Ecosystem velocity is key.
Hopin, a European startup, won the crown as the fastest growing company of 2020. As you’d probably guess, it’s a crown usually reserved for American companies.
Often I’ll hear that the key elements to success in the US ecosystem are the size of the American market, their access to talent, and vast amounts of capital.
But I tell you - I’d trade size, talent & capital for ecosystem velocity.
To be clear, the US has that velocity. What does that mean, concretely?
Cold emails work. When they make the move, companies are always surprised that they get answers to their cold emails. Welcome to the USA.
Introductions work. Everyone I know in the US accepts introductions, often without double opt-in. I intro founders to remarkable VCs in the US and they accept; I do the same with people I know very well in Europe and they decline.
Meetings are short. Intro calls are often 10 minutes. 1/3 lead to great outcomes, 1/3 to more intros being made, 1/3 to nothing.
Relationships are fluid. Pay-it-forward is the norm, there’s no pressure.
Feedback is given. Whether positive or negative, it compounds in iterating to a better product.
Foreigners are accepted. It's much easier for a foreigner to sell to an American company than it is to a European one. The USA is very accustomed to immigration.
Companies test out new products. They churn quickly if they don't like it, sure, but that’s part of the game. The ecosystem converges quickly on the best products. (This, by the way, was one big boost for Hopin - the pandemic pushed tons of companies to find an online solution for events, and they took their perfect positioning and executed super well.)
Fundraising rounds happen quickly. Angel investors are more transactional, VCs decide faster.
VCs cut the cord with companies that are average. Founders and employees are free to venture somewhere else and try again.
Secondary rounds happen earlier. Founders make money, employees make money, angels make money. They use that money to make the innovation circle spin faster.
Failure is fine. It's ok to try and try again.
Employment contracts are easy. No three-month employer notice, more poaching, easier firing. There is a heavy cost to hiring and retaining talent in the US, but that also allows for fast-growing companies to really benefit from a tailwind.
In other ecosystems we should work to be more open to potential. Every email you answer, every call you take, every investment you make, they all boost the serendipity in the system. It’s those small things that increase velocity and lead to higher growth rates.
If you have that, the score will take care of itself, and companies will raise (a lot of) capital.
Follow the entropy!
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