Unless you are a startup focused very locally -- which is just as worthy a focus -- you, at some point, will be looking to expand your business past your natural borders. Today, based on the advice of startup founders at the 4 Years from Now conference as part of the Mobile World Congress in here Barcelona, we are going to help you decide when is the right time to globalize your company, where is the right place, and how to manage it all, working you over the hurdles you will inevitably encounter.
What is the right moment to go international?
If you're following the advice given today, most startups should be looking international from Day One. Particularly if you are a tech-related or focused startup, you are inherently an international business by definition. Certainly, if you are online, available via e-commerce or work anywhere in the tech world, you should be thinking global.
But there's a difference with having an international view from Day One and knowing when you are ready to make that globalized move. Here are some questions to ask yourself:
Do you feel ready to take your business abroad?
Just because you can and feel like you should, doesn't mean you know in your core that going international is the right move for you and your team right now. Yes, with risks like these, there are many rewards, but, even the most committed cofounder can't begin to realize the stress of trying to open your company up to a new and unknown marketplace.
Remember, change can be good, but as human beings we naturally avert change, as it's disruptive. Are you ready for your workflow to be disrupted? Are your partners? Are your investors?
Do you have the resources to take it abroad?
Ask yourself -- how much money will we need to start selling our product or service internationally? "When you think of a number, at least double or triple it." Anywhere you go, it's going to be much more expensive to live and hire than you ever realized, plus you have to afford to travel around and network like never before.
Not just monetary resources are limited. Do you yourself as a CEO or founder have the time and money to go abroad? Are you ready to leave your team, trusting them to take the reigns of your headquarters? Or are you comfortable in hiring someone local to open your market abroad? Do you have the money and time to fund an office, new staff, recruit that new staff, and to travel around that country to meet with new potential customers and investors?
"You have to be ready to be less productive because you will be managing many people and you have a loss of focus," says Javier de la Torre, CEO ofCartoDB, a made-in-Spain business now based in New York. "You have a company that’s focused on one thing, and now you have to learn a whole new country," which includes local laws and taxes, distractions no founder looks forward to. De la Torre was able to internationalize his company on not much more than $50k, but says that "The expense is the executive level’s time."
Do you understand the local market?
First, why there? Many would say that the Silicon Valley is over-saturated (and it's certainly pricey,) while so many businesses are determined that they need to move there to be gain an international foothold and brand. It's your job to decide the right place to find the right customers.
And why only one country? There is a potential for synergy by spreading to more than one country at the same time, which includes not having to duplicate work like marketing later. Think about launching in three or four countries, assuring you get more done at once, you don't have to do quite so much in the future, and that you optimize learning and experience from the start.
But before expanding, you need to test the local market, understand the lifetime value of your customer there, the cost per action, the cost per new employee, etc. You need to hire a seasoned local sales rep who knows how to sell to that specific audience in that specific culture--in the U.S., that could set you back $10-15,000 a month. "And you have to prepare yourself sometimes, for whatever reason, the salesperson doesn't work -- because sales persons are usually very good at selling themselves," warned Jordi Argente of New Market Venture Management. What will you do if your first person isn't a match? How will you change your hiring strategy?
Put out feelers in a series of countries. Don't assume that just because everyone else seems to be going to Cali, that it's best for you. One alternative, as suggested by Madrid-based Job&Talent online recruitment agency founder Juan Urdiales, is to go to London first (especially for those Euro-based startups.) Urdiales says, "If you want a local market, you can stay there, but if you want to get funding to expand, you should try London to fundraise and at least one more marketplace. And then the third goal is eventually the U.S." Since Spain has such a large British population, Job&Talent was able to test their service first on local, but British-ownered businesses, then on opening their own office in London, and only now, after four years, are they researching a possible U.S. expansion.
These founders also warned that you should test in a market where you know you can make a sale. For example in Spain, almost no one pays for app, so a Spanish app company needs to test and look international from the start.
Once you've determined the right country or countries for you, start with one key salesperson that knows the market and create that team around that person. "Make a connection with the ecosystem there," says de la Torre.
Learn from their mistakes
If you're answer is Yes to all three questions above, then perhaps you're ready to take the global plunge. The startup founders were asked what has been their biggest error to date -- which the moderator dubbed a "pivot" not a mistake, at least for the technical world, an opportunity to take your company in a new direction. Here are what the panelists admitted to:
The biggest mistake is ignoring Asia. (Which, by the way, wasn't mentioned up until that moment. Perhaps as we say we don't want to focus anymore on the Silicon Valley, we still have a lot to do to break that habit, even us at PandaDoc, who started in Minsk and then moved to San Francisco. But, that all did work for us so...)
The biggest mistake is hiring too many too fast. The speakers all agreed that, when looking to expand, do not hire an entire team off the bat. It's much more important to do extensive research and interviews to hire one very great, very local person to get the ball rolling, and then build the team later around that one person.
The biggest mistake is trying to do it all yourself. Yes, even if you're bootstrapping and very small, you cannot do it all alone. One such reason is that different countries not only have different customs and customers, but they have different laws. You don't have time to learn everything at once. Outsource or at least seek guidance on taxes, permits, patents, and other such legally-numbery stuff. The amount of time and resources -- both financial and personnel -- you will save will make it all well worth it, giving you a firmer foundation to build your international business on.
And, of course
If you are moving abroad, you want to organize your company in the cloud. Products like PandaDoc take away the need to worry about the different contracts in different countries; while you should still always consult a lawyer for verbiage and laws, you can store all documents in one secure online space, hiring people from different locations, keeping things well-organized, all in one place. As you are looking to move your startup abroad, you need to plan for everything that can save you time, money, and sanity.
So, what have YOU learned from taking your business to an international level? What should you have asked yourselves? What mistakes should you have avoided? Tell us!