SaaS from India to the US: Mistakes to Avoid

These are some tough questions that every Indian SaaS entrepreneur, in the first year of their journey, must answer with limited data. Although there are no right answers to them, these choices inevitably shape the company’s trajectory.

This post encapsulates our choices while building SprintAI, and my learnings from them. I believe that at least some of these will be useful to a SaaS business that is targeting enterprises in a category that is in its early stages of customer-adoption.

Our Business, Thesis, and Early Calls

We wanted to build an Enterprise AI Saas Inventory Intelligence platform targeting retailers and brands. Since Amazon was eating everyone’s lunch, retailers were making investments in their digital capabilities to make their supply-chain more responsive. We wanted to ride this wave and replace all spread-sheet based decisions with AI assistants to make merchandisers super-efficient. (More details about the platform in footnotes.)

The Total Addressable Market of this in India, Middle East, South East Asia together also wasn’t as big as the US. Naturally, we wanted to build for and target the US market. In the US, ERPs like Oracle and IBM had poor adoption of their predictive analytics suites as the online and offline transaction data was in siloes and the algorithms were not robust. Most people resorted to spreadsheets to make decisions.

There were a few Series A funded start-ups as competition, but the overall category was still in its early days of adoption. We quickly did ~15 exploratory customer-conversations in the US to validate the macro need for our product. The overall response was positive — “I’m sure it would help X”. We believed that we could make a mark by creating a superior product.

We estimated Average Contract Values (ACVs) for them to be in the range of $200K-$1M (based on market research). Sales would be highly consultative — requiring nods from multiple stakeholders within the client’s team, with a Median cycle of 9 months. The Product Integration process would be elaborate — requiring workshops to navigate Integrations that offered new ways of managing inventory with a median cycle of 6 months.

However, we felt that India could still be our starting market. As founders born, educated, and employed in India, we had an understanding of the Indian market, and network here in India. India was the home turf. So even though our goal was to build for the US, we wanted to test the waters first here in India, learn beginner lessons, and warm up with a few small wins here to prepare ourselves for the US.

First Steps

We started with workshops with Indian prospects to understand their pain points and the different use-cases that a platform like ours could power. Through these workshops, we got a sense of what the MVP should be and also developed relationships with prospects. One of the prospects also became our first customer.

And then we got a few more. The Indian clients saw value in our offering. With this confidence, we raised a seed of $500k. During the next 9 months, we iterated the product with 2 paid Indian customers, built a team of 5 hungry engineers, had a revenue stream, and pipeline of potential customers in India.

Things looked promising in India. We were well on our way to What we had set out for as our goal in India — first learnings in building a company, selling, raising money, hiring and inspiring a team, and most importantly the satisfaction of paying customers. We were as warm as it could get to get going to the US.

But was 9 months too long to have spent on this? We’ll never know. We had not yet taken feedback on a working-product in the US because we were doing it in India for Indian customers. We were yet to validate the budgets of potential US customers because we were doing it for the potential Indian customers.

We had effectively parked deeper product validation in the US for later because, by now you know it, we were doing it for India.

The US-India Trap

9 months into our journey, we had a decision to make — “Shall we soar higher in India by capitalizing on the momentum gained in India, or flatten the growth here to focus on building for the US? ”.

We weren’t large enough for one of the teams to continue building on the India growth on autopilot, while the founders focused on the new market. Our nascent stage in India demanded active involvement from all founders. We needed to choose one market to put all our energy in.

We decided to stay put in India for 2 more quarters, as we had built a healthy pipeline of opportunities here. We also felt obliged to show growth to our seed investors and early employees. We began to onboard new Indian customers.

As we iterated on the product for them, our product-discussions kept circling back to whether the product direction would be Reusable for the US. Our mind was set on India's growth while our heart was in the US. Our legs may have been on two boats.

We just didn’t spell it out to ourselves then. And as we all know, it does make a heck of a difference.

Finally, 15 months after starting the company, we decided to put a stop to this confusion and have one of the co-founders (me) focus on figuring out customer-needs and product-fit in the US.

