A cry for Europe

As the reality of my move to the US in July comes into focus, I have started to look at the “old continent” with an increased sense of poignancy.  Like most Belgians I am a natural cultural chameleon, and I truly think of myself foremost as a “European”.  And I am deeply, deeply concerned.

I am hugely thankful for the benefits of the “European project”, which many people forget.  Freedom to move to Barcelona tomorrow and start a business the next day: how amazing!  And of course, I have seen serious improvements at the micro level in the innovation ecosystem that I live in.  The emergence of smarter angel money such as the recently announced Niel / Berrebi fund, great initiatives like Seedcamp, ambitious entrepreneurs like Daniel Ek and Martin Lorenzton or Christian Segestrale, and so on.  I continue to believe for example the European Venture offers some great return opportunities for the better funds out there.

But at a macro level, I think we are merely continuing a long, drawn-out fall. 

Ingredients of the Decline

[please forgive me for the generalisations]

A Youth with No Ambition.  In a striking poll of striking French students (yes, students strike too, in France), young people were being asked what they wanted to do in life.  The answer was overwhelmingly “devenir fonctionnaire” i.e. to become a civil servant.  When asked what their core concern was, the answer was “whether they would have a pension”.  How depressing.  I had no clue what a pension really was at that age, I just worried about financing my rock concerts addiction.

A People Living in the reflected glory of Its Past. From a surreal conversation with one of the senior people in charge of innovation at the European Commission: “the only reason why you are negative on European innovation is because you are taking a narrow historical perspective.  If you look at the last few centuries, it is undeniable that Europe is the epicenter of ideas and innovation”.  He was dead serious, not a hint of irony.  I replied that Gutenberg Inc. printing presses did not, as far as I knew, create that many jobs in the last few years.  He was not amused.  Tourism, now there is a growth industry…

Absence of Political Leadership.  It’s impossible not to feel disenchanted by the travesty of leadership that the European Union presents to the world and its citizens.  From refusing the outcome of referendums (Ireland) to timorous and hypocritical foreign policy, Europe is being killed by a culture of weak consensus. A technocracy that has taken on a life quite independent of the wishes of the citizens it’s supposed to serve.

Culture of Denial.  Somehow there is no real problem and really we are the only ones who are green and have a sustainable social system.  Far from me to decry the benefits of a more balanced system that has a strong social net and keeps people more than one paycheck from poverty, but I find very little courage in either our political class or our thinkers when it comes to taking responsibility for our our decline.

Continuous Talent Loss.  For one Daniel Borel who comes back and creates Logitech, how many Philippe Kahn’s ?  I know of a number of brilliant guys who say “I would love to come back, but I just can’t face, I just can’t do it here in the same way”.  Just ask Loic Le Meur why he moved to San Francisco.  Sheer exhaustion at the unseen “weight” that the old continent was putting on his shoulders.  The attraction is all about better food than the UK, better health than China, better culture than the US, whatever your passion.  It’s never “it’s a great place to do business”.  Lifestyle attraction (OK, Barcelona does have some winning arguments :-)) can only take us so far.

Major macro challenges to boot

Age and Pensions.  Talk of delaying the pensionable age only has so much to do with the current financial crisis or the offshoring of jobs or other simplistic crap I read in the press.  When I started at JP Morgan in 1996, the fixed income strategist told me something like this: “the overriding macro theme of financial markets over the next 30 years will be the unescapable impossibility of funding the pension gap”.  

Again, the current state of denial means no politician is able to state a simple fact, that a system designed to fund pensions at 60 when life expectancy was less than 70 and we were having babies is an impossible burden when life expectancy exceeds 80.  Here again, Europeans are in denial.

EURO cannot defy gravity.  Politics drove Euro adoption well beyond its natural habitat.  The EURO was a fabulous idea that was marred by a desire to make it the political symbol of the success of Europe.  Instead of stopping at a single market and building from there, it somehow became necessary and desirable for less mature economies to be part of this construct.  So now, poor Greek entrepreneurs are supposed to stay competitive against Germany on merit alone.  Good luck.  I personally think that countries should be allowed to fall out of the EURO and that this is highly preferable to unsustainable bailouts.

