From Pieter Welten – Prime Ventures (@pieterwelten)

Last week I went to the South Summit in Madrid and where I moderated a panel about ‘building cutting edge tech ecosystems’. It was a lovely discussion, with great, experienced panellists and obviously the audience was awesome! Fortunately, at a tech conference everybody is familiar with the most mature tech ecosystem out there: Silicon Valley. The innovation bellwether of the world (sounds great doesn’t it)! The Merkel of politics! Or the FC Barcelona of soccer! Why Silicon Valley? In Silicon Valley there is a very high concentration of talent, capital and successful start-ups. Of course, the fact that the weather is often good and it sits next to the beach helps! Anyhow, other than creating a lot of shareholder value, a thriving tech ecosystem such as Silicon Valley has a great impact on the local economy as they create jobs and wealth. Unsurprisingly, governments around the world want to turn some of their cities in the next Silicon Valley (perhaps you heard of Silicon Canals, Silicon Roundabout, or Silicon Alley..).

I understand that it is extremely challenging and takes a lot of time to build such a unique tech ecosystem. I also understand that there is not one perfect formula to create it. What I didn’t realize, though, that you could compare it with building a company like Microsoft. In my opinion, Silicon Valley is like Microsoft. No matter how great the efforts, building a tech ecosystem takes time. You can’t produce a baby in one month by getting nine women pregnant right 😉 ?

Anyhow, lets have a quick look at Microsoft. Microsoft was founded in 1975 by two twenty-something year olds old and 42 years later has a market capitalization of $575 billions. The company has strong profit margins, is profitable and has a huge cash balance. It also has a wide economic moat, great ability to attract top talent and an extreme tolerance for failure. Obviously, I strongly believe that Microsoft is here to stay for a long period of time; they will continue to innovate, dominate certain markets and create (even more) shareholder value. But if it takes such a long time to build a company like Microsoft, I don’t believe that any city in the world can replicate Silicon Valley in a couple of years. You can try to accelerate it, but only to a certain extent. Unfortunately…

Lets now have a close look at Europe. In Europe you can find fast-growing, promising European tech hubs. You can think of London, Stockholm, Berlin, Amsterdam and Paris and a bunch of other European cities. However, you can’t compare them to Silicon Valley, yet! All these cities have incubated great companies. Think of Adyen, Spotify,, Skype, Elastic, Supercell, Klarna, Skyscanner,, and Criteo. Yet again, they look tiny if you compare them to the likes of Microsoft, Facebook, Apple, Amazon, and Alphabet. The combined market capitalization of the ‘big five’ is close to THREE TRILLION dollars. I estimate the combined market cap of the ten largest tech companies in Europe below $100 billion (or 3%). Its crazy thinking about it..

Companies like Microsoft (1975), Apple (1976) and Amazon (1994) helped shaping Silicon Valley over the last decades. And like it took a while for these companies to grow to enormous heights, it has taken a long time for Silicon Valley to acquire today’s global reputation. Therefore, I personally believe that it is difficult to massively accelerate the development of any tech hub in general. Initiatives from governments, entrepreneurs, investors and corporates definitely help, and we should continue to support local ecosystems, but we should accept that it takes time. Unfortunately time is money, and therefore you see a lot of money (read: talent, start-ups, capital etc.) flowing to the iconic Valley.


Silicon Valley = Microsoft

Amsterdam = Adyen

Both cities have great tech hubs & both are great companies, at the same time it is all from another level.. and this may remain for a while..