Europe vs. the US: founder stories

 

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We at Speedinvest keep on discussing differences between Europe and the US in length, and have done so over and over again. Sigh. You probably heard it enough from us already. That’s why we wanted to ask someone who experienced the difference first hand, founded a company in Austria early and then moved to the US, to see the ecosystem firsthand. Tobias Hann, Founder of Vooch, a mobile couponing solution back from the days when nobody knew how to spell “Groupon” sat down with us to discuss startups, the US and stuff.

You founded vooch in 2009 in Vienna, what was the plan, how did it develop?

Our idea was to offer a mobile couponing service for retailers, restaurants, bars etc. We had one of the first iPhone and Android apps on the Austrian market and with marketing cooperations with local telecom providers we were able to reach more than a hundred thousand customers. While traction on the consumer side was great it was challenging to win business customers for the necessary coupons. Four years ago there was still a lot of skepticism towards smart phones and mobile apps. While we successfully convinced some great brands (such as Starbucks and Burger King) to advertise with vooch the willingness to pay for our service was low in general. In 2010 Citydeal (later acquired by Groupon) and DailyDeal (later acquired by Google) entered the couponing market in Austria and got a lot of traction. The market was swamped with coupons and it got even harder for us to acquire new business customers. As vooch was bootstrapped we eventually ran out of money and decided to shut down in 2011.

What were your learnings now looking back at vooch? what would you have done differently?

During the three years that we were working on vooch I learned a lot – experiences that I could probably not have gained anywhere else. It is quite a roller coaster ride to start a business. On the positive side I learned that I really like entrepreneurial environments and to be in charge of my own work. Because you don’t have a boss that tells you what to do, I think a strong internal motivation and work discipline are helpful personal traits for entrepreneurs. In terms what we could have done differently there are three main learnings.

First, know your future customers and the market you are getting into. Preparation is key and even before your product is done or your company incorporated ideally you already want to have feedback from future customers. You need to understand what their pains are and what product or service they are actually looking for. Knowing the specifics of the market and how sales processes etc. work is of great value too and will save you from unpleasant surprises. For example we didn’t anticipate the importance of advertising agencies for larger clients.

Second, know your team, roles and responsibilities and individual strengths and weaknesses of everyone. You really want to start a new business with a rock-solid team. Ideally the founding team has all the necessary skills to launch the initial (beta) product. Also, make sure that everyone knows their roles and responsibilities. In the hectic time of starting a business there is a tendency that “everyone does everything”. While this might seem like a good use of human resources it is actually not. Everyone should do what they can do best and not waste time by trying to fill in roles that don’t match their skill set.

Third, be prepared to change your plan. Writing a business plan is a nice theoretical exercise but chances are high that the reality will look quite different. The startup world is dynamic and what seemed a good idea yesterday might be obsolete today. Although I’m not a big fan of startup talk such as “follow the money” and “pivoting” these concepts are actually really helpful. While it’s easy to say to stay flexible in reality it is not. I remember when we heard about Groupon in 2009 and briefly thought about adopting or at least adding their couponing concept to our system. We decided not to because we were just mentally stuck in our own approach. External partners and mentors can be helpful to prevent that “out of a box” thinking.

You spent the last 2 years in Berkeley, doing an MBA, what is the atmosphere like there?

Berkeley is embedded in the Bay Area and the Silicon Vally is just around the corner. Entrepreneurship and startups are always present – in classes case studies are discussed, startups come to hire, students discuss their own ideas and you can listen to famous entrepreneurs such as Guy Kawasaki on campus instead of watching him on Youtube. Striving to become an entrepreneur is socially well accepted and successful entrepreneurs are almost treated like heroes.

How do Google, Facebook, others hire there? What are average salaries? What positions are looked for the most?

All the big tech companies are hiring right now. The problem is not a lack of positions but a lack of talent. On the IT side software developers and especially mobile app developers are in high demand and can make quite some money. For candidates with relevant experience (and for the best sometimes even straight out of college) salaries around $100k and above are paid.

Candidates with business backgrounds (and e.g. an MBA) also get hired but it is more competitive. Typical roles include product management, business development, or some analytical jobs. While salaries in general are a bit higher for business roles the gap to IT roles is not as big anymore as it might have been in the past.

The big tech firms all have big recruiting machineries and if you are not in the area or have some personal connection it will be challenging to get a hot lead. As international you also have to pay attention which companies are willing to sponsor a visa and which not. Hiring for startups is predominantly done by referrals and/or networking and a local presence is almost a must. They seek similar roles but pay less which is most often offset by some equity.

How do you perceive the Austrian Startup ecosystem after being away for 2 years?

From what I can tell the Austrian startup ecosystem has developed quite significantly over the past years. Even in 2011 it felt very different than in the beginning of 2009. Not only the number of startups has increased, also many more support structures are now in place. Initiatives like Speedinvest and the increasing number of business angels have made access to funds easier. Regular networking events support the exchange of know how and experiences between founders. The Austrian startup scene (as all the others around the world as well) has also benefited from new cloud computing services and the emergence of development frameworks. It is now easier than ever before to launch a web or mobile startup – all you need is an idea, a laptop, some time and the drive to do it!

But the reality still is that the Austrian startup ecosystem can’t be compared to the Silicon Valley in many regards. If I was starting another business today I would definitely spend some time thinking about the best possible location.