How to build a pan-European business on a shoestring (Wired UK)

Internationalisation is a major obstacle for aspiring European startups. In most cases, a solitary European market is not large enough to generate extraordinary returns. Consequently, European entrepreneurs must have an international mindset from day one. Johannes Reck, CEO of travel ecommerce platform GetYourGuide, explains how to build an international business on a shoestring.

Choose the right location
One of the most important decisions you will ever make is where you base your company. Startups with international ambitions can only be built in locations that have sufficiently large international talent pools, high labour mobility and potent consumer markets. For many years, the dogmatic answer for tech startups in Europe has been London. Recently, Berlin has grown into a viable competitor due to the city's low labour cost and international appeal. Wherever the hot-spot du jour, you should choose the location that is best for your product and consider external factors such as the abundance of engineering talent.

Don't raise too much VC money early
Having to deal with multiple markets at a time is a complex and challenging endeavor. However, the inherent beauty is that you can pick a market and fully execute your business model without having to spend a fortune on sales and marketing. Internationally successful European startups such as Spotify or Skype had a strong user base in a few core markets before they raised large amounts of venture capital and scaled their products globally. A proven business model and running operations result in high valuations and a much better bargaining position with VCs. In Europe, entrepreneurs get the chance to avoid heavy dilution, grow their companies on revenues from smaller markets and keep their hands at the steering wheel.

Don't let mediocre talent slip into your core team
A stunning commonality amongst the most successful internet companies in the world is the enormous caliber of their early employees. If you look at PayPal, Google or LinkedIn, you will find that, afterwards, many of their early employees themselves went off to build or invest in billion dollar companies. When you hire your first 20 employees, always keep in mind that they will be the key drivers to rolling out your business across multiple geographies. Don't let any mediocre talent slip into your core team -- you will thoroughly regret it later on.

Build an international team
When you aim to build an international company, you must build international teams. Bringing together people from completely different cultures and ethnicities pushes your organisation's boundaries and unleashes creative thinking. Europe's key advantage over the US is that we have a much better understanding of the cultural differences between European countries. Turn this into one of your key competitive advantages and ingrain the international aspect into the DNA of your company.

Make company culture your highest priority
There are two key factors to attracting and retaining top talent: salaries and company culture. If you can't offer big paycheques, make sure that you have an amazing company culture. Company culture can't be commanded from the top, but must be grown from the employee base. Engage your employees with your culture and let them contribute. It is essential to define committable company values and to hire and fire based upon them.

Setup local offices
Every European consumer market is different and in order to build a thriving pan-European business, you don't get around setting-up multiple offices. Employ local talent for sales & PR, train them in your headquarters and instill them with your company culture. Develop and continuously optimise operational processes and communication protocols between your offices. The Dutch hotel reservation champion Booking.com is a role model for successful pan-European expansion. They profitably scaled into more than 80 markets worldwide and set up local sales offices in each of their geographic markets. This has allowed Booking.com to contract hotels faster than any of their competitors, offer customer service with native agents and build local distribution & PR partnerships.

Optimise your processes
??As your company grows, you need to optimise your business processes for scale. Keep complexity low and efficiency high. Learn from other companies, but avoid the bureaucracy that slows big corporations down. Your business operations should live on a single platform that can keep track of leads, customers, conversions and other key business metrics. If your business has a sales side, make sure your sales funnel is as clean as it can get with just the right number of layers, from lead sourcing to key account management. Experiment with different processes and don't scale into multiple geographies if you haven't yet mastered scaling your operations within one location. Your processes should allow for innovation while also safeguarding against risk as you grow bigger. Most of all, never stop improving your processes: all successful European companies have built high-powered process machines that just keep getting better while leaving the competition in the dust.

Scale your culture
The hardest part about being active in multiple markets and opening multiple offices is that your culture must scale across borders. Fast growing companies typically operate in a high pressure environment and not sitting in the same office as some of your most important executives doesn't make it easier. Setting up guidelines for regular communication is imperative. Core values must be understood and lived across offices, starting from your executive management down to the summer intern. One of the biggest mistakes many internet companies make is to rush off with venture capitalist injections and try to tackle too many markets at once. They typically don't fail because of their product, but because they were unable to transfer their company culture into new environments. As you grow, your culture will be the glue that keeps your company together.

Source: http://www.wired.co.uk/news/archive/2012-08/16/pan-european-startups

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