No matter how much we try to avoid it, people seem to always revert back to comparing the European tech scene with that of Silicon Valley. In many ways, it’s a bit silly and irrational. Like comparing apples and oranges. After all, the European market is highly fragmented in dozens of ways and faces numerous challenges that the US market does not. Then again, it’s a necessary step in understanding why entrepreneurship thrives in certain environments and not others. (By the way, I’ll be moderating a panel on this very topic at the Advance Conference in Germany later this month.)
The Transatlantic Divide.
Clearly, Europe and the US are separated by far more than the Atlantic Ocean. European entrepreneurs love to generalize and complain about how local investors are risk averse, how taxes are insanely high and legal procedures are inefficient and overly complicated – and in many ways they are right. The incentive structures in Europe do not provide the same types of protection to entrepreneurs and investors as they do in the US, which makes entrepreneurship all the more complicated and risky. But it’s difficult to pinpoint the exact source of the so-called “problem.” Sure, it is easy to call a European investor risk-averse – but it’s simply because they aren’t protected and incentivized in the same way as they are in the US. I won’t bore you with all the details of my Master’s dissertation here (which I eloquently titled “A Comparative Approach to the Institutional Challenges Facing the Development of European Venture Capital”) but consider the influence of socialism, civil law and coordinated market economies in Europe. The deeply-rooted historical foundations of some of these systems makes it near impossible to import what works in the US without upsetting the local systems – which are not homogenous throughout the European continent. Also, they contribute largely to the types of innovations that are possible to implement and successful in different economies (highly recommend you read Hall and Soskice).
Startups are for losers.
One of the key cultural differences between entrepreneurs in Europe and the US has to do with Failure (yes, capital “F”). I’ve spoken about it specifically in a French context here. But the European failure phobia may be even more deeply rooted than my first-hand experience in French classrooms may allow me to see. While the fear of failure is largely cultural, it is also reinforced by certain institutional complexities – like investors and entrepreneurs that are provided less protection in the case of bankruptcy, for example. Such issues play a huge roll in incentivizing the local entrepreneurial crowd, since startups are a very high-risk activity. Even though we may not be able to make the European startup environment failure-friendly overnight, talking about it is definitely helping to bring awareness to the issue.
(The song that French serial entrepreneur-turned-investor Gilles Babinet used as his “anthem” at the Failconf in January.)
Stay quiet, stay stupid.
So as many of you already know, I decided to team up with Cass Philipps – who organizes the famous Failcon in San Francisco – to bring the event to Paris on September 22 (you can buy a ticket here). While everyone agrees that Europe needs to get more comfortable with the idea of failure, getting people involved in the conference has proven that there is still a lot of work to be done. Many sponsors said they would sponsor “the next one” and a number of speakers actually struggled to admit that they had, indeed, failed. It’s almost ridiculous. How is the entrepreneurial supposed to progress if people brush the issue under a rug? I actually felt that this kind of happened when Microsoft France held a similar event in January; French entrepreneurs knew they were there to talk about failure, but very few of them could actually discuss their own mistakes candidly.
Because the local entrepreneurs were reluctant to actually approach the subject head-on, I felt that it was necessary to go outside of France and outside of Europe to get to the heart of the matter. I decided to team up with Cass Philipps – who runs the famous Failcon in San Francisco – in order to really put an international spin on things. And rather than sticking to French entrepreneurs and investors, we’ve invited a number of international speakers from the UK, Canada, Portugal and the US to talk about their experiences.
Does it get any worse than this?
So rather than approaching the topic lightly, Cass and I got together and brainstormed some of our favorite failure stories. I have to say that I am really excited to hear two of our speakers in particular: Tapjoy and Sprouter.
For anyone who doesn’t already know Tapjoy, they have had an absolutely dramatic turnaround. You may remember a little fiasco that TechCrunch decided to call Scamville. Well, at the time Tapjoy was called Offerpal and the company was publicly attacked by Michael Arrington himself for being involved in scams (video below). Afterwards, the company went through a series of different CEOs and somehow managed to make a comeback. Honestly, I cannot wait to hear how they did it.
We initially invited Sprouter founder Sarah Prevette because her previous startup had failed. But then she announced that Sprouter would also be closing its doors because it hadn’t managed to secure enough funding to continue. I was horribly sad to hear that the incredible online community dedicated to entrepreneurs would be going offline. But then, in a rather interesting twist of events, Sarah followed up with a rather positive-looking announcement (image below). I guess we’ll find out what she has in store when she’s on stage at Failcon next week…
If at first you don’t succeed…
In addition to the stories on stage, we’ll have an open mic for people in the audience to share errors, mistakes, failures and lessons learned throughout the day. I honestly hope that the entrepreneurs in the room come prepared to share and really step up. Because honestly, you have nothing to lose and everything to gain…
(If anyone knows this scene from the movie Swingers, I think it demonstrates brilliantly how someone can make a big deal over something in their head and end up making a bigger mess than necessary…)