B2B Growth in Europe vs. United States

What European Startups Can Do to Aim for Global Scale

Why European Startups Lag Behind

B2B growth strategies often differ significantly between Europe and the US, influencing multiple facets of the related markets, such as the number of growth stories, IPOs, but also talent.

It’s renowned that the European landscape of B2B companies is perceived to generally lag in the above metrics, as reflected by the lower numbers of European B2B SaaS going public or expanding to the US, compared to the larger American counterparts crushing the public markets and the European expansion. The same comparison is true when looking at the talent market enabling such innovations — the EU’s top talent market is much smaller, more inexperienced, and not rewarded for the long term.

Despite exceptions like Alan, Personio, Pigment, and a few more unicorns, these aspects make it challenging for EU startups to scale sustainably and across the entire market geography.

What is this lag attributed to? Does it depend on a more conservative, perfectionist approach that prioritizes “more than good enough” products vs. an MVP mindset? Does it come down to a different risk-reward profile of founders and the VC ecosystem funding them? Or is it a regulatory and cultural fragmentation — across languages and customs — that prevents founders from making swift changes in their staff due to labor laws, or rewarding their talent properly with long-term equity incentives?

And most importantly, how can European B2B companies get inspired by their American counterparts and adjust their growth and hiring strategies to be competitive on a global scale?

In this post, we’ve talked to Loic Jeanjean, our latest addition to the HyperGrowth Partner’s roster and fractional CMO who previously headed up growth functions at European unicorns like Ledger and Pleo, but also in numerous US-based B2B SaaS companies, to find out!

As a European based in Lisbon and advising both EU and US companies, Loic gives us his unique take on the key reasons why European startups fall behind, and key tactical insights about how they could get back on track and aim for a successful scale, including US expansion. 

In a nutshell, European businesses need to embrace swifter operations in line with the fast-paced markets of the roaring 2020s, and a much more customer-centric approach if they want to aspire for global scale. Let’s dive in.

1. Embrace Customer-Centricity, Good Enough & Risk Taking!

In Loic’s experience, European companies tend to be more risk-averse and slower than their American counterparts. This attitude shows in things like over-documenting their operations, micromanaging teams’ decisions, and ultimately seeking perfection in product, marketing, and sales. 

We could speculate that to be a symptom of an idealistic culture, but it most likely comes down to the fact that many European teams don’t know what good and great products look like, or even what good enough is!

Speculations aside, this attitude toward product building leads to slower execution and responsiveness to market changes, which is reflected in delayed launches and scale.

When it comes to product releases, the focus should be on velocity — ship more times, faster. You should aim for consistent, weekly releases. As a good forcing function for your team to build such velocity, aim for shipping 80% of your plan. If you have 10 improvements, commit to shipping 8 instead, as long as you hit the mark of doing it every week.

When European teams embrace the ruthlessness of the growth mindset, made of continuous experiments at a highly tactical level, they’ll be able to quickly kill something that no longer works, and revisit it at a later stage; or swiftly double down on what does work, and push their limits to incrementally improve it. 

“I love the LVR metric — Lead Velocity Rate — and advise founders to aim for a minimum 10% MoM. This pushes Marketing & Sales teams to take more risks and come up with more tests to iterate on their work every month.”

Another key difference between American and European product teams is that the latter are generally less customer-centric; rather, they tend to develop products over-indexing on the founders’ internal conviction or personal experience, which ultimately silo their team and product from their target market.

“If you’re in product or GTM, this might sound like a broken record, but it’s impressive how many teams we see that still don’t just pick up the phone and talk to customers.”

If you’re heading up a customer-facing team in Europe, you should set a goal to speak to at least one prospect or customer per week; that includes not just sales and product, but also marketers. Surveys are not enough to grasp the nuance needed to compete in today’s market; you need to pick up the phone and invest the time to build a system to have in-depth, regular conversations about their:

• Business: who they are, their goals, and how they operate

• Pain points: what keeps them up at night

• Tooling: what they use to run their business, or their fave app on their phone

• Channels: where they learn and hang out with others, on- and off-line

• Decision-making: who they follow and respect, and influence their decisions

Build these habits and you’ll not just quickly emerge in the European market, but you’ll soon graduate to the World’s League and be able to compete on a global scale.

If you’re committed to evolving your company culture to stay ahead of the curve, we can help!

2. Broaden your Horizons of what Good and Great GTMs Look Like

Founders, CXOs & VPs, but also team leads, in Europe often lack experience in what successful GTM looks like, as they are often first-timers in their roles. 

Additionally, they tend to benchmark their TAM ambitions and set goals against local customers and competitors, drastically reducing their vision of what’s possible, and in general what good and great look like. In the worst cases, this leads to complete tunnel vision and even arrogance, which discards valid tools in your GTM’s arsenal.

For example, many European companies we’ve worked with question tactics like offline events and webinars because they “have already tried this in the past”, or “won’t scale”; when in reality the issue is a lack of expertise in executing them properly.

In turn, this attitude leads to an inability to execute the right strategies, accumulating strategy and tactical debt across the board. This debt is very hard to identify and course correct, because it compounds in the medium term, and impacts negatively virtually all functions — product, marketing, sales, data, brand, and hiring. 

Founders and C-levels who want to avoid this need to have the maturity and self-awareness to identify what’s under the hood, and typically this comes down to having seen the movie already a couple of times.

Set Global-scale References of What Great Looks Like

Even if you don’t have direct experience, you can learn from others. Expanding your horizons and learning from global-scale success stories can provide valuable insights and motivation for European founders and teams. This is especially true across GTM and hiring which are quickly becoming the more challenging aspects of sustainable scale. 

