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Europe is now a corporate also-ran. Can it recover its footing?

economist.com

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Re: Europe is now a corporate also-ran. Can it recover its footing?

#371

Post by yorwba »

kortilla wrote: post #277
Barrin92 wrote: post #99

As usual the article is almost exclusively concerned with market capitalization as an indicator of economic success. Countries like Germany are dominated by small and middle-class, family owned business. 'Big corporate' is indeed more successful in the US or China but it's just one model to manage an economy and I don't think it's that great. One of the most important points is also buried at the end of the article >…

“No big companies” is a fine policy for things that don’t require a lot of money to innovate on. A small business will never be capable of producing anything like the iPhone for example. Pushing the envelope on tech is very expensive and this is where Europe’s current model doesn’t work. If it’s just companies reselling existing things or incremental tech (e.g. grocers, telecoms, utilities, airlines, etc), then small…

On January 8, 2007, the day before Jobs announced the iPhone, Apple had a market cap of $73.76B (source: https://www.macrotrends.net/stocks/charts/AAPL/apple/market-... ) That's not exactly tiny (except if you compare to their $2T today) but it's also not exceptional. There are hundreds of companies of comparable size, including in Europe. And they gained experience producing mobile devices with the iPod released in 2001. I can't say what size company they were back then (my source only goes as far back as $33B in 2005) but certainly they were smaller.

So I think it's wrong to say that "A small business will never be capable of producing anything like the iPhone for example." since a small business can become a bigger company releasing innovative products like the iPhone.

Re: Europe is now a corporate also-ran. Can it recover its footing?

#372

Post by j_wtf_all_taken »

pydry wrote: post #360
sveme wrote: post #323

Earlier quoted context omitted.

Software often does not rely on huge capital. There‘s a bunch of European companies that have a good chance of doing exceptionally well (klarna, trade republic, celonis, biontech come to my mind, for example).

That's changing. A search engine index requires titanic amounts of capital. Likewise so does building a web services platform that can compete. Meanwhile, if you don't have a platform like that to build off you are severely constrained in many other markets. Look at elastic - this is the kind of business that will dry up in the next 5-7 years. It's structurally unable to compete without being part of a major web serv…

What's your point? That letting tech giants taking over just for a little faster innovation is worth it? Maybe the European approach is a little slower, but leads to better results?

But then ... what technology was really advanced by companies like Facebook? Except the ad-surveillance-machine and stuff you only need if you run a multi-billion-people "social" network ... the only thing they innovate in is business models that hurt society.

Re: Europe is now a corporate also-ran. Can it recover its footing?

#373

Post by Hermel »

satellite2 wrote: post #319

This article is truly bizarre. The main point it makes is that the top 500 US companies grew faster than the top 500 European ones in the last decade or so. But then it quickly mention, without any further analysis, that both their GDP actually grew at a similar pace. So the entire EU economy grew at the same speed than the US one but not its 500 bigger companies. So all else being equals it means that the smaller US…

> But then it quickly mention, without any further analysis, that both their GDP actually grew at a similar pace. So the entire EU economy grew at the same speed than the US one but not its 500 bigger companies. So all else being equals it means that the smaller US companies grew more slowly and that this article is simply mesuring increasing corporate inequalities (if there is such a thing).

No. About half of the European economy is the state. So having similar GDP growth while the big US companies grew faster could also just mean that the economic growth in Europe was driven by state activities (education, health care, etc.). You cannot conclude anything regarding the growth of small companies.

Re: Europe is now a corporate also-ran. Can it recover its footing?

#374

Post by JumpCrisscross »

j_wtf_all_taken wrote: post #366
JumpCrisscross wrote: post #335

Earlier quoted context omitted.

> Europe had iPhone precursors before iPhones were a thing That’s the point. Where are they? They couldn’t compete due to lack of scale. They couldn’t scale due to structural restrictions on scale. The next iPhone isn’t going to come from Europe. It may be first developed there. But an American or Chinese copycat will rapidly advance upon them.

> They couldn’t compete due to structural restrictions on scale. Mhm. Cause a working marked with healthy competition never did anything good. Just one question, how did European car makers then become what they are? Even though its impossible?

> how did European car makers then become what they are?

Cars have for a long time been tightly linked to the military. Every major Western car maker up to the last decade at some point built tanks.

Re: Europe is now a corporate also-ran. Can it recover its footing?

#375

Post by thow-01187 »

oblio wrote: post #199
pjbk wrote: post #170

Earlier quoted context omitted.

Nor productivity: https://www.oecd-ilibrary.org/sites/b2774f97-en/1/2/1/index....

That only shows the evolution, what are the actual numbers?

Let's just say...that the data doesn't exactly support the thesis that the lack of venture funding is a drag on Europe's productivity

https://ourworldindata.org/grapher/labor-productivity-per-ho...

