Well, I'm more used to the European side of things, so this is how I see it:
1 - Europeans, though are certainly enthusiastic, are not going to go for 80h/week workloads, not even as founders.
2 - Some sense of Naiveté in the European site, in part because of the less restrictive laws and stronger regulations (beats me how Soundcloud started in Germany, anyone who has tried to use Youtube there can relate - at the same time Soundcloud is "the exception that proves the rule")
3 - Less "hacking" spirit.
4 - A more stable social foundation "discouraging" entrepreneurship (debatable)
On the other hand, here's what I think Europe has to offer
1 - More opportunities to fill niches and offer new services
2 - Good education and people with a strong theoretical foundation
3 - Smaller costs than SV (and more affordable salaries, smaller healthcare costs)
4 - Easier to find talent amongst the whole EU, and easier to bring talent from outside (like Eastern Europe)
5 - Shorter distances between tech centers in Europe
> Europeans, though are certainly enthusiastic, are not going to go for 80h/week workloads, not even as founders.
I think it's more abstract. Europeans are much, much less likely to find understanding among friends and family for the idea of making sacrifice of any kind (of which long hours is only one kind) for "work".
Europeans are much less likely to understand the idea that a startup isn't "a job" and that starting your own business isn't just something you do to work from home, have less hours and (especially) not have a boss.
It's all on average and stereotyped, but it's definitely my feeling.
Also, it's just very, very suspect to want to get ahead. It's impolite to admit, but I can't help but think it's a damper om ambition, and with no ambition, there can be no Silicon Valley scale startups.
>I think it's more abstract. Europeans are much, much less likely to find understanding among friends and family for the idea of making sacrifice of any kind (of which long hours is only one kind) for "work".
Europeans are much less likely to understand the idea that a startup isn't "a job" and that starting your own business isn't just something you do to work from home, have less hours and (especially) not have a boss.
So, in essense, European don't believe in the gold-rush kind of startup culture. Seeing that only 1 in 100 or less companies ever make it, that's quite smart of them (well, us).
For the "less hacking spirit" somebody else said, I disagree. Heck, tons of hackers are from and in Europe (from Guido to the core KDE guys, and from projects like VLC and Haskell to OcamL).
> So, in essense, European don't believe in the gold-rush kind of startup culture. Seeing that only 1 in 100 or less companies ever make it, that's quite smart of them (well, us).
Depends on your definition of smart. I think we (again, on average and stereotyped) prefer the comfort of a stable and secure job, rather than taking a shot at a one in a hundred startup.
That's "smart" for the individual, but if no-one takes the shot, the hundred startups needed to get to the one that gets big doesn't get started.
The essence is that the modern western European culture isn't very conductive to risk-taking. This is great for stability and comfort, but it doesn't get us much progress and we will suffer in the long term for it.
Ambition is a big part of it, and European attitudes can be incomprehensible to Americans. I remember one discussion that ended with the statement, "the Belgians had ambition once and the Congo is still suffering for it".
As a foreigner observing Denmark (not sure about the rest of Europe), I think Danes are actually pretty ambitious, but often in a non-commercial way. It's definitely not cool to slack off and do nothing, so there is ambition in the sense that there's a strong cultural preference to better yourself, do interesting things, produce something. Even if you have a full-time day job, you're not "supposed" to just watch TV in your spare time, but should be an active member of an organization, have projects, something. But it's perfectly acceptable (perhaps even preferable) for your ambition not to be primarily about making money. In tech, for example, DIY hackerspace stuff, media art, nonprofits like Copenhagen Suborbitals, etc., all carry at least as much cachet as the startup sector does.
Yes, same in France, you can't be doing nothing but being explicitly looking after money is very much frowned upon.
Meanwhile in the US people are happy to use yearly income as the scale to compare people. Which is certainly wrong: any nurse should be higher on the scale than Columbian mafia bosses, right?
I think part of it is that in social position in large parts of Europe has come to be less dependent on money, and social welfare systems and strong labour movements driving salaries up have created a situation where there's less cultural pressure towards seeing money as a proxy for worth.
On the extreme end, there was a survey mentioned in Norwegian papers before christmas which stated that the majority of Norwegians believed they earned the equivalent of about $16,000/year more than they need.
That doesn't mean many wouldn't love to have more. But if you feel you're making $16,000/year more than you need, then it takes something other than money before you start taking big risks.
Of course Norway is an extreme given the income levels, but I feel that the general attitude of "having enough" or even more than you need is more prevalent in Europe - across income classes - than it seems to be in the US.
It's different from lack of ambition: Many of the same people who feel they have enough money, still want very much to reach some hard to reach goal. But choices can get very different if money isn't an important part of setting those goals.
While I understand this, remember that there are entrpreneurs, and then there is the subset of 'tech'. You won't find Richard Branson to fit the 'tech-startup' mold, but he's certainly an entrepreneur. And a pretty good one at that. Many, many people in europe privately fund all sorts of high-end businesses. They just don't use VC money and nor do they always go public. So the data have some variation of "survivorship bias", but in the sense that these data (ie, true survivors) are invisible if you are using a tech/ipo screen.
