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Where Is Europe's Silicon Valley?
An anonymous reader writes: A New York Times story delves into the conundrum faced by Europeans: Why are there few, if any, technology companies from Europe with the size and reach of American tech giants like Google, Amazon, and Apple? The article hypothesizes that, though employment regulations and other business and legal factors play a role, it's actually deeply embedded cultural differences that are the primary cause, citing less aversion to risk-taking, less stigma from business failures such as bankruptcies, little or no stigma from leaving and rejoining a company (seen as disloyal in European cultures), more acceptance of disruptive innovation, and a less rigid educational system that allows individuals to find their own form of success.
One could just as easily wonder where there aren't many $othercompanytype in the US.
This is probably difficult to understand for Americans, but the key factor that makes SV so amazing is that venture capitalists over there are a century ahead in terms of taking risks than anywhere else in the world (save for, maybe China at this point). Instead of betting in a few large projects, they bet on few smaller projects. Most will fail but those that succeed usually return huge profits.
In contrast, everywhere else, investors are much more concerned about minimizing risk and focusing on commodities such as building houses, selling mattresses, etc. Silicon Valley is so different that you can find VC offices next to an ice cream store in the middle of the street.
Neither Google, Facebook nor Uber is about innovation. It's about implementing an idea that's obvious in its time and bringing it to customers. The 5% inspiration, 95% transpiration stuff. And they did it very well.
The US's distinct advantage: Immediate access to a 320M people market with the same language
and very similar culture. Thus able to reach critical masses much faster, hence ability to collect
more venture capital, grow bigger etc. Less need for internationalization in the early phases (no, it's not just
about translation!).
Other factors may also play a role, but I think the above one is the main factor.
No reason to worry, though, Frau Moser. Diversity has other advantages, and the world would be a boring place if
everywhere would be like Silicon Valley, even though I like it.
Why make a change (that no one wants, no one asked for) to a UI element that's served perfectly fine for 15+ years? Certainly it's not for us, the audience. Please Dice, explain.
All of with lead to a more equal society in Europe instead of a winner-takes-all-screw-the-rest situation like in the US.
I think this is because of a misguided desire to turn employment into some kind of welfare system.
I think a better approach is to combine a super-efficient hands-off capitalist economy with a highly socialized government. Regulation on business should just be to deal with externalities (pollution/etc) and to prevent the formation of monopolies (which even conservative economists will agree destroy free markets).
Then have a decent tax rate on that economy and use that to fund strong social protections, including programs like basic income. That alone would eliminate the need for a lot of business regulation. There is no need to have a minimum wage or safety protections in the workplace when people can still live reasonably comfortably without a job. Employers who offer only a pittance won't be able to hire anybody, and if an employee walks into the workplace and sees frightening conditions, they'll just quit.
In such a system there would be plenty of risk-taking, and the wealthy will be able to earn great deals of money. They would of course then pay a large portion of that back in taxes. However, we won't begrudge them the odd private jet if everybody gets decent healthcare and a roof over their head.
The problem with the US is that our social programs are even weaker than in Europe, and so are worker protections. We have that strong economy as a result, but the money just goes into the hands of a few instead of benefitting the many.
Watching things like Cringeley's two series about the start of the computer revolution I cannot imagine something like that happening in Europe because the culture here is so different. Apart from a constant desire for stability there are still people walking around saying things like 'my grandfather was a miner, I'm a miner and, by God, my son will be a miner as well'. In America that would be replaced by 'my grandfather was a miner, I'm a mine superintendent and my son will own the mine'.
As anti-business and anti-success as the American tax code is, the tax codes of most European countries, in general, are worse. When Hollande put France under a 75% top marginal income tax rate, even Sarkozy started making plans to leave the country. Think about that for a second. The ex-president was going to leave to avoid the taxes.
You're not going to lure top talent to your country to try and make a billion dollar business when you promise to tax most of their income at 75%. With proper planning, in the US you'll be paying about 50% tops in California, and 40% in some other states.
Not all of them, unfortunately. Anyways, keep them. Keep your silicon valley, your banks, and your mass-media. Keep everything that is under their control. I prefer democracy, national sovereignty, and a lobby-free country.
Modded down immediately. Had I said the same thing about gypsies or muslims, probably it would have been modded up instead. Which proves exactly what I was saying.
Guys, you can mod down my post, but you cannot mod down reality.
It's the only way to keep those pests at bay. If you give them a finger, they take an arm.
If you refer to Greece, you might notice that one of the core reasons they're in the slump is that they failed to grab corporations and shake their owed tax out of their pockets. If you look further for nations with an economy problem you'll see Italy, Ireland and some others, all of them either being very permissive and lenient when it comes to corporate behaviour or already pretty much owned by corporations because their governments were or are run by crooks that sold out.
The countries that are still doing ok are the ones where corporations lament how damaging consumer and worker protection laws are.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
It's funny, though. Other than razors and keyboards/mice, none of those companies are consumer companies, at least in North America. Or, as you and the article mention, they're smaller companies.
Where are the European consumer tech giants, like Microsoft, Google, Apple, Amazon, Netflix, and others? Per capita, for each massive North American consumer success, Europe should produce two.
This sort of comparison doesn't make all that much sense. First of all Europe isn't one country like the US. People in the comments here and in the New York Times article makes sweeping generalisations about tax rates, laws and regulations in Europe, when those differ substantially between countries. There is a lot of cherry picking here to make a point. Doing a startup or going a bankrupt isn't necessarily difficult all over Europe. I can only speak for Norway where I am from and starting a company here is not hard. I've done it at I have several friends who have done it. Some more successful than others and I've worked for multiple tech startups. Nobody here in their right mind would commit suicide over a failed startup.
