Why European Startups Fail to Scale(arkley.vc)
arkley.vc
Why European Startups Fail to Scale
http://www.arkley.vc/blog-quotes/why-european-startups-fail-scale
19 comments
> If anything, Europeans appreciate cultural differences more than people from the US.
Maybe a bit too much. Sitting in Austria I've less worries about getting customers from Texas (US is US) than about getting customers from France (oh god, the language barrier, the red tape, …) or Poland (I don't even know who to hire for translations!).
And it really bogs you down. The US is one unified market, for software vendors at least. The biggest single-language market in Europe is Germany (coincidentally? its economic powerhouse), but tapping in Germany + Austria + Switzerland already means dealing with two currencies and three different legislations. And everything past it will have diminishing returns. Another language, another set of red tape to deal with, for a handful million potential customers… Why even bother? US startups won't have to deal with any of that until they want to expand internationally, and even then they can skip half the pain (l10n) if they focus on other English-speaking markets.
> Sometimes this leads to hard work (80+ hour weeks), other times to unfair play (Uber licensing and traditional taxis come to mind)
That's a bit naïve, European businesses have no problems with fighting dirty (we invented cartels, dammit, and 80 years later people still think light bulbs only last 1000 hours!), and entrepreneurs will bust their asses either way. It just doesn't get them as far.
Maybe a bit too much. Sitting in Austria I've less worries about getting customers from Texas (US is US) than about getting customers from France (oh god, the language barrier, the red tape, …) or Poland (I don't even know who to hire for translations!).
And it really bogs you down. The US is one unified market, for software vendors at least. The biggest single-language market in Europe is Germany (coincidentally? its economic powerhouse), but tapping in Germany + Austria + Switzerland already means dealing with two currencies and three different legislations. And everything past it will have diminishing returns. Another language, another set of red tape to deal with, for a handful million potential customers… Why even bother? US startups won't have to deal with any of that until they want to expand internationally, and even then they can skip half the pain (l10n) if they focus on other English-speaking markets.
> Sometimes this leads to hard work (80+ hour weeks), other times to unfair play (Uber licensing and traditional taxis come to mind)
That's a bit naïve, European businesses have no problems with fighting dirty (we invented cartels, dammit, and 80 years later people still think light bulbs only last 1000 hours!), and entrepreneurs will bust their asses either way. It just doesn't get them as far.
With respect to your point about different legislations, some states in the US have extra regulations and consumer rights. That's why you often see state-specific fine print in purchases. In the case of California, environmental regulations are stricter than many states, and CA market requires product modifications for cars and motorcycles. Sometimes these stricter regulations result in product modifications nationally.
I'm aware of that, but very little of that applies to software and services, which IIRC is most of all startups.
And the situation for physical goods is worse in Europe still.
And the situation for physical goods is worse in Europe still.
I agree with you, but I still think there are some special cases for software. If I understand correctly, privacy implications in EU states may be stricter than that of the US. I can only imagine this makes coding harder for user data (if user.country != "special snowflake").
Isn't this the reason the EU exists?
Oh, it's definitely helping, no doubt. But it can't just wish away language barriers and sovereign nation states.
> But it can't just wish away language barriers and sovereign nation states.
It's telling you think that's the goal of the EU (especially the "sovereign nation states" part). And people wonder why Brexit happened…
It's telling you think that's the goal of the EU (especially the "sovereign nation states" part). And people wonder why Brexit happened…
Only somewhat. The Euro solves the currency issues, except that Switzerland doesn't use it. The EU has some unifying regulation, but (so far as I know - I'm not in the EU) it covers less than Federal regulations do in the US, which leaves more to the discretion of the individual countries.
The US constitution has a clause that says, in effect, "if it covers interstate commerce, the Federal government gets to regulate it, not the states". If you're doing business across state lines in the US, well, that's interstate commerce by definition. States do get around that with health regulations and taxing requirements and such, but as I said, I think the situation in Europe is considerably worse.
The US constitution has a clause that says, in effect, "if it covers interstate commerce, the Federal government gets to regulate it, not the states". If you're doing business across state lines in the US, well, that's interstate commerce by definition. States do get around that with health regulations and taxing requirements and such, but as I said, I think the situation in Europe is considerably worse.
Also, Switzerland isn't a member of the EU anyways.
Drifting off topic, but, no. The EU exists to prevent war between European countries. The rest is bonus, or a means to an end, if you will.
That's absolutely not why the EU exists, come on.
I wouldn't say it the way the gp does either, but the predecessor to the EU was indeed founded for economic integration with the goal of making that integration prevent ww3.
Absolutely not? Interesting, tell me more what is the real reason (also, it works, even if it absolutely not is why).
We moved GitLab from the Netherlands to San Francisco. Some things I noticed:
1. In the US we got to see more other startups that were going really fast and that pushed us to go faster ourselves, Y-Combinator helped with this.