We’re fucked if we don’t wake up soon

The rest of the world works harder, smarter, produces more engineers, is hungry, is globally mobile, has inherent competitive advantages we often don’t have.   I really don’t want Europe to suffer the same fate as Japan or to keep kidding itself that it’s holding its own on the global scene because it’s somehow more diverse or some other B/S.

The mantra of the Lisbon objectives sounds increasingly thin and stretched when compared with our reality.  The multiplication of innovation programmes and annoucement of grand technopole initiatives rings incredibly hollow to my ears.

I spend time a few weeks back with the head of innovation at one of Europe’s very best Universities (the local MIT).  He was upbeat but realistic: “sure I keep finding good entrepreneurs and funding them.  They’re smart.  But most of them don’t have a clue what’s going on out there, they are just an order of magnitude away in terms of intensity, speed or passion.  And they really don’t get it, they don’t know what it’s like in Palo Alto or Shanghai”.

It’s going to be a long path if we want to get our mojo again.  We need to embrace change, to take risks, to fail.  Not to hang on to our past in denial of our current failings.  We need to get our future back.

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25 Responses to A cry for Europe

  1. 3marcin says:

    Fred, this isn’t very constructive. And even though I believe a good wake-up-beating is sometimes necessary, I do expect more from you – especially that you’ll abandon us soon. First question from me: what should a young (ok, that’s a stretch in my case, but bear with me) entrepreneurs do in this setting? Pack our suitcases and head for the Valley? That’s not easily done, without the startupvisa project being in place. Stay here and get f..ed by politicians, aging population, and frustrated employees? Not very tempting either.

    Any advice on what to do? Maybe a topic for another post.

  2. Fred Destin says:

    Hi Marcin
    sorry to be depressing you. I think that
    (a) good diagnostics is a first step towards recovery and I see too little of that IMHO
    (b) there is indeed a ton of stuff to do and it’s important not to idealise the valley (e.g. good luck in holding on to engineers).

    We need action at so many levels it’s not even funny, but starting your company and showing the way / going back to lecture at university and give people the holy fire of wanting to start companies / hacking politics and education / fighting stupid ideas from the EC / pushing government to focus on science, education, taxes instead of funding VC’s etc are all things we need to do.

    I am naturally action oriented and positive about outcomes and I don’t think the future is written, but I I DO think we are at risk of sliding into irrelevance. Also think we need more realism about the hard medicine required and a greater sense of urgency.

  3. Filip says:

    Hi Fred,

    I can only concur with your analysis. A couple of weeks ago I lectured in front of a classroom (in Belgium). I never prepare these things because I – naively – assume that the audience will want to know how it is to run a tech. start-up, like for instance Nomadesk.

    So I asked: “What do you want to find out about staring up a business?”… no response!
    Ok, I reverted to my fallback question: “Who of you has thought about starting a business, sometime in the future?” Dead silence, absolutely no response!?

    At that point I got concerned, because I would only be able to entertain this lot (during 90min.), if they’d provoke me with their questioning.

    So, I finally asked why they were not interested in starting up a business.
    At that point a young lady raised her hand – she was not older than 18: “Because, you hardly get any retirement fee”…

    I rest my case,


  4. Tom says:

    Hi Fred,

    I’m not one to comment very often but this is a topic very close to my heart. I left Europe (Belgium) 7 years ago and moved to South Africa and was lucky enough to get involved in a now global internet business. I don’t think of myself as an entrepreneur but i felt the same burden back then that you describe in your post and i think it is a damn shame. I left because i felt i was slowly suffocating and without knowing what i was going to do next. As it turned out, it was the best decision of my life.

    The main difference between Europe and South Africa (Cape Town) is that here there is a sense of possibility (if not urgency). My father has told me all my live i shouldn’t count on any government to pay my pension, yet that is exactly the mentality of most Belgians. Personally i look forward to being economically active till a very old age, and i found europe stifling to say the least. The US is much better in that aspect but at the same time, it is very self centered. The real entrepreneurial hunger can be found in developing countries. They may lack the infrastructure and sufficiently large local markets to be viable for now, but there is the survival instinct that is not present in the first world.
    Not all is lost for europe because it does have many advantages but i doubt it will be a center of entrepreneurship anytime soon. For now, it remains a nice holiday destination for me.

