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Whither Europe?
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Andrew Keen
Hello, everyone. It is the end of January. We haven't done it. That was the week. Tech roundup for a few weeks. Keith Teer has been gallivanting around the world in South Africa, and I've been in Europe at the DLD conference, which was, as always, a very festive, entertaining and interesting event. And one of the More distinguished speakers at DLD with another tier, not Keith tier, but Genet tier of crunch bass, talking about the difference. between U.S. and European venture and investment. So we're very honored that Jeannette Thier is joining us for That Was The Week. Jeannette, what did you make of DLD? In most of the interviews that I've run on Keen On This Week, we've been focusing on this increasing gap between Europe and America, especially when it comes to technology, but also Politics, of course, comes in. Were you struck with this pessimism in Europe about the European tech sector?
I mean, I think a big, this is my first time at DLD, my first time in Munich, and it was an incredible gathering. I think it was around 2,000 people. So there was existing tech like BMW and Infineon. There were new tech like Black Forest Labs and Sakana AI were there. So it was a kind of mix of titans of industry, people leading companies, generating interesting conversations. So it is a real, I found the event a real gathering where you are interacting, you're hanging out, you're going to lunches, you're meeting a lot of people. So it feels a little less transactional than some of the events that you're experiencing in Silicon Valley. But I think at the heart of this conference, I think there was a deep anxiety around European tech and how it will fare against the American tech scene. And I feel like Europe lost out in the last wave after 2000. They feel they didn't create the biggest tech companies ever. 20 years ago, and they don't want to lose out on this wave. So I think that anxiety, I felt, was at the center of the conference and certainly permeated throughout. And the talk that I gave looked at global venture, European venture, and I think the themes that I talked to showed, very much demonstrated the dominance of the US venture markets.
Yeah, the interviews that I've run this week, one with Marta Muznik on Europe needing to learn the language of power. That was my panel. Another with Carl Benedict Frey, who teaches at Oxford, asking whether it's game over for Europe. And a third with Ken Kukier, the executive editor at The Economist, suggesting that it's three minutes to midnight, how Europe is running out of time. Was there much hope for you, Janae, when it comes to Europe? Do you think that every year we talk about, it's the first time you've been, but every year seems to be conversations about Mario Draghi and more investment and more innovation and more venture capital. And every year, nothing changes. Did you get the sense that Europe's running out of time?
I think certainly Europe feels like it's a new moment in AI. We've had massive rounds raised by the foundation model companies in the US. Open AI, 40 billion. Anthropic, 17 and a half billion last year. And then if you look at the French AI company, and I'm forgetting their name for a minute, but they've raised 2 billion. So certainly the disparity between the two regions is huge. And what we see in our data, what's interesting, I sort of track global venture, going back from 2011 all the way to 2025. And 2011 to around 2014, the US is dominant in terms of the amount of funding going in. The US raises more than 50%, sometimes as high as 69%. If you go from 2011 to 2023,
The US is, as a total of global venture, is less than 50%. So sometimes it's closer to the 42 or 43% mark, but it's below 50% for all that time. And then in 2024, it switches back and the US becomes much more dominant from a global venture perspective. And then in 2025, 64% of global venture was invested in the US. And so certainly a lot of that is in these, you know, the very large foundation model companies in the rounds 500 million and above. But also some of the new wave of companies coming through are also raising at very large valuations and managing to raise a lot more value. than their European counterparts. So I certainly think the data shows that the US at this moment, its dominance has almost come back. And it's not something I would have predicted because I thought the foundation models, it's an equalizing technology. It's an API call away. Anyone compete. And so what my expectation two years ago is this would proliferate and allow you to create many, many more companies all over the world. And that's the trend we'd see. What we've seen instead is this trend of money, flowing back to the U.S. in a much more concentrated way and specifically to Silicon Valley.
Another of the people I interviewed was Bill Gross. He was around with Idealab in the 90s, one of the dot-com men, and he believes that the AI boom is no dot-com bubble, but everybody knows that at some point someone's going to lose some money. Jeannette, if indeed some of these what you call foundational companies collapse or collapse, at least begin losing their investors' money. I mean, open AI comes to mind. Sebastian Malaby wrote an excellent piece in the New York Times a couple of weeks ago, believing that open AI will run out of money. Believes in AI, just doesn't believe in open AI. If there is some sort of crash, or at least a mini crash, could that benefit Europe? Or is Europe going to get burnt one way or the other, whether Silicon Valley booms or busts?
