Friday, February 29, 2008

Beyond Borders: Global Entrepreneurship

Launching a startup is a challenge in itself. First you have to find the right players for the team, outline the perfect business model, then tackle the challenge of acquiring capital for your emerging business. Yet taking a startup global is an entirely different--if not infinitely more difficult--endeavor.

Today's panel included three seasoned entrepreneurs--all Silicon Valley natives--who successfully created a startup and took it international. Panelists Will Chen, Dr. Robert Lee, and Gadi Maier each shared tales of their startups' beginnings, hard times, and what they encountered when they took the leap to go global.

Fresh off a flight from China, Chen kicked off the discussion by describing the day-to-day life of an entrepreneur. He showed a picture of a man standing off the edge of a cliff and compared it to his experience as a young entrepreneur in Silicon Valley.

"You look out over the cliff, and it's exhilarating. It looks like a lot of fun. But sometimes you want to jump off," Chen said with a laugh.

Chen knows this experience firsthand. He founded Billpoint, Inc., which pioneered person-to-person payments, and grew his small startup from three people to 70 employees. Ebay later acquired the startup. Now, Chen is the CEO and founder of Accelergy Corporation, a R&D technology company that operates in both the US and China.

China has a very different business structure than Silicon Valley, according to Chen. Silicon Valley proudly boasts success stories of "two men in a garage" who later grew their businesses into worldwide companies. Yet in China, the story begins with 50 men who live together in a house. Though the set up is different, the goal is similar: everyone is working together to dream up the next big thing.

China is extremely innovative, competitive and fast-paced, Chen said. To navigate in this foreign marketplace, novice global entrepreneurs must have an understanding of another region's local markets and dedicate enough time for face-to-face communication with international employees.

Dr. Robert Lee found a way for his startup to address this communication challenge. Lee, who is the CEO and Chairman of Achievo Corporation, set up six satellite centers in China to work in conjunction with the company's headquarters in San Ramon, California."We want to be very close to our customers so that we're very local wherever we operate," Lee said.

Achievo is a government automation software company that serves global clients. The majority of its revenue--56 percent--comes from Japan. Meanwhile, 22 percent is from North America, 17 percent is from Europe, and 5 percent is from China.

Similar to Achievo's clientele, its employees are also spread out across the globe. 73 percent are from China and 16 percent are from North America, with other employees located in Germany, Canada, and the US."We are the living example of a flat world, if you will, in terms of our business model," Lee said.

Yet Gaudi Maier, CEO and President of Israel-based FraudSciences Corporation, also noted that experience is a crucial key to fostering a successful startup. Although a young group of team members bring a lot of energy to the table, nothing can replace the experience one spends in the corporate world.

"Getting a perspective of how a major corporation thinks is extremely invaluable," said Maier. "Having worked inside those companies, you have a little bit of an inside view into what's going to happen [in the future.]"

Lee agreed, but added that having past immersion in global markets is one of the most invaluable tools for a startup that is planning to expand internationally.

"The only way is to be there [abroad], suck it all in," said Lee. He later added, "One challenge [Americans] have culturally is that we think we have a god-given right to be at the top of the food chain. That is a very dangerous assumption."

So what's an emerging entrepreneur to do during this chaotic economic period in the US, when the threat of a recession is looming just around the corner?

Fear not, the three panelists answered. Venture capitalists are particularly keen to find the next big startup during sluggish economic periods--but their expectations will more stringent.

"In slow times, the bar does get higher," Chen said. "You have to look at different regions and see what works best."

China is currently an attractive option for startups, according to Chen.

Startups must be ready to answer fundamental business questions to pass the altered standards of venture capital firms.

"Why should someone give you $1000? You have to tell your story," said Chen. "It's about your idea, it's about your team, it's about your market. Can you change something? Don't let venture guys tell you it's not a good idea unless you really believe it."

And although each panelist has come out on top, they've experienced their own share of failures also. It's all a part of the entrepreneurship game, the three admitted.

"Knowing how to fail and pick yourself up is one of the unique strengths we have in this Valley," Lee said. "Sometimes you gotta look at it and laugh at yourself, and consider it part of your human experience."

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