The only reason I mention this, is that its all-together quite likely that there are some very talented people out there, in europe, who will undoubtedly have what it takes to do what needs to be done.
The better explanation as to why silicon valley does not exist in europe, however, is just cultural. The US has NASA, Los Alamos, White Sands, Area-51, and all kinds of massive experience with science/industry and the types of invention and "productisation" of technology that comes from having huge deserts to play with expensive toys (rockets, weapons). That does not exist in europe, neither the culture, the money, nor the geography. And as a point of history, that to me is a better explanation of why silicon valley is where it is in terms of leading the commoditization of technology, and being the lynchpin a broader market.[#]
Tech entre-preneurialism is a sub-set of this market (ie, many SV firms are huge, or government centric). And thats why for tech-startups, you will always over-represent in SV, because of the larger ecosystem to which VC is a subset (of funding, to wall-street and the government...which underwirite BigCo tech still).
The other thing that is relevant is culture. But in a different way than it is often portrayed here. The ambition of many middle-class people is to strike it rich... "to live like a european". Obviously, this won't motivate europeans...for two reasons. The less obvious reason is lack of social mobility; the more obvious reason is the obvious one (ie, they are more worried about keeping a good thing going, than rebuilding a good thing from scratch).
This might not be a perfect explanation, but even as a straw man its worth considering that there is some truth in it.
[#] While the wealth and brains exist in europe, the critical-density of (capital, expertise, experimental sandbox) does not.
I was lucky enough to have toured both the european space facilities, and kennedy space center. The difference is that the european space program is focused on the science and engineering first, self-promotion a distant second. The ESA facilities were not centralized (i spent a week living in a bus to see most of them), and they weren't set up to handle tourists or journalists. The actual launches aren't even done from europe, so while i did see a live rocket test and the assembly hall for the ariane 5, these are not things which you can buy tickets to, and most of what the average citizen could buy tickets to was just ... bland. By contrast, KSC is a showroom first, it's set up to impress people, especially with things like the rocket garden, the vehicle assembly building, and what amounts to a theme park in the arrival area.
When you tally up the science and cost, both programs are probably very comparable, but the US program is much more approachable, because of a strong self-promotion mindset and a complete lack of self-awareness. Loud and proud. The ESA programs are much more low key, what pride there is must be carefully weened from between people's modesty.
I think the difference in the space programs is a reflection of the cultural difference caused by how the US was formed. The european culture has always valued knowing your place, and people who didn't want to stay in that place moved to the US. The US as a consequence values people who try to shout from the rooftops and reach for the sky.
NASA and Los Alamos are mostly played out, and White Sands is just a fun place to jump off sand dunes. This isn't to detract from the rest of your post, but the US isn't what it was, or all that you think it is.
"The US has NASA, Los Alamos, White Sands, Area-51, and all kinds of massive experience with science/industry and the types of invention and "productisation" of technology that comes from having huge deserts to play with expensive toys (rockets, weapons)." ... LHC? That is all.
While I don't disagree with this by any means, you are talking an incredibly specialized asset in the LHC. The difference is that Silicon Valley was not built to play with <particular> specialized assets, so much as it was built to <develop specialized assets> to play with in general. In that regards, it was built to make toys to put in 'the sandbox'. In this view, having a sandbox to play in is quite useful. Not only is it motivating, but its "open plan" facilitates a broad imagination for useful experiments. Rather than a single-framework of experiment designed for a singular and very specialized asset.
Speaking as someone who has lived and worked extensibly in all three (US, Britain,"Europe") I would argue that Britain is certainly closer to the rest of Europe than it is to the US.
I live in Sweden now, the organisation I work for is in the Netherlands, I have relatives in Switzerland and in Spain. The way society is structured in all of the EU countries I have visited or lived in are way closer to each other than to the US, including Britain IMHO.
"Ambition is a big part of it, and European attitudes can be incomprehensible to Americans."
What attitude are you referring too? do you have any objective fact that would prove that europeans are less ambitious than americans?
If you go to any selective European school or university, students are certainly as ambitious as their american counterparts and aren't afraid of working hard to achieve their goals.
However, they are probably more interested in an executive position in the finance industry than founding a company, which doesn't sound unreasonable.
About the ambition aspect, it's not so much as "dampened" but also a dose of "they don't see a point in too much ambition" or of "doing it just to be n. 1", and they certainly want to reach the top, but enjoying the ride as well.
Yes - the general culture in the Netherlands is that being successful is great, but trying to be successful is naive until you have anything to show for it. And if you are successful, you better be modest - arrogance is widely looked down upon.
Neglecting work/life balance is looked down upon, too.
I'm sure some European founders have interesting stories to tell about that time when they "came out" as ambitious :)
EDIT: I just realised the difference is probably in the "forward thinking" culture of the USA vs. the "living in the now" culture here. If you aren't successful now, why worry about success?