    One of the other commenters asked for what to do? I believe it’s to surround yourself with competent people and move to a low cost base location until you’re big enough to warrant a move to the valley (or anywhere else where you find a high concentration of the resources you need, be it financing or people or customers). Being in the valley is no guarantee for success and I believe too many people move there for the wrong reasons. (or use it as an excuse not to start something)

  5. Pcosway says:

    I think it is very constructive – though not prescriptive. His target is not the entrepreneur, but the society; macro, societal problems are fiendishly difficult to address. And fiendishly difficult for a society to identify and admit to.

    Having lived and worked in the US and Europe, I see pros and cons to both cultures. I love Europe, but Fred’s list of “Ingredients of Decline” is spot on. I am glad, though, to see that Fred does not blame “socialism” or “high taxes”. I’d say they serve as solutions to help deal with the problems that result from limited social, economic, intellectual mobility. More effect than cause.

    If I had to give advice, I’d say “get away from home for a while”. (same advice for Americans) The most successful Europeans I know have all left their home culture – i.e., home town, country – for at least a while. They’re still in Europe, but it seems that have to get away to find the freedom, network and resources to create.

  6. 3marcin says:

    Thanks Fred.

    To add a bit of light to the picture – maybe I do live in a glass(web) jar, but in Poland or Romania for instance – you can always meet very active people, especially in the web scene. Whether proper commercial skills go with that is a different matter. Maybe it’s because CEE citizens don’t have much of a choice – if we would rely on pensions we would probably have to work until we’re 6ft under. Believing anything else would be cheating ourselves (and that’s what many of EU countries are doing).

    Distributed EU funding, if completely missing it’s point, showed one thing in Poland alone – with easily accessible funding, the amount of people wanting to start a business and take (even if mitigated) risk – is staggering.

    Believe me – we will rock you – not everything is lost :)

  7. I can’t agree more with the premises here + even though the Euro has changed things enormously, the way things get done in different countries is massively different – Europe will never be the US as a unified market.

    On other hand that also highlights what I think is the way out of the situation – I don’t think this can be about “Europe” as a whole – the chances of changing the inertia at that level are pretty much nil. What has to happen (and I believe it can) is that hubs emerge which work much more effectively than the rest of Europe (London, Paris, Munich, Berlin, Stockholm – and great plug! – Barcelona :) *)… right now that’s just force of will on the part of the companies there, but hopefully if the clusters get big enough, cities/regional governments might get smarter about legislation / taxes / restrictions and in turn those concentrations might change cultural attitudes.

    By producing a few places like that we’ll do more than any top down change could. Given the %age of the annual EU budget still spent on Farm subsidies, bottom up is the only way to go!

    * – if your city wasn’t on the list apologies – no deliberate omissions!

  8. Thank you for your post, I just want to mention a few things.

    I don’t think the youth of Europe is without ambition, not even as a generalization. I think a lot of “young” people have ideas, goals and dreams; maybe more so than ever. But you can’t expect people to suddenly do great things without somehow “instigating” the change. As far as I’m concerned we’re living in a new world, educating yourself once and then doing that thing the rest of you life doesn’t cut it anymore. But things like education hasn’t change much, if anything it has become even more inflexible. With the recession the schools are packed, house prices are still going up, youth unemployment is at a record high. Then you have the politicians calling young people lazy, spoiled, etc. when they themselves are the ones who messed things up and should take responsibility.

    Now to the good news. I think the startup environment is so underdeveloped that relatively small actions can have huge impacts on the future. Five years ago the politicians complained that no one wanted to engage in politics anymore and number of members in the traditional youth parties were at a record low. Now when the pirate party is third largest party, has the largest youth party and by far the most votes from young males, they’re saying things like “member numbers don’t reflect the true engagement” and that “it’s too easy to become a member”.

    Oh, and I love Europe. Except the Danes. Just kidding :)

  9. Sébastien says:

    Hi fred, great article. I am french, have lived in the US for 10 years and could not agree more.
    What i am wondering is how much of this is new? Would an european immigrant have written similar things 20, 50 or 100 years ago? My point is are the “ingredients of the decline” more “ingredients of staying behind” or is it really getting worse with the last couple of generations? You may have a case of good old European pessimism here! Pessimism could have made the list BTW if you ask me!
    Also what do you mean by “same fate as Japan”? I always thought Japan was better off than Europe, at least on the economic level.

