Europe’s digital start-ups need swift DSM strategy

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Mobile colour game

Mobile color game. Berlin Mini Jam, Oct 2014. [Iwan Gabovitch/Flickr]

The EU can take responsibility for changing the overall business environment for digital start-ups and infuse a more entrepreneurial mind-set throughout Europe, writes Kaya Taner.

Kaya Taner is co-founder and board member of AppLift, a mobile app marketing platform based in Berlin. AppLift is a member of the Applications Developers Alliance.

We can all agree that the EU Digital Single Market will create new opportunities for business and investment, and benefit consumers. Yet only a few leaders probably understand the importance of such a market for start-ups, the drivers of innovation in our economy, and our greatest opportunity for rapid growth and job-creation.

For big tech companies, a single market is important. It means less money spent on lawyers and consultants, and perhaps a simple single price that can be charged to all consumers. This is definitely beneficial, but not existential, as the big companies will likely keep running, albeit less efficiently, if DSM is not adopted.

Small companies and start-ups, on the other hand, might be far more strongly impacted by new DSM laws. They might thrive, stagnate or even fail, depending on our policy leaders’ willingness to rapidly adopt comprehensive and meaningful reforms that promote investment and dramatically expand opportunity.

Data flows and digital goods (such as mobile applications) are global – they cross borders easily and they can deliver new or competitive ideas, products and services to a physically remote market. But today, every rule and regulation that requires 28 compliance plans hurts start-ups and the overall economy. The cost of 28 regulatory compliance plans puts barriers in the way of innovative start-ups, and limits investors’ appetite to support European digital entrepreneurship.

Europe has some of the best software and business talent in the world. In Berlin we have many digital start-ups, but we are competing globally against technology and entrepreneurial hubs like Silicon Valley, Tel Aviv, and others across Asia. Berlin, Germany, and the rest of Europe cannot afford to keep losing talent to these competitive hubs. But in order to keep our talent, we need Europe to create an environment conducive to innovation – where companies can be started and grown easily. Entrepreneurs must be enabled by government, not hampered by red tape.

The EU did not create many of today’s European start-up challenges. For example, the EU did not write the complex national labour laws that make it hard to hire new employees and expensive to let them go if a business changes direction or must reduce costs to survive.

But the EU can take responsibility for changing the overall business environment for start-ups and infuse a more entrepreneurial mind-set throughout Europe. Brussels can tear down those walls between our national online markets, and encourage risk-taking, and curb the stigma that is linked to failure in so many parts of Europe.

That is why we truly welcome the openness that the Commission has shown so far, and look forward to taking part in the discussions and consultations that will move toward implementation of the Commission’s DSM strategy. We now need to see swift action. Words and good intentions will not be enough.

Any digital start-up’s success hinges on three points:

  • The business model itself and scalability: The job of the founders is to come up with a business model that we can scale. As entrepreneurs, we need leaders to promote or stay out of the way of this process, not think of ways to block it.
  • The market size: In terms of population, the EU has a market size that is bigger than the US. But the market that start-ups can actually address is in many cases much smaller due to the existing red tape between nations.
  • Velocity: In digital, success is all about speed. If a start-up is not fast enough, it will fail. Anything that slows us down will make us lose to our non-EU competitors.

These are the main challenges that European start-ups face today.

We couldn’t agree more with Commissioner Gunther Oettinger when he said that: “Europe cannot be at the forefront of the digital revolution with a patchwork of 28 different rules for telecommunications services, copyright, IT security and data protection. We need a European market, which allows new business models to flourish, start-ups to grow and the industry to take advantage of the internet of things.”

So give us the easy tools to comply with a single set of laws, and then let us be good corporate citizens.

We’re more than willing to play by the rules, but only the EU can write them.

The Internet doesn’t stop at borders and neither should public policy.

We need to break down these barriers in our laws, and in our minds. Let’s do it, for Europe.

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