in the EU to return all user data (down to request logs used for analytics) to the user the dynamics of tech industry would change dramatically; and in a positive way for the user too.
That will take a while but I think, or hope, it will happen eventually and either way; it will have a much greater chance of success than trying to copy a model that is inherently at odds with a value system developed over dozens of centuries.
Engineers in SV are paid bucket loads of money.
They can afford to take one year of to travel the world or just work on their own projects.
For me that is key.
How many people do you know in Europe that can do that?
Another thing is in Europe the biggest tech hub is in London. And if you're in London you have to wonder
Why am I dealing with this crappy weather when I can move to somewhere where I'm paid 2-3x more and it's summer all year?
I know someone who falls along these exact lines and has moved to SV. Although he was already working remotely to a US company.
Can they?
> Why am I dealing with this crappy weather when I can move to somewhere where I'm paid 2-3x more and it's summer all year?
Because you don't risk bankruptcy by having a health issue, if you're single it's not a sausage fest, more laid back work (in SF it seems you're bound to stay longer times at the office), greater tourism choices (a short trip away) and probably still cheaper than rent in SF even if we're talking London
Actually, London's weather isn't half bad compared to other places in Europe. At least there is no freezing cold, no real heat waves and less rain than in Paris, especially in the summer.
The problem is xenophobia. Hate of Europe is getting ever more vitriolic and irrational.
I did that, after only a couple of years in the tech industry. Most of my friends could do that. I wrote a tutorial of sorts how to do things like this in a comment on HN a while ago, but removed it because people seemed to get upset (I could summaries if someone is interested).
This is an interesting point. Can you elaborate?
But to do business through all European union, there's way more added issues at the beginning then compared to Silicon Valley vs. US (similar culture, values, interests, language) or eastern countries (China, Korea, Russia and their markets).
I also agree about the employment part from both sides (legal and employee mentality) with the exception of highly competitive fields (big 4, high end law firms) you would rarely find many employees willing to work for 12-14 hours a day when need be.
Even in the accelerators unless it was a "beer and talk night" the place would pretty much start to clear out around 5, and by 7 there would be no one there. Similar accelerators in Eastern Europe or the Baltic states (as well as out side of the EU) would be quite often still quite full till 11pm and even later.
Employment laws in many countries also make it very hard for startups to actually develop, the UK (and to some extend eastern Europe) probably has it's the easiest (which is why I think that and the combination of access to financial institution is why accelerators like London) as small businesses are still exempt from things like mandatory pension.
However hiring employees in other European countries may incur heavy financial costs which include pension, healthcare, allot of paid vacation and other benefits, that combined with the cost of actually managing all the HR related stuff and the fact that in some countries firing employees on a permanent contract requires you to involve a court makes it very unattractive for startups.
I also agree about the fact that many employees simply do not want that life style, but this has also been some what solidified by employers, as you won't find many if any at employers at all willing to pay a kings ransom for extraordinary talent most roles will have a salary range set to them and while it's possible for some one to make 10% more than their colleague or even in some very rare cases 15-20% (which will usually include other responsibilities) you wont find people making 50% not to mention double what their colleagues do simply based on their apparent talent or what they've demanded during hiring / what was offered at that time.
1. Russia, China, India and other markets that to some extent have "their own Google" are completely horrible in terms of running companies. Much more so than Europe. The US is no dream in terms of e.g. declaring taxes either. I think this has more to do with attitude than anything else. US companies simply hire someone to do this.
2. That would explain why people doesn't start companies, if Europe didn't already have many successful technology companies. It offers little explanation why those companies doesn't go on to become "Googles".
3. I do somewhat agree with this one. Because while the technology industry do pay good salaries in Europe startups usually doesn't even though they are in high cost markets. I'm not sure this is actually that different from the US though. There are huge incentives for "the best" programmers to work at Apple/Google/Facebook where they have higher salary and relative job security, especially if the want to keep up with the housing market.
I would say that that almost they entire reason why Europe doesn't "have a Google" is because we are part of the US market. All our contenders in the early days used to be domestic. Once we realized that we had to be global US companies bought those that were successful. Skype, for example, could have become a Google if it had been forced to stand on it's own or been acquired by a local company like Ericsson. Rather it was built to be sold and was to Microsoft.
