The thing that separate the internet economy with the traditional is the massive network effects that makes it a winner take all game. And at that game the USA has a massive home advantage with a huge cultural, legal and financially unified market. In Europe you start in a small country then face big barriers to expand out of it, which slows growth enough that you never get to get competitive by the time the much better funded American competitor comes to crush you.
And then it's game over, because you only get one shot at being the monopoly. Once you have a Facebook, you can't have a second one, even with all the VC cash, talent & creativity in the world. Notice that the USA did not succeed in building a competitor to Google, Youtube, Facebook, or Amazon, so how could Europe, or anybody else ?
Well the Chinese and the Russian could, by banning American monopolies from their own markets, which let them built monopolies on their own, & then attempt to conquer the rest of the world with them.
The USA is perfectly aware of this dynamic because faced with TikTok, their first reflex was to try to ban them.
And that's what Europe should do, ban American Monopolies. If we would ban facebook, instagram, youtube, etc, we'd have solid equivalents in a year, and from there enough cash flow to fund a next generation of startups.
That's not how it works, just look at MySpace. Even sites with a lot of market share are sometimes overtaken by a competitor.
The best alternative to Facebook in a fragmented market like Europe is federation across multiple social "hosting" sites with a regional focus, based on standards that are either in place already or being worked on. This can exploit even stronger platform effects than a conventional one-size-fits-all solution like Facebook.
Google and YT are in a different position since they're actually solving hard resource problems (Video streaming at scale is hard; building a usable crawl of the Web is also hard); much of their success comes from addressing these in a way that is compelling for users.
It recently blew my mind to learn just how small MySpace was. Peak user count was ~75.9 million, total. Facebook has ~2.85 billion active users.
You're ignoring that all of this money initially came from massive investment by the Defense Advanced Projects Administration (DARPA) which funded the semiconductor industry in its infancy, which funded the creation of the Internet, which funded the creation of mainframes, which funded the creation of personal computers, and continues to provide massive funding to tech companies. Heck, their decision to choose Microsoft DOS over IBM OS/2 for the US DOD literally solidified its rise as the dominant operating system. It's requirement that all parts must be multi-source-able is why AMD and Via were created as additional manufacturers of x86 processors. But it also funded PowerPC and even provided significant funding to ARM.
Sure, we don't have much socialism here (USDA farm "subsidies" not included), but we do have very strong, protectionist-welfare capitalism.
So you had the combined might of the US government founding the creation of the computing industry. That let companies take massive risks which left tons of people making tons of money before private VC even really became interested. The IPOs of the original tech companies funded the creation of half of the current major VC funds.
For example, AMD was founded within a year of Intel - years before either manufactured a CPU. You're blurring lines with antitrust lawsuits in the 90s.
Now if you want to talk about the Federal government single handedly propping up the market for semiconductors until the end of the Apollo program, that's a different story and includes more players than DARPA.
Perhaps the ending of the cold war ended this policy, thus a boom of new companies never took place.
Russia didn't ban American monopolies, they were outcompeted fair and square by the more focused local companies. For some time, at least. It took years for Google to catch up with Yandex in search quality in Russian language, and Facebook's clone is imo still better than Facebook itself in every way, no wonder it's still more popular there.
The appearance that Chinese companies have advantages over foreign companies comes from a combination of factors: local culture, understanding of the market, much much faster and fierce competition (If speed and competition in international market is 2, in China its 10. For example, Uber left China's market not because of regulatory, regulatory was equal to Didi and uber at the time, but Uber and Didi was locked into extremely heated competition at that time, both sides were pouring money down the drain. It was most likely a business decision. Alibaba's taobao vs Amazon.com, taobao was very competitive and played to the Chinese culture advantage very well. Taobao created 11/11 singles day in 2009 and hit a cord with Chinese people, even becoming a cultural phenomenon). But let say if Google/Facebook funded a team in China to create a targeted product for the Chinese market, they could have a a significant presence in the market.
The USA is perfectly aware of this dynamic because faced with TikTok, their first reflex was to try to ban them.
And this take is just hot garbage.
Israel should be lauded for managing to be an intensely vibrant and high-tech country, and European countries should try to learn from that, but even that is apparently not quite sufficient. So I think GP has a point.
It’s also too bad that it excludes public companies or large exits (e.g., Wix and Waze) since those are even better retorts to the “can’t build companies” claim.
Might this be a flip side of regulations that combat economic inequality?
If so, the two should not be addressed as separate issues. But frontpage HN posts tend to be "Applauding Europes' long vacations and progressive taxes" and "Bemoaning Europe's lack of VCs with fuck you money".
