In a video interview with the Financial Times released on September 30, PayPal founder, hedge fund manager and venture capitalist Peter Thiel shared some controversial views on EU entrepreneurs. He notably said: “I think people in Europe are generally pessimistic about the future. They have low expectations, they’re not working hard to change things. When you’re a slacker with a pessimistic view of the future, you’re likely to meet those expectations.” We asked White Star Capital‘s co-founder and managing partner Christian Hernandez to respond.
LeWeb Blog: Peter Thiel recently called EU entrepreneurs “slackers”. What was your first reaction to this?
Christian Hernandez: The recent comments by Peter Thiel were conveniently wrapped in click-bait headlines but if you watch the video of the interview he makes some points with which I agree.
His comments about slackers in Europe is directed at ‘People in Europe in General’, not specifically at entrepreneurs. While I do accept that in Europe there can be an aversion to change, there is a stark difference between that and the growing ethos of entrepreneurship across the region. In the interview Thiel correctly points out that the right type of pessimism drives people to action and we’re seeing that across European entrepreneurs.
The quote that most agree with is his statement that Europe should not seek to be a “pale emulation of Silicon Valley.” Marc Andreessen made the same point earlier in the year. It’s not about trying to copy Silicon Valley, it’s rather about identifying the core traits that could make each of the European tech hubs into a stand-alone competitive centre in different fields of innovation.
London, he correctly states, has emerged as the leading hub in Europe with its combination of world-class educational institutions, deep connections between technology and finance, and a thriving creative sector. But we are seeing other types of Valleys emerge: Sweden is beginning to be called Crypto-Valley given the growing number of cryptocurrency startups in the country helped by the readiness from the government to support them. France has an amazing talent pool of mathematicians which (along with Russia) could lead it to be called Algo-Valley.
The challenge is for us (founders and funders) to identify and nurture these hubs and ecosystems and allow them to compete on a global scale. As the Managing Partner of a technology fund recently said to me “We [founders and funders] are the ones who will define what Europe looks like in a decade.”
> What, for you, are the best counter-examples to Thiel’s claim?
Entrepreneurs, be they in San Francisco, Beijing or Paris, are unique individuals. I believe that entrepreneurs have the unique skill to create a bold vision, break it into achievable tasks and combine that with the appropriate level of delusion to believe that they can achieve it. They are also humble enough to realise that they cannot do so on their own.
Across Europe I am impressed with the level of ambition from entrepreneurs. The new generation of successful entrepreneurs have global ambitions and an amazing appetite to change the status quo. Visible examples include Kristo and Taavet at Transferwise who are actively disrupting the massive money transfer space. Also, count the geeks from Sweden, Germany and France who founded world-leading music startups in Spotify, Soundcloud and Deezer. Consider the passionate stance with which Ilkka wants Supercell to continue being a Finnish company, paying Finnish taxes and investing the Finnish ecosystem (all while conquering the world one game at a time).
The bold vision (and appropriate level of delusion) is there, the experience from previous startups supports the growing operational excellence of these startups and the ecosystem of angels and VCs is growing to support them. I have been and continue to be long on Europe.
> He also referred to a certain European demotivating “pessimism”, whereas “pessimism in China motivates hard work”. Is this unfair?
I was in China recently and was amazed by what I saw. Tencent, Alibaba, Baidu, Xiaomi are no longer just Chinese success stories. They are now becoming significant forces in the global tech ecosystem. Entrepreneurs in China work like mad. Saturday is a work day, midnight calls with partners or colleagues in the US are a norm. It’s partly cultural partly driven by a newfound ambition to put the Middle Kingdoms at the core of the global tech ecosystem… and it’s working.
To Thiel’s point, a lot of the success of China has been achieved despite government intervention. Yes, the Great Firewall and the government policies impact the ability to enter the market, but the speed at which these companies are now scaling out internationally is driven by their own ambition, not by a bureaucratic edict.
In terms of Europe, no, we should not try to replicate the Chinese model just as we should not seek to replicate Silicon Valley; but we should learn to have the same level of global ambition from the outset, the same inherent belief that a world-leading company can be built from Lisbon to Paris to Berlin to Helsinki.
> What do you feel are some of the assets that European startups should try to benefit from as they seek to scale?
I personally see the diversity of Europe as an asset. It brings together founders and teams with a different, and often more international perspective, be that two Swedes in Berlin working on Soundcloud, the Estonian Tech Mafia at Transferwise in London or the Portuguese founder of Farfetch. The open movement of labour across Europe also allows us to identify and move talent across borders with ease. There is a reason Facebook, Amazon and Google have opened up engineering offices in London: it is a great place to bring in European talent without the painful hassles of trying to secure H1B visas.
There is indeed a challenge in having to localise quickly as you scale from country to country but this should mean that product design and architecture should be built with an international focus in mind from day one.
Finally, Europe does benefit from the evolution of more traditional industries and the legacy they provide for entrepreneurs. This includes, for example, financial service hubs like London churning out FinTech startups as well as the ecosystem around the world’s largest media agencies Publicis and WPP, both of which are European. The region also benefits from the single currency for payment standardisation across the region (leaving aside the hassle of tracking varying VAT tax regimes).
So, the headline aside, Peter Thiel’s interview does make some statements that ring true about Europe in general, but I will disagree with him that only London can build world-class companies. It is evident that entrepreneurs in Helsinki and Stockholm, Paris and Belgrade are pushing pretty hard to do the same.
Christian Hernandez Gallardo is managing partner and tech investor at White Star Capital. He was formerly EMEA director of platform partnerships for Facebook.
Top photo via Shutterstock – wavebreakmedia