2. It was easier to find people that are experienced with modern sales and marketing practices in the US.
3. Customers in the US like to buy from a US company (and pay by check, these took 2 months and cost $70 to cash in the Netherlands).
4. On average companies in the US adopts newer technology sooner.
5. There was better advice and investment available in the US, Y-Combinator helped with this.
6. In the US there are much more success stories, this raised our ambitions.
I know many impressive startups and incubators in the Netherlands (shoutout to Adyen, 3ax Cycling, AppSignal, and Utrecht Inc.) and we have some awesome Dutch customers. The above examples and talking about the statistical average, there are awesome organizations and people everywhere.
1. In the US we got to see more other startups that were going really fast and that pushed us to go faster ourselves, Y-Combinator helped with this.
2. It was easier to find people that are experienced with modern sales and marketing practices in the US.
3. Customers in the US like to buy from a US company (and pay by check, these took 2 months and cost $70 to cash in the Netherlands).
4. On average companies in the US adopts newer technology sooner.
5. There was better advice and investment available in the US, Y-Combinator helped with this.
6. In the US there are much more success stories, this raised our ambitions.
I know many impressive startups and incubators in the Netherlands (shoutout to Adyen, 3ax Cycling, AppSignal, and Utrecht Inc.) and we have some awesome Dutch customers. The above examples and talking about the statistical average, there are awesome organizations and people everywhere.
Wouldn't it be enough to set up a postal box office in the USA to create a US 'presence' for many saas companies based in Europe? Provided, of course, that you are available during US office hours for email and phone support?
You still have to pick an entity to bill from. If that is a foreign entity the US customers need a special form from you to do business with you https://www.irs.gov/uac/form-w-8ben-certificate-of-foreign-s...
And having a postal box office doesn't solve cashing a foreign check in the Netherlands.
So as a first step I recommend incorporating a US entity (Inc. in Delaware), setting up the PO box (we used Earth Class Mail), and getting a bank account (heard good things about first republic bank).
And having a postal box office doesn't solve cashing a foreign check in the Netherlands.
So as a first step I recommend incorporating a US entity (Inc. in Delaware), setting up the PO box (we used Earth Class Mail), and getting a bank account (heard good things about first republic bank).
> Y-Combinator
Nitpick: it's Y Combinator (no hyphen).
Nitpick: it's Y Combinator (no hyphen).
Thanks, just seeing this now and it's too late to edit. As an alumni I should know better.
The Spanish siesta is a break in the middle of the day because of the high heat. Spanish workers are the ones who, in average, work the longest hours in Europe (38 hours/week) after the Greek (42 h/w) and the Portuguese (39.3 h/w). Please stop the prejudice.
I have something to say about that. I live in Portugal as a foreigner and the working hours mean nothing. People are making coffee breaks all day long and the amount of sloppiness and incompetence can often be mind-boggling. As an example, my German girlfriend works in a dental laboratory and her Portuguese colleague would not possibly understand why it's not common practice in a German laboratory to watch Youtube videos on your cell phone while working. He really, honestly didn't believe it when she told him that German bosses don't appreciate that.
To be fair, salaries in Portugal are ridiculous, I have no idea how people get along with 600 Euro/m, 800 Euro/m tops, when at least in Lisbon rents are high. Some hard working people seem to literally live off toasted bread and coffee. This is disguised by the average salary of 1000 Euro/m after taxes, because the gap between rich and poor is very high.
I myself work at university, and I can attest that what takes 1 day at maximum anywhere in Northern Europe is projected to take 1-3 weeks here. I have a colleague who surfs on the Net the whole day and gets paid for it -- again, extremely bad payment, though.
So no, mere presence does not count and work hours don't count either. For Portugal, I blame the bosses, though, who seem to be universally incompetent assholes and reliably manage to create a catastrophic working atmosphere.
Sorry if I've offended some Portuguese, but that's my impression of the work ethics here after nearly a decade of living here. It has its advantages but productivity is not one of them.
To be fair, salaries in Portugal are ridiculous, I have no idea how people get along with 600 Euro/m, 800 Euro/m tops, when at least in Lisbon rents are high. Some hard working people seem to literally live off toasted bread and coffee. This is disguised by the average salary of 1000 Euro/m after taxes, because the gap between rich and poor is very high.
I myself work at university, and I can attest that what takes 1 day at maximum anywhere in Northern Europe is projected to take 1-3 weeks here. I have a colleague who surfs on the Net the whole day and gets paid for it -- again, extremely bad payment, though.
So no, mere presence does not count and work hours don't count either. For Portugal, I blame the bosses, though, who seem to be universally incompetent assholes and reliably manage to create a catastrophic working atmosphere.
Sorry if I've offended some Portuguese, but that's my impression of the work ethics here after nearly a decade of living here. It has its advantages but productivity is not one of them.
