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When Should A Startup Expand Internationally?

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Uber first launched it’s service in San Francisco in 2011. I was there when they went international later that same year, launching at the Le Web conference in Paris. Less than six years later they are live in 84 countries.

For startup founders it’s getting easier and easier and easier to expand globally. The world is getting smaller every day.

However, international copycats are cloning businesses earlier and earlier making it increasingly important for companies with global aspirations to plant flags around the globe sooner rather than later. But, and this is a big but, going international too early risks costly mistakes that can and do sink entire businesses.

Judging the right moment to go international takes careful consideration.

Key takeaways

  • Go international as early as you can
  • Avoid duplicating cost in an unproven model
  • If possible, start by selling internationally from your home base

When I started investing in startups in 2000 the generally accepted wisdom for founders with big home markets was to crack your domestic market first and only worry about going international after that. That’s changed dramatically and the most aggressive founders are now thinking about growing sales globally from day one.

Looking at our portfolio two examples spring to mind. Live Better With and The Dropboth started advertising and building their customer base in the US within a few months of launch. The founders of those companies knew that they could sell internationally with minimal incremental cost and that if they were successful, they would increase their growth rate and demonstrate conclusively that their addressable market extends beyond the UK, both big drivers of valuation.

Beyond growth and proving to investors that they should factor other countries into their market size calculations the other driver for going international early is to preempt copycats. There are investors on both sides of the Atlantic who are scanning Crunchbase and other sources of data on startups to look for ideas that they can clone in their home country. If you are an American company, European and Asian clones can be an annoying interference with your global aspirations, but if you are a European founder you have the larger concern that a US clone can deprive you of your largest market.

These are powerful reasons to make international expansion an early priority, but caution is warranted. As noted above at Live Better With and The Drop international expansion was easy from an operational perspective. They were both able to leverage their existing logistics with US addresses substituting for UK addresses. At Live Better With there was a slight increase in delivery costs which they passed onto the customer and The Drop didn’t even have that. The suits they sell are made in China so shipping to the US rather than the UK comes at no extra cost.

For businesses like these, it’s a no-brainer to run an Adwords or Facebook campaign in the US very early on and see what takes. For that first test it isn’t even necessary to localise the site. If the proposition is going to fly internationally then some customers will convert even when the pricing isn’t local currency. Only once it’s clear that international demand exists does it make sense to invest in multi-currency checkout and other conversion optimisations. Then the next stage is to open an international office when it can be justified on a cost basis or when it becomes necessary to keep driving growth.

However, for other businesses international expansion is more difficult. If sales and marketing or delivery or implementation of the product requires activity proximate to the customer then local capability has to be built prior to sales, necessitating investment ahead of any validation of demand. In most cases the initial investment amounts to a couple of heads, a small office and a commitment from a member of the founding team to move to the new country, or at least be there for a week or two a month. That’s a big deal for a small company, and more so when you factor in the amount of time the rest of the team will spend thinking about and supporting the international office.

For companies that fall into this category judging the timing of the investment is critical. The best advice is to wait until you have got your model working in your home country before setting up abroad. Otherwise you are, in effect, running the same experiment at once in two different geographies, which doubles the cost of learning. That might sound manageable, but bear in mind that there’s an organisational cost as well as a financial cost. You will be making the same mistakes in two different places, which can often mean changing people’s roles or even letting them go.

The advice to expand internationally once the model is working is attractive in its simplicity, but can be challenging to follow, because there’s often no clear moment when the model is ‘working’. One great way to think about the life of a startup is that it is a never ending search for perfection. At the beginning perfection is miles away, and over time it gets closer and closer, but there is always room for improvement. The question then becomes whether the model is ‘working well enough’ to expand internationally. Two thoughts here, firstly, many startups experience a moment when it feels like the focus of the management team moves from continually fighting fires to optimisation. If you haven’t reached that moment yet then think hard about whether it’s too early to set up your first international office. And secondly, pay attention to how important the international office is to the goals of the company. The more important it is the more tolerance you should have for going international sooner rather than later.

It’s also important to think about who will go. It’s tough to execute well on an international expansion strategy and more companies fail than succeed. It’s key that the new office is headed up by a trusted senior executive, and ideally one of the founding team. That will make sure the international expansion effort gets the attention it needs back home and maximise the chances of cultural alignment across your two offices. If you can’t spare someone of the required calibre then best to wait until you can.