I just wanted to mention these things because I think it is a tired accusation that Europe is failing in this area because it is not business friendly. That is frankly not the issue. The problem in Europe is that nobody has a 320 million market. Sure Europe is 500+ million people, but these are people in different countries with different regulations, cultures and languages. We have had a number of successful tech companies here in Norway but they don't show up on the radar because we are just 5 million people. E.g. we got a very successful company that does house listings, buying and selling, job adds etc. But such a company can't quickly expand. If they want to expand they need to learn about the laws and regulations of the next market. The jargon and language used etc. It is not easy. E.g. the way you describe house size in Norway is not the same as in the Netherlands.
A second major obstacle is that we don't have VC capital even remotely as accessible as in the US. That is simply a cultural thing. American's are of course much more risk taking than most other people on this planet. We also don't think as big as American's. We get content much more quickly. People are as mentioned also more loyal to their employers. You can't change that with business laws and regulation as that is part of the culture and it is not all exclusively bad. There is a flip side to everything. The US is a country which is poor at manufacturing while Germany and Japan excels at this. This is helped by a culture of loyalty which allows companies to spend a lot of money on investing in skills of employees without risking that their investment is lost because people suddenly leave for the competitor. As an employer you would not spend say 5 000 dollars a year on training if you could use that to increase the salary and steal skilled employees from somewhere else.
And thirdly while Europe isn't one homogenous mass that could be compared to the US, neither is the US really either. I'd go so far as to claim that Silicon valley is a west coast thing. Why is there no Silicon Valley on the east coast? Doing startups simply isn't such an honourably thing on the east coast. There is more status in being a big shot banker. In many ways the west coast of America has a unique culture created by all the luck seekers all the way back to the gold rush which can't be recreated easily elsewhere regardless of business regulation.
Trying to do this is really just stupid. Each country should find their own way. Denmark has a sort of food silicon valley. In Norway we have strong business clusters around oil technology on the west coast. Lots of different countries have different specialised clusters based on what they are good at. Replicating silicon valley when one already exists is a waste IMHO.
Actually a number of European countries follow an approach not that different from this. E.g. Nordic countries have more extensive welfare systems and higher taxes than e.g. southern Europe but it has far less business regulations and red tape. Laws are usually quite straightforward and governments are efficient. E.g. tax laws are much simpler in Nordic countries than the US. The whole welfare system is also much simpler. The US has a myriad of different programs overlapping in all sort of ways, while Nordic countries usually have a few big programs that most people understand roughly how works.
Nordic countries unlike the US e.g. don't have minimum wage. Firing and hiring is quite easy in Denmark through the flexiculture system. The idea is that companies should easily fire you but that the government should give you a lot of help to get back into a job. So Denmark spends quite a lot of job re-training programs e.g. and has generous unemployment benefits.
As for things like safety protection. You can't really deal with that in the way you describe due to the problem of tragedy of the commons. It is sort of like with pollution. As an individual I don't want to start cleaning it up but if others agree to help I will do it. That is the point of a democratic system and a society IMHO. Some things we just have to agree on together and do together. It can't all be about individualism. Imagine sharing a flat with 3 other people. You like to decide what to do in your own room and how to spend your own money. But how do you keep e.g. the shared kitchen clean without everybody agreeing on something. I guess Milton Freedman nutters would insist we could just create property ownership of different parts of the kitchen and sell services to each other. Like say I own the stove in the kitchen and everybody else has to pay usage fees to me while I have to pay the owner of the fridge to use it. It all sounds geeky cool in theory but it pretty retarded way to go about things in practice.
You do know that for company formation the UK is scored better than the USA by some Rightwing think tanks - we don't have those dodgy judges in texas helping patent trolls for one.
Apparently you don't understand how well the right wing can disseminate propaganda. Part of convincing citizens that lowering tax burden and removing regulation is a good idea is convincing them these things are hurting businesses enough to damage the US economy. Telling people that even the anti-business EU has countries which beat us in company formation is a great way to do that. It works even better when people believe a right wing think tank would have some natural bias against giving credit to Europe, so the situation must be even more dire.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
Detroit is interesting because unions played a major part in destroying its car industry. At a time where US car companies badly needed to adapt to the new Asian competition, most of their money was spent paying for pension and benefits of people who had left the workforce years or even decades earlier. So they entered the death spiral of downsizing, outsourcing and such.
Same thing happens with civil servants and public workers in many cities in North America. Not only are the services severely downsized (such as in Chicago where they had to reduce the school calendar to be able to afford the gold-plated teachers conditions), but in many cases the cities have to spend tax money on pension and healthcare of retired employees who did not work harder than current ones, but simply happened to be in the workforce when the economy was booming and the unions had the cities by the balls. The result is that people who can't themselves afford a pension plan or decent healthcare and who will live in poverty when they retire have to pay for those lottery winners.
Another issue with unions is the lack of flexibility. They hold onto job descriptions to a point where it becomes totally absurd. Such as in the case of those people working in one of Warren Buffet's newspapers (I think the one in Buffalo); when the newspaper brought in a new machine to fold papers, they couldn't change the job of those poor union workers who used to fold newspapers manually. So until they retire, those people stand in line besides the conveyor belt where the newspapers exit the folding machine and in the air they make a move with their hand that is similar to what they used to do to fold the newspapers manually. They are known as "the blessers", and they are the perfect example of a situation where employees become wards of the company, not part of a team that is there to help the business.
lucm, indeed.