The problem with European entrepreneurship? Our lack of cruelty!
I have been a long time advocate of European entrepreneurship. But spending twenty weeks in dynamic Asia in the past year taught me a few things, among them the fact that our market is probably counter productively soft…
I was a mentor at SeedCamp two weeks ago. Contrary to what I thought SeedCamp is not a conference. It is an investment fund leveraging the wisdom of the (filtered) crowds, putting young entrepreneurs through an intense one week process that ends with the best ones receiving a seed investment.
I sat down - alongside fellow mentors Brad Gillespie and Prashant Agarwal - with young entrepreneurs, discussing their project, advising them on how to make the best of their ideas and talent. The 25 teams that attended the event were selected from a pool of 250+ proposals, it was the cream of the crop.
And of course there was the one team who had visibly no chance for success. A non-exiting product, barely a feature, no brand or potential. What do you do in that case? I discussed with Brad afterward and we agreed - a bit because we couldn’t find a better solution - that encouraging them was the best way to go. Entrepreneurs are precious people, their confidence is fragile, they need to be pushed and should be able to rebound from failure.
But are we really helping an entrepreneur by encouraging him to pursue a project that has a big chance to fail? Probably not. Most of the web start ups that are launched these days have no chance to succeed. And not telling them is one of the problems we have here in the Europe.
Our market is not cruel enough.
I see several reasons for that. First, we are much softer and diplomatic in Europe. We are not used to have people telling us what they really think. The Americans are used to extreme freedom of expression. In Europe (and it might be an heritage of greater diversity) we put a lot of efforts into softening what we say. That might not be true in southern France or Italy, but in the east and north that’s very obvious.
Another factor is the fact we don’t have enough projects in our ecosystem. It makes each of them extremely valuable. Bad projects are always better than no projects, at least in the eyes of all the governmental agencies promoting innovation and entrepreneurship.
Last but not least, a slower market means a slower feedback. If you can launch your product in three months you will quickly know if you have potential or not. With fragmented markets, multiple languages and heavier administrative burden, European start-ups need more time to reach their clients, and bad projects get the news later, after they have spent many resources.
This has a number of consequences.
The first is that good projects have less resources available. Less space at the incubator, less seed investment, less access to mentors. And less media attention. It’s easier to cover the latest non-innovative-but-web2.0-certified blog platform launched by a local company, less to talk about a more complicated but revolutionary project like Fairtilizer.
Another factor is that failure is more painful. When you have invested three years of your life in a project and need to close it down, it is much more difficult than when you have been working for a couple of months. Failure has deeper consequences, on the ego, the finances, the network. It is less accepted because more visible and hurtful.
Then there are consequences on the ecosystem itself, with bad projects giving a negative image of entrepreneurship, creating the perception that working in a small company is less safe than working in a big one (something that recent events have shown is probably not true ;)
At this point, with our resources getting more rare, it might be important to reconsider our attitude on this, and become more courageous when assessing projects.
October 2nd, 2008 at 11:17 pm
You make a number of very important points. But I wanted to comment on one in particular, namely “are we really helping an entrepreneur by encouraging him to pursue a project that has a big chance to fail? Probably not.”
Are there simply “bad” ideas out there? Absolutely. Will they stop simply because someone tells them “it won’t work”? No (and if they do they’re in the wrong business). Should they stop? Probably not. More often than not the market (be it money, talent, users, revenue etc.) is the only one who can effectively determine if the idea doesn’t work (and effectively deliver the message) . So as an entrepreneur if you believe in your idea, you are compelled to get it out there and see if your belief is founded. Advisors are not judge and jury (but good ones can help by identifying some potential pitfalls early on). As a result I don’t worry about negative feedback discouraging a true entrepreneur.
That being said, giving honest but difficult feedback is never easy. Too soft and you risk having your message misunderstood. To hard and the other party writes off your views and you become the arrogant know-it-all.
When confronted with a project I’m doubtful of, I think it is important to say “I don’t see this succeeding because of X, Y, and Z”, but I also think it important to say “if you really believe in the idea, prove me wrong”. This to me is very different than saying “it won’t work”. This acknowledges the fact that there is as much (if not more) chance that I’m wrong as there is of the idea being crap. I may not understand the target market, or more likely I’m too dense to get the idea. And then there is the difficulty of predicting success. The reality is that it is very very hard it is to predict success in part because we fool ourselves with compelling “explanations” of the reason for the success after the fact (e.g. Black Swan events). If you are right 2 or 3 out of 10 times you are doing very well. Any advice should be honest and direct but tempered with the fact that in this business “nobody knows nothing”.
October 3rd, 2008 at 9:18 am
I totally agree: there is no truth in business (other than customers fighting to buy or ignoring your product). My point is that we seem to struggle more with the “any advice should be honest and direct” part, as it’s somehow against our culture and, well, interests? (in the case of entrepreneurship promotion agencies)
Your comments are a needed reminder to anyone who has to assess a project: be humble, approach this exercise as if you’re the one who could be wrong. But sometimes - and you probably know what project triggered this thought right? - it’s just too obvious, and helping is trying to re-route an entrepreneur to another career or project.
I’ll quote you from now on: “I don’t see this succeeding because of X, Y, and Z. If you really believe in the idea prove me wrong”
October 3rd, 2008 at 2:17 pm
Both of you make really good points. I agree that it’s best to be honest and upfront with your feedback but make sure to deliver the feedback in the most constructive way possible so that the brave entrepreneurs direct their energies in the right direction. At the same time feedback only goes so far. Sometimes you have to fail first before you can succeed.
That gets to the larger problem which Laurent articulates very well. I just relocated to Helsinki from London and I’m getting to know the startup community here. Their issues are the same as the folks in London. People seem to be caught in a vicious circle between culture and ecosystem. So when a team has drive and an idea they start to look to the US for a chance at success.
Events like Seedcamp are helping. But is there more we can do? To me it seems the low hanging fruit is the stigma of failure. How do remove this stigma? Can you?
October 3rd, 2008 at 6:32 pm
That’s a tough questions. When assessing Switzerland I always say “they’ve done the hardest part. People are educated, the infrastructure is amazing, the system works. All they have to do is change their perception of risk, their mentalities”. And what seems to be the easiest to change (in theory changing the way you think is easier than digging a tunnel through the Alps ;) is in fact the hardest.
We don’t need more money or infrastructure, or simpler administrative processes. We probably need a change of mentality. And often it seems that’s the hardest thing to change in society…
October 3rd, 2008 at 9:26 pm
From an swiss perspective, I totally agree that it’s quite hard to find feedback. Hopefully there are friends and collegues that can help us like this, with constructive feedback: http://www.hyperweek.com/article/view/22/
Bad feedback is from my “entrepreneur-side” point of view this type: “it’s too close from Ning, so it’s useless.” (note: the dot is just after useless)
October 13th, 2008 at 10:31 am
[…] Haug, founder of the great LIFT conference in Geneva, recently analyzed the European startup scene on his blog and came to one conclusion: There is not enough cruelty. Because we Europeans are too nice and not […]
October 30th, 2008 at 7:35 am
[…] The problem with European entrepreneurship? Our lack of cruelty! Une réflexion intéressante vis-à-vis du rôle du mentor dans des programmes pour startups comme Seedcamp. Quelle attitude doit-il adopter lorsque le projet d’un entrepreneur semble avoir peu de chance de réussir ? […]