I think either, you know, I'm not sure. I think either way, Europe doesn't necessarily benefit Europe if there's a sort of boom and bust cycle around AI because everyone, the money going into AI kind of lifts all boats. And one thing I think that is heartening about Europe or is positive about Europe is that when you look at the last three years, so 2025, Global funding grew around 30%. In North America, it was around 46%. So Europe year over year has not grown from a global venture perspective. But when you look at the longer term trends, the last three years have been much stronger than the pre-COVID timeframe. So I think Europe is on a stronger venture footing. I saw that at the event as well. I met a lot of investors who specifically focused on A lot of deep tech investors, semiconductors, aerospace. So I think the new moment for Europe is to invest in some of these deep sciences, deep tech. A lot of the rounds that I'm seeing that are larger in Europe are coming from these sectors. But I think the anxiety for Europe still remains that will it create kingmakers? Will it create companies that are very appealing, that will get acquired and eaten up by American companies? Or will it be able to create some of these kingmakers like ASML? who is the company who produces the machines that makes the chips that they presented. It looks like an incredible, you know, they're an incredible company. Infineon, semiconductor, not in GPUs, but in other semiconductor sectors. And so I think the question for Europe is there's this deep tech moment, a lot of money across Europe that favors a sort of spread, all these universities, all the sciences. So I think there is a moment for Europe in this deep tech. I think the question still remains, will Europe create you know the next wave of some of the largest companies or will it be missing out and selling out again just because there's so much more money going into the us market
Genet, we're over eight minutes into this conversation, and I've never had eight minutes when Keith, your dear husband, had said nothing. I think you must have intimidated him. Keith, do you have any questions or remarks about what Genet has said? You weren't at DLD, so we're relying on Genet for our wisdom here.
I did watch most of the video streams on YouTube, so I'm kind of somewhat aware of what was discussed. You know, I think there's a bizarre ideological bubble in Europe that looks at America through horror-struck eyes and doesn't quite know what to make of it. And I think that's a European problem, not an American problem.
There are, but as we're talking about Europe, I'll focus on the Europeans. I do think the open AI thing is bad timing by the guy who wrote that article. I mean, today it was leaked that they're raising another 50 billion. The idea that they're going to run out of cash is laughable on the face of it. And there is a bit of a terrible campaign against open AI led by Google mainly that is just not true.
Yeah, well, that's conspiracy theory. Jeannet, do you have a take on OpenAI? It isn't just Sebastian Maliby, who, by the way, is married to the editor of The Economist and is one of the most authoritative writers and thinkers on venture capital.
Well, I think, you know, from our data we're looking at in 2020, they raised seven or eight times more capital in 2025 than they did in 2024, so $41 billion. So massive up leak. And as Keith's saying, they're about to raise... possibly another. So I don't see them running out of money. I think they can keep raising. There's lots of parts of the world where they can get money from. And then if you look at all the circular deals or the deals that they're doing to be able to purchase compute, I just think it's an incredible machine. If you look at their user base, and you know keeps growing hundreds of millions they keep bringing out new models so i think the the idea that they could run out of i think there's too much momentum towards them and if you think of the infrastructure spend that's being committed so i just i don't i haven't read this article but i don't see that as um
yeah the other news the other news guys is their cfo talk last week and announced that their run rate, which was targeted at 13 billion by the end of last year, was actually 20 billion. So their revenues are accelerating even faster than they predicted.
Well, we will see on that, but I certainly don't think everyone is such a believer in open AI. And as Malaby said, you can believe in AI, just not in open AI. Those are two quite different questions.
Google may be anti-open AI, but Keith, I think you're... Unrealistic. I mean, Anthropic and Google also have very good AI. What's your take, Jeannet, on this? When it comes to the idea that if open AI doesn't win or you're not enthusiastic about open AI, then you're against open AI.
