Europe must ‘accept and embrace’ disruption or innovation will be ‘stifled’ and startups ‘strangled’, says Google’s Schmidt
Europe must reform and embrace disruption along with all it entails or risk stifling innovation and stunting growth in the start-up scene, according to Google boss Eric Schmidt.
Writing in a blog post directed at vice president of the European Commission Neelie Kroes, Schmidt called for reform in Europe and for the creation of a “truly digital single” market.
He said the European economy has been put at risk from not seizing the opportunity set out by digital technologies, adding “it’s time for action”.
Forging a single, digital market will give European start-ups the tools they need to thrive and drive forward the economy, according to Schmidt.
“This will give European entrepreneurs, who have all the right building blocks, the incentive to invest and the ability to achieve global scale at greater speed. Significant political will needs to be mustered to support these changes and ensure Europe’s start-ups succeed.
He openly supported Kroes’ formerly contesting the ban of taxi sharing service Uber by a Belgian court, having tweeted at the time: “We cannot address these challenges by ignoring them, by going on strike, or by trying to ban these innovations out of existence.”
Schmidt went on to describe the benefits and low overheads of internet-based companies over the traditional legacy businesses, adding that if Europe reformed as a single digital market, the European Union’s GDP could rise by at least 4 per cent by 2020, generating up to 250bn euros of additional growth.
He also referenced Europe’s “most pressing” problem as its high unemployment rate, but added that digital entrepreneurship was “central” to solving this.
“Fortunately, the Internet is making it easier and easier to start new companies. In order to solve its jobs crisis, Europe must encourage the risk takers. High-tech jobs pay better than low-tech ones and promote higher wage growth more broadly. Best of all, they have a multiplying function: every high-tech job creates four other jobs in Europe,” he claimed.
However, he said traditional European companies and industries had “lagged” in adopting new technologies, which put them at a disadvantage in what had become an increasingly competitive global marketplace.
"Another important challenge is accepting failure. Entrepreneurs are risk-takers, and emerge more readily in cultures where risk-taking is encouraged. Talented and skilled Europeans must see starting their own business or joining a startup as a viable career path.
"A thriving startup ecosystem relies on easy access to capital. Europe needs tax incentives and other proactive measures that make it easier for startups to get funding. Governments should think carefully about the balance between driving growth and taxing capital.
"Most of all, Europe needs to accept and embrace disruption. The old ways of doing things need to face competition that forces them to innovate. Uber, for example, is shaking up the taxi market -- for the good. It offers riders convenience and cheaper fares. Understandably, the incumbent taxi industry is unhappy."
Schmidt backed recent comments made by new European Commission president Jean-Claude Junker in the Wall Street Journal, where he said Europe must redouble its commitment to the single market.
“I agree completely. If everything stays the same, innovation will be stifled and startups strangled. New businesses promoting new ideas should not be held back by bureaucratic or regulatory hurdles. Success is never guaranteed, especially in an area that is as competitive and fast-changing as technology, but Europe has all the right ingredients. It must redouble its commitment to the single market and steel its nerve to permit disruptive innovations.
"If the new European Commission manages to introduce effective reform, Europe will play a leading role in the global digital economy and be a better place to work and live," he stated.
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