Why Europe Fails to Scale, and How the EIB Plans to Fix It

Christian Soschner00:04:56

That's true. I like that: every crisis is also a chance and an opportunity. You grew up in Vienna, and I'm pretty sure you are accustomed to Viennese culture. We have one beloved tradition that's probably a little hidden. We don't talk much about it. I'm talking about Viennese "Sudern". We don't look at the positive things in life first. We always skip the good part and go straight to the bad part, and criticism and negativity, especially ranting in a bar, is our hobby.

As a politician you have a lot of experience talking with leaders from East to West: China, Russia, Ukraine, the United States. I have spent the last 25 years building deep tech companies, and on my podcast I had over 200 conversations with business leaders. I have an opinion about what's wrong with Europe, and now I'm curious to hear yours. Why can't we commercialize Europe's world-class science in the same way the US does, and produce companies like Nvidia or Tesla with a tremendous market capitalization? How do you see that?

Karl Nehammer00:06:21

I think the question is a little bit the answer as well. You described the problem as it is. I think we have to look at this like a coin; it has two sides. You are right, we have a lot of challenges to face. We are really great in research and science, and afterwards we see startups that don't stay. They go to the United States, for example, and there are a lot of reasons for this.

I think we have the knowledge now of what we have to change, and it's a kind of window of opportunity now, because we are under pressure. We are between the United States and China. We have a lot to do. Our energy costs are too high, for example. We fight for every investor to invest in the European Union.

And this kind of pressure is now the good thing, I think, because it leads us to do what we have to do now. That means we have to reduce regulation, we have to speed up, and we have to do what we have talked about for years: the capital market. We have to find ways to increase risk capital in Europe.

We have to change culture. This is not easy; we have a totally different culture compared to the United States. But I think this time is really a chance as well, because these processes are now under way. These discussions are now in the European Parliament, in the Commission, in the member states. So I think we are now starting to do the right things.

Christian Soschner00:08:26

That's good to hear. So the energy is already there, and Europe is moving forward. I totally agree with all your points. At this event today, BIO-Europe, we have a lot of people from the life sciences, investors and entrepreneurs. They did a tremendous job during the pandemic and accomplished something I thought was impossible: delivering so many vaccine doses and diagnostic tests in such a short time. Looking into the future you described, where we need to change a lot, what lessons from the pandemic can this industry take with it?

Karl Nehammer00:09:17

To start with the positive: the pandemic showed that if the pressure is really high, we can act fast in the European Union. It was great to see how shared knowledge worked, how scientists all over the world, especially in the European Union, shared their knowledge. The goal was to find a vaccine against COVID, and we did it. So this is a very positive aspect.

On the other side, COVID showed us in a brutal way how fragile we are, if we think about supply chains. We have to solve this as well, and it's not easy, because it doesn't mean that we will be totally independent in what we need. But we are now thinking about new ways to be better prepared if such a situation comes again. There is still a way to go; we are not where we want to be. But you can see that if we really have the will to solve a problem, a catastrophe like COVID, then we can do it.

I'm really totally convinced about that. We have to think about our strengths and our brilliance in research and innovation, and with this knowledge we have to create the new ways we are talking about. You mentioned "Sudern". It's a typical Austrian term: everything is bad, there is no hope, well, let's see, maybe it's the last day. But if you look around, it's not only an Austrian phenomenon now, not a Viennese phenomenon. It's a European one.

To overcome a crisis, you have to think about how you can solve the problem and not live in the problem. That's the point. If you look around our member states, you can see so many interesting and fantastic ways to overcome a problem, to solve a problem, to think outside the box, to build a new frame. We have to use this kind of power. It makes no sense to look at each other all the time and complain. I think the only chance we have to overcome a problem is to think about how we solve it, and not how we suffer. This is the key point, and the pandemic showed us that it is possible. I think this is the most important point.

Christian Soschner00:12:17

Good point. I didn't know it's a phenomenon all over Europe now, so our culture has spread. Oh God. It's great to have you here, because when I listen to politicians, they always say "we can do that, we can do this". Now I'm curious. When we look into the future, I would like to ask you one question personally. What is your personal vision for Europe? How do you see Europe evolving in the future?

Karl Nehammer00:12:52

Easy questions today. I think we have to accept Europe as it is, and that means 27 member states, 27 member states trying to find solutions. If you look around the world, it's a unique construction. It's not possible to compare it with others: 27 democracies, and democracies are a minority in the world.

So what do I mean? In some elite discussions you will hear that Europe has to do this, Europe has to do that, the European Union has to improve, maybe become the United States of Europe in the future, whatever. But we have to be careful, because it's always also a question of expectations. If we overload the expectations, the EU cannot win.

So let us focus on what we really want to reach: a real single market, the same rules for the member states, a capital market. This is a huge task. Let us solve these problems first. I'll give you an example. Did you know that in our single market of 27 member states we don't have the same railway standards? Did you know that?

So if you ask me what my vision is: let us do our job. Let us build a real single market, let us build a well-functioning infrastructure. Let's try to overcome the really difficult and different rules in the financial market to build a capital market. This is so important, because we need risk capital, for example. So let us do these things and think about how we can solve them. This is really not easy.

But let us also see that this construction of 27 member states, the EU, is unique. It's fantastic if you think about history. In Austria we have a special year now. The war ended 80 years ago, we have been free for 70 years, and we have been a member of the European Union for 30 years. That means 80 years of peace, 70 years of freedom and democracy, and 30 years of membership in a union that gives us a real vision of how we can live together, how we can solve problems, how we can build a strong economy, and how we get through the totally crazy situation that exists in the world now.

So if we think about the union and about the future, let us see what we can do now, not in 10, 15, 20 or 30 years. I think that makes no sense. Let us solve the problems we have, let us build what we want to build, the foundation of the European Union, and then I think we will be able to create new visions. But let us do the job first.

Christian Soschner00:16:54

That's great. I like your energy and your positivity. When we look at the European Investment Bank, what impact do you personally want to make at the bank in the future?

Karl Nehammer00:17:06

First of all, I have to mention that we are a group: there is the European Investment Bank and there is the EIF, the European Investment Fund. It's really fascinating to see what this group is doing now and what it can do in the future. What we are trying to do now is to build bridges, to do what we can to help startups find financing, and to help the economy in the union restructure and transform. To be a partner: I think this is the most important thing, what we want to be and what we are. The EIB and the EIF are partners for the economy, but also for the member states in their vision. There is a lot to do, and you can always become better.

I have been there for two months now, and I'm deeply impressed by the quality of the staff, the high expertise, the advisory. I think this makes hope that in the future we will really be a trusted partner for the companies, and also for the member states.

Christian Soschner00:18:33

Future and hope: these are great words. Today is also a chance to celebrate the entrepreneurs and the investors in life sciences, especially the women in life sciences. When you look around the room, as my last question to you: what message do you want to give the people building the future with you?

Karl Nehammer00:19:00

Maybe it sounds too emotional, but believe in yourselves. Empower yourselves. If you have a strong will, you can also overcome hurdles. If you think 30 years back into the past, so many things have changed, and you see how powerful, how important and how strong women are in our society, and not only in our society, everywhere you look.

So if you have a strong will, there have to be opportunities, and creating them is the job of politics. If you ask a CEO how he thinks about it, the best thing that can happen is to have diverse employees, women and men, different cultures, different experiences, because it's good for the business and it's good for society. So what I wish for you is: empower yourself. Don't wait for another person. You can do it yourself. I think that's the most important thing.

Christian Soschner00:20:14

That's a perfect message. Thank you, Karl, for this conversation.