>> "1 - Europeans, though are certainly enthusiastic, are not going to go for 80h/week workloads, not even as founders."
This assumes that to be successful startups need to be working 80h/weeks. There are plenty of successful tech companies working much less than that. Treehouse for example works a 4 day week. Long hours are important when building the MVP and getting it out but after that I think you can work normal hours.
>> "4 - A more stable social foundation "discouraging" entrepreneurship (debatable)"
Doesn't this encourage entrepreneurship? It enables you to take the risk without fear of ending up homeless. For example if I were to start a new company there are programs I can sign up for which would give me £60 per week for 6 months + I believe I would still qualify for housing assistance (basically my rent would be paid for me). So as a single guy I could easily bootstrap a company with little-no risk.
"This assumes that to be successful startups need to be working 80h/weeks."
You are correct, and I don't assume it. But several people do.
"Doesn't this encourage entrepreneurship? It enables you to take the risk without fear of ending up homeless"
Yes, there are two sides to it.
Edit: I'll reply here why does this discourage entrepreneurship and my fault for not making this obvious
The sentiment of "failing at business" as a failure is much stronger. Yes, you won't end up homeless, but it doesn't mean the society (and the people close to you) "accepts" what happened.
Because you went for "computer stuff nonsense" instead of going for a traditional job.
The way this relates to the welfare structure is in their "origin" of having everything nice and square and predictable.
OP basically says people in Europe look at you weird for starting a business. Failing the business afterward is a social tragedy.
It's about social/peer pressure.
Having lived in many countries across Europe, I can attest. Some countries are worse than others of course (the worst being the ex-commie/socialist ones).
My experience was different. Failing the business is a social tragedy only if you took too much debt. If you simply find a job afterwards, then it is ok. At least among my friends.
Europe is ~800million people with very different cultures. You can find geniuses here. You can find entrepreneurs. You can also find people that are sloppy. You can find people that have built billion dollar tech companies. Stop generalizing.
>Europe is ~800million people with very different cultures. You can find geniuses here. You can find entrepreneurs. You can also find people that are sloppy. You can find people that have built billion dollar tech companies.
But you can't find a Silicon Valley or a similar economic and/or cultural spot. He's trying to explain why.
>Stop generalizing
Generalizing is the (literal and historical) start of science -- putting things in general categories and taxonomies is essential in understanding them.
There are categories of things -- and different places have different characteristics in aggregate, not just because "there are various kinds of people in general".
Nobody is saying that generalizing is wrong in the general sense. It's just that sometimes advantages can be had to being particular. For example, I have a feeling that the culture in Estonia (including one's attitudes towards entrepreneurship) is quite different from the culture in France.
I think what the post is trying to say, if you look at Earth, you'd say, look at those bunch of whiners, on average they don't do squat. I mean most of them are just plagiarizing and barely make ends meet. Or just starving to death...
Taken into average VC spirit is pretty dead in most places on Earth. Can VC in Africa, India and China be compared to USA?
USA shares common history, language, state system. Europe is waaay more diverse. Treating it like a singular entity is much like treating all human states on Earth as a single entity.
> But maybe my experience living, working and studying in 3 different countries in the EU is worth nothing.
I'm not really impressed, given how wide strokes you painted. I just think it's more constructive to at least state the countries you're talking about rather than just the continent that they share.
Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Estonia
Finland
Greece
Hungary
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom
I for one think it's amazing that I see so many globetrotters (well, continent-trotters) that have experienced and gotten to know so many different European cultures. At least that's the kind of credentials that I assume when they talk about Europe as one homogeneous group of people...
Some of the things you mention apply to subsets of Europe, but not all of them. With more than 50 countries, the cultures, work habits, legislations and economic levels are very different all around. Romania and Sweden, Estonia and France, Finland and Portugal, UK and Russia - yes, Russia, or Ukraine - are vastly different when compared on all the points. Even inside each country and age group people work and act differently. So many young founders all across those 50+ countries put in 80+ hour workweeks, hack or never mind the local legislative restrictions. They feel and act much more as a part of Silicon Valley than the economy and local culture their parents and non-tech friends share.
> 2 - Some sense of Naiveté in the European site, in part because of the less restrictive laws and stronger regulations (beats me how Soundcloud started in Germany, anyone who has tried to use Youtube there can relate - at the same time Soundcloud is "the exception that proves the rule")
SoundCloud actually started in Stockholm and moved to Berlin. Maybe because of the music scene there.
> 3 - Less "hacking" spirit.
I can only talk about Sweden, and I certainly think there's a culture like that here. Lots of old demo coders, etc. Probably one reason why there are quite a few game companies.
As I see it, the startup scene is real and has the same kind of "glorification" here, maybe because of the country's past with entrepreneurs and large companies. Or maybe because of success stories like Minecraft, Spotify, Skype, etc. People will certainly not look down on you for going your own path. What's lacking though are VCs willing to spend money, I think it's harder to get funding.
