The biggest economic story in Europe right now has nothing to do with populism, Brexit or Trump. It’s not something that’s happening in the boardrooms of our multinationals, and it’s not something happening in the political corridors of power.
The most interesting story in Europe right now is happening in the coworking spaces and coffee shops of our leading tech hubs. It’s the untold story of the pan-European technology boom, and it’s going to be one of the key drivers of Europe’s economic future over the next five years.
Why aren’t we celebrating this? Put simply, its narrative is interspersed with competition: London competing with Berlin, Berlin competing with Lisbon, the list goes on. We tend to focus on the stories of individual cities and risk missing the bigger picture. It’s time we start talking about the “European story.”
A decentralized network
European technology was initially concentrated in a few major centers – namely London, Berlin and Paris. But as Europe’s tech sector has matured we have seen a more decentralized network appearing, with a number of strong, smaller cities, specializing in different sectors.
We’re now seeing regional cities or smaller capitals developing names for themselves in tech subsectors – the recent Slush and Atomico State of European Tech report highlighted that Munich, Zurich, Lisbon, Madrid, and Copenhagen in particular, will be ones to watch over the coming years.
The best kind of technology is borderless, and Europe’s tech companies are exploiting that, finding new regions and tech hubs in which to start up, many of which have low rents, good quality of life, and a well-educated, highly experienced workforce. European governments have woken up to this and are doing all they can to create the very best environment for young companies. The Estonian government has gone even further – its e-residency is redefining what citizenship means in a digital world, whilst the Portuguese government has made Lisbon one of the globe’s most attractive places to start a tech company, including significant tax breaks for investments in the sector.
This increasingly borderless attitude has also had a noticeable knock-on effect on the companies themselves. European tech startups have internationalization built in from day one – a unique quality. It’s much easier to get a truly international workforce with a global outlook when you’re recruiting from a diverse pool of talent.
Tech founders based across Europe can also get by without speaking German/Portuguese/Estonian, etc. The vast majority of European tech companies operate in English, meaning that working together across borders has never been easier.
A shared culture
Europe’s history of innovation is exceptionally strong and our collective cultures, though so different in many ways, share some fundamental values. It may seem like a generalization but the European “way” is highly iterative. We don’t look for that big breakthrough, the fabled “light bulb moment.” Instead we work hard to make small incremental improvements as we improve gradually. It’s our shared engineering heritage and our focus on continuous learning and continuous improvement that sets us apart. It might not be headline-grabbing, but it’s working.
Take Booking.com. It’s a shining light of European iterative and continuous improvement. At the end of 2015 it reported, for the first time, that it had more than 21 million bookable rooms. This is an astonishing figure, that has been achieved over a number of years (Booking.com was founded in 1996). Skift, a travel news publication, reported that the Dutch company is “a much larger lodging provider than Airbnb by just about every measure.” But if you were to take a straw poll over which company is perceived to be more “innovative,” you can bet Airbnb would win every time.
We share the same philosophy at Trivago. Rather than launch new products or services with a big fanfare, we look to carefully test and learn. We release new technology slowly, we test relentlessly, and the ones that work, we keep and continue to refine and improve. It’s the European way, and it works.
Funding is getting better
So Europe’s tech fundamentals are only getting stronger. But we’re still dwarfed by Silicon Valley when it comes to availability of capital, which is crucial for young companies. The good news is that the VC funding in Europe is growing dramatically. A Tech.EU report showed that funding in 2016 has grown 11.7 percent by value year on year, with the number of deals up 32 percent. U.S. firms are increasingly investing in European companies, but European VC firms are starting up across the continent in droves. As with many things in tech, VC funds go where the momentum is. And the momentum is increasingly coming from Europe.
So our continent has a bright future and one that is becoming more reliant on the success of its broader tech sector and less reliant on one particular city. The decentralized network, with a strong focus on internationalization, means startups across Europe are exceptionally well positioned to succeed. We may not shout the loudest, but I’m confident that Europe is evolving in the right way.
Rolf Schroemgens is CEO of Düsseldorf-based hotel-booking site Trivago.