[fredm-de]

While it is true that securing funding for new ventures is much easier in the US compared to Europe, the question how much this contributes to the building of successful and sustainable companies is still unanswered.

The fact that European companies can't afford to burn through cash for decades might lead to better resource/talent allocation. This is visible in the very healthy deep tech industry in Europe.

Right now European companies are very good at solving narrow but difficult problems, whereas American companies seem to be much better at creating consumer facing technology.

[pjlegato]

If the "deep tech industry in Europe" refers to bloated, bureaucratic legacy enterprise software like SAP, European tech is doomed.

They only continue to exist because of cronyism, forced sales to large organizations through personal connections; and expertise at navigating the stifling local bureaucracies of their countries.

Those places aren't good at solving narrow problems. They are at best mediocre at addressing the problems of 40 years ago, at a price point far higher than smaller and more innovative companies could do so. They innovate approximately nothing in terms of product design or value added.

Nokia is another cautionary tale of what goes wrong with that model.

[ManuelKiessling]

Just a hunch, but you and GP are probably partly talking past each other: “tech” for some essentially means software/SaaS/cloud/mobile, but for others, it includes a lot more, like all sorts of physical-world technology engineering.

[FirmwareBurner]

I agree with you but there's a reason Nokia died and SAP and Accenture live on despite both not doing innovation well.

Nokia activated in the cut-throat consumer space and had insane competition. SAP avoids both these traps and is in no threat of going away anythime soon like Nokia did.

[FirmwareBurner]

>the question how much this contributes to the building of successful and sustainable companies is still unanswered.

Is it unanswered though? Out of TOP 100 companies by market cap[1], 80% of those are from the US, with the wealthiest being tech. EU only has few companies there ranging from oil, luxury goods, cosmetics, drugs, with only Siemens, SAP, Accenture(?!) and ASML being the only major EU tech companies a large and wealthy continent could muster, with SAP and Accenture not being known for much innovation.

The US's 7 largest tech companies alone, Google, Apple, Microsoft, Tesla, Nvidia, Amazon, Meta, are worth more than Europe's entire tech sector combined including UK, Switzerland and Norway. It's not even a competition. It's like Muhammad Ali versus your kindergarten bully.

But hey, at least we get paid sick leave and free healthcare.

[1] https://companiesmarketcap.com/

[alephnerd]

> Accenture(?!)

They changed their HQ from Chicago to Ireland for tax reasons.

[happytiger]

The word you’re looking for in narrow vs broad is scale.

The more heavily regulated and concentrated European capital markets and more challenging regulatory environments tend to make broad risks less attractive, leading directly to more entrepreneurs betting on readily available opportunities. This is simple incentive: the higher the risk the more you need a sure bet to take the risk or help just as importantly convince those with venture capital take the risk with you.

This risk management choke tends to encourage more specialized or “narrow focuses” as you have identified.

So, you see risk directly shaping the types of companies that are built, and the nature of the businesses that get created tends to be different.

Unfortunately, narrow, more certain companies tend to work better in specialized markets, limiting their scale, so while you end up with many leading companies you also tend to miss out on broad transformational events and ground floor opportunities.

This is my own theory and learning, so very open to criticism.

The American system tends to be messy, wasteful and speculative with a great deal of highs and lows and a lot of failures. The high lubrication of liberal employment laws, liberal bankruptcy policies, and a culture of small angel investors in many cities encourages experimentation. The downsides are obvious, but the huge amount of experimentation is what drives the economy, as there also exists a massive and ready acquisition pool of large companies and private equity ready to exit those founders.

That generally creates a virtuous cycle that is much larger than its equivalents in Europe, furthering the advantage of scale (just look at ycombinator: blank checks and plug-and-play support for good ideas is almost taken for granted in the US). The cost is a huge, wasteful and messy system that tends to deprioritize labor and financial stability for its workers on the whole for this system, but that’s one of the benefits.

Of course all of this is later stages, as the sources of funding for most startups in the world in the earliest stages are in fact banks and personal savings:

https://www.ondeck.com/resources/startups-really-get-money-s...

So I really think a lot of the effect is in the amplification of early stage experimentation that gets traction not necessarily in the support of early stage experiments prior to investment worthiness. This whole question deserves and even deeper comparison.

I do not mean to advocate for deregulation, just make an observation of what is working (and what is not).

[richwater]

> the very healthy deep tech industry in Europe.

Is this a joke...?

[hnu123]

> This is visible in the very healthy deep tech industry in Europe.

How can it be deep if new ventures find it difficult to secure funding? If you can't continually grow new companies, you can't develop much depth.

> whereas American companies seem to be much better at creating consumer facing technology.

America's B2B tech sector is just as dominant.

Europe certainly has the population and wealth to be a major tech player, but they've underperformed.