But for the crowd of Silicon Valley executives at the forum – a partnering and investment event for California-based technology companies – it is Europe that they are hoping is open for business. They were there to find out about opportunities in the UK and the continent, and to learn how to crack these promising markets.
Richard Tompane, president and CEO of Gemfire Corporation, accepted a Cal-IT Alumni Award at the forum and told delegates: “Most IT companies struggle with expanding in Europe; it can seem quite daunting. But it can be very rewarding and there are advantages.”
After some early struggles, 60% of business for Gemfire, which specialises in applying planar semiconductor-type processing technology to optical platforms, now comes from Europe.
Search for growth
With North America still recovering from its post-1990s hangover, most growth in the IT market is in Europe and Asia, particularly China.
“North America is just waking up,” Mr Tompane acknowledged. After the technology bubble burst, leaving massive overcapacity, it was felt it would be years before North America would provide opportunities for growth again. Consequently, many Californian IT companies looked abroad to places where there had been no overbuild.
“For us it was the difference between surviving and not surviving,” Mr Tompane said of Gemfire’s venture into the UK market. But it is not always an easy move, especially when it is driven by necessity rather than choice, and given that US-based companies tend to prefer to conquer the domestic market first before branching out overseas.
UK launch pad
The UK is the obvious launch pad into Europe and Intransa, a provider of internet protocol storage products and software with 100 employees worldwide, proved no exception.
Having got the two-person London office up and running, the San Jose-based company is now expanding into the Scandinavian marketplace. It has recently partnered with a distributor in the Nordic and Scandinavian region and set up an office in Denmark, where the distributor has a main office. There are plans to replicate what has been done in Denmark in the bigger neighbouring market of Sweden.
As for the rest of Europe, next on the agenda is France. Intransa is in the process of hiring a country manager to handle France and southern Europe. And it plans to hire someone in the first quarter of 2005 to run operations in Germany.
Soon after, Intransa will turn its attention to central and eastern Europe. “It’s a very exciting market for us,” says Paul Klinkby-Silver, general manager for Europe, Middle East and Africa (EMEA) at Intransa.
The company has entered eastern Europe already through a partner company and distributes throughout the area. “That’s been our introduction to the market, so with appropriate demand we will put in personnel,” Mr Klinkby-Silver explains.
Partnering is Intransa’s preferred strategy for European expansion, he says. “You have to understand the demand first and then, when the revenue justifies it, you get somebody in and build from there. It makes more sense; if there’s no demand, it’s hard to put personnel in.”
Caution over CEE
Aruba, a privately-held wireless networking company, also takes a cautious approach to new markets. It has no immediate plans to go into central and eastern Europe. Despite the impressive level of economic progress and the flurry of investment activity in the former Communist countries, president and CEO Don LeBeau is not convinced there is substantial enough spending yet on technology like Aruba’s. “You cannot afford to go into these markets too early because of the investment that it takes to be there,” he says.
Don LeBeau, Aruba
Aruba’s strategy is to test the water first before installing a local team. “We have an executive in charge of EMEA,” says Mr LeBeau. “He starts talking to reseller candidates and looks for projects, and when we see that there’s enough activity to support a local team, then we hire a sales executive and a technical person.”
Aruba has 150 employees worldwide but is in the middle of a growth spurt; it just moved from its San Jose corporate headquarters into a larger space in Sunnyvale. In Asia, the company has people in Japan, Hong Kong and Taiwan, with the latter two serving the vast Chinese market and the south-east Asian countries. There is a new team coming on stream in Korea shortly, and the next investment will be in south Asia – in particular, Singapore and Malaysia – although there is no firm timetable set on that yet.
“We’re very excited about the rapidly growing opportunities all around the world,” says Mr LeBeau.
In the EMEA region, Aruba has a regional headquarters in London with six employees as well as offices in France, Germany, the Netherlands and Dubai. “We use London as a base to build traction in European markets and then we bring teams in,” says Mr LeBeau. “Clearly, they are large markets and they tend to be pretty big adopters of technology so what we do has quite a lot of appeal in Europe.”
Like Intransa, Aruba is considering expanding into the Scandinavian region. “In Scandinavia we have some very interesting things going on with companies that are major players in those markets, and we think it’s time for us to make that local investment now,” says Mr LeBeau.
But Aruba has only just started its push into Europe. “It’s a never-ending process. We are barely touching the tip of this big iceberg. We have over 400 customers today, which is great for such early penetration, but it’s only the beginning,” he says. “I think the international markets will see greater percentage growth than our North American markets because the rate of adoption in those countries is going to speed up.”
Tried and tested
It is important to remember that European markets, and European consumers, are different from those in the US and therefore must be approached in a different way, advises Mr LeBeau.
“California companies tend to be recognised as innovators and creators of leading-edge technology. But many of the buying entities in Europe and the Middle East do not necessarily want to be out on the leading edge; they want something that’s tried and true,” he says.
When trying to set up shop in Europe, above all, US companies must avoid the temptation to think of Europe as a single entity, or a collection of states, like the US. “Europe is a very diverse market, so you have to understand how to do business in the various local economies and what people want out of corporate relationships,” Mr LeBeau advises.
“Being able to say ‘there is a French company that has deployed our product’ has much more meaning to a French customer than saying ‘let me show you somebody in New York who is using our product’.
“You really have to make the investment to get the early successes that can be local reference points for what you’re doing,” he says.