Capter 6: THE SECRET RECIPE TO REACH THE ABSOLUTE TOP
Creating a gorilla sized tech company — it shouldn’t be too difficult, huh? I mean, the United States has generated quite a bunch of them, each one totally dominating its market. Yet, Europe has come up with none, despite having all the prerequisites at hand. What is the magic formula they have “over there”, that we just seem to lack here in Europe. I’ll tell you exactly what it is.
Following his new book on digital strategy How To Become A Digital Marketing Hero, Rufus Lidman is now translating all his knowledge to the most revolutionary field in the world. A field in desperate need of a digital strategy. In a series of articles, we will get an upclose view of this new mind-blowing market, seen through the eyes of a digital strategist.
>> Chapter 1: The Revolutionary Technology That Will Change Your Life
>> Chapter 2: The Birth Of The Future
>> Chapter 3: A Real Revolution In Practice
>> Chapter 4: A Metamorphosis You Are Not Prepared For
>> Chapter 5: The Apocalypse Of The Establishment
So, we’ve obtained a sense of what the blockchain is. We’ve gotten a feel for its first most speculative properties, with all from the early days of cryptocurrency to the explosion of crypto and ICO’s, that took place last year. We have also seen some of the reactions this explosion provoked from the aging dinosaurs.
We have after that sensed an inkling of the revolution that it all entails. The first ripples on the surface, as well as the more substantial applications showing the way of what’s to come. Which is also causing quite a rude awakening from some of the powers of today.
We have since moved forward even further, and arrived at the question of applications and what awaits us in the near future. With a data integrity that will make you richer and the gorillas poorer. And how the new technology will eliminate each and every middleman, who until now has been skimming off the top.
We have lastly widened the analysis and seen which consequences this will have on a broader scale. Not only for old centralized companies, but even for the most centralized entities in the world — nations themselves.
So the big questions that remain are — what use is all of this? Is there anything positive? What can we hope to achieve? Is it good for you as an individual or is it just another way of increasing efficiency for the well-to-do global elite?
In the following chapters we’ll address exactly these questions. First, for the one who thinks with their wallet. Then the one who thinks with their heart.
Europe — A Strong Tech Continent?
Slowly waking up from the biggest tech event of Europe, Slush, with 20 000 investors and entrepreneurs from 130 countries (plus a bunch of interested observers, a few presidents and some royals). A couple of high-intensive days, but what was the most important question asked? And what was the answer?
The most frequently addressed issue during the event, was how the digital boom of the past few years throughout Europe has led to overall growth as a ”tech breeder”. And that now we’re all ready to take on the world. The biggest question being if Europe is set to create the next digital gorillas in the vein of the United States or, even more so lately, China. Ideally, Europe should give birth to the next FANG-company. FANG being Facebook, Amazon, Netflix and Google, the four biggest tech companies trading on Nasdaq.
Our mutual hero and founder of Skype Niklas Zennström mentioned that there have been a record amount of investments this year amounting to 2 billion USD in European tech companies. And that they now have every opportunity to make it big. “You have everything in Europe to create billion dollar companies, ten billion dollar companies or maybe even hundred billion dollar companies”, he said. All as a direct result of an amazing year, that led to the growth of hundreds of potential unicorns across the continent.
Looking at it a bit closer though, you’ll see that only 50 of these companies are evaluated at over 1 billion USD. As a Swede, I can proudly note that Spotify is in the top position and the top three all have significant ties to Scandinavia. Though, our European brethren in the field all claimed Europe was very well set up to spawn the next generation of gorilla-sized companies (that is, a company evaluated at more than 10 billion USD and holding a global dominance in its industry). But if you look more carefully, history paints a very different picture.
Of the ten most highly valued companies in Europe, not a single one is a tech company. On the other hand, if you look at the highest valued companies in the United States, the five biggest ones are tech gorillas, and even in China, the two largest are tech giants.
Europe And The US Are The Same Only In Theory
Despite this, we heard not a peep about what made European unicorns less than 50 times smaller than their US cousins, whether it be cultural or structural.
Personally, I have one foot in Sweden, the other in the United States. Sweden, a country that has created six unicorns, which, per capita, is the highest in the field. And in absolute numbers, we’re talking unicorns to a value greater than the entire country of Germany. And the United States, a nation that has delivered by far the biggest number of unicorns of them all. To me, the answer is given.
