Scaling your startup successfully into the States

Nov 20, 2012
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Nic Brisbourne of DFJ Esprit wrote a great piece last week called, “The smart way to expand software companies to the U.S.” I won’t rehash the whole post but definitely recommend you read it. While Brisbourne’s advice is geared for British startups, much of it is relevant for France as well. His money shot is his conclusion:

“Much better to expand to the U.S. with a series of small well managed steps than to jump in with two feet and a blindfold on.”

My own track record investing in European startups that attempted to penetrate the U.S. market is probably more spotted than Nic’s. I think I could legitimately claim to be 4-for-6 on the enterprise software side. If I try to glean patterns from this small data set, I note that the four success stories followed Nic’s advice in two areas: i) they piggy-backed on domestic subsidiaries of large American multinationals to extend the account geographically; and ii) the CEO invested significant time early on with prospects and analysts in the U.S. before opening an office in the States.

The two portfolio companies that stumbled in their transatlantic quests invested a big chunk of money to open a U.S. office, hired a premium headhunter to recruit high-caliber but expensive American country managers, and sunk capital into a long struggle to gain market traction which never really paid off. While in both cases, the funds at risk encompassed significant portions of subsidies, the opportunity cost of the investment in money and especially time never justified the relatively limited fruits borne by the efforts.

Another difference was that the successful companies were either Belgian or Dutch, whereras the other two firms were French. Again, a data set of six is too insignificant to draw any general conclusions. But this brings up another set of distinctions: the Belgian and Dutch companies did not raise any government subsidies; they started in small domestic markets; and they operated in English as their base language.

Whilst British startups have the benefit of speaking English by nature, it’s not the same language as in America. Even DFJ Esprit’s best practices involve British firms employing locals with Yankee accents when they intend to target the U.S. market (and of course, there’s no scarcity of ‘culturally daring’ Americans in London).

You have to do better than Wall Street English™

This notion of standardizing on American English from day one is even more important for French ventures with global aspirations. The local startup accelerator Le Camping wisely imposes this as a rule on all its members.

Even if selling into markets beyond France and francophone Belgium is not part of the plan (which barring some exceptions, is probably a mistake), every tech startup should understand their role in the international ecosystem of partners, investors, acquirers, etc. and for this should maintain web and presentation materials in English at a minimum. Furthermore, all such materials should be proof-read by a native English speaker before release (yes, even your choice of company name). Do this and you’ll already be one step ahead of the French government.

And there’s really no excuse for not doing this. There are over 150,000 American residents in France, with an estimated 25% young, educated (and hence I would guess, tech-savvy). Some, like the leaders of the Rude Baguette, possess direct expertise for building businesses in the States. Others are simply bright expats that have learned almost by osmosis over years of being bombarded with American marketing messages.

Now go West for mom and apple pie…