European founders are driving innovation

By Nicolas Brusson on May 25th, 2012

As European entrepreneurs, we often beat ourselves up about how US companies are constantly ahead, how leadership always comes from the US and how hard it is to raise money and build world-class companies in Europe. Most of these thoughts are self-defeating and over exaggerated, as there are a number of areas where Europe is leading innovation globally and will continue to do so.

Perhaps the most obvious industry right now is music, where we’ve seen a stream of endless disruption coming from high-profile European start-ups such as last.fm, Shazam, SoundCloud and Spotify. But, this is just one industry example. Other verticals where Europe has been paving the way have included private sales with Vente-privee, transport with BlaBlaCar, online fashion with Net-A-Porter, and gaming with Rovio and Gameforge.

So, I don’t really buy into the arguments that Europe lags in innovation, its best business model is to clone American companies and that it’s impossible to fundraise in Europe. It just isn’t the case.

While there are a number of industries where Europe is and will continue to pioneer innovation and leadership, one of the most exciting ones is certainly transportation and social travel.

Transport is a huge market and we are only seeing the beginnings of its potential for disruption. Public transport is a huge industry but people by and large are still using cars to make trips. Two figures I often use to quantify the opportunity is that the French and German train companies (SNCF and DB) alone generate more than €70 billion of revenue, and the ERF (European Union Road Federation) claims that 80 per cent of travellers still travel using their own car. So that is less than 20 per cent of travellers generating a whopping €70 billion.

Europe is uniquely positioned to lead and continue to drive transportation innovation through a number of important market characteristics. Europeans are very comfortable with public transportation for distance travel and:

  • Have strong public transportation systems available and use them frequently
  • Live in countries where petrol prices are super high, and
  • Are increasingly feeling the pain of transport’s growing cost.

The US market lacks these qualities and as a result will not see the types of innovation and growth in transportation that we are seeing in Europe with highly disruptive companies such as BlaBlaCar and WhipCar.

My company, BlaBlaCar, which connects drivers with empty seats to paying passengers, has become the global leader in ride sharing. It transports close to five million passengers per year, has a highly active community, and is seeing no signs of slowing down. WhipCar was the first company globally to pioneer neighbour-to-neighbour car rentals and has achieved notable early traction. Both are great examples of social, collaborative consumption solutions.

Growth in social travel has been fuelled by a number of additional contributory factors as well. With petrol prices already high by global standards and climbing – they have increased by 41 per cent over the last four years – and public transport costs constantly on the rise, it is no surprise that ride sharing sites are experiencing exponential growth in Europe. Further pain caused by strikes, travel chaos, natural disasters (like the ash cloud) and general congestion have only strengthened the advocacy and wider adoption of alternative transport solutions.

It isn’t just social travel that has been driven by Europe. Europe also has seen innovation in transport apps focused on short-distance travel, such as Hailo, a network that matches passengers and licensed taxi drivers, and taxi booking system MyTaxi. Top investors have taken notice of Europe’s leadership in the transport space with Accel Partners investing in both BlaBlaCar and Hailo, and Wellington Partners investing in Hailo.

Interestingly, there is no ride-sharing player with a remotely similar scale to BlaBlaCar in the US, and without the same type of market environment, it will struggle to catch up. This creates a very compelling space for European companies to claim leadership and build great businesses. BlaBlaCar is now the most active collaborative consumption community in Europe, and given the nature of travel networks, ride sharing is the fastest way to create a large-scale sharing community.

However, this community should not stop at travel. There is a massive additional opportunity for Europe to continue to innovate in collaborative consumption and build a massive community beyond transport, largely due to it having a culture of sharing and resourcefulness. BlaBlaCar’s significant traction in Spain, France, Italy and the UK is testament to this.

While disruption of the accommodation industry through peer-to-peer services like Airbnb and Counchsurfing.org have clearly come from the US, companies like BlaBlaCar or Mitfahrgelegenheit in Germany have built over one-million-member communities with a fraction of Airbnb’s funding to date. Combine that with the fact that Airbnb’s second-largest city for accommodation sharing overall is in Europe – Paris – a position established before Airbnb even had a team on the ground, and we have strong indicators that collaborative consumption can really take off.

This is the perfect time and market for European start-ups to claim leadership and build great companies, and I am excited to see what additional world-beating collaborative consumption businesses originate and emerge from Europe.