"People in European countries on the other hand seem to be encouraged to avoid risk and avoid anything that might lead to less job security in the short term.
Hence the best programmers, designers and other such people usually either find employment in a more stable company (read, one where there's a work/life balance) or move to the US to work in Silicon Valley."
No deep analysis from me, but very briefly looking at ROI of Google's shareholders one can see it flows to investors worldwide, not the US in particular.
Taxes then... very minimal, and are mostly redirected through a Dutch-Irish tax scheme anyway, EU probably profits more than the US.
Employment, 50k or so, that's significant for sure. But 40% is outside the US, and compare it say to Walmart which employs literally a couple million, and you'll find tech companies in general don't make large dents in employment figures.
As for actual services, there's barely any difference. A European benefits virtually the same from Google's products and services, albeit sometimes say the launch of the latest Nexus happens two weeks later in small European countries like the Netherlands.
Mostly I'd say the benefits are related to generating and disseminating your own culture, more political/legal influence in worldwide companies, drawing talent to your country etc. These benefits are significant, but I don't think Europe has anything to be alarmed about. Tech here is great, lots of solid companies with billion dollar valuations, solid infrastructure, but fewer unicorns. And that's no surprise with the EU being, deep down, a fragmented market where the biggest first-language market is German which stands at 18% of the EU population. It's not easy to roll out companies that grow to hundreds of millions of people in Europe, if the biggest language that people speak as a first language is only spoken by 18% of the union. European talent with great ideas that aim very large tend to go English first, and then move to the US at the earliest signs of solid traction. Everyone else stays, and that's how you get lots of solid companies like Supercell with a few billion dollars valuation that are relatively small compared to a Facebook. That's not a bad thing.
We are a <10 person startup, and yet we have customers that speak Portuguese, Spanish, French and English.
Homegrown American, Chinese or Japanese Internet company can have hundreds of millions in revenue before it even starts to think about localization and adjusting to other countries, cultures, languages, payment system and advertising biz.
Network effect rules in the Internet business and US based business had huge upper leg in this regard in early 2000s.
Also recently, international payment can be considered a solved problem with iban/bic, PayPal and credit cards.
Which means you can get by just as well with English, French or German only, and some point down the line you add i18n for one or two other languages first, and then whatever there might be a demand for.
On the other side of the coin, next-day national shipping for 3,50€ to 5€ is the norm around here. Go try that in NA.
I live in Finland and I can tell you that you don't have full access to mass markets unless you handle the language, deliveries and local payment methods as well.
Case: https://www.varusteleka.fi/en It's very successful Finnish army/outdoors store that sells mostly trough net (probably biggest in the Europe). They have build loyal international customer base outside Finland mainly because they have a great customer service and they're very honest about the products it sells. No marketing bullshit, if they sell inferior products, they tell that the product sucks balls and sell it very cheap.
They have been gradually expanding their operations from Finland to Sweden, Estonia, Russia and other countries. Similar company started in Minnesota (same size as Finland) would be several times bigger by now.
Not entirely true, they are not just in advertising or catalog merchant business: Uber, Airbnb, Facebook, LinkedIn, Twitter, Priceline.com, Netflix, Palintir, Salesforce, Workday, PayPal
LinkedIn for example is a $31 billion market cap business social network, that is still growing its sales 10% quarter over quarter.
Google and Amazon, which are the only two examples that stand-out for your reference, are old Internet businesses. Naturally they would be larger than a company founded five years ago.
Regarding the early 2000's... who would expect a ten year old business to be worth $200 or $300 billion? Since when can you create such large businesses faster than that? Point being, of course the biggest Internet companies come from that time or earlier, they would inherently have to.
There is a Finnish service called irc-galleria.net. It's a service that was created to let irc users to share pictures of themselves to other irc users. It got really big in Finland. They even had big screen in center of Helsinki to show new pictures uploaded to the service. They had this paid feature which let you keep a list of friends in there. Everybody talked about irc-galleria stalking.
