Does The Sun Still Rise In Palo Alto?
And should the UK & EU try to emulate US Tech?
The light of the golden hour was beginning to fade as I stood in a hotel garden on the outskirts of Madrid, conversing with a senior manager who exceeded my pay grade by a rough factor of five. I sipped cold Heineken and pounded crackers and cheese, desperately trying to line my stomach after a catered lunch that (quite literally) left a lot to be desired. As I crammed a fourth payload of brie-laden saltine into my mouth, my partner in conversation shared the following anecdote:
“As far as tech is concerned, the sun rises in Palo Alto and moves east. ”
I’d never heard this sentiment expressed before, but I’d certainly felt it.
At the time I was living in Malaga, a port city situated along la Costa Del Sol — the Coast of the Sun — in the south of Spain. I was attending a corporate training at the behest of my employer, Oracle Iberica — the Iberian wing of US tech behemoth, Oracle.
It‘s quite surreal working for a US Tech giant outside of America; you get a sense that there’s a metaphorical ocean between you and all the strategic decisions.
There’s also a literal one (the Atlantic) and it does separate you, and whatever corner of corporate Europe you call home, from who the yanks refer to as the movers & shakers.
This dynamic isn’t so bad. Hitching your wagon to the US Tech rocket ship can be incredibly lucrative. I should know — did I mention Oracle sent me to live in a place called the coast of the sun?
But while I spent my weekends tanning (burning) on the Spanish coast, I got the impression that, in the tech realm, the figurative sun represented opportunity — and it rose somewhere else. Somewhere I wanted to be.
Now I knew where: Palo Alto.
The west coast was pretty far away though. So I set my sights on eventually living in the US, period.
I’m a London-raised US citizen, a fact that afforded me an easy route to move stateside and a privilege few people in Europe (or the rest of the world for that matter) have access to.
I know that’s not the vogue thing to say on Medium. The algorithm has me pegged as an insufferable, metropolitan city hopper (that scans) so I’m peddled endless articles authored by Americans sipping Aperol on la piazza, their very presence making some small town in Italy just a *tiny bit* worse, while they bang on about how every aspect of European society is superior to that of the USA.
They don’t seem to appreciate that being able to live in the US is a massive privilege.
What dropped the penny for me recently was this visualization.
I’d seen graphs like this before, but hadn’t internalized their implication beyond my limited understanding of economics.
The collapse of British civil society woke me up to the true value of my US passport — access to an economy ten-times larger than that of the United Kingdom, with an array of considerably more attractive opportunities to boot.
“But hold on!” The patriotic voice inside me chimed.
We’re the British. We invented capitalism. Not that that’s something to necessarily be proud of, but you play the hand your ancestors dealt. America may have created the internet, but it was all spearheaded by this one British guy — sort of. And what about Europe? Yes, Brexit was an unforgivable black stain on our relations with the EU but, like, we’re still mates. Maybe we could team up and attempt to dispel the yoke of American tech dominance…
I started to question why I felt the need to leave all those years ago. More broadly, I began to ask:
Why hasn’t the UK/EU mounted a more serious challenge to America’s Tech hegemony?
It’s not a simple question to answer.
And although I’m still rather junior in my career, I’ve felt the perennial influence of the United States at every step. I’ve worked for a US tech giant while based in Europe, prior to moving to the UK to work for a European tech company being led from the states. Now I’m experiencing the scene first-hand, working for a hyper-growth startup on the east coast.
So I’m going to take a stab at it.
C.R.E.A.M
It makes sense that the US fought for their independence from the British crown.
You simply cannot have two monarchs — and make no mistake, in these parts:
Cash is king.
Having now lived here for a couple of years, one of my defining realizations about American culture has been just how much money talks.
You’d think it wouldn’t come as a surprise; the British may have invented modern capitalism, but the yanks certainly perfected it — a fact that they broadcast globally as a prime cultural export.
Without living here though, it’s hard to grasp the extent to which every facet of society is designed to maximally extract wages from wallets.
Whether it’s a kindled desire to spend thirty bucks on a wood-fire pizza at the airport because there are service-tablets on every counter, or making it all but essential to pay for software to file your W4 because the tax code is more complex than a tabletop game of Warhammer — the capitalist experience is simply not the same in Europe.
It lacks a key trait of its American cousin.
No matter if it’s a technological innovation or a bureaucratic headache, America’s brand of market capitalism is hyper-aggressive.
Now take that consumer-focused aggression — tenfold it — and you’ll start to get a sense for how US venture capital behaves.
