Practical tips and insights from people who’ve been where you are and have the global companies to show for it.
So you’ve decided international expansion is the next step on your company’s journey. Gulp.
Expansion is a difficult undertaking, high in both risk and potential reward. In order to help you with this big step, we’ve put together a collection of practical advice that will (hopefully) help you avoid some of the pitfalls others in your shoes have made.
Think of this as a pocket-sized field-guide made from learnings from our own international expansions and the expansions we’ve enabled for our portfolio companies.
Then we finish with the 5 international expansion rules every Nordic software company CEO should have tattooed under their eyelids.
Advice is only as valuable as the giver, so let’s meet the brains behind this ebook’s insights:
— Co-founder, Operations, Monterro
You name a role in the software industry, Peter’s done it. He was CTO of Front Capital Systems, CEO of Protect Data and Episerver, and President of Pointsec Mobile Technologies. He’s managed many international expansions, and even moved to Chicago for three years himself.
— CEO, Outpost24
Martin specialises in leading innovative companies to major success. For the past 25 years, Martin has held positions such as President and CEO, sharpening his focus on solid business performance and extending business impact globally.
— CEO, Operations, Monterro
Gustav has over 20 years of experience in software, in such roles as founder and CEO of Netstar, COO and VP Sales at Episerver, founder of Trive and co-founder of Wiraya. He’s also a seasoned international expander, three of which were to the UK (where he even moved for one).
— CEO, Palette Software
Mats started out as a pilot in the Swedish Air Force, before moving into software where he’s held roles such as VP and Managing Director of QlikTech, Head of Customer Intelligence for SwedBank, Managing Director Nordics for BMC Software and VP Sales at Tilgin.
— CEO, Viedoc
As CEO of Viedoc, a clinical trial software company, Mats has overseen the global growth of the company both in terms of customers and bases for the company. Viedoc has over 200 customers globally, and offices in Sweden, Japan, China and USA.
It’s safe to say, these guys know what you’re going through.
Okay, first things first, where are we expanding to? There’s a tendency for Nordic companies to first consider expanding to other Nordic countries. But geographic proximity doesn’t always mean the best fit. So, how do you identify the best fit?
Are there any obvious opportunities presenting themselves? These could be warm leads in other regions, a pre-existing relationship with a certain region, or even just an alignment between your software’s capabilities and another region’s needs.
As much as this will hurt to hear: it doesn’t matter how good your Nordic references are. Local references are gold, so any way to get a local reference will save weeks, if not months of door-knocking and cold calls.
So you need local customers to get local customers? Pretty much. There is one tried-and-tested method for cracking this Catch-22 though: Identify if any of your current customers have subsidiaries in other countries and try to convert them first.
Mats Klaar“Our first expansion was moving into Japan. It’s a special market but is 8 hours ahead of Sweden. We caught a wind of opportunity. One of our co-workers had good knowledge of the market, then by luck and hard work we met a key opinion leader in this niche market that liked us and championed our entrance.”
It’s important to identify market size/dynamics, competitors, customer behavior, customer needs, but on the back of the opportunistic thinking. You need to do the desktop analysis, but you shouldn’t over prioritize it. If you go to a management consultancy firm, they’ll spend a month analyzing all the different markets. If you work from the opportunities first you identify where it makes sense to look at, then you research to make sure you’re not missing anything obvious.
If this is your first expansion, start with one region. To put it simply, right now you don’t know what you don’t know. Things you didn’t know could be an issue will end up causing significant delays. Not just to your expansion, but to your roadmap as a whole. Seriously.
On the subject of starting small, don’t try to migrate your entire product portfolio at once. Identify a vertical that you can gain success in, then land and expand.
Peter Larsson“The most important question you can ask is: What impact will this market have on my current roadmap? You can divide the markets and identify opportunities, for instance revenue potential, but you’ll get a sense of all that stuff. For some regions, like taking Itello to the UK, expanding is like starting a new company.”
There are few decisions you will make in the life of your company that are as important as your first international hires. They can be the make or break of your expansion’s success, and you often won’t know if there are problems until a year or more down the road. By which time you may have to start again, losing years of progress and customer trust. Get it right the first time.
You’ll need a minimum of two people to start with. One sales, one customer support. Hire the sales role locally, they will know the culture of the region. This will be vital to actually make any sales.
