Entrepreneurial Spirit: Happy Socks and Angry Birds

Monday, January 19, 2015

Entrepreneurial Spirit: Happy Socks and Angry Birds





I want to thank the Lisbon Council for all the work they’ve done on entrepreneurship and continuing to push the conversation forward. I feel privileged to speak here today on a vital topic that is near and dear to our hearts at Google.

Just this month, Niklas Zennstrom, the Swedish founder of Skype was interviewed in Foreign Affairs magazine, where he was asked for his thoughts on the global spread of tech entrepreneurship.

In the article, Niklas spoke about the usual concerns you hear about being an entrepreneur in Europe. Red-tape. Scarce venture capital. A risk-averse culture. Unforgiving bankruptcy laws.

That’s become a commonplace critique in Europe. As far back as 2003, the European Commission asked a similar question in a Green Paper on entrepreneurship: “Why are so few Europeans setting up their own companies?”

But, overall, the tone of Zennstrom’s interview was surprisingly upbeat.

“Ten or 15 years ago,” he said, “if you wanted to be an Internet innovator or entrepreneur, you packed your bag and bought a one-way ticket to Silicon Valley and made it over there.”

But “today,” he said, “you don’t need to do that.”

So while there’s no shortage of doom and gloom when discussing the startup climate in Europe, I’m here today to side with Niklas, and to talk about trends that suggest Europe’s entrepreneurial spirit is very much alive.

The same continent that gave birth to several of the world’s most important companies of the last century—BMW, Maersk, L’Oreal, —is producing a new generation of startups that have the potential to shake up markets, grow economies and boost jobs. It’s a trend we’re witnessing firsthand at Google, both in terms of the numbers and through the success of our many partners. And it’s one we’re heavily invested in promoting.

Data

Let’s start, as we often do at Google, with the numbers.

In capital after capital, European startups are having banner years. In London, tech firms set a new investment record in the last year, bringing in nearly 1.2 billion euros in investment, double what they raised in 2013.

In Madrid, startups raised 187% more capital last fall than they had just a year earlier.

In Berlin, tech start-ups saw their investments grow by 140 percent year-over-year, with two of Europe’s largest tech IPOs. Both the e-commerce site Zalando and the incubator Rocket Internet earned multibillion euro valuations.

And in Stockholm, we’re witnessing the birth of one of the most prolific tech hubs in the world, with 6.3 companies valued at a billion dollars for every million Swedes. In Silicon Valley, that number is only a little higher at 6.9.

The emerging picture shows that across Europe, 2014 was a great year for tech startups. In fact there were as many start-up exits in the first half of 2014 in Europe as there were in all of 2011 and 2012 combined.

Stories

Ok, so let’s look beyond the numbers for a minute and look instead at cultural influence. The most downloaded gaming app in Google Play last year was Candy Crush, created by British gaming company King. A few years after the Finnish firm Rovio defined app-based gaming with Angry Birds, other Helsinki-based firms like Supercell are following in their footsteps, with massive hits like Clash of Clans — 2014’s top-grossing game for iPhones and iPads.

And the future of the music industry is increasingly being charted by ambitious European companies. SoundCloud is a Berlin based platform for musicians and music fans to promote, share and stream music. Since its launch in 2007, it has built up a base of over 175 million monthly users who contribute over 12 hours of new content every minute. Experts expect its valuation to soon top €1 billion. Another example is the popular Swedish music streaming service Spotify. Since Spotify was launched, Sweden’s record industry revenues grew by more than a third, while piracy plummeted. Today, Spotify has more than 60 million users worldwide and is providing global exposure for chart-dominating European acts like Clean Bandit and Hozier.

All of these developments have left us at Google with an optimistic view of European entrepreneurship. That’s why Google Ventures, our Venture Capital investment arm, broke ground in Europe in a big way. Last year we established a European venture fund of $100 million to support the next generation of European companies, helping fuel their passion and bring their ideas to life. And after a few months we announced that we would be increasing that fund to $125 million - a clear sign that we believe investing in European entrepreneurs is good business. While I know it has often been fashionable to bemoan the lack of European venture capital funds, we’ve been impressed by their number and quality, and we are actively seeking to co-invest with them.

We want Google to be an engine of entrepreneurship in Europe, helping match the enormous talent and ambition of European entrepreneurs with the opportunity the world’s largest market provides. We’re excited to join a vibrant investment scene in Europe and work with other European investors to give our support directly to European businesses.

