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What are the total number of start ups in Europe versus the US? How many succeed, for some various metrics of success? What is the total revenue of companies started in the last X years? What are the returns to investors, both absolute and relative to the size of their investments?
Without knowing the outcomes of the different investment strategies, you can't pick a winner.
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> My thoughts on this come from a chapter of Alan Greenspan's memoirs on his experience in Vienna and thoughts on cultural differences, especially when it came to Vienna's timelessness and beauty. Then you're talking about Austria, not all of Europe.
Just because the example that inspired the thought was drawn from Vienna, it does not mean I cannot extrapolate it to across Europe when I look at the beautiful and ageless cities and traditions that exist throughout Europe. And I put the disclaimer first that I am making conjecture only and nothing more.
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None of these are issues that European entrepreneurs I talk to have ever had.
Hi. You're right, no European entrepreneurs talk about these topics, but they are very much implied barriers to entry. What is normally vocalized is the size of their markets - which implies that scaling out to a whole EU launch is much more difficult.
To be honest, even treating Europe as a collective is silly. When each country has different tax laws, traditions, outlook on life; how can you really, meaningfully compare them?
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> 2. Americans are less risk-averse because Americans are mostly descendants of immigrants. And immigrants are more likely to have a less risk-averse DNA. Do you have any evidence that this is a genetic trait, and not a cultural factor? I have never heard this postulated before, but it would certainly be interesting if true.
No, this is just an idea that occured to me a long time ago in school, it may be completely wrong.
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>> "it's not as easy to build huge successes in Europe." Why? Could you explain this further?
Here is just a short list. a) Different cultures b) Different languages c) Different tax systems d) Different company types e) Different legality All these in combination creates a lot of friction that makes it harder. There are obviously exceptions (ex. skype) but in general it's just very hard to navigate compared to the US.
"As European talent in the form of startups and entrepreneurs continue to flock towards the USA, the question remains: why? Is it attitude or is it money? Is it bureaucracy or is it poor infrastructure?" This is a loaded assertion. And, sincerely very cliché. Oh Europe is bureaucratic and expensive? And yet there's nothing like this: http://en.wikipedia.org/wiki/Giro in the US. Ridiculous Funny how several of these b…
That has absolutely nothing to do with why European investors are more risk-averse (they are).
This is not all bad, since it would be harder for them to invest in companies like Color
They still invest in risky stuff, like a Sound startup in the most picky country w.r.t. intellectual property online http://en.wikipedia.org/wiki/Soundcloud (and what are the issues in Germany can be summed by this: http://en.wikipedia.org/wiki/Gesellschaft_f%C3%BCr_musikalis... )
Learning from failures is good, and might help entrepreneurs to develop a more viable proposition if they try again. But that still doesn't make failures good. It just means there is a silver lining for some of the participants, if they have enough left to try again later.
Hit-it-out-of-the-park success is good, and from an investing perspective funding a number of failures may be a reasonable cost of doing business if it means you get the occasional smash hit as well. But that still doesn't make failures good. It just makes them tolerable.
Moreover, the hit-it-out-of-the-park outliers in SV are mostly part of one big pyramid scheme these days. It may be a while before the bubble bursts, because at the top of the chain you've got the outlying outliers like Google and Facebook that really have managed to bring in actual revenues and build up huge war chests, but even then the theoretical valuations for some of these giants are dubious. There literally aren't enough people in the world to continue growing their core offering at historical rates in some cases, and attempts at diversification have mostly been failures propped up by those core offerings. Even if these weren't the case, the biggest giants in technology rarely manage to remain dominant for more than a decade or two before newer ideas from more nimble competitors start to intrude.
Meanwhile, smaller companies being bought for staggering sums of money when they have yet to demonstrate a viable business model for monetizing what they do is just silly in most cases. In the ones where it isn't, the acquisition is often for strategic reasons rather than a genuine investment in expected actual value.
So the bottom line is that European investors have less time for boom and bust than US ones. SV couldn't happen here, and we don't want it to. Culturally, while there are start-up incubators and the like around, we tend to be more interested in investing to grow something after its foundations and basic viability are already established. That could be demonstrated either through having a working business model that only needs cash immediately to accelerate growth that could have happened anyway, or through at least having a plan with clear potential to generate real money, for example. While I don't have any hard data to back this up, I suspect we also tend to put more emphasis on bootstrapping your own business or going to the bank for a loan rather than taking angel investment, and use more informal support networks such as old university connections here in Cambridge for the non-monetary benefits that angels might provide in somewhere like SV.
I would hypothesise that there are two reasons for this. 1. The size of the US market is a huge advantage. Startups targeting and operating in the US market can grow bigger. China has the same advantage. 2. Americans are less risk-averse because Americans are mostly descendants of immigrants. And immigrants are more likely to have a less risk-averse DNA.
1) a cohesive market, which is also your first point. EU is huge, bigger than US, but the market isn't very cohesive at all. The first time I heard about the EU Commission wanting to push for turning EU into a "federation of states", much like US, I was pretty pissed off, because I know that just means increased corruption at the top, with fewer people having more power over a huge region.
And I still think that's going to happen, unfortunately. But now I also think we can't turn down the advantage of having a cohesive market like US. Maybe if we can delay it into 2020's, by then the Internet will make things a lot more democratic, and it wouldn't be so easy to be corrupt at the top of EU.
2) I'm not so sure it's genetics. I think it's the culture, but not even the "entrepreneurial American culture", but the Silicon Valley culture.
First off, there's no "start-up center" in Europe, certainly not one as concentrated with entrepreneurs and especially investors, as Silicon Valley.
And second, people aren't used to "pitch their ideas" to investors, which are few and hard to find to begin with. There may be a lot of rich people, but they aren't actively seeking entrepreneurs to invest in their ideas.
So it very rarely happens. That's why you don't see start-ups that "change the world" from Europe, because while a start-up getting millions of dollars just based off an idea is kind of a daily occurrence in Silicon Valley, it almost never happens in Europe.
Seems to be a lot of patriotism in these comments. Today I've learnt that Americans are genetically superior to Europeans because they have genes that make them more likely to take a chance and Americans have "vision" where as Europeans don't (yes I've exaggerated these a bit). To be honest, even treating Europe as a collective is silly. When each country has different tax laws, traditions, outlook on life; how can y…