Stateless Startups (int'l edition)
These companies have no national identity and thrive on diversity--and that could be great news for Europe's competitiveness in high tech

When Italian entrepreneur Francesco Caio decided to create a pan-European Internet service provider last April, he nabbed a Brit as chief financial officer and a Frenchman as head of corporate development, then set up headquarters in London. Netscaliber, the fast-moving upstart founded by Caio, already packs a surprising punch. Through acquisitions and a rapid rollout of services, it has nabbed 10,000 customers in seven months and forecasts $46 million for 2000 revenues. It also boasts a war chest of $240 million from Morgan Stanley Capital Partners and other investors. ''Our concept was convincing to investors because it was international from the start,'' says Caio, former CEO at Omnitel, Italy's No. 2 telecom operator.

Gone are the days when European startups were condemned to slow growth by the 15 borders separating small, culturally divergent markets. Netscaliber is one of a new breed of European startups that has no particular national identity. The managers of these companies hail from Helsinki to Haifa; they conduct business mainly in English; and they rely on diversity for rapid growth. Although their numbers are still small, these startups herald a dramatic shift in Europe's entrepreneurial environment from local to transnational focus. The change could bolster the region's competitiveness in high technology and the Internet, which are global markets requiring rapid international expansion for success.

European entrepreneurs didn't start thinking big until the late 1990s, when an explosion of venture-capital funds and the arrival of stock markets for fast-growth companies such as Frankfurt's Neuer Markt or Paris' Nouveau Marche provided the startups with the capital necessary for rapid international expansion. With a clear mission to go cross-border from Day One, young European companies have begun assembling their management teams from a global talent pool. ''We have to build hybrid teams to succeed. We have to be obsessed with the task of embracing globalization,'' says Paul Costigan, CEO at Massana Ltd., a four-year-old semiconductor-design company based in Dublin and Campbell, Calif.

Experience outside one's home market is the vital component for transnational startups. German Jan-Henrik Lafrentz studied Paris, London, and Wiesbaden, Germany, nabbed internships in the U.S. and France, took his first management job in Spain, and recently signed on as chief financial officer of VisualNet, a three-year-old Barcelona startup.

His background made Lafrentz an ideal partner for VisualNet founder Enrique Irazoqui, a Spanish television producer who has set his sights on creating a global e-commerce market for audiovisual equipment. Both speak four or five languages--as does their Swedish chief information officer, Peter Lundh von Leithner.

Unlike large companies that must work hard to integrate multinational managers into their top echelons, Europe's new virtual startups thrive on cultural diversity. Mixed backgrounds and contacts among top managers help in the search for venture capital and broaden critical networks when companies attempt to find partners, technology, or managers. Caio recently put the managers of a German company he acquired in charge of the company's entire backbone network, since the Germans' skills in network management were strongest. ''Physical assets used to be national. Now assets are knowledge and information--and are international,'' says Martin Velasco, a Spanish investor who lives in Switzerland and funds startups around the world.

GLOBAL REACH. No group is more acutely aware of these transnational trends than Europe's venture capitalists. Using their powerful international networks, they are now building startup teams with no clear nationality. ''The challenge is how to get a little organization to think like a global organization,'' says Dag Syrrist, partner at Vision Capital, a Geneva-based venture fund with offices in Menlo Park, Calif.

Business schools with highly diverse student bodies and international exchange programs, such as the International Graduate School of Management (IESE) in Barcelona and INSEAD, the European Institute of Business Administration in Fontainebleau outside Paris, are also spawning a new generation of multicultural startups. Tony Raad, a Lebanese-born British national, launched an e-commerce startup called MedHermes this year with INSEAD classmate Thomas Lengweiler, a Swiss national. Both worked for 3Com in London before founding MedHermes in Paris, which offers medical professionals information, news, and interviews with experts. While everything on the company's first Web site is written in French, all the back-end technology is handled out of London and operates in English. The pair knows how to work in multicultural settings: Raad's marketing team at 3Com included an Armenian, a Dane, a Greek, an Indian, an American, and several Brits.

Cultures can still clash, of course. France's long lunches drive Raad crazy: ''Everyone else is still eating, and I'm burning to get back to my desk.'' But managers with a deep knowledge of foreign countries can also wield that experience to their advantage. Javier Perez-Tenessa, co-founder and CEO at multilingual travel portal eDreams, based in Barcelona, spends long hours socializing with Spanish and Italian investors and business partners, because ''you find out where you stand over dinner.''

The culture of innovation is the key to diminishing the inescapable differences in national character. At fast-moving technology companies, the imperative of getting products to market quickly means that managers ''speak the same language and have the same approach to opportunities. No matter where they come from, they could all be from Palo Alto [Calif.],'' says Velasco. Europe could use much more of such borderless thinking.

By Gail Edmondson in Barcelona

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