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What do you think?
“Europe may have the richest poor people of any region in the world, but you can count on one hand the £1bn companies that have started from scratch over the past 30 years. Fine entrepreneurs went elsewhere to build their dreams”, writes Julie Meyer, chief executive of Ariadne Capital, and co-founder of First Tuesday, an international network of entrepreneurs.
“There are great entrepreneurs on every continent”, argues Ms Meyer, “But there has been something premeditated, even sinister, about Europe’s ability to smother and quash the ambitions of its entrepreneurs.”
Ms Meyer proposes radical change. “People must take back the ownership of their society by reducing the role of government and making room for enterprise”, she writes.
Do you agree? Does the EU help or hinder entrepreneurs? Should European governments be doing more to encourage enterprise? Ms Meyer answers your questions below.
Your thoughts on the need for Europe to do more to encourage entrepreneurship echo my own. For the last few years I have been involved in trying to commercialise some truly innovative technology but my efforts are in vain, as our project is dying of apathy in the big wide world. My question - Do you think that things will ever really change?
Graham Taylor, director, Hypercraft Associates Ltd, UK
Julie Meyer: Make the change happen in the world that you want to see happen.
It has taken me nearly 20 years to be able to effect some of the changes that I understood needed to happen when I was a very young woman.
Be bold and brave, and first and foremost, be a net contributor to the system. If you are genuinely try to create a better system, other like-minded people will find you, and you will be more powerful.
Sometimes, we are not able to achieve what we want immediately. The situation in Europe is very dire as many people are unaware of the problem. It requires radical change, mobilised people, and subversive action.
Find other people with whom you can collaborate to make things change. It is too lonely otherwise.
And remember, the history of the technology world is the triumph of marketing over technology – so not knowing a thing about what you are doing, if people aren’t buying it, maybe you’re focusing too much on the technology, and not enough on the go to market strategy.
More support would make a difference. What do you think of micro finance/lending - Yunus style- as a way to encourage young entrepreneurs? A peer-to-peer style self organising system would be a radical start from government grants which seem to have quite a high administrative barrier. It would also create a peer support group beyond finance / again back to the confidence booster. By the way, Belgium ranked at the bottom of the list of entrepreneurial countries.
Reginald Warlop, London, UK
Julie Meyer: I believe this idea if run by you – as I know well your talents and abilities – would be very successful.
Yes the Grameen Bank has been an enormous model of how to help people pull themselves up out of poverty by empowering them with credit. The Grameen Phone then empowers them with mobile telecommunications. Yes, let’s take these models from the so-called developing world and bring them to the so-called developed world.
One of my favourite organisations is the Fredericks Foundation, founded by hugely successful UK entrepreneur Paul Barry-Walsh – an Ariadne investor I might add.
They have helped more than 3,000 people in the UK become entrepreneurs by investing small amounts - £5,000 – into their businesses. These are individuals who were going off track, and through Paul’s foundation, he was able to help them help themselves, thus saving hundreds of millions of taxpayer’s money that otherwise would have kept them on the government unemployment or in prison or recovering from substance abuse.
Interestingly, the UK government’s first reaction I am told to the Fredericks Foundation was that – this is truly unbelievable – that loans/investment wouldn’t work and that Fredericks should make grants. So give money away rather than help people understand themselves as an investable asset that smart people would want to back.
Reginald – you have everything it takes to be a very successful entrepreneur. I absolutely loved working with you, and Europe needs you to do more.
My firm has learned the hard way that the Netherlands is most definitely not an environment for entrepreneurs. Has anyone done any type of benchmarking that helps entrepreneurs determine what is the best domicile in Europe? If so, where does Ireland rank?
Toni Moss, Naarden, Netherlands
Julie Meyer: I believe that Ireland has done some tremendous things to attract entrepreneurs and investment. I also know brilliant entrepreneurs who are currently choosing to go to the Netherlands.
