In a resounding report published last fall, Mario Draghi sounded the alarm about the extent of Europe’s technological decline compared to the United States since the mid-1990s. The former president of the Central Bank European Union is proposing a bold plan to stop this decline and reverse the trend. It has three components, directly inspired by what makes the United States superior to Europe in terms of disruptive innovations. Firstly, a market for goods and services which is truly unified and integrated in order to make innovation profitable.
Secondly, a financial ecosystem that encourages risk-taking: a densified network of venture capitalists (venture capitalists) and business angels (seed investors), institutional investors (pension funds, mutual funds) and more securitization of bank loans in order to free up capital and facilitate new loans, while offering investors in diversified assets.
Finally, a reform of policies supporting fundamental research and disruptive innovation (we have nothing in Europe that is akin to Stanford and Silicon Valley, to rich public and private research foundations, nor to Advanced Research Project Agenciesnotably Darpa).
It is no coincidence that between 2000 and 2020 we observe more creative destruction on the other side of the Atlantic, while in Europe the companies filing the most patents have remained the same for twenty years, as shows economist Antonin Bergeaud (HEC, Innovation Lab of the Collège de France). It is also no coincidence that, according to a recent study by the Toulouse School of Economics, disruptive innovation occurs mainly in the United States and in cutting-edge technologies (biotechnologies, services and software, artificial intelligence), while Europeans confine themselves to incremental innovations in the mid-tech sectors (transport, household equipment).
From Zip2 to SpaceX
Despite all the reservations that we may have with regard to the character and his management methods, the spectacular rise of Elon Musk illustrates in a very telling way what the American innovation ecosystem allows, which we do not we don’t have in Europe.
A native of South Africa, Musk studied economics and physics at the University of Pennsylvania before joining a postgraduate program in applied physics and materials science at Stanford University, in the heart of Silicon, in 1995. Valley. Musk left university after two days but settled in Palo Alto, where he created Zip2, an online publishing company financed initially by business angels (for a few thousand dollars) and later by venture capitalists (for $3 million). Compaq bought the company in 1999 for $307 million.
-In partnership with other investors, Musk then founded X. com, which offers financial services and payments by email. X.com merges with Confinity to form PayPal. Musk took the company public and then sold it to eBay for $1.5 billion in 2002. But rather than launching into another Internet business, Musk invested what was left from the sale of PayPal ($170 million of dollars) in SpaceX (100 million), which he founded in 2002, in Tesla (50 million) and in SolarCity (10 million).
Encourage risk-taking
SpaceX was born from a crazy dream: that of creating new rockets that could transport people to Mars, which Musk considers essential for the survival of humanity. The company almost came to an end, with three first launches of the Falcon 1 rocket failing. It was not until the fourth launch that, in 2008, NASA awarded a cargo transport contract to SpaceX and that another contract was subsequently signed to transport astronauts to the International Space Station. SpaceX achieves revenue of $10 billion in 2024.
The Tesla adventure is also instructive. By investing your own funds and above all by attracting new venture capitalistsMusk is radically transforming the electric car producer. Like SpaceX, Tesla initially made a loss and remained so for several years before finally becoming profitable in 2019.
In total, it took this powerful ecosystem of innovation and all these players who together encourage long-term risk-taking and the exploration of completely new areas of activity for SpaceX and Tesla to see the light of day and, above all, to be able to grow. to the point of becoming essential players in an American economy more than ever at the forefront of new technological revolutions.
