 Good morning ladies and gentlemen to this press conference from the 49th annual meeting of the World Economic Forum here in Davos. Good morning to the third day of this meeting. We're starting a couple of minutes late. We hope it's not a symbol for Europe being late in the innovation race. Everybody's talking about China and the S being locked in this battle for tech dominance. So the question is where do we stand with Europe and how competitive is Europe in this global innovation race? This press conference is also dedicated to a launch of this report. Innovate Europe. My colleagues here have some copies if you are interested and you'll also find it online on our website as of now. Thank you for joining here in the room and thank you for being on the live stream here with us, whether through Facebook, Twitter or our website. Welcome. Without further ado, let me introduce our wonderful panel here this morning. To my immediate left we're joined by Martina Larkin. She's the head of Europe and Eurasia and a member of the executive committee of the World Economic Forum. To her immediate left we're very pleased to be joined by the Prime Minister of Estonia Yuri Rattas. Right at the heart and center of our panel we're joined by Gillian Tanz. She's the CEO of booking.com. To her left we're joined by Klaus Hommels who's the founder and CEO of Lakestar Advisors, one of Europe's biggest venture capital funds. And last but definitely not least the man with the most difficult name for me to pronounce on this panel, Jörgen Knutstorp, the chairman of the Lego Group. I hope I got that right. Thank you very much for being here. Martina, the Innovate Europe report. Tell us a little bit about what it is and why the World Economic Forum is doing this piece of work. Thank you Gill and welcome everyone. We have been quite concerned about Europe being left behind when it comes to innovation and to leading the transformations brought about by this fourth and last revolution as you mentioned. None of the ten biggest tech companies are in from Europe. The large platform companies in the US and China are dominating the marketplace and investments in AI for example are very small in Europe when you compare it to the US and China. And the scale in Europe still has no comparison when it comes to the rest of the world. So given the concerted efforts in China and the US, we really feel Europe needs to step it up essentially and really develop a much more scaled up and better innovation model across the region. So we brought together a number of thought leaders, experts, digital leaders, some of them on this panel as well to really think about what this new innovation model could look like. Because Europe does have some good aspects in its economy. As we know it has one-third of the top universities and research institutes in science and engineering. We're leading in e-governance and of course on data protection and regulation with the GDPR. Europe has taken a big step forward as well. So we have developed this new report and innovation model essentially to think about how Europe can lead when it comes to this innovation race. And we've identified essentially four key catalysts that Europe needs to focus on. One of them is to be much more strategic when it comes to the industries that it focuses on and that it wants to drive. And we think that we need to create much better cross-sectoral innovation strategies and platforms for high performing industries like healthcare, like the financial sector, like manufacturing. And for example in the UK we have seen how they have pushed fintech also through sandbox experimentations and really helped fintech companies be much more innovative in the future. The other aspect is data. And Europe needs to and can lead when it comes to data governance. And as many of you know, data is sort of the new oil that is what is being said all the time. So Europe can change the data dynamics and needs to lead when we think about governance of data around the world and developing a system that is based also on European values and principles. And governments can also play a big role in this when it comes to really the governance of data. And then the third aspect really relates to talent. And it has also been said by the forum and by our chairman that talent is winning over capital because capital is becoming much more abundant in the world. But where you can really differentiate yourself and be much more competitive is when it comes to talent. And those companies and those countries that can attract the talent will also be the winners. And here again we can do much more to attract more talent but also grow them and keep them in the region because we see a lot of talent leave Europe to go to the US to go to China to do other parts of the world. And specifically also we would like to encourage European companies to increase female entrepreneurship because only 5% of female founder companies were female in 2007 and in 2008 they were female in 2017. And that's why we have to do this alone. So there's huge opportunities for growth in that respect. And then the last part I would say when it comes to this European model of innovation is related to the public leadership, public sector leadership. Again we have huge public procurement in Europe and this can be allocated much more strategically, much more dedicated also to digital industries and growing the economy and probably in Dallas we should say data is the new snow but we can go with oil for now. Prime Minister, people might not usually look to governments for innovation. Now Estonia is a bit of a poster child in Europe for innovation and especially your e-governance is unrivaled in Europe. What role do you see for the public sector in that innovation race? Thank you. Also good morning and I would like to thank this opportunity to be and to take part of the World Economic Forum and also for the initiative and work with the report and for inviting me here today. I have, that's true that I have the honour to be the Prime Minister in a country that takes innovation very seriously and there are several ways for the government to facilitate innovation. It starts with providing good quality education for all school children, education that gives kids the ability to better interact with technology. We need talented people in