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Europe has a chicken-and-egg startup problem

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I’m a European, in the full, quixotic, let’s-all-be-friends sense of the word. I prefer the present, highly imperfect European Union over the past of nationalistic disunity and warmongering strife. As a fan of the so-called European project, I want to see it do well and prosper, and as a keen observer of the tech industry, I know that the quickest route to economic prosperity is by developing and owning the technology that people use. Europe used to be really good at that, but it’s lost its way, and now I fear that it may never recover the leadership role it once enjoyed. That’s because the next wave of great tech companies will grow out of the incumbent leaders we already have.

A common misconception about tech startups is that they sprout out of thin air. It’s romantic to think that all a person needs is a good idea and the communication skills to convey it to interested investors, but the truth is often more prosaic. Successful new businesses are usually offshoots from established ones. Nest, the smart home appliance maker that was acquired by Google for $3.2 billion last year, was started by a pair of Apple veterans. Pebble, the most-funded Kickstarter project of all time and a pioneer in smartwatches, was built on the experience of creating the BlackBerry InPulse watch. The guys who built the Paper and Pencil drawing tools for the iPad had previously worked on Microsoft’s canceled Courier tablet. And Facebook’s biggest acquisition to date, the $19 billion WhatsApp messenger, was conceived by a pair of ex-Yahoo engineers.

Europe wants to grow and nothing grows faster than tech

Europe today finds itself in need of exactly this sort of young, vibrant businesses, but it lacks the ecosystem of established leaders that’s crucial to their proliferation. One of the reasons Silicon Valley keeps producing profitable new startups is because the profitable old guard is already there — and what better way to learn about the gaps in a given market than to work at the market leader? Apple, Google, Microsoft, and Amazon: all the modern giants of software and services are US companies. Samsung, Lenovo, Foxconn, and Sony: all the manufacturing leaders are in Asia. I look for similar strength in Europe, and all I see is Spotify and… Archos.

It all comes back to the importance of mobile technology. We usually talk about it in future terms, but it’s the past profligacy of European companies in this space that is hurting the entire continent’s chances today. Nokia and Siemens were responsible for the first GSM phone call way back in 1991, and together with Ericsson led the development of the mobile industry for a long time. But that momentum hasn’t been sustained, and today all three have exited the consumer electronics market, vacating the space for Apple’s iPhone, Samsung’s Galaxy series, and China’s upsurge of affordable Android handsets. Even so, Nokia’s legacy persists in the shape of the Jolla smartphone and efforts like the Leikr GPS watch. Neither of them has really grown into a success, but their existence supports the notion that even a failing giant stimulates more new ventures than having no giants at all.

The best tech incubator is an already thriving tech industry

European authorities have been putting in a valiant effort to reverse their tech laggardness, but none of it truly addresses the absence of real industry leadership. Yes, there are now startup accelerators, incubators, and enablers in most European capitals. Yes, London is trying really hard to get people to talk about its self-branded Silicon Roundabout. And yes, Wunderlist and SoundCloud have emerged from Berlin’s creative ferment. But then again, Wunderlist maker 6Wunderkinder has already sold out to Microsoft and SoundCloud faces the daunting challenge of taking on Apple Music and a litany of other services in its quest to connect fans with musicians (and make money in the process).

This is not a new problem for Europe, and it’s a topic that plenty of thought and digital ink have been expended on already. What I rarely see, however, is a recognition of how important an initial advantage is to ensuring prosperity in the future. Just think about the fact that most Europeans today will be using an American-designed, Chinese-manufactured smartphone to check their American news app for the latest rumors about the next Hollywood blockbuster. The services and companies that are dominant today, whether it be Apple, Facebook, Netflix, or Twitter, contain the best seeds for those that will come in the future. The best tech incubator is an already thriving tech industry.

If there’s a lesson to be drawn from this repeated experience for Europe, it might be that it should have taken greater care of the successes that it had. We’re now locked into a trend of self-reinforcing American dominance, which continues to renew itself through a culture and heritage of innovation that keep getting passed down through corporate generations. Competing with it seems like an insurmountable challenge, but a good start will be to nurture the talent and courage that’s produced the likes of Spotify and Deezer, and to try to build on it the same way that American entrepreneurs have done.