Web2.0: Israel Better Than Europe?

If the expansion of the late '90s Bubble was limited in Europe compared to the US or Israel, it would have been mainly for two reasons – localization needs and entrepreneurial obstacles.

Localization needs

I was part of the team that brought Amazon to France in 2000 and this was a topic we struggled with daily.

Many people oversimplify localization to be a language issue. In reality, localization is anything that can be done to convince a user that a product was created in their locale (usually country or region). Big issues like currencies, units of measurement and cultural references need to be taken into account, but also details such as whether to place a $ or € symbol before or after a price. Only large companies can afford to have localization experts like Amazon did, and it gets even more complicated and expensive to manage with every new locale. Amazon had big plans for Europe when I was there but a quick check today in 2007 will show you that the French site is still Amazon's last launch on the Old Continent.

What has changed for Web2.0?
Web2.0 is about communities and sharing, which are difficult to do across boundaries such as languages or cultures. The localization issues continue to exist, but their urgency has somewhat abated in Europe now that English has become more and more pervasive as the language of the Internet, bridging groups of people regardless of their mother tongue. As many of the Internet words like email have trickled into other languages and emoticons have become universally meaningful, the understanding of English netspeak has become more accessible to all. In addition, improvements in usability and the increasing application of standards and best practices have had their impact; some sites now require so little reading to be useful (e.g. Twitter or del.icio.us) that a localized version may never be needed.

More important has been the democratization of free open-source software and the accompanying trends towards openness and transparency. Local versions adapted by volunteers are immediately made available for use by anyone, especially people who feel they may otherwise have to wait for their favorite site to appear in a national version. In consequence, Wikipedia is available in dozens of languages and Germans who love Digg can customize Upwarded.com or similar package and launch their own version (Ausgrabb?) quickly and cheaply just like the French have done with Fuzz.fr.

How has the Israeli Internet industry dealt with this problem?
Localization was never much of an issue in a country where most people speak English and love American brands and expressions, Internet-based or otherwise. The Israeli mentality that local business is a distraction has led most Israeli startups to aim their business abroad from the get-go, usually towards the United States, which played well with local users who often used these sites without even realizing they were homemade. Finally, developers in Israel have also been able to benefit from open-source software as much as any developers in Europe.

Entrepreneurial obstacles

Nurturing an idea into a profitable European business used to mean challenges of bureaucracy, dealing with banks and financiers who didn't understand the Internet, and even cultural change when you consider that many Europeans idealize the ‘stable' government job.

What has changed for Web2.0?
Progressively over the past few years, European governments have begun to shift gears, simplifying formalities for startup ventures. Encouraging small business in France, a recent law limits corporate taxes as long as revenue stays beneath a certain threshold. In the United Kingdom, starting a company can now be done in less than a day.

The investor scene in Europe has also evolved, as was often discussed at the recent LeWeb3 conference. There are more local investors willing to invest in European startups, and more foreign investors have begun to include European companies in their portfolios. At the same time, the use of free open-source software has significantly lowered startup costs to the point where many founders no longer feel compelled to take on outside investors, making this point a moot one in many cases.

How has the Israeli Internet industry dealt with this problem?
Although Israeli bureaucracy is still an issue, the government was already improving its practices for startups years ago, part of the reason for success at companies like ICQ during the Bubble and for Metacafe and eSnips today. Also key are investor attitudes towards Israeli companies, which continue to be so strong that firms like Sequoia Capital have local branches while still shunning Europe. And like in Europe, many Israeli startups have also benefited from the lower technological entry barriers and costs resulting from the open-source community.

Plus, Israel has Orli.