Can Europe still compete in technology?

Europe — especially “old” Europe — still has the fundamental tension between its genteel approach to labor laws, with short work weeks and extensive protection for workers, and the reality of competing with more market-based (or, some would say, more ruthless) economies.

Another ETRE attendee, Rudy Burger, has been CEO of companies in both Europe and the U.S., now helps European firms establish beachheads in the U.S. market. “Europeans,” he says, “need to reconsider their six weeks of vacation. Unless they feel they are far more intelligent than the rest of the world, they need to race at the same speed.”

Another issue that faces Europe is that, regardless of a unified currency and open borders, it is still a collection of disparate countries, rather than a single large market for technology. (For now, the U.S. is the world’s largest market for technology products, although China will someday usurp that role.)

“You can grow a big company in United States,” says Burger, “before you try to take it overseas. But the European market is fragmented. Take Ireland: there are a lot of very bright, highly-motivated entrepreneurs, yet the total population is 3.5 million. If you start a company there you have to think about going global from day one, and that adds enormous challenges.”

A number of ETRE attendees said the real entrepreneurial opportunities may lie in “new” Europe. “The Eastern European countries,” says Roel Pieper, chairman of Favonius Ventures, a European venture capital firm, “are Europe’s biggest chance. These are countries that want to change, and it’s not clear that the rest of Europe feels the same way.” These countries currently lack a well-organized financial infrastructure and clear operating rules, but, says Pieper, “you tell me what the operating rules are in China,” where firms are rushing to invest.

The Eastern European countries also have excellent math and engineering curricula — indeed, in the early 1990s, many of the most insidious computer viruses came from the former Soviet Bloc, where kids had plenty of grudges and lots of experience writing very efficient software for their outmoded computers. “So many kids in Eastern Europe are growing up hungry, in career terms, compared to U.S. kids,” says Burger. “Poland, for example, is very promising. While it’s seen now by Western Europe as a manufacturing threat, it’s largely discounted as a source of innovation.  But the next Google could come from there.”

Innovation does still come from Europe. At ETRE I heard about a remarkable new kind of reading device, with a rollable screen. It wasn’t until I was back in New York that I had a chance to meet with Karl McGoldrick, CEO of the Dutch start-up Polymer Vision. McGoldrick was carrying the first prototype of the Readius, a sleek device not much larger than an old-fashioned pager, which fit comfortably in his shirt pocket. The trick: you can pull on both sides of the little box and it unrolls to reveal an ultra-thin five inch display screen for text and images. The prototype version lets you click around between book texts and news from the Web. “It is the answer,” says McGoldrick, “to how we can give pocket-sized mobile devices large screens.” 

It’s an impressive device. And Polymer Vision, a spin-out from Philips, already has larger — but still fully rollable — screens in the lab, and they are working on color versions for 2007.  What’s worth noting is that I saw it not in Europe, but in the United States, where McGoldrick had come to find support for the next phase of Readius. Europe, in short, may still be able to compete, but in the new game of global innovation it will also need to choose its partners well.  

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