The lost Flow of European Innovation
And how to get it back.
Alexander after the Battle of Issus, Napoleon after Austerlitz could not have been cockier than Truman was after In Cold Blood. He had the golden touch, and he was already looking forward to his next triumph, a party that would end the year as it had begun—with all eyes focused on him.'
Anderson Cooper and Katherie Howe - “Vanderbilt - The Rise and Fall of an American Dynasty.
I’m a big fan of high levels of controlled ambition.
If you’re able to craft a vision for something greater than the current reality, with a burning desire to make it happen, while still being able to “control your delusion” in a way that makes sure you don’t abandon your moral principles in that pursuit, I salute you.
People like this, at every level, are what makes humanity exceptional. Innovation has always been part of our story, and contributing to it—by creating something—unlocks a unique sense of purpose and meaning.
I remember when I read The Rise of Superman by Steven Kotler, while researching flow state and got my mind blown by the idea that most people prefer the feeling of Flow to the feeling of happiness. After some ponderation, it made absolute sense.
Reflecting on my own experiences and favorite memories, a lot of them are associated with that state. The high moment of inspiration while improvising on the guitar and giving a lecture, or a sense of selflessness when running in the rain or playing a particularly good tennis game.
In Flow, everything is aligned, you just know what the next step is. Ted Gioia wrote a phenomenal piece on it recently, which you can read here:
A lot of people assume that Flow demands you to be doing something in which you’re a master. The truth is way more nuanced. In order to get into a state of Flow, you need to have a challenge that slightly surpasses your current skill level, inducing a high level of concentration. As long as you have this ratio, it doesn’t matter what the actual skill level is.
So, we can conclude that the right challenge will drive you to your best self. This is also why a lack of challenge and ambition will put you in a path of self-contempt.
"My life was never destined to be quite happy. . . . Inherited wealth is a real handicap to happiness. It is as certain a death to ambition as cocaine is to morality.”
William Kissam Vanderbuilt
If you’re given everything without any effort, you lose part of what makes you feel alive. This is why, I would argue, innovation can be a source of meaning for lots of people, by trying to understand how they can improve their surroundings.
We need to give people the opportunity to engage with things that they care about and can induce flow.
On a small scale, it can make a difference in someone’s life. On a larger scale, it can impact a whole continent.
Nowhere is this more evident than in Europe, where individuals and groups have been at the forefront of innovation across all areas of human history for centuries. And yet, we seem to have lost our flow (and our edge) to innovate.
In my class on Emerging Technologies and Innovation, at The Socratic Experience, the one topic that all students enjoy debating is AI. I’ve tried programmable matter, space traveling, or robots, and even though those are fun, their eyes glow with any mention of Artificial Intelligence. And I get it! We’re living through a revolution that will transform their lives.
Jonathan Bi named it “moving history” in his interview with Tyler Cowen.
J: How should we live in moving history?
T: Think about your children. I think psychosocially it's very disturbing that you can no longer tell people what kind of world they should prepare their kids or grandkids for.
Of course, they would want to learn and discuss more about the technology that’s dominating their lives and disrupting the world in a way that makes it impossible for adults to convey a sense of security.
Because of this, I have to be somehow on top of big highlights happening in this space. So, week after week I get to tell them about all of these American companies, working on the frontier of AI.
For a while, much like Truman Capone, in the opening quote, America felt “cocky” around AI and its state of innovation. It seemed like they were the only player in the space with companies like Nvidia producing the microchips that allow for the different systems to run, or OpenAI with ChatGPT becoming the number one large language model (LLM).
Truman ended up an outcast of the same society that built his career because ge overestimated his position in the literary and social world. The US might’ve done the same. Whenever I talked with American friends, they seemed to believe they were 5 steps ahead of everyone else. And, to be fair, I did too.
Then, on the same day that Trump took office as a President, highly focused on technology and competitiveness, a Chinese hedge fund called High Flyer released Deep Seek, an LLM with the same power as ChatGPT but way more cost-effectively.
It’s worth pausing to admire how Deep Seek was developed.
High Flyer is a quantitative hedge fund that uses AI to analyze the market and execute trades. In 2020, two years before the U.S. imposed restrictions on microchips and advanced semiconductor technology to China, they purchased a series of Nvidia A100 chips to power their AI model. After a while, they realized their model was flawed and ended up pivoting to a different one, no longer needing the chips. As a side project, different people in the company decided to build their own LLM, and DeepSeek was created.
Anyone who has studied creativity or problem-solving knows that, sometimes, constraints are beneficial. This is one of those examples. Due to the restrictions on materials, the team creating DeepSeek couldn’t count on more microchips than those that they already had. This made them understand how to harness their power through better code and create a product as good as the standard model of ChatGPT at a fraction of the cost.
DeepSeek reminded the world that AI and LLMs were a competition open to more than just the US, that there was still room for innovation.
Of course, the internet kept reminding Europe, rightly so, that we were behind everyone else, pointing out a very specific innovation we’ve had happen here recently:
However, a couple of weeks ago, finally, something changed.