Start with building the right mindset and attitude towards learning. In the US, it’s common sense that you have to invest resources upfront to make a return. In other words, you have to break an egg to make an omelet. That’s not always the case in Europe.

You need to be humble enough, willing to acknowledge that and invest your resources into painting a picture of what good and great look like on a global scale. 

In the Internet era, you don’t need millions to get started. Just join cutting-edge e-learning platforms like Reforge & CXL to access the top thinking and tactical frameworks to empower your team with the right tools.

And please read the classics of Go-to-Market and Leadership — books like Good to Great, E-Myth, Obviously Awesome, The Ultimate Sales Machine, From Impossible to Inevitable, Crossing the Chasm, Predictable Revenue, The Sales Acceleration Formula, The Cold Start Problem, Play Bigger, Managing Oneself, Measure What Matters, Radical Candor, High Output Management, and more.

Bring in External Advisors to Set World-Class Examples

It’s a no-brainer that investing in your team is one of the best things you could do; not just for your individual contributors, but also, most importantly, your leaders.

Get your leaders an advisor to mentor them. Engage advisors with repeated, real-life experience in the “wild wild US market”, ideally those who have worked in companies that are already past your current and next stage of growth. Task them to help you reshape your team and operating culture, and transform your GTM.

Focus advisors on what we have discussed so far —  helping you build velocity and take more, bolder, shots at the net, tight feedback loops with customers, and a higher risk-reward attitude. But also uncovering blind spots!

External advisors or fractional executives who have experience in leading hypergrowth companies have a much better compass for identifying real problems and course corrections. Just be open to listening to them, and implement their advice, or you’ll be fooling yourself twice! We’ve seen many examples of leaders investing tens of thousands in advisory, ignoring their advice, and ultimately going bust.

Need an advisor with world-class experience to help you transform your team, culture, and GTM?

3. Leverage a Distributed Remote Network of Talent and Investors

Engage VCs with the Right Operating Team

Last but not least, there’s another key difference between Europe and the US — how funding is released, hiring is made, and equity compensations are structured, with the European VC and talent market being smaller and slower. 

According to ~G~ , that’s exactly where European sluggishness comes from:

"The European ecosystem as a whole is more risk averse, and that starts at the VC level. EU VCs expect more revenue, and more maturity at an earlier stage than their US counterparts. That culture permeates into the companies through the founders and creates more frequent positive outcomes but smaller ones. Unfortunately, the venture business is not about getting ‘1 more X’, it's about getting the ‘100X’"

According to fabri, it comes down to culture: 

“I think there’s a lack of culture of ‘good advisory’. Most VCs in Europe have never seen it, never done it, never tasted the good stuff. They’re also reluctant to pair founders with advisors who can push them to do better and give them the blueprint. Overall, Europe plays risk-averse in an asset class that's based on huge risks”.

The European venture capital ecosystem also tends to have fewer experienced operators and successful founders compared to the US, which can impact the quality of advice and support provided to portfolio companies. This creates a "vicious circle" where the lack of success stories makes it harder to build a strong VC ecosystem, and founders rely on average advice to approach hiring and GTM.

Loic’s advice is to inspect carefully former operators in VC teams to determine what good looks like. Bonus point if they have members who successfully led the US expansion of European companies, or worked in a US SaaS before in a high-impact position like CRO, CMO, or VP of Sales & Marketing.

Hire and Reward Risk Takers in Your Team

When it comes to hiring, the nature of the European market is even grimmer. According to Loic:

“I've always been a huge fan of hiring for potential, but at some point in your startup journey, you'll need to bring people who have seen the movie once or twice. Once you pass 5-10M in ARR, it's hard to wing it.”

Hiring and nurturing talent can be more challenging in Europe — causes are both cultural and regulatory. A tendency to keep employees that “have been with us since the beginning” results in hiring and keeping inexperienced talent, and builds reluctance to make changes when needed. Managers conflate “being nice” with “making the right business decision”. In parallel, strict labor laws prevent letting people go when they’re not the right match. These hurdles can make it more difficult to adapt to swift market changes and proactively evolve company structure and culture as required.

But there are strategies to mitigate these problems. Using EOR solutions like Deel or Remote to get globally distributed talent can be a good starting point, as it increases your talent TAM and your experience range. Especially after COVID, lots of Europeans who worked in the US are slowly coming back to Europe bringing their SaaS experience to the continent — that’s an amazing opportunity to get these unique profiles — with exposure to both cultures —  into your organization. 

And once you hire the right people, adapt compensation practices to reward risk-taking and scale operations more aggressively. Don't punish risk-takers, but get them to share their learnings — the good, the bad, and the ugly — with the rest of the org. This will transform your culture, boasting transparency, accountability, learning, and curiosity.

Also, uncap your commission plans — make it really exciting for people to crush their goals. And make these commissions accessible to your entire GTM team, not just sales. For example, a marketer who gets a €100,000 base salary could have a variable plan with 50% of their bonus based on overall company performance — uncapped, to encourage team collaboration — and 50% pegged to their impact — tied to pipeline, marketing-generated revenue or a blend of several metrics, also uncapped. 

Remember, the culture we build in our organization is reflected in your incentive scheme. To build a risk-taking, competitive culture to compete on a global scale, set the carrot and the stick accordingly.

Closing Thoughts

By transitioning from a perfectionist approach to one that values agility and customer centricity, European B2B companies can enhance their competitiveness and achieve greater success in global markets.

This strategic shift requires embracing risk, focusing on rapid iteration, and putting the customer at the heart of all business operations. These changes not only align with global business practices but also pave the way for sustained growth and market penetration, especially in challenging markets like the US.