02 June 2014

Startup leadership in Europe and US: What’s the difference?

xybodytreatments.com.eu web

EYIF is organizing UnConvention 2014 in September! it is the unique meeting point of innovators, policy makers, startups investors and many more from the Silicon Valley and the EU. Learn more and preregister here. That’s why we have decided to explore the difference between American and EU startup leadership.

Startup leadership in Europe and US: What’s the difference?

Comparisons can be odious, but they also help us understand why things are one way or another. When Phil Hodgson, director of Leadership Programmes at Ashridge Business School in UK, realized that for the last 50 years most of the literature about leadership was based on the US – so US examples were widely known and quoted – he formulated a research question: can we identify a European leadership model?

We wondered the same. When people compare European and US startups, everybody tends to speak about regulatory differences, language barriers, red tape, investment and ecosystem. But what about leadership? Does it have something to do?

In his in depth essay, Mr. Hodgson maintains that there is, indeed, a European leadership model. “But it needs to contain a huge number of dimensions for it to fully represent the complexity and interconnectivity of what we heard from our subjects”, he writes. Regardless of the differences among European cultures, he summarized what defines this model: how things get done matters as much as what it is that actually gets done; questioning, disagreeing and arguing are part of commitment, and a strong feature of European leadership is tolerance for difference.

The research did not make distinction between different kinds of companies and it was published in 2007.

It’s been 7 years. The leadership theory differenciates between autocratic (employees just listen and work), bureaucratic (everything follows an established process), laissez faire (employees have as much freedom as possible) and democratic style (employees are part of the decision making). Employees skills matter when applying one or another, as well as the type of the company.

Startups, no matter the country, are small, often lack resources at the beginning, need to move fast and innovate in technology or processes through technology. As for their culture, they have embraced a new one of doing things in which research, appreciation, experimentation and networking are important. Does the leadership style still vary between US and EU startups? Are their leaders, within the employees and as public figures, different from one cotinent to another?

To find this out, we looked at how eight leaders, half from the US and half from the EU, manage their companies. Our conclussion? Culture is just one of the variables that affect leadership. And that there is a shared culture in the startup world that stands for doing things your own way, focus on an idea, be fast, make mistakes, learn from them and empower your team.

Find out yourself in the cases below. Do you consider yourself a leader? Share your experience and let us know!

leadership

U.S – Jordan Metzner, founder of Washio, and on-demand laundry service launched in March 2013. 

  • Empower your employees and create a community

Washio, known as the Über-for-laundry, lets you order through a smartphone app a Washio-employed driver to pick up and do your clothes. To create the cleaners crew, Metzner chose to hire “premium” people and empower them. Cleaners are called ‘ninjas’ and once a month there is a company party so they feel part of a community. As the CEO notes in New York Magazine, “it stems from Disney, which called everyone a cast member (…) All of these nameifications, or whatever, is basically to get everyone to think they’re not doing what they are actually doing, right? No one wants to be the trash guy at Disneyland. ‘No, I’m a cast member.’ At Trader Joe’s, they’re all associates. What does that mean? It means nothing, but I would rather be an associate than a cashier. It helps people elevate themselves and think they are doing something for a greater good”.

EU – Daniel Ek, founder of Spotify, a streaming music service, founded in 2006 in Sweden

  • Be patient, let team members be autonomous and break rules

Music industry is not an easy one. Profiled by Forbes, Spotify’s founder deals with it managing every side of the company: the technology, the strategic and the business one. As one of the board members of the company points out, “he’s the only tech entrepreneur who’s had the patience to achieve what he has with the record business. He has this Zen-like patience and an ability not to crack under pressure or get frustrated. Over and over again he puts himself in a situation where a normal person would have thrown in the towel”.

On the product size, Spotify’s development team has published some insights on its engineering culture, the autonomy that everyone has and how this motivates employees. Stuck in the scrum development mode, they decided to break the rules and follow other organization (explained on the video). The leader’s role? “Communicate what problem need to be solved and why”.

johnfelen web

U.S – Katia Beauchamp, founder of Birchbox, a discovery commerce platform founded in 2010.

  • Learn from mistakes, delegate and focus on priorities

“The most important thing I can do is show that I really understand the priorities of the business, and help people not do things and continue to focus on the highest priorities”, Beauchamp told to The New York Times. “That’s hard for me because I’m the kind of person who, for most of my career, has been a “yes” person. I hear exciting ideas, and I’ll say: “Yes. When? How? Let’s do it. Tomorrow? Perfect.” So developing the part of me that can say no or “we’ll revisit that in six months” has been a big challenge”.

Birchbox founder also recognises that it took them a while to start delegating, but that the company likes learning from mistakes. “Our biggest mistake, as our biggest learning, happened six months after launch. We had a great traction with a good number of clientes but we were still few employees. We didn’t have time to make the team bigger. Because you have to take care about your baby that think no one is going to understand it. Second of all, because it takes you so much time that you never take that step. When you realize, you are so stressed doing stuff that you could delegate. However, in Birchbox mistakes are seen as something healthy, to learn from”.