We need more spotlight on the tremendous success stories out of Europe in the media rather than the really bad television and media coverage of low pop culture which exists. Why aren’t there tv shows celebrating the successes of our entrepreneurs? Are we really so far gone that we have to watch people in the Big Brother house yelling at each other?
I’m not aware of any type of benchmarking that exists, but please Toni don’t talk about this too much or the EU governments and agencies will probably want to hire some consultants to spend more of our tax money to do this kind of work.
Good luck to you and with your business. It’s not easy, but “never give up, never accept no, and never ever go away – even when they want you too” – Candace Johnson, the founder of SES Astra
What needs to be done to attract the best US entrepreneurs to come to Europe to launch real businesses?
Frank Gelardin, Madrid, Spain
Julie Meyer: More people like you. More people who will give support, take phone calls, and give advice, and generally encourage and cheer and say that it’s all worth doing. It’s a very lonely business creating businesses.
If we had a couple of breakthroughs in Europe – Skype certainly has been one, I think FON, SpinVox, Zopa will be others – then, if we could signal to entrepreneurs around the globe that Europe had reconsidered its destiny, and has decided to create a high growth Europe for the 21st century – then the best people and smartest money would rush in.
Look what happened in India. When the current prime minister turned towards the free market, India took off. Since the early 90s smart Indians want to go to India.
Europe has no shortage of great entrepreneurs. Its citizens have lacked the will to take charge of society, and make government the servant of the people. So back to the pusher/user – junkie metaphor below, the pushers get re-elected as no one pushes them out of power.
Your article highlights two main ideas: namely that Europe may have the richest poor people, and that Europe is essentially hostile to entrepreneurs. Considering this, it would be strange not to suppose at least some degree of relationship between those two factors. Do you think there maybe a trade-off between them so that making Europe friendlier to entrepreneurs could harm its social model and make the poor poorer?
Vytautas Kuokstis, Lithuania
Julie Meyer: The poor will always be with us. No one on this planet, not even Bill Gates, can make that go away. We can try, but the best people to try are those people who have made money – the most successful entrepreneurs I know – not surprisingly are the most generous.
They make money, and then they attack problems in society that need to go away. So we can trust in the inherent goodwill of people who themselves have made money to remember the help that they had along the way, and to give back. Really – only 5 per cent or so of successful entrepreneurs go on to give back nothing.
Second point: it’s a dynamic changing, unfair world out there, and we can’t change that either. One of the biggest drivers for getting out of poverty and, more importantly, for discovering what your unique contribution to the universe is meant to be, is not having a lot of money to start off with.
Like anything in life, if it is too easy, then the burden doesn’t drive you to get out of a bad situation.
I am not saying that we should let people die on the streets or live in squalor. I am saying that based on my personal experience and what I’ve seen over 40 years, that some people drive themselves to success from unbelievably difficult situations and backgrounds, and others who have everything going for them manage to contribute nothing.
What’s a social model, Vytautas? I want an environment where I enjoy the fruits of my labour, where my talent can be put to good use, and where government doesn’t attempt to redistribute my assets and income to others who don’t have my drive and talent? Is that Europe’s social model? Maybe it should be.
I am not a voice in the wilderness. More people agree with me than don’t. However, people are not yet prepared to create the disturbances in society to turn upside the current set up in Europe. I hope that we can see what needs to be done and do it rather than just allow pain and panic to drive Europe to change. I am always in favour of peaceful change.
Is more room for enterprise the solution? Is the EU not free enough? Nordic businesses are heavily taxed and strongly regulated and are doing very well for themselves and their counties.
Leandros Papaphilippou, Nicosia, Cyprus
Julie Meyer: From my good friend Eric Hoppe which I agree with: “The very essence of capitalism is the unending drive to strive for something better, whether it be a longer lasting light bulb or a new computer process. This desire to achieve is fuelled by man’s instinctual curiosity and it is this human impulse that drives Adam Smith’s “invisible hand”. Cutting to the chase, the logical conclusion therefore is that economic freedom equals personal freedom.
