Technology startups in China and Scandinavia

business — By Bob Riel on October 12, 2006 at 1:05 pm

Business Week currently has two articles on technology startups, one with tips on investing in internet businesses in China and another about new technology companies in Scandinavia. Within both articles are clues to the business cultures of the respective regions.

First, some cultural advice for investing in China …

One of the biggest challenges for a company in China is hiring the management team. … In China, the Internet, and even capitalism, is relatively young, so finding talented executives is more difficult.

For cultural reasons, replacing the CEO of a Chinese startup is often next to impossible, therefore that individual is a critical hire and will be a long-term partner. Investing in startups run by U.S.-educated native Chinese, or “sea turtles,” as they’re known colloquially, helps mitigate risk.

Also …

Model businesses to reflect cultural differences. Baidu, for example, travels door to door to sell ads to local businesses, not only because it’s cost-effective, but because the personal relationship is valued in China.

And, here is a view of some of the successes and challenges of technology startups in Scandinavia …

“Scandinavia has created world-class entrepreneurs who’ve gone on to build world-class services,” says Danny Rimer, general partner at Index Ventures, which backed Skype. …

It helps that there has been a sea change in attitude toward entrepreneurs since the dot-com bubble burst, says Rebtel’s Winbladh. “Failing is not seen as bad as before.”

Yet for all the inspiration and technical expertise, entrepreneurs say there are elements of Scandinavian society that still must change if entrepreneurialism is to flourish. One big sticking point: It’s tough to motivate employees by giving them stock options because options are taxed at high personal income tax rates when they’re exercised. It’s thus “very difficult to employ people who can share the upside – which is what you need to grow,” says Winbladh.