Taavet Hinrikus, a co-founder of the Estonian startup, TransferWise, proposed five ways to encourage innovation in Europe in a speech at the EU informal meeting of ministers responsible for competitiveness in Tallinn, Estonia, on 25 July 2017.
I’m here to give you the view from on the ground as a tech entrepreneur in Europe, having been part of the team that built Skype here in Estonia and now as founder and chair of TransferWise.
And as a tech entrepreneur, I find the recommendations from the Lamy High Level Group Report (the group’s task is to find ways on how to maximise impact of EU research and innovation programmes – editor) very encouraging and I hope they will be adopted by Europe.
I’m particularly excited about the recommendation to adopt a mission-oriented, impact-focused approach. The biggest challenges we face today are global and it’s only by coming together that we will solve them. But perhaps the foundation of all the other recommendations is to educate for the future and invest in people who will make the change.
Because it’s people, not policies, that invent rocket ships
Securing and attracting the best talent is an obsession in the tech industry for good reason. It’s your main asset; it’s your edge. Historically, people have flocked to Silicon Valley because of the belief that that’s where the latest innovation is happening. It’s a snowball effect. And one that can happen on other places too: we saw something similar – if smaller – starting in London a few years back. It may well reverse; it’s something you have to keep working at. Maybe we’ll see it next in Paris.
“Securing and attracting the best talent is an obsession in the tech industry for good reason.”
Talent is a complex subject: from the education our kids get in kindergarten and beyond to the re-skilling of some parts of the workforce; from the opportunities available for research to how we attract the best people to work in our companies. And of course, there’s the topic of immigration.
So how do we help people to invent those rocket ships? How do we encourage innovation?
To invent a rocket ship, the first thing you need is an attitude of curiosity – the desire to ask the question, “what if…?” And that’s the question you keep asking when you’re an entrepreneur.
An idea comes from going beyond the usual confines of our thoughts and crossing those boundaries. And then the ideas keep spilling over: there’s no single Eureka moment but a series of opportunities and possibilities.
The attitude to failure is one of the characteristics that’s often called out as the difference between the US and Europe. And we do need to be less risk-averse, more embracing of failure. Having failed makes you look bad in Europe. But in the US, it makes you look experienced.
“Having failed makes you look bad in Europe. But in the US, it makes you look experienced.”
But I’m not sure that looking at things in the binary way of “was it a success?” or “was it a failure?” is that useful. I’m not even sure there is such a thing as failure.
Estonia is known as a start-up nation. And we do seem to have made the entrepreneurial streak a national trait. Maybe our past has something to do with that. When I was growing up in Estonia, it was part of the Soviet Union. There’s the old phrase that necessity is the mother of innovation. And that was definitely the case for us. If we didn’t have something, then we had to build it – or go without. We didn’t consider whether something was a success or failure. If it didn’t work – we learned and we tried again.
To me, the only failure is not trying.
So how do we encourage that mindset of curiosity in our children, our students, our researchers, our entrepreneurs and our workforce? How can we create a culture that asks, “what if….?” So that everyone is playing a role in innovation.
Here are five starting points:
What if entrepreneurship was on the curriculum?
Of course, we need to focus on STEM education and encourage people to understand how things work during early years of education. But what if we went a step further and made sure everyone came away from school and university with entrepreneurial experience no matter what their subject focus; having set up a company and seen what it means to take an idea and turn it into reality in real life. At that age, it’s definitely as valuable if not more valuable than studying macro-economics. And makes building a business something normal and not to be afraid of.
What if research was about the moonshots as well?
Research is the area where you think you’d find the most curiosity but it can be constrained by how funding is decided. The role of research is to keep widening and deepening our understanding. We need research with clear parameters – but we also need to encourage research that considers the moonshots, the mission-based approach talked about in the Lamy Report.
The ideas that look a bit crazy need investment too. To give you an example, when Skype was just starting out, one of the top guys at AT&T called it a toy. Most toys don’t get funding – but there are many innovations that get dismissed as a toy at the beginning and end up changing the world.
“The ideas that look a bit crazy need investment too.”
Partnerships between the private sector, including start-ups, and the public sector need to be encouraged; and the idea of “sandboxes” adopted so research can take on an MVP approach.
What if regulation was developed to create opportunities rather than restrictions?
Regulation is playing catch-up to the potential for innovation that tech has created. And in many places, it’s constraining innovation rather than supporting it. Whether it’s sector-specific regulation like AML in the financial services sector or more general business regulation that can cut red tape for small businesses, getting the right regulatory framework is key to a flourishing ecosystem.
The free movement of data that the Estonian presidency is proposing is one example of how we can give research the fuel it needs. And for that to happen, regulation needs to be created that not only allows but also encourages cross-border collaboration. What if regulation helped us cross boundaries not uphold them?
Regulation should work towards creating a big market: the 500 million people of Europe are still in 28 different markets in too many cases. To understand why, look at how ride-sharing or AirBnb has to work regulation on a market-by-market basis. Or if you want to hire people across many European countries, can you do it without establishing local entities in every country? Having a huge market goes a long way towards encouraging people to try.
“Regulation should work towards creating a big market: the 500 million people of Europe are still in 28 different markets in too many cases.”
Which brings me back to immigration.
What if the way we looked at immigration was how to encourage people to move more?
Immigration is key to economic growth and innovation. In countries with an aging population – which includes most of Europe, it’s also an economic necessity.
The free movement of people within Europe is perhaps the single biggest benefit of the EU; extending that beyond the region would bring greater benefit.
The collision of ideas between people and between cultures always propels us to a greater potential than we could ever achieve on our own.
What if we celebrated success instead of condemning failure?
Another Estonian trait is that we’re not that great at praise and celebrating the things that work. But that’s something Europe needs to do.
Showing what’s possible: there’s no doubt that success stories like Skype, like TransferWise play a part in strengthening the ecosystem. It was really after the growth of Skype that things started happening in Estonia. It’s a virtuous circle. From inspiring new generations to developing talent to creating investment. We need to shine the light on those stories. To show what’s possible when you ask, “what if?”
I don’t think it’s possible to underestimate the importance of innovation for the economic competitiveness of Europe, for the development of our society and for the future wellbeing of everyone not just in Europe but around the world.
I believe we will have many Silicon Valleys in Europe. Ecosystems that reflect our strengths and become the building blocks of our future. Full of ideas sparked by people who ask, “what if…?”
The opinions in this article are those of the author. Cover: Taavet Hinrikus (courtesy of TransferWise.) This article was originally published in Medium.