It was the same with the PC business back in the 80s and 90s. Here’s an article from the New York Times in 1996, struggling to understand why European PC manufacturers were all failing to expand outside their home markets: https://www.nytimes.com/1996/10/07/business/why-european-com...
25 years later, the story is the same. Europe missed out on most of the big business opportunities of the internet, fell behind and lost the smartphone revolution, is largely missing from the top names in the app store, failed to create an internationally relevant social media company, etc. etc.
However, I wonder if this could be an inflection point. Covid has dragged everyone into the future kicking and screaming. Meanwhile Europe is looking grossly undervalued due to a lack of tech exposure. European stock markets have been essentially flat since 2009 while American stock markets have 3X’d (pre-2009, European returns basically tracked American ones). Tech salaries in Europe are now just 1/5th of what they are in Silicon Valley. It seems like the pendulum has swung a little too far in the American direction.
It took Europe 40+ years to become internationally competitive with Detroit in auto manufacturing during the 1900s. Maybe this is the natural cycle (of course, this time there’s no wars to use as an excuse).
If I were ever going to place a bet on Europe in the last 40 years, now would be the time.
SV is so atypical that it's almost impossible to draw any kind of conclusions from particular factors and anyway is now probably self sustaining - VCs go there because tech talent goes there and tech talent goes there because VCs do. Very hard for anywhere else to break out in that scenario in the absence of substantial barriers to either talent or money. Barriers to employment are just high enough (not just visas, but leaving friends and family behind etc) to prevent a lot of European developers from moving for the higher salaries but not so high that a lot of top founding talent goes there.
I do wonder if the temporary barriers of Covid might have triggered something, we'll see.
As a German this is an interesting point.
While I'm no big fan of the big cities (Berlin, Munich, Hamburg) we see lots of successful* startups happening and gaining track there and in smaller towns.
University cities are often doing fine, too and are slowly but surely developing startup structures and everything else.
To me this looks more promising than concentrating all startups and money in one place and measuring everything against that.
Nevertheless those banks are often the biggest lenders to local businesses and startups in need of credit (my brothers' wife is working in such a department) although that is not VC like in "burn it if you need to". German banks are more risk averse, at least the most of them.
So maybe it's time for Europe to shine.
Facebook doesn't sell data. They sell advertising space. They're a billboard company.
Just at a cursory evaluation, it makes no sense, because if Facebook sold the data directly, why would advertisers even need Facebook after that? All of those questions can be answered by simply playing around with FB Advertising UI for less than an hour. But hating on FB is fashionable now, regardless of whether the reasons are justified or not. Given how there are plenty of legitimate issues with Faceebook, it really annoys me when people throw around these types of questionable accusations against FB without even looking into the subject matter first, because it just weakens legitimate criticism of FB.
Back to the topic at hand, you are totally on point about the billboard analogy. If you are a business, you don't go to Facebook and say "give me the data of these users", you say, for example, "here is my ad, show it to users who are in this geographic area Z between ages X and Y who are into surfing and indie music". And then you get to see stats about interaction of those users with your ad, like "users who are closer to age X than age Y are more likely to click on your ad", so you draw a conclusion that your ad doesn't seem to appeal as much to the upper boundary of your target age range, maybe you need to tweak the ad or split it into 2 separate ads (one for users between ages X and (X+Y)/2, and another for ages between (X+Y)/2 and Y). At no point you get any additional info on the users, and neither do you get any individual user info, just anonymized aggregates.
Did you find anything factually wrong with what I said about how running FB ads works? Because you just accused me of being a shill, but you weren't able to provide a counterpoint to any factual things I've said in my original comment.
Also, I am not defending FB. I literally said they have plenty legitimate things to be criticized for. But with baseless accusations about FB like the ones higher in the thread, they just cause legitimate criticism to get washed out and get lumped along with baseless accusations.
The DAX30 (German Index) tripled since 2009. The British and French indices did pretty much move sideways though.
The growth of the S&P 500 is pretty amazing though.
Those are pros or cons?
>Tech salaries in Europe are now just 1/5th of what they are in Silicon Valley.
Are SV salaries 5 times higher than in Zurich or London? seriously? or you're talking about peak of peak of peak?
But most places in Europe with tech scenes and outsized VC investment, eg. helsinki, stockholm, berlin, amsterdam, etc you’re talking 5X less salary than in Silicon Valley.
Given the tech talent in those cities, there must be some arbitrage opportunity there.
Seems fair to consider max salary in Europe when comparing with SV.
There should also be arbitrage opportunities for cities outside of SV in USA.
The median US software developer earns $110,000 (excluding any benefits).
The EU median is close to 1/3 that.
Specially since EU has a (mostly) functional social security system, which the US doesn't. It takes money to run that system and I'll happily take a pay cut to the gov if people in need are getting "my" money.
