It took eBay something like 4 years to go to Germany, by which time there was a local clone there that proved to be uncatchable. The expensive result was that eBay had to buy the clone (Alando) for 43 million dollars to become relevant.
Kickstarter is still US-only. Stripe as well. So are countless others.
We're not talking about products that you need an huge infrastructure in the country. This is mostly about translation, and not explicitly prohibiting things.
The expenses seem miniscule to the possible upside. So why do all those fancy startups hold themselves back?
Kickstarter's payment needs are pretty different from other crowdfunding sites, as the credit card is authed right away... but not charged until the project is funded AND the deadline is reached (up to 60 days). There are very few payment vendors that will hold a conditional credit card charge like that, and certainly not any that will hold off on charging the card for 60 days.
Amazon Payments recently announced that they are going to stop "boarding fresh crowdfunding accounts at this time," and also kicked book crowdfunder unglue.it off their payments platform. Amazon's explanation was that, "we have regulatory obligations as a licensed money services business for how we operate."
In order to expand beyond the US, Kickstarter needs to either wait for a major payments provider to support their unique payment requirements... or to build up their own international payments provider. It's hard enough building a startup; building a second payments startup is a huge additional endeavour.
In short: payments is often much harder than it seems. It's not just a matter of translation and miniscule expenses... there is real engineering work required to tap into international payments and understand how payments work on a country-by-country basis.
Do you have a reference for this? I'm under the impression they only charge the cards once the funding goal is reached. Amex in particular only allows pre-authorizations to last up to a week.
1. If the project has met or exceeded its funding goal, all backers’ credit cards are instantly charged and funds go directly to the project creator.
2. If the project has not met its funding goal, all pledges are immediately canceled. And that’s it.
Amazon Payments is the only processor that currently supports these requirements, and currently Amazon Payments does not support non-US recipients — meaning that you need a US bank account and address to launch a project on Kickstarter. >>
BTW, obviously all startups handle money in some way, but for these 3 it's a bit more complicated, as they're providing financial services to third-parties. (Ebay+Kickstarter to sellers/buyers, Stripe to sellers.)
You have a small team, often located in the valley or major US city, that expects to spend years working on developing their business model, product and infrastructure. Even if they are fabulously funded all efforts seem to be US centric because there's no way you can split so few people across so many countries when you're still developing the foundations of your business.
Instead of the typical startup organization that all but guarantees that you will expand too slowly to other markets, startups should look into more flexible forms of organization that allows them to set up partnering organizations in other markets. Imagine if your startup from day 0 has co-founders that are solely responsible for offshore markets development, pr and marketing. These co-founders would be an interface between your business and a specific country or region that actively engages with his market so that customers knows what is happening and what your startup's plans are for their market.
What you pay in equity and title you get back in a vibrant presence and a highly skilled and competent person that can guide you through each country's customs, laws and regulations, and bureaucracy.
That said, it is an interesting idea, I know of at least one startup founder that's trying to do just that.
Ultimately it is a question of persuasion, to rally up interest and support for your cause and we've been doing this as long as we've been walking upright.
to address the point more generally, the IFC (private investment arm of the World Bank) does a report ranking the ease of doing business across countries: http://www.doingbusiness.org/rankings
0. You're obviously speaking mostly about startups that primarily interface with moving money or physical goods. Regulations and infrastructure in these areas are not insignificant operations. US startups working outside these areas (e.g. Facebook, Zynga, Stack Overflow) don't stop at US borders.
- Each market has its own customs, language, and tone. Marketing into a new country cannot be an afterthought, or it will not be successful.
- Language is a big deal. If you translate your website into German, you create the expectation that your customers will be able to email you questions in German and get help in German. You don't have resources for this unless it is a necessary step on the path to success. Even Stripe's $20mm isn't enough for this: remember that they are competing against very big, rich, public companies like eBay and Amazon.
- There is competition at home, in a very large, familiar, homogeneous market. If you are based in the USA and lose the American market, you will likely fail. (In fact, someone could become a competitor by starting the US-only version of your service to take advantage of your distraction.) So you need to win there first. Startups by definition have not won any markets yet.
- Non-US markets in industrialized countries are in general not all that big individually compared to the US market. Germany is like 20% the size of the US market; the UK about 12%, and Australia 10%. So it's really hard to get any major additional scale in one country, even after you jump through all the hoops to launch there and service their customers.
- US states are big economically. A startup trying to scale can probably get more mileage out of a big marketing push in a single state than by launching internationally. One sample choice: launch in the Netherlands (~15 hour flight from CA, different language, customs, regulations) or make a big push in Florida (~5 hour flight from CA, you're likely already in compliance with all their laws, your website is already in their language, your support staff speaks their language, etc.). Florida's economy is about the same size as the Netherlands'. Texas (~3h flight from CA, 4 metro areas over 2m people) has an economy and population roughly the size of Australia.
