I think the real reason is language. Europe does not share one language. There is no European media, no European public, hence creating a brand and reaching a lot of people is infinitely more difficult than in the US.
French consumers will learn about a German startup only if it gets picked up by the english speaking media (which may take years).
I think European startups should look to Isreal for a clue. Israeli startups don't have a home market to speak of so they go straight for the US market.
Language is one reason, yeah; I'm not sure how strong a reason it is overall.
You know one very serious problem? Shipping. Amazon can sit in California and send something cheap anywhere in the United States, but if I'm sitting in Hungary and want to buy something in Germany, it might literally be cheaper for me to just drive there and back to get it, depending on the item. That really carves up the market into minuscule chunks.
Someday soon, somebody is going to start offering low-cost shipping throughout Europe and they're going to end up billionaires.
French consumers will learn about a German startup only if it gets picked up by the english speaking media (which may take years).
I think European startups should look to Isreal for a clue. Israeli startups don't have a home market to speak of so they go straight for the US market.