My grandfather pays 0€ in insulin, compared to the 100s$ in the US thanks to all the kids who don't want to share their money with people that actually need it to survive.
But now I'm comparing economic systems (more community driven vs full capitalist), and this discussion can go on forever, so I'll just end it here.
Certainly not for the same seniority level (and not considering stocks, which people in those places do get)
Or you're telling me that someone making 60kEUR in Berlin could be transferred to SV and their salary would immediately flip to $300k on the payslip? (no promotions/stock/etc)
Realistically, more like 2x, 2.5x, 3x if we're stretching it for the mentioned cities
> Given the tech talent in those cities, there must be some arbitrage opportunity there.
Absolutely ;) Though on SV salaries you're getting paid for the less PTO, the stretched hours, etc so probably not such a big arbitrage
Yes. And it’s not just FAANG anymore. That’s a totally reasonable comp at about 30-50 different companies in the US right now (and the number of companies paying this comp is increasing along with the size of fundraising rounds).
Also, in my experience nobody is working 60+ hour weeks at these companies (the bigger the company, the easier the job), so it’s not like anybody is being overworked to get this money.
I just spoke with someone two years out of CS undergrad who’s starting at $350k TC at one of the big SV unicorns.
I make 78k in a medium cost of living US city where a 3 bedroom 2 bath house costs $450,000 1 hour away from work. The same home costs $700,000 within 20-30min of work.
Something overlooked a little bit is student loan debt many American devs start with. I have $50k in student loan debt myself.
We make more than in Europe, but most of us aren't drowning in money like people from SV would make you think.
Yes, at most I'd say at that seniority level, that's why I'm questioning it. (300k is probably at a higher level AND with stocks, etc)
(Though I mentioned Berlin, not AMS, which has slightly higher salaries)
I hear this over and over, but in my 20 years of living in Europe, I haven’t found this to be the case.
Perhaps it is only in some European countries or cultures?
Like saying, "oh at least you tried!"/"good for you!"/"you learning something right!"?, this is something I get.
No one ever asked, "What went wrong, what went right?" / "What did you learn, what would you do differently?" / "Next time you'll try something hit me up!" / "I have something I'm working on, check this out, are you interested?" / "We should talk more about this"
You may say, those are different types of persons, one shows support the other shows curiosity and drive - but in the case of the latter they actually care and are "invested" in your failure as well to the point they'll give up some of their time and attention to ask about it, so they can learn something from your experience as well.
What we lack in Europe aren't patting on the back, it's actually to value the experience of failure.
It's "easy" to say nice words.
Having worked at both, the main difference between SV and Europe is "share your failures so that everybody can learn" vs "downplay your failures so that you look better".
Not true among my Paris based friends, had dinner with some of the latter which included someone who was on their third startup and a few Sciences Po / X types who have the kinds of jobs you would expect and the latter were extremely interested in the what the former was up to and how the startup ecosystem worked. Definitely not a sense that they thought having tried and failed to start a tech company was somehow a bad mark - and realistically grande école types tend to be very status conscious so would have picked it up if it was there. I can't speak to what older people, people outside of Paris would think of it. I would guess much more conservative.
In my experience with job interviews (from both sides of the table) people tend to be ashamed, or they assume you should be ashamed about it.
As for me personally, I like sharing both my failures and my successes, and receive a lot of positive feedback about this. But when I ask them to do the same, I usually get a "I wouldn't want to ruin my reputation.".
YMMV.
Yes, I have.
What they are (require to be) ashamed of is tricking the system or running illegal businesses that lead to the aforementioned failure.
Are you trying to say that most startup failures are due to their illegal nature? If that's the case for majority of failed startups in Europe that you are familiar with, that's kind of telling (whether it is in regards to startups in Europe in general or just the European startups that you are personally familiar with, that's a different question).
I'm trying to say that people are not ashamed of failure in Europe and that the only kind of failure that is a shame is using illegal/unethical tactics.
In several European countries what Uber and Airbnb did to local markets is considered shameful.
Also the term disruption is considered a bad thing.
To put it in more simple terms for you: people are more important than profit.
That's why, generally speaking, quality of life is better than US average, despite lower average salaries.
Also Europe is not a monolith, so whoever talks about Europe as a single entity is probably wrong.
Barcelona, for example, has a very active startup scene and it's 10 times better than any city in the US.
There is also a tendency is the US to consider a success becoming a monopolist or a unicorn, that's not what many startups here aim for.
There is also a huge language barrier, Americans usually show no or little interest foe anything that is not in English.
It's highly probable you don't have frequent contacts with people speaking (only or mainly) French, Spanish, Danish, Hungarian, Italian , German, Dutch etc. etc. but most Europeans do or know someone that can work as a trait d'union.
there are many startups working in the green economy here that are doing great things, by working together instead of fighting each other.
