Cultural Learnings of America for Make Benefit Glorious Nation of Europa

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This week’s TechCrunch 50 conference in San Francisco brought together a number of threads and stories which have been kicking around the back of my mind for while. A little like Borat, I’ve been asking the Americans a lot of questions (though hopefully without the accompanying chaos).

The first one seems obvious but is worth spelling out one more time: to launch a consumer web service or, increasingly, mobile application, America remains the golden prize worth shooting for.

It is a large, homogeneous market which speaks one language. It is quite simply a no-brainer to really go for it there. That has always had implications for European startups. How do you launch in a market when you are not actually in the USA, or headquartered there? How do you get traction? It is of course perfectly possible.

But many startups wring their hands about the issue and outside of trying to get a post in TechCrunch, it’s tough to get traction unless you have something which is innately viral. But this ‘launching in the US’ issue has been impressed on me even more this week after hearing about the experiences of startups like CloudSplit.

Watch my interview with them and witness how, towards the end of the video CEO Joe Drumgoole almost goes into an fit of ecstasy when I ask him whether attending TechCrunch 50 had been worthwhile. His reaction was typical of others I’ve spoken to – and I’m not just saying that because it was our conference.

Discussions like this have made me realise,once again, how useful it is for companies to build bridges between the US and their natural, native European markets. I have never been an advocate of just being in Europe.

The smartest startups launch internationally. But increasingly it’s clear to me that, if you are in the consumer applications space, you simply cannot afford not to launch specifically your startup at or literally in the US. That means tailoring your service so it looks and works like one of the locals, even down to using American English spelling.

I am also once again reminded of how smart companies like HubDub have been in launching their service at the US market. Out of the UK startups they’ve pretty much written the book on this, and I commended you to both the guest post by CEO Nigel Eccles and the presentation by his co-founder Lesley Eccles at the TechCrunch Europe conference earlier this year.

And there is of course just packing your bags and moving to America. It’s a hard choice but many startups have to make it. I just hope that, if they do, they don’t forget their roots, and they bring their knowledge, and their money, back to help other startups.

Another train of thought has come home to roost. Lately we’ve been hearing how hard it is for startups to raise early stage funding from VCs in Europe. If a VC goes in early into a company in Europe it is likely that that they will have to provide follow-on funding at some later stage.

That worked when the market was buoyant but they is no longer the case so they are just not starting in the first place. It’s quite clear that this is in part why the launch of new seed funds like PRO Founders has been driven by this market need.

But while here in San Francisco I’ve also come across European VCs who are simply not spending their money on consumer propositions in Europe. They are just not that keen. For business applications, yes, Europe, and particularly London, remains a great platform for business apps.

But talking to one European VC while I was here it became crystal clear that even the consumer web or mobile companies he was interested in backing in Europe were less interesting to him if they didn’t have plans to launch in the US.

  • James

    That’s a tough one. There are so many factors involved. Technology is typically global and low barrier. So assuming you have a product or service, how do you break into the US market? You’d have to travel here for some face to face meetings with US ad agencies, business development partners, publishers, tech conferences, etc. Once you solidify these relationships, start cracking deals. Short answer, you have to move here.

  • coldbrew

    I think it is important to point out how rampant consumer culture is here in the US. There is a “holiday” in every month of the year (except August), and most people celebrate whatever it is no matter how silly.

    I don’t think it is necessary to move to the US, but having someone native to the US on the ground working on your behalf will help to provide an understanding of the culture and a route to develop business relationships.

    Excessive consumerism was invented in the US, and it doesn’t translate that well (thankfully).

  • http://www.ontheroad.to mromanova

    We had a chance to interview Robert Scoble, on what should non-US startup do to enter the US market: http://techcrunch50.ontheroad.to/show/robert-scobleizer-scoble-exclusively-for

    Although our start-up is from the Czech Republic, US market is crucial for us. We have two people in Seattle (Czech native), and it is extremely difficult for them to get an attention of any US media, VCs or partners. Or it was difficult till the TechCrunch50 event.

    After the DemoPit day, after literally 12 hours of intense, non-stop talking about our travel service OnTheRoad.to, exhausted as never before, we all had to agree on one fact: TechCrunch50 was a kick-ass event for us. All the contacts and feedback from VCs as well as potential partners are priceless. Get this, after only one day we got media coverage in Reuters, Washington Post, The Next Web and many others.

    In my opinion, it isn’t enough to have someone in the US, it is necessary to attend these types of events, such as TechCrunch50.

  • http://www.techcrunch.com/2009/09/17/techcrunch50-wrap-up-congrats-to-all-the-startups-who-made-it/ TechCrunch50 Wrap-Up. Congrats To All The Startups Who Made It.

