The Beatles got there first, of course, breaking into American culture with their mop tops and smart suits and Mersey melodies. But the prospect of succeeding in the lucrative U.S. market is an idea that has intoxicated many a European since the Fab Four first appeared on The Ed Sullivan Show. Today the lure of the new world remains just as strong, with companies like Sweden’s Spotify and French luxury sales site Vente-Privee keen to make America a critical part of their business plans.
But not everybody thinks charging across the Atlantic and into the American market is a good thing. For some European entrepreneurs, says Stan Laurent, the chief executive of British print-on-demand company Photobox, trying to crack the U.S. could be the startup equivalent of Napoleon overstretching himself by invading Russia in the winter.
“And being French, I’ve learned my lesson,” he laughs.
That is not to say he is not ambitious, however. On Tuesday Photobox announced that it was buying U.K.-based online greetings card company Moonpig for $195 million, one of the biggest local acquisitions we’ve seen for a while. But despite being prepared to move aggressively in order to expand, Laurent is confident that staying on one side of the Atlantic is enough for the time being.
“We’re focused on Europe for now,” he says, pointing to a huge growth opportunity that remains. “Photobox is number one in Europe, but it’s only got 10 percent of the pan-European market share. We have 30 percent of the market in the U.K. and France, but it’s lower elsewhere.”
Moonpig, he adds, is also the market leader in its area — but it is a narrow segment: Ninety-six percent of cards are still sold in traditional retail outlets rather than online.
“What it does for us is increase the ambition,” says Laurent.
His opinion that companies should learn to walk locally before they try to run is not something everybody agrees with. There’s even a hint that the Moonpig acquisition wasn’t entirely straightforward: It was, he says “contested.” Perhaps there was pressure coming from some investors to go a different route?
“It’s tempting to look elsewhere when investors and backers want to realize the appreciation they’ve achieved,” he says. “Clearly it was a contested process, but I feel very happy that we could have the backing to really create a solid and ambitious European business.”
Of course, it’s easy to amplify weak signals — the deal had the internal code name “Mars,” named after the Roman god of war, reveals Laurent. But cracking the complex European market is something that is risky and takes years: By comparison, breaking America might be a gargantuan task, but at least it is simplified by the fact that it has what amounts to a single culture, a single language and a single federal legal system.
“I do think there’s a strong rationale for consolidation in Europe, but I think it’s something that takes a lot of time,” he says. “The reality is that every European country is a different market. There are a lot of players, most of them subscale, in different countries. We know there’s an underlying trend for consolidation. At the same time, we’re still growing organically.”
But even then, consolidation doesn’t save you from being overtaken. In fact, perhaps it just makes you more attractive to who wants to move in the other direction: That’s what left Lovefilm, the Netflix of Europe, open to being acquired by Amazon earlier this year. It had conveniently rolled up half a dozen video services around the continent into a single package that could be picked up in one fell swoop.
So will a European-focused Photobox go public, as rumored? Or does it simply become an attractive target for an American competitor? Laurent remains tight-lipped.
“At some point, we have to provide them with an exit,” he says of his investors. “But what that will look like is unclear yet.”
Photograph used under Creative Commons license courtesy of Flickr user Ninanne