Adapting to the US

As soon as we hit the road in the US, there were a few upfront realizations:

1. This wasn’t home turf and there was no cushion of pedigree. Getting meetings from prospects wasn’t as straightforward as it used to be in India.
2. Unlike in India, we needed to set up a demand-generation engine (LinkedIn, Email, Advisors, Contract Sales Resources, etc.) and set up marketing-content (Decks, Website, Blog, etc.) to support sales. Basically, it was a whole new ball-game. Though the confidence from having sold in India came in handy, most learnings didn’t; a whole lot of unlearning and learning laid ahead.
3. We observed the following differences in how the two markets approach vendor-selection

During this time the following in handy for me:

1. Having a sales-coach to help adapt.
2. Having an advisor to help with a warm introduction, someone who had sold to the same customer segment and was in my situation 3–5 years ago.
3. Joining an accelerator program. We did YCombinator. This helped establish a base of peers (it’s lonely in the US) and open up the network of US investors. We also did Target Accelerator, which added credibility while we were doing US GTM.

Learning from Early Product-validation in the US

1. The macro-validation checked positive. The core hypothesis behind what we are building got validated with conversations with multiple CXOs.
2. Use-case in India did not directly fit in the US. However, we found another use-case relevant to the US. We were a bit hesitant to decide to go after this use-case as that would mean a delay in US GTM, but after a lot of deliberations, we decided to let the customers direct us.
3. We also learned that the Indian-users’ personas and their workflow were different from US-users. Also, unlike Indian-users, the US-users needed a completely self-serve product. US-users also assigned a higher value to end-to-end automation, as compared to our customers in India who were very ROI focused.
4. While we could leverage our current platform, we had a lot of work on the product, marketing, and go-to-market planning ahead of us.
5. Enterprise Customers liked our solution approach, but they were skeptical about betting on a startup. Almost all vendors claimed to have superior algorithms, so it was hard to differentiate prima-facie. Further, evaluating us required customers to move products in the physical world based on our recommendations, which was a high risk. Only simulations and scenario-analysis weren’t convincing. The Indian customers added limited credibility to us.
6. Customers had budgets for POC (Proof of Concepts), but for them to sign a Letter of Intent (LOIs) for long-term contracts we had to show a proven product. This was a reflection of either of the following: (1) The problem area that we were solving didn’t feature in their top priorities. (2) They were hesitant to bet on a startup to solve this problem. It wasn’t evident which of the above two was the real reason.

This being said, we wanted to make a dent in the US and we got going.

US GTM

We decided to pause India-growth and any further product-development for India and we started building the product for a US-launch. Our team launched the first version in two months.

We targeted smaller retailers in the US and gathered interest in the form of paid PoCs (Fixed Price) from some of them. Almost all these conversations were still ‘push’ driven sales and there wasn’t a very strong ‘pull’ from customers. Most prospects were still debating whether this is an immediate priority amidst other projects that they were doing. As expected, they weren’t willing to sign long-term letters of intent (LOIs). We were still away from a PMF even for smaller enterprise customers.

Like any other PMF journey, this was expected, but the problem was that we were going to embark on it 18 months after we first launched in India.

We needed time for more iterations. However, Covid-19 hit at around the same time when we needed to work closely with the US-customers. Our target segment (Fashion Retail) was badly hit. All investments in experimental projects were put on hold. In some cases, our key sponsors even got fired.

We did not get the luxury of time. We decided to shut down operations in Jun’20.

What I would do differently, if I build from India and go after Enterprise SaaS Market in the US again

