CAJ#9 Europe's SV

When writing my last post about the seven “ingredients” we would need to build a Silicon Valley in Europe according to Reid Hoffman, I thought “Well, we do have these ingredients”. You don’t remember the seven elements he mentioned? Here they are in bullet points:

• ·         Human capital – entrepreneurs
• ·         University & culture
• ·         Supportive government
• ·         Investors
• ·         Market
• ·         Developed infrastructure
• ·         Global mindset

LONDON

Well, the European global mindset might not be as developed as others and European investors might not be the most adventurous but still we do have the requirements for having a Silicon Valley in Europe. Here is a look at three hot tech hoods on the European continent:

Silicon Roundabout, London

Silicon Roundabout and Tech City are London’s hottest tech hub zones. They have been all over the news in 2012 when Amazon moved there. The Silicon Roundabout is a relatively small concentration of high-tech firms centering on Old St. Roundabout. In 2010 85 new startups were reported there. TweetDeck and SongKick are two of the names people have likely heard that got their start there. Because of Prime minister’s interest the Roundabout area was expanded into a larger “Tech City”, which had its own officialy-appointed entrepreneur manager, and around 200 firms had homes there in 2012. Facebook and Google have placed some operations in this area.

Silicon Fen, a small area around Cambridge and Silicon Corridor, the Britain’s earliest version of Silicon Valley are only two more high-tech hubs in Great Britain, Europe.

DUBLIN

The Irish city is increasingly earning the nickname of “Europe’s Silicon Valley”. The Irish Times noted in 2011 that Twitter's decision to locate its third international office in the city in the docklands area of the city resulted in the zone being called Silicon Docks. In early 2011 Google bought the tallest building in the city, the 15-floor Montevetro building, for $136 million as its earlier local office was too small for its growing staff. In June Nuance Communications, the firm behind the voice-recognition tech in systems like Apple's Siri digital assistant, revealed it was planning an international office in Dublin, leveraging the cosmopolitan and tech-savvy workforce that Dublin is fostering. 

 

BERLIN

In 2011, the New York Times ran a long piece about the boom of tech in Berlin. SoundCloud is perhaps the biggest name you know that has sprung from Berlin’s new startup scene. Germany is in general Europe’s biggest economy, which aids Berlin’s startup scene, though traditional German risk-aversion in business may be an issue.

CAJ8#do it like China

On this picture you can see the original Hallstatt in Austria and the rebuilt Hallstatt in China.

No, I did not all of a sudden change my topic. It is still about the Silicon Valley. All I want to do is make you think about the following question:

Why don't we just rebuild the Silicon Valley somewhere in Europe?

Reid Hoffman, the most connected man in the Silicon Valley and number seven on the Forbes' list of Tech’s Top Inventors published seven“ingredients” you need to rebuild Silicon Valley.

In order to build the Silicon Valley in Europe you need a healthy entrepreneurial ecosystem, which first of all needs human capital (1). Without its entrepreneur the Silicon Valley would be nothing. So where do we get entrepreneurs from? Supermarket? No, we need universities and a culture (2) that allows innovators to set their creativity free. This means that entrepreneurs should not be seen as being unemployed but being innovators. These innovators of course need support. A country’s government (3) should make it easy for entrepreneurs to start their companies. However, not only the government should support start ups. The entire model of the Silicon Valley is dependent on investors (4) taking some risk and putting capital in exchange for equity or debt. Besides the external factors having influence on an area like the Silicon Valley the goal market (5) of a company is of course of high importance. Companies need to be located where its customers are to best understand their needs and decision. For instance is it easier to build a fashion company in Paris than in other cities where fashion does not play a big role. Finding the right city or country to build something like the Silicon Valley implies a developed infrastructure (6). It is important to be able to meet like minded people to work with. Last but not least, there is a final element that many emerging ecosystem still miss: global mindset (7). Visiting other countries, establishing relationships with potential partners early on, and build a product that meet global market regulation and industry standards.

Filling these gaps could definitely lead to a new and, how knows, maybe even better Silicon Valley, somewhere in Europe.

CAJ7#U.S. stealing German brains?

The goal of the German Silicon Valley Accelerator is to find the best German ideas in the field of technology, make them internationally known so they can start their own business in the Silicon Valley in San Francisco, U.S.

I know, I wrote about this goal in my last two posts and you already know that. But think about this goal. Germans like Dirk Kanngieser who is the co-founder and CEO of GSVA, put a lot of effort into finding German brains who were educated by Germans, whose education was supported by the German Government and whose idea could bring a huge boom to the German economy and therefore create hundreds of thousands workplaces. They spend a lot of money on the selection of these brains and once they found the best idea they send it to the United States. They do not use it in German or in any other European country. No, they send them to the United States and weaken the international competitive power of Germany.

So where is the sense in sending the best German engineers to the United States instead of using their knowledge in Germany?

The German public-service television broadcaster ZDF (Zweites Deutsches Fernsehen – Second German Television) discussed this problem on one of its official blogs. They also see the problem that a “brain-drain” could occur in this situation. Also Kanngieser himself claimed that he knows the danger that German engineers simply stay in California once they are successful. He knows that in individual cases they have to accept this fact. In most cases, however, Kanngieser knows that Germany can only benefit from the program GSVA. In the field of technology, most people tend to come back to Germany. There are logical reasons for this. First of all, Germans are known as the one of the leaders in the field of technology and although you might find some Germans overseas, it is the easiest way to find Germans in Germany. Moreover German engineers are cheaper than engineers in the Silicon Valley (good engineers might be used to very high salaries of big and successful companies – see CAJ#4). Moreover Kanngieser points out that social factors like friends and family make German engineers come back to Germany. For most people these social factors are more important for a successful start-up than the rational advantages the Silicon Valley offers.

To put it in a nutshell, Kanngieser of course wants to avoid a brain drain from Germany to California. He wants the young German entrepreneurs to go to the Silicon Valley, gain new experience, benefit from the technological surrounding and then come back to Germany and let Germany benefit from the Silicon Valley.

And if, in some individual cases, German brains stay in the United States then Kanngieser at least hopes that there will be some manufacturing bases in Germany.