Why European Tech Companies Need the US Market: Closing the Profit Gap

Recently I came across an article in the Austrian Trend Magazine. By Hermann Simon and Thomas Haller. Simon-Kucher Consultants.

The title: "Profits as Survival Strategy".

The numbers? They woke me up.

The Uncomfortable Truth About EU Profits

Here are the facts. Straight up.

The average net margin of Austrian large companies is between 5 and 6 percent.

Sounds okay at first. Right?

Now comes the shock: The US Fortune 500 is at 9.1 percent.

Austrian companies achieve only about half of American values.

Let that sink in. Half.

Why This Is a Massive Problem

Simon and Haller nail it with this quote:

"Profit is generally confused with greed instead of understanding it as a prerequisite for investment and sustainable growth."

Exactly.

Without profit no innovation. No expansion. No sustainable growth. No survival.

Companies from the D-A-CH region often struggle with:

Overcapacity. Lack of focus. Capital market weaknesses. Start-up challenges. Restrictive labor laws. High taxes. Management qualification.

But here's what they often overlook: The market they're playing in is too small.

The Elephant in the Room: Market Size

Austria has 9 million people. Germany has 84 million. The EU together? 450 million.

The USA? 335 million people in a single market. One language. One regulatory framework (mostly).

Even more: The USA is the world's largest tech market. By far.

If you as an Austrian or German tech company only sell in Europe you're massively limiting your potential. You're playing on too small a field.

What US Companies Get Right

US companies leverage inherent advantages:

• Larger Home Market: They scale faster. Reach critical mass earlier.
• Higher Valuations: US investors pay higher multiples. That means more capital for growth.
• More Aggressive Management: US culture rewards growth and risk-taking. German-speaking culture is often too protectionist and conservatively anchored.
• Better Access to Capital: Silicon Valley. NYSE. NASDAQ. Capital flows easier.
• Talent Pool: The best talent worldwide wants to go to the US. That attracts innovation.

But here's the good news: You don't have to be a US company to profit from these advantages.

The Solution: Internationalization to America

If Austrian and German tech companies want to double their margins there's a clear path: Entering the US market.

Here's why:

1. Higher Prices Achievable

In the USA customers pay more for quality. For innovation. For European engineering excellence.

Austrian and German products have a reputation bonus in America. "Made in Austria/Germany" = Premium Quality.

That means: Higher margins. With the same products.

2. Larger Volume

The US market is simply bigger. More potential customers. Larger industries. More applications.

What's a niche in Austria? In the USA it's a significant market.

3. Diversification

Don't put all eggs in one basket. European market struggling? US market can compensate revenues.

Plus: Economic cycles are usually not synchronized. When Europe is weak the USA can be strong.

4. Innovation Boost

The US market forces you to stay innovative. Competitive pressure is higher. Customer expectations are higher.

That pushes your entire business mindset forward. To the delight of your EU customers too.

5. Valuation Uplift

As soon as you have US revenue your company valuation increases. Investors pay more for companies with diversified international revenue sources / revenue streams.

Especially when part comes from the USA.

But: It's Not Easy

I won't sugarcoat things: Entering the US market is challenging and extremely demanding.

You need:

• The right go-to-market strategy. Direct sales? Distributors? Reps? E-commerce? The wrong choice in sales channels costs you years and millions.
• Channel partners who understand you. US distributors and reps function differently than in Europe. You must speak their language and incentivize correctly.
• Local presence. At minimum virtually. Better: An office. A team member or even a logistics solution, a warehouse.
• Budget. US go-to-market projects aren't cheap. But a proper ROI can transform your company sustainably.
• Patience. Typically it takes 2-4 years until revenues fully support their own US entity. But then: Exponential growth.

I've spent the last 10 years supporting Austrian and European tech companies with US market entry.

And I can tell you: Companies that do it right often double or triple their margins.

Not just because US price levels are higher. But because:

They learn to work more efficiently and effectively. They adopt best practices from the US market. They're forced to think leaner. They professionalize their business.

The US market makes you a better company. Period.

The Key Question: How Do You Start?

If you're thinking "Ok, that makes sense. But how do I begin?" - here's your playbook:

Phase 1: Preparation (3-6 Months)

Market Analysis: Understand your addressable market in the USA. TAM. SAM. SOM.

Competitive Landscape: Who are your US competitors? What are they doing right or wrong?

Go-To-Market Strategy: Direct? Indirect? Hybrid? What fits your product and your budget?

Business Case: Can your CFO see the numbers? ROI timeline? Break-even point?

Phase 2: Pilot (6-12 Months)

Select a Pilot Market: Don't try to boil the ocean. Focus on one region. One vertical market.

Build Initial Partnerships: Find 2-3 channel partners or first customer champions.

Test and Learn: What works? What doesn't? Be quick to adapt.

Establish Presence: Virtual office. US phone number. US bank account.

Phase 3: Scale (12+ Months)

Expand Geographically: Roll out success stories from pilot region to other regions.

Grow Partner Network: From 2-3 partners to 10-20.

Consider Local Entity: Found an LLC or Corp. Build local team.

Optimize Operations: Supply chain. Fulfillment. Support. All local.

The StateMinded Approach

At StateMinded we help you exactly with this journey. We help EU tech companies go this path smarter. Faster. More cost-effectively.

Our tools and services:

• US Market Entry Planning: Business case. Go-to-market strategy. Roadmap.
• Channel Partner Network: Access to our network of distributors. Reps. VARs.
• Market Intelligence: Real-time insights. Competitive analysis. Customer feedback.
• Operational Support: Entity setup. Compliance. Banking. Logistics.

We're not just consultants. We're your partners for your first American revenue.

Bottom Line: The Profit Gap Is Closable

The numbers from Simon and Haller are a wake-up call.

Austrian and German tech companies can no longer play only in Europe. The market is too small. The margins too low. The growth potential limited.

The US market is the answer. Not the only one. But the most important one.

It's time to think bigger. To play on a larger field. To compete globally.

The companies that understand this? They'll be the winners of the next decade.

The companies that ignore it? Risk becoming the hidden champions that no longer exist.

Your Next Step

If this post resonates with you. If you think "Yes. We need to do this."

Then let's talk. No sales pitch. An honest conversation. About your situation. Your challenges. Your opportunities.

Maybe we can help. Maybe not. But you'll have clarity. About the path forward.

Contact us and let's start your US market entry journey.

The profit gap is real. But it's closable.

Time to make your move. 🚀

Sources:

• Trend Magazine: "Profits as Survival Strategy" by Hermann Simon and Thomas Haller (Simon-Kucher & Partners)
• Fortune 500 Data
• ATX Dividend Report 2024 by Vienna Chamber of Labor

About StateMinded: We help European tech companies successfully enter and scale in the US market. Through expert consulting. Comprehensive business planning tools. Proven market entry strategies. Get StateMinded.