Irrational “inevitability” & other confessions of venture backed European CEOs who launched in the US
Launching and scaling in the US market is hard. We spoke to over 50 VC-backed European CEOs who are on this journey, some with incredible success. While the potential of the US market is undeniable, winning here is far from certain.
Succeeding in the US means overcoming substantial risks as attested by the trail of talented and well-funded teams who retreated back to Europe. In our conversations, even the most successful CEOs had to contend with many unexpected challenges — we hope their cautionary tales will help you think through various risks and plan your own US entry appropriately.
“On reflection, the decision to enter into the US felt irrationally ‘inevitable’”
In their eagerness to seize the US market opportunity, many did not stop to ask whether expanding overseas was in their company’s best interests. For most, there was no limitation on the growth in their home market. The option for continued rapid growth was there to be taken, with no risk of the company reaching a saturation point in their home market in the near future.
“We may have chosen to expand internationally for the wrong reasons”
Worse, some decided to expand internationally to compensate for a lack of growth in their home market, even if their share of the home market remained very small — suggesting that the company had yet to find product-market fit or a repeatable, scalable, measurable sales process in their home market.
“Wow, this feels like therapy”
Yes — this was the reaction from several of the CEOs we spoke to — and it underlined to us how isolated many of the founders felt in making the bridge to the US. The decision to expand internationally was often made quickly by the Board and then left to the CEO to execute with limited further guidance or support.
“The US market is massive, but we underestimated or were unaware of the competitors”
While this observation is made time and again, most companies underestimate the breadth and depth of the US market, its regional differences, and the fullness of the competitive landscape. The fear of missing out is often anchored to a headline market sizing, without an appreciation for the number, diversity and accessibility (or not) of markets that make up the total number.
“Setting up in the US was incredibly expensive”
Again, this is a well-known fact, but all the CEOs spoken to underestimated the cost of entering the US market. The hidden costs included the extent and degree the senior management team focused on US market entry, the time and cost of hiring (and then firing and starting again), and the time and cost of pursuing the wrong strategy and not acting swiftly enough to correct course (as well as all the basic costs of setting up in the US).
“I was not sure whether to move to the US or when to do so. Who would run the business day to day at home?”
If a business is not yet successful and sufficiently resilient in the home market, the expansion adds strain to a vulnerable position. There’s consensus that CEO and/or founder DNA is a necessary (though not sufficient) condition to effective US entry, and splitting attention between the two continents can diminish the probability of high success in both markets.
“We made the wrong first hire and this cost us 12 months”
Hiring strong local talent can be a challenge, as there is intense competition from American companies. The job market is very liquid, driving up prices and lowering retention. Meanwhile, customers expect a local presence and local services. Strong local partners — experts, service providers, strategic partners — are impactful for success.
Knowing which role / level to hire is also not obvious. A B2B business may choose to hire a junior salesperson to surface leads for the CEO to close, as there’s a very limited prospect of hiring an A1 Sales leader to join a European startup with a limited presence in the US. Conversely, a B2C business may opt to hire a senior GM given that there may be data to support US market readiness. The advantage of this later strategy is that US GM can build a quality team around them.
“We could have done so much more before we hired people here.”
Extensive pre-marketing, market assessment and network building are almost always overlooked. The variety of activities that a European business can do before entering the US to de-risk the market entry is often overlooked. Distinguishing between being operational in the US and having people on the ground there full time is critical.
“We struggled to maintain our culture across the two offices”
Every CEO interviewed spoke of the difficulties of maintaining culture across continents, of underestimating the impact of miscommunication and of the toll of constant travel on focus and energy.
Thank you to all the CEOs interviewed — you know who you are — for your frankness and openness. Your lessons will help the next generation who follow in your footsteps! If you’re a CEO or founder of European venture backed business that has raised more than $10M and are currently living and working in the US — consider joining this email group. You will be in be in great company.