You have not offended this Portuguese. However, if one was to go exclusively by your account, one would come out with the understanding that is a country of incompetent slackers, and I'm sorry, but that simply isn't true. I do however concede that most of management in here is fairly amateurish and incompetent.
I agree, it wasn't meant to be generalized and is only a relative thing. If the horror stories I've heard are right, Portugal is a shining beacon of diligence in comparison to Angola. My point was just that if your boss is an asshole and you only earn 600 Euro/month, this can hamper your motivation.
Bah, I could tell the exact same stories about middle Europe and northern Europe.
> it's not common practice in a German laboratory to watch Youtube videos on your cell phone while working
Boy have I got news for you...
Boy have I got news for you...
While the Spanish work day is longer, it's not necessarily more productive. Long lunch breaks and the fact that the country uses the wrong time zone (enforced by Franco, no less) make the Spanish a sleep-deprived people:
http://www.economist.com/news/europe/21704816-and-knackered-...
http://www.economist.com/news/europe/21704816-and-knackered-...
The US has high-heat and we don't have any concept of a siesta, so it's not wrong at all to say there are cultural differences.
Of course there are cultural differences, but this has nothing to do with "work behavior". The average work hours in the US, for example, is 34.4 hours/week.
Yes, and Spain's is only 32.48[0]. What is your point?
[0] - http://fortune.com/2015/11/11/chart-work-week-oecd/
[0] - http://fortune.com/2015/11/11/chart-work-week-oecd/
My source says 38 hours. My point is that saying that "Southern ones are more carefree and want to relax" is false and prejudiced.
Just like saying that Walloon are dumber than Flemish.
> My source says 38 hours.
Care to cite your source then?
Care to cite your source then?
False? Maybe, maybe not - I have no idea. Prejudiced? Most certainly not.
If you don't know if it's false or not, you clearly don't have the data to judge it, hence you've got prejudices.
Fun fact: Most Spaniards I've met in UK are shocked by the "calling off sick" (after a night out) and low effort culture they've found in Britain. I personally think that's not true either, but tells me more about Spaniards than anything.
Truth is Spain is unproductive due to corruption. Also, you've got prejudices, like everyone else :-)
P.S.: I'm Spaniard and I consider myself lazy, hence why I got in IT (earn more with less effort). I run away from manual labour :-)
Fun fact: Most Spaniards I've met in UK are shocked by the "calling off sick" (after a night out) and low effort culture they've found in Britain. I personally think that's not true either, but tells me more about Spaniards than anything.
Truth is Spain is unproductive due to corruption. Also, you've got prejudices, like everyone else :-)
P.S.: I'm Spaniard and I consider myself lazy, hence why I got in IT (earn more with less effort). I run away from manual labour :-)
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It would be good if Spain could get in with the 20th century and use air-conditioning
(but yes, it's a cultural thing)
(but yes, it's a cultural thing)
There's air conditioned everywhere, not sure which Spain you've visited really.
On the other hand, it doesn't have to be ON all the time at like 19 degrees Celsius like in the US, where I carry a jacket around to put it on only when I'm inside a building :-)
On the other hand, it doesn't have to be ON all the time at like 19 degrees Celsius like in the US, where I carry a jacket around to put it on only when I'm inside a building :-)
It may be true, but infrastructure has nothing to do with work ethics.
[deleted]
If only English had a word for siesta like, don't know, nap? I would use nap in the same sentences as siesta and I always considered them equivalent.
The cultural thing with siesta is that after midday and for a few hours it's pretty much suicide to go outside, less do work under the sun, hence why in agricultural towns is common to work from 5 or 6 am until noon-ish then go to have lunch and sleep a while until it's safe to go outside and start with your social life.
In the cities that schedule doesn't exist, but some traditions remain like shops closed from 2pm to 5pm or businesses closed the whole month of August. In any case, these are also disappearing due to big chains taking over the high street, who have enough money to invest in several store clerks to cover 10am-10pm (yup, that's the typical mall schedule in Spain).
The cultural thing with siesta is that after midday and for a few hours it's pretty much suicide to go outside, less do work under the sun, hence why in agricultural towns is common to work from 5 or 6 am until noon-ish then go to have lunch and sleep a while until it's safe to go outside and start with your social life.
In the cities that schedule doesn't exist, but some traditions remain like shops closed from 2pm to 5pm or businesses closed the whole month of August. In any case, these are also disappearing due to big chains taking over the high street, who have enough money to invest in several store clerks to cover 10am-10pm (yup, that's the typical mall schedule in Spain).
An interesting thing I found out from getting to know a Swedish family living in Mexico was they make a conscious effort in their society to not be too good or better than everyone else. People strive to be a B versus an A. Not every single person subcribes to that thinking but I've rarely met a Swedish person that didn't seem to be fairly happy.
