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36
STRATEGY

Start-Up, Spanish Style
 

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When Nicolas Luca de Tena was setting up his franchising business in Madrid in the mid-1980s, "entrepreneurs" he says, "were considered bad people" in Spain, an assessment that didn't help much in his desperate effort to attract customers.

By its second year, 1984, Multiasistencia, his 24-hour home repair service, was fixing to go under. While Luca de Tena had been hoping to line up insurance and credit card companies to co-market Multiasistencia's services, he couldn't do it because "big corporations didn't trust our company," he says. "They had strong reputations, and they didn't want to mix their names with ours." Such credibility problems, Luca de Tena says, are still common throughout Europe, where until recently "start-up" was considered a synonym for "doomed" and the word entrepreneur conjured up the image of an uneducated charlatan. The company was instead relegated to soliciting individual customers door-to-door, which yielded depressing results.

"Big companies are very skeptical of small ones," claims Heinrich von Leichtenstein, executive director of the European Foundation for Entrepreneurship Research. "For the first five or six years, nobody takes you seriously." To overcome that bias, smart start-ups try to create alliances with well known partners, hoping some of their respectability will rub off on them.

And more often than not, says Richard Onians of Baring Venture Partners in London, it's the American multinationals who are willing to dance with European start-ups, because "American corporations are more playful than Europe's corporations - they have a much greater yearning to get back to their entrepreneurial roots."

For Luca de Tena, salvation finally came in the form of American Express Corp. Amex had opened up shop in Spain only a few years back, and Luca de Tena eventually persuaded the adventuresome team there to include Multiasistencia's home-repair service in the package American Express offers card-holders. "We got 20,000 clients in one fell swoop," boasts managing director Philippe Kerno - as many as the company had gathered in two years of door-to-door misery.

Aside from the obvious windfall - Luca de Tena got no money from American Express but did collect royalties from the workmen who performed repairs - the alliance paid huge dividends in credibility. Within a few months of listing American Express as a customer, he says, Multiasistencia was hauling in customers "by the boatload," including banks and insurance companies. The company expanded its network of franchisees nationwide, and, with 1994 revenues of $15 million (1.8 billion pesetas) and 188 employees, is now eyeing France and Britain. Can American Express lend a hand? Not likely. "They ended their contract with us several years ago," says Luca de Tena. "But they were the ones who opened the door."

Editor's note: Starting a business is hard anywhere, and Europe presents a set of particular problems for its entrepreneurs - for one thing, Europe is just starting to develop the supportive culture so strong in the United States. One Spanish entrepreneur's solution: partnering with a larger company. This story was written in conjunction with the April 1996 Inc. Magazine story "The Defiant Ones: Europe's Hottest Entrepreneurs."

Jerry Useem is a former reporter at Inc. Magazine.

Last updated: Apr 26, 1996




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