Dear Founder #7: Thinking global from day 1

By ssyc1
May 1, 2020
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One of the happy things in my day-to-day life is that we are increasingly seeing founders who are thinking global from day 1. Substantive thoughts about building a “global” company has gone from “nice to have” to “must-have”. It is part of the business plan, thought through, no fuss needed. Some of these entrepreneurs have either operated in Asia and know the markets, in some cases know where to get their OEM or ODM manufacturers, or have a strong co-founder or operator in their team who has, and in other cases, have even achieved some success in the Asian markets in a previous life.

Is it a necessity? Not unless you want to do at least one of the following:

Increase your addressable market by 10x, 20x, or more
Leverage lower costs and tap into pools of high-value human capital
Stay close to customers, enable faster feedback into product innovation
Build a “global” company that has a global identity and visibility.

We have found 4 interesting cases of young technology founders’ thoughts and strategies about globalization:

First, for founders based in small countries, it is almost a necessary concomitant of scaling up and sustaining growth. Getting big requires thinking global. There are a good number of success stories: Israeli companies who become very successful in the US market.

Second, the interesting cases are companies based in large markets who then successfully enter either a 2^nd large market or enter many other markets (and take on the “complexity” challenge). There aren’t many success stories here; markets can be very different, and larger markets tend to be more entrenched in their own ways.

Third, there is then the very interesting case of companies that went global almost from ground zero – Uber everywhere. In the era of the internet, this is much easier. In some ways, the “brand” and the “concept” made it possible for these companies to enter all markets, especially since these are “asset-light” businesses. These tend more to be either very specialist B2B companies or mostly B2C or C2C companies (where you don’t have to spend time “sitting with the customers” to get the sale). But even strong B2C brands like Starbucks has benefited from adaptation to local tastes; in the meantime, there has been a variety of ways in which Uber has worked in each local market to create an enabling environment (e.g. finding support from the existing taxi industry, its regulators and so on), with varying degrees of success too.

Fourth and finally, this leads me to a second trend we are happily seeing. We are seeing more “regional” companies. Geographic proximity and cultural similarities combined do make it easier for a “translation” to take place. Grab, Didi are examples of regional plays.

It is also helpful to note that many founders are already running companies with a “global” element: if you speak to founder-CEOs of many young companies in the Silicon Valley that are of European origin, you hear how having the Europe part (and origin) is a competitive advantage, with greater team loyalty and lower employee churn especially of the engineering team and so on. This is especially relevant for software-dominant companies as web 2.0 and cloud has reduced the importance of physical distance or separation.

And then there’s a second group who have a hardware component to their business, and especially for those with semiconductors in that hardware, they are inevitably already dealing with Shenzhen or some version of it.

When I meet companies, I often ask the question “do you have a China / Asian strategy?”. I don’t expect them to have a presence there, but I expect them to at least have some rudimentary explanation of what questions they will have to answer to decide on it, even if the current answer is something like “in 2 years’ time, we’ll need to consider these 3 things”. Ambitious young companies need to have a global perspective from day 1 – because competition today has a global element, Coronavirus or not – whether they have started building globally or not.

Postscript: successful new market entry is of course not a simple matter and requires yet more art of beating the odds. In the main, we find founders not incorporating global thinking early enough while being too early or not prepared enough when they actually enter new markets (the strong emphasis entirely meant!).