When my employer posted me to Germany in the early 2000s to open its subsidiary for the so-called D-A-CH (German speaking) market of Europe, we had no reference customer in Germany. When prospects would ask who we worked with, I'd list out the names of several
American customers. Prospects would shake their head and ask for references in Europe. I'd then list out a few companies in UK. They'd fire back, "Oh, forget UK, they don't even drive on the right side of the road"!
That was my first exposure to the heterogeneity of the European market for IT products and services. Lacking similar exposure, the honchos back in the head office assumed that Europe was one single market.
15 years later, the IT industry continues to make the same mistake.
I was recently talking to the founders of an American fintech. Its European product strategy is to build the software for UK and roll it out to Continental Europe after changing menus to local languages. That's it. While I know that's a recipe for disaster,
no amount of external advice would change their mind.
These misconceptions about the European market stunt the growth of IT companies. But they're too deep-rooted to go away by themselves.
Thankfully, Brexit shatters these misconceptions.
While many people fear that Brexit would cause a massive fragmentation of the market, I envisage that the following changes triggered by the new regulation may be for the better:
- Leaders will now have to accept that UK and Continental Europe are different markets and develop different GTM strategies accordingly
- Product managers will realize the need to tailor their product separately for each major market of Europe viz. UK, D-A-CH, BE-NE-LUX, Nordic, and so on
- Everyone will understand the subtext of Donald Rumsfeld's famous question, "What number do I dial if I want to call Europe?".
One size never fit all of Europe. When their European reps said it, corporate chieftains didn't believe it. Now they have no choice. Brexit conveys the point in a manner that they can't ignore.
I see this as the upside of Brexit.
That's why I never believed doomsday predictions that Brexit will kill the fintech industry and, in its very early days, predicted
an exactly opposite effect.
My optimism seems to be well-placed, going by early data points reported by Finextra in its January 2018 article entitled Fintech
leads the way as investment in UK tech firms doubles in 2017:
- "...London's fintech sector remains a hotbed of investment activity, capturing the lion's share of a £2.99 billion venture capital splurge on UK tech firms."
- "...VC investment into the UK’s tech sector reaching an all-time high in 2017 at almost double the £1.63 billion invested in 2016."
- "Brexit may be a dark cloud on horizon, but UK firms attracted almost four times more funding in 2017 than Germany (£694m) and more than France, Ireland and Sweden combined."
I wouldn't hazard a guess about its long term impact but, in the short term, there are solid reasons why Brexit is good for the IT industry.