Re: Europe is now a corporate also-ran. Can it recover its footing?

#376

Post by yoz-y »

dmitriid wrote: post #356
yoz-y wrote: post #241

Earlier quoted context omitted.

The major problem in EU is not really starting the companies. Most countries have ways to incorporate by filing a form and sending an email or two. The problem though is financing, French investors for example are really stingy and you won’t get somebody to just throw a few millions at you to see if you succeed. France has decided to build the “French Silicon Valley” multiple times by grouping schools and companies t…

> If you start a company here, better think about profitability from the get go. How is this a bad thing? Compare this requirement to, say, Uber, who has been losing billions , and has used investor money to engage in price dumping to corner the market.

There are tech startups and then there are "burn cash by subsidizing the 10% using VC money" startups. Uber is the latter and imo the role of the investor is to be able to distinguish which one is which.

However there is a case when you need money to actually do things, e.g.: pay employees, run clinical trials, rent or build up production capacity. If you don't have initial funds then you will be bogged down by doing contract work to hopefully fund your idea one day. It will slow you down and also quite possibly tangle you in support contracts in products you don't actually want to maintain.

Re: Europe is now a corporate also-ran. Can it recover its footing?

#377

Post by j_wtf_all_taken »

eecc wrote: post #293
wpasc wrote: post #109

Earlier quoted context omitted.

In defense of the article (not agreeing nor disagreeing), the article then includes reasons why it is concerned with market capitalization: >But if it continues, the waning of Europe’s business will bring consequences. Big firms invest in innovation, which boosts economic growth. Left to regulate only foreign groups, Europe’s ability to shape global business norms—on privacy, say, or the uses of artificial intelligen…

OTOH megacorps rarely "innovate" from within, they're too bureaucratic and management stakes are too high for fast risk-taking. What they usually do is to buy out smaller entities that have somewhat proven the concept and pretend they're geniuses for having found a truffle.

Also they have no reason to innovate if they got a monopoly. Sometimes they buy that small innovative company and then that nice idea somehow just dies ... maybe cause it'd hurt their business model?

Re: Europe is now a corporate also-ran. Can it recover its footing?

#378

Post by suction »

Aunche wrote: post #328
Barrin92 wrote: post #99

As usual the article is almost exclusively concerned with market capitalization as an indicator of economic success. Countries like Germany are dominated by small and middle-class, family owned business. 'Big corporate' is indeed more successful in the US or China but it's just one model to manage an economy and I don't think it's that great. One of the most important points is also buried at the end of the article >…

>Europe has no homogeneous consumer market for tech giants like the US or China which can propel tech firms to gigantic size. Yet they use Google and Facebook all the same. WhatsApp was an American company that wasn't even used in America but dominates Europe. As far as domestic companies go, Nokia was a former megacorp and SAP is still one today, which proves that big tech has always been a possibility there. Howeve…

The state of mind is changing though, especially with Facebook - Europeans are aware what happened to the US in the last few years and are scared of a new wave of fascism powered by High-Tech social networks and fake news, more so than US citizens. This won't lead to a European competitor for Facebook though, just to regular people shunning everything that's made in the US. So in the long term only China will profit from the US's tendency to create (too) big corporations. The bigger is better mindset is ultimately not compatible with European values.

Re: Europe is now a corporate also-ran. Can it recover its footing?

#379

Post by suction »

238475235243 wrote: post #43

I've lived in a few different parts of the EU, and couldn't imagine a worse idea than starting a company there (which I did, once). Starting is hard enough without the general negative attitudes, the government insanities, the insane taxes, the low work ethic, the 8 weeks of vacation every month (I exaggerate, slightly). And I was in one of the two best EU countries, God only knows how bad it is in Spain or Italy or…

Yet again, people start companies all the time and succeed - just not megacorps like in the US. Maybe you just hadn't what it takes?

Re: Europe is now a corporate also-ran. Can it recover its footing?

#380

Post by [deleted] »

bartread wrote: post #362
JumpCrisscross wrote: post #335

Earlier quoted context omitted.

> Europe had iPhone precursors before iPhones were a thing That’s the point. Where are they? They couldn’t compete due to lack of scale. They couldn’t scale due to structural restrictions on scale. The next iPhone isn’t going to come from Europe. It may be first developed there. But an American or Chinese copycat will rapidly advance upon them.

Nokia? Lack of scale? Nokia couldn't compete because they made a string of incredibly poor investment and management decisions, such as the N-Gage, until their mobile division was eventually bought out by Microsoft. Even with Microsoft's scale they couldn't turn things around. The reality is that there were a number of mobile phone manufacturers making lots of really bad decisions whilst trying unsuccessfully to comp…

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