European Startups are not out to lunch – My speech at Le Web

During this year’s Le Web conference in Paris I was asked to speak about the European startup scene. Now, I’m not really a PowerPoint kind’ve guy (as you’ll see in the video), but I wanted to show that although what happened in 2007 was a boom for startups and exits, it was also a boom in innovation. The wave of new companies it produced has diversified into a range of sectors that will be with us for years: Cloud Computing, Online Entertainment, Niche Social Networks – you name it. And that has meant that the European startup scene is as diverse as ever. Europeans are increasingly shying away from the “clone” tag and using the interesting hurdles of a diverse market to produce robust businesses. The upshot is that European startups are not, in fact, “out to lunch” – in any way shape or form. And they are using Europe’s complexity to their advantage.

There is a reason many US businesses hit a brick wall when they enter Europe – its complexity. They are used to a big, single market. The best European companies use this diversity to their advantage. If big US companies, grown fat on their large home market, are forced to buy the European player because they can’t break in, who is the winner here? Video by Ustream.TV

Let’s also remember that “Europe” now includes Poland and the Czech Republic – places with increasingly sophisticated economies, and increasingly entrepreneurial. Then there is “Old Europe” (UK, France, Germany). Despite the recession the UK is a dynamic and flexible economy where it is probably easiest to hire and fire in Europe. Just watch the UK produce startups in this down economy – it will happen. Yes, in France it still costs 10,000 Euros and 6 months of red tape to start a company. But you will STILL find some amazing startups like or Vente Privee. In Germany there is a healthy startup scene, especially in Berlin, but taxes remain high. In Athens – despite the amazing weather and easy-going cafe culture – I found entrepreneurs like George Tziralis doing which was spun out of his PHD research.

You must remember that increasingly, as European graduates leave university only to find withered economies (especially in Southern Europe), that they will find themselves either staying in academia and spinning out new web projects or launching outright themselves. Yes, some of it will be out of desperation. Out of a desire to break through some of the older, stultifying social boundaries that exist in some European countries. Yes, in Europe we are fans of cynicism, and sophisticated, dry, black humour! But that does not mean a new generation of entrepreneur won’t start breaking through. This down economy is certain to lead to it.

For instance, in Rome I found Angel/Entrepreneurs like Gianluca Dettori of dpixel trying their damndest to get a startup scene going, resorting to throwing their own conference (TechGarage). In Istanbul I found blogger Arda Kutsal or Webrazzi writing about the Web 2.0 scene in Turkey – and there are more Turkish connections inside Silicon Valley than you might think.

In Berlin, we had a meetup involving over 30 startups and 300 people. In Dublin about 150 people turned out for a TechCrunch event – I got to see startups like Locle and Toddle. Even Barcelona, famous for it’s partying and bars, has an increasingly international startups scene, pooling talent from inside and outside Spain, attracted as they are by the lifestyle and the weather. Nuroa is one example. Even pristine, pretty, Zurich has startups like Wuala and Amazee creating a hub of activity. Over in Amsterdam, eBuddy and others are creating as aggressive a startup scene as I’ve seen anywhere. It is worth mentioning that after my speech (only 10 minutes long) I had people come up to me saying how surprised they were to find out that there were startups as far away as Istanbul.

It is absolutely the case that many Europeans choose to move to Silicon Valley. Let us also remember that there are many amazing entrepreneurs in Europe who CHOOSE to stay in Europe, despite the tax, scepticism from their peers, you name it, because they want to live here. This is where there roots are, their families. You think they care that much about the nay-sayers? Entrepreneurs anywhere aren’t like that – as much in Europe as anywhere else. But in the future we will need more of our own Internet heroes. We need people like George and Arda, all the way up to Nicholas Zennstrom, founder of Skype and Joost, to be on stage at Le Web (he wasn’t this year for some reason) and at other conferences around Europe.

Yes, we do enjoy a good lunch (er, who doesn’t?), but everywhere I went in Europe, the startups I met would take me to their office, have coffee and chat. Nobody ever said lets have a long lunch. In Zurich I grabbed a sandwich with a CEO. In Istanbul a Turkish coffee, appropriately.

The historical context here also needs addressing. Silicon Valley is a classic “cluster” and has had 50 years to develop. It was also born out of the innovations that came during and after the war, and its close association with the military industrial complex.

In Europe, left weakend in the years post-1945 , our “Silicon Valley” never really developed outside of universities and science parks attached to majors cities. Only in recent years, with a new generation, have we created a Silicon Valley “state of mind” and whatever peers we can gather around us in our city.

Yes, there are very large US tech companies acquiring European companies. The accident of birth that is the “scale” and single market that the US has helps it a great deal in this regard. And let’s remember that the Internet took off first in the US, while their free local calls environment enabled people to stay online for whole days, well before Europeans had cheap access. Europe has had barely 10 years so far, if you count the last bubble, to get used to this.

These are not excuses. They are merely important historical contexts.

But on the upside there are few things in Europe’s favour. While the America government refuses to educate its citizens properly outside of the private sector, Europeans have enviable state school systems. The recession will make our economies weaker but our governments are increasingly looking to support small startup businesses as the engines or innovation, as evidence by recent offical recommendations to the UK government. While the US government bails out failing industries, European governments continue to hand out grants to startup businesses on “main street”.

Let’s also not forget that Europe is a highly mobile-oriented tech scene. As much as we all love the iPhone, it won’t end up being be the only player, and anyone who says so is naive.

And things are changing – because, guess what? Things like social networks are bringing together companies. It’s now easier than ever to find other entrepreneurs in Europe, whether it be via Facebook, LinkedIn, Xing, Twitter, or even the excellent the Polish Twitter, Blip. You just have to look.