French President Emmanuel Macron hosted the AI Action Summit, which focused on the role Europe will play in the future of Artificial Intelligence. France is set to receive a $113 billion investment from the private sector in AI over the coming years, aiming to position itself and Europe as a global AI hub. Macron also emphasized the importance of clean energy for AI, playfully countering Trump’s “drill, baby, drill” slogan with his own phrase: “plug, baby, plug,” highlighting Europe’s commitment to sustainable energy solutions.
Finally, also from France, “Le Chat” by Mistral AI got its app released this month, presenting a direct competition to ChatGPT and DeepSeek in all the different tests, even overperforming in one key area (for Europeans, and maybe the world): privacy.
Many large companies restrict access to LLMs at work to protect their private data from being used by companies like OpenAI or High Flyer. Le Chat offers similar performance but with a stronger emphasis on data privacy, operating under strict EU compliance standards to ensure that no data is used for training its models. This focus on privacy is expected in a continent where you’re greeted by a “DO YOU ACCEPT THESE COOKIES?” window every time you visit a website.
I’m hopeful that all of this marks the beginning of a renaissance in terms of European innovation, putting France and, hopefully Europe, on the map again. A sign that we’re no longer lying on our backs and enjoying previous glory, but understand that we need new ways of doing things in order to “get to the arena”.
However, there’s a major difference between France and the European Union. These changes need to be coordinated by all member-states to be as effective as they could be.
Last year, with the help of different entrepreneurs, academics, and police makers, Mario Draghi, the former President of the European Central Bank, published a report describing the changes that the EU would need to embrace to claim its spot as a major innovator in the global scene. The report touches on a series of different things, ranging from innovation to military safety, but the chapter on the innovation gap is the one I want to focus on. It provides a series of policies that we can use to compete against the US and China.
A key starting point to understand the issue with European innovation is examining our approach to it. While the US shifted its focus from pharma (which was high in the 2000s) to software and hardware in the 2010s, and more recently to the digital sector, Europe has remained more static in its industrial structure and research. This has resulted in lower levels of investment and innovation.
If we look at published papers in the top scientific journals (often considered sources for new innovations), we fall behind China and the US. Europe has 3 major institutions constantly publishing in such journals, compared to 21 in the US and 15 in China. Even if that wasn’t the case, contrary to these two countries, our pipeline from Academia to Business is either inexistent or extremely slow, which prevents fast innovation over recent discoveries.
We lack, Draghi argues, a focused, centralized protocol to implement public money in key areas of Research and Development.
The European Union has a major advantage, the Single Market. It allows free movement of goods, services, capital and people across member states. The only issue is that it’s not complete yet, which, in areas such as the digital space, makes it hard to scale a product for other countries. Because scalability is highly limited, the investment interest is reduced. The solution so far? Relocation. Out of 147 unicorns (companies evaluated in more than 1B dollars) founded in Europe between 2008 and 2021, 40 of them moved their offices abroad.
We face an overwhelming amount of regulation and bureaucracy in technology, something JD Vance hinted at in his speech during the French summit. Europe introduces too much complexity for its digital businesses, with a heavy burden of regulation and costly procedures across fragmented national systems. To make it worse, digital companies aren’t allowed to do business across the EU via subsidiaries, which just makes the whole process even more complicated.
Sometimes, the idea that other people have about Europe is that we lack both ideas and ambition. I disagree. We have talented research and capable entrepreneurs as well, a lot of them even filing patents for new products. The problem is that every entrepreneur acts in a playing field designed by policies and ours is crooked, leaning against innovation.
The problem is not that Europe lacks ideas or ambition. We have many talented researchers and entrepreneurs filing patents. But innovation is blocked at the next stage: we are failing to translate innovation into commercialisation, and innovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations.
Mario Draghi in The Future of European Competitiveness.
This can still be changed, but time is crucial. If we want to build a Modern Golden Age in Europe, changes must be made quickly.
Now, to be fair, the European Union hasn’t been totally inactive. We have a major funding initiative focused on innovation called the “Framework Programmes”. The major issue, Draghi argues, is the way we’ve organized them. For the next batch, we should focus on making it more effective, by aiming at a small number of key areas, compared to the current ones, scattered across a bunch of different ones. Also, the programmes should be managed by people who have a track record on innovation, not EU officials.
A final policy that I want to highlight (there are many more suggestions in the report) is the idea of an “Innovative European Company”, a legal statute that allows for companies working in key digital areas to have a single digital entity valid throughout all countries in European Union, making it easier to scale their products and improve the pipeline between investors and innovators. This would be a great intermediate step, aiming towards the completion of the Single Market in the EU, in all different industries.
Just because something is very loosely regulated, doesn’t mean that will guarantee a good outcome. Sometimes, it’s even the opposite. No matter how inspiring JD Vance’s speech was, the truth is that pure deregulation might harm more than help. However, as most things, there is a spectrum and Europe clearly needs to change its position.
Sure, our continent might have “built the old world”, but we can’t keep collecting this fleeting sense of credit about it. It’s time to focus on the present and use our past as inspiration to propel us forward, into the future.