European vs US startup mentality
18 12 2007Last week something odd happened. Or how often would you say that two of your friends start the same business idea - separately - without them knowing about each other. One was started in Sweden, and the other in San Fransisco. I think we have ourself a match.
The two companies are Tuurf.com and Zkout.com. I don't know any details of the business ideas, but I do know that both are operating in the mobile social networks market. They are not alone, and reports keep coming in that the mobile social network market is going to be huge.
What is really interesting here is that the two companies have taken two completely different approaches to creating their businesses - one silicon valley style, and one European style. During Seedcamp we discussed that European startups are usually to humble in their approaches to solving a problem. That Europeans do not aim big enough, and on the other hand, US startups go super big with sometimes very crazy ideas. But crazy ideas are only crazy and funny if they are done with bad timing.
Tuurf has not yet taken any funding, and that is not because they can't but due to strategy. Zkout has on the other hand taken an angel round and are hiring at least 10 people from what I've heard. Tuurf does not yet have any full time employees and it is treated as a project as the founders all have other jobs or are still in school.
So what is the best strategy in this situation. Either you go full speed and work in the market and closely follow all developments in user trends, burn though a lot of cash fast to try and get an early piece out of a growing market? Or do you watch this market grow from a distance, and try and get a trend line on the direction of the market without following all ups and downs, and let others do the dirty work of breaking in the market?
As I'm all for the "go big, or don't go at all" kind of mentality my first thought would be to go for the more aggressive Zkout. But then again, I think this market is still a bit too immature for even early adopters to use these types of services. So, if Zkout are to come out a winner in this fight, their pockets better be deep, or they will run out of cash before the market is ready.
On the flipside, Tuurf might miss out on some key trends by not being focused enough, and might not have the manpower to scale up in time when the market is ready. Going too slow might be a problem, and is probably as hard to fix as going too fast.
I'm not that passionate about the mobile market, so for me I might not even be an early adopter for these types of products. But looking at this match in terms of business strategy, I would not want to miss a minute of the action to come.
Tuurf isn’t really a startup. We do have some shared traits with a startup, such as being young, crazy and intensely brilliant. But we are really a joint inhouse project.
There are three parties involved in the Tuurf project whereas Tewonder is providing us with traditional design and marketing skills from their 9+ years of expertise in the area (check tewonder.se for references). The other two partners are extremely technology adept and have between them several years of previously successfully creating, deploying and maintaining online web solutions. All without venture capital.
With that said, venture capital has not been actively sought for (but it is something we previously have been offered with other projects but politely denied because of the negative effects of such money on creativity, idealism and general coolness). Venture capital comes with a catch, and that is that you have to deliver in terms of revenue. Tuurf does not have to deliver anything except exceptional performance to its users. Now take that for a pitch!
Yes, but I think the attitude difference towards venture capital is what makes the difference. As you say you have a preset mind that if you raise money you have to deliver revenue. I don’t think that is true at all. Because you really should focus on exactly what you said, “deliver exceptional performance to its users”. That is the key and should be the goal. If it is met, then revenues will come, and there are many venture capitalists that tell you not to focus on revenues at all.
Indeed it is. We are however well aware of the issue of upscaling when the time is right.
Personally I feel very comforted by the fact that we have a strong backing from our partners at tewonder for that reason. They have already done the travel from small startup to 15 people once before.
As we have been discussing on my blog lately (swedish) we do sincerely believe that the market is very premature at this momen. You are entirely correct that a larger company will need large pockets or a good guard service escorting people of the premises when the VC runs out…
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