In Europe today, we have a higher level of optimism about technology. We also have good access to venture capital, with larger amounts, not just from ourselves, but from the US and Asia as well (the latter having increased spending by 110% this year). We have heavy research within the most important deep tech ABC areas (AI, Blockchain and Crypto). We have access to one of the most well-trained and well-educated talent pools in the world. And we have an enormous interest in entrepreneurship and tech businesses down to the youngest generations.
The will is there. The skills are there. The structure was there.
In the final days of the last millennium, Europe managed to standardize telecom and agree on a mutual network (GSM), that turned Ericsson and Nokia into the last true digital gorillas of Europe (again, Scandinavians), while in the US they were still using beepers. But in the dawn of the new millennium, the power balance has flipped completely. The US has a domestic digital market all its own, while the EU has fallen behind with scattered and confused industries.
There’s something else missing.
I’d argue it’s just as much a matter of soft factors such as what you’d call culture. If I could speak freely, I’d call it a matter of balls. Since I’m a man of decent upbringing, I’ll rephrase. Let’s say this. Despite all the structural prerequisites, despite the talent pool and despite the sincerest desire to achieve greatness, the attitude and culture just isn’t there. Us Europeans just don’t ”have what it takes” to become the digital champions in the areas of true importance.
At least, those of us who do have it are few and far between. It’s both a matter of individual psychology and a broader scale of societal culture. As much as we have all the hard potential, we just lack the nerve.
“While for us in the valley, for good and bad, the sky is the only limit.”
The speakers who best lived up to the tagline ”biggest tech event of Europe”, were of course not any startlingly self-aware europeans, but complete outsiders. Mood Rowghani from venture capital company Kleiner Perkins, as well as Ankur Jain, founder of Kairos. Both engaged in extremely American gigs, but despite this (or perhaps precisely because of this), they were the only ones at the scene who truly stood out.
They managed to pin down the issue in an instant. Europeans are suffering from what they called a ”socialistic” culture. That in Europe, there’s always this perceived invisible boundary for what can be achieved. A hard limit, a maximum level of how far you can take success.
“While for us in the valley, for good and bad, the sky is the only limit”.
With these words ringing in my ears, I was half an hour later sitting with a well-regarded European venture capital representative. I explained that in my company, AIAR, we are in a hurry. Both to nail down the strategic window for the ”Spotify of Learning”, as well as to take control of the field at large immediately. Since no one knows how long the window to do so will remain open. I put my cards on the table and told him we have a clear up-or-out strategy, where we know that the winner takes it all. I told him we’re not interested in being a company that pulls in eight digit profits, when there’s room for so much more. I told him that we know there’s room for a maximum of two or three gorillas in the field and that we are going to be one of them.
”Well, no one can accuse you of being humble at least”.
Just an hour later, I’m in a meeting with another European ”angel” investor who tells me he doesn’t like losing money, so he only invests in things he ”knows” will be a success.
”Unfortunately, you have to learn to expect some waste, but at least 20 out of my 25 investments will do well enough.”
And suddenly it dawns on me. The Americans were right.
With a culture that engenders people, with few exceptions, not to reach for the very top (Zlatan Ibrahimovic being exempt) and minimizing risk (”at least 20 out of 25") instead of maximizing opportunity (”we’ll deliver the next Google!”), most of Europe has a massive social handicap, to put it bluntly.
Suit yourselves, you’ll never win, while money from Asia and the Valley stand to rake in more and more of the ABC-winners in your stead. You won’t lose too much, but you’ll have a snowball’s chance in hell to bear the next Google, the next Tencent, the next Amazon or Facebook.
Sad, but true. Or at least probable.
To Not Just Make A Difference, But To Actually Change The World
The rest of you who nonetheless have a little — and pardon the expression again — ”balls”, buckle up for a ride that will break every social inhibition and cultural crutch that our centuries old continental culture has crippled us with.
The big point I want to make here is that we all, with the help of second gen internet and game-changing ABC-technology, have a golden opportunity to straighten this ship up.
But only if we decide to stop trying to just ”make a difference”, and instead actually decide to change the world entirely.
At least that’s what I’m going to do.
And it won’t just be an amazing, incredible journey lined with success after success. It will be awesome and a fun time to boot. And that’s what everyone should be doing. Don’t aim to be the 51st unicorn of Europe, but be the first gorilla! The first company to reach the $10 billion level. The first tech company to qualify as being in the top ten of companies on the continent.
Humble or not.