It feels like the only path Mistral has to win is by targeting risk-averse European enterprises by waving the EU banner and having them force it on their employees. Even then, if they fall far enough behind they won't be able to do that either. Seems like a sad outcome for European tech given all the talent Europe has. It's frustrating.
You watch the OpenAI launch videos and its a surprising variety of Europeans accents talking about all the value they're creating in the US, instead of back home, simply due to the more favorable business/investment policies of the US.
My pet theory is, outside of the silly regulatory stance, the real reason Europe can never compete in each wave of tech (mainframe > pc > internet > mobile > social > AI > etc.) is government pension systems hoovering up all private capital and investing it into european governments (bonds) instead of european businesses (equities).
Centralizing the financial assets of an entire country, subjecting it to the whims of politics thus requiring it be invested it into extremely low risk bonds instead of a larger portion in European equity indexes or even a tiny portion in venture capital has created this situation: https://i.redd.it/fxks3skmvt4e1.png
Yes, a vast majority of VC funds lose money. Hence why it's bucketed in 'alternatives' and never a major part of pension portfolios. But the small group of winners literally create the future tax base to fund the social welfare system to continue existing (not to mention the future military tech which it turns out is useful when your neighbors get hostile). Not taking the risk means you never get the reward.
If Europe put even 1-2% of their $5T in pension assets into venture...even grossly mismanaged Softbank style...I find it hard to imagine you wouldn't accidentally create a few $100+ Billion companies in 10-20 years. More important would be creating the startup ecosystem for taking the rest of the worlds capital into these ventures as a multiplier.
Government pension funds are a part of it, but it’s a combination of many things, like:
- The US has been a single market for a much longer time than the EU, and the EU still is not a single market, primarily due to language barriers (Germany, France, and Italy are large enough markets to have their own localized, but slightly worse SaaS options)
- European societies are more arranged around the common good and have lower income differences between people and super-wealthy individuals by design. The US is built around being the place where talented people can make the most money out of their skills, which results in many people worldwide choosing it as the place to go to, as the talent market is a global one.
- European values tend to value making as much money as possible or competing and being the winner less, which results in people grinding less and being happy when they become rich enough to focus on other things.
Yes on the single market being a huge issue, but the other "cultural" differences are total BS, and just modern media narratives.
Western Europe and the US had essentially the same level of government safety nets (and government spending and economic growth) from the 1950s to the 1990s.
Who do you think started all of the European industrial giants that are still globally competitive today? Europe had no problem competing in the industrial revolution, if these were actually European values there would be no competitive European industry like there is no competitive European tech. It's only the digital revolution that Europe has struggled with.
I feel the main issue was that the US historically was the place to go if you want to study or work with the "best" tech minds so talent flocked there. During the industrial revolution you couldn't so easily just pack up and move across the world.
Even now where I don't think that holds true so much (there are small pools of talent elsewhere, e.g. Stockholm is hot right now), a good senior engineer in Europe may be able to get €100k, and you are looking at 2 or 3 times in the US, so it's still attractive to relocate.
Cultural differences (mainly language barriers) made it hard for somewhere like that to evolve in Europe. Yes everyone in tech speaks English, but if you move to say Poland and want to rent an apartment or see a doctor, you would have had a hard time without at least a basic understanding of Polish. It's completely different from someone moving from Texas to SFO.
Ironically all the immigration of Russian speakers over the last few years has actually helped embrace English in these countries, as for nationalistic reasons they don't want to embrace Russian.
In the 2000s and early 2010s London was the tech hub of Europe (English speaking, many high ranking universities in the vicinity), but Brexit f***d that up.
If you think that this is sad, take a look at Canada and Cohere. I think it's not that Europe is lacking something, but rather the US and China are the only ones that are able to pull something off.
Not true, I switched to LeChat for my every day stuff just because it is good enough and I like the french twist.
I tried Mistral for a bit, and it is so fast everything else feels bad now by comparison. I think there's lots of opportunity for OpenAI, Anthropic to stumble on features and performance.
> simply due to the more favorable business/investment policies of the US.
It has nothing to do with policies, or pension system or whatever, and all to do with market size: when building an American company, you have access to the whole US from the start, then you can build an international product (with all the hassle that comes with it). If you're “European”, you have 27 different markets to address and except your own, none of them is easier for you to get than for an American company.
