Thoughts on Local Startups
March 16, 2008 – 18:48 by Mikko HämäläinenLoic Le Meur of Seesmic fame has some extremely interesting thoughts on locality and startups. Coming from Finland, that is a very closed market, I might counter some of his thinking. However, when taking a second thought about it, I seem to agree with his reasoning.
When you actually think about it, pretty much all global web startups originate from the U.S. and for a pretty good reason: Europe is both culturally and linguistically fragmented market whereas U.S. startups reach the whole English speaking population even if they are only targeted to the “local” audience. Take Finland: there are around 5 million Finnish speaking people that pretty much limits your options. Take Estonia, and the headcount is even smaller with around 1.3 million. Even if you manage to pull through an astounding innovation, you’re still limited to an audience too small to actually have any impact in the global scale of online business.
This means that you will almost certainly a) become an acquisition target for the multinationals or b) become obsolete when global players enter your business (this might include option a if you’re lucky) unless you go for the global or at least pan-European web audience from day one. Many of the European countries still have local and national players dominating the online marketplace. This is something I think will change over time, just like Google, eBay and Facebook have been gaining marketshare throughout Europe. In the online space, you need to operate globally and act locally.
2 Responses to “Thoughts on Local Startups”
Hi!
I’ve found the Estonian business environment to be very entrepreneural. There is lot of startups and lot of young people building business around their ideas. However, the entrepreneural attitude is not only limited to startups, you can see the same approach in the management of established companies too.
Fruitful environment is probably based on good basic and higher level education system, state of the art communication infrastrucure, and in general Estonia being in a growing transition economy. Now there is a slowdown after over heated period, but I’m quite sure that the growth will continue quite soon.
As you say, their domestic market is very small and startups will for sure be a targets of international financial and industrial investors. Yet, I believe that Estonian markets will provide us continuosly new entreprenurial success stories.
By Eero Korhonen on Mar 26, 2008
That is very true. There have been a constant stream of innovation from small Nordic and Baltic markets, but the problem is that it is really hard to grow into a global operator from such a small user base. There are some very notable exceptions to the rule, such as Skype and Jaiku - however both got acquired, by eBay and Google respectively.
It just might be that we are good at incubating new business, but not good at commoditizing the innovations into scalable concepts without support of multinationals’ existing networks and business infrastructure.
By Mikko Hämäläinen on Mar 29, 2008