16 ms·

I don't get it. Why do US net startups very often make the same mistake of not expanding into the whole world quickly? It took eBay something like 4 years to g

by Gring 14y ago

I don't get it. Why do US net startups very often make the same mistake of not expanding into the whole world quickly? 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?

niyazpk 14y ago
You are vastly underestimating the effort required in setting up a payment gateway in a country.
- Gring 14y ago
  Why? It's just some contracts and APIs. And it doesn't explain all those other startups that deliberately limit themselves (and then later have to buy local clones because they did not expand quickly enough).
  - niyazpk 14y ago
    >> just some contracts and APIs 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.
    - lowmagnet 14y ago
      It takes us about a week to get another account established in the target currency and set up an account with our payment vendor to take orders in that currency. Translating the site to the target country takes longer than establishing another currency.
  - phereford 14y ago
    It's more than just contracts and APIs. It's ensuring that your practices follow that specific country's rules and regulations. Every country has a different set of regulations for handling money. 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.
    - ErrantX 14y ago
      In the UK it is called PCI compliance :) (a lot of the relevant standards are now international in nature)
    - lobster_johnson 14y ago
      PCI [1] is actually an international industry standard that defines security practices for payment card processing. For example, it requires that your system is behind a firewall, that credit card numbers are stored securely, etc. Your system must be audited annually by a certified consultant. Stripe is -- presumably -- already compliant, since they already run a business that processes credit cards. [1] http://en.wikipedia.org/wiki/Payment_Card_Industry_Data_Security_Standard http://en.wikipedia.org/wiki/Payment_Card_Industry_Data_Secu...
  - hmmmm123 14y ago
    It is more than that, it is tax rates, money laundering the archaic regulation that differs between countries (even in the EU) a lot of boilerplate stuff needs to be in place.
- Ecio78 14y ago
  But if you are Stripe and you get millions in investments ( i.e. http://techcrunch.com/2012/07/09/sexy-payments-startup-stripe-swipes-20m-from-general-catalyst-sequoia-thiel-and-more/ http://techcrunch.com/2012/07/09/sexy-payments-startup-strip... ) you can afford to hire specific european nation experts, lawyers etc.. to get into these markets quickly
  - dmix 14y ago
    Thats a dangerous strategy for such an early stage startup. They need to validate their business THEN expand. Which is what they are doing now... Stripe just started beta testing internationally.
    - grasuxxxl 14y ago
      Can you provide a link where there is information about the international beta testing?
      - dmix 14y ago
        http://news.ycombinator.com/item?id=4345913 http://news.ycombinator.com/item?id=4345913
    - mikegirouard 14y ago
      I can't reply to the child comment, but this is also relivant: http://news.ycombinator.org/item?id=4376193 http://news.ycombinator.org/item?id=4376193 The post also mentions being a CA beta tester.
  - kimmiller 14y ago
    You're underestimating bandwidth. You can't buy time, it's just not that easy. If it were, every start-up that raises millions would do it. Hell, every listed company in the world would be global.
- gadders 14y ago
  Those difficulties and processes would be the same for Stripe as Samwers.
  - biesnecker 14y ago
    Yes, but they're each just trying to do it in a single country. It's a PITA to set up a payment gateway _anywhere_, but when you try to do it in multiple locations simultaneously it just becomes exponentially harder.
mmcnickle 14y ago
The founders don't have the local knowledge and contacts to get through the regulatory hoops involved in launching a new payment gateway in dozens of countries. 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.
- stef25 14y ago
  > The founders don't have the local knowledge and contacts to get through the regulatory hoops involved in launching a new payment gateway in dozens of countries With the millions of dollars these companies get from investors you'd think they could hire local knowledge to figure it out for them.
  - mbesto 14y ago
    And how do these founders know/trust local knowledge? Imagine trying to deal with an Eastern European market or Middle Eastern market, where bribes ("legal" and illegal) are necessary. How do you know you're not getting ripped off?
    - matthewowen 14y ago
      But this clone is in Germany. The fact that some countries are difficult to do business in doesn't mean that all countries outside the USA are difficult to do business in.
      - mbesto 14y ago
        I wasn't talking about just Germany. The OP's point was - why can't they just throw money at any country.
    - stef25 14y ago
      Hire lawyers and consultants that decide that for them.
- 14y ago
JCB_K 14y ago
Funny that all 3 companies you mention are money-related, which is a tough nut to crack in most countries. There's so many rules and regulations which all differ from country to country that I think it's quite understandable for companies like these to focus on 1 country first. 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.)
- arkitaip 14y ago
