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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.
Worker protection in the EU isn't the problem. There are all sorts of ways to go around the protections. If you had been in business here you would have noticed that. Outsourcing is one of the ways that "problem" gets worked around here. Worker protection for outsourced staff can be quite flimsy.
I would also say that bankruptcies actually happen quite a lot in the EU. What is much less common in the EU are successful restructurings or people who get back on business later and have success at it. Quite often it is legally easier to declare bankruptcy here than to restructure a company, especially if you have a large contingent of long term employees that would otherwise be hard to dismiss, while starting a new business after a failure can be quite problematic. Quite often in Europe people in the business know each other really well, it is a lot smaller, if people know you failed once they will be adverse to doing business with you again unless you provide extraordinary assurances that you probably wouldn't need in the USA. This is a cultural matter. I have noticed people in the USA usually keep to their own business and don't care much what happens around them but I can assure you the opposite is usually true in the EU. For good and bad.
The main issue in the EU is the lack of easy access to funding and the risk-adverseness of those with capital in Europe. They basically expect guaranteed returns on everything they fund. A lot of them got rich off the teat of the government or of government backed monopolies and are not interested in anything remotely competitive. So most innovation ends up happening with small enterprises people start on their own houses, much like in the USA I guess, the problem is then these small businesses cannot scale because there are no viable sources of funding to grow the business. So quite often either the business grows slowly and organically until it becomes massive (e.g. Ikea) or the founders just cash out on the business very early. But quite often the cash out isn't as gargantuan as what you see happening in the USA. It quite often ends up paying out like an order or two of magnitude less. If Facebook had been funded in the EU I bet if they did an IPO there people wouldn't have thrown them all that money just that. Then this money given to founders can be re-invested in new businesses. That's the main problem here. In Europe the founders never get quite enough to bankroll major new investments like what happens over there.
There are also infrastructure problems. The article talks about Silicon Valley. Well there aren't a lot of places where you can do silicon prototyping or manufacturing in the EU. There's Silicon Fen i.e. Cambridge the UK and Grenoble in France but little else. There are quite a lot of software hubs though. Like Silicon Glen in Scotland for games software, or Estonia (a place where Finnish investors usually go to because costs are cheaper and Internet access is fast) where Skype was located. etc.
Most of the "weaker" EU members during the last recession failed due to private banks failing and the state assuming their losses. Most of the talk about entitlements is pure bullshit.