Working in technology, people frequently ask me about the future: what will things be like 20 or 30 years from now? But because I work in the startup world my usual reply is that I’m more interested in the present than in the future. I’m passionate about what we can do here and now, not in 20 years time. I want to focus on the problems we should solve today by founding new businesses and building new institutions to make the shift easier.
A great deal of today’s problems in European tech can be explained by this misplaced fascination with the distant future. Too many people in Europe still think that successful tech companies are built by mad scientists with a taste for science fiction. They think catching up to the US is about cutting-edge science and technological disruption. For them, we need more moonshots, more basic research and more technology transfers.
As such, it would seem entirely logical to acclaim the new (yet-to-be-confirmed) EU Commissioner who is in charge of growing tech startups in Europe. Earlier this week the French government confirmed that 64-year old Thierry Breton is Emmanuel Macron’s new nominee to join the European Commission. And so far Breton has been received favourably by the tech community: he has founded the Futuroscope educational park in Poitiers, written science fiction novels, been chief executive at several prominent tech-related companies and spent a few years as a cabinet minister in Paris.
But maybe people in the startup community should take a few steps back and realise that Breton might not be their guy after all. Because if you think that having a “high-tech guy” as EU commissioner is going to be good for startups you need to think again — there is a big difference between a high-tech guy and a startup guy.
It may be true that many chief executives in tech are passionate about science fiction and use their fascination with the distant future as a compass to lead their company ahead. At the startup stage, however, the rewards are not reaped by those who are into cutting-edge science. Rather they fall to those who succeed at focusing on a problem and using cheap, existing technology to solve it for their users.
As detailed by William H. Janeway in Doing Capitalism in the Innovation Economy, you need basic research (funded by either the state or large corporations) to provide the technology used by tech startups — from microprocessors derived from military-funded research to the NoSQL database systems designed by open source communities; from the Open Compute Project Facebook launched to reimagine hardware to cloud computing platforms such as Amazon Web Services and Microsoft Azure. But conducting this research and building the necessary technology is not a startup’s business. Rather they need bigger companies and institutions to undertake those efforts to create a stack of available technology that startups can use to solve problems and discover new models. Entrepreneurs want to be able to “dance” on this upstream platform from day one without having to bother with moonshots or coming up with the next big scientific breakthrough.
China has proved that at this stage the success of an ecosystem is not related to having the best scientists pursuing the most ambitious moonshots. As venture capitalist Kai-Fu Lee argued, startups in China don’t come from basic research but rather from extreme competitiveness and unrivalled customer-centricity. This is a key distinction between the Chinese ecosystem and Silicon Valley. The latter is easily bored and keeps on chasing the next big thing (deep learning, augmented reality/virtual reality, crypto), while the former is focused on using existing technology to discover new business models.
It’s not that cutting-edge technology doesn’t make sense from the perspective of startups and venture capitalists. When crypto emerged as the new big thing, for instance, a few US venture capital firms were early supporters and deployed capital so that they had skin in the game. As we’re still early in that cycle this hasn’t translated into obvious success yet, but it did put those firms in a better position for the future when crypto rises up again.
However, playing that long game is not a luxury that we Europeans can afford. Venture capitalists in Europe don’t have enough capital to squander it early when the technology is not mature yet and Europe still lags behind when it comes to building startups from the previous wave of technological breakthroughs. This is why the next EU Commissioner should prioritise projects that are not related to high tech: building up local startup communities; connecting them through a pan-European ecosystem; enacting techno-utilitarian regulations to level the playing field in key industries and promote innovative business models; and solving structural problems such as employee equity.
As I don’t like to predict the future I won’t rush to judge Thierry Breton. But his résumé suggests he might bring the worst of France’s tech industrial policy: betting everything on vain science fiction inspired moonshots while providing top-down support to exhausted incumbents that have little in common with the startup world. As a former chief executive of a large telecommunications firm (France Telecom) and a large IT services company (Atos) he may have a hard time relating to the challenges that tech entrepreneurs tackle every day. And, having never expressed an interest in institutional innovation within the new paradigm, the role may prove a challenge.
Whatever happens with Breton startups and investors should be clear in promoting an effective agenda for the upcoming EU Commission. This agenda shouldn’t be about supporting what Peter Thiel calls the “Computer Rust Belt”, which Breton-led corporations perfectly embody, or about preparing for the next paradigm shift once the age of computing and networks has passed. Rather it should focus all its attention on catching up with the shift that has already happened. As this shift left Europe behind. There is not much time left, which means all the more reason it should happen here and now — rather than in the distant future.