How US startups see the European market (ceBIT 2016)?

(or “Do American electric sheep dream of European androids”)

While browsing in the numerous pavillons at the ceBIT, I wanted to measure how exhibitors from the US (startups, software companies, organisations) did apprehend the European market.

If some of them came for the first time, others have been exhibiting in Hannover for 10 years in a row. Some work in mobile, analytics, infrastructure, …

So I asked them the following questions.

Do European customers understand better your offer than their US counterparts?

  • For a majority of companies I talked to, the US market is well ahead of the European market, maybe 6 months or even 1 year in advance;
  • For a minority of them, the maturity of the leads or customers is the same in both continents;
  • Only one startup considered that the capacity of understanding the technology at the ceBIT was higher than in the CES.

My analysis: Apart from one startup who said that European customers are better advanced in understanding new technologies (probably because the audience at the CES is more mainstream than the one at the ceBIT), it is clear that the US are still ahead of Europe, in launching disruptive solutions.

Is Europe a good territory for your business?

  • As only a fraction of your US competitors are in Europe, being there is definitely have a competitive advantage, at least for a few months;
  • Some US companies prefer to target Europe in lieu of the Asia Pacific zone, as they think that dealing with Asia Pacific customers might be politically or economically challenging. Hence, the explanation of why the number of startups doing business in Europe regularly rises;

My analysis: Owing to the fact that US startups target North America and are cautious to do extensive business in the Asia Pacific zone, Europe should better promote its skills to seduce US startups and help more efficiently its own firms.

What are the drawbacks of doing business in Europe?

  • As the American technology is ahead of the European technology, you must evangelise the European market, meaning that revenues are not for today;
  • Some large companies seem to be interested in solely using your tool in a single marketing campaign. As a result, not integrating it in their overall branding strategy, is not ideal to have sound metrics on your long term strategy;
  • The decision process in Europe is slow as each step of the sales cycle has to be validated and checked, to avoid failures. In the US, it is faster because of less formality, but therefore prone to more errors;
  • Too many startups think that if the US market is too competitive for them, Europe could be the key for an alternative road to revenues. The problem lies on the fact that the business model of these startups might be flawed and going abroad will not solve issues;
  • It is difficult to understand how to struggle with different regulations and it’s time consuming.

My analysis: Obviously, Europe is a promising market, but it is not a unique land with one language, one culture and one regulation. It is always the same mantra: « Think global, act local! ».

As a US-based company, how do you manage your presence in Europe?

  • For a minority, being present once a year at the ceBIT is a way to remind old customers that you’re still alive, and it’s not necessary to have workforce nor exhibiting at other events;
  • For more early stage startups, a Sales Rep is enough to cover all of Europe;
  • For some startups with almost no workforce, OEM agreements or white labels with European partners could be the first choice. But, they consider that as long as their product is in Beta and that they just have a small portion of large accounts, it’s better to consolidate it beforehand;
  • For larger organisations, there is a European headquarter with a telemarketing / insides sales team, speaking the language of the country (if necessary);

My analysis: Considering that being in Europe once a year is enough for your business is a bit surprising for me, as more events or more partnerships could increase revenues.

As for the other companies, no surprise, as the physical presence of workforces and offices is directly linked to the level of revenues.

photo: flickr