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Why is Europe no longer innovating?


A little test. Name a European dotcom that has changed people’s life in the last years? No clue? With only a minor change, substituting European for American and the list would be long: Google, Facebook, Twitter, LinkedIn, Zynga, etc.

Even when innovations make it over the ocean, Europe is limited to doing business development, sales and some limited support. Look at the job pages of the big dotcoms and you will see the VP of Engineering in California and the business development manager in Europe. So the future is defined in California and Europe is just a market to sell the innovations that have been tried and certified in the USA.

Most people would not care less if Zynga would come from the USA or Tongo [No harm meant to anybody from Tongo]. However Europe is missing out on some major innovations that can boost the productivity of any small or medium enterprise. Think about Square, Quickbooks, Dwolla, etc. as examples.

Europe some years ago was leading the mobile and telecom industry with Ericsson, Vodafone, Telefonica, Orange, Deutsche Telekom and Nokia being clear examples. Nowadays it is Apple, Google, Facebook, etc. that lead the mobile and telecom revolution. Many might not realize it but Google has not only disrupted the mobile operating system market. Google has the first global software-defined network in the world. Google is writing history and being a major driver behind Openflow. Also the USA is leading together with Britain in White Spaces and other future wireless innovations.

What needs to change in Europe?

The European Union and local governments have always had a preference to over-protect the communication industry. Many laws protect former state-monopolies from getting real competition. The European Union should really look at White Spaces as a way to bring much-needed innovation back into the industry. Instead of selling the licenses to White Spaces to the usual suspects, the European Union should declare White Spaces as a “free” WiFi on Steroids alternative to LTE. White Spaces can be the solution for rural areas that want to get 21st century broadband connectivity.

Also the laws that oblige telecom companies to give national service are outdated. We do not have gigabit fiber-to-the-home in big cities because competitors are obliged to give universal service. Why not let 10 competitors fight without obligation to connect everybody? The free markets will connect those people and companies that are economically viable. By obliging universal connectivity, everybody is connected to a slow network. Leading to European broadband mediocrity.

Telecom companies that have started to set-up venture capitalist offerings are going the right way. Unfortunately too little money is poured into new ventures. Telefonica’s Wayra is offering $30-70K during a 6 months incubation. That means €46K to €109K on an annual basis as seed capital. What can you buy for this kind of money? Virtually nothing. Only one or two people teams at most. Great people would earn more money in their day job so they are unlikely to jump on Wayra. More realistic numbers would be €150-200K, which would allow teams of 3-10 people plus potential for hardware and other types of innovation. The chances that a 2 people team on a small budget makes a world-changing impact are very slim because you need multiple skills to really innovate.

Crowdfunding  should also be high on the list of the European Union. Let people participate in ventures as very small minority stakeholders via collective seed investment. Give Europe some chance of building a European Kickstarter on steroids. Cross-European laws would need to be put in place for this.

We need European Entrepreneur Heroes as well. Europe needs a European version of Steve JobsJeff Bezos, Larry Page, Mark Zuckerberg and Marc Benioff. People that can convert a vision into a multi-billion industry. People that will be role models for future generations.

If Europe wants to leave the current recession behind, it needs to think about moving away from farming subsidies into investing in innovation. We need modern digital laws and a general legal simplification to allow more entrepreneurs to start innovative companies. European corporations should set-up more venture capitalist funding and crowd funding should be high on everybody’s agenda.

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