On Europe’s digital future
I spent the summer of 1995 in California. Between the second and third years of University, I got up and went on my own. The experience was unquestionably life-changing; meeting new people, engaging in new experiences, and even helping to move someone from San Diego to San Francisco (and Sarah, I’m still sorry that I accidentally packed your mom’s broom).
I didn’t understand at the time that SF was going to be the epicentre of consumer technology, as we now understand it. I do remember meeting a bunch of developers, who let me stay at theirs in the Mission, and had broadband at home — a “fixed line” at home that I found extraordinary. But, even as this little world became part of everyone’s universe, “tech” wasn’t new for San Francisco and the valley. It had already borne global companies such as Hewlett-Packard and Apple but of course the situation these days is much bigger — in every way.
The US builds brands like no other country on earth. You don’t eat a burger and fries, you have a McDonald’s. You don’t watch streaming TV programmes, you Netflix and chill. You don’t drink coffee, you have a Starbucks. The ability of US companies to make their brands stick in such multicontextual ways is really unlike anything else, anywhere else.
But, what is often missed is not just the ability of the US to build businesses and brands, but the ability to vertically-integrate them. Look at “tech” this way. You’re using this website or app (Medium, from the US) on an operating system (probably from the US) on some hardware that is most likely to come from the US. And, when you’re reading about “tech”, you’re doing it through browsing US publications which largely cover US tech companies. Facebook / Meta, Apple, Uber, and Google all grew massively in the 2010s because we were all reading TechCrunch. It’s essentially a media-technology complex, that builds a virtuous circle for US tech hosting US media to talk about US tech.
And, it‘s this media-technology complex that is becoming increasingly globalised. National broadcasters across Europe, all of whom have been far too slow to get this stuff, are being totally outclassed by the big-budget US streamers (Netflix, Prime) and the small-budget homegrown shows on YouTube. It globalises US culture in a way that, again, doesn‘t happen elsewhere. I am eternally grateful for it myself, but it seems rather pathetic that with all of its many cultures, Europe cannot catch the US in terms of exposing and commercialising what it has.
To be clear, I’m not criticising the US at all in this article. The ability for its companies to execute, as per the examples above, is astonishing. It’s a beautiful, diverse, unique country, I love every minute that I can spend there, and I proudly work for an American tech company.
But, because it’s so good at all of these things, it makes the socio-economic and technological challenge for Europe, that much harder. China vertically integrates (economy / business / technology / media) politically, while the US vertically integrates economically. Both vertically integrate socially. Europe doesn‘t do either at all well.
The fundamental problem that Europe has, is: what is it? Starting a tech business in the US usually requires the adoption of just one language. Once the business is successful, it can then branch out to other languages as per geographic adoption. European businesses in Italy would start with Italian, those in Sweden with Swedish, and so on. The EU has 24 official languages, so building an European audience is nowhere near as easy as in the US. That can’t be “fixed”; it’s just a fact. Starting a business in Europe requires careful consideration of the user base across multiple countries and jurisdictions, and investing in legal and translation support in a way that an English-first big single country as the US simply doesn’t need to do. That becomes exponentially harder when conversational AI is part of your offering.
Let’s stick with AI for a moment.
If you were starting an AI business, where would you do that in Europe? There are clearly some obvious choices, but don’t you also want to keep your business in a smaller country if you’re from there? Again, the single big country of the US simply doesn’t have this problem. To up sticks from (say) Bucharest and move to Berlin is not easy. It’s not impossible either, but it makes the unicorn status of Revolut and Wise all the more heroic, given that their founders moved to from Ukraine and Estonia to London to grow their businesses.
However, even the nascent sector of consumer AI looks like it’s dying in Europe. Mistral is the only big European player, but it already appears to be struggling. This is a massive reputational loss to a continent that is already seen as being a frustrating and frankly poor place to do business. Of course, there are some successes – Revolut, Wise, Klarna, Vinted – but there simply isn‘t enough of them to say that Europe as a whole has a successful tech sector when judged in terms of economic success.
Europe is basically a big bag of complexities — some are easier to overcome than others. Some national and transnational governments like the UK and EU are starting to finally get it, but I get the feeling that — particularly with the EU’s actions — that it’s going to boil down to “soft interventions” rather than the harder, faster policies required to regain the technological competitiveness so urgently needed.