order to have innovative ideas and the governments are responsible for providing a good business environment that supports innovation. Legislation has to be flexible to keep up with the fast technological chains whether it is self-driving cars or using AI in products and services. The government can also be a role model by being open and innovative itself. This is where I believe Estonia can provide very good example. Together with the private sector we have built a digital government which provides daily concrete value for our people and for our businesses in terms of time and money saved, easier access to services and much more. We have secure data management where individual data is cross-used for several services but stays under the control of the individual. Over the past 20 years we have also built strong trust in digital solutions by maintaining them user friendly and cyber secure. Of course other countries have their own success stories. The question now is how do you gain advantage on European level? We want your total outcome for the EU to be larger than the sum of all the contributions made in every single member state. Europe has to remain competitive in turbulent times of rapid technological and social change. We can build on our strengths, shared values and cross border cooperation. We must raise the power by having high standards concerning cyber security in addition to the existing set of digital data protection value rules. The focus needs to be making the single market for better in the digital age. This includes having strong digital IDs, a framework to tackle cyber threats and of course the free movement of Theta. There is still a lot to do also in Europe level. Thank you. Thank you Prime Minister Gillian. You are now at www.the-europeen.com. If you take 27 Lego pieces, they fit nicely together you might not say the same about the Member States and the European Union. I would like to hear from you what are the standardizations we need to have a single market in Europe and how can that help innovation. First of all let me say that it was an honour to be able to participate on this report. We a business that started off in Europe and we grew our business all over the world out of Europe. So Europe for us is so important both because we're based in Europe but also because of course we operate in all of the countries in Europe. I think this report shows both the strengths and weaknesses of Europe with a very tangible action plan which needs to ensure that Europe remains competitive. We looked at the input for two areas that are critical in our opinion for the long term success. So the first one is digital infrastructure and interoperability. So if we don't have the right infrastructure in place we will not be able to compete with digital bigger digital economies. We need to remove existing friction that you see all across countries in Europe and we need to make sure that we have a close collaboration to get there between businesses and governments across countries and this goes basically from broadband to software companies to make sure that we make improvement. The second notion is really around harmonizing legislation and standards. Creating a true digital single economy will be crucial for future success. A single regulatory or competence center should be established with the responsibility to develop key principles in the areas of innovation such as algorithm governments to look at fair taxation of digital companies and the competition of mobile players. I think if you look at emerging innovative technology companies in Europe today they simply cannot operate every few hundred miles. They have to deal with different standards different law and different regulations. The burden is too much for companies today and it's the strength while they should be focused on these 500 million customers that we have in Europe to build better successes. I think we have the innovation in Europe. We have the drive and the appetite and the willingness of getting getting there but I think sometimes we're getting in our own way and I hope that with this report it shows clear actions what should be considered to keep building successes. Thank you Gillian Klaus you told me earlier that you that you're from Grävenbräuch the iconic German town that nobody knows in the room here or on the live stream. Well we have one gentleman who knows it. Do you sometimes wish you were born in Shenzhen or San Francisco. How is the funding situation for innovation in Europe. What's your what's your latest update there. To answer your first question I think I'm pretty happy being born in the Rhineland for you more reasons nevertheless the funding situation is better in different areas in the world. Let's reassess where do funding nor does funding normally come from. If you go to the U.S. funding for VC comes from endowments pension funds and family offices and insurances. So if you go to China China the state plays a very active role and provides in every year and the double digit billion financing for VC and for startups. In Europe the picture is a little bit different. So we do not have endowments in the classical way like we have it in the U.S. very few. The regulation prohibits insurances and pension funds to invest into into venture. So all this gives us a pretty area with very little powder to take part in the race that is currently going on to give you an idea. The biggest 30 companies which are digital companies which are not listed. They had a total financing the last eight years of 62 or 64 billion. In this financing in 14 percent of the rounds European government money took part. Europe's money invested 1.9 percent and we are represented was 1.4 percent in the cap table of this decisive companies. So meaning we are not happening on a global scale if it comes to to participation in that development. So if we look at at Europe the situation is within Europe that we do have a decent system for early stage the EIF has done a really good job. But then we talk public money and the public help to make these companies grow and the moment they need a 40 or 50 million financing there's nothing here in Europe anymore. And then these companies rely on foreign financing which implies that at this moment foreign funds invest in these companies which means they get into the supervisory