The phrase“aggressive market capitalism” might as well be carved into Mt. Rushmore, it’s that integral to the modern American story, but it only really took hold of the Tech Scene during the 80s, with the rise of Palo Alto and Silicon Valley.
The dawn of the dot-com era meant that the stock exchange money-men of the east coast traded in their Manhattan penthouses for Malibu beach fronts.
This boom proceeded a historic bust — as they often do. But the venture capitalist weren’t the ones left holding the bag. They’d made off like bandits — as they often do.
Consider that, alongside all the important shoulders they’d rubbed up against on the golf greens of California, and you can begin to understand why these people had no plans to return east anytime soon.
Hell, a lot of them probably just preferred the weather.
So when the internet age really got going in the late 2000s, the VCs had already cultivated fertile networks of experience, market expertise and liberal financing opportunities with which to dazzle the new crop of “hoodie and fuck you! flip flops” tech entrepreneurs.
Speaking of Zuckerberg, he perhaps encapsulated the moment best with his now infamous mantra:
“Move fast and break things”
Contrast this with the lumbering approach of capital markets across the pond.
The Aris(tech)orats
The hegemony that proceeded the US was largely built on Europe’s advanced banking apparatus. The foundations of this legacy still persist, as European capital continues to broadly focus on financial services. Much like the dot-com bust paved the way for the modern US Tech scene, the remnant pedigree of European banking acts as the fertile ground from which Tech startups can grow; the difference being, those that find success are predominantly Fintechs.
Placing all your Tech eggs in the Fintech basket isn’t the best bet to encourage widespread innovation. That aforementioned ‘remanent pedigree’ can also act as an old-money, red-tape fueled bureaucracy — something that can just as easily kill as it can catapult flourishing startups. If & when these businesses do succeed, they face an additional hurdle; having to chase the golden goose of Fintech and attempt to enter the most lucrative, protectionist financial market of them all — The United States.
The focus on financial services pervading European Tech has thus bred capital controllers who are more risk-averse than their American counterparts; such is the nature of finance. But when it comes to Tech innovation, that’s a pretty counter-intuitive stance to take.
This has had a knock-on affect on European Tech businesses seeking the resources required to compete on the global stage. Outside of the Fintech sphere, startups that do gain significant market share are either:
a) Seduced by the allure of American capital and are swiftly bought out by a US-based challenger
or
b) unprepared to front the necessary capital to enter into the American market, and are swiftly out-maneuvered and superseded by a US-based challenger.
There are, of course, notable exceptions.
I’d like to give a particular shoutout to the nation of Sweden, who lead the way here with the likes of Klarna — a Fintech that’s penetrated America (although how long BNPL will last remains to be seen), and Spotify — arguably Europe’s cloutiest tech export and a company founded to spite Silicon Valley, but which imbues the uglier aspects of American capitalism in its treatment of Artists.
Germany’s SAP deserves a mention; a success story which, in part, can be explained by the notoriously challenging-to-penetrate German Tech sphere. American companies struggle in Deutcheland — those pesky Krauts seem to think that profiting off of personal data is bad, going as far as passing laws which prohibit it. This produces a quick shudder followed by a hard pass from most US-backed ventures.
I could also list France’s BeReal — the current darling of social media and an app so poorly optimized that I’d actually prefer it to be operated by Americans. BeReal is an exception in that they’re currently being outflanked by a Chinese tech company, ByteDance, via TikTok’s new Now feature — whether the Chinese will be able to successfully execute this flanking maneuver is another question entirely.
All of this is to say that the institutional behavior of European capital creates barriers for businesses trying to enter the “move-fast and break things” world of Tech.
And these barriers aren’t just limited to the realm of seeking capital investment. They reduce the exposure of Europeans to both the strategic and operational aspects of the industry.
From the freshly graduated IC slinging SaaS licenses out of a Slough call-center, to the senior executive gazing at the Shard from their office in the Gherkin — this impacts pretty much everyone.
Stacks on Stacks on Stacks
Ahh, building a tech stack.
You can’t say “this software implementation is a real pain in my aaS” without as a Service.
Standing up a tech stack is the art of combining multiple software products— usually delivered SaaS style—to simplify, automate and integrate the various functions of your business.
The goal is to create a seamless digital experience that can solve every problem you might encounter in a professional capacity. Except maybe, finding a new role — because you just automated yourself out of a job.
Indeed the greatest trick that Tech ever pulled was convincing us to contribute our blood, sweat and tears towards technology that’s going to make us obsolete in the next few decades.
We’re not quite there yet though, so in the meantime one of the the predominant skillsets within the space is to build an intricate understanding of the various best-in-class tools on the market.
