Why European start-ups have to try harder
It is a simple law of economics. To be successful, a start-up needs to expand. Any market has a natural limit. That threshold will be hit much sooner in any European country than in, say, the US, China or India. So, at a much earlier part of a start-up cycle than in America, European founders have to start thinking about expanding abroad. And what exactly is abroad? Well it’s often the US or a hodge-podge of very distinct countries that we lazily refer to as “Europe”. Yes, true, you do have the EU and it makes our business life a little easier by having set common standards, trade agreements and, oh yes, nearly forgot, peace. But, at the end of the day, what makes Europe so wonderful to live in makes it quite hard to make business in: cultural differences.
So, if it’s so critical to companies to expand abroad, you would think there would be a good set of literature, advice and shared experiences. Well, no. Even though it is always amusing to highlight cultural differences at dinner parties, it is always controversial: summing up a country with a set of overarching cliches is quite rude and easily becomes disrespectful to its rich culture. Try googling “business habits in Spain” and you will find a dearth of information, or tactless information that will make you cringe: See the e-diplomat recommendation. If you google “launch start-up in France”, you will find advice on regulation, laws and taxes of setting up a business (see Doing Business in France) — not very useful if you are wondering if you can even make money from your product in that culture. What you need is too granular and unclear. What you will find online will not be be relevant to your particular sphere, so we all end up doing a bit of market research and trial & error.
What would be relevant is a collection of start-up launch stories abroad, some introspective work on it and its link to the new culture. Should you hire a local? Should you manage from abroad or set up shop in the country? Should you do a low burn launch or fully invest yourself? Do you need to change your marketing? Do you have to tweak your product for local needs? What kind of competitions will you face in the new country? And how are you going to manage this new complexity?
I’m just getting started, but here is a set of beliefs: focus only on a few markets at at time. The ideal market is the biggest one with pain points that mirror those in your initial market. Yes, do hire a local if possible — cultural expectations are not something you can learn in a day. Don’t go with a half-baked approach, but do not set up shop abroad until necessary. Tweak only what you must in the product, but do fully adapt your marketing to the country.
Or do you try the Netflix strategy? Start with the most natural market, the closest to your culture: U.K. first, then Scandinavia, then the Netherlands. People speak English, have an open and tolerant attitude to other countries’ products, and a tradition of trade. But then what? Read this fascinating in-depth article from Variety on how Netflix is bracing for battle in the next set of European example.
So, how did you invade Europe? What’s a good launch story you have seen? Share your thoughts!