Missed opportunities by startups, cities & investors
Every time I hear “[insert city name] is going to be the Silicon Valley of Europe”, or “We’re building the Silicon Valley of [Insert Country name]”, I know I have a B-player in front of me I’m not going to do any business with.
Sadly, I’m sick of hearing those sentences time and time again.
There are many reasons why trying to replicate Silicon Valley is a delusion, but these are the main ones:
- There’s only one Silicon Valley, an ecosystem with a unique culture that has matured through decades. Not only it’s on top of tech innovation globally and attracts the best engineers from everywhere, it’s also years ahead of all other tech hubs.
- Imitating any success formula, in the best case scenario, limits you to second place, as you’ll never be able to beat the original playing the same game, with the same rules and less resources.
What this means is that trying to build an “European Silicon Valley” not only doesn’t make any sense when you think about it carefully, but it also subconsciously traps you into a loser mindset that artificially cuts your true potential, and makes you miss the opportunities in front of you.
Having this in mind, I wanted to analyze and give some thoughts on what European startups, cities, and investors could do to build a different, better ecosystem with a winner mentality.
It’s true, Silicon Valley startups have a LOT more capital sources available, with twice the number of deals and significantly bigger round sizes compared to Europe.
Still, I think an important part of what keeps European startups back has to do with entrepreneurs themselves.
It’s very common to see a lack of confidence and ambition, not only in startup founders, but in tech talent in general in Europe.
There’s somewhat of an inferiority complex that’s preventing European startups to achieve their full potential.
Most often I’ve observed this when entrepreneurs face investors and direct competitors.
It’s not uncommon to see founders that overdilute their participation too much, too soon, and for too little capital when funded.
Founders should remember that venture investors can’t make money without startups, and they can only screw you if allow them to.
Even if you don’t feel like it, you must always think and act like you’re at the same level than investors, not below them.
When it comes to competitors, European founders lack the ambition for their company to become a market leader, and the confidence to believe they can be the best at what they do.
An important part of the problem it’s startup founders don’t go and talk face to face with their competitors (especially big corporations) enough.
When you go to events and talk to competitors, not only you’ll have a better understanding of them, but you’ll build confidence in your company and boost your motivation, as you’ll see their flaws and how you can take advantage of them.
I was once talking with a very well-funded (by many prominent VCs) startup competitor from the Valley at a conference, and when I challenged their fundamental concepts, their response was that what I was doing (build an AI that outperforms recruiters) was impossible.
Talk about getting more motivation!
The biggest and most absurd mistake that’s happening in Europe right now is the fragmentation of the tech ecosystem.
Every major European city is fighting to build a tech hub on their own, competing with each other, and almost in isolation.
Nowadays it’s normal to see multiple startups building the exact same product/service, with identical business model, not only in every country, but in every city too…
The worst cases are when VCs come into play, and start a funding war between very similar startups with very low to no market entry barriers and a business model with very thin margins.
In a continent where, despite the EU, you have to target every country specifically, it doesn’t make sense in the first place to back startups that doesn’t bring a unique solution so superior, that the competition can’t catch up with the value it provides and the efficiency of its solution.
What can we do change the situation?
The first and most important step it to connect founders and startups across different cities and countries.
A good example of an organization doing this is Startup Grind, which is building an awesome global community, and last June organized the Startup Grind Europe Conference where I met founders from everywhere.
We must foster communication and interest in what’s going on in other tech hubs, not only the one we live in, so we can create synergies between entrepreneurs and startups in different cities, that help build a bigger and better European ecosystem for everyone.
Tech media coverage has an important role in this too.
Most European Business Angels and VC investors are too risk averse, focused on short-term exits, very rigid and close minded, with a serious lack of ambition, and what’s worse, too many of them haven’t been tech entrepreneurs before.
This, among other things, has led to an unhealthy relationship between investors and startup founders, that not only hurts both sides, but the growth and development of the ecosystem of each city and Europe as a whole.
Fortunately, there are some VCs that are starting to take notice of these issues and mistakes, and are looking for a way to change and improve themselves.
A triple win approach between LPs, VCs and startups is what’s needed for more successful companies and bigger exits for everyone involved.
Building a winner ecosystem
Silicon Valley has a business culture build around engineering, that affects not only how they innovate and build businesses, but how they see the world and how they solve problems/challenges (and which ones).
This culture has produced many of the biggest and most successful companies in the world, but it has also many weaknesses, flaws and limitations.
The best example to illustrate this is its total incapacity to solve the well-known diversity issue.
Instead of limiting European startups to the same engineering vision and reproduce the same mistakes (European style, of course), we should learn from them and, as Bruce Lee said:
“Absorb what is useful. Discard what is not. Add what is uniquely your own.” Bruce Lee
In other words, absorb the good from the engineering culture of Silicon Valley, discard the limitations and problems of it, and add what makes Europe unique, being great examples the rich variety of cultures, languages and long history we have.
A culture embracing the following 5 cornerstone values will transform the European tech ecosystem into a unique, more competitive, world leader in innovation and business:
- Diversity — make it define us: gender, ethnic, cultural, languages…
- Creativity — let’s take full advantage of our amazing creative tradition.
- Efficiency — transform a necessary trait into a competitive advantage.
- Knowledge — science, underestimated and underutilized in tech.
- Leadership — who understands talent & helps develop people’s potential.
Whether you agree with all, some, or nothing I wrote in this post, I’m pretty sure we agree that Europe tech ecosystem is nowhere near what could be, and the necessity to keep looking for ways to improve it, and never be satisfied with nothing less than developing its true potential.
I want to thank Magdalena Requejo for helping me with the images. If you’re looking for a graphic designer, contact her at firstname.lastname@example.org