The sheer number of market-leading, easily accessible Tech companies across America means this is an undertaking that US-based workers have become well versed in; both from a strategic— connecting the tools— and operational— actually using them— perspective.
It’s more challenging to implement and maintain such a stack — for businesses both small and large. But if executed correctly, it makes exponential growth that much easier.
And when it comes to buying the component software within these tech stacks, Americans and Europeans alike have a propensity to buy American.
There are a few factors contributing to this tendency. The remnant impact of the Marshall Plan, the echoes of the great European trading empires and the US’s position as the global hegemon are all likely culprits.
The bottom line? Businesses across the continent are happy to trade with foreign entities — and the United States takes full advantage.
This has had an unintended consequence on how the European sector operates.
Because so many of these SaaS offerings are based in America, and because of all the logistical issues dealing with these vendors directly, many European businesses adopt an alternative approach to building their tech stacks.
Instead of buying SaaS apps individually, with their purchase & roll-out being handled by internal IT, a fair number of European businesses prefer to partner with SIs— System Integrators.
SIs are monolithic companies in their own right, specializing in an eclectic selection of full-stack tools.
When a business opportunity presents itself, SIs will generally package a variety of different softwares together, covering all the required business processes, and ‘white-label’ it.
‘White-label’ being the practice of jerry-rigging multiple applications, stripping the branding, and connecting them via a single user portal to create the appearance of a unified application.
There’s another term this approach goes by:
Frankensoft.
A cobbled together mishmash of softwares, their interoperability questionable.
The other popular approach, which is functionally very similar to the SI route, is to partner with a singular Tech Giant. In this scenario you buy into the promise that, because you’re purchasing from a single vendor, you’ll be afforded a unified experience.
Some of the applications will be market leading. Most likely one of the acquisitions.
Others will be a bit shit — also likely to be the acquisitions.
Regardless, the outcome for workers is the same.
If you’re tasked with learning these tools, you’re faced with either a mystery-box of mid-tier applications or an enterprise-grade juggernaut of varying software quality.
This equates to being either unable to internalize what it is you’re actually learning, or what you’re actually learning not being worth very much.
It’s my belief that this model is the underlying cause of a lot of atrophy across the technical workforce in Europe. And if ICs with this understanding go on to become Execs, their lack of hands-on experience in choosing & using best-in class software leads them to opt. for the single vendor, frankensoft approach all over again — the cycle continues.
Sure, if you work for an SI or Tech Giant, you get to peak behind the curtain. But for the vast majority of frontline ICs having to use these systems, the lack of exposure leaves them woefully unprepared to compete with their US-based counterparts.
Tick Tock
On the one hand, European venture capital needs to shift its focus away from Fintech and act more aggressively when backing emerging innovators if they aim to compete with the American market.
And on the other, European businesses need to move away from the single vendor model and directly purchase more market leading software in order to develop a globally viable technical workforce.
But that’s just my two cents.
As the more tech-savy generations (X, millennial, Z) enter positions of authority, I’m certain we’ll see a strategic shift across Europe in regards to capital investment and technical approach. It’s a goal of mine to one day return home, having sequestered all the juiciest tidbits I’ve learned working in the US, and play a small part in leading that charge.
The death-spiral of globalism may end up being a net positive for Europe; it’ll be forced to look within its own borders for technical innovation. This shift looks to have already begun, with the continent poised to enact a technical renaissance in numerous Web3 fields.
This article has intentionally focused on the Western world. The sun may rise in Palo Alto, but I would be remiss not to mention Tech tigers like India who, with their zealotry for all things technology, are sure spawn a wave of unicorns in the coming decades. The likes of Israel, the UAE and Australia also deserve a nod.
And then there’s China — a globally prominent Tech hub in it’s own right.
Times are changing, and the American Tech market is in the midst of a very public crisis. The mantle of ‘growth for growths sake’ is being shed in favor of a more realistic pursuit — efficiency.
Tens of thousands of tech workers are the victims in this particular coup de’tat.
And that begs a more poignant question than asking why the UK/EU are still playing catch-up.
America’s tech philosophy has certainly wrought financial success.
But then so has tipping culture, privatized healthcare and employment laws that heavily favor corporations over livelihoods.
In order to make a billion dollars, eventually you have to hurt some people.
That’s just business, right?
Maybe.
Or maybe those Aperol sipping yanks on la piazza have a point.
It would be nice if the US could have bountiful market capitalism and take care of its most vulnerable members of society.
Perhaps that’s just trying to have your cake and eat it too.
But if it’s possible for anyone, it’s the Americans.
