30th March, 2017
Australia ranks a measly 73rd in the world for innovation efficiency, but Europe dominates the charts. Why?
That was the question posed by Google Play’s head of apps for Western Europe, Tamzin Taylor, at the Myriad festival in Brisbane today.
With Google she’s been able to experience the growth of Europe as an innovation hotspot first hand.
While Australia languishes in 73rd place, according to the Cornell University’s Global Innovation Index, countries such as Luxembourg, Malta, Iceland, and Moldova are in the top five.
So clearly something is going on in the region.
Taylor said since 2011, the number of tech startups in Europe has grown a massive 3.5 times while the capital is starting to flow into the continent.
Cities such as London have spawned companies like Skyscanner, which was sold to Ctrip for $A2.4 billion.
Meanwhile Berlin has sprouted Hello Fresh and Soundcloud, Paris is famed for Bla Bla Car and Stockholm spawned Spotify – which was recently valued at $8.6 billion.
So, what is Europe doing right?
“Number one, there’s a huge increase in investment and democratisation of investment – so crowdfunding and some of the larger players are starting to lend to smaller startups,” said Taylor.
“The second one is cultural. Europe has traditionally been pretty risk-averse and I think that appetite for failure is increasing and changing – which is a real positive.”
However, there were also several factors making Europe an innovation hotspot where Australia might be falling behind.
She noted the example of Singapore, which poured billions into innovation and tech in the 90s – when the dotcom boom and bust was going on. Today it’s number one for startup talent, according to Taylor.
She also said that education and the ties between the private and education sectors played a huge role in what’s happening in Europe right now.
“Great hubs have depth of investment into academia and into education,” said Taylor. “EMEA (Europe, Middle East, and Africa) is lucky because it’s 30 percent cheaper to hire people compared to Silicon Valley.
“According to a friend of mine who works in venture capital, that’s because people you hire in EMEA tend to stay two to three times longer than they do in Silicon Valley because there’s less competition.”
She also said European startups benefitted from a huge acceptance of diversity in their workforce, with Berlin and Stockholm boasting the third and fifth highest visa acceptance rates in the world respectively.
One of the benefits of diversity, apart from the better ideas which tend to be generated from it, is that it helps with global connectedness.
“A report showed that startups, 21 percent of their customers are international versus other regions where the average is 13 percent – that really helps them drive their business,” said Taylor.
She also pointed to Tallin in Estonia as an example of what can happen when a city or country goes all-in on innovation.
“They’ve got 300-900 startups, but the city’s only 450,000 people. It’s absolutely tiny,” said Taylor.
“Estonia was the first country in the world to offer elections online and the first one to offer EU residency.
“You can do a tax return in under five minutes and you can register a company in less time than it takes to drink a cup of coffee…and 98 percent of banking transactions happen online.”
Australia has a unique advantage though – it’s Australia.
It’s a great place to live, with great weather and great people. If we can get some of the other stuff right, there’s no reason why Australia can’t climb up the charts.