May 17, 2006

The New Garage: Entrepreneurs Reveal Canny Models for Innovative Start-ups

Europe-based innovators are using skillful strategies to get their new businesses airborn. At an Innovate!Europe 06 panel moderated by Chris Shipley of Guidewire Group, three entrepreneurs revealed how they have carefully constructed their business models for growth.

First up was Gary Stewart, founder of Goa Internet Services. Gary, an American now based in Barcelona, has launched Mi Goa , a vertical search engine. Mi Goa will start by offering tightly targeted real estate, job and auto sales searches for the Barcelona area. Gary's longer term plans are to take the formula to other European cities and even Latin America (he has fluent Spanish). Gary first decided he wanted to start a business in Spain and then looked to the U.S. for commercial ideas. He was seeking models from the well-developed U.S. ecommerce market that would have early mover advantage in less developed Spain. Vertical seach and the buzz around Craig's List looked to fit the bill.

Cedric Maloux, founder of AllPeers, is French but decided the UK offered the lowest friction environment for launching his information sharing platform. And that Prague is the best bet for software development. Later stage business and marketing development will be handled from the UK. Today's European entrepreneurs are flexible and mobile when its comes to finding the best locations for their businesses at different stages.

Niclas Begstrom, founder of ReadSpeaker, described a sophisticated early growth model that shows how imaginative European entrepreneurs can be in building their businesses and market positions. The ReadSpeaker team wanted to square the circle of growing a speech processing business fast across multiple language areas, harnessing the sales drive of eager entrepreneurs in each country, while ultimately retaining a significant stake. So they created a new company and sold all the ReadSpeaker rights to it. That company then issued three year licenses for the ReadSpeaker system to entrepreneurs in target markets. Alumni of a European business school snapped up several of the franchises. At the end of three years franchises will revent to the licensing vehicle and franchisees will be granted stakes in that company on a formula that will reflect their success in building sales and margins. Smart or what?

Posted by Philip Gallagher at May 17, 2006 12:19 PM