Where to locate your startup? The world.
Bangalore at night by MalayalaM on Flickr
(This is a loose translation of this spanish post: Emprender en España) Over the last year I’ve met a lot of tech startup founders in Spain who said:
- “It’s disgusting to start up in Spain”
- “Here, everything is against the entrepreneur”
- “We had to open an office in London because nobody believes that any good high tech can come out of Spain”
- “All the VCs have said no… because we’re not located somewhere close to one of their regional offices.”
I see a common problem among entrepreneurs who fixate on a specific part of the world. “You’ve got to be in Silicon Valley“. “It’s impossible to start something in [fill blank of countries/cities that are not a tech hotspot]”
In reality, it seems foolish to think like this. Our industry can only be understood as a global industry.
For the majority of technology solutions there is a reduced number of buyers in each market. For many startups, success might come by having 200 customers in 20 countries. Especially in B2B.
Furthermore, the partners who can help us create an ecosystem around our products are generally not where you are.
Nor the most prolific distribution channels.
Or the investors.
Therefore, it seems hard to conceive that one would start a local tech company. A more viable strategy would be to start a global tech company with presence in wherever region/backwoods you might find value. To me, Skype seems a model worth following. A Swede and a Dane get together and set up development shop in Estonia (cultural affinity to their nordic backgrounds, but much cheaper engineers of exceeding quality), product management in London (because cool people want to live in cool places), commercial office in San Jose (literally a single family house inside of Ebay’s campus, because the big tech companies are in Silicon Valley), and their legal HQ in Luxembourg (because who likes to pay taxes?)… For them, what mattered was to find the best talent that could be afforded where it was, and open up the possibilities for their business to make vital connections with its respective constituents.
There are exceptions, of course. Your tech business may be a local business. Take Idealista.com, the most successful Spanish online search engine for real estate, and the brainchild of Jesus Encinar. (By far, better than anything we have in the US and their Realtor monopoly). But even them started something locally and grew it internationally.
I’ve previously confessed my admiration for Martin Varsavsky. An argentinian who grew up in New York and came to Spain and built some of the most successful tech startups in the countries (and his share of flops). For me he is one of a kind, even though he has incredible investors, he is based in Madrid and not in Mountain View. Yet I’m sure he doesn’t think of Fon as a spanish business, but a business with a presence in Spain.
- Look for foreign cofounders who live in other countries
- Travel, move around, meet people
- Open an office somewhere where you can connect to the ecosystem, be it the Valley, NY, Bangalore or Beijing
- Internationalize and localize your product
- Attack distribution channels in other countries
- Don’t assume that another company can do this for you (“we help companies with their international expansion strategies”)
- Have a multilingual management team (may I suggest Spanish