managing split teams with Danny Wong of Blank Label, a site for creating custom men's dress shirts and a startup in the growing field of co-creation. These types of startups, which have gained more traction overseas than in the U.S., run on a model of on-demand production, which allows them to become cash-flow positive in a relatively short period of time. Wednesday I had the chance to talk about co-creation with Carmen Magar, a German woman living in New York who works for chocri, a German startup that sells customizable chocolates.Last week we talked about
According to Magar, Germany is quickly becoming a hub for co-creation startups while the U.S. and the U.K. have been much slower to adopt them. Before setting up shop in the U.S., custom t-shirt company Spreadshirt actually began as a startup in Germany. Magar, who has spent significant amounts of time in both countries, says that while the difference in cultures has been an influence, the main reason that co-creation has taken off in Germany is the country's smaller market which allows startups to make a larger impact.
"What happened in Germany is that there were a lot of startups doing co-creation; a lot of companies that didn't have a production process in place that were really flexible and could talk to their customers directly," Magar told ReadWriteWeb on Wednesday. "In the U.S., the way it was proselytized was that soon in the future every big company would change their production process to enable mass customization, but that's actually a really risky thing to do. What I think will happen is that the startups, the small companies that are nimble, will lead the way to bring that control to the consumer."
Another reason why co-creation and mass customization may have taken root in Germany is that the country, like many in Europe, suffers from a severe lack of seed level funding, while the U.S. has incubators and VC firms across the country targeting early stage companies. As we mentioned last week with Blank Label, most co-creation startups use a business model that lets them produce products only as they are ordered, keeping costs down and allowing the company to have an early cash flow.
In a region like Europe, the need to bootstrap businesses from the ground up like chocri (which started with 25,000) is much higher, and co-creation is a great way to accomplish this. American startups may be less likely to go down the route of co-creation because the investors are more willing to take risks on less proven businesses.
Magar, who lived in Germany most of her life and came to America to get her MBA, believes that Germany's propensity towards mass customization is also part of what led chocri to hire her as their representative in America. The company just happened to be looking to expand their presence to the U.S. when Magar called to express her interest in the company.
"I think why they chose to have a German on the team is because I saw a lot more of this happen, and I understand more about mass customization," says Magar. "Because I live here I've experienced the American market, but it was more important to them to bring in an understanding of the concept."
This is an important concept for startups to grasp, both in the U.S. and abroad. When looking to expand overseas, it is important to find someone with familiarity in both regions who can survey the new market and who can grasp the core values of your business. As a German, Magar completely understood chocri's co-creation strategy, and studying in America made her a great choice to help the company find a presence there.
Is co-creation finally beginning to catch on in the U.S. with companies like Spreadshirt and Blank Label? Or perhaps co-creation is more alive in America than we realize? Or is mass customization a startup model that will continue its struggle to gain traction in America? Let us know what you think about co-creation and spreading startups overseas in the comments below!