board they define in the share purchase agreement in what way and which rights this company is governed. So actually we are losing these companies at the moment of this kind of financing more. So which is which is really really for Europe a disaster I think it is popular to always cry for more money. So but let's underpin it with some facts. If we want to play the game as it is played in the US or in China the big companies the big 2030 have in average gotten financing of 2.2 billion. So if we are not in a position to finance companies in this kind of vicinity then we structurally will not happen in this big companies. Secondly it's not the very very big ones all the ones that have gotten to a stock exchange and had achieved a listing they got 240 million dollar. So we need to think that there's really a step change in the way we have to think about money. The good thing is we do not need if we ask states and other participants to invest in this market we do not need to ask for grants or subsidies or whatsoever. So if you look at the European Investment Fund the 2012 vintage of their VC fund which is a structural one is above 14 percent. So it has become an attractive asset class which there are very little reasons not to consider investing in from the big capital pools. Thank you. Thank you Klaus. Jürgen. Martina already mentioned it's not just capital is also talent and I know you're this is keeping you up at night the questions about what talents do we need what scaling what re-skilling do we need to do in Europe to be competitive. Please share with us your thoughts. Thank you very much. I think as some of my other members of the panel have described is there's both reason to be optimistic and somewhat concerned for the future of Europe. I actually had a very positive experience coming here on Monday and being part of this annual talent competitiveness index conversation that World Economic Forum is doing with INSEAD and actually on the list of top 20 countries around the world for talent development. It's strongly dominated by European countries Switzerland being on top. Some of the Scandinavian countries also being in the top five. So I think we have many of the important conditions for talent development. The thing of course we will have to address is so-called upskilling and re-skilling of the workforce to be ready for the fourth industrial revolution. And the angle I would like to allow myself to take here is how do we do even right-skilling from the beginning? How do we create talent that is capable of lifelong learning? And that lifelong learning turns out to originate in childhood, how we grow up and how we are going through the basic education system. So one of the really critical things is early childhood development. It is what you're being exposed to. Children are natural learners, but as we grow up, we sometimes stop learning because we are no longer curious because we are not willing to take risks, we're not willing to be playful. And there are education systems that deliberately minimise that and there are education systems that constantly encourage that capacity to have curiosity, to have resilience, to have creativity, to be able to construct your own knowledge. For instance, in the kindergarten system and early school systems, there are some systems that are based on a sort of instructional pedagogy. You see a picture of a football and you ask the children, what is this? They raise their hand and say, this is a football. But if they have never actually played with a football, if they may even made their own football, they really do not understand what it is. They just know when they see the picture, this is what it is. So if we need talent that is capable of inventing new companies to reskill themselves, to acquire new skills, they have to have made, so to speak, their own footballs. They have to construct their own knowledge. That is the source of the entrepreneurial creativity that I think we need for the future of Europe. And to some degree, that means turning our education system upside down. There has been intensive research on what makes people creative at the workplace. It's a combination of creativity and discipline. But in terms of learning, it's about apprenticeship. And I think Europe, including here in Switzerland, has some really phenomenal models of apprenticeship. But what it means is we learn through the specific and then we abstract up into theory. Unfortunately, many education systems, and this was discussed on Monday in the talent competition index as well, focused on giving people degrees and passing through tests. That's learning generalistic knowledge. But what we need is people who have specific skills, who are then able to move from the specific skill up to the abstract knowledge. So what is this an example of? What can we learn from this? This is the kind of talent we need to start companies, to provide the innovation across Europe. But I think we have some education systems that provide that. We have the know-how to do it even better in the European education system. And we actually have phenomenal conditions for the kind of talent that would like to work this way, because they love to live in the European capital cities and be part of the European Union. So I'm very optimistic that if we can accomplish those things, we can create a much more interesting workforce. Thank you very much. So we heard some optimistic, some maybe more pessimistic notes about your Prime Minister. Are you an optimist about Europe and the innovation race? Are your fellow government leaders in Europe looking at your example? Are they learning from you? That's true, that I'm quite optimist. And why? I just would like to give you one very concrete fact. It was in the end of September 2017, when Estonia was the EU president's country. And then we had, in our capital, Thailand, the Digital Summit. And it was the first time when all the European leaders, we are together. And you mentioned this digital infrastructure. And I think that that is a very right point also here, if you are talking, if we are talking innovation. And the question was also this one and a half year ago about the digital infrastructure. And what was very positive that all the countries, all these 28 countries in the EU, they are saying that we have the same very positive