1. There are a large number of Europeans working 80h/week workloads at investment banks, private equity firms etc.
Many go into these roles from graduate school and I can't think of any that match Stanford etc in entrepreneurial spirit. Intriguingly enough, although grad school is a fraction of the cost of the US, expectations that one should go into an "established" firm after are, if anything, even higher
2. In the UK at least laws and regulations are in many cases better than the US, certainly from a tax perspective
On #1, I will say that the finance and consulting people I know in Europe (particularly Germany, Switzerland, and the UK) seem to work just as hard as their U.S. counterparts. I don't see why entrepreneurship can't be the same.
> 1 - Europeans, though are certainly enthusiastic, are not going to go for 80h/week workloads, not even as founders.
First of all, yes, we do. Been there, done that. That said, I don't think it is/was beneficial - I've had to send people home to rest because they became a net drain on the team.
I think your points are highly dependent on where in Europe - I don't recognize myself in any of your top four points.
Isnt working 80 hours a week ineffective due to you being tired soon and burned out after few years? Assuming that really work those 80 hours instead of chatting, browsing or mindlessly staring into screen.
I read some studies about that. Maybe I believe them cause I am European. Or maybe cause I did worked a lot in the past and my experience confirmed studies.
If you put those 80 hours/week into a high-growth startup that takes off, a few years are all you need. After that, the expectation is that you'll be a multi-millionaire and can practically retire.
Without making any specific claims or predictions, I think it's reasonable to assume that expanding the EU's areas of free movement (eg Romania and Bulgaria a few weeks ago) opens up new opportunities, in labour/talent markets for sure.
> 2 - Some sense of Naiveté in the European site, in part because of the less restrictive laws and stronger regulations (beats me how Soundcloud started in Germany, anyone who has tried to use Youtube there can relate - at the same time Soundcloud is "the exception that proves the rule")
It proves (tests) the rule and the rule doesn't hold for them, which is an argument against the general validity of the rule. I don't understand why you write "at the same time..." because then it looks like the fact that it proves a rule is in fact an argument for the general validity of the rule.
As a EU founder I think the article misses the two primary reasons Europe isn't doing well with startups.
1) Target market
USA: natural target market of 320 million people with a very high level of (disposable) income. Established businesses are happy to buy products from startups. There is a positive feedback loop where businesses try to grow fast and therefore want to outsource the stuff they're not good at so they can focus on their core skills. This means startups can pop up to take care of everything else (HR/Invoicing/Data crunching/etc-as-a-service).
EUROPE: you have to deal with dozens of languages and cultures. Although the and Germanic countries are OK with English-only products, the rest of Europe wants their products translated. Salaries are much lower here and businesses are much more conservative. Businesses that grow slowly have to care much more about operating expenses, which means they will try to do everything in-house to cut costs.
As a consequence we get the vast majority of our revenue from the US, even though people all across the world try our software.
2) Culture
A lot of people talk about starting a startup, but nobody seems to want it badly enough. Perhaps this is because there are so few success stories over here in the Netherlands. People tend to focus on the negative (what if you fail? what about work-life balance? what if you get sued?), but it's hard to say if that matters.
The US has only one Silicon Valley. There is nothing comparable on the east coast, even though the east and west coast have a lot in common. If we figure out why Silicon Valley works and other places fail to really take off we should be able to create startup hubs all across the world.
Yes, but the main point he makes is an excellent one that is normally missed everywhere else: namely the cultural one-way street that exists between the US and Europe. Europeans watch American TV, listen to American music, read American blogs, etc. But does that also work the other way around? No. This already fails at the language level, as most Europeans speak English, but not many Americans speak another European language. I would even go as far as saying that most European journalists read more US sources than they read sources from their neighbour countries. This is also mostly caused by language skills.
As a consequence, when trying to gain attention as a European startup, you can either try to conquer the European countries one by one - or you can try to get American attention (e.g. techcrunch) and let the European tech journalists copy from there. This is a though choice US entrepreneuers don't have and its caused by the cultural one-way street.
I agree with most, except the last part. I came to SV from the Netherlands myself and i had the pleasure to meet Neelie Kroes (highly respected EU politician from Dutch origin) here in SF in the first month after I moved to the US. She was saying how Europe could learn from SV and how she was getting billions of EU funding to recreate SV in Europe and setup 'startup hubs' in places like Strasbourgh and Brussels. I think there's some flawed thinking here: you shouldn't want to recreate the success of SV by just copying it. It will fail. Europe should figure out what would work for them. It doesn't have to be the same as SV.
Money is a part of it, but the bulk of the problem is a lack of a culture that celebrates entrepreneurship and embraces failure as a normal stepping stone to success. This is why there aren't Euro SVs.
Culture is changed through the media and other social proof. An increase in money might make people feel comfortable enough to take some new risks, and some of those risks might pay off and spawn some companies that the European general and tech media can report on.
Why do you believe Europe isn't doing well with startups?
