Your CEO's Here But Your Company's on the Other Side of the AtlanticMay 02, 2011
San Jose Mercury News
by Peter Delevett
Like any CEO, Dan Serfaty has regular meetings with his executive staff. There’s one difference: he’s in San Francisco. His chief technology officer, chief financial officer and every other top executive at Viadeo work in Paris.
Serfaty—whose company competes with LinkedIn—is among a growing number of techies who’ve launched companies in Europe, then relocated to the Bay Area to take advantage of the region’s unparalleled access to talent and funding.
“Here, being a startup, you’re part of an industry,” says Mikkel Svane, who founded customer support provider Zendesk in Copenhagen in 2007 and moved it to San Francisco two years later. “Where I come from, if you’re at a startup, you’re kind of the odd man out.”
Many European CEOs say they felt compelled to move to the U.S. because so many of their customers are here.
It’s gotten where one could be forgiven for confusing Taulia CEO Bertram Meyer with Talend chief Bertrand Diard. Both companies are based in San Francisco, but the former’s a spinoff of a German tech firm, while the latter was founded in France.
Diard says he knows about 30 valley CEOs who hail from France alone. Many, he says, were inspired by pioneers like Business Objects, founded in 1990. It was the first European software company to go public on the Nasdaq and, with dual headquarters in San Jose and Paris, was eventually acquired by SAP for $6.8 billion.
“We were clearly a novelty when we moved,” said
Business Objects founder Bernard Liautaud, who’s invested in Talend as part of London’s Balderton Capital. Today, his portfolio includes two other valley startups—Abiquo and Nlyte—that were founded in Barcelona and London, respectively.
And while the trend isn’t unique to Europe—Palo Alto online payment company Bling Nation, for instance, was launched by two South American entrepreneurs, and Israeli techies long have flocked to the valley—VCs say the fractionalized European market makes the United States more attractive for relocation than it is to young CEOs in vast places like China and India.
“In Europe, when you want to launch in a new country, the language is different, legislation is different,” says David Marcus, who started mobile payments firm Zong in Geneva and quickly moved it in 2008 to Menlo Park. “It’s like starting a new company each time.”
Dana Stalder, a venture capitalist with Matrix Partners in Palo Alto whose portfolio companies include Zendesk and Zong, says the trend of European CEOs moving here has accelerated over the past two years. “I’ll bet you well over half the companies in Plug and Play right now are foreign nationals who’ve relocated to start companies,” he says of the Sunnyvale tech incubator.
Some companies, like Zendesk, have moved nearly everyone to the United States. “It’s very taxing on you to have lots of people in different time zones—all the travel, all the late-night calls,” Svane says.
Serfaty, who’d built and sold three previous companies in Europe, admits he’s struggled to adjust, particularly to the time zone differences. “I was working from 5 a.m., and at 3 in the afternoon I felt like it was midnight.” He’s now replaced standing meetings with his direct reports to as-needed video confabs.
The relocation bug isn’t limited to startups. When Darron Antill in January became CEO of AppSense, a 12-year-old maker of “virtual desktop” software, the first thing he did was move from the United Kingdom to New York. The proximity paid immediate dividends, as AppSense the following month closed a $70 million funding round with Goldman Sachs.
Half the company’s roughly 300 employees are still based in England, but AppSense’s technology team is in San Jose, including the chief technology officer, and Antill expects to expand rapidly here.
Of course, arriving from Europe means having to recreate one’s professional network from scratch. Serfaty’s Viadeo boasts 35 million members in China, India and Europe, but when he moved here in March, he quickly learned: “You arrive in a country with nothing, and you don’t know anybody.”
And dislocation can have a ripple effect in families where the entrepreneur is already working around the clock.
“It’s a complex move—you can ask that of my wife,” says Diard, whose company provides open-source software that, for instance, can sync your Outlook contacts with those on your cellphone.
“She needed to rebuild her social relationships, try to learn the language. We put our daughter in an American school at 3, and it was challenging for her.” The Diards spend a month in Europe every summer so their kids don’t lose their French.
Other entrepreneurs say their families have felt welcomed by the valley’s polyglot culture. “Nobody’s really from San Francisco; everyone comes from somewhere else,” Svane notes.
Another big difference is in the venture capital scene, which in Europe is much less robust than along Sand Hill Road. While expatriate CEOs generally praise valley investors for “getting” technology and thinking big, some have encountered frustrations.
Because there are fewer venture firms and entrepreneurs abroad to provide competition for deals, Diard says valuations there tend to be higher. His company last year raised $30 million from Menlo Park’s Silver Lake, on top of $34 million previously invested by European VCs.
Benjamin Mestrallet—CEO of a Java-based enterprise portal called eXo Platform—says U.S. venture investors wanted to take a larger share of his company than their counterparts in his native France, and they also sought more control over the board. He took their financial term sheet to his European backers and got them to match it.
Still, quips the 33-year-old, who relocated to the Bay Area in 2009: “It’s easier to get VC than a visa.” Expat CEOs echo that point.
Miguel Valdès-Faura, chief executive of 2-year-old business software provider BonitaSoft, moved to San Francisco last November at Diard’s urging. He says his visa dossier ran to 600 pages, and he recalls being grilled by an airport immigration agent about his business plan.
But none of the CEOs interviewed said such challenges would scare them or others away from the valley.
Says Marcus, who came here with his wife and two children and has now added a third: “I don’t plan to go back to Europe, ever. If you’re a tech entrepreneur, there’s no better place to be than Silicon Valley.”