  The challenges that finance related startups face on a global market are complicated and costly but to me the underlying problem is how startups are organized in the first place. 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.
  - GFischer 14y ago
    You need to have found a viable business model, AND convince someone to partner with you, instead of cloning you - though it sounds reasonable that they would if you already have the infrastructure set up. That said, it is an interesting idea, I know of at least one startup founder that's trying to do just that.
Tichy 14y ago
Why bother - they know the Samwers will do it for them and are very happy to sell.
mbesto 14y ago
Groupon took your advice and (in my opinion) has contributed to their poor numbers. The problem is that when an established US company looks to expand, those countries tend to put a premium on expansion there. For example, if Groupon expands to the UK, sales people will ask for more money up front and put a premium on "acting faster". 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.
- rmoriz 14y ago
  Facebook didn't do the mistake of buying the local German copycat (StudiVZ). StudiVZ is now dead.
  - ojilles 14y ago
    Same in NL (hyves.nl)
  - r3m6 14y ago
    haha....actually they DID want to buy StudiVZ :-) 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.
- itsprofitbaron 14y ago
  Groupon makes more revenue outside North America than it does within it (in Q2: $308MM for international; $260MM for N.A. on a total customer base of 38MM users) 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.
herval 14y ago
Paypal's biggest problem on it's entire history was related to expanding internationally too fast. You open a door to larger profits, but also open a huge window for frauds of all sorts. Not to mention the regulations, that differ A LOT in different countries (just as a quick example, crediting dollars in an account in Brazil is forbidden - there's no "support" for this kind of transaction, so you have to go through a conversion process that is not only bureaucratic, but also VERY error prone and time consuming...)
kanamekun 14y ago
Kickstarter is US-only because Amazon Payments is US-only (well at least, they only denominate payments in dollars). 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." http://www.techdirt.com/articles/20120809/09213019977/amazon-stops-processing-payments-crowdfunding-platform-creative-commons-books.shtml http://www.techdirt.com/articles/20120809/09213019977/amazon... 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.
- naz 14y ago
  > the credit card is authed right away... but not charged until the project is funded AND the deadline is reached (up to 60 days). 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.
  - kanamekun 14y ago
    << As you know, every Kickstarter project has a funding goal and deadline, both of which are determined by the project creator. When that deadline is reached, one of two things happens: 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. >> http://www.kickstarter.com/blog/amazon-payments-and-us-only http://www.kickstarter.com/blog/amazon-payments-and-us-only
oskarth 14y ago
I would say 43 million dollars is quite cheap to get a whole continent. It is not unlikely that it would've been more dangerous and more costly to do it themselves.
mmahemoff 14y ago
Startups are motivated to change the world. Regulators are motivated to keep the world stable. 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.
- misiti3780 14y ago
  nice quote "Startups are motivated to change the world. Regulators are motivated to keep the world stable."
robk 14y ago
To their credit, Fab.com is one of the few companies to have thought of international expansion somewhat early in their lifetime (~12 months). They've acquired in the UK and Germany to date. It may have helped that the CEO has lived in Germany before however and had more of an international perspective than the typical US-born founder.
- mmahemoff 14y ago
  Yes, although in this case, the founders are Irish and must have been acutely aware this could happen, but really had little choice at such an early stage in a tough industry like this.
runako 14y ago
Some suggested reasons, to add to the others cited: 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.
- kimmiller 14y ago
  To add to this list: - 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).
vitno 14y ago
I was actually talking to the Stripe president about this. He was talking about the difficulties in expanding to new monetary markets and how they have to partner with banks and such. However, They are expanding to Canada, UK, & Germany very soon.
- junto 14y ago
  I just hope that Stripe don't make the mistake of forcing users who want to operate in Germany of using the site in German. Paypal assumes that everyone is German, who is in Germany. I live in Germany and I'm not German. I know lots of other people here who aren't German. Europe has a fluid movement of people between different countries. Physical location and language preference have no direct relationship over here. 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...
pbreit 14y ago
This is a disastrously limited view of what it takes to roll out a good service in a different country while retaining a good service in the home country.

by Gring 14y ago

niyazpk 14y ago

You are vastly underestimating the effort required in setting up a payment gateway in a country.

