7 factors that determine whether your start-up will be a success abroad

Stop looking for one ultimate answer that offers the solution to all your questions about internationalization. That answer does not exist. Every success has its own story and it is important to include the ingredients that can help you further. That is the motivation for us to set up the Scaleup Global Tour where we want more than 20 different entrepreneurs to share their experiences spread over the various sessions. 

For example, Pieter van der Does, CEO of Adyen, said in one of our previous programs that they have a 4-step strategy for international expansion. Making at least one customer with a high brand reputation an ambassador of their product, that's what it's all about. Only then do they pick up and open an office. For Adyen that starting point works very well, but it is not automatically said that this should be the same logical choice for your business model. 

This became even clearer to me after a conversation I had with Menno van Dijk, founder of ScaleUpNation. In his programs he experiences that many companies operate opportunistically, they choose a new market because they happen to already have a customer there. It doesn’t mean that that particular country offers the most opportunities. Do research before you start spending your resources on this.

A good example is a Dutch e-commerce party that started to focus on Italy because of a deal with an investor. Only gradually they discovered that Italians hardly buy these products online. To prevent this from happening, it is imperative to do good research into different markets first. 3D Hubs co-founder Filemon told me how they are working in their expansion with an analysis where they score 20 cities on more than 10 different attributes. From addressable market, talent, and competition to more practical points such as accessibility, time zone and tax attractiveness.

Finding good people in the Netherlands is already difficult, but that will become even more complicated abroad. For example, how do you recognize talent in a country like the United States, where everyone can present themselves extremely well and where you are unfamiliar with most programs or organizations where they have worked at? Your first local teammates determine the local culture which in turn can determine your success. At Impraise, we had all new people come to Amsterdam for a few weeks to build contacts and get involved with our culture. This works very well.

Expansion costs money. For example, in a new market you want to revalidate whether you can build traction. And when that point is reached, you want to actually be able to step on the gas pedal. My biggest fuck-up took place at a trade fair in the United States. There, we stood with our silly little booth with some cans of sponsored peppermint next to our competitor’s beautiful castle where they served visitors fresh sashimi. It is difficult to make up for that reputational damage afterward. This is especially harmful if your product or service is not transactional and your buyers will check its reputation with colleagues from the market: 80% of HR buyers make reference to peers in the market. At other fairs, we started to focus more on side events and dinners around events. These often deliver a better ROI.

Don't count on quick wins when internationalizing. In your home market, it probably took about two years for people to talk about you. Therefore, focus mainly on cities, preferably within large markets such as the United States. What helped us a lot at Impraise is that we came from Y-Combinator, an accelerator program with an insanely good reputation from alumni like Dropbox, Airbnb and Stripe. This increased our credibility and ensured that doors opened that would otherwise remain closed. In addition, we had a strong online content strategy that allowed us to build awareness and traction before we made the crossing.

Now, since the outbreak of the corona crisis, we have been used to regular meetings via small Zoom windows, but with a foreign branch you cannot escape from this way of working at all. The lack of the usual conversations at the coffee machine or a walk after work can lead to you not being 100% clear about what is going on with your team abroad and whether you need to be present to make adjustments. Continuing to communicate with great regularity is essential. And don't underestimate the impact of time zones. All of a sudden you might be sitting late at night at 11 pm having a meeting about all kinds of important issues. This will affect your effectiveness. 

Okay, sometimes you just cannot escape from them, but a strategy with resellers is not something I recommend in the early stages. Especially when your product or service requires an advisory sales approach. However much those resellers try their best, they often turn out to be much less adept at conveying your vision. What is missing is the passion and perspective that you, as the founder or key hire, bring with you to win over those first local customers.