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Why Is Europe Failing to Create More $1B Startups?

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Re: Why Is Europe Failing to Create More $1B Startups?

#201

Post by caskance »

s73v3r wrote: post #110
bitL wrote: post #99

There is no Delaware. Taxes are paid regardless of whether the company hits $1M revenue or not, salary taxes are high, health/social insurance is mandatory and paid for the most part by the employer, there is a minimal salary, extensive bureaucracy and you can't sign away most of your rights if necessary for company survival. Moreover, some countries impose rules which make starting up with little to no money impossi…

"and you can't sign away most of your rights if necessary for company survival. " I don't believe for a second that someone signing away their rights is necessary for company survival. Maybe you as a company leader need to do a better job so you don't come to that point, and if you have, then maybe you aren't fit to run a company.

The end result being that fewer people are fit to run companies in Europe, so they run them in the US instead.

Re: Why Is Europe Failing to Create More $1B Startups?

#202

Post by dheera »

dheera wrote: post #190
threatofrain wrote: post #184

Earlier quoted context omitted.

China's largest businesses are extremely state-connected, and it's hard to imagine any successful business in China not being deeply connected to the government. I basically consider those entities as extensions of the Chinese state. I don't know if China would look the same if they allowed western companies to just swoop in to extend monopolies.

This is irrelevant to the fact that a very large market and testing ground exists today among the Chinese-speaking and Chinese-cultural population, both inside and outside China. Most successful startups in post-2000 China are largely privately owned. While they are indeed subject to regulatory constraints, needing to work together with the government is largely a constraint to survive, not a reason for success. Thei…

@threatofrain You are correct in that without proper local connections your foreign business will die in China. I'm not disputing that.

My point is completely orthogonal; I'm simply saying that regardless of how business is done in either USA or China, each has its own massive market testing ground that speaks a single language, each has its own reasonably homogeneous culture and each has its own reasonably homogeneous set of consumer problems.

This is very different from, say, Italy and Sweden which are different on so many cultural levels. I'm simply supporting the point that Europe should not be treated as one market.

Re: Why Is Europe Failing to Create More $1B Startups?

#203

Post by caskance »

bobthechef wrote: post #164
briandear wrote: post #133

Earlier quoted context omitted.

Little companies are rarely disruptive and disruption is what creates value and drives society forward.

Not true at all. Indeed, it's the little companies that often can be "disruptive" (I hate that word; why is disruption necessarily good?). Indeed, large companies are in practice often invested in ways that prevent them from pursuing profitable business that smaller business can. Their business model can prevent them from pursuing profitable business because it would involve biting the hand that feeds them. Large com…

Survivorship bias. Disruption isn't necessarily good. That's why most startups fail. The ones that thrive tend to be those that disrupted goodly.

Re: Why Is Europe Failing to Create More $1B Startups?

#204

Post by exelius »

chimeracoder wrote: post #174
exelius wrote: post #167

Earlier quoted context omitted.

IMO the EU is too protective of its economy to allow the kind of innovation Silicon Valley is famous for. The EU has a default assumption of "you have to prove that this will not be harmful before you can do it" where the US has a default assumption of "someone else has to prove that this will be harmful before we will stop you". The important part is that this burden of proof in the US is not placed on a company at…

> They're only able to address the EU market because they have a large, profitable base in the US. Uber is only able to address any market because they have a ton of outside venture funding. Don't get me wrong - I agree that the EU is overly protective and that this harms their startup economy, but Uber is not a good example of that point.

That's true of any startup. But I guarantee you in one of those venture funding pitches someone asked them "So most cities have taxi regulations that make what you're trying to do illegal. How are you dealing with that?"

Their answer was basically "Fuck 'em, we'll flood the market with cheap product, make consumers love it and the regulators will cave." That would not have worked in Europe if they hadn't already done it in a bunch of cities across the US.

Re: Why Is Europe Failing to Create More $1B Startups?

