If not in the Valley, at least compete with it!

In one way or another, I've addressed the topic of "Where is it like Silicon Valley in Europe" a hundred times, be it in interviews, blog posts, on Twitter or on panels. Nevertheless, there really isn't a "Valley" in Europe, only some places kind of like it. If you want my ideas on that, I have other posts regarding that topic.

Yet, as an entrepreneur in Europe, don't forget that the Valley exists. Measure yourself by "Valley standards" and not just  by your peers in Europe. It's been irking me a bit when I speak with start-ups that they compare themselves only to their local competition. So often I hear a pitch and ask who the competition is in the US. Often enough I've heard (unfortunately never directly) "we haven't taken the time to figure that out yet." If this is your take on things, you're nuts. There is most likely some entrepreneur in California who would of swum to the US if possible, worked four jobs for money to launch his venture and wouldn't of thought for one second about "quality of life" nor "spending time with the kids." Think what you like about that entrepreneur's priorities in life but don't forget he'll enjoy crushing you if you're competing against him or her.

The Valley may be sunny and inviting but everyone is there to win. If you don't, you tend to leave quickly. Those who've stayed and continued to start new businesses or finance them have the loftiest of goals. They're probably also not about the money. Sure, they enjoy the perks of an exit but my experience is that lots of people there want to change the world. If not change it, at least try. You hear it in their pitch and you see it in their eyes. Ask me the one thing I see lacking most often when it comes to start-ups in Europe and I'll answer "hunger, drive and lofty goals." The few that have it you recognize immediately. They usually end up succeeding quickly and you chase them to invest in their companies. Those that don't have it probably never will. It's also not about being "American", which also often comes up. The Valley is made up of people from every corner of the earth. Each and every start-up I've visited there was a pot pourri of backgrounds, often Europeans.

So do we need a "Valley" per se in Europe? No, who cares. It's just a term anyway. Do we need entrepreneurs who are hungry, passionate and aiming high? Yes and in order to remain competitive, we need to know who our true competition is in order to know where to aim.

Comments

[Benjamin Rohé]

that, somehow, is well connected to our last conversation regarding business angel involvement's / spray & pray approach. It just takes more than luck - it's personal commitment form everyone involved and strong involvement to the marco- AND micro-tasks.

The european entrepreneurship spirit needs an upgrade - who's first?!

[Scott Wheeler]

In my more cynical moments I refer to some of the local navel gazing as "people getting a gold metal without realizing it's the special olympics".

I find that there are almost two German startup scenes though, and the second has been a pleasant surprise. There is an undercurrent of "coincidentally German" startups (e.g. SoundCloud) that aren't talked about much within the German startup world, but are in the broader startup world. There are more of those sorts of startups than I'd originally thought, they're well, just not as loud. ;-)

[Paul Jozefak]

Scott, I couldn't agree more. My opinion is that we are increasingly seeing more solid teams. This is what keeps me at it here in Europe and yes, I looked at Soundcloud. Great team and unfortunately, they were offered a better deal. My post refers to an issue you'll only resolve over time. You need more entrepreneurs who spent time in the Valley getting an idea of how it is and you need stronger peers for them here in the EU. Again, both Soundcloud founders spent time on the West Coast
before launching Soundcloud in Europe. I'm pleasantly surprised by many of the folks who come to pitch us. Unfortunately, they're still few and far between when comparing with the US. We'll get there though in Europe, I'm sure of this.

[Patrick Schmid]

Totally agree with you. I just wonder where that attitude is actually coming from. In the past US startups were disregarding Germany and gave way to copy cats in Germany. All these German startups had to do was satisfying the local market. Comparing them to someone abroad with respect to competition was out of the question after successful exits such as Alando or even more recent StudiVZ. Hence, the notion of competing for a local market is homegrown. Who is to blame for this development? Is it really just the teams who just strive to be what their childhood heroes were resembling? I think that's a bit too easy.
Sometimes it is right not to look at competition abroad. I believe Europe works differently in so many ways. Nevertheless, I am also convinced that too much gets lost without thinking big.
But with respect to that, the Valley also has something very unique that differentiates it from the pack. I don't know any other place where even trying to build a great company (or even changing the world) gets that much respect from people. I sometimes believe that we in Germany still think too much in terms of winners and losers rather than crediting people who try to make a difference. And who is to blame for that attitude?
Of course we would all like to see world class companies arising from Europe. And I think Germany does have a fine entrepreneurial scene and the potential to create the next big thing. But I also agree with you that it is still a long way to go. The only way we will ever get across this is a change of mind. Talking about it is a great first step.
Keep up spreading the word!

[Paul Jozefak]

It's not necessarily about looking to US competition to copy them. I agree that the local market here in Germany and in general in Europe has it's own way of doing things at times. Nevertheless, if you are successful here, competition from the US will arrive. Just look how Facebook has muscled into the market and made life for StudiVZ that much more difficult. When I say look to your competition in the US, I mean more the mindset than copying their products or strategies.

[Jan]

I agree with your statement. But have you thought about comparing US to EU VCs? A lot of what you are saying applies equally.

[Paul Jozefak]

I have before. US VC's also have a leg up and a couple (maybe 30 years) head start. I compare myself to them as well when building my peer group. I also look to the UK where there are some strong examples of people doing good work in Europe. I do my best to apply many of the principles I write about to myself, first and foremost. Do I have areas where I need to improve? You bet. Do I continue to try doing so? Yes again!

[Nicolas Toper]

The big difference IMHO between US and Europe is cost of capital and the help of the State.

In France (at least), the State helps a lot meaning a lot of companies don't need seed funding (my company is in this category). On the other hand, BA/VC money is very expensive as opposed to the US.

For instance, one of our customers (our customer base is mostly startup) got laughed at in France by VC/BA or they had very bad deal. A year after, they rack 1ME of profits/year without the funding they rejected.

They could now raise money to grow faster. But the terms would be of the kind "win big or loose all". Hence they stay small and (very) profitable.

[Paul Jozefak]

Nicolas, you're very correct about the gov. involvement, especially in France. VC's also have it easier in France due to gov. regulations which make it easier for LP's to invest in funds. Hopefully, Germany will soon learn. On the other hand, in the US, the State is not involved or at least not to the extent as in France. The firms do much better though. It becomes a long, drawn out discussion whether the gov. aid actually benefits or not. I guess it depends on how you view it. I'm a bit on the fence in this regard but at the moment feel that any help which comes in Europe is and should be welcome.