It might be true that Europe isn't doing well with web startups reaching stratospheric valuations in no-time, but Europe is full of startups doing well, and starting companies in Europe is not particularly hard (co-founded several; been one of the early employees in a couple more). And in many countries you can practically get government grants thrown after you if you put in a minimum of effort into applying.
You have some points with translation, but where you see problems, I see opportunities: Translations can be done cheaply enough that being aware of internationalization issues and cultural issues can create enormous benefits in the form of erecting barriers exactly against US companies. I've worked with a number of US companies on i18n issues, and I've yet to find a single one where the US team understood the European concerns (I still shudder to think of the one multinational who thought that it didn't matter if all their past invoices changed if they changed their invoice template, to, e.g., change their VAT registration number).
I also don't agree with about culture. Well, sort of: What you say is true about the US too. Most people don't want to start companies badly enough. Or they would have. At least a huge number. Lots of people do though, we just don't have a single geographical area as small as the valley where it's all concentrated.
There are hundreds of internet startups in London alone, for example.
And I don't buy that you have so few success stories in the Netherlands, though perhaps you're not aware of them as they're not in "as hot" sectors. E.g. consider Bibit - a payment processor funded in Bunnik, that was acquired by RBS and merged with (London founded) Streamline/WorldPay (who has also acquired half a dozen other European startups in the payment space over the years), just to take one of the top of my head that I've personally dealt with. (And a bunch of the people from Bibit are now behind Adyen - another Netherlands based payment processor startup)
Though there is definitively cultural differences. The "fail fast" approach that many in SV takes is definitively less popular, not least because in many countries here for many types of jobs, having a failed company on your CV, at least as a founder, is seen in a more negative light. And this probably explains a lot of the perception too: Many European startups takes longer to grow big and may never even aim to grow as big as an equivalent Valley startup, and so may often be seen as a medium to big established company by the time mergers and acquisitions happens - it's easy to fly below the radar for the entire lifecycle of the company as an independent entity.
I agree with these points. I read Gründerszene and I find the companies described are mostly pretty dull -- selling shoes, or hotel bookings, or something like that. Not terribly technical, and not really moving the needle.
There's still a lot of conservatism. You can make a physical product in the US and people (early adopters) will try it out. In Europe they will want it to be certified and proven and above all know that the founders are properly credentialed. This is probably one reason why all these companies have been formed in domains where credentials don't matter and people are willing to take a chance
We really don't. We (barely) share a language and are held hostage together in a room by dead white male slaveholders who a vocal minority have turned into a new American Pantheon.
The west coast has some political common ground with the northeast, but there are still huge cultural gaps, and the "east coast" extends a long way south of Maryland and DC. This isn't some big mystery, just a big continent.
Think about how many cultures you would encounter walking from Paris to Moscow. Now compare that with walking from New York to LA. Even though Paris is much closer to Moscow than NY is to LA, you'd experience much more cultural diversity along the european walk.
Hell, you would experience much more cultural diversity of you would walk from one end of France to the other.
Just like Europeans have difficulty mentally grasping the physical size of the US, Americans seem to have great difficulty grasping the internal cultural diversity of Europe.
In my state alone, I can encounter at least three very different cultures just within the English-speaking populace. I'd have to have some long conversations with people in the Spanish-speaking populace to establish a rough approximation of the real number.
But something tells me you draw your own entirely subjective cultural lines in vastly different places than I do mine.
We've had this argument here before and in some sense you're right in that culture is relative and 'more diverse' is essentially a meaningless phrase.
What is true though is that Americans tend to underestimate the homogenizing effect a shared language, border, government and media apparatus has and the degree to which it helps in facilitating cross-country trade.
I'm sure there's a substantial effect there. I have no idea how to estimate or measure it, and I don't really care, either. I also don't really care whether the US has larger or smaller cultural gaps than Europe, and I wasn't talking about that. I spoke of present reality in the US as I observe it, not long-term trends.
Present reality is that anywhere east of the Rockies may as well be a foreign nation. I am far more comfortable with many foreigners, even non-Western foreigners, than with most people in the eastern US. Present reality thus leaves me utterly unsurprised that Silicon Valley remains relatively unique in the US.
Edit: Incidentally, I'm amused by the strongly negative reaction I'm getting from Europeans who wish to tell me, an American, what America is really like. What would be your reaction, exactly, if I started telling you what Europe is really like?
The negative reaction is probably because while you can argue this position from a perspective of wisdom (re impossibility to quantify cultural differences) many Europeans have plenty of prior experience with arguing this from a perspective of ignorance (i.e. failing to consider even basic things like the implications of language differences making you resort to sign language a few 100km from where you live.)
Technically your argument didn't necessarily show any signs of such ignorance, but statistically speaking it would have been quite likely.
Present reality is that anywhere east of the Rockies may as well be a foreign nation.