Finally, there’s one special case of international expansion that I want to mention here. Some founders consider expanding to the US because they want to increase their chances of raising venture capital from US investors. I think the important thing to understand is that US VCs rarely invest in seed or Series A companies that are outside the US. There are a few who do so occasionally, and a number of them advise founders that having somebody on the ground in the US is either a gating factor or will make it much easier to get a deal over the line. However, they will never guarantee that if you do open a US office they will invest, making it dangerous to do anything you wouldn’t otherwise do in the hope of getting them to commit to your business. The bottom line is that if you really want US investors in an early stage startup you should move the company HQ to San Francisco or New York. Anything else is playing at the margin.

In conclusion, getting the first international sale and opening the first international office are exciting and value creating moments in the life of a startup and ambitious founders want to get these milestones under their belt as soon as possible. However, expanding globally is riskier for some startups than others. Best practice in deciding when to pull the trigger is to build a solid understanding of that risk in your company and to balance that with the reward you will get if you are successful in executing on your international strategy.

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About the Author

This article was written by Nic Brisbourne of the Path Forward. The Path Forward was developed by Forward Partners, a VC platform that invests in the best ideas and brilliant people. Forward Partners devised The Path Forward to help their founders validate their ideas, build a product, achieve traction, hire a team and raise follow on funding all in the space of 12 months. The Path Forward is a fantastic startup framework for you to utilise as an early stage founder or operator. The framework clearly defines startup creation as being comprised of three steps. The first step of this framework involves understanding customer’s needs.Nic is Head of PR & communications at Forward Partners. Over the course of a 10 year career in communications, he has working with global brands including Orange, Warner Bros., BBC, and amazon.co.uk.

Callum Connects

Joelle Ung, Founder of Treasure Unity

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Joelle’s entrepreneurial journey has been an interesting one, leading her to the world of network marketing, enabling her to help other entrepreneurs succeed.

What’s your story?
The sense of wanting to make an impact, of needing to add value to ‘something,’ be it focused on business or peoples’ lives, has led me, through many failures, to where I am now, the food and beverage manufacturing industry. My entrepreneurial journey began as a wedding planner. Then, having tasted initial success, my desire to find meaningful business mentors brought me to the world of network marketing.
Having benefited from the teachings of my mentor, plus the time I spent growing up as the daughter of a great father, I realised that the urge to ‘pay it forward,’ by mentoring future entrepreneurs and helping my colleagues, other entrepreneurs to succeed, had become a personal mission.
The Honest Living Program, owned by my current company, Treasure Unity, is a realisation of that dream. The program opens up learning opportunities for women under duress, underprivileged women and single mothers. It provides a platform from which I am able to teach, imparting people skills and the art of presentation through the day-to-day program. It is absolutely free.

What excites you most about your industry?
To be able to keep adding values to others. On stage or off, it doesn’t matter. I enjoy every call I receive, every appointment that is set up, every individual I have met, and have yet to meet. There is only one agenda, and that is to add value to the person I am speaking to.

What’s your connection to Asia?
Having lived in Singapore and Malaysia for the past 39 years, my heart is impacting the people in Asia.

Favourite city in Asia for business and why?
Singapore, Malaysia and Indonesia. Because of the people who live there, and because there are no barriers to communication for me.

What’s the best piece of advice you ever received?
Don’t make any decision out of confusion, disappointment or anger. Decisions should always be made with a restful heart.

Who inspires you?
Walt Disney: “If you can dream it, you can do it.”
My husband is an ‘overcomer’ who had a near fatal stroke 18 years ago. He lost the ability to practice his dream career as a medical doctor, yet he chose to be a prisoner of hope rather than be a prisoner within his body, and he has never indulged in self-pity.

What have you just learnt recently that blew you away?
Lately, I have learned to be still when an opponent strikes at me. It works! You do not need to immediately rebut an opponent. He, or she, will most probably be waiting for a reaction. When they don’t get one, when you remain still and unmoved, you become unpredictable. They do not know your next move.

If you had your time again, what would you do differently?
I would have sought advice from more wise counsellors before making major decisions, especially if finance or investments were involved.

How do you unwind?
Sometimes I like to take a short getaway or, on a daily basis, I read bible verses that I find uplifting.

Favourite Asian destination for relaxation? Why?
Penang. It is close to home and you can get a premium service at an affordable cost. Also, I can pack light, and it is easy to find anything and everything there.

