Why European Startups Fail to Scale

What I think plays a big role is aggression. Startup founders in the US would do whatever it takes to succeed. Sometimes this leads to hard work (80+ hour weeks), other times to unfair play (Uber licensing and traditional taxis come to mind). Generally, in the US there's a "win by all means necessary" attitude, while Europeans prefer their work-life balance and don't "break the rules" too much. All this is based on personal experience and I have no data to back it up.

That said, I see the same difference between northern and southern European nations. Southern ones are more carefree and want to relax. They even have words and concepts around this (think the Spanish siesta). It's part of culture which translates to work behavior.

I think this difference in founders and employees might contribute more to the scale of startups than what the article talks about. I see value in both approaches.

While i agree the article makes it a bit sound that this is the delta to US startups. US startups don't recognize this neither and still grow insanely big.

> The United States is far from a homogenous market.

Consumer media and consumer market is cross continental in the US. And that's the big difference.

If you launch in boston there is a good chance people in portland will hear about it. If you launch somewhere in new jersey there is a good chance that somebody in LA will hear about it (worstcase via NYC media)

If you launch in portugal nobody in poland will notice. If you launch in serbia poeple in finland will never know.

That kind of launch acceleration startups in the US have enables them to "fall forward" while doing mistakes.

TL;DR: EU VS USA - Same downside (fail) - completely different upside (succeeding) [especially in form of early stage market pull] leads to different scaling patterns ("rocketships"), risk awareness (investments) and companies that are (need to be?) build

But I think the article misses an important point. Namely access to venture capital money.

Put it simply, it's much easier to raise a lot of money for a startup (especially an early stage one) in the US than in Europe. So European companies often operate on a shoestring budget in comparison to the US counterparts. Heck, many of investments I've seen for UK companies wouldn't pay for a single engineer in the valley. Or at best, they leave a lot less cash available for marketing later.

Just seems like there's less access to money or a support network in Europe. So as a result, US startups can operate on a much larger scale.

We're also assuming that 'scaling' is the goal and considering the writer is a 'growth hacker' it's good for business to pretend it is. But if we're talking about cultural differences it's important to consider differences in the overall goal. Profit seems to be a much bigger driver in Europe - scaling to billions of users and then trying to squeeze some money out of them isn't as appealing. I don't think you can say one approach (scale vs. smaller but cash flow positive) is better than the other.

I'm not convinced the Valley in 2016 will turn out successful as the previous few decades. Maybe the East Coast & Europe are the smart ones.

> the main reason they don’t succeed to scale is because European startups fail to recognize that they have to confirm to the rules...

I have been punished for this before, but I can't help notice when someone starts lecturing about typos, and can't proofread their own prose.

In the U.S., you can launch a startup in NY, SF, or Texas. It doesn't matter. You can still reach everyone in the U.S. with a web service in a single language from the same location.

It's very different if you launch a site in Germany, Estonia, or Spain. You just won't have the same reach by default, especially if you only offer the service in English.

If you want to reach all of Europe and most people, then you'll have to offer the service, the ads for it, and the support, in 20+ languages.

Alternatively, you can stick to English...but you'll reach far fewer people. Search for a certain type of product or service on Google Adwords in say Estonia or Poland in English, and then in the native language, and you'll see at least an order of magnitude more potential traffic/clicks for the native keyword.

It may be easier to scale physical products than services in all European countries, but it still won't be as easy as such expansion would be in the United States. You may still need to deal with locals in their native language, so you may have to hire some people in those countries that speak that language.

Hopefully, Google or someone will solve this issue through technology, so that in 10 years it won't matter if your service is offered in English only. Because otherwise, it will probably take another 50 years before 80% of the European population speaks English well by default and prefers to search for everything they want to buy online in English.

Without citations this reads like the author is bigoted. Chose to stop reading at that point.

You can't replicate a Silicon Valley without grokking SV culture. I have yet to meet a fellow Irish in the flesh who understood it, any of it, except perhaps at a Hackerspace one time in a different European country.

Europeans should do as the Japanese did with the English/Dutch before they made the foreign technologies their own.

Synchronize with the hive. Places like SSC, LW, HN. Read their books. Think their thoughts. That's part of why I spend some time here. Perhaps, like the Japanese, we would pick up things we do not quite need, like umbrellas and Victorian pocket doors, but also something less tangible, less capable of being denoted on a PowerPoint presentation.

Silicon Roundabout and other government led projects are Cargo Cults.

In recent months, chatting with a foreign friend has made it uncomfortably clear to me that Americans are bad about thinking all white people who speak English and are successful are American. America is kind of narcissistic (such as when so many of us assume you must be American when you post to a predominantly American forum). I suspect one thing that helps foreign countries succeed here is "passing" for American, which many foreign countries likely make no effort to do.

For one thing, you have to figure out how customers can pay you. This is not a trivial problem, particularly for B2C companies, because there is nothing even resembling a universal method of payment. Credit cards are near universal in some countries but hardly used in others. Direct bank charging via SEPA or other Direct Debit schemes is popular in some countries but not others. There are national schemes that are widely used but only in one country.

Then there are the tax rules. The EU is absurdly bad at this, as anyone affected by the VAT rules can tell you. I've talked with local businesses here in Cambridge UK that are considerably larger than any of mine, and some of them still say that with hindsight they would have simply dropped all of their customers from within the EU but outside the UK when the rules changed last year, because the compliance costs simply aren't justified.

There are also very different legal environments in fields like consumer protection and intellectual property, which can have a big impact depending on your line of business.

And finally, there are the overheads of starting and running a business at all, which obviously is a prerequisite to scaling. The UK is regarded as relatively business-friendly compared to some of our European neighbours, yet the current government has already hurt small business owners with not one but two major tax hits since taking office last year. Those apply even for small all-director businesses, which might be the case for the stereotype three-guys-in-a-garage kind of startup, but as soon as you take on any employees at all you're in for a whole new world of joyous regulations, form-filling, cash-grabbing and statutory obligations. It's a crazy situation that makes setting up a real company that can grow and create jobs a significantly worse proposition both financially and in terms of regulatory overheads than just going it alone or in a small group and all being self-employed. And as I said, this is in the UK, which is paradise for entrepreneurs compared to some other European nations.

Ultimately, the factors that give startups the best chances to become established and then scale up are mostly about flexibility and moving money around easily. You can go too far -- I wouldn't want to give up reasonable protections for employees to exploit them in the way that US companies routinely do, for example -- but in general, most of Europe has a lot to learn from our friends in other developed economies about those two key areas.

I doubt that's an uncontroversial statement in Belgium.

What's behind this, though? Excessive business regulation? Investment regulation? Culture of entrepreneurship? All of the above? Something else?