attitude about the digital infrastructure. I'm very, how to say positive and agree with what you said, that this data is this kind of new goal. But I would like to say that where is our problem? Our problem is actually that we haven't good infrastructure if we are talking the different digital solutions across the borders. And that is quite a big problem also inside the EU. For example, I have very good news about, only about some days ago, we started the project between Finland and Estonia, that for example, Finnish people in Estonia, they could use the e-prescription. If they need some medicine, then they could use their identity ID card and also the e-prescription. And that is very concrete thing, I think, where we could see and we could be this kind of front runners between two countries. And of course, like I said in my speech, that more than 20 years we have been developed and build this digital society inside Estonia. Thank you. Thank you, Prime Minister. Let's give the members of the media a chance to bring us back down after this positive note. We have a question from the gentleman. If you could identify yourself for the sake of our online audience as well, please. Hi, good morning. I'm Kamaru from Estonia, Malaysia. My question is if you're looking at Europe, the digital economy knows no border, individuals or industries. Estonia, for example, is a digital citizenship. So how do you marry all these new possibilities and already realities of the digital economy and innovation that is regardless of geographical distance and demarcations? Thank you. Thank you. I think that you're asking also over this e-residence project. And that's true that today we have thousands and thousands people who are taking the e-residence in Estonia and also run the business under the EU legislation and under Estonia legislation. What is my point that you must be very transparent. And the most important question is why different businesses or why different citizens, they are using these different e-services or digital infrastructure. And I think here we could say that that's the best way to save our time. That's the best way to be transparent. That's the best way to fight against corruption. And I think these are very important aspects inside the Estonian society. And of course, today we are very happy and we are saying welcome all the e-residency all over the world. And we could see that today we have more than, I think, 130, 150 countries where we have the e-residency. Thank you. Thank you. At booking.com you know a thing or two about working across borders. What's your perspective on how we can work with these technologies that are by definition borderless? Yeah, so yeah, like I said, the harmonization in Europe and the digital single economy is so crucial. And I think even more crucial today than in the past if you think about technology and how digital companies, right, you need three things, you need ideas, which I think has improved a lot in Europe if you think about the startup ecosystems, the funding that startups are getting even though it is still less to other parts in the world but you do see improvements. But besides the ideas, you need basically skill and speed. And today that is crucial for to get more successes like booking coming out of Europe. And I think there the regulatory framework is extremely important to make sure that these companies are able to reach scale and speed also has to do with funding. Which I think for scale ups in Europe is very far behind today. Thank you. Klaus, do you want to add something? I think basically everything that I said for the finance, I mean, there are no limits for finance anyways, for financing. So that is an obvious one. Okay, we'll quote you on that, that there's no limits on the financing. I'm sure some founders will be very happy to hear that. We probably have time for one more questions. There's a gentleman in the back there, please. Hi, I'm warm from Estonian population in Delphi. I've got a quick question for the Prime Minister. Your co-panelists highlighted the need for to look at pension funds as possible funding sources for digital economy. You're a Prime Minister. You've got pension funds in Estonia. Would you be willing to look at pension funds, relaxing pension funds investment regulation for them to be able to invest in digital startups? And also sort of success companies? Thank you. I think that to be in this market, if we are talking investments and pension funds, I think we must be very, very open on the one hand, but on the other hand, it is always the question how we could promote and how we could make it more interesting for the pension funds to invest in different fields. And of course, in Estonia, we are really, really ready and we are really open and interesting into how more investments also from the pension funds. Thank you. Klaus, I think that's a question that got your attention. Do you want to add something? Yeah, that's true. So basically the regulation comes from a time where in the Neue Market and in the early 2000s, the asset class destroyed a lot of value. So and then the natural instinct of a regulator is to protect the pensioners and make it more complicated to invest in this asset class. But if you, this is a long time back and in order to assess whether this asset class is a valid one or not, you have to give it some time and fund investment or fund of fund investment in a grown up asset class venture in the US or in Europe, the risk, the implied risk that this asset class has now has nothing to do with the implied risk it had at the time when this regulation was done. So it is more than necessary to rethink the underlying risk models of that asset class. So basically allowing currently, insurances have to underpin VC investments plus 49% of equity, which makes it very unattractive. So given the new risk profile of that mature asset class venture now, this can all be remodeled. Thank you very much. Mindful of the time in this organization. I have to close the press conference here. Thank you very much for being here. Thank you very much for watching and a special thank you to all our panelists today. And please go to our website, have a look at the report and find out more about what the World Economic Forum is doing with its wonderful panelists here in that space. Thank you very much.