#205

Post by pluma »

logicallee wrote: post #55
ThomPete wrote: post #5

Earlier quoted context omitted.

I hate the word unicorn too, but it's shorter than private market companies with a valuation of more than $1 billion :) With regards to lack of investors I don't think it's as simple as that. If it was only a matter of investments then surely US investors or Asian investors could just come in with the money. There is something that makes European VCs risk averse and keep american investors out of Europe IMO.

"If it was only a matter of investments then surely US investors or Asian investors could just come in with the money" - grand-parent is saying they don't, you're saying they could. You're both right.

US investors do come in, but make it part of the deal to relocate operations to the US, thereby killing the original European startup.

Re: Why Is Europe Failing to Create More $1B Startups?

#206

Post by caskance »

raverbashing wrote: post #124
OJFord wrote: post #107

I certainly agree that "Europe has no Silicon Valley", but I'm not so sure about "or New York". What part of "the full stack entrepreneurial ecosystem and access to funding" does London lack that New York has? (Genuine question - I don't know NY well)

Or you know: Paris, Amsterdam, Berlin.

AKA Los Angeles, Oakland, and Detroit.

Re: Why Is Europe Failing to Create More $1B Startups?

#207

Post by tschellenbach »

1.) Lack of seed stage investors 2.) Lack of exit scenarios and later stage investors. This makes seed stage investing less attractive. 3.) Few experienced engineers, designers etc. There is plenty of talent, but it's hard to build up experience without successful startups. 4.) Part of the talent leaves Europe 5.) A vicious circle of those factors

Re: Why Is Europe Failing to Create More $1B Startups?

#208

Post by hodwik »

kragen wrote: post #165
hodwik wrote: post #129

Earlier quoted context omitted.

This is nothing like the phone lines -- the FCC isn't going to come in and force them to play nice, and these companies are not going to do it out of the goodness of their hearts. The big players will just starve out the little ones. AirBNB isn't infrastructure, it's a service. Without a complete socialist re-imagining of society, that will never happen.

The FCC isn't forcing Level3 or Global Exchange or AOL to "play nice" either. You're apparently arguing from a complete ignorance of history, and consequently your prescribed remedy is likely to make the situation worse instead of better.

The internet evolved over the phone lines, where providers were legally banned from blocking traffic. They were made to play nice. The fact we still have a free internet is the result of that legacy.

Re: Why Is Europe Failing to Create More $1B Startups?

#209

Post by petercooper »

Combine lots of languages with lots of regulatory areas and you end up with numerous smaller communities. Add this to Metcalfe's Law and you have disproportionately smaller opportunities for company size when social effects are important (as they are to most Internet-based unicorns, though not to companies Europe does do well at - like car companies and manufacturing, say).

Mathematically, say one network with size 100 has opportunity of 10,000. Ten networks of 10 have opportunity of 100 each - totaling a far lower 1,000.

Note how several of the top "unicorns" are from China (Xiaomi, Lufax, Didi Kuaidi, DJI, Zhong An, Dianping) or India (Flipkart, Snapdeal) - other countries with (mostly) unified languages (formally, if not in practice) and vast middle class populations (due to their overall gigantic populations). Other unicorns outside of big territories are Atlassian and Spotify - but they're valued so highly because they work in the US market almost as if they were US companies.

Re: Why Is Europe Failing to Create More $1B Startups?

#210

Post by ThomPete »

petercooper wrote: post #209

Combine lots of languages with lots of regulatory areas and you end up with numerous smaller communities. Add this to Metcalfe's Law and you have disproportionately smaller opportunities for company size when social effects are important (as they are to most Internet-based unicorns, though not to companies Europe does do well at - like car companies and manufacturing, say). Mathematically, say one network with size 1…

Yes but historically Europe have had much more success with creating large companies so the question is what changed?

Historically the EU used to be much more divided which is exactly why the harmonization process seems to have such a paradoxial result.

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