Next Year’s LTV Course Advice

by Andrej Rusakov

Given the number of international students at HBS, I think the course could benefit from the inclusion of one or two non-U.S. cases. LTV does a great job of preparing U.S.-based entrepreneurs, but in my view, being an entrepreneur outside of North America is drastically different than from being one within it. Below are a few things I came across while working in Europe and Russia.

Size Matters.

The larger and the more homogeneous the underlying market is, the easier it is to test hypothesis, get funding and scale. In order to successfully scale in Europe, for example, the product would need to be translated into multiple languages (and often adopted to market localities); PR and marketing would need to be tailored to each specific country; different and usually multi-language sales teams would need to be hired - all of which drastically slow the company down and limit potential upside. Large and relatively homogeneous internet markets like the U.S., Brazil, and Russia provide a more fertile soil for technology startups from the speed / potential upside standpoint.

Being a Non-U.S. Entrepreneur is Expensive.

Despite the relatively cheap developers one can find in Europe (largely in Eastern Europe) and Russia, it is much more expensive to launch a venture there than in the U.S. The fundraising market (both Angel and VC) in Europe and Russia is significantly underdeveloped if compared to the one in the U.S., resulting in very low valuations for startups and significant dilutions for founders.

European talent (non-developers) is also expensive. Start-ups usually have to pay a premium to hire people as they generally tend to be more risk averse than in the U.S., prefer to work for well established companies, and don’t quite like/understand compensation in equity. I would also argue that high quality managerial talent suitable for new tech ventures is scarcer in these geographies (definitely so in Russia).

It is much more “socialistic” outside the U.S.

The general public’s perception of an entrepreneur in Europe (and to some extent in Russia) is very different from that in the U.S. In my limited experience it has some connotations of a “dealer” and a “schmoozer” rather than a pure value creator. Thus, getting resources together is a bit harder, the team dynamics are a little more complicated (especially in situations where an entrepreneur is younger than most of the team), and failure is not rewarded like it is in the US but punished instead. All of these small factors add up to making it harder to do business (in my view).

I think it would be interesting to learn from people who had first-hand experience in launching tech ventures outside of the U.S., how they went about choosing the geography, combated differences in underlying target market(s), dealt with large amounts of bureaucracy and country specificities, and what fundraising strategies they employed. I have a sense that their experiences would be rather different from those of the U.S. first-time entrepreneurs.