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  • http://500hats.typepad.com Dave McClure

    fascinating piece MikeB… altho perhaps a little depressing for startups in the european market to have to focus so intently on the US.

    while the unified language / homogenous market in the US is certainly appealing, i’ve got to think the EU market is still attractive, even if fragmented. it’s surprising to hear that EU VCs wouldn’t see that territory as their natural habitat, even if they are also expecting startups to go after US audiences as well.

    interested to hear more about this when we hop over to London for SeedCamp & the rest of the GeeksOnaPlane trip.

    see ya next week…

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  • http://timoelliott.com Timo Elliott

    Thanks for the article! I hadn’t even realized there was still a debate about this. I was lucky enough to participated in a highly successful startup, Business Objects, that managed to aggressively attack the US market without losing its European “soul”. For me, the lessons were clear — if you have a good product you should sell it globally, as fast as you can, and you should enter each market as if you were a local.

  • http://jp.techcrunch.com/archives/20090917techcrunch50-wrap-up-congrats-to-all-the-startups-who-made-it/ TechCrunch50の総まとめ. 出場企業のみなさまおめでとう&ご苦労さま

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  • http://www.mobileindustryreview.com Ewan MacLeod

    Totally agree. Got a startup in the consumer space? Go west. Don’t hang around in Europe. We simply don’t think big enough.

  • Classifieds

    Great article! The current economic crisis has brought up many new startups and not always successful ones. You outlined clearly which difficulties they faced that made them unsuccessful. Really good!

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  • http://www.broadbandproviders.co.uk Martin Chamberlain

    Monitise PLC (mobile banking solutions) is a company I’m watching closely.

    They’ve crossed the pond and partnered with Metavante Corporation to offer Monitise Americas.

    Mobile banking is still in its infancy and America is indeed the golden prize.

  • http://btclip.com/2009/09/18/techcrunch50-wrap-up-congrats-to-all-the-startups-who-made-it/ TechCrunch50 Wrap-Up. Congrats To All The Startups Who Made It. - btclip

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  • http://www.chinwag.com Sam Michel

    Hi Mike,

    Interesting perspective and one I’d have to share. I always feel that I’ve returned to the foot of the mountain on returning from the Digital Mission (http://digital-mission.org) trips.

    Admittedly, there’s an element of post-trip blues, but I miss the ‘can do’, ‘will fund’ attitude of the US market.

    The size and scale of the market can’t be underestimated (although wait until China gets a bit easier to access for UK companies) but it lacks some of the focus that the UK provides.

    For a UK start-up, there’s a quality threshold that’s lower than many of the US equivalents, the product of a single market environment that, relatively speaking, has less competition. In the UK, your product/service needs to excel or it dies. (OK, I’m simplifying a little).

    But the kind of brutality a UK start-up needs to go through, provides a good grounding and discipline for going into a bigger market. Access to money aside, this is one of the key things that makes the UK’s digital sector so strong.

    The next series of Digital Missions that you’ve supported (thanks, BTW) to LA/SF, New York and South by South West, help bridge the pond by linking top UK digital companies with partners and investors in the US, by allowing companies to have the best of both the markets in the US and UK.

    There’s more info on the Digital Missions here:
    http://digital-mission.org

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  • http://www.proofhq.com Mat Atkinson

    ProofHQ is a UK headquartered business application. Within three months of launch over 60% of our clients were in the US. After we attended Digital Mission to SXSW and WebMission to San Francisco that increased to over 75%. Those trips also led directly to partnerships with two of the largest tech companies in the world and that would have not happened without “boots on the ground”.

    Our take on that experience is:

    First, I’m not sure if there is any distinction between launching a consumer or a business app – the US market is still the big one to go for.

    US consumer culture does give consumer focused start-ups the opportunity to scale rapidly, but US business culture is equally innovation-friendly and US companies lead the way as early adopters. Through tech blogs and search engines US clients are going to find you anyway.

    Second, I think that European companies can adopt a gradual approach to establishing a presence in the US. It does not have to be a “big bang” relocation before launch.

    On a practical level, there are a number of steps that a European company can take to develop a US client base without have to be based there.

    As well as regular trips (especially to secure distribution deals), extending customer service to US hours, hosting in the US and pricing in USD (bit of a no-brainer!) are key steps that are making a difference for us.

  • London VC

    Its current “issues” aside, Skype was a brilliant exception to this generalisation — not having focussed on or at the US market for its success. Its massive user growth started in Europe, went to Asia and only then the US.

  • will

    seed funding is the key, in britain it took me 6 months to get under 15k for my startup. (although to be fair hsbc lent me 3k after 15 minutes, when i was a student so its not all bad) im not knocking the people or the funding i got, but now im looking for early stage capital, the gulf between britain and america is vast.

    to get angel funding, (via a network rather than being introduced) takes a huge amount of rigmarole , yet in america there is at least one vc, that offers a 250k unsecured loan, as a quickstart, just for the development of an idea.

    Untill we get something similar, we couldnt hope to have anything like silicon valley.

    the thing is, we should have that kind of seed/venture funding in britain, its obvious that the investment bankers, like to take a risk, so if they put, 1% of the money they put into things like CDOs, into startups instead, it would be the greatest thing to happen to the british economy since thatcher.

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