Startup Success
30 June 2014

Can One Repeate a Startup Success?

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They have been called ‘mafias’, and they are everywhere: from the US to South Korea and, sure, Europe. The term describes the groups of former companies employees that at some point leave and found new ones. In which sectors? Guess: digital and tech.

In 2007, Fortune Magazine made it popular by telling the story of PayPal Mafia, from which companies like Youtube, LinkedIn, Yammer, Tesla or SpaceX were born. In 2002, Paypal was purchased by eBay for $1.5 billion and, as the article describes, “the deal, remarkable only because it happened in the bleakness of 2002, wasn’t so much an exit as an explosion”.

That explosion led to new entrepreneurial adventures. The employees didn’t find it easy to adjust to the Ebay’s more corporate culture and started leaving and creating their own products. Not only the talented people that worked there, but also their hiring process had something to do with it. Ever heard of ‘intrapreneurship’, or ‘the act of behaving like an entrepreneur while working at a large organization’? Back in the times, PayPal founders wanted to hire a specific type of candidate: a competitive, work-lover candidate, similar to themselves. So when PayPal stopped being like them, those ‘intrapreneurs’, that had already made money, just left.

From Google or Apple to Samsung, with obvious hints, the story keeps happening and fostering new generations of entrepreneurs, innovators and new success stories. In Europe as well. So let’s have a look at four of our continent ‘mafias’:

– Skype (Estonia). Founded in 2003, sold to eBay in 2005, Skype’s exit was nearly twice as much as Paypal’s one, $1.5 billion, but the profit was less distributed. However, their founders and former employees are also developing new companies or VC firms to fund others. Transferwise, a P2P transfer money service is run by Skype’s first employee, Taavet Hinrikus, and streaming music service Rdio, by Janus Friis, Skype’s cofounder. Founder Niklas Zennström runs now a VC company, Atomico, which is also healthy for our ‘european ecosystem’. Their portfolio includes more european than american or asian companies. To mention two: taxi app Hailo (UK) or productivity app 6Wunderkinder (Germany).  

– Nokia (Finland). Nokia is definitely not a modern startup. Founded in 1865, it later became the world’s largest mobile phone manufacturer and had a big impact during the nineties – not only in our pockets but in Finnish economy. Today, “we’re finally getting out of the cycle where everything revolves around Nokia”, said recently Peter Vesterbacka of another finnish success story, Rovio. What did he mean? Yes. Nokia attracted talent for years and now finally some of their employees are getting out their Nokia-confort-zone to launch their own projects.

As quoted by The Next Web, Veli-pekka Marin from Uplause felt he “needed new challenges and wanted to start something on my own (…) Nokia was a great experience for me, almost like an “international business school”. I had about 7 different jobs, many of them global, so I really got to understand international business, mobile and high tech and where it is going. This gave me a lot of self confidence to start up my own business and aim for global markets”. Other projects by ex-Nokia employees include names like HeiaHeia or the non-profit organization Mobile Brain Bank, that actually encourages people getting out of Nokia to launch their own startups.

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– Rocket Internet (Germany). While Rocket Internet has been featured – and critizised – as the Internet Clone Machine, when we wrote about Berlin we already noted its positive impact in the city as a hub. “They employ thousands of people. Product management, online marketing, engineering, logistics… And all go through the education on how to run a business. At some point they get tired and do something else”, said VC Max Claussen. In that article we saw the case of URList, not founded by an ex-Rocket employee but employing it. But the company’s effect goes beyond Europe. As they launch companies in emerging markets, their startup ‘mafias’ are founded in other continents.

“This is one of the unusual features of the company, and one of its best”,  said to TechinAsia Bede Moore and Susie Sugden from Lazada Indonesia, and now launching Vela Asia. “The Samwer brothers created a culture of performance by encouraging people to be proactive and think for themselves. I think that’s what makes working there such a positive learning experience for so many people”,

– Tuenti (Spain). What once was a pure social network is now turning to be a mobile operator. Founded in Madrid in 2006, the company was acquired by the major communications group Telefónica on 2010 and as it transformed the product and business model, a lot of its employees left. And some of them started their own projects. Examples include job platform Job and Talent, opinion network Origo or Dymotics, an app to control all lights and appliances from any brand.

Founded by Miriam Muros, she worked at another startup by a former Tuenti employee, Eduard Giménez, the survey service Emtrics. “As he transmited me his entrepreneurial energy, I decided to do the same”.

WIll they all succeed? If we apply the general rule – 8 out of 10 startups fail – there is no point in saying that. While some of them are just starting, there are also projects we did not include that are no longer working. Maybe the point here is: will they succeed because of coming from successful startups? Of course not. But more than government programs or money flowing, successful startups are good for the ecosystem: they create role models and led and encourage employees to try and do something for themselves.