Last week we saw AirBnB announce a partnership with Springstar, a relatively unknown incubator (at least in the US) to help with international expansion. I happened to be in Berlin with BASES and EBS visiting Springstar when they made the announcement (crazy, right?).
Here are two insights I gleaned from the trip:
First of all Springstar is not an incubator; at least, not like the ones here in the US.
Secondly, this type of partnership is the first of many we will be seeing in the near future.
Springstar is not an Incubator
If Silicon Valley is about Innovation, Europe is about copycats. And, while we may scoff at their lack of fresh ideas, they aren’t in the business of new ideas. They are in the business of building companies.
The investment environment in Europe is not the same as it is here. Investors are much more risk averse. This has, then, changes the focus of VCs and so-called incubators. Rather than focusing on discovering new business models, they instead focus on executing and scaling proven models.
Calling Springstar an incubator is somewhat of a misnomer. They are better termed holding companies who have internalized all of the core functions of running a tech company: Search engine marketing, Management, development. They have done their utmost to minimize execution risk.
Leaders in international expansion
By focusing on execution instead of innovation firms like Springstar and Rocket Internet are spending resources on opening markets, not iterating on product design, thus creating a comparative advantage in setting up shops in multiple countries.
They’ve been to Sao Paulo, New Delhi, and Dubai. They know how to set up office spaces, how to hired local talent, and how to market effectively. They have experience with the idiosyncrasies of the local markets and are familiar with the regulatory environments.
These European incubators are minimizing execution risk and are very attractive options for any US company looking to tackle the international market. Expect AirBnB to be just the first of many to take this route in the future.
Do you think the European model incubator could work in the US?