> European startups fail to recognize that they have to confirm to the rules and expectations of the new market they are entering.
While i agree the article makes it a bit sound that this is the delta to US startups. US startups don't recognize this neither and still grow insanely big.
> The United States is far from a homogenous market.
Consumer media and consumer market is cross continental in the US. And that's the big difference.
If you launch in boston there is a good chance people in portland will hear about it. If you launch somewhere in new jersey there is a good chance that somebody in LA will hear about it (worstcase via NYC media)
If you launch in portugal nobody in poland will notice. If you launch in serbia poeple in finland will never know.
That kind of launch acceleration startups in the US have enables them to "fall forward" while doing mistakes.
TL;DR: EU VS USA - Same downside (fail) - completely different upside (succeeding) [especially in form of early stage market pull] leads to different scaling patterns ("rocketships"), risk awareness (investments) and companies that are (need to be?) build
While i agree the article makes it a bit sound that this is the delta to US startups. US startups don't recognize this neither and still grow insanely big.
> The United States is far from a homogenous market.
Consumer media and consumer market is cross continental in the US. And that's the big difference.
If you launch in boston there is a good chance people in portland will hear about it. If you launch somewhere in new jersey there is a good chance that somebody in LA will hear about it (worstcase via NYC media)
If you launch in portugal nobody in poland will notice. If you launch in serbia poeple in finland will never know.
That kind of launch acceleration startups in the US have enables them to "fall forward" while doing mistakes.
TL;DR: EU VS USA - Same downside (fail) - completely different upside (succeeding) [especially in form of early stage market pull] leads to different scaling patterns ("rocketships"), risk awareness (investments) and companies that are (need to be?) build
Or in other words, diversity in cultures and languages that isn't as prominent in the US. The US has 350 million people with one language and a general shared culture, Europe has 740 million people with tons of languages and very different cultures between them.
But I think the article misses an important point. Namely access to venture capital money.
Put it simply, it's much easier to raise a lot of money for a startup (especially an early stage one) in the US than in Europe. So European companies often operate on a shoestring budget in comparison to the US counterparts. Heck, many of investments I've seen for UK companies wouldn't pay for a single engineer in the valley. Or at best, they leave a lot less cash available for marketing later.
Just seems like there's less access to money or a support network in Europe. So as a result, US startups can operate on a much larger scale.
But I think the article misses an important point. Namely access to venture capital money.
Put it simply, it's much easier to raise a lot of money for a startup (especially an early stage one) in the US than in Europe. So European companies often operate on a shoestring budget in comparison to the US counterparts. Heck, many of investments I've seen for UK companies wouldn't pay for a single engineer in the valley. Or at best, they leave a lot less cash available for marketing later.
Just seems like there's less access to money or a support network in Europe. So as a result, US startups can operate on a much larger scale.
Fully agreed. I work with several startups both US and EU side. I see 3 hurdles, all solvable:
1. No unified capital market and banking union, hence funding is restricted to per country Capital accumulation.
2. Still no unified digital products, payments, and IP market. The cost of selling any sort of IP in the EU is orders of magnitude higher than in the US.
3. Most countries have some sort of ridiculous immigration and work permit regulation, hindering startups to hire people easily and from anywhere.
At this point it is easier for somebody from the EU to incorporate remotely in Delaware, setup a bank account through Atlas Stripe, do fundraising in the US through Angellist, hire globally through any number of online platforms, and close deals with ready made YCombinator SAFE notes, and travel with a visa waiver every quarter cheaply to the US, than to even try incorporation in the EU.
1. No unified capital market and banking union, hence funding is restricted to per country Capital accumulation.
2. Still no unified digital products, payments, and IP market. The cost of selling any sort of IP in the EU is orders of magnitude higher than in the US.
3. Most countries have some sort of ridiculous immigration and work permit regulation, hindering startups to hire people easily and from anywhere.
At this point it is easier for somebody from the EU to incorporate remotely in Delaware, setup a bank account through Atlas Stripe, do fundraising in the US through Angellist, hire globally through any number of online platforms, and close deals with ready made YCombinator SAFE notes, and travel with a visa waiver every quarter cheaply to the US, than to even try incorporation in the EU.
>> At this point it is easier for somebody from the EU to incorporate remotely in Delaware, setup a bank account through Atlas Stripe, do fundraising in the US through Angellist, hire globally through any number of online platforms, and close deals with ready made YCombinator SAFE notes, and travel with a visa waiver every quarter cheaply to the US, than to even try incorporation in the EU.
Maybe you can go into this in more detail because my understanding below seems pretty simple:
1. Register an LTD company in the UK online, in minutes, for £20 through the government website.
2. Hire anyone that lives in the EU with very little restrictions or paperwork. I don't see why most companies would need to hire from outside the EU and that is a huge talent pool.