It’s not that Europe is not wonderful – I’ve lived in Paris and London for 15 out of the past 18 years – I love it here. But I want to be part of a new Europe which is growing and evolving – not one which is slowly dying, becoming a museum, with the poorest rich people in the world.
What is “well for themselves”? Why do some of the most important entrepreneurs leave the Nordic region for other parts of the world? We don’t have enough personal freedom in Europe. And we need to ask ourselves why we allow that?
Our freedom is our oxygen. Deprive yourself of that, and you know what happens...
Do you share my view that entrepreneurship has an inverse relationship with social security? This view is built up from observing small business behaviour in Asia. The sooner Europe learns the better as it is already the third placed continent on this subject.
Julie Meyer: Yes I do – I was fortunate to learn this early in my life. There is no social security – it is not that it is a flawed concept, but it is an un-realisable concept. People who push this concept to the citizenship are being quite dishonest as they cannot control all of the variables required to deliver on the promise.
The sooner that one learns and explores risk in one’s life, the sooner that one learns what one can do as an individual. I was compelled to throw myself into Paris as a 21 year old with $700 in my pocket and a credit card that maxed out at $1,000 as I needed to know what I could do as an individual. Stripped away from the influence of my parents and the cosy environment I grew up in – Who was Julie? What could she do on her own? What was my unique contribution to the universe?
There are many different ways to win in any business, and what you learn when you start taking risks is how many doors you can walk through to get to the other side.
Entrepreneurs are people who understand not how to take risks, but how to de-risk opportunities. We don’t stop when we have a set back; we say – OK, let’s think about that and channel the learning into taking the next step forward.
When are US venture capitalists going to discover the European startups and entrepreneurs? Why is it so hard to find experienced US venture capitalists in Europe?
Cem Dalgic, Germany
Julie Meyer: Proximity is a very important thing in investing - being close by to help out and monitor one’s investments is part of what makes venture capital work in the US or indeed anywhere.
There are some tremendous venture capitalists here in Europe and in the UK. You don’t need to look to the US. Some of my favourites in the UK include the guys at Eden Ventures, DN Capital, Amadeus Capital, Index and Wellington. I probably could name another 20 here - do some research.
What I will grant you Cem, is that overall the funding of innovation has not kept up with innovation and entrepreneurs in Europe, and that there are currently many more world-class entrepreneurs in Europe than world-class investors, but let’s work to bring both sides into balance.
What would the election of Ségolène Royal to president do for enterprise and entrepreneurship in France and Europe?
Michael Labeit, New York, US
Julie Meyer: I believe Royal’s views are well-articulated on her personal website, and I haven’t spent the time yet to educate myself on her economic policy.
If you are looking for a list of actions to take to bring back ownership of our society into the hands of the people and out of the unaccountable political class, here’s a start:
• Demand (write letters, create a ruckus every which way possible, shine a big spotlight on this) that the European Commission’s books are signed off by their auditors; this has not happened for more than a decade – think about the implications of this – this is absolutely shocking
• Organise online debate putting Royal and Sarko under pressure to adopt business-oriented policies
• Create an online community of believers in a new Europe which is centred in European entrepreneurship
• Work with young students to help them understand their potential
• Read Atlas Shrugged and give as many copies of it to people as you can afford
Two key elements are missing in Europe that have proven invaluable in the States - free-standing universities that churn out commercial IP and pension plans that need to pursue highest possible returns that pour risk capital into VC funds. Europe lacks both and I believe both are required for next step in evolution of the European entrepreneurial ecosystem. Do you share this view?
Jim Robinson, London / New York
Julie Meyer: You have identified two very very interesting elements of the US cocktail which work. And I believe that we should look for models, wherever they are, which work and think about their adaptability to the European and UK environments.
There are some success stories in the UK which are churning out commercial IP. Look at the work of Imperial College, and Loughborough University which I believe – with successful companies like Intelligent Energy – are going to create other models of success here.
