According to the U.S. Department of Commerce, more than 70 percent of the world’s purchasing power is located outside of the United States. Making inroads to new, global markets offers many advantages for successful companies stateside: diversification of revenue streams, access to new talent pools and customer bases, outmaneuvering competition, and increased profitability.
Going global, however, is a significant undertaking that not only poses disruption to daily operations but can also compromise company brand if not pursued thoughtfully as part of a company’s core strategy. As Chris Boody, CTO of SVG Partners shares, “You can’t talk in broad strokes about going global”, indeed, a team's scaling efforts should be focused, founded on empirical market readiness, and committed to investing in the necessary resources to make the move.
In response to the growing number of companies expanding overseas, SVG Partners hosted its first GlobeX session at the SVG Innovation Center, inviting leaders from Nest, Highwire Press, GreenLight Technologies, arvato Bertelsmann, and Bessemer Ventures to speak about the opportunities and pitfalls emblematic of the global expansion journey.
Below, we’ve distilled the most important points shared by our GlobalX speakers, who covered everything from conducting solid market investigation, installing local infrastructure using the “country in a box” template, the value of customer support, and attracting the right talent.
1. Keep GlobeX in mind from the very beginning
Bessemer Venture Partner Sunil James advises that while companies need not scale at the outset, they should plan for it. He encourages teams to implement systems that can serve current needs and support future scale up initiatives.
2. Let the market speak for itself
Successful expansion hinges on understanding the region in mind, beginning with a thorough scouring of data to determine whether the market is ready for your company's product. Combing through consumer behaviors, online spending, consumer demographics, internet penetration, purchasing trends, technology adoption rates, and credit card usage provides a good baseline understanding of market readiness, says Alberto Acito, CMO of SVG Partners.
3. Use your virtual presence as a springboard
“You need to know when you’re winning and when you’re losing,” Jason Green, Founder and CEO of Greenlight explains, “you need really good oversight.” For stateside companies, this equates to tracking where your downloads originate and by monitoring your company's online traffic using tools like google analytics.
4. Focus, focus, focus
Serve targeted markets: no more than 3 to start. In each, tailor your company’s value proposition by understanding consumer trends, local culture and competition. “Starbucks recently put their first storefront in Italy”, shared Acito of SVG Partners, demonstrating the importance of striking a balance: do understand when the opportune moment is by tracking the market, and strike when the moment is right.
5. The “Country in a Box” template
In order to avoid any serious missteps upon entry to a market, set up a generic “country in a box” template, which John Hartnett, CEO of SVG Partners describes as the ultimate checklist of customer operations, supply chains, team, admin and office facilities, taxes and legal that a company can turn to as they sketch and phase their global expansion strategy. With incremental expansion, rinse and repeat, bearing in mind local market conditions.
6. Comprehensive infrastructure
Carve out a dedicated international role within the organization. Having a beachhead executive or team with an international scope ensures focus and accountability while maintaining daily operations. Acito of SVG Partners encourages that the dedicated international team lands with at least one strategic partner to tap into the local ecosystem. In terms of sales and marketing, he warns against having an insular view of the market: “while locking in with a company’s headquarters is critical, don’t waylay your understanding of local market channels: cycles and pricing are different by each region”.
7. Cultural cross pollination
“From a venture perspective”, says James of Bessemer Ventures, “we look for a company that can scale globally and can make the international team feel a part of the original unit”. Having a strong company culture prior to expansion cannot be overstated. Conversely, bringing culture from new markets fosters your company’s sustainability and innovation.
8. The often undervalued, but critical customer support function
If you place emphasis on the people you’re serving, they will help you scale faster and better” says John Moses, Head of Customer Support at Nest. Whereas most support functions are placed in the corner, some of the most successful global companies integrate customer support into their overall value proposition; think Apple. What this does is to ensure that there is a consistent brand experience universally. After all, “attempts to not help your customers is expensive” Moses highlights, “when a customer can’t get in touch with you and address their need, you’ve damaged your brand, you’ve sent them to a competitor, and cut yourself off from the repurchase cycle”. So, ensure a customer support function is baked into the cost structure of global expansion, whether it’s high touch or more financially feasible lowtouch points at first.
9. Fortify your code
The first line of code in building your product architecture holds major ramifications when you scale globally. Localizing your code, especially in EMEA where EU policy strongholds the market, ensures your transition overseas is not stalled, says Chris Boody. In fact, the EU technology mandates are a great resource when internationalizing code. Failing to address security during global scaling efforts will compromise your brand, Boody emphasizes. On this front, he encourages companies to conduct an external audit to identify where its product may have security shortfalls. Lastly, companies should capitalize on the financial and tax advantages afforded by a country's R&D programs (especially those in the EU).
10. Attracting local talent
In terms of keys to success in making the right hires, Dan Filby of Highwire Press encourages that first hires be strategic: “look for people who are well connected with the local community and who are experts with local knowledge.” Jason of Greenlight recommends that companies know their goal and clearly articulate it out to local talent pools, “you’ll attract people with the same kinds of passion.”
Pulling together these resources in a framework will provide brand consistency and customizable, localized implementation. Ultimately, trial and error is a part of the iterative process of globe expansion. Ultimately, it’s about thorough research, thoughtful, phased planning predicated on real market opportunities, making resources available and investing in critical infrastructure.