As an American who lives in the central region of the United States, I call baloney on that statement. My HN user profile discloses that I have been to all fifty states of the United States and some of the other territories of my country. The United States really is startlingly homogeneous, all over the country. One illustration of this is the role of English as a national interlanguage unifying all ethnic groups. Only about one-fourth of Americans have ancestors who were speakers of English before arriving in North America. (Sure enough, strictly less than one-fourth of my ancestors were English speakers, even though my family name is English.) Two of my four grandparents (all of whom were born in the United States) received the entirety of their schooling in German rather than in English, but both were perfectly able to communicate with me in English. (Another grandparent grew up in a Norwegian-speaking household, although all of her school lessons were in English.) The United States has a great deal of cultural, ethnic, and even today linguistic diversity, which is a blessing to the country, but the United States also has a great deal of shared culture and ability to communicate in one language from east to west and from north to south that is quite amazing in other countries. Only a little more than half of the people in China even have a common language for conversation.[1] By contrast, people in the United States can use a common language that takes them not only all over their own country, but increasingly all over the world.
You are an example of exactly what I'm talking about. You have an utterly alien mentality and worldview to me. In no small part perhaps exemplified by the fact that you have managed to spend a wall of text arguing aimlessly against a strawman.
What east coast culture? That was part of my point, the northeast is not the south is not the midwest is not appalachia is not the west is not the west coast... (And for that matter, there are at least four very different regions I could divide the west coast into.)
My brief description of the northeast would hardly be "bizarre", but probably "traditionalist", or "old world". Of course, New England and the mid-Atlantic are themselves quite distinguishable.
I didn't say we had "nothing" in common, any more than I would say I had nothing in common with a European, but it's hardly one culture.
Ambitious entrepreneurs don't move to SV because they just want to raise money or have access to a bigger market. It's because they can be among like minded individuals in a competitive and inspiring environment.
As a European entrepreneur that moved to Silicon Valley I can only say culture, culture, culture. You can look at VC activity, amount of startups, even bring on Skype all you want but this is the one thing you can't change and unfortunately The European culture is not as flexible nor open to new ideas, innovation, risk taking, etc.
I do agree with the author that Nordic and new European states have a much better environment for successful tech startups to flourish.
My impression of Scandinavian startups (though I could be wrong) is that those who move to the U.S. really are mostly concerned about the business side of things (investment, customers, vendor/partner relationships, and at strategic times, capital-gains taxes). You can see that in the fact that they often do a half-move, where they move everything except the technical part of the company. Unity3d is one prominent example: the headquarters officially moved from Copenhagen to San Francisco, and any kind of announcement that makes headlines comes out of the SF office, but the core engine devs are all still in Copenhagen. If it were about the technical culture, you'd expect them to want to move the actual technology work to Silicon Valley too, but it was mainly the business side.
I find the UK a particular anomaly from the fund-raising perspective as:
1. High net worth angels can invest up to £100,000 into a startup and the UK government will offer capital protection of up to 86.5%.
86.5%! Startups can take £150,000 that way, then there is another scheme that allows them to take up to £5,000,000 and the UK government offers up to 61.5% capital protection. Crazy. If you look at pre-money valuations in this light for angel-funded rounds, UK startups tend to raise at a 10-20x lower valuation than Silicon Valley startups..
2. Startups that make money of their patents only need to pay 10% tax on that money
3. Companies can get back 25% of their R&D costs from the government
4. Government grants of up to £250,000 (matched funding) for proof of concept, development of prototype etc on original, innovative products
If you had the above in the US, things would be far, far crazier than they are now.
That about half of European venture capital funds are from local governments despite tailwinds like this certainly points to a deeper cultural issue.
My experience in the UK is that despite these "tailwinds", interest in supporting new technology is quite weak. My own experience is that this is primarily due to a lack of technological education in the upper echelons of VC, who mostly appear to come from a finance or City background. Attempting to persuade City types of the technical advantages of an innovation inevitably leads to a simplification of the issue and a lower level of insight and willingness to invest.
The government incentives are certainly there but like you have already pointed out the culture is vital and sadly absent here (London,UK). It also feels like there is no money here either. When it does come, it's paltry and requires you to give up so much control.If we had a few successful high profile exits, talented engineers working for the Banks and Media companies may be more willing to take the risk. As it stands, I know few people willing to leave their cushy 6 figure salaries.
If a startup wants to reach a similar customer base as a startup in the US it will always have to deal with 50 different markets with 50 different legal systems, 50 different marketing channels, and 50 different social networks. Starting a complete web-based company like Spotify or Soundcloud may still be possible because itunes has paved the way to organize media rights efficiently, but as soon as you touch the bricks and mortar world it becomes a different story. The startups I know were first of all focused on their home country and became international only much later, after building local representations in the different countries, and then they had to deal with the local competitors and became successful in only a subset of these countries.
I don't think you understand how the EU works. You don't have to "deal with... 50 different legal systems" just the one you are based in. That's the beauty of the EU, free movement of goods, people and capital.
You can manufacture a car in Austria and sell it in Portugal without there being ANY barriers, except those imposed in Austria... which is the same legal framework as in Portugal and the rest of EU countries.
The EU economic and trade integration is in many cases more homogenous than that in the US between states.