Well, I don't think there's going to be one winner. Obviously, we have Anthropic. I think there's going to be a lot of smaller models. At the conference, you also met companies who are looking at creating the next equivalent of models for robotics. So I think the space, we're three years in to this moment. It has a long way to go. There's a lot of focus on smaller models or doing things with models that are not quite as large, but far more intelligently. So I think there's a long way to go. I wouldn't bet against either OpenAI or Anthropic, just because I think there's so much momentum behind these companies. And what they've achieved in such a short space of time is incredible. And so, yeah, I'm pretty bullish on them, but I think there's a lot more to come. And there's a lot of research going on in different areas, which we're seeing in Europe, but also across the U.S.,
Did you see anything else different about DLD compared to your Silicon Valley insider? You work at Crunchbase. You were one of the founding team at TechCrunch. You've done many other things in Silicon Valley. Did you see many other cultural differences, the focus on the environment, on the doughnutty economics, which was quite popular this year at DLD?
Yeah, well, you know, at the conference, they have a lot more academia, they have a lot more researchers, they have a lot more artists. So the conference has this feel of bringing together, you know, it's not only tech, but it's in all of these other fields. I think when I'm in the Bay Area and going to tech conferences, it's very much the new wave of tech companies that are raising at very large valuations that everyone's seeking to hear from. So it feels a little bit more, not transactional, but it feels there's a lot more that's being fought for. So I think in the US, it just feels like this tougher environment, whereas in Europe, it feels like everyone's there to chat, to hang out, to learn. And I love the phrase, they say you've got to eat with people, hang out with people, and then we'll do business. And so it definitely has a different feel. I don't know which is better, but...
Certainly when you're in the Bay Area, you feel the heat of some of these newer companies coming through and competing in this market in a much more elevated sense.
And I guess the other thing is that from a European point of view, does it really matter if tech doesn't work out? Did you get the sense that for most Europeans, the tech issue isn't necessarily existential, that they can survive without AI or at least without dominant AI companies?
I think it is existential. I think this is going to drive the next wave of some of the biggest companies. And I think Europe wants to be part of that. So I think it is existential for all societies. And it's where does that innovation, where is that innovation going to come from? Is Europe going to play its role? And how is it going to proliferate? And, you know, you have the US, you have China, you know, the leader in Asia, and then you have Europe, this other block. And I think Europe wants to play it.
Sure. So Crunchbase is this database of all of the companies, all of the founders, all of the venture investors connected. And you can go in there and try and understand what's happening in the ecosystem. So I have to say at the conference, I met a lot of people who say they use Crunchbase on a daily basis. They have their queries set up. They're tracking companies they're interested in watching. They're tracking investors that they watch closely. They're tracking investors that they invest in. and who have followed on and invested later in their companies. So I think it's the whole ecosystem. And if you're interested and want to understand what's going on, Crunchbase is a great resource. And I did meet a lot of people at the conference who use us daily, as do I. So I find it incredibly useful.
Well, Janae, you promised us 15 minutes. I've already kept you for 20. I'll leave the last word, as always, with Keith. Do you have a final question or comment, Keith, for your wife?
so i'm gonna run but lovely to see you both well congratulations jenna i heard your your speech i missed it because i had to leave on saturday but i heard your speech was outstanding and next time we'll do more hanging out at dld thank you so much
looking forward to it cheers andrew cheers keith bye bye
Words and timings
lookingforwardtoitcheersandrewcheerskeithbyebye
Andrew Keen
So Keith, what else happened? We've been three weeks and we haven't done it. That was the week enough DLD, no more arguments about open AI. I know how you, where you stand on it, you know, where I stand, we will see this year, but what else happened or what has happened over the last three weeks since we've done a show?
Well, honestly, I think the biggest development is the emergence of Anthropic and Google alongside open AI. as if you will, the three horsemen of the apocalypse. But both have done a pretty amazing job of shipping new products. And there definitely is, I don't even think of it as a race. There's a massive rising of the tide that all three are part of. My only position on OpenAI is not separated out as worse than the others. It's the leader by far. It belongs in the group.
Yeah, I don't know. I mean, no one's arguing that they're the worst. The point that Malaby makes, and there was an analyst on X, George Noble, making the same point, is that their business model isn't viable, that they're spending too much money and ultimately they're flawed as a business. That doesn't mean that their product isn't any good. No one's denying that.
