Entrepreneurship and research essential for Europe not to loose the competition

by | Nov 24, 2010 | Business Insights, Events, Personal Insights | 2 comments

Some weeks ago I attended a meeting with Burton Lee, a Stanford University professor and Super Angel, who visited Poland. I was lucky to be present at a very intimate presentation and discussion with him in Gdynia. With the characteristic pride of an American he explained why Europe is legging behind and why this is probably not even going to change. But something will have to change if we don’t want the US, India and China to rule the world. Both entrepreneurship and research should lead to the European recovery.

US based companies change the rules of the game

You could question whether or not Europe is doing so bad. With one single example he showed what’s going on. In the past two years both Apple (iPhone) and Google (Android) gained billions of dollars of turnover, while Nokia lost. Just by thinking different they changed the established market. See my post about the changes within the mobile market for more details. Besides you only have to point to several recent success stories like Microsoft, Google and Facebook. The US based companies are setting the new trends.

Burton Lee focussed in particular on Poland, but pointed out many issues in other European countries as well.

In the US you can be proud when you are an entrepreneur

One of the big differences in between the US and Europe is how they treat entrepreneurship. If your company fails this won’t be treated as a personal failure. The basic attitude is that you should learn from this. In Europe you will be a looser and besides they might even try to take your private money to cover the losses.

Serial entrepreneurship (setting up multiple companies one after another) is the trend in the US. A failure among them is not an issue. Without taking risks it’s hard to he successful.

This entrepreneurship starts already at the university. Stanford University is 100% private money funded. As a lecturer, researcher or professor you have to commit to their high standards. Research drives them, but everyone has to acquire his own funds for a research project. In fact you have to be an entrepreneur to be successful at Stanford. That’s why many successful companies have their roots at the engineering faculties of such universities.

We should aim for a healthy innovation ecosystem

Burton showed the impact these universities and their business spin offs have on the local economical development. It’s amazing to see how many companies are more or less related to Microsoft in the Redmond area. Microsoft even supports these companies by buying their products, meanwhile monitoring the success of their product. Sooner or later they might be willing to buy it. These companies have been started by former Microsoft employees. For Microsoft this means they can rely on a certain knowledge, professional and quality level. The entrepreneur is able to run its company with this support. In Poland this wouldn’t work like that. Due to the fact it’s a low trust society a former employer wouldn’t think about a company started by a former employee. As we can learn from the US situation this is a real pity. Together we would be stronger. From idea generation and talent creation up to venture capitals it has to be one healthy innovation ecosystem.

Companies like Facebook, Google and Amazon are doing the same. They follow new startups and invest in them together with business angels. Once successful they buy them. Such an ecosystem is lacking in Europe.

So, something has to change in Europe.  As an example Burton Lee pointed out to the current situation in the UK. The government is planning to save a lot of money on education. The only good way for universities to survive will be adopting private funding like in the US.

And the same will be applicable for other universities in Europe. Before the meeting in Gdynia Burton Lee had a panel discussion at the Polish Investment Forum with representatives of Polish universities. At the end of the discussion he had to conclude they completely didn’t realize what they should focus on. The main part of the discussion was about the perfect curriculum. But as you might understand by now it should have been about how to stimulate research and entrepreneurship. Innovation is what is lacking in Europe.

Even the venture capital market clearly shows the difference

As an entrepreneur it is hard to gain funding these days. Banks will hardly support you, so super angels and venture capitals are the main sponsor of entrepreneurial ideas. The software market can still count on intensive support of Super Angels. Often these Super Angels are former employees of earlier successful startups who sold their shares. Especially mobile and social apps manage to acquire startup funding. But the story was not as positive as it sounded at first. Just about 1% of all the funding requests receive funding in the end. If you have a good idea it’s best to develop and sell it first yourself. In case successful it will be easier to acquire venture capital.

Thanks for an inspiring discussion

I really liked the discussion with Burton Lee. It was very useful to hear the opinion of an outsider. Although, during the presentation we found out he has a lot of inside knowledge from the past as well. He understands the complex European structures very well. I believe it’s good to listen to people like Burton Lee and see what we can learn from them. It won’t be easy to change, but it looks like it’s the only thing we can do. Fortunately, it looks like the European Union realizes something needs to change as well. The programming Transforming Europe into an “Innovation Union shows the ambition.

2 Comments

  1. TimOnWeb

    There are lots of differences here:
    1) Psychologic. To above mentioned I’d add that americans aren’t afraid to invest, if they know that something will bring money in the future they won’t be greed: buying a service/assets or investing in something. This stiulates economy on a whole.
    2) US Market is the biggest consumer in the World. And this can’t be changed. In US they have 300 000 000 citizens which are more sales oriented and rich than 500 000 000 citizens of EU.
    3) Most products and services trying to enter US market. Even european music bands are dreaming about conquering US. I don’t think there is an equal thirst to enter european market.
    4) And in the end, a bit comic, but true … they are printing money… Europe not.

    Reply
    • PetersOpinion

      Hi Tim, thanks for adding your thoughts. For sure they are true, but
      do they really explain the difference?

      Reply

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