Internet startups outside the US

Question

Most Internet companies are based in the US. Some start to appear in (eastern) Europe, Australia and Israel. What are the advantages and challenges of such 'foreign' companies, baring in mind that most of the Internet's activity, hype and bandwidth are still US centric?

edit: Mind you, Israel has its own Paul Graham like startups hub. The obvious place would be Tel Aviv through neighboring suburbs seem to be gaining traction. I was thinking more along the lines of being removed from the heart of the Internet culture, which is basically american.

Answer 1

Some challenges: hiring people, finding investment, finding other business to partner with.

Paul Graham talks about this quite often, e.g. this article

As far as advantages go, you might find that hiring people can sometimes be a plus - if you're in a great location where there aren't many startups, you might find it relatively easy to attract people. I guess Fog Creek in NY is the obvious example that springs to mind.

Maybe being located elsewhere could help you work on different concepts; places like Silicon Valley seem quite incestuous in the way they churn out multiple versions of the same product - let's face it, social networking has gone too far.

Answer 2

The disadvantages I've noticed are mostly in marketing: it's not easy to meet the press or your potential customers, since most of them are in the US. The same goes for conferences and other networking events.

Hiring shouldn't be a major problem. There are smart people in all the major industrialized countries. If you have a great location and low living expenses, you can probably motivate a lot of (young, adventurous) people to relocate. Paperwork might be a hassle, though.

All in all, it depends on the market segment: if you're selling industrial plant control software, you'll have to meet with your clients, which means you'll have to start locally, ignoring the US at first. Web-based software is easier to support from halfway around the globe.

Answer 3

Don't forget that some companies can be just outside the US' doorstep in Canada. In this case, the broadband connections work just as well and we share the same power grid and telecommunications channels to some extent, e.g. electricity as well as data go back and forth quite regularly.

Advantages to being in Canada can include cheaper labor since $1 Cdn ~ 83 cents US. We are also home to some great schools that have started some technology companies like Research in Motion or OpenText both of which use the internet in their products, fwiw.

Answer 4

I'm not really sure what you mean. I'm from central Europe (Germany, actually) and starting Internet startups is pretty easy. There might not be quite the same number of startups but for someone with the skills and the conviction, and perhaps a good idea (but that's strictly optional; your sales skills are more important!) this is relatively easy and there are a lot of venture capitalists who specialize on small and middle-sized funds for such startups.

Additionally, there are quite a lot of federal funding programs to boost the economy and it's not very hard to get started there, as well. They usually have less influence in your business, as well. On the other hand, their funding is of course limited.

Answer 5

You will be surprised (or not) but often the US "base" is only a virtual office with 1/64th of secretary, just collecting post and forwarding it to real location. I can recall two very "unknown" companies - Skype and Fring - working this way.

Of course the Internet is more US-centric, but it is definitely going wireless and mobile - and in cellular services US is far behind Europe (and Japan is years of light ahead both of them).

As said before, the main disadvantage is a limited ablility to meet your customers face-to-face, but the advantages are different culture and way-of-thinking, lower time-to-market due to reduced development costs etc

Answer 6

Two other technical hubs that come to mind are Dublin and Sophia Antipolis, France.

Speaking of Ireland, as that is what I know, one of it's major advantages is a well educated and english speaking work force. We are not very far removed from American culture or at least it's influence; thus allowing to adapt better to the US centric web (I would question that a little).

This could of course describe Israel, and the government has a strong role in encouraging entreprises in Ireland just like in Israel.

Answer 7

We're based in Cambridge, UK. Why? Because both I and the other founder live there with our families. It's easy to recruit. While there might be advantages to being in Silicon Valley instead of Silicon Fen, the disadvantages for us would rather outweight that.

As for the internet's hype being mostly American, I'm not sure that's true at all. It's a silly example, but don't forget that the world's first website was at CERN, in Switzerland.

Answer 8

You will need sales presence in the US to be successful. Development can happen anywhere it makes sense for it to occur.