In browsing Quora recently, I was struck, but not surprised, by how many people sought advice on how to expand a startup internationally. Not surprised, because for many young companies international expansion ranks with M&A as something that’s easy in concept, but difficult to execute well. (See the many Quora responses, including my own, to Why do companies often fail at international expansion?)
I believe you can maximize your chances of getting international right the first time around if you:
1.Lay the groundwork from the moment you start your company
2.Launch internationally with an owner, a strategy, and a plan
3.Apply some key principles and best practices once you’ve launched
Part 1: Laying the groundwork
I grew up in Ireland. With a population of only 4.5 million, it’s a tiny market — so Irish entrepreneurs have to think outside their borders from the beginning. Relative to his Irish counterparts, the American entrepreneur is born with a silver spoon in his mouth. He has the luxury of a massive home market — 300 million affluent consumers, 30 million businesses, one language, one currency, one culture, one legal system — from sea to shining sea. Initially, that’s a huge advantage that allows him to build a company of significant size without even needing a passport. Google rocketed from zero to almost $350M in revenue in four years — 80% of it from the United States market.
On the other hand, that huge starting advantage can become a liability when it comes time to expand internationally. I’ve personally experienced the pain of taking products, systems and processes designed for the US market and trying to re-engineer them years later to work in Europe, Latin America or Asia. Even Google struggled initially — more on that below. The good news is that much of this pain can be avoided if you lay the groundwork from the time you start the company.
Talk the talk from the beginning — and walk it too
Even if you’re still far from ready to launch overseas, it’s never too early to start talking and acting as a future global leader. Based on my experience, here are some ideas to consider:
•Make the company’s mission explicitly global from the outset. Mission statements like these set a global tone (the underlining is mine):
- Google: To organize the world’s information and make it universally accessible and useful.
- Nike: To bring inspiration and innovation to every athlete in the world.
- Avaya: Provide the world’s best communications solutions that enable businesses to excel.
- Facebook: To give people the power to share and make the world more open and connected.
•Mix in some international DNA on your management team — consider making international experience an explicit hiring criterion for at least, say, 30% of your positions. In addition to international perspective, your team will benefit from diversity of thinking.
•Make internationalization and localization experience mandatory for senior product management and engineering hires.
•Recruit board members with international experience and perspective. At my last company, Silver Spring Networks, we killed two birds with one stone, adding the CFO of Nokia to our board for both his international and financial expertise.
•As you develop product and market strategy for the US market, challenge your team to think about the implications of taking this beyond the US later. What might we do differently if we wanted to take this to Asia next year?
•From the beginning, try to track relevant developments in key overseas markets:
- What countries are we getting most website traffic from? Why?
- Ask your employees who are citizens of other countries to keep you posted on what’s happening in their home country — they’ll be delighted to do it.
- At least once a year, make an effort to spend a few days in Europe, or Brazil, or India or China. You’ll come back with a hundred new ideas.
•Talk to local competitors, customers, partners, investors.
•Is this market developing differently from or similarly to the home market?
•What local players are emerging that we need to watch?
•What user or customer trends offer lessons to improve our product or market strategy?
•Who might be a great local partner to get started with?
•Reinforce the global leadership message in all-hands meetings, company emails, one-on-ones, performance reviews — get the message out any way you can, and keep doing it! Our market is the world!
•Carve out some time to discuss international expansion at quarterly reviews or strategic offsites.
Make the right code choices from the start
Many entrepreneurs don’t think about it, but they’re making a decision with major ramifications for their global strategy from the moment they write their first line of code. I was amazed recently when a senior executive from a major emerging Internet company told me that they had neglected to internationalize their code when they started, which would now cost them millions of dollars and months of delay in getting into overseas markets. In the meantime, local competitors were springing up around the globe. Don’t make that mistake.
Here are some suggestions:
•Read the excellent Beyond Borders by John Yunker.
•Make an explicit decision on internationalization up-front.
Ideally, your code should be fully internationalized, meaning that it can be adapted to different languages and regions (aka localized) without engineering involvement.
•If your code isn’t internationalized, the problem is getting worse with every line you add. Bite the bullet and get it done as early as possible. I highly recommend this Quora post by Yishan Wong about Facebook’s organization-wide effort in 2007 to separate their content from their code and set it up for crowdsourced translation into over a hundred languages.
•Facebook’s brilliant use of crowdsourced translation has become legendary among consumer Internet companies. However, enterprise software companies are also making effective use of their global user community for translation, as Nicholas Muldoon of Atlassian Software explains in his Quora post. Check out translations.atlassian.com.
•Unless you’re a giant organization like Facebook, it won’t make sense to create your own translation platform. While it may not work for everyone, I was intrigued when I got a chance to see Smartling’s approach to dynamic website translation.
•Although customer-facing code may be the most obvious internationalization candidate, your revenue-related systems are equally critical: By 2004, more than half of Google’s traffic was international, and the company could boast of 104 language versions and 13 overseas offices — but monetizing it proved challenging initially, due to systems that were never intended for international use. With a billing system described internally as “fragile” and “glued together”, “the company worried that it might not be able to accept payments from advertisers in some foreign currencies as well as through bank transfer and direct debit in certain locations.” Don’t let that happen to you.
Protect your IP
•Make sure your IP protection plan covers you internationally. (The Patent Cooperation Treaty process can give you some global protection while postponing the need to file regional or national patents.)
•Register trademarks and domain names in the top 10-20 world economies. You don’t want to invest in building a killer global brand only to find someone registered it before you in Russia.
If you take these steps, you should be in excellent shape to execute a winning global strategy when you’re ready to do it. Of course, to execute a winning global strategy, you have to have a strategy and someone to lead its execution.
John O’Farrell is a general partner at Andreessen Horowitz. John led the firm’s investments in Facebook, Twitter, and Groupon, and works with portfolio companies on partnering, strategic transactions and global expansion. John has an MBA from the Stanford Graduate School of Business and a Bachelor of Electronic Engineering from University College Dublin. He speaks English, German, French, and Portuguese.