propelled by giants like  Nokia, Siemens, and Ericsson.

But then….something changed.

Europe lost its dominant  position on the world stage.

Today, it seems everything we use is made  in China and runs on American software.

The market cap of the ten largest  tech companies in the U.S. is 15

times greater than the market cap of the  ten largest tech companies in Europe.

How did Europe fall so far behind?

Because Europe makes it difficult  for people to start and do business.

When two Irish brothers, Patrick and  John Collison decided to set up an

online payment company after dropping out of  MIT and Harvard, they launched Stripe in San

Francisco with initial financial support  from the startup accelerator Y Combinator.

Accelerators are prolific in Silicon Valley,

providing the crucial early support  that John and Patrick needed.

Later, when the brothers approached  Peter Thiel, the former CEO of PayPal,

Thiel led a $2 million funding round that  included investments from Sequoia Capital.

While European startups do  receive substantial support,

equity investment provided  in the U.S. is far greater.

In 2023, around 4,700 European  start-ups received venture capital

backing of 13 billion euros or around $14 billion,

while U.S. start-ups attracted $170.6 billion in  venture capital across nearly 16,000 companies.

VCs in Europe are known to be conservative,

preferring to focus on revenue and short-term  returns rather than long-term growth.

Could Stripe have been started in Ireland?

No. And, that's not my opinion. It's  from the mouth of Stripe's founder.

In a 2012 blog post, Patrick Collison  explained that when he and his brother

approached Irish banks to discuss partnering  and integrating Stripe's online payment system,

the banks were not very receptive.

They were cautious about adopting new technology  that had yet to be proven reliable or profitable.

By contrast, the U.S., particularly  Silicon Valley, has a history

of financial institutions  collaborating with startups,

making it easier for Stripe to establish  partnerships and advance their platform.

Similarly, Spotify was founded  in Stockholm, Sweden; however,

to scale effectively, Spotify expanded  its operations to the U.S. in 2011,

gaining millions of new users and attracting a  $100 million funding round led by Goldman Sachs.

Entering the U.S. market allowed Spotify  to go public, increasing its visibility,

credibility, and driving its growth.

Patrick also highlighted another crucial  challenge faced by startups in much of Europe.

The smaller talent pool compared to the U.S.

One of America's defining strengths is  its ability to attract a diverse and

highly skilled workforce from all over the world.

Even if European startups do  manage to attract top talent,

they face another significant hurdle: a  highly restrictive regulatory environment.

Labor laws in France, for example,  are famously protective of employees.

They allow a maximum 35-hour work week and  at least five weeks of vacation a year.

From my own experience  living and working in France,

it wasn't uncommon my friends to  get 8 to 9 weeks of vacation a year.

While these labor laws provide excellent  employee protection, they can also make it

difficult for startups which often operate  with an “all hands on deck” mentality.

Without this hard push, it's more  difficult to compete on a global scale.

This need for intense effort is  epitomized by Elon Musk, who once said:

“Work like hell. I mean, you  just have to put in 80-hour,

80 to 100 hour weeks every week. I mean, if  other people are putting in 40 hour work weeks

and you're putting in 100 hour work weeks,  then even if you're doing the same thing,

you know that, you will achieve in four  months what takes them a year to achieve.”

As the CEO of Tesla, Elon is no stranger to  the challenges posed by heavy regulations,

particularly in the EV industry.

Starting in February 2025, European manufacturers  must declare the carbon footprint of every

EV battery produced at every manufacturing  plant. (coming into effect February 18, 2025)

Companies grossing over 40 million euros will  be periodically audited to ensure they identify

their raw material suppliers, specify their  location, and detail the transactions involved.

By 2027, all EVs sold in the EU  must include a 'battery passport'

that provides information about  the battery's carbon footprint,

supply chain, durability, resource  efficiency, and materials used.

And this will all be accessible  to customers through a QR code.

While these requirements  are aimed at sustainability,

they can slow EV growth by adding costly  and complex administrative burdens.

As the head of the European Automobile  Manufacturers' Association said,

“...too often, the EU puts the  regulatory cart before the horse”,

imposing heavy compliance burdens before Europe  has a fully developed EV industry in place.

European car companies are already  struggling to keep up with China's

dominance in the EV market, which benefits  from significant government subsidies.

Meanwhile, American incentives to go  green through tax credits, grants,

funding, and consumer discounts  also increase competition.

Europe is also regulating its way to “last  place” as a Wall Street Journal article put it,

in the domain of artificial intelligence.

In March 2024, Europe passed the  EU AI Act, the first law of its

kind that will shape how companies are  allowed to use artificial intelligence.

Some systems are banned, such as those involved  in social scoring or biometric identification,

to guess someone's race, political  affiliation, or sexual orientation.

Profiling that can determine someone's

likelihood of committing future crimes  is also banned, think Minority Report.

Goodbye, Crow. Wait, wait!

Deepfakes will have to be clearly labeled as such.

ChatGPT must become more transparent by disclosing  the datasets used to train their AI systems.

While the intention is to keep people safe,  the Act could also stifle progress in a

rapidly evolving industry that could surpass  the significance of the Industrial Revolution.

Before the AI Act passed, executives  from top European companies wrote an

open letter to EU lawmakers, warning  that a stringent AI law “could lead

to highly innovative companies  moving their activities abroad.”

“The result would be a critical productivity  gap between the two sides of the Atlantic.”

In Europe, venture capital deals related to  AI have lagged far behind the U.S. for years.

We've already seen how heavy  regulation can hurt an industry.

The European space industry has struggled  to innovate quickly and efficiently.

Europe no longer has an independent  way to reach space after losing

access to Russia's Soyuz rockets  following the invasion of Ukraine.

Meanwhile, Europe's flagship rocket,  the Ariane 6, faces significant delays.

This non-reusable rocket, manufactured by  the French aerospace company ArianeGroup,

is expected to fly this  summer—four years behind schedule.

A decade ago, an executive from its  sister company scoffed at Elon Musk

for attempting to build reusable rockets.

SpaceX primarily seems to be selling a dream,  which is good, we should all dream. I mean,

I think a $5 million dollar launch or $15M  launch is a bit of the dream. Personally,

I think reusability is a dream. How am  I gonna respond to a dream? My answer to

respond to a dream is, first of all,  you don't wake people up. They have

to wake up on their own. Y'know, they're not  supermen. So, whatever they can do, we can do.

This skepticism reflects a cautious European  mentality that favors incremental progress

and proven methods over the American attitude  of risk-taking and setting ambitious goals.

So, it seems the American mantra – dream  big, work hard, and cut the red tape --is

a lesson that European governments might need to  embrace if they want to be part of the future.

Innovation is key to staying ahead,  and learning how to innovate starts

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Thanks for watching.

For Newsthink, I'm Cindy Pom.