Early Stage Internationalization
Today, startups can expand their business to any market they want. Moreover, they have the power to do so immediately after product launch. Organizations offering diverse products, especially services, are adaptable, and their product adoption knows no boundaries; geographic, functional, or otherwise.
Being an early stage startup that’s planning to internationalize requires a strategic mindset. Initial global adoption can happen spontaneously, when you consider the power of the Internet. Nevertheless, serious market penetration on an international level involves cross-functionality, efficient communication and tight coordination between departments.
Going Global as an Early Stage Startup
Worldwide presence in multiple markets for startups, especially in the early stages, is super rare. Many them are focused on saturating markets locally first, and many investors back that approach. A company’s ability to drive growth and returns on initial investments usually have a risk profile to match. Venture capitalists are focused on local markets at this stage as well, wanting to see traction and revenue generation before providing additional capital investment.
On the other hand, expanding globally is resource-intensive. It requires much more patience, there are cultural and legal considerations, and teams lack scalability in their processes. But when you see that companies that they learn from, such as Apple and Google which drive the majority of their revenue outside US, it sounds like the right quest to pursue.
A startup that goes international and manages to successfully penetrate new markets exposes itself to several risks, that many of their smaller competitors don’t encounter at all. First of all, consumers are different. There is also a much higher likelihood of multiple direct competitors. More geographic markets mean more opportunities for rivals to come from all sides and the reality that companies based in each country will backed by their governments via more preferential laws and guidelines for domestic companies. A global focus dictates long-term strategy, with its high initial costs and low ROI.
As previously mentioned, if you’re going to go global you’re in it for the long haul. Sure, internalization brings great risks, but it also paves the way for some great opportunities. As an CEO of a company that went all in and did it despite many doubts, it has proven to be the right decision.
Putting aside the sales and labor cost benefits, there are many other phenomenal opportunities. Exploiting economies of scale and learning curve — especially in development, in-depth insights into clients, diversity and industry problems, value chain gains and benefits from other markets along the way.
Honestly, in the long run I think it is probably riskier not to internationalize at all. You may experience some painful moments and difficult situations, but if you play your cards right, remain patient, flexible and simply adapt, you’ll be light years ahead of your rivals, trends and will be able to satisfy your customers, as well as retain them.
How Your Product Benefits from Global Markets?
One of the main reasons why many companies slip while expanding globally is because they fail to adapt their product offering. One-size-fits-all doesn’t exist for SaaS startups. It has no place in subscription and on-demand economy. Each market is specific and what best entrepreneurs manage to accomplish is a “product-market fit”. Some markets are more complex, customers may need a basic or advanced version of the product, and pricing is never the same for different regions.
Making adjustments at the local level is essential. Your marketing needs to develop messaging that works globally, but also stays loyal to specific audiences living and consuming the product in various ways. Your communication and outreach strategy will vary. Not to mention questions around culture and languages that affect every facet of the business.
SurveyBot is a product we created for moving companies, and it has major applications worldwide. We think that each one of our clients has his/her own brand to defend. Moving is personal and the service movers provide is delicate. Therefore, our goal is to provide them with a customizable product, one they can adapt to their team’s needs.
Had we postponed our international growth, we would have experienced major difficulties with adapting SurveyBot to local markets. Thankfully, this isn’t the case. Experience and insights, we picked up along the way was huge for Crater. It provided us with an easier, faster way to build the product for different uses from the start, and avoid doing it later, when development is too far ahead.
In the meantime, your rivals are still penetrating your domestic market, not being able to get outside of it while trying to differentiate. That puts you in the position to be an industry leader. Your customers trust the product, giving you outstanding word-of-mouth all over the world. With customers comes great feedback you can use for further product improvement, and to drive more growth. The initial growing pains no longer hurt. Instead, they push you to move beyond what you believe your limitations originally were.
Knowledge & Operational Benefits
Every entrepreneur considers intellectual property to be the most valuable asset. You want to have long-term benefits from it and defend it at any cost. Nevertheless, options for protecting might be more limited than you think.
Patenting is a time-consuming, expensive and frustrating process. To put it simply, there are no guarantees. How important is to get a patent? Just look at the examples that took the spotlight in recent years — Amazon’s one-click shopping process, Priceline’s reverse auctions, even earlier situations with Apple, Google, Facebook and Yahoo. Nowadays, business owners are aiming to patent their business model instead of software, which shouldn’t surprise anybody really.
Our product was patented this year in the US, and I must say I’m overjoyed because of it. Besides the obvious reasons, understanding your product and inventive capabilities enables you to create a result-oriented patent strategy from which you will benefit. My interest is to protect 1) intellectual property, 2) product and 3) opportunities. In other words, people and their skills, are the core of SurveyBot and potential opportunities for the company. In an industry that lacks innovation, I find that to be critical.
Another big argument for Crater internationalizing was customer support. Differentiation is what makes a business unique. 24/7 support is something Crater is very proud of and what makes us stand out. Non-stop client service puts an enormous pressure on the company. Especially if you’re operating globally.
You need to be there for your customer regardless of the location or time zone. A startup in the early stage didn’t seem like an ideal company to get into 24/7 support worldwide. But, the fact that we knew it was a must-have for our customers who are operating in such a specific industry, and we weren’t afraid to take the risk, while dealing with obscurity of both resources and manpower, proved to be a hell of a decision. Even though most second guessed it. Sleepless nights, fixing all kinds of problems, breaking barriers and implementing the culture we believed in from the start, is now paying dividends.
I said before and I’ll say it again; although it’s an extremely difficult challenge, in the long run it would be riskier not to internationalize at all.