There is a lot of money in Europe. I know where a lot of it is, and whether it’s pension funds or European family offices – the source is less material, and more whether it is committed to investing in the next generation of entrepreneurs. Much of it is not because the risk/reward continuum is skewed by government intervention.
If European family offices and the private investment vehicles of successful entrepreneurs felt that the best place for their money was investing in the next generation of entrepreneurs, we wouldn’t be having this debate. However, most people believe that the market is so skewed by the distortion of government forces that they prefer to put their money elsewhere and that is a great shame.
Would you agree that the tax structure in most of our European countries is totally unprepared for the globalisation of the world economy? Taxes on labour double our production costs, but decrease our productivity by half. Just like protectionist measures like import taxes, they create distortions in global trade. Our semi labour-intensive industries are being moved to countries where the productivity is even lower at a very high pace. Would a shift of taxes on labour and capital towards a tax on consumption turn the tide for Europe?
Gino Landuyt, London, UK
Julie Meyer: You raise some very good points. I’m going to step back and address what I think is the fundamental issue: where does government get its legitimacy to tax its people? From the people!
I was amazed at the World Economic Forum in Davos a couple of years ago when in addressing another global issue and the money needed to address it, President Chirac’s response was a 1 per cent tax on all Europeans. I can’t remember the details, but I sat in horror just thinking – governments and politicians never downsize – they always think that they can reach back in and take more of our money.
We have to be very aggressive back to our political leaders and say – “No, we’re putting you on a budget because that’s how we have to live our lives, run our businesses etc, and this is your budget, and it’s a percentage of what it is today.”
Let’s not shift taxes from different parts of the industry or supply/demand curve – let’s reduce taxes – let’s not put up with this any more. Don’t you think that we all know how to spend our own money at home and at business better than the government does?
Why do we so doubt our judgment and outsource so much to the government? History is a long long chronicle of governments doing things very inefficiently when people/citizens/businesspeople could have done twice the job for half the money.
Governments’ main job in the economy should be to promote and protect free markets and competition. Governments should not protect specific capitalists, particularly incumbent owners of companies. It seems like a good idea to make cultural icons out of entrepreneurs to encourage competition and company creation. Let’s focus on real life entrepreneurship. Capitalism as a system - even in it’s most developed form in America and the UK - is a work in progress, no?
SP, London, UK
Julie Meyer: Capitalism as a system is a work in progress – look at how it is evolving in India – different than in the US or Europe. Look at how private companies like Zopa, a marketplace for lending and borrowing, or Monitise, a mobile banking services company, are enabling people through capitalist tools.
Any kind of protection is always short-term. No, of course the government should not protect specific capitalists. The only way that society will continue to grow and that innovation will come to market by the best home-grown entrepreneurs is if they believe that it is worth taking the risk, doing the blood, sweat and tears, for a reward - if the government skews that equation, then entrepreneurs go elsewhere.
I think Europe is a highly entrepreneurial continent with many hundreds of thousands starting and running small, family style businesses for much of their lives. However, unlike the US, it is the ambition to be truly a truly large and dominant player in a marketplace which is lacking. Do you think this cultural difference is steeped in years of history or is it created by the political set up we now have in Europe?
Tricia Fox, Bacon Eggs & Entrepreneurs, Scotland
Julie Meyer: I agree Tricia that Europe has some phenomenal entrepreneurs – both big names, and names that never get coverage - it is a fundamental part of the human spirit to create, so that is not in lesser supply in Europe, but I would liken the situation in Europe to a pusher and his users/junkies.
Income redistribution (aggressive government levied taxes) has created an economically needy and dependent class within society.
If the government is the “pusher”, then its citizens have become the “users”. Once hooked, it is near impossible to get one off whatever one has become dependent upon. Perversely, the junkies are allowed to vote for their favourite pushers - get it? It’s sad but true.
I think we have to look this in the face and recognise it for what it is - what continues to be revolutionary about the US is that the cultural software of one’s brain that you grow up with over there encourages you/me/one to think we can do anything.
Julie Meyer - A novel approach to ensure Europe prospers