Maybe you can go into this in more detail because my understanding below seems pretty simple:
1. Register an LTD company in the UK online, in minutes, for £20 through the government website.
2. Hire anyone that lives in the EU with very little restrictions or paperwork. I don't see why most companies would need to hire from outside the EU and that is a huge talent pool.
Hire anyone that lives in the EU with very little restrictions or paperwork.
Hiring anyone at all is a significant hurdle in much of the EU, whether it's from your home nation or another member state. If we're talking about startups just starting to grow beyond the founders here, you're not going to have anyone on board yet who is dedicated to dealing with HR, legal and payroll issues. Those won't necessarily be a full-time job with employee #1 either, but they're already a significant overhead the moment you start looking to hire that person, and if anything unusual or adversarial happens it can quickly become an actual full-time job.
Hiring anyone at all is a significant hurdle in much of the EU, whether it's from your home nation or another member state. If we're talking about startups just starting to grow beyond the founders here, you're not going to have anyone on board yet who is dedicated to dealing with HR, legal and payroll issues. Those won't necessarily be a full-time job with employee #1 either, but they're already a significant overhead the moment you start looking to hire that person, and if anything unusual or adversarial happens it can quickly become an actual full-time job.
So don't hire them. Let a payrolling company officially hire them. The payrolling company sends you a monthly invoice and takes care of all the legal stuff.
I'm currently doing this in the Netherlands, and it's totally legal.
Here in the UK, there are also a lot of rules around intermediaries and agency workers.
>> "HR, legal and payroll issues"
These aren't issues for US based companies?
These aren't issues for US based companies?
I'm sure they are, but as I understand it, the amount of regulation involved in most of Europe compared to the US is on an entirely different level.
For example, in much of the US, employment is typically at-will. Make a bad hire, or simply change direction so an early hire is no longer a good fit, and you have minimal obligations.
In much of Europe, employment immediately or almost immediately involves things like not being able to fire someone without being able to show they are either genuinely redundant or not just really bad at their job but also not capable of improvement to the point they could be useful.
Obviously there are issues of employee protection and fair employment contracts to consider as well, but it's hardly surprising that given the very different employment relationships either side of the Atlantic, small US businesses thinking about taking on their first employees can be much more liberal in hiring new staff because they have much less commitment.
For example, in much of the US, employment is typically at-will. Make a bad hire, or simply change direction so an early hire is no longer a good fit, and you have minimal obligations.
In much of Europe, employment immediately or almost immediately involves things like not being able to fire someone without being able to show they are either genuinely redundant or not just really bad at their job but also not capable of improvement to the point they could be useful.
Obviously there are issues of employee protection and fair employment contracts to consider as well, but it's hardly surprising that given the very different employment relationships either side of the Atlantic, small US businesses thinking about taking on their first employees can be much more liberal in hiring new staff because they have much less commitment.
Not to nearly the same degree in the US, particularly for small companies.
It's considerably simpler to hire people initially as contractors in the US. But hiring in general is a lot simpler, not to mention firing.
Imo the reason why there is less access to capital is the same why there are less fast growing europe wide companies. Game dynamics of slower/limited upsides.
The reason could be that in Europe investors are more conservative, too.
I can't imagine that a startup gets half a million dollar here in Europe because they let send you a friendly Yo to your buddies. (If I'm wrong here, tell me, I got some code laying around doing stuff like that). And with Uber and AirBNB don't tell me about embracing local laws and taxing.
I cannot give this comment enough points so that is the top one.
But this is actually the single concern I have: conservative VC. It is sooo bad, you guys in US cannot even imagine.
If, let's say, 5-6 years ago you could get away with a broken demo and a nice paper describing the idea , plus a business plan, now unless you are having 3-4 customers and everything already works they don't even look at you. And don't get me started on the accelerators. Biggest BS ever.
All in all, above even connections, money matters. You can build your stuff in 50 languages, perform 1000s of studies how to market, etc, if you have the capital for this. This should not be expensive, but this is the stuff you need _before_ you can expand or even reach a customer. But at this stage, you are left on your own, or give away a big chunk of shares for some little change from an accelerator.
But this is actually the single concern I have: conservative VC. It is sooo bad, you guys in US cannot even imagine.
If, let's say, 5-6 years ago you could get away with a broken demo and a nice paper describing the idea , plus a business plan, now unless you are having 3-4 customers and everything already works they don't even look at you. And don't get me started on the accelerators. Biggest BS ever.
All in all, above even connections, money matters. You can build your stuff in 50 languages, perform 1000s of studies how to market, etc, if you have the capital for this. This should not be expensive, but this is the stuff you need _before_ you can expand or even reach a customer. But at this stage, you are left on your own, or give away a big chunk of shares for some little change from an accelerator.
This seems completely wrong to me. I'm guessing that the assumption 'European startups fail to scale' is in comparison to US startups. I haven't seen any US startups change branding colours or change UI for European markets. They succeed in spite of this.
