Yes, European startups can compete with US giants like Groupon
Outspot is a social buying & “daily deals” platform, in essence a direct competitor to US giant Groupon, who by the time I wrote the book had gone through an IPO at a market valuation of $ 13 billion (they have since dropped to a market cap of about $ 3,3 billion and fired their CEO Andrew Mason – photo).
But at that time Groupon employed some hundred people in Belgium. My reason for selecting Outspot as a case in the book was quite simple: how does a small Belgian startup compete with a giant like Groupon?
The conclusion I draw from my discussions with Outspot’s co-founder might be somewhat surprising, but I’d hope they would be helpful to some of you.
The power of growing organically
Admittedly Outspot was first on the Belgian market, which gave it a little advantage over Groupon before they entered it. But more importantly Outspot was able to grow organically within its home market, it is, so to speak, ‘embedded’ in it. In my eyes it is the profound knowledge Outspot has acquired of its target market, growing with it step by step, that has given it a competitive edge.
Compare this to the hundred employees that were most probably quickly hired and thrown on the market to sell Groupon’s services, who needed time to get organized and gain knowledge of this specific market. Need I say more?
The power of sticking to the plan
This will shock the adepts of Eric Ries’ ‘pivot moment’ doctrine, but in the case of Outspot sticking to the plan was what gave it its competitive edge.
From the beginning Outspot has stuck to its high quality checks and superior customer service, making no compromise for quick wins or big promises. It had a bigger vision from the start, but was willing to reach it step by step, even when it started to feel the breath of Groupon in its neck.
The power of being small
Here’s most likely my biggest catch: small is actually beautiful. Negative press about Groupon’s quality of service started to emerge virtually the day after its IPO, which led me to believe that local subsidiaries were suddenly pressured for growth and results, in order to satisfy its shareholders’ expectations.
No such stress at Outspot, that turned profitable this year and is ready to weather both good and bad times at its own pace. In fact, it has silently acquired two competitors this year, patiently readying itself for big competitive battles ahead.
This latest observation can lead to another conclusion: there might be a good opportunity to copycat American startups that are likely to go public in the near future, and wait patiently until they start to make mistakes under pressure of post-IPO shareholders’ expectations.
All joking aside, there are effective ways to compete with foreign giants, despite all marketing and sales power they can throw in the battle. As so often the devil – in this case the competitive edge- is in the detail.
(ed.: the author has no affiliation with Outspot)[photo: Kevin Krejci, Flickr]
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