Launch GLOBAL startups from day one: the art of geographical arbitrage
Raf Weverbergh got in touch with me a few months ago with this mad idea of creating a magazine for European thought leaders & entrepreneurs. Fast forward a few months: Whiteboard is born. The tagline now reads ‘Ideas. People. Money.’ But what happens when we apply that tagline to Europe? We have plenty of ideas. And plenty of people. But plenty of money? Not so much.
I talk to lots of budding entrepreneurs for my newsletter “Tales of Creation”. The topic of Europe tends to come up a lot, often in frustration. And more often than not in comparison to Silicon Valley. It doesn’t matter if the entrepreneur in question is from France, Greece or Poland, there’s always this undercurrent of frustration. ‘We’d have funding by now if only we were in Silicon Valley.’ The goldrush still travels West.
But from my point of view as a tech entrepreneur, a far more frustrating issue than lack of funding is Europe’s national fragmentation and the resulting regulatory clusterfuck. Some examples.
Stuff you can’t do in Europe
Want to crowdsource your startup? Sorry, you can’t use Kickstarter. You’ll have to settle for second-rate platforms that *are* available in your country. Want to accept payments like a *boss*? Sorry, you can’t use Stripe. You’ll have to wait until the Samwer’s cloning lab has gone over it. Want to build a VoiP-based service? Sorry, while you can setup a US phone line in a matter of seconds, you’ll have to wait a few days to do the same in, say, Germany. Looking for funding? Sorry. Yes you can get on Angellist, but good luck finding US-accredited investors who’ll talk to you if you don’t actually fly out West.
The common thread here is that ground-breaking services simply tend to be available later in Europe than in the US. And the culprit is regulation and fragmentation. Why bother bringing your new innovative service to Europe if it means you’ll have to translate it to a hodgepodge of languages and adapt it to every tiny little country’s local rules?
Geographical arbitrate: it’s for you, too
A startup’s job is to optimize for rapid growth. So you can’t really blame these service providers when they focus their efforts on the biggest markets first. But hey, it could be worse: try doing a consumer tech startup from behind China’s censorship-loving Great Firewall! The unified market’s there and honestly, the opportunities in China feel better than in Europe. But, for now at least, that bloody firewall is killing it for consumer tech startups. I’m writing this on a couch in Shanghai, even though I’m (still) a Belgian national officially residing in Germany. And this kind of transnationalism may just be the solution for entrepreneurs. Let me explain.
Recently I started hanging out in some South-East-Asian online expat forums & I think the answer to European entrepreneur’s woes can be found right here. A lot of these expats tend to be into a thing called ‘lifestyle design’. The idea is simple: setup your life to maximize geographical arbitrage opportunities. It works like this:
- Earn your money in a high-income region
- Pay your taxes somewhere favorable.
- Andactually live somewhere cheap.
I’m not suggesting to go ‘let’s evade taxes’ on Europe. Have a little mercy on the poor baby, she needs your tax money. Especially if you enjoy the sweet, sweet quality of life that Europe offers. But when you do need the benefits of a switch of locale, there’s really no excuse.
Setting up a US shell company in order to get access to US-only services is *easy*. So is flying out West to California to meet potential investors. There’s no excuse not to launch your business globally from day one. If tiny one-man expat operations can arbitrage jurisdictions, then an ambitious startup sure as hell can figure out this stuff, no?
Launch global startups from Day 1
Launching global startups today still means launching in the US first, especially for consumer tech startups. But there’s absolutely no reason why you can’t do that from Europe. Some of the European startups I respect most are exactly those who say ‘Screw it, we’re launching globally!’. From huge outfits like SoundCloud to little upstarts like TL;DR.
I like this attitude because it shows resourcefulness. And being relentlessly resourceful is one of the core values of entrepreneurship.
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