Is Globalisation Killing Or Helping Start-ups?

Often denounced as the harbinger of inequality, the term ‘globalisation’ has been making waves since the 1960’s. With the move away from traditional enterprises and the rise of entrepreneurs, questions surrounding the impacts of globalisation on start-ups have increased. Is it more of a hindrance to developing businesses or a help? To try and settle this matter, Mike Rosenbaum, the co-founder and CEO of the Australian start-up, Spacer, and the Sharing Hub, shares his insights into the impacts of globalisation on start-ups.

The Sharing Economy has taken the business world by storm with its innovative outlook on what consumers want today and using underutilized assets to meet these demands. Whilst the industry is still relatively new, with some of the most well-known businesses just approaching their 10 year anniversary, the Sharing Economy is drawing a lot of attention. Most of the businesses in the Sharing Economy operate in a peer-to-peer or business-to-consumer business model, providing the average person with the opportunity to derive additional income. Companies are empowering the general public to use their idle assets, such as their own vehicles and properties, to supplement their income. These businesses have become increasingly popular in cities with a high cost of living, for example Sydney, Paris, Amsterdam, London, San Francisco and New York, where residents are struggling to afford the expected lifestyle.

When examining some of the correlations between successful businesses in the Sharing Economy, it becomes clear that these companies tap into a universal need. Whether this be affordable transport, accommodation or parking. The benefits for consumers is clear, with consumers offered a wider variety of goods and services. Start-ups, in return, are best placed to address these global demands and to respond to different cultures. They are flexible, adaptive, at the forefront of technology and are comfortable with the world of digitalisation and the dependence on the internet. They can respond far quicker than traditional multi-nationals and as such, globalisation appears to be less of a threat to them. The eventual entry into international markets becomes the obvious next step for businesses, once it has been successful in its opening country. Consequently, in considering the typical trajectory of Sharing Economy businesses, the reasons for and benefits of globalisation starts to become clear.

With the prominence of globalisation, entrepreneurs are now considering international scale during the conception stage of their business. Startups that haven’t adopted to a global mindset have been left behind and out-competed by the businesses that have integrated these ideologies into their culture. In regard to the importance of having this global perspective, Mike shares that “it’s not exactly a choice, it’s more of a necessity”. As the world shrinks and entrepreneurs are increasing in numbers, there is more competition to stand out and produce something new and different. Having a global perspective, the respect for cultural differences and willingness to communicate and engage with a wider audience greatly benefits the business as well as the start-up and Sharing Economy as a whole.

Despite this, it is important for start-ups, as well as established organisations, to recognise the differences between marketplaces. The details of a business offering are rarely interchangeable between cities, whereby a successful company in London may not function as smoothly in Sydney. A slight difference in the country’s culture or logistics can have a detrimental impact in the future. Reflecting on the past few years, there have been many examples of hasty, failed market entry. Perhaps these examples have fueled the doubts and negativity surrounding globalisation for start-up’s. Scholars have argued that this climate is forcing smaller companies either out of business or to compete on a global level, highlighting a divide between multinational corporations and smaller companies. Rosenbaum disagrees, “it’s more fear of the unknown”, he says when talking about the limitations and negative thoughts surrounding globalisation. Small businesses are now more familiar with operating on a global scale then ever before. The increased competition leads to more startups using a plethora of skills and ingenuity to challenge the market. Startups have no option but to compete or watch as their competition passes by and beyond.

Rather than fight the tide, the Sharing Economy is turning globalisation into a benefit for all startups. Businesses are utilising the tools of digitalisation to connect with audiences from all over the world and to source new talent. This movement is reflected in the common flat organisational structure of startups, a consequence of the need to accommodate for workers spread across the world. International teams are then encouraged to learn about the different cultures and customs in order to communicate effectively and respectfully within their international marketplaces. “You’re able to extend your reach into other markets, which ultimately gives your business a much bigger advantage.” says Rosenbaum. There has been a rise in the number of digital platforms supporting startups and the Sharing Economy. This includes mobile phone applications that act as aggregators for retailers, placing startups on the same playing field as some the more established corporations. Additionally, accelerators, such as the Sharing Hub, facilitate relationship building between startups from across the world, whether it be for marketing, manufacturing or technology purposes.

Returning to the original question, of whether globalisation is more of a hindrance or a help, the perception of the changes is critical. It seems it is more about how startups leverage and respond to globalisation, that defines it as an opportunity or a threat to success.

About the Author

Mike Rosenbaum is the CEO and a founder of Spacer.com.au – The Place for Space. He is also CEO of Parkhound. Mike previously co-founded DealsDirect, a pioneering online Dept store in Australia and is an angel investor & advisor to a number of startups in the Sharing economy. Mike also co-founded The Sharing Hub, aiming to accelerate Sharing Economy startups in Australia & contribute to the ecosystem.