E.U – Jacques-Antoine Granjon, founder of Vente Privee, a french flash-sales ecommerce company founded in 2000

  • Know your market and don’t forget your DNA

Vente-privee.com is the pionner of online flash sales e-commerces, which means they sell discounted stock from brands for a limited period of time. The model was later imitated by other companies. What makes Granjon a distinguished leader is the way he faces this. “We do not worry”, he said in an interview for Emprendedores. “Competitors in Spain are too many small companies because the model is easy, but they are small. We don’t look at them. Then we have two big competitors. One, Buyvip, does not know how to make flash sales, so we are not afraid (…) Privalia is the other one and we do not respect them, because they have copied every detail of us, every tool, every moment. They do not innovate, do not have revenue and lack a long term strategy. They are doing a good job but it’s expensive for them. I know it because I invented this business”. Wow!

To face competition, “we’ll focus on our core-business. We can do a lot of stuff to sell more. But always without forgetting my DNA, which is making real discounts”.

U.S – Phil Libin, founder of Evernote, a productivity app, founded in 2005

  • Focus on your idea and get rid of anything unnecesary (even if that’s phones)

Evernote has been around for almost ten years and it is one of those digital products that people fall in love with. Founder Phil Libin is focused on the idea of creating “an external brain”. He says so in every interview, as an slogan, as a pitch. “My two first startups did products for other people. We sold them. We wanted something for us, that we loved and which we did not have to think as another client”. He does not like to talk about business, just about product. “If I had that presentation to do today, I’d say: “There are two parts to this. To be honest, the business part is weaker, so I’d like to start with product, just to get you in a good mood”, he wrote in INC.

As for the culture on the company, check this New York Times story out: “we have a flat and very open structure. Nobody has an office. In fact, there are no perks that are signs of seniority. Obviously, there are differences in compensation, but there are no status symbols. You certainly don’t get a better seat or any of that kind of stuff, because they’re just unnecessary. They create artificial barriers to communication. They create artificial things that people focus on rather than just getting their job accomplished. We try to have an organization that just helps you get your work done, and then it’s my job to eliminate all of the risks and all the distractions so you can just focus on achieving. That attracts people who are primarily motivated by how much they achieve. We got rid of phones in the office. Just on a whim, I thought that at every company we start, and this is the third one, we’re going to eliminate one piece of unnecessary technology”.

E.U – Pedro Serrahima, CEO of Pepephone, a spanish mobile virtual network operator founded in 2007

  • Do everything as you think it needs to be done. Make mistakes

Pepephone is a small mobile virtual network operator that operates in a market that in Spain works as an oligopoly: it’s lead by three big companies with aggressive discounts and techniques to get clients. Pepephone reinvented the mobile operators market by doing the opposite: no marketing, no agressive offers, just good prices and customer service. CEO Pedro Serrahima was interviewed by El Confidencial and talked clear about the company and its vision.

“Every monday we sat down, from the office manager to the cartoon drawer, to talk about what we want to do and how we want to do it. It’s like a committe meeting. Everyone needs to understand anything we do. If someone does not understand something it does not work, even though we discuss for six hours. So everyone who’s here has the same opinion. We do not have a strategic plan and investors will never ask me to have one. Plans are never done and it’s coward to say where you’re going to be in 5 years when no one knows where the sector is going to be in 5 years. I just assure one thing to the investors: if the market changes in 20 minutes, Pepephone will have changed in 25. It’s one of the good things of being small (they are 14 people!). They can beat us with money and knowledge but not by being fast. That’s our model”.

onlinecareertips web

U.S – Stephen Kaufer, founder of Tripadvisor, a travel website acquired by Expedia and founded in 2000

  • Run and never let the company slow down

“Speedness wins”, Kaufer says in an interview with Emprendedores. Tripadvisor was once a start up. Today it is part of Expedia Inc and operates 17 brands. One of the things Kaufer claimed to be relevant to succeed was being always fast. “For several years, everyone said that it was going to be inevitable that as the company grew it would slow down. I always asked why. And they said ‘because that’s they way it is’. It seemed stupid to me. So I launched a challenge for my employees. Speed wins! I said ‘now we want to go fast, even faster. It’s easy to talk about agile and rapidity when you’re five, but when you’re working on different timezones a lot of the decisions have implications in different part of the world. It’s not as easy, but that does not mean it’s impossible. You have to take decisions fast and implement them fast as well. That means that everyone in the company should move as fast as possible”.

To tell this to employees, he says, “we help so everyone in the company can be agile and don’t lose time in weekly reunions. That’s ridiculous. Launch your idea and see if you can develop it in 30 or 40 days. If it’s just a change, why don’t you do it in 3 or 5 days? Sometimes there’s people who want to be as perfect as possible. But sometimes this extra effort is not as necessary because no one notices. And that time is not going to the next important campaign or update”.