Gring 14y ago
Why? It's just some contracts and APIs. And it doesn't explain all those other startups that deliberately limit themselves (and then later have to buy local clones because they did not expand quickly enough).
- niyazpk 14y ago
  >> just some contracts and APIs 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.
  - lowmagnet 14y ago
    It takes us about a week to get another account established in the target currency and set up an account with our payment vendor to take orders in that currency. Translating the site to the target country takes longer than establishing another currency.
- phereford 14y ago
  It's more than just contracts and APIs. It's ensuring that your practices follow that specific country's rules and regulations. Every country has a different set of regulations for handling money. 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.
  - ErrantX 14y ago
    In the UK it is called PCI compliance :) (a lot of the relevant standards are now international in nature)
  - lobster_johnson 14y ago
    PCI [1] is actually an international industry standard that defines security practices for payment card processing. For example, it requires that your system is behind a firewall, that credit card numbers are stored securely, etc. Your system must be audited annually by a certified consultant. Stripe is -- presumably -- already compliant, since they already run a business that processes credit cards. [1] http://en.wikipedia.org/wiki/Payment_Card_Industry_Data_Security_Standard http://en.wikipedia.org/wiki/Payment_Card_Industry_Data_Secu...
- hmmmm123 14y ago
  It is more than that, it is tax rates, money laundering the archaic regulation that differs between countries (even in the EU) a lot of boilerplate stuff needs to be in place.
Ecio78 14y ago
But if you are Stripe and you get millions in investments ( i.e. http://techcrunch.com/2012/07/09/sexy-payments-startup-stripe-swipes-20m-from-general-catalyst-sequoia-thiel-and-more/ http://techcrunch.com/2012/07/09/sexy-payments-startup-strip... ) you can afford to hire specific european nation experts, lawyers etc.. to get into these markets quickly
- dmix 14y ago
  Thats a dangerous strategy for such an early stage startup. They need to validate their business THEN expand. Which is what they are doing now... Stripe just started beta testing internationally.
  - grasuxxxl 14y ago
    Can you provide a link where there is information about the international beta testing?
    - dmix 14y ago
      http://news.ycombinator.com/item?id=4345913 http://news.ycombinator.com/item?id=4345913
  - mikegirouard 14y ago
    I can't reply to the child comment, but this is also relivant: http://news.ycombinator.org/item?id=4376193 http://news.ycombinator.org/item?id=4376193 The post also mentions being a CA beta tester.
- kimmiller 14y ago
  You're underestimating bandwidth. You can't buy time, it's just not that easy. If it were, every start-up that raises millions would do it. Hell, every listed company in the world would be global.
gadders 14y ago
Those difficulties and processes would be the same for Stripe as Samwers.
- biesnecker 14y ago
  Yes, but they're each just trying to do it in a single country. It's a PITA to set up a payment gateway _anywhere_, but when you try to do it in multiple locations simultaneously it just becomes exponentially harder.

mmcnickle 14y ago

The founders don't have the local knowledge and contacts to get through the regulatory hoops involved in launching a new payment gateway in dozens of countries. 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.

stef25 14y ago
> The founders don't have the local knowledge and contacts to get through the regulatory hoops involved in launching a new payment gateway in dozens of countries With the millions of dollars these companies get from investors you'd think they could hire local knowledge to figure it out for them.
- mbesto 14y ago
  And how do these founders know/trust local knowledge? Imagine trying to deal with an Eastern European market or Middle Eastern market, where bribes ("legal" and illegal) are necessary. How do you know you're not getting ripped off?
  - matthewowen 14y ago
    But this clone is in Germany. The fact that some countries are difficult to do business in doesn't mean that all countries outside the USA are difficult to do business in.
    - mbesto 14y ago
      I wasn't talking about just Germany. The OP's point was - why can't they just throw money at any country.
  - stef25 14y ago
    Hire lawyers and consultants that decide that for them.
14y ago

JCB_K 14y ago

Funny that all 3 companies you mention are money-related, which is a tough nut to crack in most countries. There's so many rules and regulations which all differ from country to country that I think it's quite understandable for companies like these to focus on 1 country first. 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.)

arkitaip 14y ago
The challenges that finance related startups face on a global market are complicated and costly but to me the underlying problem is how startups are organized in the first place. 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.
- GFischer 14y ago
  You need to have found a viable business model, AND convince someone to partner with you, instead of cloning you - though it sounds reasonable that they would if you already have the infrastructure set up. That said, it is an interesting idea, I know of at least one startup founder that's trying to do just that.

