So, you want to expand your business into the United States, the land of the free, the home of the brave? Good luck… Chasing the American Dream (particularly if you aren’t American) is a fantasy that has entrapped aspiring, would-be CEOs and entrepreneurs for years. For every one successful entry, there are four that have failed .
But the definition of the American dream has also changed dramatically since it was first introduced as a concept. In reality, for many tech businesses based outside of the US, they see breaking into Silicon Valley as breaking into the US. This seems to be their own American dream with the hopes of quick access to investment, influence and exposure. Concur the Valley, concur the country.
Breaking into the US market isn’t for the faint-hearted. It won’t be easy, will likely be expensive (Tesco failed after investing £1.5bn ), and you have to deal with an onslaught of laws and regulations you didn’t know existed, but it can be done.
Winning at home first
It is a great ambition to want to expand internationally, just make sure you are well-prepared before making the leap:
- You need to have established yourself in your home market first. Build a strong and loyal customer base. Have you done that? Yes? Great…
- Make sure you understand if what you are selling is what people are buying… Does the US need or care about your tech? They do? Wonderful…
- Spend the time, money and energy to do your research, write your business plan, and surround yourself with the right team and advisors to help you succeed in this quest? Done that too? Perfect…
Winning in the US
Tip 1: Check your Tech
We often see companies with the ‘best piece of technology ever’. They’ve spent years of their time and money tucked away in the back corner of some incubator developing the next best thing, but they’ve failed to understand who their market will be.
Just because you can build it, doesn’t mean people want it…
HAILO, a London-bred taxi hailing app sought to take on rivals Uber and Lyft in the US. They failed to understand that it’s not just the technology that needs to be solid, but the rest of the business model does too. They were overshadowed by the stronghold Uber and Lyft had, and after just a year and a half called it quits .
It is crucial that you do your research. Find out what the US market values, what new trends are taking off, which part of the country they are most engaged in. And importantly, can you make a business out of your tech in this new market? Will the pricing model, sales strategy & growth plan that projected you to success in your home country have the same impact in the US?
Tip 2: Stay out of the Valley
The rate of tech development in Silicon Valley is staggering. However, it is important to note that although it still tops the list in the world as an ecosystem for tech companies to spawn and develop, other cities are close at the heels.
Unless you’ve got serious momentum already, do you really want to try and standout in the oversaturated tech-cesspool in Silicon Valley?
Why not take it to some less-popular but growing hubs like Boston, LA or Seattle? The potential to make a bigger splash in a less populated environment may give you enough leverage to make the inroads needed to grow.
Tip 3: Pay your taxes
What does the President of the United States, a self-proclaimed business genius, have to say about you wanting to come in and set up shop?
Corporation tax just got cut from 35% to 21%. In the long run this will should have a positive impact on future earnings of your business. However, the short-term implications can be quite negative, especially if you are already somewhat established in the US. This change makes it harder to deduct past losses from future tax bills.
If your business is still in start-up / growth stage, there is a high potential that you are operating at a loss, and as such, this tax reform could push you over the edge. The net result could be that investors shy away from the investing until profits are turned… potentially adding years to your forecasting.
A little relief…
Understand where you are best placed to register the business, understand the implications of the regulations around business in the US vs your home country. Look for funding, for R&D tax reliefs or grants to offset against losses you may incur.
It won’t be easy, but it will be worth it
UK born and bred Huddle has successfully navigated its way into the US market. This SaaS content collaboration tool is used by more than 160,000 businesses worldwide, but it has its roots just South of London.
So how did Huddle break into the US?
From the beginning, the founders decided it was their ambition to be an international company, and as such, they geared up from day one… starting with the name. They assumed (correctly) that having an American-sounding name and brand essence was an important step Westwards.
The second big thing they did was create early partnerships with big players in the US-market: HP and LinkedIn.
Classically, they have been through a few funding rounds. Their Series A was the typical seed funding needed to continue growing… but it was by the time they raised Series B that they discovered a key cultural difference between US / UK investment.
Go big, or go home
Dan Steinman of Gainsight has picked up on this insight that American investors are more inclined to take [bigger] risks than British VCs. Mindset in the Valley is very much risk/reward. Betting big with a founder and tech that has ambitions of global domination, not the founder who wants to simply achieve slow and steady growth in a niche market.
With the right mindset, quality of tech and growth ambition, the dream of breaking into the US market can become a reality.
“Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty… I have never in my life envied a human being who led an easy life. I have envied a great many people who led difficult lives and led them well.” ― Theodore Roosevelt