But if you're knowledgeable in the space, those aren't true facts. And their business model is the biggest of all and growing the fastest. It's based on two places where they get revenue, one from subscriptions and the other from developers using API calls. They're both growing massively. So I don't know where those ideas come from that their business model is.
noble he wrote a couple of days ago open ai needs to generate 200 billion dollars in annual in annual revenue by 2030 to justify their projections that's a 15x growth in five years while costs keep exploding but that isn't fact factual either
andrew that is making a huge assumption that they don't raise any more money. And they literally today have raised 50 billion. So the other thing is Jensen Huang from Nvidia in Davos this week, when asked about the rate of investment into AI, argued that there's a need for several trillion dollars more of investment. Now, when they say that, he isn't saying my company needs it. is saying that the gains that the world will make from AI being successful... Yeah, but that's... Again,
Let me finish the sentence, because it's a rational point of view that the gains justify continuing investment not in the search of short-term profit, but in the search of long-term abundance, which is, of course, also profit. So... These negative points of view are short-termist based on static views of what's going to happen. And honestly, I don't believe I have any credibility.
Well, that's Keith Teer's view of Malaby and a number of other people who are becoming increasingly skeptical about open AI. We shall see. Meanwhile, Keith, your theme this week is, and I'm quoting you, the new stack is power. What does that mean?
Well, it literally means power, literally, energy. I don't know if you saw Elon Musk interview today by Fink, the leader of BlackRock in Davos. And a lot of what they talked about was SpaceX doing an IPO to be able to fund the launching of rockets with data centers into space to take advantage of the power of the sun. Several terawatts is the phrase they used. So these are not kind of pie in the sky people. These are people who spend a lot of money and raise a lot of money and do things with it. And I think power is a differentiator. They both made the point that China has a huge advantage in power generation currently and in the growth of power generation. And that the only way the rest of the world can keep up with China is to find a solution for very large amounts of power, and that space is, they believe, the most likely place that can happen. So power being the stack, it doesn't mean power as in governmental power. It literally means power.
I think everything points to Europe needing to have a point of view about everything. Basically, we can see, and this isn't just true in tech, although I think tech leads on this, Europe has been abandoned as a center of progress by America and by China. Europe is a marketplace where you sell things, It largely is not a place where you make things or build things. And Europe is not, apart from German cars, mostly not a seller. It even buys Russian gas and oil because it doesn't have its own. So it's certainly the case that Europe is going to have to come out from under the cloak of the post-Second World War settlement and stand on its own two feet. That's true of nations as well as Europe collectively. And it feels as if, you know, this Trump peace panel or whatever it's called that he announced yesterday had a couple of Europeans on it. I think it was Orbรกn and the Italian president, but mostly non-Europeans. Even Putin was invited. There's a redrawing of the map of the world from a power point of view, and Europe is certainly in third place.
And as Janae hinted at, I mean, people are, or at DLD, everyone, of course, was talking Trump, Greenland, Venezuela. Do you think that has any impact at all on Europe's failure to keep up, its unwillingness to take responsibility for its own security?
I don't think you could think of these short-term symptoms as being the cause. I think the cause is the United Nations, NATO structures that were put in place, followed by the World Bank and the IMF later, that basically had the goal of protecting Europe from another world war, which was a worthy goal. It certainly made sense at the time. But we've now moved on from that. And with the, I'd say, the disconnection of America from the world economy that Trump is championing and America first replacing America's world role, that certainly begs the question, what is everyone else going to do? And they have to do something. They can't just sit on their hands. So it's going to be a period of change. It isn't necessarily scary. In fact, it may even end up being positive because everybody stands on their own two feet and prospers through having to care.
Most of my conversations are with people who want Europe to succeed. And after highlighting the problems, they map out ideas. What do you think Europe could do to compete in tech? Or is it too late, Keith?