We're also assuming that 'scaling' is the goal and considering the writer is a 'growth hacker' it's good for business to pretend it is. But if we're talking about cultural differences it's important to consider differences in the overall goal. Profit seems to be a much bigger driver in Europe - scaling to billions of users and then trying to squeeze some money out of them isn't as appealing. I don't think you can say one approach (scale vs. smaller but cash flow positive) is better than the other.
We're also assuming that 'scaling' is the goal and considering the writer is a 'growth hacker' it's good for business to pretend it is. But if we're talking about cultural differences it's important to consider differences in the overall goal. Profit seems to be a much bigger driver in Europe - scaling to billions of users and then trying to squeeze some money out of them isn't as appealing. I don't think you can say one approach (scale vs. smaller but cash flow positive) is better than the other.
Oh, thats rich. If i have ever seen companies less interested in adopting to local laws and regulations, its the US ones...
Its similar to why East-Coast companies Fail to Scale? Perhaps scaling isn't great. I think its largely that investors don't throw money at companies with a dream and little else.
I'm not convinced the Valley in 2016 will turn out successful as the previous few decades. Maybe the East Coast & Europe are the smart ones.
I'm not convinced the Valley in 2016 will turn out successful as the previous few decades. Maybe the East Coast & Europe are the smart ones.
> Whereas Europeans are lenient to typo’s or faulty grammar, Americans are not (...)
> the main reason they don’t succeed to scale is because European startups fail to recognize that they have to confirm to the rules...
I have been punished for this before, but I can't help notice when someone starts lecturing about typos, and can't proofread their own prose.
> the main reason they don’t succeed to scale is because European startups fail to recognize that they have to confirm to the rules...
I have been punished for this before, but I can't help notice when someone starts lecturing about typos, and can't proofread their own prose.
Is it about Europeans being lenient to typos or faulty grammar in another language than their native tongue (i.e. English)? That's for sure.
But for instance, French people are not lenient at all with typos or faulty grammar in French...
But for instance, French people are not lenient at all with typos or faulty grammar in French...
Well, now we are forced to be lenient, because half of engineers and other highly educated individuals who come out of school nowadays cannot write a single sentence without at least one fault :-(
Yeah, it sounds like I worship the good old days, you have to see it to believe it.
Yeah, it sounds like I worship the good old days, you have to see it to believe it.
Two words: language barrier.
In the U.S., you can launch a startup in NY, SF, or Texas. It doesn't matter. You can still reach everyone in the U.S. with a web service in a single language from the same location.
It's very different if you launch a site in Germany, Estonia, or Spain. You just won't have the same reach by default, especially if you only offer the service in English.
If you want to reach all of Europe and most people, then you'll have to offer the service, the ads for it, and the support, in 20+ languages.
Alternatively, you can stick to English...but you'll reach far fewer people. Search for a certain type of product or service on Google Adwords in say Estonia or Poland in English, and then in the native language, and you'll see at least an order of magnitude more potential traffic/clicks for the native keyword.
It may be easier to scale physical products than services in all European countries, but it still won't be as easy as such expansion would be in the United States. You may still need to deal with locals in their native language, so you may have to hire some people in those countries that speak that language.
Hopefully, Google or someone will solve this issue through technology, so that in 10 years it won't matter if your service is offered in English only. Because otherwise, it will probably take another 50 years before 80% of the European population speaks English well by default and prefers to search for everything they want to buy online in English.
In the U.S., you can launch a startup in NY, SF, or Texas. It doesn't matter. You can still reach everyone in the U.S. with a web service in a single language from the same location.
It's very different if you launch a site in Germany, Estonia, or Spain. You just won't have the same reach by default, especially if you only offer the service in English.
If you want to reach all of Europe and most people, then you'll have to offer the service, the ads for it, and the support, in 20+ languages.
Alternatively, you can stick to English...but you'll reach far fewer people. Search for a certain type of product or service on Google Adwords in say Estonia or Poland in English, and then in the native language, and you'll see at least an order of magnitude more potential traffic/clicks for the native keyword.
It may be easier to scale physical products than services in all European countries, but it still won't be as easy as such expansion would be in the United States. You may still need to deal with locals in their native language, so you may have to hire some people in those countries that speak that language.
Hopefully, Google or someone will solve this issue through technology, so that in 10 years it won't matter if your service is offered in English only. Because otherwise, it will probably take another 50 years before 80% of the European population speaks English well by default and prefers to search for everything they want to buy online in English.
Are you the founder of MtGox Bitcoin exchange?
'The Flamish are earlier adopters, are more experienced, and access English language websites or apps. Whereas some Walloon users might still hope for a Minitel comeback and tend to believe clickbait links.'
Without citations this reads like the author is bigoted. Chose to stop reading at that point.
Without citations this reads like the author is bigoted. Chose to stop reading at that point.
