Why Europe needs to develop a risk culture among senior executives?

Silicon Valley is still by far the best place to start a new venture and get an opportunity to achieve world dominance as Facebook, Google, Amazon, eBay, Paypal and many more did. The San Francisco area benefits from prestigious universities, the largest venture capitals, many ambitious people and, maybe the most important, the American culture which promote risk and reward and do not blame those who fail.

In recent years, many cities in Europe have tried to build areas, or at least districts, similar to Silicon Valley: London (Silicon Roundabout), Berlin, Paris, Barcelona (@22) among many more. They try to attract venture capital and create tax-incentives for people investing in start-ups, they promote the collaboration between universities and companies and they try to develop an entrepreneurial culture among young people. This last point remains very weak.

Nevertheless, European start-ups achieving world dominance are almost inexistant. Except Skype, which achieved a true global leadership, the largest successes concern start-ups which achieve at best a European dominance, and are often bought by American competitor: Meetic, Vente-privee, etc. Let's see what happen with Spotify, it is probably to early to answer.

To explain the American leadership in the start-up world, funding and culture (risk, reward, fail) are the most common reasons used by experts. Nevertheless, they are probably missing one key point: the capacity of start-ups to attract first level experienced executives to scale the business once traction has been achieved.

As an entrepreneur in P2P finance, I was recently very excited when reading that Lending Club, the leader in P2P lending but still a very small company compared to banks, had been able to get John Mack on board. The former Morgan Stanley Chairman and CEO, joined the Board of Directors and invested 2.5M$ of his own money! I am unable to imagine an ex CEO of a leading European bank joinning a P2P finance company. They do prefer manipulating the LIBOR and things like that. John Mack joining Lending Club is probably an "extreme" example of an ex Wall Street star joinning a start-up. Nevertheless, concerning senior positions like VP, Directors, etc., American start-ups have a great ability to attract first level professionals able to bring their experience from multinationals companies, and thus a lot of value-added, to companies that need to jump from being a start-up to being a fast growing company. This is something requiring a very different kind of management and that is when senior managers are necessary to convert an innovative company into a global leader.

In 2001, when Google hired Eric Schmidt as a CEO, the company was not yet the cash-machine it is today. Nevertheless, E.Schmidt, a former CEO at Novell, accepted this risky position along with the challenge to build world dominance .

To be able to compete with Silicon Valley, Europe definitely needs to develop a risk / reward culture among young people AND among senior executives.