  10. Pascal says:

    Very interesting post, but I would not be so pessimistic. More exactly, I think this is also an US problem.

    When you look 10, 30 or 40 years backwards and analyze the growth difference between Europe and the US, you find that 90% of the 1% yearly difference comes from the demographics. When you take it out of the equations (US women do have more children), the GDP growth difference is just 0,1% per year. So I believe the US share most of our problems (except for demographics).

    Social mobility in the US is lower than in France (meaning that the American dream is not in fact accessible to many, and that it is mostly a dream). GM got bankrupted because of pensions, the Congress regularly complains against an overvalued dollar/yuan parity, and California public finances remind more Argentina than Sweden. The Valley itself is complaining about talent loss (to Asia and also to Europe!) and lack of ambition in young entrepreneurs (shy of IPOs since the SarbOx was passed).

    All the problems quoted by Fred are real worries, and it is a pity that Europe does not try to adress them. But Germany before Bismark was in a similar state (parcelled, politically weak, with no ambition). IMHO, the main problem is a lack of political leadership. Unfortunately, like Fred, I do not see any easy solution.

  11. Dave Kellogg says:

    The saddest part for me is that even when there are big European entrepreneurial successes (e.g., Business Objects, of which I was a part in Paris in the 90s) that very little is re-injected back into the system.

    Despite long odds, hostile tax policies, a lack of system-level engineering expertise, we built a great company but many of those who built it are not in France or, for that matter, Europe, today.

    In Silicon Valley, when you’ve been successful you re-invest your money and time back into the ecosystem. You become a VC. You sit on boards. Or you work as a consultant.

    In France, for example, that’s not really possible thanks to policies like the wealth tax which drives those have been successful out of France and thus out of the system.

  12. Mark says:

    Hi Fred,

    I completely concur with your comments with regards to France. No wonder Loic moved to San Fran. And how many hundreds of thousands of other French to London ? We all know that for VC investments as a % of GDP, France is about 11th in Europe. And whilst we both know a couple of individuals who believe that France has the best system, from my experience France is not representative of Europe or the other respective EU member States in this respect. Having lived in the heart of Silicon Valley I can testify it’s a great place to be for start-ups but France notwithstanding, there are start-up friendly places in Europe too.

    Good luck with your move.

  13. FredericBaud says:

    Fred, Dave, I don’t think that pin-pointing all the things that are wrong in Europe is the first step in the right direction. There’s little chance that it can lead to the course of actions that will transform our economy, it will at best perform some revamping of our institutions to play catch-up with the US that is also loosing a lot of ground.

    My view is that Europeans should not even pay attention to all the things that could/should be better and just concentrate on inventing a new game. The assumption behind P2P Venture, and P2P Banking in general is just that, let’s invent new ways of financing entrepreneurs to help them do the new things that this new world of communication will need.

  14. PasqualinaP says:


    Interesting: though l agree with you on some points and others l fervently disagree and will take issue you with.
    Though you admit to the generalisations, you have been too sweeping with your generalising.

    A Youth with No Ambition
    The youth of today: As with the youth of any generation they always show an lack of interest in most, if not all things, that is why the George Bernard Shaw (26 July 1856 – 2 November 1950) coined the phrase – ‘youth is wasted on the young’. They are no more disfranchised than we were at that age.

    On some topic they are more astute, aware and socially minded than any previous generations.

    A People Living in the reflected glory of Its Past.

    Admittedly Europe does has one of the most hostile environments for start-ups, which deprives it of its essential seed bed of growth, the start-ups and entrepreneurs.

    However, all these companies were once start – ups, were they not?
    Global top 100 companies source CNN Money http://bit.ly/RfsPm
    57 are European
    20 are Asian
    28 are America

    Absence of Political Leadership

    Europe leadership does seems to be floundering at the moment, but give it time and it will bounce back.

    Europe is being killed by a culture of weak consensus. I would have said more indifference.

    However, with all due respect anyone looking for leadership over the past few decades could certainly not say in a conversation without being ridiculed – America has had some great leaderships.