Here are some thoughts as to how that could, at least partially, be achieved.
Pan-European location strategy
Cluster businesses in particular cities and regions, and support people and businesses moving there to grow, with support available to overcome cultural and linguistic barriers, and to internationalise products.
The fintech scene in London has been critical for Revolut and Wise. Berlin has a great ethical tech scene. What about graphics, or connectivity, or medical, or AI / AGI, or futures research? Unfortunately clustering such areas will piss off some other European countries, but it’s for the greater good, given that a company with (say) a Romanian CEO locating his fintech business in London will most likely grow sufficiently to open a future office back in Bucharest.
Single European company registration
The SE model has been great for large companies, particularly German ones, to grow across Europe from one corporate entity. Now do this for SMEs. Make it low/zero tax, zero paperwork, and allow such an entity to operate in any European country. Basically take what Estonia has done to create a pseudo-corporate entity for foreigners, and make it fully legally recognised. This can be managed by the EU but the UK and EFTA countries should be part of it (essentially facilitating the single market through digital means). Thankfully, it‘s an idea that is already likely to be adopted.
Open source
Encourage European businesses to foster open source into their working practices. Open is good in every sense; it delivers innovation, builds community, and creates social value.
One of the biggest open source success stories ever comes from Europe: Linux. Open source should be celebrated, reinforced, and promoted as a way to do business.
Social impact
… and on the point of social value, build companies that have a lasting social value. This is where Europe can really differentiate. Software may be eating the world, but it should also give back. How can European business think and act in a way that is, of course, about building wealth, but also about respect, equality, and environmental stewardship? There must be structures in place to allow for that, in a way that is totally non-disruptive to business growth.
Keep the backbone
Regulate “big tech”, sure, but don’t let such regulation get in the way of European business growth. As US consumer tech companies become increasingly politicised, the EU needs to more convincingly argue a case for such regulation and why it is necessary (given that many consumers need educating on their rights in the first place, even before they understand the reasons for regulation).
Don’t stop doing what you’re good at
If we move beyond “tech” as being short for contemporary communications technology, then Europe actually has some great technology companies: Siemens, SAP, Dassault, Amadeus, Ericsson, Deutsche Telekom, and Schneider.
Similarly, we are great at retail (Inditex, Carrefour, H&M); pharma and bioscience (GSK, Roche, Bayer, AstraZeneca); and commodities (Glencore, Vitol). However, many of these companies are risk-averse and yet yearn to play a part in future technologies. They shouldn’t stop doing what they do, but they should definitely use more of their financial power to invest in startups and support ecosystems.
Create the media-technology complex
As per my earlier point about the US, Europe needs to be much more vertically integrated. This is a golden time to build media businesses which both talk about and support the businesses that need both growth and coverage. European media is so far behind and it hasn‘t understood the part that it could, and should, play in reinforcing its own culture. Startups need exposure and there is no obvious way of doing that in Europe right now. Culture and media is so important to this, and it seems to be tragically forgotten.
I cannot emphasise this point enough. Create spaces for startups, technology companies, and tech in general to be talked about. Europe is fucking pathetic at it.
Build funding networks
Companies need funding, from traditional and non-traditional sources. Build those connections. Be risk-aware, not just risk-averse by default. This is the most challenging point, because while Europe is actually quite good at Private Equity (for example), the money tends to flow into other sectors which are seen as less risky. Encourage founders to connect in order to jointly build new PE companies off the back of successful maturing businesses.
More generally, funders need to be quicker, and better. ElevenLabs is a Polish AI voice startup, already valued at $3.3bn, with funders including A16z, Salesforce, and Sequoia. Why aren’t European funders more involved in deals such as this?
Learn
Quickly learn from failure. Why are European tech companies going bust, or selling out? What are the regulatory, economic and cultural hurdles to prevent that from happening again? If any of the aforementioned suggestions don’t work quickly, then pivot the fuck out of them. Don’t do yet another “3-year programme”-type intervention which is lovely in theory but the world has moved on by the end of it.
A summary of the approach is: be fast and pivot quickly, within the context of both greater risk on the part of funders, and less risk on the part of society. Build your own identity, not trying to be the fucking “Silicon Valley of Europe” every time.
The old slogan for MG cars describes this approach in just two words:
Safety fast.
For more on this topic and to get involved in building Europe’s digital ecosystem, visit the European Accelerationism campaign site.
