Six steps to internationally launching your business.
Early-stage businesses face a myriad of challenges: organising funding, developing their products, finding product-market fit, hiring and managing staff and trying to grow their client bas. If you’re a European business, these issues are exponentially magnified by the very ground underneath your feet... in the words of Cecilia Lundborg of Paris VC fund Daphni:
“there are very few European markets which are big enough for companies to maintain and sustain their growth over a long period of time.”
It is advisable, therefore, for early-stage European businesses to make international headway sooner than later. If you’re in this position, here are the five steps we recommend to begin your international growth journey.
1. Consider your industry in a local vs global context.
This is the starting point as it informs the timing, location and everything which flows after. Most of the advice you’ll read around internationalization comes from VC’s, and VC’s look to maximize return while minimizing risk. Their advice, therefore, is often to be as international as possible from day one. Generally that is a sound approach, as it future-proofs European businesses in the medium to long term. But consider some examples.
Imagine a German startup working on improving metal manufacturing processes. Germany has a large, technically diverse and well-developed industrial manufacturing and export culture, so such a business could probably operate solely in German, with German clients, for many, many years and have little need to look outside for new customers. Classifieds businesses are another example. Marktplaats, the Dutch online classified business which dominates local selling in that language, has never left the Netherlands. In 2005, just six years after being founded, eBay bought the site for €255 million and a similar experience can be seen in Belgian with the ecommerce business Cool Blue.
Conversely, a French company selling software for electronics supply-chain should probably be thinking of potential customers outside of France from day one, as their market of local manufacturers is quite small on a global scale. There is also the example of Qonto, the French neobank targeted at SME’s. Fintech businesses usually move slowly and deliberately from market to market, adapting their product and communications as they go. However, with one eye on their near future, Qonto already has end-to-end English-language comms, despite launching only in France so far.
2. Decide when to launch internationally.
Many things can go wrong with an international launch. You may enter a new market much too late and find a larger, faster competitor has established market leadership. The classic examples are Google attempting to move into Russia after Yandex had become locally entrenched, and LinkedIn still being 2nd in DACH markets behind Rocket Internet’s Xing after more than 15 years of direct competition.
Of course, as in our previous examples, you may decide that your industry dictates you make the international leap early, before proving yourself in local markets. Your industry and your place within that industry directly informs any decision on the timing of an international launch.
3. Decide where to launch internationally.
Many founders are heavily fixated on succeeding in the USA. The decision to enter the US is often driven by investors, with advisors looking to prove (or disprove) business efficacy in the US as soon as possible, viewing it as the ultimate ‘litmus test’. For B2B SaaS businesses, that makes logical sense and most non-US headquartered businesses begin in New York or Boston, often relocating to San Francisco at a later date.
Yet again, the industry is crucial in your decision about international launch locations, as the US or UK may not necessarily be the next best market, especially in heavily regulated industries such as finance or accounting. French startup Expensya, which uses a character recognition app and cloud-based platform to manage business expenses, found success within France before expanding to Spain, and then to Germany. Why these countries? With business accounting regulation differing from country to country even within the EU, the localization and adaptation of their product was a potential barrier as well as language and communication. As currency wasn’t a factor in these new markets, the team could tackle the most difficult issues and gradually manage growth. Later expansion into larger markets, with variable currencies, languages as well as regulations could therefore be handled because of these earlier, incremental learnings. Their industry informed their decisions in the context of when and where to launch internationally.
4. Set goals and monitor performance metrics
Just like the very early days of any business, it is more difficult to succeed without a plan. Sure, you may have launched all ‘lean’ and ‘agile’, and you may lionize the idea of ‘moving fast and breaking things’… but even so, you had an idea of your market size and your potential customers. In many ways, understanding thus is even more important for taking the international leap. Following through on the three previous steps by taking into account your industry, potential locations and the timing helps to properly gauge your potential and therefore quantify any success. It should also make it easier to set a definable launch strategy and the steps required.
Having definable goals and performance metrics lets you determine when to take each incremental step. Depending on how you intend to grow in a new territory, the first actions will probably be about staffing, resources and investment.
5. Choose people and resources
There are arguments to be made, especially when launching into the US, about opening a local office, hiring local staff and founding members re-locating. It does make some logical sense, however the question is whether this should come before you’ve even proven that a particular international market exists? That depends on how you define success.
In his 9 steps to Repeatable, Scalable, Profitable growth, David Skok of Matrix Partners lists Step 5 as “prove non-founders can sell”. It could be said that this step should be overcome prior to international expansion, and in fact, we’d take that a step further and suggest that before moving to the next step of his plan, doing so from your original location is the way to go before moving anyone or creating new office locations. It may be more difficult at first, and perhaps it will involve late-night calls, long flights and multiple on-boarding discussions. Maybe you will pull your hair out, or lose some along the way. But once delivery is achieved, a new client in a new location can act as a bridgehead, verification of your concept, social proof for competitors and an example to other prospects.
This is also the most cost and time-efficient way to launch into a new market. The only question you should be asking is what you need do to achieve this from your home base.
5. Localization not Translation
The final step in considering your internationalization, lies in your execution. The difference between Localization and Translation is a discussion we have quite often. Essentially, if you’ve conquered your local market in your local language, why not begin by taking all existing communication, product messaging and the product itself and translating it for a new location and language?
Firstly, there may be aspects of your product that make no sense or are unnecessary in a new market. Do you know what these useless or unnecessary elements are? Do your team? Do you know anyone who can advise you?
Second, take the example of moving from another language into English. You may think all Anglophone markets are the same, but this is far from the case. With a Finance product, launching in the UK before the US makes sense as it is a smaller and more manageable market, with a different currency and vastly different regulations. Likewise, communicating with a British audience differs greatly from a North American one and isn’t restricted to spelling. British consumers are more sceptical, don’t like to be ‘sold’ to and gravitate towards humour and irreverence, even with serious topics like finance. Consider as UK-centric examples the success of Comparethemarket, Transferwise and even how controversial payday loan business Wonga was promoted in the beginning.
So there you are, six steps to international launch. No matter what stage your business is at, there are always risks and uncertainty. What is certain is that this process is made easier with experience. Therefore, if you’re in the position to launch internationally and want some advice, please contact us.