The author's explanation for the lack of european tech companies is that almost all software relies on business models other then charging money, and for various reasons european companies aren't able to use these business models. This doesn't seem sufficient. For three of the five big US tech companies - Microsoft, Apple and Amazon - the main business model is charging money. If the author's explanation is correct, these companies could could just as well have been founded in europe, yet no company even approaching their power and influence has been.
Microsoft Apple and Amazon date from a time before saturation internet access, Amazon being created right at the start. Back then internet advertising wasn't a plausible business model. Even when Google was new it wasn't taken seriously in America. Google tried to sell to Yahoo for $1M and they said no because everyone knows you can't monetize web search.
Once it became clear that ads were a bit more profitable than that, the success of Google/FB led to a tidal wave of VC capital searching for opportunities that looked just like those. So suddenly everyone is trying to give their service away for free and make it up on {ads, volume}.
I guess I feel very mixed about this, being a European who is now starting his own software company (taking a break from coding for a few mins at the moment). I remember when I was in my early 20s, before YouTube was acquired, my mother pointed at it and said, "Why couldn't you have made that?". My response was to laugh and say, mum, look, you can't pay for video streaming using banner ads. Streaming is expensive and banner ads don't earn much money.
Was I right? Wrong? I still am not sure. YouTube may or may not be profitable. It was extremely ambiguous to what extent Google's businesses outside of web and content ads made money when I was working there, although that was years ago, so of course it may be very different now. Obviously the YouTube founders did very well out of it, but their business model was basically "sell the company to someone who can save us, or die trying". Whether it's European culture or parental expectations I don't know, but deep down I didn't and still don't feel like that is a truly honourable way to create and run a business. I would feel guilty and bad if I were hiring people to a company without having the foggiest idea of how to ever pay their salaries, nor would I feel comfortable pitching to investors a firm whose business model was clearly unworkable. Yet, this is the standard business strategy in the Valley.
Years later I found myself in the offices of a16z. I wasn't there to pitch, although the receptionist assumed I was. I'd been invited to discuss an app I'd written that had attracted their attention. I told them the app was open source and I wouldn't take their money because I had no idea what its business model could be.
A mistake? Maybe. European? Very.
I could now go raise funds for my new venture, and maybe at some point I will. Plenty of investors have expressed interest. But, fundamentally, I still don't want to. It feels somehow like "cheating" to create a business that doesn't really make money. Or if not cheating then at least somehow not quite something you can be proud of. Certainly, the American way of creating a startup that loses money for years would not at all impress my friends, family or fiancé. They would in fact see that as failure, not success.
And I'm OK with that. So I'm probably destined to create another small European software company that may or may not one day sell to a bigger US firm. Don't get me wrong. I dream big. But deep down I know that if I attract too much attention I'll always be at risk of being steamrollered by a "success is failure" US VC backed company that has no idea how to become sustainable, but might somehow stumble onto a plan anyway and if it doesn't, well the VCs will force one of their other investments to make an acquihire and somehow it'll work out so that everyone can save face. Bankruptcy is after all, basically unheard of in the Valley, and spending other people's money for a decade is lionized.
> Microsoft Apple and Amazon date from a time before saturation internet access, Amazon being created right at the start. Back then internet advertising wasn't a plausible business model.
That doesn't explain why even that time, no such companies were founded in europe. I guess your thoughts on profitability are an attempt to explain that? I can't find data on when these companies became profitable, but at least for Microsoft it seems likely that they became profitable after three years[1].
Yes, Apple and Microsoft are from a different generation when the rules of business still applied. Even Google is from the tail end of it, although they needed vast VC injections in the beginning and didn't really have a workable business model (but they knew it and saw it as a problem, hence their attempt to sell to Yahoo).
But there were lots of tech firms founded in Europe in the 1980s. ARM is the descendent of Acorn Computers which was the UK's attempt to compete with Apple, and that was just one of many examples. Acorn developed its own computers, its own RISC OS and so on.
If you look at the history of Acorn and the interviews with its founders, one of the things that killed them off was a small home market, very limited ability to sell into Europe and it being too difficult/slow to expand into the USA due to a variety of factors. So a lot of what you see discussed elsewhere on this thread.
And obviously Finland produced Nokia which ruled the roost for a long time in mobile, but again, most Americans don't realize that because Nokia managed to dominate everywhere except the USA, where a variety of structural barriers hindered growth.
SAP dates to that time too, I think. Possibly even earlier.