I think it is culture with a pinch of geopolitics.
You can't replicate a Silicon Valley without grokking SV culture. I have yet to meet a fellow Irish in the flesh who understood it, any of it, except perhaps at a Hackerspace one time in a different European country.
Europeans should do as the Japanese did with the English/Dutch before they made the foreign technologies their own.
Synchronize with the hive. Places like SSC, LW, HN. Read their books. Think their thoughts. That's part of why I spend some time here. Perhaps, like the Japanese, we would pick up things we do not quite need, like umbrellas and Victorian pocket doors, but also something less tangible, less capable of being denoted on a PowerPoint presentation.
Silicon Roundabout and other government led projects are Cargo Cults.
You can't replicate a Silicon Valley without grokking SV culture. I have yet to meet a fellow Irish in the flesh who understood it, any of it, except perhaps at a Hackerspace one time in a different European country.
Europeans should do as the Japanese did with the English/Dutch before they made the foreign technologies their own.
Synchronize with the hive. Places like SSC, LW, HN. Read their books. Think their thoughts. That's part of why I spend some time here. Perhaps, like the Japanese, we would pick up things we do not quite need, like umbrellas and Victorian pocket doors, but also something less tangible, less capable of being denoted on a PowerPoint presentation.
Silicon Roundabout and other government led projects are Cargo Cults.
American consumers behave as if they have already seen and done everything.
In recent months, chatting with a foreign friend has made it uncomfortably clear to me that Americans are bad about thinking all white people who speak English and are successful are American. America is kind of narcissistic (such as when so many of us assume you must be American when you post to a predominantly American forum). I suspect one thing that helps foreign countries succeed here is "passing" for American, which many foreign countries likely make no effort to do.
In recent months, chatting with a foreign friend has made it uncomfortably clear to me that Americans are bad about thinking all white people who speak English and are successful are American. America is kind of narcissistic (such as when so many of us assume you must be American when you post to a predominantly American forum). I suspect one thing that helps foreign countries succeed here is "passing" for American, which many foreign countries likely make no effort to do.
> uncomfortably clear to me that Americans are bad about thinking all white people who speak English and are successful are American.
Don't worry, if you're black you're African-American too.
Don't worry, if you're black you're African-American too.
Yeah, my sons and I recently discussed some of the problems with calling people African-American or even Hispanic-American. I noted that we don't call whites "European-American" -- a term I am tempted to start using ironically, in part because I increasingly object to surveys that ask if I am white or some long list of other labels, none of which is really accurate. There is never an option that really fits me or a means to write in "German-Irish-French-Cherokee ethnicity and American citizen by birth" or something.
Signed: European-American with a dash of Cherokee who finds the entire system offensive.
Signed: European-American with a dash of Cherokee who finds the entire system offensive.
Today the distinction between an European and US company is blurred, as it is easy to register business abroad or in multiple countries. Many European startups incorporate in the US from the beginning, but operate from EU, many open sister US companies at some point. Should these companies be counted as successful EU or US companies?
While there certainly is more cultural diversity across Europe than within the US, this article overlooks some other fundamental problems faced by new businesses in Europe as they try to scale out to different markets.
For one thing, you have to figure out how customers can pay you. This is not a trivial problem, particularly for B2C companies, because there is nothing even resembling a universal method of payment. Credit cards are near universal in some countries but hardly used in others. Direct bank charging via SEPA or other Direct Debit schemes is popular in some countries but not others. There are national schemes that are widely used but only in one country.
Then there are the tax rules. The EU is absurdly bad at this, as anyone affected by the VAT rules can tell you. I've talked with local businesses here in Cambridge UK that are considerably larger than any of mine, and some of them still say that with hindsight they would have simply dropped all of their customers from within the EU but outside the UK when the rules changed last year, because the compliance costs simply aren't justified.
There are also very different legal environments in fields like consumer protection and intellectual property, which can have a big impact depending on your line of business.
And finally, there are the overheads of starting and running a business at all, which obviously is a prerequisite to scaling. The UK is regarded as relatively business-friendly compared to some of our European neighbours, yet the current government has already hurt small business owners with not one but two major tax hits since taking office last year. Those apply even for small all-director businesses, which might be the case for the stereotype three-guys-in-a-garage kind of startup, but as soon as you take on any employees at all you're in for a whole new world of joyous regulations, form-filling, cash-grabbing and statutory obligations. It's a crazy situation that makes setting up a real company that can grow and create jobs a significantly worse proposition both financially and in terms of regulatory overheads than just going it alone or in a small group and all being self-employed. And as I said, this is in the UK, which is paradise for entrepreneurs compared to some other European nations.
Ultimately, the factors that give startups the best chances to become established and then scale up are mostly about flexibility and moving money around easily. You can go too far -- I wouldn't want to give up reasonable protections for employees to exploit them in the way that US companies routinely do, for example -- but in general, most of Europe has a lot to learn from our friends in other developed economies about those two key areas.