Move the product expert from the mothership, they will know the culture of the company. This will be vital so the offshoot feels like part of the same company.
Hard-won hint: Don’t hire the person who knocks on your door.
When the rumours start to spread about you expanding, you will get someone who turns up at your door with a great looking CV, asking for a job. Do not hire them. We’ve seen this happen many times. It never works. Just don’t.
Mats Ferm“How do you succeed with an expansion? It’s 100% about the team you build. The business plan you can change, but if you don’t get the right people you’re pretty screwed.”
Understand the hiring process in the country you’re moving into.
Hiring a salesperson in the US is not like hiring a salesperson in Sweden. The compensation package will be very different. Go into the process blind and you’re either going to be shocked by the difference and hire someone cheaper (but not as good) or get ripped off.
You’ll find cultural differences in any region you try to move into, both in terms of pay, and how staff are treated. One region’s rock-star shout-outs are another region’s public embarrassment.
Gustav Lagercrantz“It’s difficult to get the right people on board in your local market, but it’s 10 times harder in a different market. In particular if you try to recruit in America. Their CVs look outstanding, then 9 out of 10 recruitments will be failures. That’s why it’s so important to use existing contacts.”
Hiring internationally is hard, and not just logistically. In international markets, CVs and references can look glowing, and the person ends up being wrong.
Start by looking for a connection in your contacts. Talk to those whose advice you trust about the role you’re looking to fill and see if there’s anyone they’d recommend. Even if they’re not an ideal long-term pick, you know the first person through the door is trustworthy.
Make it a rule that every new hire is interviewed not only by the person who’ll be their manager, but their manager’s manager too. It kills nepotism and breeds community. Do it.
Once you’ve got your hires, you enter the balancing act of making them feel utterly local, while feeling like a unified part of your company. So how do you do that?
We see a stark difference between companies where someone senior spends significant time at the new office and ones which don’t. For Viedoc in Japan, that meant someone going out for two weeks at a time, six times a year.
If actually visits aren’t possible, find whatever way works for you to get truly involved with the new office.
All the time. Even if there’s nothing to talk about. Have a regular call booked in your mutual diaries and stick to it no matter what.
Martin Henricson“If you employ someone who’s supposed to be responsible for the local market somewhere then you need to be close to them. Because otherwise that person might start to think ‘I’ve been put here on my own and if I succeed I’ll be a big hero, but if I fail it’s easy to get rid of me. You need them to feel safe and secure, because if they don’t feel safe they won’t perform well for you.”
New people will bring with them ways of working and tools (CRM, marketing automation). You need to get them using your company’s methods and tools or you’ll end up with incompatible teams.
While you have to be strict about enforcing some things to stay the same, it’s important to listen to what the new region needs in terms of change.
There may be customer needs that you hadn’t accounted for or don’t see the need for. Staff requirements that you don’t recognize. Ignoring these is a sure-fire recipe for failure.
Translating your offer to a new region is about far more than just translating sales collateral. It may be tempting to use agency partners to make the first leap, but if you don’t have face-to-face sales people, you won’t fully understand the market, which means you won’t fully integrate. And only an integrated offer will truly stand the test of time.
Peter Larsson“People will have a tendency to use tools and processes they have experience with, but you need to force them not to. Otherwise you end up with islands of processes for how your company is run.”
Carve these into your mirror. Write them on the ceiling above your bed. Print them off and staple them to your loved ones. Just don’t forget them.
You can’t be all things to all people straight away. Start way narrower than your offer at home. It will feel strange but it will pay dividends in the long run.
With the best will in the world and the best team known to man, there will still be surprises. Prepare for this expansion to affect everything.
Hire local, hire smart, pay them and treat them the way the local market dictates. Any sort of ‘but that’s not what it’s like back home’ thinking will hinder the success of your expansion.
If you can, go there. And not just for a meeting and a beer. Spend two weeks there every couple of months. If you can’t, call them all the time. Even if there’s nothing to talk about.
It’s about way more than just translating assets. There will be ways of working, ways of making sales, methods of customer service, tone of voice in marketing, and the list goes on (and on).
We’re Monterro, an investment firm (of the get-your-hands-dirty with strategy and operational support variety) that specializes in Nordic software firms looking to expand globally.