Tichy 14y ago

Why bother - they know the Samwers will do it for them and are very happy to sell.

mbesto 14y ago

Groupon took your advice and (in my opinion) has contributed to their poor numbers. The problem is that when an established US company looks to expand, those countries tend to put a premium on expansion there. For example, if Groupon expands to the UK, sales people will ask for more money up front and put a premium on "acting faster". 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.

rmoriz 14y ago
Facebook didn't do the mistake of buying the local German copycat (StudiVZ). StudiVZ is now dead.
- ojilles 14y ago
  Same in NL (hyves.nl)
- r3m6 14y ago
  haha....actually they DID want to buy StudiVZ :-) 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.
itsprofitbaron 14y ago
Groupon makes more revenue outside North America than it does within it (in Q2: $308MM for international; $260MM for N.A. on a total customer base of 38MM users) 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.

herval 14y ago

Paypal's biggest problem on it's entire history was related to expanding internationally too fast. You open a door to larger profits, but also open a huge window for frauds of all sorts. Not to mention the regulations, that differ A LOT in different countries (just as a quick example, crediting dollars in an account in Brazil is forbidden - there's no "support" for this kind of transaction, so you have to go through a conversion process that is not only bureaucratic, but also VERY error prone and time consuming...)

kanamekun 14y ago

Kickstarter is US-only because Amazon Payments is US-only (well at least, they only denominate payments in dollars). 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." http://www.techdirt.com/articles/20120809/09213019977/amazon-stops-processing-payments-crowdfunding-platform-creative-commons-books.shtml http://www.techdirt.com/articles/20120809/09213019977/amazon... 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.

naz 14y ago
> the credit card is authed right away... but not charged until the project is funded AND the deadline is reached (up to 60 days). 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.
- kanamekun 14y ago
  << As you know, every Kickstarter project has a funding goal and deadline, both of which are determined by the project creator. When that deadline is reached, one of two things happens: 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. >> http://www.kickstarter.com/blog/amazon-payments-and-us-only http://www.kickstarter.com/blog/amazon-payments-and-us-only

oskarth 14y ago

I would say 43 million dollars is quite cheap to get a whole continent. It is not unlikely that it would've been more dangerous and more costly to do it themselves.

mmahemoff 14y ago

Startups are motivated to change the world. Regulators are motivated to keep the world stable. 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.

misiti3780 14y ago
nice quote "Startups are motivated to change the world. Regulators are motivated to keep the world stable."

robk 14y ago

To their credit, Fab.com is one of the few companies to have thought of international expansion somewhat early in their lifetime (~12 months). They've acquired in the UK and Germany to date. It may have helped that the CEO has lived in Germany before however and had more of an international perspective than the typical US-born founder.

mmahemoff 14y ago
Yes, although in this case, the founders are Irish and must have been acutely aware this could happen, but really had little choice at such an early stage in a tough industry like this.

runako 14y ago

Some suggested reasons, to add to the others cited: 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.

kimmiller 14y ago
To add to this list: - 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).

vitno 14y ago

I was actually talking to the Stripe president about this. He was talking about the difficulties in expanding to new monetary markets and how they have to partner with banks and such. However, They are expanding to Canada, UK, & Germany very soon.

junto 14y ago
I just hope that Stripe don't make the mistake of forcing users who want to operate in Germany of using the site in German. Paypal assumes that everyone is German, who is in Germany. I live in Germany and I'm not German. I know lots of other people here who aren't German. Europe has a fluid movement of people between different countries. Physical location and language preference have no direct relationship over here. 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...

pbreit 14y ago

This is a disastrously limited view of what it takes to roll out a good service in a different country while retaining a good service in the home country.