Startups need every advantage they can get to not take the default startup path (failure). The bottom line is that launching outside the US is not a barrier to ultimate success (your eBay example), but does introduce risks. So it's not often going to be a priority.
- Being a market leader in your home market is much more important (and usually cost effective) than growing internationally. Stripe still has a huge way to go in terms of 'crossing the chasm' in the US, moving out of SV bubble and in to the main-stream.
- Geographical acquisitions when expanding globally aren't necessarily a negative. Although they feel dirty, a lot of the time they can be a win/win for both players (quick foothold in the market, market leading position, entry certainty, local hires etc).
The post also mentions being a CA beta tester.
Hell, every listed company in the world would be global.
Again, you sound like a very optimistic person. :)
In reality, contracts make forever to set up, and it's better not to talk about APIs from commercial banks. Whenever monitory transactions are involved, you will have to confirm to a huge amount of regulations and conditions to meet which you will have to get involved with even more bureaucracy.
Coming from India, I am sad to say that I have got a fairly grim perspective about these things.
Translating the site to the target country takes longer than establishing another currency.
The US has something called PCI compliant and I would assume that every other country has something similar but with a different subset of rules.
(a lot of the relevant standards are now international in nature)
Oh, and pretty much what everyone else mentioned... It's extremely difficult for any newly establish company to estimate how much red-tape (translate -> money) they will need to go through in order to trade in another country.
Edit: Actually, Marc Samwer was head of international operations until earlier this year:
Groupon already has a presence in the UK, its international expansion particularly in europe was helped via an acquistion of another Samwer Brothers company MyCityDeal.de which became Groupon.co.uk, Groupon.de etc.
The reason Groupon is only growing 31% in Europe compared to in North America's growth of 66% is for several reasons including the fact that their deals are more expensive compared to their North American offers (this is confirmed by both Apple & Groupon in both of their earnings calls), the merchants aren't getting the same value from Groupon in Europe as North America which is because of the underlying fact they want higher prices AND finally because half the stuff that Groupon does in North America doesn't even exist/is in its early stages here; Deal personalization = early stages, Groupon's mobile offerings = not as advanced/early stages, its deal bank (searchable, unused Groupon deals) is at the same stage as well.
> the merchants aren't getting the same value
Groupon (much to the OP's point) is like every mindless American out there who thinks that you can simply copy and paste an American business model into any part of the world. The world does not simply work this way, but we (Americans) are brought up to think so.
The reason the merchants aren't getting the same value is because of what I explained above, that merchants aren't willing to give the same level of discount as their North American counterparts so people aren't redeeming as many deals, due to the discount not being as significant meaning the European market is only growing at 31%.
I'm actually from England, and Groupon actually made a smart acquisition from the Samwer Brothers of the MyCityDeal.de brand, even though it has received a lot of complaints (some of them were before the acquistion, and because the advertising laws across Europe all vary) however, Groupon has cleaned up these issues and openly admits to them which is why its outselling LivingSocial in the UK by 14 to 1.
Simiarly, whenever a company does any M&A it calculates the costs associated to expanding to the UK on its own, and the ROI from building its brand from scratch as opposed to purchasing a company outright and folding it into its brand. Whenever the costs benefits from an acquisition outweighs the decision to start from scratch, a company will always try and complete the M&A. Always.
But the VZ owner, Holtzbrinck, did not want to sell at this time. Obviously a huuuuge mistake in hindsight. Only after that refusal FB started to sue VZ.
Note I didn't say regulators are motivated to not change te world. Many individuals performing regulation are well-intentioned and want to improve society, but their primary objective is to keep risk levels low.
On an individual level, startup founders have huge financial upside if their plans succeed. The regulator won't even see a bonus for that. No-one's going to say "well done on letting those guys launch here, here's a bonus for your efforts". The main financial incentive for the regulator is a safe retirement plan, and that only happens if nothing hits the fan.
"Startups are motivated to change the world. Regulators are motivated to keep the world stable."
I think there was an article on HN where someone was talking about how these kinds of startups (the ones with difficult regulatory barriers) are the only ones that you should consider cloning in other countries for this very reason.
And the original HN comment thread: http://news.ycombinator.com/item?id=4091462
Interestingly enough the first startup the author suggests should be cloned is Stripe.
With the millions of dollars these companies get from investors you'd think they could hire local knowledge to figure it out for them.
US startups needs to heed this advice. The minute you plugin that IP-to-geolocation technology, remember it is a guide, not a rule and it definitely does not translate to a language preference.
What puts me off Paymill is that I have no way of choosing a language preference. If I could select English I'd be there like a shot.
Google translate only goes so far...