2014.09.18 Trusting your instincts while going against them

Within the U.S., The San Francisco Bay Area has its own undeniably technophile culture. We celebrate geeks the way People Magazine celebrates movie stars.

In spite of the many national cultures introduced by immigrants from all over the world, there are certain sub-culture commonalities that tie the populations in similar situations together. A fixation with tech gadgets and software and funding lurks just under the surface in the Bay Area - regardless where people originate from.

Because this area is hugely efficient at creating high paying jobs, it is natural that other places try to "break the code" of what it is that makes is so successful. From Texas to Mumbai to Scandinavia they try to copy the model of combining universities, venture capital, and hopefully intelligent risk taking.

On behalf of The Kingdom of Denmark the Innovation Center Denmark (or I should say centers since they exist in many other locations around the world) provides services to Danish companies who want to establish a foothold in foreign markets.

Collecting learning experiences from Danes who have succeeded abroad may give hints to what could be done better back in Denmark, what can't be done in Denmark anyway so just live with it, and what newer startup companies wanting to establish a presence overseas can do to minimize their risks of failure and increase their chance of success.

September contained a couple of such experience-sharing events, one of them referred in more detail on ICDK SV's website. The event had a panel of successful entrepreneurs answer questions on, among other subjects, what had taken them by surprise when they moved to Silicon Valley. "Think bigger, go way beyond.” was a counter advice to a Danish tendency to aim for "good enough".

A strong trait of what the cultural researcher Shalom Schwartz calls "Intellectual Autonomy" runs in Danish culture. We like to do what we want to do, not what we are told to do. Consequently, many startups in Denmark are born out of a wish to become independent from corporate restrictions on what to do and how to behave. But this trait also means that if our little company can feed us comfortably, we are not that keen on selling parts of it - then we will become beholden to the other shareholders.

Danish government officials are pulling their hair out in frustration, calling for a new Lego, a new Danfoss, a big company that can create work in Denmark. They seem not to be realizing that all the role models they set up this way are family controlled companies. Very few big Danish companies are listed without the controlling influence still resting in a family foundation. That may have worked fine in an era where companies could grow organically, reinvesting their profits, expanding abroad as they were ready, and when they - eventually - went public the family could keep controlling "senior" shares while selling the low influence "junior" shares.

That is not how the markets work these days, neither in growth rates, nor when getting funding.

If you want to get funded in Silicon Valley, you better have a story that will compel the VCs to invest many million dollars in your company. Not because you know what to use the many millions for tomorrow, but because VCs often have so much money that they have to dole them out in big chunks - it is not efficient for them to sit on your board if their financial investment can't create enough profit to cover their time investment.

And these people expect an "hourly rate of return" that would make you blush - not the least if you are Danish.

To entice the VCs, Heini Zachariassen, CEO of Vivino, said he had to, “trust my instincts while going wildly against them— the mental leap is the toughest of it all.” His guts told him that Vivino's wine app could become a world wide phenomenon while his Danish instincts would warn him not to "bite of more than he could chew" and create a vision of this company and its potential that would be hard to live up to.

In just 5 years Vivino's app has gained almost 6 mio users - equal to more than the entire population in Denmark - and has offices in 4 countries. Fortunately he went above and beyond the standard Danish line of thought (particularly since he grew up on the Faroe Islands where he described the wine culture as having two choices, red and white.)

People have all different reasons to start their own companies and they are all valid. But if you want to think big, getting out of a country where the GDP of the whole country is less that Walmart's yearly revenue may not be a bad educational investment. Attacking the world market in one - not three - generations requires funding that can't come from people who are afraid that "you may get too big for your breeches."

But don't start a company with focus on how it will make you rich. You can't entice anybody to work 80 hours a week with you if your vision is not more compelling than that.