Breaking into the European market as a technology start-up is a difficult task for those based on the other side of the Atlantic, according to the CEO of Scality.
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French-born Jérôme Lecat is based in San Francisco. His company specialises in object storage-based technology for large scale organisations with huge data needs, such as service providers or government departments.
In a meeting at the firm’s offices today, the CEO admitted he could see why a number of start-ups in the surrounding Silicon Valley area would avoid Europe.
“As a European based in Silicon Valley at a start-up, you wonder why any start-up would do Europe,” said Lecat. “It is expensive, it is difficult, there are many languages, incredible diverse entry into each country and the market is small.”
He claimed these issues explained why there was much more innovation in the US, especially around the Bay Area, than on his home continent.
Lecat said: “The 10 biggest file sharing companies are here in the US, online back-up… there are maybe two players in Europe and one of which is really one from Palo Alto [F-Secure]… those technologies are founded by technology companies in Silicon Valley and the first consumers of those technologies are technology companies.”
“I don’t think it will change. I don’t see a path to change. I don’t see how it can. This is frustrating for me because remember I am European, but if I were to just look at the numbers, [making] sales alone cost more in Europe.”
The CEO did believe there were other parts of technology firms that were much better off in Europe, however, namely development.
“Development costs half as much in Europe than the US so I don’t understand why Silicon Valley continues to develop in Silicon Valley and I am very clear we won’t do this,” he said.
Scality itself faces very different challenges in the two markets. Whilst in the US it predominantly deals with companies which already have huge storage needs of 5PB or more, Europe is still growing to these levels.
“In the US we have very large projects… with people who already have that data,” said Lecat. “So when we meet potential customers, they already know about the problem of managing 5PB of storage. They have already tried and they have to do it day after day. In this sense, it is a pretty easy sell… [but] our competition is if they do nothing as they already have a way of managing it.”
“In Europe they are talking about going from 1PB to 10PB in the next four years. This they could do with [our competitors] so they always factor in the conversation. That is why the competition there is more traditional for us.”
However, there was one area that the CEO found both sides of the pond agreed on, even if the finding was a surprise.
“People are not really concerned about the cost of storage,” he said. “When we do an independent survey, what they say is they are used to the need of storage increasing every year, they are used to needing their budget for storage to increase every year and this is already factored in.”
“So, whenever they launch a new project, they look at the underlying storage costs of the project and they [factor] it in. At the end of the day, they build their business plan in mind and cost of storage is not a big issue. Obviously, they always want more for less but overall, price is not a big challenge.”