Updated: May 14
Expand To Spain asked 4 international startups from various countries, who already have made the expansion journey, about their insights when taking their business to Spain. Here is their best 8 advice to make it an easier and faster journey. Quick tip: Patience is required!
Both from a macroeconomic and startup microeconomic perspective, it is great timing to look at Spain. Talent, the easy access and high quality of this crucial startup commodity comes up every time in the replies.
Marc Miralda, COO, TechBuddy, on-demand tech-support, says:
“Because of the access to Spanish talent, we saw a great opportunity to create jobs within the Gig economy for people that are passionate about technology.“
Less competition for tech talent in Spain
The recovering economy has pushed down the massive unemployment rate with more than 10% since the peak of the crisis, but the current rate is still at 16.7% (Q1 2018), especially punishing young, highly educated and hungry people. A fact that persuaded Cristóbal Viedma, CEO and founder of Lingokids, games for English learning, to go to Spain:
“In San Francisco we were competing for local talent with the likes of Uber and Airbnb. I´m from Madrid myself and knew what great talent we have in Spain so we decided to go here in 2016.”
Spanish giant Inditex is one of the many corporates being well aware of this phenomena, finding ways to tap into the local tech talent through organizing Hackathons, together with South Summit, one of Spains most known startup conferences.
Spain is the 4th largest B2C eCommerce market in the EU with €28 billion in online sales 2017. Top product categories were Travel and Hotel, Direct marketing, Ticket services, Electronics, Clothing and Food.
The potential of the Travel and Hotel eCommerce sectors was the main reason for Doinn, housekeeping services for short-term vacation rentals hosts, to expand their online platform from Portugal to Spain, tells Noelia Novella, CEO & Founder of Doinn.
Spending money will last you longer
Like the classic song Got My Mind Set on You, by George Harrison, implies; “It's gonna take time, a whole lot of precious time, it's gonna take patience and time, ...To do it right child!”
Marc Miralda, comparing with Sweden and the Nordics where Techbuddy was founded, emphasizes that especially partnerships with corporations take time, affecting the expansion cost. And Noelia Novella adds another important metric and unexpected observation that Spanish managers do not take into account the price of their own time.
Cristóbal Viedma, says that they extended their runway 3x when taking their educational platform from San Francisco to Madrid. So, contrary to the lyrics in the song, the part of the “spending money” is less true for Spanish expansion.
Your expansion capital will last you a lot longer in comparison to startup hubs in Northern Europe, not to mention if you already have managed to raise capital in Silicon valley.
Emphasis on People and Passion before Process
As with all stereotypes they tend to hold some truths and although what is said - not necessarily flattering - about the Spanish work ethic is somewhat confirmed by the interviewees, there are cultural reasons to take into account before you form your opinion.
The average full-time working week is just over 40 hours, from 9am and can go on until as late as 8pm, with long lunch breaks between 2pm and 4–5pm. Work talk starts after coffee, and lunch is considered a time to relax, not the working lunch you may be used to.
“Most people warned me about productivity being lower than in France. For me this factor shows in how Spanish people are so passionate, even in business relationships”, says Clément Destoumieux, CEO and founder of medmesafe, genetics analysis from home. He continues:
“The way to make business is very casual in comparison to other countries and in my opinion, people are more important than processes for the Spaniards.”
“Business people are super friendly and willing to help”, comments Noelia Novella.
The people before process motto is paired with the importance of meeting someone in person, not just talking on the phone, as confirmed by Marc Miralda:
“When it comes to negotiations with potential partners it is really important to meet physically. I guess Spanish people just like to be close to each other, to be with other people.”
In regards to the common complaints of the red tape, Cristóbal Viedma mentions an interesting finding, originally in a report from the Economist, showing that it is the Spanish people themselves that tend to have the worst expectations of their bureaucratic processes:
“Spanish people are saying that things are terrible here and that everything is so complicated, which I think is not true. A great example has been when applying for a Visa when hiring people from the US, which turned out to be a fast and very efficient process.“
Spanish language skills help a lot
In terms of getting by with only English it is getting easier and most people are willing to help you and go the extra mile to understand you, regardless of your language, as commented by Clément Destoumieux:
“The English level is not that bad, I think their level is enough to work and Spanish are very open and friendly people that will do everything for communication to work out.”
However, like everywhere else in the world speaking the local language will always give you an advantage, especially in the corporate world, according to Marc Miralda:
“In the startup world you can manage with only English but in the corporate world Spanish is a must. Many times my counterpart does not speak English at all and to have a translator would slow things down and effect the flow in a negative way.“
And to strengthen your local network and meet in person, as is still preferred, you need to be in the country.
It is too hard to develop the business without a local presence, so I’m moving to Spain, says Noelia Novella who until now has run the company from Portugal.
Opportunities and challenges
Mentioned strategic partnerships are different local partners in the respective industry, legal partners and region specific associations for startups and business sectors.
“We have been really active in the Barcelona startup community and attended lots of events to find people who show energy, commitment and passion”, says Marc Miralda.
There are cross regional differences in policies and rules for the 17 regions in Spain. As recommended by Clément Destoumieux: “You have to work at a province or regional level as the country is not centralized.”
You also need to take into account a considerable learning curve for your end consumer when it comes to digital products, as explained by Cristóbal Viedma.
“The conversion to paying for a subscription is harder here in Spain where people are not as comfortable paying for software, culturally being more into tangible things, physical products.”
Marc Miralda says the Spanish collective culture has provided some indirect competition:
“Everyone here has a tech savvy friend or relative they can ask for help, which is different from Sweden. Although more people are now willing to pay to save time to solve a specific problem."
As for further opportunities when being based in Spain, “It means an open window for the Latin America market”, says Clément Destoumieux.
8 best advice for an international startup expanding into Spain
1. Find a local person to adapt and adjust the business.
2. Find local partners for setting up and providing local contacts.
3. Get visibility in the startup community, be really active there!
4. Respect the culture and the specificities of the country.
5. Spain has to be understood as a union of 17 different regions.
6. Ask the market about their real needs.
7. Hire a local person.
8. Translate everything to Spanish.
In summary, the proverbial red thread can be found both in the infamous and tedious red tape as well as in the equally famous, scarlet red and passionate heart of the Spaniards.
You need to come here armored with lots of patience and willingness to embrace the slower pace. And use the waiting time to increase your knowledge about the culture by talking to people in person, getting to know them more intimately than on just a “business acquaintances” level.
Javier Sanchez-Marco, CEO, Furgo, on-demand transportation of bigger items, exemplifies the great opportunities that come with the Spanish culture for international startups:
“The use of social media in Spain reflects our culture and way of life. We are more dedicated to creating relationships and sharing content, rather than only reading and absorbing information. Maybe it is initially more expensive to connect with Spanish consumers but the retention is higher than in other markets.”
Did you find this interesting? Do you agree? Or disagree? I so love an interesting conversation and would love to hear your thoughts. Please do leave a comment!!
Crafted by Caroline Lagergren.
Learn more about the Services provided by Expand To Spain.