Fintech is also better in Europe than in US.
There are 513 million people in Europe spread over 28 countries, excluding Russia.
Have you met all of them?
In my 25 years of experience in the field, the opposite is true.
I also find it a bit narrow-minded to think of Europe as risk-averse simply by judging their attitudes towards tech investments. Spain (where I'm from) definitely appears to be one of the most risk-tolerant EU countries when you look at certain sectors and our foreign investments in infrastructure and other types of construction, but one of the most risk-averse when it comes to tech. If I were to speculate (and I stress, speculate), it seems to be influenced by the type of markets with capital that we have access to: the Middle East, Africa, and Latin America. This is also the case when you think of partially publicly funded projects that are quite risky -- especially in countries that are politically unstable like ours. A perfect example would be renewable energies, which would have been the great success story in Spain until new legislation practically killed any hopes of it being eventually profitable.
Germany, on the other hand, seems risk-averse _even_ within their own main domains (industrial engineering, automotive, etc). They also have a big global presence and prestige/reputation, but I have never lived or worked in Germany so I wouldn't even dare speculate why this is the case. I've often seen the finger pointed at bureaucracy, but other countries with similar levels of bureaucracy and hurdles don't seem to be as risk-averse. Different cultures, I reckon.
The UK (where I now live) on the other hand was one of the most risk-tolerant countries in the EU (until their departure) when you think of tech investments. The fact that they speak in English and have a strong services economy helps in that respect, I would guess. I'm definitely not an expert.
1. https://voxeu.org/article/cross-country-differences-risk-att...
We assumed that, the closer the percentage was to the median, the more risk-averse people would be (assuming the median represents some optimal size for the government).
We never validated the idea though; I'm quite curious to see how that would hold up after verification.
https://en.wikipedia.org/wiki/List_of_countries_by_public_se...
UK investors are less risk-averse than Germans, but still not quite the same as SF.
The European ecosystem is focused on well-understood business models, and is less likely to fund something disruptive and novel. It's probably epitomised by the Samwer brothers' cloning American businesses like eBay.
If you want to build a well-understood Enterprise SaaS company, I think the European ecosystem will suite you fine.
If you want to try a crazy idea, like renting out Air beds to people in your living room, you're better off in SF.
I'd say it depends. I lived in several places and my feeling is that the bigger and more cosmopolitan the city is, the less it is risk adverse.
So the worst is usually the countryside or towns and cities far away from any border and with no particular significance.
> big difference with the US is the fragmented market: different languages, cultural differences, legislative constraints, market demands
The Germans tried to address this in the 1940s, but no one seemed interested. /s
This is a major issue in Japan too AFAIK. Working for a big corporation or the government is still considered superior to entrepreneurship, and failing at a company brings a lot of shame.
Without permission to fail, it's impossible to succeed. As Elon Musk put it: "we're gonna have to blow up some rockets."
I've wondered if the most significant innovation of the past 500 years and the one that led to our historic technological and economic explosion of progress wasn't just limited liability companies.
In the past to do anything big you had to either be already rich (vastly limiting the pool), find a patron (again a small pool), or borrow money. In the old days borrowing was basically loan sharking. You'd end in prison, dead, or at best shamed and broken for the rest of your life if you failed to repay with interest.
All that meant very few people could take risks, so very little innovation.
Limited liability allows vastly more people to take risks. Yes it does lead to abuse, fraud, and waste, but it also leads to a huge amount of innovation since people have permission to take risks and fail and then recover.
Failure at something like a startup still comes with costs. If you (the founder) are not a narcissist or a psychopath it will probably come with emotional costs like a feeling of failure and a feeling of having let people down. But it doesn't ruin your life, blackball you from your career, or land you in prison.
Also, European culture is slightly different: most people consider a startup failure as something bad that you drag along for the rest of your career.
I've talked to some European VCs, and while they have big ambitions and are starting to gain momentum, it might take a while before the shift in the European mentality happens, and we end up with a thriving ecosystem. Some hubs (Switzerland and Berlin for example) seem to be doing quite good.
I also assume a big difference with the US is the fragmented market: different languages, cultural differences, legislative constraints, market demands, ... For example, in my experience high touch B2B sales are highly impacted by the language gap, in fact some countries (France, Spain, Italy, ...) are notoriously against working with people who don't speak their mother tongue. (On the bright side most of us Belgians do speak at least 3 languages, so it is still somewhat doable.)
As an alternative to VCs in Europe, you could look at some of the national and European subsidized tracks, although they tend to be mostly coupled to the trend-of-the-decade (sustainability is hot right now), and also require quite some effort to enter with no guarantees of success. (Disclaimer: it's on my to-do list, so no real experience with this.)
I would presume the combination of all of these factors results in people looking on other continents for better opportunities.
(I personally think Africa might offer huge opportunities in the coming decades, but that's for another time.)