Bloomberg Businessweek

Barcelona

2

47

I

Bloomberg Businessweek August 20, 2018

Lisbon

4

Estonia

9

Paris

4

15% foreign customers 50%

Moscow^

1

startup per

1 million

people

Amsterdam

8

London

18

European startup ecosystems

Berlin

39

Helsinki

16

Stockholm

7

S

n Berlin, you can see that the problems start with thinking

small. For more than a decade, Rocket Internet SE has

built a series of businesses here, in the city with the most

startups per capita in the region. Mostly, Rocket shamelessly

copies successful U.S. and Asian companies, the idea being to

create regional market leaders or at least make them enough of

a nuisance that the originals buy them out. Rocket has drawn

thousands of young graduates, who could otherwise be aiming

higher, to work in its clone factory by day and enjoy Berlin’s

insane club scene by night (and then day and then night again).

Even Rocket’s most successful creation—Zalando SE, a

onetime Zappos.com doppelgänger that’s become Europe’s

largest online fashion retailer—hasn’t pulled itself onto a

larger stage. Although Zalando has a market value of more

than $14 billion and 15,000 employees, its sales remain con-

centrated in Germany, Austria, and Switzerland, and it has set

its sights modestly. Its expansions into Ireland and the Czech

Republic this summer were its irst since 2013.

Zalando has been trying to transform itself from a mere

e-commerce website into a “platform” that helps fashion

brands such as Adidas AG and Club Monaco manage inven-

tory and logistics, a la Amazon.com Inc. So far, it’s had trou-

ble navigating the cultural and legal barriers that persist across

the euro zone despite the common currency. In an oice

tower steps from where Checkpoint Charlie once stood, Eric

Bowman, one of Zalando’s top engineers, says that compared

with Silicon Valley, “we need more people to do things here,

because of all the diferent languages and payment methods.”

This is how Europe’s consumer-tech companies often wind

up as MVPs in minor leagues, says Harry Nelis, a venture cap-

italist at Accel Partners in London. “The kind of companies

that can be created in China and the U.S. are still very hard to

create in Europe, just structurally,” he says. “You could be the

No. 1 company in Germany, but in France people won’t have

heard of you.”

tartups that transcend their intra-European niches

run the risk of being forced to sell out, even if,

unlike some of Rocket’s creations, they don’t nec-

essarily want to. From Amsterdam, Booking.com lists

rooms for rent at some 1.9 million properties around the

DATA, FROM LEFT: KPMG; PITCHBOOK; COMPILED BY BLOOMBERG; STARTUP GENOME