Another way of building Europe
For many people in my generation, Europe remains an enigma. On the one hand, we keep hearing all these politicians campaigning on Europe as the solution to many problems. On the other hand, the European Union (EU) doesn’t really exist in our everyday life. I discussed this paradox with Sarah J. Robbins in this article published last year in Hacking Finance:
“We have to realize that Europe is much more fragmented than most people think. The same politicians are speaking all day long about Europe and Brussels and the EU, but this doesn’t exist in everyday life. You are where you are, and you watch your TV in your language. Weather reports in France are a map of France; we don’t care that it’s raining in the UK.”
The indifference explains a large part of the outcome of any European election. Europeans don’t go to the polls thinking that they’re about to influence the destiny of their continent. Rather, they don’t really care and choose to use the vote as a way to send a signal to their national government. “Because this election doesn’t matter, we’ll use it to scream as loud as we can and reveal our true opinion.”
This is all flabbergasting to everyone who knows the long and painful history of building the EU. Its founding fathers saw it as the only way to tie Europe together in the wake of World War II and as the threat of the Soviet Union was already looming on the horizon. Then it became obvious that a more integrated Europe would serve American strategic interests on the continent, which led to the active support of the US government in bringing European countries together (first in Western Europe, and then all the way to the borders of Ukraine and Belarus). Finally, there was a clear economic argument: the EU was about free trade, and free trade has always been conducive to economic growth.
That being said, free trade (or what we in Europe call the “European Single Market”) only actually exists in certain sectors. As I wrote in Forbes a few months back, “Startups are used to obstacles to doing cross-border business. There’s a general idea that the European Union is a single market, but this is only true, and even then only to a certain extent, for singular industries such as tangible goods, airlines, energy and railways. On the other side, many other industries such as healthcare, urban transportation and real estate are still highly fragmented in terms of language, culture and regulations. This doesn't prevent tech entrepreneurs from trying to grow pan-European businesses in those industries. But cross-border gaps and frictions are already a reality for many startups.”
We could think that it’s time to expand the Single Market to every service industry in which local startups are struggling to do cross-border business. But as a project, the EU is affected by diminishing returns to scale: the larger the EU is and the further the single market expands, the more difficult it is to open up yet another industry via decisions made in Brussels. Urban transportation is a case in point. Ride-hailing platforms such as Uber have been somewhat counting on the EU to make national governments behave and force them to be more welcoming to new business models. What we’ve learned, however, is that the European Commission became afraid of a political backlash and decided to...stall and do nothing. The more integrated Europe is, the more resistance there is to deepening that integration.
And so we shouldn’t count on ‘The EU Commission’ or ‘Brussels’ to take charge when it comes to going further. Instead, we should take a step back and reflect on where the EU is headed and what we could expect from it in the coming years. Indeed the EU is one institution, among many, that will likely disappear (or be radically transformed) through the current paradigm shift. Because it was built in the Fordist Age, there are reasons to think that it was specifically designed for the particulars of that age. It shouldn’t surprise us that as we go through the current paradigm shift, the EU appears for what it is: an obsolete institution that’s ill-designed for a radically different world.
It doesn’t mean that Europe as a continent will unravel into violence and destruction. There have been long periods in history when the EU didn’t exist and yet Europe was relatively at peace. I know I’ve mentioned this many times, but it’s worth remembering again what Karl Polanyi wrote in The Great Transformation (1944)—namely, that in the 19th century the business and financial worlds were an influential agent of peace in the very loose system then known as the Concert of Europe.
“By functional determination it fell to haute finance to avert general wars. The vast majority of the holders of government securities, as well as other investors and traders, were bound to be the first losers in such wars. The influence that haute finance exerted on [European governments] was consistently favorable to European peace… Consequently, there was never a time when the peace interest was unrepresented in the councils of the Concert of Europe... [And so] we shall begin to see why the awful innovation of an armed peace of dozens of practically mobilized states could hover from Europe from 1871 to 1914 without bursting forth in a shattering conflagration.”
Maybe, following the logic of “forward to the past”, it’s up to businesspeople and financiers again to bind Europe together and to prevent conflicts between the various countries. During the transition, alas, we cannot count on politicians. Many of them are still stuck in the past, and that includes France’s Emmanuel Macron. Others have an idea about what Europe could become, but they’re still stuck at the margins of the political system. That’s because politics, too, is undergoing a paradigm shift. It will be a while before the political landscape is redesigned to better reflect what the Entrepreneurial Age is about.
Meanwhile, we European entrepreneurs and investors need to tie Europe together by building bridges between the many startup communities across the continent. And we need all the help we can get, including from the tech (and non-tech) companies that help us do cross-border business more easily. That would include, among many:
Sifted—How come it took so long for a media organization to cover technology at the pan-European level? We European startup people long had to rely on the occasional TechCrunch article to learn about what was going on in other European countries. This is now over thanks to Sifted, the Financial Times-backed brainchild of veteran journalist John Thornhill, the Innovation Editor at the FT. You should visit Sifted’s website, subscribe to their (excellent) newsletter, and join the founding community.
Stripe—For many European entrepreneurs, expanding on neighboring markets has always seemed like the easiest way to scale. But that never much took the fragmentation into account. The very simple fact of crossing the border means dealing with a different language, a different culture, different regulations, and a different financial system. What I like about Stripe is that they’ve set out to make those gaps and frictions disappear—all supported by an inspiring vision of empowering entrepreneurs at the global level!
TransferWise—Who ever said that you must have a bank account in the country where you live? That has long been the assumption, and banks really didn’t make it easy for you to access their services from abroad. Fortunately that’s all over thanks to TransferWise’s borderless account. Now you can concentrate your money on this one bank account and use their banking services from anywhere in Europe, whether you’re a visitor or a resident. And it’s only the beginning as they just raised $292M to go further.
easyJet—When we started The Family back in 2013, we were shocked by how reluctant French entrepreneurs were to travel to other countries for business. Clearly that was a major disadvantage when compared with their US or Israeli counterparts. And so we decided to set an example, to expand our own business at the pan-European level, and to travel in Europe as much as necessary. I must say it’s not that difficult—and easyJet makes it both affordable and as convenient as possible.
There are many other examples of businesses that are helping Europe come together in the Entrepreneurial Age—in a way that’s very different from that of the EU, that byproduct of the Fordist Age. I like to think that The Family itself is part of this adventure. Read my colleagues’ accounts from our criss-crossing the continent—in Berlin 🇩🇪, Copenhagen 🇩🇰, Amsterdam 🇳🇱, Warsaw 🇵🇱, Brussels 🇧🇪—and my own pieces about Tallinn 🇪🇪, Germany 🇩🇪, London 🇬🇧, Switzerland 🇨🇭, and Italy 🇮🇹.