Safe Harbor is Gone— Go to Market in Europe Now

If you haven’t been living under a rock you know by now that the US-EU Safe Harbor initiative from July 2000 has been killed by the European Court of Justice (ECJ). Invalidating of the Safe Harbor initiative should not have been a huge surprise though as EU has been tightening the loose belt of the privacy laws surrounding EU consumers, and trying to force national and international players to adhere to the wishes of EU residents for quite a while now.

This decision might not impact all companies immediately. The European Commission has some guidance as to when transatlantic private data transfer may occur as well as a promise to work on an initiative to enable continuity of business between US and EU. If you are involved in international business with transatlantic data flow you need to start looking into ways to comply with the upcoming new regulations.

Wind of change

With the death of Safe Harbor, the “fuzziness” around EU privacy laws is starting to clear and allows for more decisive future planning. While the European Commission is still trying to establish regulations around data residency and privacy there is a clear direction as to where all of this is going, and it sure doesn’t look like it’s heading outside EU borders.

With economical threats looming around the corner from disappointing numbers coming from emerging markets to FED still holding off raising the interests rates in the name of unstable economy, investors and companies might be inclined to sit tight and wait out some of the uncertainty and doubts that keep creeping in when reading the latest news headlines.

Keep in mind that a healthy dose of common sense and doing your “homework” diligently should go without saying in this as in any other cases. Let me get to the point. At the risk of sounding biased let me tell you that I am certain that Europe is a very viable target for tech and tech-dependent companies to achieve massive growth, especially now that other regions are underperforming and that the EU privacy laws will gain clarity. Here is why.

Europe’s potential

The Safe Harbor initiative kicking the bucket can be a positive thing as it will force not only companies, but also the regulators, to get this sorted out once and for all, and focus on finishing the framework businesses can use as compliance standard for growth continuity of international business.

At the same time the emerging markets uncertainty is not quite the same as doing investments in Europe and if you worry about the interests rate hike let me ask you this: when did anyone not borrow money to jump on business opportunity that made perfect sense?
 Let’s take a look at what the play is here and why it does make sense to make a move now to secure your piece of the pie.

For starters the European Commission has launched plans to grow the Digital Economy which means that EU wants to convert 28 national markets to a single one by reforming laws and implementing standards that will involve changes from simplifying VAT laws and changing telecom rules to stimulating ecommerce and cloud computing use. That’s not all though as these initiatives will be supported by a serious injection of cash into the region by the European Union Commission with the research and innovation funding program: “Horizon 2020” which is set to support Europe’s economic growth, jobs and global competitiveness and has a working budget of whopping 77 billion EURO. That is nothing to sneeze at and it will secure major positive economic changes within the EU in the next 5 years.

Next to the tremendous amounts of money that is going to be pumped into the region by the EU Commission, Europe also houses interesting and full of potential startup hubs which have been on the radar of many Venture Capital firms. With 24 billion-dollar exits over the last 5 years Europe has been breeding some serious movers and shakers from London to Berlin. Booking.com and TomTom are known on a global scale and still based out of Amsterdam, which is one of the prominent startup hubs.

If Europe is making sense for your business expansion and you need physical and digital presence there for compliance and regulatory or simply latency reasons, make sure you do have IT infrastructure present within EU borders and focus on your core business from there on.
 Still having doubts about Europe because of capital investment? There are well-established companies that can help you launch your business expansion and avoid CapEx through the use of OpEx model to finance new IT infrastructure in Europe.

This September during the HostingCon Europe 2015 tradeshow in Amsterdam we covered this topic. Representing PhoenixNAP, there I had the pleasure to discuss “European Go to Market Strategy” during a panel with participants from SoftLayer, ProfitBricks, i3D.net and NL-ix. Here is a quick summary of my view on the subject, including a few action points:

  • If you want to do business in Europe make sure you have the IT infrastructure within the EU borders to avoid any future compliance and regulatory complications. Find the right partner that can accommodate your current and future needs.
  • Have a very clear understanding who your competitors are and what your potential markets look like. Does your value proposition bring something new and special to the market or is your business just another one of many?
  • How are you reaching your customers at home? Are you going to use similar or different strategy abroad and are you starting from scratch or do you actually have business cases validating your investment in Europe right off the bat?
  • Keep your investment risks low, keep your business agile and be ready to pivot in order to reach the growth you desire. To do that go with OpEX and stay away from CapEx on the IT infrastructure side. Partnerships with IaaS providers that operate and are present intercontinentally will secure not only the presence in the right location, but also compatibility on cultural and business level.
  • Make sure that if you are coming from outside of the EU that you understand which country you want to start doing business in and how it can serve as a local base of operation or the rest of Europe. Take into consideration the climate for foreign investors and ability to communicate locally in English with prospects and partners alike.
  • Make sure your base of operation is in a location with good connectivity and well built out infrastructure to increase potential for your services adoption.
  • Work with a partner that can not only help you manage the IT infrastructure, but also has its own local presence and has the financial stability and technology solutions to accommodate your needs when you start and when you grow. Last thing you want is missed opportunities due to scalability issues.
  • Use a healthy dose of common sense and always do your homework. Talk to your potential partners and service providers and visit their facilities at home and abroad if you have such ability. In either case ask them to be transparent about what their limitations are in different scenarios and don’t be afraid to ask for advice as after all they have already been through the process of international expansion first hand and they know the drill.

Growing your business is never an easy task and expanding internationally brings many new opportunities, but also risks to the table. Make sure you understand well what these risks and obstacles are so you can make well educated decision, but most of all don’t let the fear of unknown stop you as after all you are an entrepreneur. The time to strike is now.

Originally published at www.thewhir.com on October 27, 2015.

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