14 Oct 2014

Before Expanding In Europe

tl;dr Europe may be more complex than you think it is.

One of the smart move that some european entrepreneurs make is cloning successful american startups. They make all the product research and design for you, they find the right vertical and, usually, Europe seems to be a far away place that is worth looking only after the conquest of the US 300 million people market.

Discussing about this with an american entrepreneur, a question came quite quickly: "Do you think that I should expand ASAP to Europe to avoid copycats?". The short answer is: "No, I don't", unless you really understand what you are doing.

Even though I more and more introduce myself as a European, there is a few harsh realities.

There is no such thing as Europe

At least not as you may view it from the United States of America. The countries composing Europe are still not ready to fully work together, the European Union is the first step to a long journey that is about overcoming local protectionism and local politicians interests. That is a long journey.

For example, it's common to see local state / region call for projects attributed to local companies, and that is not necessarily because they are the best fit, or maybe that is because the call for project has been tailored for them.

Keep also in mind, that while Europe is building itself, most countries have some local level nationalist movements such as Corse in France or Cataluña in Spain. Even if those are marginal in most countries, this gives you a good feeling about the european patchwork.

There are many europeans

And a lot of difference between them. We have no common language, no common culture, just a common project to work together and to make a common market.

To illustrate this, I would not be surprised to discover that there was more US produced media content available in a given European country than from all others european countries. A random Swedish probably knows more about New York than he does about Lisbon or Brussels.

This means that your product would not have to fit the European market but to fit all its individual, nation wide or smaller, markets. That's a lot of work in localization: translation, marketing, regulations...

To be more specific, firing someone can be super easy in some countries like the UK, others like France or Italy can make it almost impossible or very costly. For engineers, the notice period can expand from two weeks in the UK to three months in France.

Managing the VAT will become a nightmare as of January 2015 when the unique rate that every european business could apply to its customer will explode into one rate per state. The resulting situation will be closer to the US system.

Business practices changes a lot, a consequences of the culture and the legal framework. I was surprised to see that in Luxembourg a lot small bars and restaurants lease from one the major beer brand of the country. Actually their branding is often much more visible than the one of the restaurant itself. Through this those brands try to enforce the exclusivity of their product in those important distribution channel. A practice that I never saw outside of this half million people country.

It's all about execution, right?

Those potential copycats can do a lot of work at moving legal borders and triggering adoption, which could ease your work for when the time will come to extend. If you barely hear about those copycats it is either because they fail, because they stay local or because they get buyout.

If your target is to maximize your traction / investment ratio, I would rather suggest to focus on what you know best than to spread your resources on the unknown.

Fräntz Miccoli

This blog is wrapping my ideas and opinions about innovation and entrepreneurship.

Ideas expressed are here to be challenged.

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