Building A Localisable Product
For countries in Asia.
There is a big difference between building a scalable product and one that’s localisable. A truly scalable product is also localisable. This nuance is often missed when founders calculate their total addressable market (TAM). For the most part, they look at shared customer characteristics, for example, language and consumption patterns in particular countries, and assume that their product will resonate.
This is less of an issue for founders in the US and China. The high internal consumption in these countries keeps founders and their teams busy serving domestic customers.
In smaller countries, like Australia, founders are forced to look offshore to scale. Historically, this has meant planning a US market entry for two reasons. First, access to capital is greater in the US and due to the culture of innovation and venture capital, founders can more easily map to investors who are aligned with their vision and opportunity. Second, the ability to understand consumer trends where target customers are relatively homogeneous between both countries is relatively straightforward.
That said, the trade-offs are also apparent. The US is a large geography with diverse sub-cultures, multiple time zones, a nuanced (and highly litigious) legal system and unstable trade and immigration policy.
While none of these factors is insurmountable, they do impact business development and increase costs. The point is however that for the most part product in this context doesn’t require significant changes to be localised.
This isn’t true when it comes to Asia.
Building localisable products for “Asia”
Like 45 countries make up Asia (technically 48 if you include Russia, Kazakhstan and Turkey, each of which has land in Europe)
Like English is spoken by some 300M people but dwarfed by the 500M who speak Hindi and 1.4B who speak Mandarin and Cantonese.
Each country has a unique collection of sub-cultures and most have a growing middle class who look to western lifestyles for inspiration on how to live.
These characteristics create a unique set of opportunities and challenges for founders in Australia and across Asia.
The opportunity lies in fuelling that new consumption or providing a remedy to deal with the impacts of that consumption (e.g. in personalised healthcare for a growing obese population).
The challenge lies in localising products for a selected number of countries and cultures. In the same way this challenge should not be underestimated, the opportunity should not be ignored.
A checklist for making a localisable product
I have learned a number of lessons from building companies in Asia. And because introducing Drop into selected Asians countries will be a large focus for my team over the foreseeable future, I would like to share the framework I am using to navigate this opportunity.
I caveat this by saying this framework will evolve and I look forward to connecting with other founders and investors to discuss further.
1. Acknowledge the nuanced pain-point
While the regional macro conditions might suggest an opportunity, each geography will have a nuanced version of the story. Invest time on the ground understanding the issues in detail so you can design with the end customer’s culture and their potential adoption rate in mind
2. Be partnership driven
Expect that in order to be taken seriously a local business or government will need to vouch for your business. And I’ve written before about the value of growing as an ingredient product. Western founders often do a poor job of understanding their Asian competitor landscape. This is usually because they aren’t connected into the venture ecosystem (or have difficulty Googling who to look for) but it can also be because they naively believe their product couldn’t possibly exist in Asia (big mistake)
3. Incentives are (still) superpowers
Identify and understand the flow of incentives including those that relate to financial benefits, control and status (in and across organisations, industries and governments). The conclusion might be that your company and brand should attempt market entry independent of a local partner. I would be surprised if that was the consistent conclusion.
4. Quality wins
While cost is still an important factor of closing deals, some countries in Asia can present a quality premium. This is particularly relevant to a number of countries including but not limited to Singapore, Australia and New Zealand. This is largely due to the standards and regulations that companies need to adhere to in their home countries.
5. Optimising for language isn’t enough
Language is an expression of culture. And culture is complex. The best illustration of this is to consider any language you are familiar with. Each one (including English) contains different dialects and while translation software is improving, creating a language-specific version of a product in and of itself won’t cut it. Because more often than not, it will miss important cultural cues.
One Last Thing…
Up until the mid-2000’s many Asian-based companies, particularly those in consumer electronics, invested heavily in ‘westernising’ their brands to increase their appeal and capture market share. The rising consumption in many Asian nations and the opportunity this presents has meant that western brands don’t only have to create localisable brands, they need to compete with local incumbents.
So here’s the punchline: Identify and engage with the best possible partner(s) to learn and build compelling, localisable products. You could start by going it alone but experience tells me that would be a mistake.