My friend Loic Le Meur wants to convince startups to avoid the lure of focusing only on local markets. He asked to write the guest post below, which I think is worthy of debate.
Loic recently moved to San Fransisco with his family to build and launch his new startup, Seesmic (I’m a small investor in Seesmic). For more from Loic, see his Ten Rules For Startup Success, which created quite a stir last December. His personal blog is here.
His post and a related video follows:
When the commercial Internet emerged in the early nineties, the first startups were very local, addressing their local markets. Take search for example: we had search engines all across Europe using different technologies, different names and indexing local content in their local language.
None of them have survived; they were all acquired or killed first by companies like Yahoo, and then later by Google. It reminds me how fast an established leadership such as the one Yahoo had, can disappear in a record time. French or Germans were mostly looking at French or German sites and not so much outside. We had hundreds of auction sites like EBAY. How many are left now?
This is all over, startups have to think globally now, unless they want to just sell for cheap. Look at the Internet in Europe: how many world class Internet leaders there? We had Skype, it is now Ebay owned. We had the leading european travel site LastMinute.com, it is now owned by Sabre. I could go on and on – most european companies that could become world leaders are now American owned. This is sad but just a fact. Of course there are exceptions like the dating site Meetic that many tried to acquire and remains European, but there aren’t many like these.
Here is my advice to startups just starting to think about their product and target market:
1. Think global as you create the business
It is very difficult because our natural tendency is to think local, to eat lunch and dinner with people around where we live and think in our own language. I lived in Paris most of my life and I was naturally addressing the French market first. Moving yourself and your family to a very international city like London, NY or San Francisco helps
2. Move to Silicon Valley
Talking about a move, that is clearly the best environment in the world for a startup. It is where you can gather the best team and the best partners. It increases your chances to get big faster. The European video site Dailymotion was launched before YouTube, was not a copy cat, but YouTube became larger more quickly and was sold for over a billion to Google while Dailymotion still keeps raising funds.
3. Create an original product: new and different
Digg or Twitter have created new social relationships and even though they have hundreds of copycats, they will remain the originals. The best way to succeed is definitely an original and great product.
4. Do not create a copycat, unless your goal is only to get acquired
Do not do copycats, even if you are in a remote market and even if it is tempting, unless you are just here to create a company and sell it quickly to the leader, which is a business model that some entrepreneurs have become masters about. Why not partner with the mothership and launch them where you are instead of copying ? Innovate, do not copy, life is too short for that.
5. Try to raise funds from world-class VCs
They will help you become world-class, but if you are not based in Silicon Valley you have a lower chance that they invest in your company. If you go for local VCs, always take the most international ones.
6. Hire people from all nationalities as much as possible
Americans hire Americans. French hire French. Spanish tend to hire Spanish people. Even if it is easier, you should hire as much as possible a team with as many cultures and languages as possible. Cultural cross pollination is a wonderful way to stoke creativity.
7. Register your domain names in the key countries you are interested in (and the large ones you are not interested in)
A common mistake made by most startups. Very difficult given how rare good domain names have become but you would absolutely try.
8. Protect your brand Worldwide
do not wait to sort out trademark in the key regions
9. Make a site that is language ready day one, even if you launch in English
More non-English content is posted every day on the web than in English. It is ok if you localize when you have built the product, but at least make it very easy to do by separating the language text files of the interface. Obvious? Yes. Do not forget that many languages have words much longer than english words and they tend to break the interface, take Finnish or German and you will see what I mean.
10. gather an international community since day 1
International starts the first day you launch the company. Having members from all around the World will give you different perspective and different uses of your own product. We have not even launched Seesmic yet but we have users from more than 20 countries who came and used it. We learnt each time.
11. Talk to the most active members of the community to help you understand their market and become evangelists there
these active members can be very powerful evangelists in the different countries, they can also help you get introductions to potential partners
12. Create an application that lets your community translate the site by themselves
the way Facebook translated its site in many languages using an application where members could do inline translation and then vote when there was a discussion on the best term to use. This was a brilliant way to come back with high quality and fast translation. It also helps you have languages you would have not even thought of launching. Do not forget what it takes to maintain them though.
13. Languages are not the same in all the countries they are spoken
French in France is different than French in Quebec so is Spanish different in Mexico and in Madrid. Words may not even be understood the same. email for example is “email” in French (it’s just as often the english word) and “courriel” in French canadian. Use “courriel” or “pourriel” (for spam) in France and some people will laugh at you. Same for “chat” which is “clavardage” in quebecois and just “chat” in France…
14. Do not think that Europe is the U.K.
Most US companies launch from the U.K. thinking they are launching in Europe. There are more than 20 languages in Europe, and the cultural differences between a Danish, an Italian and a Portuguese are huge. Succeeding in the U.K. does not mean you will succeed in the Netherlands.
15. Manage costs properly
Going international by creating your own office or dealing with a partner is expensive. Think about incorporating the company in a country you do not know, respecting social and work local laws, accounting, reporting… In some countries work is not flexible, if you had to close the office and fire your team it could cost you up to a year of payroll…
16. Never do a 50/50 deal with anyone
The famous “golden share” is very important. If you do 50/50 deal nobody has control and it leads to a mess most of the time. The best is of course to be in control of your own business.
17. Do key partnerships with large local players
A great way to go international is what LinkedIn has just done in France by partnering with the largest human resource organization, APEC. APEC’s established position on the market will guarantee LinkedIn initial volume and branding.
18. Never trust that if the partner is large your service will be a success
Partnering the the largest ISP or portal in a Country does not mean they will heavily promote you. You are likely to end up as the service #867 promoted on a page nobody watches. They would never do that to you? I experienced this many times… You would better partner with a small site in your space which will really feature your service than a large one where it will be lost like in a Christmas tree.
19. Create an international reseller program
Sharing a nice % of the business with your partners or resellers is a good way to get them motivated. Web hosting companies have been good at establishing worldwide presence by offering reseller programs, partner conferences, joint marketing, etc.
20. Kill your local copycats
Despite all your efforts, you will have copycats in many markets if your product is successful. Try to kill them first, if you are the leader you should have more traction and means
21. Buy your local copycats if you can’t kill them
Can’t kill them Buy the best ones to grow, if they are copycats they do not have that many exits possible, most of the time they were created for you to buy them. Think about making sure the team will stay in place and not only the founders…
22. Be very pragmatic
In some markets it could be a joint venture, in others it could be a partnership with a large player, and other places just creating your own team works
23. Do not apply any of this to Asia
I do not know the Asian market enough to judge what is happening there but it seems that most large US sites that launched in China pulled back or were not successful. The Japanese market has its own leaders, but I wont’ risk an opinion on an area I do not know enough, I would just be very cautious there.
24. Do not apply any of this to Russia
Everybody forgets the Russian Internet market, it is huge and growing fast, the leaders there are local and operated by russians. They even buy American startups – LiveJournal was bought from Six Apart by Sup.
25. This advice only applies to Internet startups
My experience extends only to Internet startups. Other young companies may find that much of this advice does not apply to them.