Then Facebook came. The major difference was that facebook let you make friends for free. Year later nobody remembers irc-galleria.
Dislodging a platform is easier than ever. It's enough to make better or cheaper product, then just get lucky. Previously you had to also take distribution and marketing into account and then get lucky.
The most frustrating searches I've had with google are always about some thing I have seen before, but can't find again.
It would be relatively easy to optimize for this if you can have some kind of bookmark app and search history available. So that search would prioritize stuff I have bookmarked or found previously. It would be probably be valuable for the search engine to know what products I have bookmarked. The catch here is that I'm not going to trust google with that data.
So essentially delicious with very powerful search as by product.
Irc-galleria was many million euro behemoth in the context of Finland. Facebook at the time could not spend even 10k to tackle irc-galleria.
Tackling many billion-euro incumbent is probably harder than tackling many million-euro incumbent. But it's probably like twice as hard, not 1000 times harder. And it has happened in less favorable situations before. Look up Toyota.
In Europe, we have wealth redistribution. A few companies with so much concentrated financial power is not healthy.
Europe's dynasties do not tend to give away their wealth, instead they pass it down through families for generations. Most of Europe's largest companies and fortunes are controlled through family dynasties. American billionaires always dominate the list of most philanthropic.[1] It's also why Europe sees such a low rate of turn-over among their billionaires, and why such a high proportion of their billionaires are derived inherited wealth. [2]
[1] http://www.forbes.com/sites/randalllane/2013/11/18/the-50-ph...
How many American startups are a result of a pissed off employee working at a successful company going off and creating the same thing his or her employer did but better? And this cycle feeding on itself.
Or university students with an idea getting all the financial, technical, and managerial support necessary to create the next big thing.
You have to understand the process and then try to replicate the process. And each component of the process is as important as the other. You need the whole pie. Not a piece for it to succeed.
You can seed this with massive capital expenditure, tens of billions basically poured into private coffers of Caplists, but the process has to be very similar for it to actually work.
Some numbers might make your point more convincing.
Intel started like this.
See the companies founded by ex-Googlers
They should instead look in China, where there already is not only a second Google but also a second Facebook, Amazon, WhatsApp, Stripe, ...
So, why did the Chinese succeed where Europe failed? Here are my thoughts:
* Regulation: With its strict censorship and great firewall, the Chinese government effectively shut out most American IT companies from their market, giving local companies enough time to grow.
* Culture: Chinese culture is much more different from American than European culture is, hence it is also much more difficult to adapt an American IT service to the Chinese market than to the European.
* Market size: With 1.3 billion people, 900 million of which speak Mandarin the market size for any IT service is enormous, even taking into account that many people still do not have reliable Internet access or a lot of money to buy services / products online. Likewise, the market growth is much higher than in the US or Europe.
Personally I believe that the main competition for American IT companies will not come from Europe but from China. Right now, most Chinese IT startups only follow in the roots of their successful American idols, but with so many well-educated young entrepreneurs this should change soon, and I predict that we will see more and more disruptive Internet startups "made in China" very soon.
Because they are in Europe, not China. It's a British article.
It's hard explaining to people what exactly google does for so much money. Europe is more "feet on the ground" when it comes to business in general. What does google sells by the way ? Ads, android (which is mostly open), internet services... it's hard to really tell. In europe, technologies and research will often rather belong to the public sector than the private sector.
The silicon valley is a typically american thing because US business laws and the culture allow it. In europe it just won't. The only way you can really thrive as a programmer in europe, is by doing open source, and Torvalds is a good example of that, so by a loose definition it's only accessible to people who spent a lot of time in universities. There are no other way you are going to do business and getting money typing code in europe. It just won't happen.
I too could make the most amazing software if I could by open sourcing it. Without resources nor the organization, nothing will happen.
Startups do not need free services that ridiculous, they need an environment which will allow them to take risks and not to have to cut trough a mile of red tape to hire and employees.
How many tech company founders met at university? Now, how many studied the exact same things? I'd say a lot less of them.
Well, a short search returns:
Google: two PhDs studying the same thing.