AdWords

Now we’re also seeing firsthand how small business entrepreneurs are using the Internet to create innovative business models and grow what many will see as traditional businesses. And we’re proud that our products are helping entrepreneurs in all fields to hire talent and expand their reach into new markets that were previously closed to them.

Study after study has shown that small businesses can do better when they establish a strong web presence, growing sales up to four times faster than their competitors when they embrace the web and digital tools.

The clearest reason for that growth is the internet’s ability to help entrepreneurs tap a vibrant export market. It’s important to remember that 30 years ago, small businesses couldn’t afford to advertise, certainly not on a global scale. They could afford listings in the yellow pages or their local paper, but expanding beyond that market was simply out of reach. Today, with technologies like Google’s AdWords advertising, they can market their wares globally, exposing their craft to a much larger audience.

We’re not really known in Silicon Valley for our sense of fashion. But today, I’m proud to be wearing these very loud and very vibrant socks. Six years ago, on a bleak day in Stockholm, a man named Viktor Tell noticed his friends had all worn colorful socks to lift the mood. He realized how hard it was to find colorful socks and took to his shed to begin a new trend from the ankles-up.

For years, Happy Socks, the company he founded, has been using our AdWords advertising product to take his local experiment in optimism worldwide. By advertising and selling his socks online, he dramatically increased his traffic and revenue, doubling his turnover in 2013. Today he has customers throughout Europe, Japan, Australia and the US, making Happy Socks a global player with a presence in over 6,000 retail stores.

And even if you prefer to go sockless on the beaches of the Aegean, we can help. The Greek travel Agency Pamediakopes.gr has grown tremendously since it began to advertise with Google AdWords in 2010. In four years, both its traffic and sales have quadrupled, leading a small company of 35 to grow to 150 employees. By targeting Russian, Romanian and Bulgarian web traffic through AdWords, Pamediakopes is now a leading travel agency in each of these countries.

Google has helped hundreds of thousands of European small businesses like Happy Socks and Pamediakopes succeed online, giving them new ways to grow and promote their businesses. A study by the German Institute for Economic Research credited Google products with helping create 28,000 companies and 100,000 jobs in Germany during the worst years of Europe’s downturn.

But we still need to help educate people and businesses to get online; for example, in the UK only 45% of small businesses have a website.

In Germany, we kicked off the “Weltweit Wachsen” initiative to do just this, helping German small businesses to use the internet to tap new markets. By the end of the year, we expect to engage more than 250,000 people through educational workshops to bring their businesses online.

And we also launched a digital platform called Made in Italy, to support traditional Italian industries like food, fashion and handcrafts by improving their digital skills. Through free online training for business owners as well as personalized support from over 100 tutors, we plan to reach over 80 percent of Italy’s traditional small businesses.

YouTube

Some of those jobs may not be the type you’d expect. YouTube, our online video site, is helping create an entire new type of field: the online video entrepreneur.

Rather than explain what I mean, let’s embrace the spirit of YouTube and have you see it for yourself in this video.



With a simple camera, a YouTube account and the savvy to realize that the music he loved wasn’t being covered anywhere else, Jamal Edwards built his passion into the leading youth media music force in the UK, SB.TV. In fact, when we ran that ad for the first time in the UK, the SB.TV web site crashed because nearly a million people searched for Jamal Edwards.

Now, Jamal is spending his time expanding SB.TV, landing himself on the cover of the Economist and breaking new artists worldwide. In fact, Spotify’s top male artist of the year, Ed Sheeran, actually broke through on SB.TV.

And speaking of breakout stars, I’m curious, how many of you could guess one of the five most popular celebrities among US teenagers, according to Variety magazine?

Not Katy Perry. Not Leonardo Dicaprio. Not Taylor Swift.

According to Variety, the top five most popular celebrities are all YouTube stars, coming out ahead of traditional stars like Jennifer Lawrence and Johnny Depp. In fact, the third most popular celebrity is a 25-year-old Swede named Felix Kjellberg who lives in Brighton, England. Felix is better known to his fans as PewDiePie and he currently has the most popular YouTube channel in the world, with over 33 million subscribers. By the end of this month, that number will probably be 34 million.

Every week, Felix reviews and comments on video games to a global fanbase that extends throughout Europe, North America and Asia.

In fact, YouTube stardom has become so mainstream that in Germany, we’ve seen something remarkable happen. When our German YouTube stars apply for a loan, they list their occupation as YouTuber.