For one thing, you have to figure out how customers can pay you. This is not a trivial problem, particularly for B2C companies, because there is nothing even resembling a universal method of payment. Credit cards are near universal in some countries but hardly used in others. Direct bank charging via SEPA or other Direct Debit schemes is popular in some countries but not others. There are national schemes that are widely used but only in one country.
Then there are the tax rules. The EU is absurdly bad at this, as anyone affected by the VAT rules can tell you. I've talked with local businesses here in Cambridge UK that are considerably larger than any of mine, and some of them still say that with hindsight they would have simply dropped all of their customers from within the EU but outside the UK when the rules changed last year, because the compliance costs simply aren't justified.
There are also very different legal environments in fields like consumer protection and intellectual property, which can have a big impact depending on your line of business.
And finally, there are the overheads of starting and running a business at all, which obviously is a prerequisite to scaling. The UK is regarded as relatively business-friendly compared to some of our European neighbours, yet the current government has already hurt small business owners with not one but two major tax hits since taking office last year. Those apply even for small all-director businesses, which might be the case for the stereotype three-guys-in-a-garage kind of startup, but as soon as you take on any employees at all you're in for a whole new world of joyous regulations, form-filling, cash-grabbing and statutory obligations. It's a crazy situation that makes setting up a real company that can grow and create jobs a significantly worse proposition both financially and in terms of regulatory overheads than just going it alone or in a small group and all being self-employed. And as I said, this is in the UK, which is paradise for entrepreneurs compared to some other European nations.
Ultimately, the factors that give startups the best chances to become established and then scale up are mostly about flexibility and moving money around easily. You can go too far -- I wouldn't want to give up reasonable protections for employees to exploit them in the way that US companies routinely do, for example -- but in general, most of Europe has a lot to learn from our friends in other developed economies about those two key areas.
> The Flemish are earlier adopters, are more experienced, and access English language websites or apps. Whereas some Walloon users might still hope for a Minitel comeback and tend to believe clickbait links.
I doubt that's an uncontroversial statement in Belgium.
I doubt that's an uncontroversial statement in Belgium.
It's uncontroversial because only Flemish people can read it. Zing!
One of the things that the article misses is that Americans are constantly assaulted by marketing. This is why advertising is so expensive, and why Americans are only interested in novel products.
And not enough money in general...
The subject is interesting, but I don't think the article author gets into the real issues. I'm thinking something broader - it seems like there's virtually no business/tech innovation in Europe at all. How many innovative American tech companies are big in Europe? Apple, Google, Uber, AirBnB, Facebook, Amazon, etc, just off the top of my head. Can you name an innovative European company that's big in the US? I can't think of any that I could call innovative with a straight face.
What's behind this, though? Excessive business regulation? Investment regulation? Culture of entrepreneurship? All of the above? Something else?
What's behind this, though? Excessive business regulation? Investment regulation? Culture of entrepreneurship? All of the above? Something else?
> Can you name an innovative European company that's big in the US? I can't think of any that I could call innovative with a straight face.
BMW is innovative and big in the US. I'm sure you can keep a straight face. Also, Audi.
There have been plenty of companies in the past like Skype, Nokia, ARM, Mojang, CCP. But many of them get bought.
In any event, it's obviously more lob sided towards the US. There are many of factors. If I were a researcher I would probably begin by investigating how many Europeans move to the US to start or join companies (lots) and if there is any 'patriotism effect'. For example, I've only seen the severe distinction of "domestic" vs. "import" (e.g. cars, beers, etc) in the US.
BMW is innovative and big in the US. I'm sure you can keep a straight face. Also, Audi.
There have been plenty of companies in the past like Skype, Nokia, ARM, Mojang, CCP. But many of them get bought.
In any event, it's obviously more lob sided towards the US. There are many of factors. If I were a researcher I would probably begin by investigating how many Europeans move to the US to start or join companies (lots) and if there is any 'patriotism effect'. For example, I've only seen the severe distinction of "domestic" vs. "import" (e.g. cars, beers, etc) in the US.
A generation or two of people that can handle written english good enough to use products and services only available in said language.
What I think plays a big role is aggression. Startup founders in the US would do whatever it takes to succeed. Sometimes this leads to hard work (80+ hour weeks), other times to unfair play (Uber licensing and traditional taxis come to mind). Generally, in the US there's a "win by all means necessary" attitude, while Europeans prefer their work-life balance and don't "break the rules" too much. All this is based on personal experience and I have no data to back it up.
That said, I see the same difference between northern and southern European nations. Southern ones are more carefree and want to relax. They even have words and concepts around this (think the Spanish siesta). It's part of culture which translates to work behavior.
I think this difference in founders and employees might contribute more to the scale of startups than what the article talks about. I see value in both approaches.