The second hottest tech market after the US (and not that much behind) is China, and don't tell me that's because they have favorable business policies, ask Jack Ma! It's literally a totalitarian state where CEOs can get abducted if the CCP thinks they're getting too powerful. Talk about incentivizing risk taking. But that's a market of a billion people, the second highest GPD on the planet, and American companies can't monopolize every markets because they are being heavily restrained by the government.
The only way for Europe to thrive technologically, would be to close the doors to the American corporations, that's how you can have Alibaba or VKontakte.
I'm not holding my breath though.
China is communist in name only. In fact they are the most capitalist major country on earth right now.
Government spending makes up a smaller % of Chinese GDP than in the US, so definitionally their economy is more privatized than the US economy. China is at 33%, US at 36%, Europe is at 50%.
For every Jack Ma, there's a million other Chinese businesses flourishing in every niche imaginable with very little oversight from the CCP.
The world is much more complex than a dichotomy between “capitalism” and “communism”, and it doesn't make any sense to have a hierarchy of what is the “most capitalist country”.
Also, “government spendings” isn't a good proxy for how much a government intervenes in the economy, especially when the said government can just order businesses to do this or that without handing money to them.
Of course, but it is literally the best proxy available in 1 metric.
Definitionally, it's the percentage of economic activity that is dictated by decentralized private market actors vs. centralized government ones.
All stats are imperfect reflections of reality. But name a better one for this particular issue.
State owned enterprises as a percentage of GDP, seems definitionally a better metric than government spending per GDP for comparing "decentralized private vs centralized government actors". This shows China at 29% and USA at 19% for 2024. So even discounting legal frameworks for state intervention, regulations, or supply-side policy it seems very contrived to reach your conclusion in terms of, again, "decentralized private market actors vs. centralized government ones" - and I'm aware of the difference it would mean wrt government spending as a % of GDP.
But I'd just like to point out how silly it is to dismiss the person's concerns by claiming we should all just agree to be reductive because it's easiest to discuss a single metric. It's certainly easiest to use this single metric to make the discussion about your conclusion, though, if that's what you were aiming for. I hope not, though.
SOE % is definitely a great challenger for this. But I'd argue it misrepresents the picture by not including things like regulated monopolies in the US and poorly capturing taxation-driven redistribution.
Chinese utilities are all counted as SOEs, regulated utility monopolies in the US aren't, even though defacto they are government entities. The US likes to brand everything as more capitalist (just as China likes to brand everything as more communist), so this distorts the picture.
If we're just trying to capture the full picture of money flows in an economy, and whether each incremental currency unit is responding to market signals or not, % of GDP that is government spending is more reliable imo.
It's far easier to compare internationally and less fuzzy to calculate, given there's much more data on it globally.
“It's not a good metric but it's easy to calculate so let's use that to make a completely nonsensical point”.
Did you know what happened like this week, with the military parade stuff and financial institutions being told to behave around that because the government didn't want any market turbulence around their glorious parade?
The reality is that Chinese government has total control over the entirety of the Chinese economy. They don't exert their entire control all the time and let things go around as long as it doesn't interfere with their agenda, but it will interfere in absolutely anything whenever they decide for whatever preposterous reason like a military parade or anything.
I'm no fan of Chinese authoritarianism, but you could say exactly the same about the US government. This is not a good rebuttal.
We're just 3 years from the US government shutting down all businesses during Covid? In WWII the US forced its entire manufacturing sector to retool from consumer products to war equipment. Detroit went from producing cars to producing tanks. Until recent decades the US had a mandatory draft where they took young men from their families involuntarily to go die in the jungles of Vietnam. I could cite a million other examples.
Not liking the data because it conflicts with the narrative you have in your head does not mean the data is wrong.
> We're just 3 years from the US government shutting down all businesses during Covid?
Did you see the Chinese version of Covid lockdown? Claiming that the US did the same is complete nonsense.
What the US did during Covid is closer to what Xi did for military parade stuff than what they did for Covid.
> Not liking the data because it conflicts with the narrative you have in your head does not mean the data is wrong
The data isn't wrong. Your interpretation of the data makes no sense, that's the issue here.
> Europe can never compete in each wave of tech (mainframe > pc > internet > mobile > social > AI > etc.)
I would not dismiss the contribution of European companies to each one of this domains so quickly though. Especially on the mobile side, there was a time where Nokia/Siemens/Ericsson/Alcatel were big names in that industry.
huh.
Can your theory explain then the difference between San Francisco/Bay area and the rest of the United States? Perhaps it is California's generous tax policies compared to say Texas?