Today, thousands of YouTube channels are making six figures annually and total revenue amongst our YouTubers has grown by 50 percent in each of the last two years.

Android

I spoke earlier about companies like Rovio and SuperCell, both companies that have found success through the emergence of the mobile economy. Mobile marketplaces are serious business, with a recent study finding that the mobile economy generated about 90 billion euros in revenue in Europe in 2013. It’s estimated that there are more than 2.9 million developers in the world and more than 2 million apps.

We’re proud to be a part of that ecosystem. Indeed, one of Google’s largest efforts over the last several years was developing our open-source mobile operating system Android, with our own app store called Google Play. We announced at our global developers conference last year that we had paid out more than $5 billion to developers since the previous year’s event.

Developers like 6Wunderkinder, a Berlin startup who built a task management app called Wunderlist that was a top app on both Google Play and the App Store last year. Wunderlist’s largest market is the US, but its also thriving in China and Europe as well. They recently attracted 16 million euros from Sequoia Capital. Sequoia’s name is legendary in the US, having backed companies like Apple, Oracle, even Google. But it wasn’t until 6Wunderkinder that they made their first investment in Europe.

Elsewhere in Berlin, EyeEm has built a global community for photographers in record time. In 2013, the app had 1 million users. Today, 10 million users from around the world have a destination to sell photos, share tips and connect with other aspiring photographers.

Supporting Entrepreneurs

If we’re honest, entrepreneurial growth in Europe isn’t just a question of capital, or helpful products or global platforms like YouTube and Android. It’s also a question of skills. Entrepreneurship feeds off of collaboration and partnership, with people coming together to learn from each other and generate new ideas.

Our own effort to seed Europe’s playing field led us to create Campuses that attract ambitious and aspiring entrepreneurs in a place to connect and create. We’ve also been proud to partner with a number of leading start-up organizations - such as NUMA in France - to support start-up working spaces and programs for entrepreneurs across the EU. Globally our programs have reached some 280,000 entrepreneurs who have launched 8000 startups, created 6600 jobs and raised 160 million euros.

Google’s London Campus has already grown to 32,000 members, leading to startups that have created nearly 600 jobs and attracted 44 million euros in funding. Across this year, we’ll be launching new campuses in Warsaw and Madrid, based on the inspiring demand we’re seeing on the ground in those cities. At each of these centers, we're supporting founders and developers to improve their technical and business skills so they can take their ideas to market. We offer thousands of hours of free mentoring, networking with venture capital and other events to support these entrepreneurs.

We also launched Actívate in Spain, where youth unemployment has reached a massive 54% in 2014. Actívate is an initiative to provide free online training in e-commerce, analytics and cloud computing to Spanish youth. These are real courses designed in partnership with Spanish government and academic institutions, awarding official certificates that can breathe new life into CVs throughout the country. Our goal is to offer these courses to 160,000 young people in Spain by year’s end.

And we’re already seeing these efforts pay off. Last year, María Victoria Ruiz joined an Actívate digital marketing course in Spain. This inspired her to set up her own business with co-founder Eduardo Fernández, and in 2013, Maredas was born – an online shop selling urban-style espadrille shoes. Working with Google AdWords, Maredas has built their visibility and attracted new customers, exporting to other parts of Spain and even to France and Italy. In fact most of their sales increase has come from abroad.

We are also helping to fuel the creative economy and grow the next generation of creators and media companies online. Both Google Play and YouTube have provided a paid distribution platform to creators to reach a global audience. YouTube alone has paid over €1 billion to the music industry, propelling the success of countless European creators. The YouTube Space London is YouTube’s state of the art production facility open to European YouTube creators to learn from industry experts. Creators learn everything from camera basics, to being a business on YouTube, share best practices, collaborate and network with other creators and create the dream video through the latest technology in video production. Hundreds of talented creators have got the chance to create brilliant content and showcase it to the world.

Support from policymakers

We know there’s more Google can do to spur the blooming trend of entrepreneurship in Europe. And we plan to keep investing—in both ideas and people. But the question I get asked most is what can policymakers do to help.

Now, I’m always very nervous as an American going to other countries and offering advice to people on how to manage their policies. But here’s what I’ve observed from ten years of repeated trips to Europe and conversations with policymakers and entrepreneurs alike.

I speak to many entrepreneurs who struggle with 28 different rule books. The Internet is in many ways borderless and yet there are many borders still within Europe, even within the single market. With over two dozen frameworks, many of which are inconsistent, entrepreneurs stumble when they seek to grow or hire across borders or trade goods and services. The biggest step the EU can make is to complete the formation of the digital single market, a goal the European Commission rightly recognizes as critical to the Continent’s growth.