    Culture of Denial.

    Absolute balderdash. Reforms over the past decade have erode the once strong social net, it has now leveled out and is sustainable.

    Health-care, as it should be is available to all regardless of income.

    Long live the safety net for the unemployed, infirmed, the sick and needy.

    Every system will be abused, but l would rather have one in place, than none at all.

    Europe is more aware of the environment, has done more and will continue to do so; I rest my case with the Kyoto Agreement and that fiasco in Copenhagen last year.

    Continuous Talent Loss

    As English is the second language of most Europeans, by default America is the most logical of nation to migrate to. Having left the UK over 20 years ago to move the Netherlands, my next move would be to north America, why, because having learnt another language, l really couldn’t be bothered to do it all over again, it takes time and energy. I do want to live somewhere else, but it would have to be an English speaking nation.
    Ergo logic dictates a English speaking country.

    Age and Pensions.
    Can’t argue with you here, the system is totally f*cked.

    EURO cannot defy gravity.

    Yes, Europe does have to awake from its slumber , but it’s certainly not fucked as you so eloquently put it.

    ………….Europe to suffer the same fate as Japan……
    Never not in my life time, Japan’s downfall was in the words of Richard Katz (Katz 115) “Collusion, regulation, and bank loans to the uncreditworthy all serve as covert social safety nets in a country where only half the workforce is covered by unemployment insurance. These practices shore up moribund firms and industries, sustaining millions of unnecessary jobs…………….
    This to me sounds more like the American economy than of Europe’s.

    All European governments have to encourage start-ups, and Entrepreneurship that is for certain, but just because the last few years has seen some amazing start up in the field of social media, Facebook, Twitter, et al, lets us not forget the crash of the last dot.com The creation of jobs has to come from a variety of industries and not just the ones that are blooming at this moment in time.

    Entrepreneur is after all a French word

  15. Oh, Fred, It’s almost depressing reading this and realizing how much I have to agree with it – pretty much all of it.

    Pascal: yeah i hear the same stats but it just never feels that way… perhaps it’s that entrepreneurs are high performers, outliers, and for those people Europe feels paralyzing whereas Silicon Valley feels liberating.

    Pasqualina: those companies you celebrate are mainly natural resource extraction (let’s gloss over how Europeans came to control so many international mineral rights); banking (a legacy of Europe’s past); and deregulated former state-owned utilities. I don’t think that bears much relevance on the topic at hand.

    I think Fred’s right about the lack of ambition in youth, though. Pascal has a valid point that this is a problem in the US to a degree too. But it’s nowhere near at the level of apathy and lethargy shown in Europe. IMHO

    To those that don’t like to hear the message, I would put good money on a wager that Fred feels devastated that this is true – I’d bet he doesn’t relish it in the telling. Because, to be honest, that’s how I feel. I am saddened to be in Silicon Valley doing things I know would be impossible in my home country. The opportunity isn’t there, and there isn’t the critical mass of entrepreneurial intent you find in Silicon Valley – where it’s inescapable.

  16. stop whining, you belgian
    just fund my french based worldwide ambitious startup

    do your work FCS

  17. AM says:

    Fred, I usually like your posts, and respect your thinking. But some of the generalisations you’re making in this post are so lame it’s not funny…

    I currently live in the US and, well, the past 2 years have been rough. There’s not much going on. Lots of hype, but not much besides the innovative big guys and “yetanothertweeterbased” idiocy.

    Having worked in the VC and PE tech and cleantech space in Europe and Asia recently, I find it more dynamic there than here in the US currently, in quite a few areas outsie of core US competencies.

    Good luck in the US, it’ll be so much better than Europe, right! ;-)

  18. Fred Destin says:

    Hi Arturo:
    This is not a US vs Europe post, this is a post about Europe.

    BTW far from me to suggest the US is without its problems, and know well (from experience) how people idealise it. Gerrymandering, overbearing lobbying, etc etc. A post for another day and not the topic here.

  19. AM says:

    Point taken. But underlying your post (and in particular knowing your approaching move to the US) was a clear parrallel with the US as a reference: Palo Alto, MIT, the entrepreneurs having moved to the US and not having returned, etc.