That's not really true. While there are EU-wide standards for many products and regulations, which can make this job easier, there's not a true single legal framework. Look at Google in Germany for example.
Do not confuse the right and freedom to do business and sell your products/services with lawsuits (not established laws & regulation) that may arise from specific regions. Lawsuits != law & regulations.
In the US, when Google got sued for tracking Safari users when they had opted out, Google didn't have to settle in all US states but only some. This "Germany example" is no different.
"If a startup wants to reach a similar customer base as a startup in the US it will always have to deal with 50 different markets with 50 different legal systems, 50 different marketing channels, and 50 different social networks."
* You don't need 50 markets to get to the same size, you need 5. The population of the just the 5 main Western European economies: UK (63m), German (82m), France (66m), Italy (61m) and Spain (47m) totals (317m) which is more than the US (314m). The GDP per capita in the US is slightly higher ($49k in US versus $41k in Germany, $39k UK, $40k France) but at roughly the same level.
* Under EU laws, you have free movement of goods and mostly (almost) a single legal system covering things like e-commerce.
* Language is not really a barrier. For B2B stuff, depending upon your industry, then English alone is probably sufficient. Translating a product or marketing material is hardly a difficult task these days.
* Assuming by social networks you mean things like Facebook/Linkedin/Twitter, then they are the same across the EU.
Your GDP per capita numbers do not appear to be accurate. There is a substantial difference in the per capita incomes; off the top of my head I think the countries you list are about 1/3 lower (or their per capita has to climb 50% to match the US). This by itself is a big deal when sizing up a market.
It's also worth noting that you can relatively easily reach into the wealthy Canadian market if you're targeting the US; Canada's economy is larger than Spain's.
The numbers you cite are PPP (Purchasing Power Parity) which is not really relevant to this discussion about the size of a market as it weights GDP by cost of items/living etc.
With "social network" i ment the "real" network, not the technology (which is the same as you point out). People in Germany talk less to people in Poland, for example, than people in neighboring US states. Citation missing.
"50 different markets with 50 different legal systems"
The EU mitigates this somewhat, but you do have a point. You can run into the same problems with US states too though; obtaining a license to become a money transmitter is one example that I can think of.
I agree with Sten that it's a pitty that Europe doesn't receive more attention from SV. But most Europeans don't care. Most people don't want to be like SV. We don't care that there isn't as many startups. We're happy about living a balanced life and that most people here can do that (Most think it's ok to be taxed hard so that so many don't have to suffer and at least get healthcare and shelter...). People just don't strive to be financially hugely successful. Doing good is enough so that you can focus on what's important for you, which for most europeans isn't work. The ones that love to push their intellectual boundaries all the time and devote themself to work find their niche in Europe or move to the Valley. That's ok. I've heard from friends in SF that a lot of people there are "depressed" because of their high ambitions that they're not reaching. Europeans are often considered a bit boring. We don't have the same highs as in SF of pushing something amazing forward every day. There are good and bad sides to both of these places.
Startups are essentially a high risk casino, that collects cash from muppets (individual investors and funds with more money than brains) and redistributes it with ratio about 100:1. Like musical chairs - 100 people and one chair. Most of these 100 people don't even know where the chair is and can barely hear the music. One person close to the chair collects the payout and shares it with few others who helped him to push the muppets away.
It seems that Europe either doesn't like this game, or just doesn't know to play it.
It is interesting to read this from Sten having heard him speak a few times about improving work relations between the US and Europe (ostensibly Estonia) while at Skype. Having spent significant time working at Nokia (and interacting with Finns, Estonians, and Germans) as well as living in Helsinki and Germany for a period of time, I usually found his prior discussions missing something -- but maybe I was coming at it from a different perspective than the typical Silicon Valley engineer. I will need to reread this.
Personally, I would like to hear more from entrepreneurs in Berlin, London, and Helsinki on how they view the interaction. Berlin is a current hotbed, Helsinki has a few more international startups, and London is english speaking and a tech center as well.
I'd like to see more interaction between the Valley and Europe with startups originating cross culturally. Build on the strengths of both regions and less of things like the Samwer brothers that basically copycat things.
Locally, there is certainly an echo chamber in the Valley. Lots of press/blog inches dedicated to social and the hip/popular startups in San Francisco. In other parts of the Valley (Fremont down to Almaden Valley) you have many startups working more internationally with components in Asia and Europe depending on their focus -- hardware, etc.
With Europe, at least on the enterprise and VC/IB side, you still have to deal with people that will only do business with their official business friends and so lose out on deals because of their own inability to get out of their comfort zone. Sure it's smart to have a long relationship with financiers, but being too hard to get a meeting with is stupid.
With SV, a similar thing is happening. It's basically like going to an event and only talking to your friends... and not meeting new people. This translates into missing opportunities. The other signal is that people in the valley aren't non-tourist living abroad enough to understand elsewhere. That's a fail-at-life in so many ways.
