And what about the bigger ones?
Large organizations have problems on the opposite end of startups. They need to innovate or they will be disrupted and die. More and more large firms are setting up their own accelerator. I've worked with a few companies and I’ve done quite a bit of reading and research into this area. The main points an enterprise should make sure to address are:
The internal enterprise startup should have clear goals
The enterprise startup should have a separate team located outside of the main corporate offices
The enterprise startup should have its own budget (like funding from a VC)
The firm should provide incentives for the "founders" of the startup
The enterprise startup should have a plan to re-integrate the successful startup where the main organization won't squash it (maybe financial integration while keeping the team separate)
We actually have a whole system to help enterprise, but these are some of the main points. If M&A is involved - keep the acquired entity as separate for as long as possible. Think of YouTube and Google.
This is a trend here in Berlin, too. A lot of corporates start their own “creative space” outside the existing routines of value generation. But it’s always troublesome to re-integrate the results of these “outside territories“. Any practical advice how to overcome these immune reactions?
Yes! Don't integrate. YouTube is in its own complex, separate from Google. YouTube is headquartered in San Bruno while Google is in Mountain View. Turn the successful acquired venture into a separate division and enable it to become a monster (in a good way) on its own. Everyone wants to work on the thing making the most money or bringing in the most respect. Keeping things separate is a way to keep priorities in line for the smaller, growing products that are your company’s future cash cows.
What about re-inventing organizations from the inside? How to establish an “entrepreneurial mindset” within a culture of administration?
Inspiring an entrepreneurial mindset is hard to do, especially when your teams are bound by corporate rules. The mindset change needs to be top-down lead AND organic bottom up in an organization in order to see any movement or alteration of behavior. Why do I say that? Because leadership is top-down, but if the people at the bottom don’t believe in it (they are the ones actually doing it) the change will fail. Middle management is always too afraid to initiate change. It’s not in their best interest to rock the boat.
What are the biggest differences between the startup scene in Europe, Israel and the US?
There’s a reason why the US is the height of the startup scene. The market is filled with people who love, and are open to, new things. I can’t think of a single real social network which has grown to a global scale that started from somewhere outside of the US. WeChat is the closest, and no one here uses it - but I have friends in China who VPN into Facebook. If you want to start a social network and you’re based somewhere outside of Silicon Valley / SF - move. It’s that simple.
Amazing at hardcore innovative tech. The best in the world at security tech. Israeli companies tend to flip quickly and sell for less than an American company in the same space would. They get less in funding (numbers are closer to Europe) than a SF based startup and have to make money faster. Sales is the top priority.
Europe has different personalities depending on the region, so it’s hard to lump it all into a paragraph. Overall Europe is best at taking the most interesting companies from the US, copying the business model, and aiming it at Europe. Of course, I’m referring to the Samwer brothers who have created a great business - Rocket Internet. I prefer innovative companies, but no one can argue with Rocket’s bottom line. And at the end of the day, that’s what matters.
And realize, all of these are gross generalities. In reality every area has it’s special niche.
Slovenia has had several successful Kickstarter campaign with real products
London is known for Fintech
New York for adtech and fashiontech
Israel is machine learning, secruity, and hardcore tech
Berlin has a mix since it has so many startups move there from other countries
Los Angeles has music and media related startups
Every area has something amazing and wonderful about the startups that start there and there are diamonds in the rough getting more beautiful by the day in places I didn’t mention and may not even know exist.
What is the most important advice you share with founders of new start-ups?
TEST EVERYTHING. You don't know anything for certain until it's been tested
Make sure your co-founder is someone you will want to be married to for the next 10 years because that's typically how long it takes to get close to an exit
Know how to read a term sheet. It's mind numbing reading. Learn it anyhow
B2B might not be sexy,but it makes for a great business
You get what you pay for. If you hire someone for a job (say, Marketing or Branding) because they are cheap - you will get what you pay for, and you deserve it
It's a tight-knit market, conduct yourself with integrity. I met someone who asked me how I can help him swindle a company into bying them. Needless to say that was a huge red flag to stay away from that person. Don't gamble you reputation on a short-term gain.
Do or do not. There is no try.
Shira, thanks a lot for sharing your insights!