    Also, I remember reading an interview of Loic Le Meur and I think I recall the number one reason why he said he wanted to move to California was because it was “where it happens” that time around rather than constraints in Europe that had forced him out. I also remember he explained the reasons for his success with some points he made about replicating what had been successful in the US. He was first successful in France/Europe, so maybe not a very good demonstration of your arguments in this post?

    Anyway, I fully understand it was not an EU vs US post, and I shouldn’t have taken that angle, but if I had taken the strict European perspective I would have needed to come up with a long case against several of your points.

    For me the single most important, relevant and accurate point you made in this post (some of the rest like youth with no ambitions and a people living in the reflection of its past I’d argue is pure BS!) is the lack of leadership, and its consequence: integration in Europe is too slow, even though huge progress has been made in the past 60 years, to say the least.

    One of America’s great strengths with regard to entrepreneurs and the economy is a large, developed, and fully unified market speaking one language (or 2, mainly) but having an institutional setup flexible enough to allow local determination in areas like education, tax and civil rights.

    I’m no Victor Hugo, but to me the dream is the same as his, one of some sort of united states of Europe, even if it’s very different from the US setup in the end (and it will have to be). But you can’t achieve that without great European leaders. And since the first 2 or 3 waves of visionary leaders have passed, we haven’t found the leaders we need for the next step of this major transformation of Europe.

  20. Bernhard says:

    A bit of a pessimistic view, but i know where you are coming from. You seem to love Europe. To be honest, I don’t feel that mobile technology/augmented reality/websites are really changing society that much. It makes everything seem so easy, but alot is just waste. Web 2.0 bubble… . In the big scope of things its just another step towards total digitalisation/technologicalisation of society. There are so many opportunities out there still… and there are many paths that lead to ….

    But I agree, the flame of entrepreneurship can’t be enticed enough here.

    Bernhard Sombekke

    ps. Can someone get http://www.seedcamp.com to come to Delft. Its insulting that there is no consideration for NL at the moment.

  21. Todd says:

    “We need to embrace change, to take risks, to fail. Not to hang on to our past in denial of our current failings. We need to get our future back.”- This should be the spirit and the message pointed out by this post.

  22. Fred Destin says:

    @Todd: exactly
    @AM: I don’t expect much from our current political class so we should take our future into our own hands. Change needs to come from within. I would add that we are suffering through (globally) a sad age where government involvement is prevalent in every area and where loss of responsibility, autonomy and control seems to be the norm.

  23. That sounds so depressing, but nevertheless it’s an accurate description of what’s going on.
    However, having the luxury of having lived in a couple of European countries, and regularly visited some more, I’m convinced that there is still hope.
    Europe is so diverse, so many different people and cultures, that creates a dynamic which overcomes these problems. Sure, you won’t change the French students desire to “devenir fonctionnaire” overnight, but if I look another European countries, for example my favorite Sweden, there I see a lot of entrepreneurs growing.
    In the south of Sweden in the city of Växjö has reduced CO2 emissions by 30%, won the “Sustainable Energy Europe Award” and in the same time grew the number of enterprises to 7000 and the economy by 50%!
    Now that’s encouraging, and that’s Europe, too.

  24. Fred–

    You love Europe–that’s obvious in the writing. You’re trying to protect it from itself, it seems, as if you have inside you the ideal European. I am not saying you don’t; in fact, I am inclined to align with you on several key points, but be careful. French youth now looking forward to pension promise (and looking laterally to contemporary politics for the answer) describes to me a population that’s involved. When compared with a concert chaser, my endorsement is clear…

  25. This is spot on. I actually did a weird thing as a young US citizen and moved to Brussels. I worked for the EU and specialize in NLP/Data science in communications. Very advanced and extremely relevant stuff to address the EU’s communication deficit. I started consulting as well but after I just felt it falling off. I was always fighting up stream to introduce new concepts or ideas. I talked with communication and media firms in Brxl/Europe, but they just kept on talking about what social media means and never wanted to make moves, much like the institutions, which are actually more progressive than the private sector here. I started applying to the US and now moving to NYC. I already have very favourable interviews set up. There people seem to like to more productive/effective work and don’t fight it.    http://ow.ly/9nS5q