I think the fundamental structural weakness in Europe is that innovation is based on the universities, deep tech, and government funds. That is the axis of innovation in Europe. Very little private money. Most European families invest in the American startup scene more than their own. And that's due to all kinds of things. The fact that there are many, many countries in the EU all with different regulatory systems doesn't help. This week they announced the desire to create something called EU Inc, where a company can be an EU company and not regulated in any of the individual countries. That would be progress. Then money might flow. And entrepreneurs who are researchers in universities might have a reason to step outside of the university and become funded by private capital in the same way American startups are. And that can lead to bigger and better outcomes. Probably the stock markets would benefit from that in Europe, which are currently not first choice. Even the London one is not first choice. So it's structural. It's historically structural. It's even worse, by the way, in China and Russia, where universities play a bigger role and there is no government money to speak of. In Russia, at least, there's less and less government money in China. So America has a structural advantage that money is private, flows directly to entrepreneurs, and doesn't go through either academic or government structures. And what about the UK? UK is a slightly better version of the European problem. There is a bit more money coming from early stage investors that are more American-like in how they work. But it's still a tiny fraction of the money. Most of the money is coming from the British Business Bank via the British government.
starting with pension funds which are currently not allowed to invest in venture capital in europe due to rules that prevent them from paying the fees and the reward structures that venture capital lives on so there's a lot to get done and i think there is a desire to do some of it but maybe not enough to get to legislation and make that change happen
Ken Kukia from The Economist, as I said in my interview with him, suggested it's three minutes to midnight in Europe, although he was talking about politics as well. What's the time for you in Europe, Keith? Is it more or less than three minutes to midnight? Do they have more than three minutes to turn this thing around?
You know, I don't really fear for Europe because I'm not convinced that winning in tech really matters at this point. firstly it's highly unrealistic to think it can happen but even if it did happen the you know the impact on europe's gdp which is collectively you know the third biggest in the world would be negligible and i i think europe is wealthy not in decline um
pretty hierarchical as in you know the money does sit it's a lot of old money and not as much new money but it is comfortable with itself it's happy in its own boots it's got beautiful countries beautiful institutions universities and the like I don't really worry for it unless it sets itself the goal of being first, and that probably is going to not be successful at. But it's not as if being second or third is disastrous if your starting point is wealth, which it is. Europe will also benefit from American companies that get close to offering AI to every European citizen for free. That will benefit European citizens. It's just that the revenue will flow to America. But that's a minor point in the big picture.
Well, putting ads into a billion people engaging every day will produce some money. And so my point was going to be that revenue gets spent. A lot of it will be spent in Europe. on infrastructure in particular. So it isn't a zero-sum game at all. And it's depicted as if it's this three minutes to midnight thing, as if some catastrophe is going to happen. All it really is, is that in a horse race, the three leading horses, there's going to be increasing distance between them, as there already has been, as we've seen. American GDP per capita has doubled compared to EU in the last 20 years. There is distance between them, but it doesn't mean the third horse is living in poverty.
Well, there you have it, Europeans. If you're all watching and listening to Keith Teer, you can finish third after the US and China and still be happy. Is that the message, Keith? Still have your late lunches, your martinez over lunch, have your siestas.
I think that's true. I think the biggest problem Europe will have is how to transform its political ecosystem. You know, clearly the rise of populism, nationalism,
the growing narrative that says, the German finance minister today made a speech saying that Europe can't get out of its own way due to regulation. It seems that getting out of its own way probably means getting rid of the EU Commission's power to regulate or reducing that regulation down to as little as possible.
I saw Margaret Vestager, by the way, at DLD, and she knows how much you love regulators, so she sends her love to you. Maybe the best thing America could do is send Europe Lena Kahn.
that can be his free gift you know it's a big a big part of the problem i've noticed in recent weeks bernie sanders talking a lot about ai and let's assume that bernie and elizabeth warren and lina khan are roughly in the same camp and there are differences between them um and the It's interesting that Bernie is struggling with the production of wealth and the distribution of wealth. And he seems to think that you only have to focus on the second. He doesn't understand yet that you can't distribute something you don't produce. And so it behooves me to say that Ezra Klein is more on the right track here. The production of wealth, which AI should accelerate is the precondition for its distribution. And we all, I think, want wealth to be distributed to raise everyone's life.
Well, there you have it. Europe is third. It doesn't innovate. It's got the wrong structure, but Europeans can be happy. That was our special European edition of That Was The Week. Keith, next week we'll be back to normal, right?
We will try, Keith. I will see you next week. And it was really very, very invigorating to have your wife, Jeannette, here on the show. She's no longer here, but Jeannette, if you're still watching, thank you so much. You brought some color and light to a usually dark, miserable show. Thank you so much.