For example free education improves a software company's hiring prospects as there are lots of employee candidates available with good education. In some countries social mobility is a real thing. As a practical counter example, Sweden has massive taxation and something like most billionaires per capita and a very vibrant software and startup scene.
One could actually do some kind of survey what happens to European software companies. Take for example this one started by three Danish guys: https://en.wikipedia.org/wiki/Borland
Simplified, many great old successes (old money, i.e the billionaires) and many new promising, but few in-between.
Is Borland actually a European company? It looks like it was started in California and has a headquarters in Texas. It is now owned by a company in the UK, but it doesnt really seem European to me.
> Borland Ltd. was founded in August 1981 by three Danish citizens, Niels Jensen, Ole Henriksen, and Mogens Glad, to develop [...] However, response to the company's products at the CP/M-82 show in San Francisco showed that a U.S. company would be needed to reach the American market. They met Philippe Kahn, who had just moved to Silicon Valley...
So yes, Borland is a US company, but founded by 3 Danish folks. That might indicate that Europe doesn't lack innovation or talent, but a large unified market with high purchasing power.
I'd say it would have been hard to sell anything that specific even elsewhere in the US at the time.
I wonder if Sweden has higher funding than the rest of the continent?
https://www.nationalreview.com/the-agenda/guest-post-tino-sa...
60% of all wealth in the United States is inherited.
We're talking about how billionaires make their wealth as a proxy for entrepreneurship. It makes no sense to talk about how many billionaires Sweden has as a measure for their entrepreneurship if most of them inherited their wealth.
> Not particularly relevant. A significant chunk of that inherited wealth comes in the form of housing. The US has a total wealth of $105t, $36.2t of that is housing, which then ends up getting inherited by homeowners' children.
Feels utterly relevant; what's irrelevant is your fact that much of US wealth is bound up in housing: The top 5% wealthiest families are hardly likely to live in 50% of all housing.
https://www.statista.com/statistics/1071105/value-of-investm...
https://en.wikipedia.org/wiki/List_of_Swedish_billionaires_b...
This was at a time when the US was actually more egalitarian than Europe.
That is why I'm somewhat skeptical against the article's proposition, offer it for free and then later come up with a scheme to extort users. I think there are other steps that can be taken first.
However, the mechanism seems simple:
1. Regulation is designed to combat inequality
2. Lower inequality is achieved thanks to this regulation
3. As inequality is lower, fewer people have spare capital for risky investments
Meanwhile, if this mechanism doesn’t work as above, that might imply we don’t (yet) have an effective way to regulate inequality down.
correct me if i'm wrong, Europe is dominated by legacy business/banks that normally won't take such risk. legacy business like BMW. European and Asian want to see you have some success or already making money before they invest. while American will throw money into something that just an idea.
" For one, we lack the imagination and vision to launch something without knowing how it might eventually make money. "
tells a different message, than just
"Europe lacks imagination."
That's not a problem, that's the solution. There's some other problems causing the need for this solution.
It also strikes me as really inaccurate. If anything, a lot of Europeans value creativity and cultural interests over raw productivity or money.
It's pretty wild that founders would need to pay back this money. That would have a massive drag on any risk taking or innovation.
The entire point of venture capital and similar funding mechanisms is that in exchange for a potential massive return on investment, funders are willing to lose everything.
Bank strategy is to avoid risk, while VC strategy is to take risks.
Or that people pay great % in tax and they cannot afford to save their own money to start a business. They need to apply for government grants instead (which people who decided about them can be corrupt) or share their business with someone from the start. That's a buzz killer.
Funnily big corporation are free to avoid tax as they please, because the high earners won't even turn to the streets to protest so they can be taxed through the nose.
Boy, you would make one offended American...
Why then did Airbus put their VC arm [1] right slap-bang in the middle of Silicon Valley?
Note. In this case, its Europe bringing/managing the capital - they are choosing - all by themselves - where to find the talent.
You'd have to ask them, but I'd posit that it's simply because SV is where all the meetings are.
It's extremely common to siphon the most promising projects or ideas to the HQ. Keep the golden egg hen close to home.
Once the project becomes successful people will ignore or quickly forget where the idea came from.
What it lacks is freely flowing funding such that risky enterprises can be funded even if 1 out of ten or 1 out of hundred actually are successful. This kills business models which cannot show any profit whatsoever, and a large portion of the remainder are killed by data regulations forbidding "alternate paths of monetization" (to put it charitably.)
Rather, a problem is that once a European project becomes successful enough, it soon becomes an American project, either by acquisition or by moving to where the investment money is.