Everyone in business should read this book:
Like a Virgin, by Richard Branson

Shameless plug for your business:
Become an irresistible woman with substance! We will bring out your natural leadership skills through the Honest Living Program.

How can people connect with you?
They can connect with me by email [email protected], through WhatsApp 92300071, or they can call me on my mobile.

Twitter handle?
My twitter account is inactive. @ungjoelle @treasureunity

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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Entrepreneurship

Women on Top in Tech – Dr. Vivienne Ming, Co-Founder and Executive Chair at Socos Labs

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(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Dr. Vivienne Ming is a theoretical neuroscientist, entrepreneur, technologist, and an author. She co-founded Socos, her fourth company, where she combines machine learning, cognitive neuroscience, and economics to maximize life outcomes in education and the workplace. Vivienne is also a visiting scholar at UC Berkeley’s Center for Theoretical Neuroscience, where she pursues her research in neuroprosthetics. In her free time, Vivienne has developed a predictive model of diabetes to better manage the glucose levels of her diabetic son and systems to predict manic episodes in bipolar suffers. In 2013, she was named one of 10 Women to Watch in Tech by Inc. Magazine.

What makes you do what you do?
I grew up reading far too much science fiction. It always seemed not like an escape, but like a guide to a better world that we could build. When I ran into challenges later in my life and learned how easy it is for a high potential life to slip through the cracks, it was that love of science fiction that kept me thinking that something better was possible. I found a purpose in that failure that drove me to earn my PhD in neuroscience and machine learning so that I could build the worlds that I used to read about.

How did you rise in the industry you are in?
I have worked in several different industries. As an academic, I had a rather shocking amount of success as a graduate student with papers published in top journals and I went on to appointments at Stanford and Berkeley. Then, I started all over again when I founded an education company. When the company rose to prominence and I was giving keynotes at major education conferences, I left that behind to develop technologies for talent acquisition, healthcare, and anything and everything that made better people. My path to success was always forged by me solving problems, with a lot help from simple dumb luck.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
After founding a number of technology companies, I decided I wanted to take what I learned and share it with as many people as possible. I wanted to have an impact on global policy. Based on advice from colleagues and friends, I founded Socos Labs, a think tank that uses machine learning, economics, and behavior research to explore human potential. Socos Labs experiments with whole new visions of work, education, innovation and inclusive economies to inform more human-centered policy.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? How did you make a match if you did, and how did you end up being mentored by him/her?
I’ve been influenced and supported by a great many people in my life, but I cannot say that I’ve ever had a mentor or even a hero that acted as a guide for my career. I’m not belittling the value of great mentorships (my own research argues for its impact), but rather it’s equally important to recognize that a career isn’t a formulaic movie plot with predefined roles.

Now as a leader how do you spot, develop, keep, grow and support your talent?
My work is about making better people and helping people grow. It has always been very important to me to give people a chance who might not otherwise have the same opportunity elsewhere. I have built companies where people who don’t have traditional credentials can come and work on projects that make a difference in people’s lives. The only component I’m really looking for is potential.

Do you consciously or unconsciously support diversity and why?
Supporting diversity is both a mission of Socos Labs and a key part of nearly every company with which I am involved. I sit on the board of companies that foster diversity and I’ve founded companies to find strategies to reduce bias in the hiring process. Creative diversity is crucial to run any high performance organization. My research show that companies should build teams in which everyone brings different, complementary strengths to the table, and diverse life experience is one of the greatest sources of those strengths.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
I suspect there are many ways to be a great leader. My personal approach is perhaps naively simple: do good work and share it with the world. I am sure there are more sophisticated and effective ways to gain attention and build high-performance organizations, but my approach (which I heartily advocate for anyone else) is to focus fanatically on what you’re trying to achieve, your purpose, and find or simply create the means for your work to reach other people.

Advice for others?
Seek out problems that are so messy other people have given up on them.

That is exactly where I want to be and what my new think tank, Socos Labs, aims to explore. We partner with companies and NGOs that share in our mission and help advance a new understanding about education, workforce, health, innovation, inclusion, and so much more. Along the way I’ve learned enough to write a couple of books, How to Robot-Proof Your Kids and The Tax on Being Different, which will be out later this year. In both I discuss how we can begin to untangle many of these big messy global problems.


If you’d like to get in touch with Dr. Vivienne Ming, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/vivienneming/

To learn more about Socos Labs, please click here.

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