What I Learned From Building a Company Across Europe
The European business ecosystem is currently on a major up-swing. Last year set a record for the highest amount of VC funding raised, with €16.9 billion in capital invested across the region. Machine learning and artificial intelligence companies in particular, saw deal count grow 30-fold over the past decade. With increased VC funding and government support, you could argue there's never been a better time to start a company in Europe.
However, amid the opportunity in the region, there are some big roadblocks. Europe is heavily fragmented, and with 50 countries, language barriers and cultural differences, launching in Europe can be a huge challenge. Here are some of the barriers we faced at our own Austrian-based company, and how you can take off to rise above them.
Avoid the stigma of failing by starting incognito.
It's no secret: Europe doesn't accept failure in the same way the U.S. does. Across the pond in the U.S., failure is actually celebrated; it puts entrepreneurs into a club of strong, resilient risk takers who aren't afraid to bounce back. In Europe, however, failure is completely taboo. It's a sentiment that, unfortunately, wards off many would-be successful entrepreneurs from even starting a business in the first place. Many feel it's just too risky -- once you fail in Europe, your name gets tainted.
This fear of failure is so strong in fact, that the EU has developed a program to fight it. FACE -- which stands for Failure Aversion Change in Europe -- is designed to promote a risk taking culture, and through discussing the topic openly, show entrepreneurs that failure can actually lead to opportunities.
But, the culture isn't going to change overnight. So in the meantime, European entrepreneurs today can consider launching their ventures incognito. Going incognito virtually gets rid of the fear surrounding public failure, and enables entrepreneurs to build a minimum viable product and find a real product-market fit.
While building our company, we did one year of research and development incognito -- and once we figured out the perfect business model, we went all in. And considering we raised €1.5 million in seed funding off the bat, it worked out pretty well.
Market differently due to language -- but also culture.
In Europe, B2C marketing is a challenge for every company. There are 23 officially recognized languages in the EU alone. Of course, this doesn't include languages like Ukrainian, Serbian or Russian, among many others, which are spoken in non-EU countries. To reach consumers 200 kilometers west or east, a company generally needs to market in a completely different language -- but oftentimes, in a completely different way as well.
This is especially true for globally focused markets -- think the travel industry, for example, which our company operates in. Just take a look at how German, U.K. and French residents' travel behaviors differ. According to the most recent PhocusWright European Consumer Travel Report, adults of all ages are traveling in France and Germany, but young travelers in the U.K. are in sharp decline. Meanwhile, U.K. residents 55-plus spend about €600-€700 (close to $750-$870) more on vacations than their French and German counterparts.
Even more, travelers from the U.K. and France are twice as likely as Germans to book directly with airlines; German travelers place a higher value on human interaction. They also want to see a variety of ideas, offers and photos before booking a getaway -- and enjoy reserving a good beach chair, too. So much so, in fact, that one German resort developed an online booking tool to do so.
Consumer behavior highly differs in the European ecommerce industry, too. According to PwC's Total Retail Survey 2017, 45 percent of Germans start their product searches on Amazon, however, only 24 percent of Hungarians do, and in Denmark, the number goes down to 14 percent. And when it comes time to make a purchase, 44 percent of Italians buy products on mobile. But, in Poland, it's way less -- just 19 percent of people do.
So while non-Europeans might box European countries together as one-in-the-same, it's evident each culture needs to be targeted differently. But, how can travel companies, and others, reach their desired audiences most effectively?
It's prudent to hire local marketing companies to make sure the campaigns are authentic for each target audience. This ensures a company gets the best reach -- and well, makes sure their campaigns don't get lost in translation. That's what happened to Dallas-based Braniff Airlines back in 1989, when the company's slogan "fly in leather" actually translated to "fly naked" in Spanish. Coincidentally, the airline went under that same year.
Hire a multinational team to help with cultural differences.
For any pan-European B2C company, a global mindset needs to be ingrained into the company DNA. To achieve this end, it's imperative to have a multicultural team that can help reach customers in different regions around the world. Our team consists of people from Austria, Russia, Pakistan, India, Korea, Lithuania, Azerbaijan and Australia -- among other places. And while many companies open branches in different countries to market themselves globally, we've done the contrary. We've built a multinational team to really help keep the company united.
Since members of our team have roots around the world, they're able to collaborate and support each other in working with a global client base -- whether it be to educate their peers on sales techniques, or customer service. Different sales tactics might work with Austrians while the same sales tactics wouldn't work with the French. And our international team tries to make sure our employees get it right when conducting business.
Just because a company launches in a healthy or growing space, doesn't mean it's going to be a hit. There are a number of cultural roadblocks to consider when starting a company anywhere in Europe -- but finding a way to take off above them will be one of first steps to success.