Editor’s note: Peter Arvai, founder and CEO of Prezi, is working to help people share ideas. Prior to joining Prezi, he established healthcare startup omvard.se and was a part of creating the world’s first mobile news reader. Follow him on Twitter.
Just months before Twitter launched in 2006, a company launched in Helsinki, Finland — the land of Nokia, ruler of mobile phones. The company’s idea was simple: Make it easy to publish short messages via mobile phones. Ring a bell? For the Internet-savvy community in Northern Europe, it was Jaiku that kept people up to date and connected. I was one of Jaiku’s happy users.
But then a series of events unfolded. First, Twitter launched in the U.S., and Americans started using it rather than the then-unknown Jaiku. And toward the end of 2007, Google bought Jaiku. Jyri Engeström, Jaiku’s founder, joined Google along with his startup and the service was open sourced. But use of the service stagnated and Google finally shut it down. The swan song was a project called Google Buzz.
This story is not meant to be a generalization about acquihires — or Finnish startups for that matter. Nor is it about Jyri who, for all I know, is an amazing product guy. This is the story about how Jaiku’s experience helped guide Prezi’s launch and inspired us to open our offices in San Francisco not more than two months after we launched Prezi in Budapest.
If you want to build a global brand, there is currently one market that will determine your long-term potential, and that is the U.S. In the case of Prezi, the presentation culture in the U.S. was already relatively strong compared to Europe, so clearly there was an opportunity for us. By contrast, despite the popularity of texting in Europe in 2006, the critical mass needed for Jaiku to survive as an independent player was never reached because people speak different languages. The concept of critical mass helps to make sense of this. It relates to the number of users speaking the same language, the number of investors with global ambitions, and the number of advisors who can help you navigate the troubled waters of company building.
Here is an example from our experience: When we first launched Prezi, our offer was priced in euros. Then we quickly discovered that many of our U.S.-based customers did not know what a euro was. Once we flipped the switch to dollars, we were good with everyone around the globe.
As a European, and with a company that employs 80 of our 100 people in Hungary, I would hate to tell you to avoid starting companies in Europe. In fact, I believe that the talented people living in Europe are misjudged by Silicon Valley at the moment — particularly by the part of the Valley that is scrambling to find engineers in the U.S. Europe has great successes with companies with transatlantic setups. Just think of Skype, Spotify and Soundcloud.
Having said that, the reality is — and probably will be for the next few decades — that no matter where you start, if you’re an entrepreneur who’s dreaming of building a global brand, the U.S. market will be your key to success or failure.