I think one of the largest things holding back startups in europe is the fact that there still isn´t one Europe. You still can´t offer your service to all 400.000.000 people from one office, rules are different across borders, languages, etc.
If you have a service you expect 1 in a million people to use, you can have a userbase of 300 in the US, but to get the same number of users in Europe you will need multiple translations, manuals in multiple languages, knowledge of the regulations in multiple countries, etc. Even if on paper Europe is a larger and richer market.
I believe the biggest problem by far is a lack of VC money in Europe. In the US, it seems like you can show up at a VC with nothing more than an idea written on a bar tab and a pot-smoking coder and you get tens of thousands of VC money (obviously exaggerated).
In the EU "startup scene", if such a thing exists, the only chance to get meaningful amounts of money is if you take loans on something (your house, car, whatever) or clone a US-proved concept/site/technology.
THIS is what needs to change. Europe badly needs VC firms/banks which can readily supply capital!
Edit: also, we (ESPECIALLY Germans, badly burned by the Deutsche Telekom IPO desaster, and now the Prokon scandal) do not have a large stock market. Stock trading here is for the dead rich and banks only, I believe. And without private (stock) capital, no VCs...
I've written a pretty long blog post on the entire topic some time ago. It's about my experience as a founder and entrepreneurial student in the US, Asia and Europe and the cultural differences..
Getting easy capital (even from private angels, its already hard to get more than 25-50k Euros from a German business angel) is one side of the deal, but at least in Europe I cant help but think that the social environment has been holding entrepreneurship back for the last decades. Although that seems to be changing slowly.
People should keep an eye on the middle east. I think it's a part of the world that's going to explode with innovation. There's a ton of money and western influence there, and the people running the show are very business/entrepreneurial-minded, like the Sheikhs leading the development of the UAE. And the markets there are significantly less saturated than they are here in the US.
London and Berlin have a lot of people in general, from different fields (finance and government as much as tech). Is the number of programmers/capita higher in those two cities than average? I think Silicon Valley is the highest you can get (that's my guess at least).
EDIT: IMHO, the closest thing Europe has to these is actually Zurich: it has top universities, money and big companies all in a small geographical area.
Zurich is a tenth the size of silicon valley by population though, and it is a big financial centre too. There are other comparable tech-specific places, like Sophia Antipolis, Toulouse.
By github usage, which seems a decent proxy [1], London is second after San Francisco, followed by Paris, and Berlin is only 7 (much smaller city though, so density could be higher).
Unfortunately, London and Berlin are national capitals. Silicon Vally (even if you extend it to San Francisco) isn't even a state capital.
National capitals have defence contracts and government IT, which so lucrative it sucks a lot of talent away from industry. London is also a financial centre, so that's even more competition.
London does not have defence contracts, thats largely out west, Reading way. It does have a fair amount of government IT, but that is more dispersed too (uk.gov is a new exception, but historically things like tax collection were moved out of London back in the 1970s).
show me a payment system able to accept any form of currency, payable to any person/entity anywhere in the world, then SV will find the rest of the world pretty quickly.
Or more accurately, the rest of the world will finally be on an equal financial footing.
"Europe" as an entity does not exist in the sense the USA does.
The EU is trying, but from a company perspective, there is not single market when it comes to marketing and selling a product. It's all individual target groups, with big differences in language, culture, etc. They do not share a common cultural background.
Simple example:
In the US, you can make a pop cultural reference and everyone will get it. Take a German reference/joke and try it anywhere else. At best people won't get it, at worst they'll be deeply offended.
There are big French software vendors that do not bother to post job listings on their careers page in any other language than French.
Europe consists of individual markets, some a single country, some a group. DACH, Nordics, UK+Eire, but then Spain, Italy, France,...
Universities are not European. There is no European MIT. Each country has their own elite tech uni, some truly good, some mediocre. ETH Zurich? Awesome. TU Vienna? Meh. etc etc etc
europeans are more homogeneous and more united, with a solid culture to back them up, which gives them some leverage against the corporations. The corps thus know it is harder to exploit them. Also, because western europe is more united against Capital, western europe does not allow as much cheap 3rd world labor into their nations. Thus, capital prefers to exploit american workers via mass immigration and H1Bs etc
1 - Europeans, though are certainly enthusiastic, are not going to go for 80h/week workloads, not even as founders.
2 - Some sense of Naiveté in the European site, in part because of the less restrictive laws and stronger regulations (beats me how Soundcloud started in Germany, anyone who has tried to use Youtube there can relate - at the same time Soundcloud is "the exception that proves the rule")
3 - Less "hacking" spirit.
4 - A more stable social foundation "discouraging" entrepreneurship (debatable)
On the other hand, here's what I think Europe has to offer
1 - More opportunities to fill niches and offer new services
2 - Good education and people with a strong theoretical foundation
3 - Smaller costs than SV (and more affordable salaries, smaller healthcare costs)
4 - Easier to find talent amongst the whole EU, and easier to bring talent from outside (like Eastern Europe)
5 - Shorter distances between tech centers in Europe