The life of the entrepreneur in Europe can be more difficult than in the U.S., but unique opportunities suggest "Vive la différence!"
European executives discussed the topic Entrepreneurship in Europe at the 2003 HBS European Business Conference, held November 22 at Harvard Business School. Ken Morse, senior lecturer and managing director of the MIT Entrepreneurship Center, moderated the panel.
The selling territory is different and in some ways more difficult in Europe, said Stephen Randall, CEO of nVend, a wireless phone marketing company. In the U.S., vendors can reach literally millions of customers by targeting shopping malls and other key outlets. In Europe, you touch only hundreds of people at a time because markets are more fragmented. "It's much harder territory to scale," he said.
However, once you do manage to get your merchandise in a couple of countries, "it's easier to defend" than in the States, added Javier Perez-Tenessa, founder of eDreams, an online travel agency. In Europe, you should think locally and act locally, even if you are selling a global product.
Startups have an easier time selling their products in the U.S. than in Europe, where relationships and a track record are more important to buyers, several panelists agreed. "U.S. companies are more willing to take a chance" with a new entrant, said Alex Vratskides, founder of Upstream, which designs mobile interactive ad campaigns.
Spanish Amazon
Other roadblocks to European entrepreneurs include difficulty attracting seasoned executives to run entrepreneurial companies; inflexible labor laws; weaker intellectual property protection; a more insular, less collegial environment; and unwillingness by venture capitalists to back untested ideas.
Randall said it is easier to get seed money in the U.S. But European backers, he said, want to see customers and revenue before they fund, making them more like banks than VCs. Perez-Tenessa disagreed, arguing that European backers will bankroll a project if it has a proven business model, ignoring the fact that the model might be very difficult to execute. If you pitch "Amazon in Spain," venture capitalists will shout, "Great idea!" he said.
"Something that would never get funded in the States will get funded in Europe," he said.
Morse asked panelists to list industries where it is better to be a European entrepreneur. The answers included 2.5 and 3G wireless, automotive technology, mobile products, games, and nanotechnology.
| If everyone tells you it's a good idea, it probably isn't. |
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— Alex Vratskides, Upstream |
Giving advice to student entrepreneurs in the audience, Vratskides said it is more important to get out and try something than to analyze it to death. "If everyone tells you it's a good idea, it probably isn't," he added.
Yves Charles, founder of Quallaby, a network management software manufacturer, said good ideas are not enough—you need business smarts to succeed. And in Europe, he added, the key is to build trust with customers. A trusting customer base will allow you to open doors with new potential buyers.
Understanding the differences
In a keynote speech earlier in the day, former Nestlé CFO Mario Corti (HBS MBA '75) discussed the differences between Americans and Europeans. Most Europeans, he said, know little about U.S. history or the country's values and beliefs. In a survey, 80 percent of U.S. citizens said they were proud to be an American, 60 percent said religion plays an important role in their lives, and 66 percent agreed that the role of government should be to provide freedom to pursue goals rather than ensure no one is in need. The percentages would not be nearly so high for Europeans asked similar questions, he said.
At the same time, Americans need to look at history and understand, especially, the impact of World War I on modern Europe. "Europe managed to autodestruct…and never fully recovered," Corti said.
He told students in the audience that their role is not to bridge the differences, but rather fight against an erosion of mutual understanding.
"Everyone should make an effort to understand the differences better and to fight clichés," he said. 