3 Tips to Succeeding in Your Market Expansion

A month ago I was invited to a 500 Startups: Insider event to speak to a room of early stage founders on “A Crash Course on Market Expansion”. After having spent the past year advising founders across various sectors (education, healthcare, e-commerce etc.) on their market entry strategy in Asia, as well as operationally helping to scale startups like Homage, Carousell and Sandbox VR in the region, I must admit that it was challenging to try and condense all of those learnings into a 20-minute presentation.
But I managed to put together a couple of slides for the presentation and am now uploading them after receiving requests to do so. Looking at how brief my bullet-points were on the slides, I’m also going to take this opportunity to highlight some of the key points I covered. In this post, I’d jump right into my sharing on operating principles in market expansion.
Allow me to preface this post by the fact that expanding into a new market is a huge undertaking. I don’t see it as any different to you starting up as a founder all over again. From setting up the business entity and registrations, bank accounts or employment contracts (all the boring stuff) through to striking up your first local partnerships or closing your first sale in a market where (most likely) your partners or customers don’t know you yet.
On top of that, your customers are also never the same, your relationships or networks are almost certainly weaker than in your home market, and it can appear completely intimidating venturing into this new country / city you don’t know well. While you shouldn’t let your fears paralyse you, in some cases, it does make sense to not enter into a new market — be it for strategic reasons or timing. I touch on this bit in the presentation as well — why in some cases founders should not prioritise expansion, as well as the pre-requisites you need before entering into a new market. But I’ll leave that to another day.
So, assuming you’ve got that bit settled and now you’re just trying to figure out how best to succeed, I believe there are 3 main operating principles to bear in mind.
1. Figure out what are your most critical assumptions, and test them in the lightest, cheapest ways possible
In line with the Lean Startup methodology which has since become one of the main operating bibles in the startup world, this principle is also something that our team at HYPE Asia care deeply about. Because you’d never really know how customers are going to react to your product until you speak with them — or even better — start to put it into their hands.
Coming from someone who started out his career as a management consultant, the following advice from me might sound paradoxical: but go lean on your surveys or market research. Don’t get caught up in analysis paralysis; just go into the market and test out your key assumptions.
The great news is, that in this day and age, there are a ton of tools or services which enable you to do so. In less than an hour, you can get a landing page set up via Squarespace, Unbounce and the likes. You also no longer have to go on the hunt for the cheapest office space and commit to a 6-month lease, because the surge in co-working spaces now allow you to easily pay per month (or even per day) for a hot-desk along with a proper office address. Or take things a step further and get your customers to really put their money where their mouth is by crowdfunding pre-launch projects simply with a campaign page on platforms like Kickstarter.
To give you an example, I worked with a founder of an EdTech startup with an AI-driven math learning app for iPads / tablets who was looking at market expansion and prioritisation of efforts into several new markets including Singapore and South Korea. While we did the research and spoke to tons of people to help us understand customer needs and the market for the product, we also recommended simply creating a landing page with a product video and waitlist form. Spend some digital marketing on it (another great tool for blitzscaling) and figure out if there is a demand for it, instead of spending more than a month trying to localise the product to local education curriculums before getting market feedback. Alternatively, bring the product down to classrooms for a limited period and observe how students use the product.
2. Be adaptable and localise
It is vital that your new market leads work independently with a founder’s mentality. You’d often be surprised at the nuances in each market, even when you’re comparing between “similar” ones.
Homage is a Singapore-based startup providing personalised in-home caregiving and nursing, and the imperfect (but likely a lot simpler) way to describe Homage would be “Grab (or Uber) for in-home caregiving”. Over the course of a year, our team led Homage’s expansion from Singapore to Malaysia, also squeezing in an expansion to City #2 in Penang before our handover.
While Singapore and Kuala Lumpur really isn’t all that different — the cultures, languages we speak etc.; our supply operations processes (i.e. recruitment of nurses and caregivers) broke when we tried to transplant them to Malaysia. Homage’s tools enabled a self-service process for applicants to schedule their appointments, sent them automated reminders and enabled them to upload documents and more. This process ran almost seamlessly in Singapore, with interviewees coming through the office door almost like clockwork. But in Malaysia, the process fell apart with most applicants (we later realised) rarely using their emails, resulting in probably just 10% of them selecting an interview time-slot after registering their interest on our website. As a short term workaround, our team in Malaysia instead had to send out manual Whatsapp messages or dialled follow-up calls to the applicants.
And even within Malaysia itself, this problem was also further exacerbated expanding from Kuala Lumpur to Penang.
It is vital to hire the right type of people who are fast and adaptable, but it is equally important to empower them with the autonomy to make decisions and the resources to execute on them.
While Uber’s expansion into China isn’t always seen as a success story, from an operational standpoint, you’d actually have to admit that they did pretty well. They entered China as a late entrant when there were already two extremely strong competitors (DiDi and KuaiDi), and managed to end up with a 20% shareholding of the market leader in two years. This was really only possible because they created SWAT teams in each city and had an extremely aggressive strategy, empowering local city and regional managers to break all things (like marketing guidelines) while launching hot-air balloon rides or puppy delivery services for media attention in order to penetrate the market.
3. Align and integrate (not command and control) new markets from HQ
One of the greatest mistakes we see founders do when it comes to market expansion is to try and remote-control their new markets from HQ. At the risk of sounding naggy, here’s it again: entering a new market brings a whole new set of challenges. Unless you’re on a lean, pure-distribution market expansion strategy (e.g. you have a mobile app that you just need to market & distribute), it is crucial to balance local team empowerment and HQ team involvement and buy-in.
While you should hire locally to ensure you have team members who understand the market nuances, you should also get your HQ team to spend time in the new market. This is especially so if certain teams (e.g. Product, or at times Marketing or User Operations) are centralised — nothing beats spending time in the market to get a sense of how users hear about or interact with your products or services. GoJek also often talks about the importance of this, and has set up initiatives for engineers in India to spend time in Jakarta and see their product in action for themselves.
Finally, this is much easier said than done, but to drive ultimate alignment, you also have to make sure that your OKRs and targets are also aligned between the new markets and HQ. With any centralised teams, ensure the leaders are also accountable for expansion outcomes — e.g. having the product lead be accountable for product performance and business objectives in the new market. This however, is a fine balance and is something which you should invest time in planning out, to prevent a situation where leaders are stressed up managing two sets of targets while feeling a loss of control and ability to change things in new markets.

Have market expansion in mind and don’t know where to begin? Feel free to reach out to me at bolong.chew@hypeasia.co, or comment and discuss down below!
Originally published on bolong.co, November 6, 2019.
