There is no such thing as a sure bet in early-stage venture capital. If, however, you want to make an investment that comes closest to that, you can look out for a ✨role model✨. An easy example would be Trade Republic (Founded in 2015 in Berlin) following the role model of Robinhood (Founded in 2013 in Menlo Park), of building a mobile-first, low/no-commission stock brokerage. People will call Trade Republic ‘the European Challenger’, or ‘a National Champion’. And as we’ve seen with the German FinTech raising north of a Bn USD, this strategy may well pay out as a great entrepreneurial success and a great investment case, in a market as big as retail investing, with such structurally, legal, and regulatory differences between the two markets.
Sounds like a great blueprint to you? Unfortunately, my dear reader, I have bad news for you. This pattern is most likely not going to be applicable if you are founding and building in B2D. In this episode, I want to summarize why the G2M of a B2D company is global by nature and cannot be based on a national champion story. But don’t you worry, because this on the flipside also poses great opportunities that may well outweigh the drawbacks.
🚧 A place with no boundaries
The internet has no boundaries. Simply said, for many developer-focused companies, there are no geographical barriers to sharing information or selling that piece of software. Developers can access software from anywhere in the world, and companies can market their products to a global audience with ease.
👯♂️ Global tribes
Devs like to form global communities online. They work in all parts of the world and often interact with each other online through various forums. These are often based on shared beliefs, technologies used, or problems faced, but also shared interests and preferences, rather than merely on shared geography. Many favored platforms, such as Stack Overflow or Reddit, for these sorts of exchanges, are readily accessible globally.
🗣 Shared languages
Developers have the advantage of not only sharing one common language (English - which is the closest human-readable language to most programming languages), but also many different programming languages >> though chatting in JavaScript proves to not be the most practical way, exchanging ideas, solutions, and help in a programming language is often the core of an exchange and can be mutually understood.
A funny anecdote I heard from a befriended developer is that he actually learned English alongside becoming a developer, as most of the learning material was in English and key functions, methods, and operators are in English anyhow.
🔨 Standardized tools and processes
The standardization of development tools and processes has made it easier for companies to create software that can be used globally. Developers around the world use similar tools and processes, so software solutions can be designed and marketed with a global audience in mind.
While many aspects of the technology industry are dominated by the US and China, technology creation is more distributed. Just think about stitching together a dev stack:
You could prototype a real-time data analysis system, a few developers may stitch together a transactional database like MySQL (Swedish), with a fast analytical database like ClickHouse (Russian, out of Yandex), connected by an ETL solution like Talend (French), monitored by a tool like Prometheus (German, out of SoundCloud), and visualized by Apache ECharts (China).
All components are available globally. I think the point to make here is really that devs do not care where technology is from, as long as it solves the pain point they have.
🪄 Global talent pool
One aspect that in my opinion has one of the most severe impacts on the globalization of the B2D segment is talent. Several sub-trends sculpted the developer talent pool to become a truly global one:
Remote work: The rise of remote work and distributed teams have significantly expanded the geographical boundaries for hiring developers. With advancements in communication technology and collaboration tools, companies can now hire talented developers from anywhere in the world, allowing them to tap into a global pool of talent.
Talent shortage: The demand for skilled developers often surpasses the local supply in many regions. In such cases, companies are compelled to look beyond their local markets and explore talent globally to fill the gaps in their development teams. This drives the need for a global market for developer talent.
Cost efficiency: Hiring developers from countries with lower labor costs can be economically advantageous. By tapping into global talent pools, companies can find skilled developers at competitive rates, reducing their overall development costs.
Diverse skill sets: Different regions and countries often have their own strengths and specializations in terms of technology and development expertise. By accessing a global market, companies can gain access to a diverse range of skill sets, allowing them to leverage specific talents for specialized projects or technologies.
What do you need to take away?
You need to see developers as a global audience from the get-go, instead of sequentially rolling out country by country. While this can still make sense to focus marketing and sales resources more efficiently, the addressee in mind still needs to be more universal.
A regional champion story (think - GitHub for Europe) will in most cases not make sense as a multi-Bn venture case. There might be exceptions where e.g. regulatory barriers or also large cultural differences can lead to the need for more local adaption.
In terms of competition, you’ll need to see all competitors globally as directly battling for the same cake with you. Do not ignore market participants just because they are >1kms away from you.
While this G2M nature sure poses challenges, I believe it holds more opportunities by offering a large addressable market, the potential for strong communities and support, and the possibility of really building a huge global champion that defines a category.