1. I will be thoughtful about the macro opportunity or industry trend that I am betting on. Timing is important (the eternal “Why Now” question). Any of the below factors could help drive conviction on ‘right’ timing: (1) Regulatory change in the industry, (2) Changing Consumer Expectations / Behaviors driving an industry to adapt, (3) Technology shift enabling something that was not possible before unlocking tremendous business value for the industry. These are difficult to sense if you not from the industry and chances are you may get the timing wrong, so it’s helpful to have someone on the founding team (can be an adviser as well, but should have skin-in-the-game) who is from (or served) the same industry that you are trying to disrupt.
2. I will be thoughtful about the first product (foot in the door) that I choose to build. I will prefer it to be, (1) Easy to evaluate (working demo under 4 weeks), (2) ACV under $20k to get started, with a single stakeholder (preferably business user) as the decision-maker, (3) Shorter sales cycle (under 4 weeks), (4) Possible to sell over a video call, (5) Can work with out-of-the-box integrations. It is 10 times easier to get into an enterprises bottoms-up with a line managers budget, than if it requires you to align with IT.
3. I will think long term and spend much lesser time talking to Indian customers focusing only on US customers to validate the product’s needs and willingness to pay.
4. The only reason to work with Indian customers would be if I need to build integrations or gather initial data to setup the data models (if applicable). I may at maximum on-board one or two customers in India for this. With these customers, I will not spend engineering efforts on building front-end or workflows in India. In other words, I’ll be wary of taking an in-between call — A call that neither focused on building for big revenue in India nor a call to figure out a PMF in the US.
5. I will not raise any money before getting early indicators of PMF in the US. In my opinion, customer-validation can be done in under $10k over 3–6 months, with a maximum of 1 visit to the US to at most 30 days.
6. Finding PMF is about, (1) Reading the ‘pull’ from the market and not ‘push’, and (2) Identifying the right customer segment who needs the product badly as compared to existing alternatives. One of my learning at YC has been that in the early stages it’s better to build something that a small number of users love, than what a large number of users like.
7. For getting early PMF indicators, while still in India, I will do conversations across 3 different levels (CXOs, Sponsors, Users) in the US. I will keep a good mix of customers of different levels of tech maturity (gauge based on tech stack, the median age of leadership, and whether they are buying from other startups), relevant behavioral segments (depending on the problem), and revenue size (SMB, Mid-Market, Enterprise).
8. I will start the conversations with potential Early Adopters in a segment of users where I think the product would be most applicable (hypothesis). To start with, I will have a conversations with at least a few customers (2–3) across segments as I keep refining the hypothesis of who my early adopters will be. I had written a twitter thread on this.
9. With CXOs, I will ask them to list their priorities and budgets, share vendor evaluation criteria (preferably ask for RFPs) and cycles. I will ask them to rank the priorities. Ex-CXOs and current CXOs respond well on LinkedIn (but not someone who left the company more than 1–2 years ago). GLG is also a good source to get these interviews. My learning have been to seek advice from this segment of customers, rather than selling to them in early stages.
10. With Sponsors (VPs / Senior Directors), I will pitch the product to validate what I am building against the top few things they want to solve. I’ll be wary of the fact that — when you talk to a customer about a specific problem, they will naturally “focus” on that problem and give feedback at the exclusion of other problems on their list of priorities. To bypass it, I’ll look for evidence of the effort that they are already making to solve my problem, as that is a better reflection of their intent. This is a very good video on ‘How to talk to users’
11. With Users, I will have conversations to learn how my solution would be a part of their day to day work and fit with other solutions that they use. I will show them what I have built (or plan to build), rather than taking them through a pitch deck.
12. Once there is some sense of customer-validation, I will pick 1 industry-conference where my customers visit. I’ll set up a booth there to pitch the product and validate responses. I’ll be watchful of conversion numbers (% booth ‘relevant’ visits that convert to demos and sign-ups) for the different customer segments.
13. I will crack the US GTM by working with US SMBs / Mid-Market and then move up to US Enterprises in the growth stage. The India base has significant cost advantages to target US SMBs / Mid-Market because of the lower cost of Go To Market.
14. I will be careful about whom I select as my first few customers. I will pick a growth stage company that is tech-savvy, has an acute need for the product, and have the patience of iterating with me.
15. While building the product with the SMB / Mid-Market customers, I will keep doing a few workshops/customer conversations with enterprises to ensure that I am building the right product applicable to them. This is also a great way to build relationships to break into these accounts.
16. If my solution is not applicable for US SMB / Mid-Market customers, then I will consider boot-strapping with a consulting business with US Enterprises and being razor-focused on the path to a product.
17. To start with the sales team can be in India when I am targeting smaller ticket sizes, but with time the outbound sales and customer success teams will be in the US closer to the customer as you start targeting enterprises. (Post-COVID)
18. I will bring a Co-Founder on-board from the US ecosystem. This should ideally be on Day Zero, but if not that then early in the product journey.

Please take these opinions with a ‘buckets’ of salt. Pick and choose what applies to your context.

I am happy to chat more if you would like to and brainstorm what may be applicable in your context. The best way to reach out to me is to mail me at ankjain8609@gmail.com. You can also DM me on LinkedIn or Twitter. I have also written a short post with concrete ways that I can be of help to founders.

Footnotes

We were building a ‘Modern Inventory Management System’ for fashion brands (eg. Levi’s), where physical stores would fulfill online orders as well. We would drive optimal inventory decisions like product re-balancing, replenishment, and order routing. Unlike the legacy systems that treat online and offline channels in silos, our systems would solve them in tandem. Our thesis was that retailers will not replace their legacy systems and legacy systems won’t build sophisticated predictive analytics. We would be part of large digital transformation budgets for retailers for the adoption of data-led practices to improve profitability. We picked fashion retail is our first target segment as it was ailing globally (shrinking profits). Predictive analytics solutions to improve their profitability seemed a good macro to bet on.