We hope the Transatlantic Trade and Investment Partnership can also provide a generational opportunity to support the growth of the transatlantic economy and open up new avenues for growth to European and American companies alike.

I also hear from policymakers and business leaders about the crucial role intellectual property plays and need to protect their innovations. The Internet creates opportunities for creators to reach new audiences and develop new sources of revenue. Copyright rules should take full advantage of a new single market to promote research and innovation while protecting the rights of creators.

Of course, the other ask from entrepreneurs is to make it easier for them to access capital to grow and scale-up their business. Nicklas Zennstrom called on governments to encourage private investors to put their money in start-ups by reducing capital gains taxes for investing in start-up companies.

And anyone who’s in need of talent talks about the importance of encouraging our youth to acquire the digital and scientific skills of the future, both in Europe and the US. By 2020, nearly 90 percent of all jobs will require some technical information and communications skills. At current rates, the EU predicts a shortfall of 900,000 jobs that will go unfilled because students—especially young women—are lacking these skills. In the US, 57% of bachelor's degrees are earned by women, but only 12% of computer science degrees.

At Google, we’ve invested in initiatives like the RISE Awards and Made with Code to encourage children to adopt technical skills. And we’re also working with more than a dozen Science, Technology, Engineering and Math—or STEM—education organizations across the EU to give over 90,000 students exposure to computer science. Our goal is to ensure that children have the technical tools to solve real world problems, whatever their passion.

Conclusion

We at Google see clear reasons for confidence in Europe’s entrepreneurial potential and we’re proud to play our part. But in all this talk about Happy Socks and Angry Birds, IPOs and investment rounds, it’s easy to lose sight of what entrepreneurship really means.

Despite the revolutions we’ve seen in technology or the transformations that have shaken both our economies, when it comes to work, one thing has never changed. As people, we still largely define ourselves by our calling—by our profession. Whether you choose to be a barrister or a baker, a politician or a police officer, you derive a sense of pride from your work. That is something that is fundamental to the human condition—we all seek meaning through work or service.

The human costs of unemployment in both America and Europe have been massive. When people cannot find work—when they cannot better their own lives or the lives of their families or their communities—they lose more than a paycheck. They lose a sense of themselves. They ache for meaning.

What we’re beginning to see in Madrid and Milan and Athens, as well as in American cities like Detroit and Baltimore, is a response to that ache. We’re witnessing a belief in entrepreneurship that suggests people can climb out of their circumstances, if only their talent and ambition can be met with opportunity.

That opportunity doesn’t just exist on one shore or in one country. On both sides of the Atlantic, we’re seeing a drumbeat of innovation grow steadier, taking advantage of the scale and support that only our combined markets can provide.

Silicon Valley has been a tech hub for nearly fifty years. And I hear the question all the time: How do we replicate Silicon Valley? And my answer is not that you can’t, but that you shouldn’t.

Silicon Valley is the product of a number of forces that came together to create something unique. Whether it’s proximity to a world-class university in Stanford, or even nice weather--there’s no one thing that makes Silicon Valley what it is, nothing that can be exported on a barge and sent across the Atlantic. And there’s definitely nothing in the water...

There’s no reason that the forces that were harnessed in Silicon Valley-- talent, creativity, ambition, and as we like to say at Google, a healthy disregard for the impossible-- cannot be brought to bear to create an equally valuable, and uniquely European technology sector. In fact, major European cities already have much more than Silicon Valley ever did at the beginning, when it was just a lightly populated region south of San Francisco known mostly for producing apricots, plums and strawberries. London, Paris, Berlin, Warsaw, Stockholm--you have vibrant, diverse cities, with a deep-seated sense of culture and a shared history, full of creative people with brilliant ideas just looking for an opportunity.

More than anything else, Silicon Valley was built on an entrepreneurial spirit—on a prevailing idea that entrepreneurs could build something from scratch and see it thrive and expand.

But there’s no natural limit to that spirit. It doesn’t need a work visa; it doesn’t need translation. It travels easily. Google began 1998 in a garage in Menlo Park. But today, it’s just as likely the next great company will begin in a warehouse in Berlin or a Swedish cafe or a British tech incubator.

Good ideas are everyone’s domain; they just need to be nurtured to reach their potential. And that’s a commitment we can all make together.

Thank you.