Apple: Jobs and Woz met when the former was in High School; they never attended the same college.
Yahoo: two EE graduate students.
Microsoft: childhood friends, didn't attend the same college.
Oracle: didn't attend the same college, met when working for the same company.
Red Hat: didn't attend the same college.
Salesforce: met while working at Oracle.
At least for the software behemoths, it seems it's not that important to have mixed colleges.
http://www.dw.com/en/eu-allows-france-to-bankroll-google-riv...
The main source of disagreement was the format of the search engine, with German engineers favoring a text-based search engine and the French engineers favoring a multimedia search engine. Many German engineers also balked at what they thought was becoming too much of an anti-Google project, rather than a project driven by its own ideals."
https://en.wikipedia.org/wiki/Quaero
https://www.exalead.com/search/
The project failed to deliver. Though the Exalead web search engine survived and got bought by Dassault Systems (CATIA 3D CAD). Next time they should open source the public funded projects...
So what else then... Taxes, here tech companies are notorious. Stories of FB paying a few thousand in total taxes in the UK, Apple leaving its cash abroad to avoid taxation, Google channeling its revenues through a royalty-scheme between Ireland and the Netherlands that goes virtually untaxed (Dutch Sandwich) etc... tax wise these companies contribute little to the place of their main business (e.g. the US for the above three companies).
Then, employment? Here too, tech companies are known for providing relatively little employment compared to the size of the business, versus other industries. To take an extreme example, walmart (a company which pulls the vast majority of its revenues from the US alone) has up til recently had more store locations, than FB has employees. FB doesn't even have 12k employees, Walmart has literally a couple million. The article mentions Whatsapp as an example, it just had 55 employees when it was sold for almost $20b Compare that with say Vente Privee, a French online retailer that has 2500 employees and close to $2b in revenue and a slightly higher valuation, that nobody talks about. Which would you rather have in your country, creating jobs? You may still (likely) say Whatsapp, but it wouldn't be an obvious answer. Instagram is similar, 18 employees, who cares whether they're in the US or not? It's a meaningless figure for employment alone. And again, ownership wise the billion dollar valued company is in the hands of international investors, and tax wise it's likely little to nothing.
So what's the contribution of these US companies to the US then? What is Europe really missing? It profits from all the international innovations (I happily use Google's services), while it taxes the above companies for doing business in the EU.
If tech was shitty in Europe, sure, all of this would be alarming. But we have great research (e.g. hadron collider), IT/ICT infrastructure is very solid, if I look at my own country we have digitised and modernised everything from insurance to banking to tax filings, at the supermarket I pay via NFC, as I do in a bus, metro, train or tram. I don't live in some outdated world without technology.
There are very obvious counterarguments to make... in particular political and cultural control and influence that large companies like Google have and the power that wields, that Europe thereby doesn't have, can be or become an issue. Reinventing our own industries the next few decades without inspiring tech companies, is trickier. Seeing talent trained at great European universities with great startup ideas fly to the US for various reasons, is an issue. I appreciate all of that, and yet I feel the importance of companies like FB's contributions to the US as opposed to the rest of the world, is overstated, and that we're not missing out all that much by not having a European FB, for example.
At the end of the day there are 3 superlarge markets, the US, Europe and China. Then a number of very large ones like India or Japan. But of those first three, the EU is merely a partial economic, political and legal union, with a wide range of languages, laws, cultures and systems. While the US and China certainly have internal diversity, it's nothing like the EU. It's why we have tons of companies with a few billion dollar valuations, that capture a substantial portion of the EU but far from all of it. The biggest first language market in the EU is German, and it stands at 18% of the EU as a first language, see what I mean? In the US or China, you can pretty much roll out tech products nationally in many cases, not without any friction, but in a way that's much more natural than in the EU. That doesn't mean tech sucks here, that we have little value, no jobs or shitty digital/online services, it's just fine here (find me digital/online services that the US has that we simply don't have access to, that's missing in EU markets completely), but we have fewer ultralarge unicorns like Google or Facebook, and I'm not all that convinced that this is as big a problem as it's made out to be.
