With France’s “most exclusive startup event in Europe” taking place September 28, it’s time an open letter was written to the wider startup ecosystem. 65% of startups feel too dependent on GAFAM, but there are other options. Every entrepreneur and CTO has the power to change things, by making the right choices now.
Inspired by the success of some of Europe’s most impressive unicorns such as BackMarket, Klarna, Revolut, Doctolib, Celonis, UiPath and Bolt, you, fellow entrepreneur, are preparing to take on the most thrilling of adventures - launching your startup in a landscape that, over the last five years, has never before seen such investments to encourage the creation of technology companies.
We might be going through a crisis, but the challenge of building your startup will have you hooked. Unlike in the year 2000, after the dot-com bubble burst, this time you’ll be able to rely on the support of European governments. For example, French Economy Minister Bruno Le Maire drew up an ambitious roadmap this summer aiming to create 10 homegrown decacorns by 2030.
Ernst & Young’s latest barometer on the Social and Economic Performance of French Startups will give you every reason to be optimistic. In 2021, the average amount raised per startup since their creation was nearly €32 million compared to €18 million in 2020. According to the barometer, despite the conditions, startups are pursuing their growth and continuing to increase their revenue.
Launching your business as cloud-native means making the right choice—guaranteeing agility and dynamic development—using public cloud will allow you to focus on your core business, without worrying about what’s going on “under the hood” (managing your IT infrastructure). Making this decision from day one also guarantees you’ll be able to scale when your business takes off.
Which Cloud Provider to chose?
So using cloud services is the obvious choice, but which provider(s) should you choose? That’s where things can quickly become complicated as you’ll be faced with a number of myths designed to influence your technical and business decisions. For startups, it’s complicated not to end up permanently dependent on suppliers due to the generous offers of free cloud credits from the bigger players. This “free money” will give you the illusion of being able to build and develop an IT architecture unlike any other, with no time or financial constraints.
Such an illusion will lead you to fail to react to your incidental dependence on a single cloud provider, and you won’t be alone if EY’s barometer is anything to go by - 65% of startups still currently feel dependent on GAFAM. This little-recommended purchasing practice is likely to jeopardize the digital resilience of your business. It’s an illusion. An illusion that will make you forget how much you’ll actually have to pay when they cut off the “free money”, with no turning back. You might even be faced with the magnitude of egress fees that will bind you, for all of eternity, and against all logic, to your cloud provider. It’s worth noting that the United States House of Representatives, the Japan Fair Trade Commission as well as their Dutch and French counterparts, and the European Commission, are all taking interest in the adverse effects of such practices that generations of entrepreneurs before you have been subject to.
Will Europe catch up on American competitors?
You’ll also constantly hear that European cloud providers are “no match” for their “world class” American competitors, and that they will “never catch up”. These carefully polished claims are of course the result of the marketing genius of the tech giants, even if largely proven to be false.
For example, when looking at the trillions of dollars of investments laid down by the big tech players for their global deployment, you’ll hear that European cloud providers don’t have a strong backbone. Rest assured, it’s thanks to the backing of billions of euros of cumulative investment that companies such as OVHcloud, Hetzner and Scaleway (frontrunners in a whole line of cloud SMEs and mid-caps, and some of which are already centaurs!) have been innovating daily for over 20 years. Despite fierce competition, these European stakeholders are developing ultra-competitive offers with cutting-edge technologies aimed at “cloud natives”.
The icing on the cake, even if it might seem anecdotal to many developers, is that these offers give you, and your clients, the highest level of guarantee in terms of technological independence and respect for EU data protection legislation. In other words, unlike data stored by American cloud providers, there’s no risk of a US judge gaining access to the data stored by European clouds.
And finally, you’ll get persuaded that European providers are not up to par, by comparing the extent of their product catalogs. No, European providers don’t currently offer as many elaborate features as their US competitors. So what? In actual fact 20% of the catalog of Amazon Web Services—supplying 75% of the Next40 Startups—is sufficient to cover 80% of your needs, of a purely practical nature.
Myticism vs rationality
Between mysticism and rationality, short-term financial mirages and the need for long-term resilience, you are now at a crossroads trying to make a decision that is not only informed in terms of cloud(s), but also aligned with your values and the desire for impact that guides you daily as an entrepreneur.
In these times of tightened budgets and all-out rationalization, this decision will be more critical than ever. Do you choose the cloud provider that seems to immediately meet your needs but that will end up forcing you to use unnecessary services for too long? Or do you choose one that will leave you the freedom to only use what you need, and to increase or decrease the number of services when you want? That’s where the real challenge of sustainable growth lies, growth that’s on your terms, not based on imposed conditions that you’ll only discover when it’s already too late. The choice is yours.
Yann Lechelle, CEO of Scaleway.
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