I attended Telekom’s Innovation Day a couple of weeks ago and joined a discussion on European Entrepreneurship. The other people joining this discussion were from different backgrounds: Finance, product management, startups, entrepreneurs. After a short while the discussion centered around two questions: what is the reason Europe seems to be creating less successful startups and how do you successfully start a company internationally?
How do you start a startup to become big internationally?
I think a great comment came from Sebastian Wallroth who pointed out the difference between the business and the developer perspective. Developing something to be internationalized and building something for international use might be seen differently by these two parties. I personally believe that it is important to start your company close to your initial users/customers. It is crucial to get as much feedback as possible–especially in the beginning. Facebook’s Net Jacobsson also repeated this theme at the very same event, stating that he attributes much of Facebook’s growth in applications to Facebook’s developer garage events which were held locally to strengthen the community and gain insights into what developers wanted.
Having been a software developer for several years, I know how tempting it can be to build the best, most robust and extensible application right from the start. And while I certainly agree that web applications should be built with internationalization in mind, I can also see the threats of over-engineering and getting tied up in details. Starting a company in a European country (aside from the UK most probably) almost demands rolling it out in the local language first. However, if your application has global applicability, it might be worth considering a first beta version in English.
As Julie Meyer from Ariadne Capital put it in a panel discussion earlier at that event: there are many startups which think small but then need to grow big quickly.
What about Europe?
As there are more than enough examples of highly successful European entrepreneurs in the US, the logical inference was that it might be Europe which is limiting the growth in new companies. While many agreed that the lack of sufficient seed and early stage capital might be a factor, I doubt that the underlying problems can be solved by just providing more cash for young entrepreneurs. On the other hand, I do not neglect that Germany should provide a better soil for more VCs. However, an entrepreneur who wants to work at a startup just for the salary is probably not all aware of the difficulties ahead.
I certainly believe that the attitude towards taking risks is different in Europe. Having spent two years in the heart of Silicon Valley, I am pretty sure that rewarding risk is almost unique to the most vibrant startup scene on this planet. Risk-taking is a vital part in startup life. Europe lacks this sort of entrepreneurial thinking. This thinking also includes the idea that people who have been out of the large corporate setting for some time are still able to adapt and thus capable of switching to a different working environment. Unfortunately, this is just not (yet) part of our thinking.
Selling too early?
Another, very interesting point came up shortly before the discussion ended: what about the statement that a lot of companies in Europe are not able to develop fully before being sold? The hypothesis was that a lot of investors in Europe are also still not willing to take larger risks and hence hinder greater exits. Thus, the lightning rods like the ones in Silicon Valley with high valuations are lacking and in turn not creating enough interest for people to pursue an entrepreneurial career. I found this to be a really compelling statement. Too bad it is most probably going to remain a hypothesis for the lack of actual data.