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Tips on succeeding in the US market From the Silicon Valley Association of Startup Entrepreneurs. Part 3 of the "Accelerating Your Growth Bootcamp" session held at MaRS April 19, 2010.
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1
Chris Gill President & CEO
SVASE Silicon Valley Association of Startup Entrepreneurs
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Source: World Bank, www.DoingBusiness.org Spain Rank: 39
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Starting a company
Employment
Source: World Bank, www.DoingBusiness.org
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Common approaches to entering the USA market….
We have no competitors
We just need a partner
Our techno- logy sells
itself
We will send our best engineer
We can sell to most verticals
Just put a sales person on the
ground
We will just hire more
staff
We only need 5% of the
market
We will manage US customers
from home
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….Resulting Track Record
• Most companies fail to gain traction • Tactical sales instead of strategic business • Wrong personnel • Unfamiliar with local legal, business,
customer needs,culture • Little/No planning – no market analysis, no
localization of products & purchasing options, mismatched sales channels
• Insufficient funding
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Observed Factors for Success
• Strategic imperative for the business • Development of Strategic Plan • Commitment of resources & time • Evaluation, recognition & understanding of
local market conditions • Best people in most important market
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Understand the market and how to segment it
Customers Want Competition
Scalable Business Model
Resources Required
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LEVEL 1
LEVEL 3
LEVEL 2
LEVEL 4
Where you start
Where You’d like to be
Understanding where you fit in the value chain
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Integration
Application development
Nondiscretionary programming/Application maintenance Clients now
Solution
IT consulting, Strategy
Clients 9 - 12 months
from now
Value chain example from Offshore Software Development
Clients 2 - 4 years
from now
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Example from Wireless Games
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Direct Sales
Early Adopters
System Integrators
OEM/VAR
Electronic/Web
Retail
Distributors
Innovators
Early Majority
Pragmatists
Late Majority
Conservatives Laggards
Sales Channels over Product Lifecycle
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Customer Type
Target Market Opportunity
Competitors
Technology Adoption Profile
Marketing Strategy
Communications
Promotion
Profit
Product
Supplier Strategy
Introduction Lead Users/Early
Adopters
Lead Users: 3-5%; 1-3 years
Early Adopters: 5-12%; 2-4 years
Minimal/NA
Strategic advantage motivation
Hi-risk tolerance Competitive
advantage Reference accounts
Build awareness/Gain acceptance
Heavy
Negligible or none (Investing in new market)
Technical Support- intensive
Open to “unknowns”
Growth Early Majority
Early Majority: 15-30%; 2-4
years
Rising/many
Productivity improvement
Balanced risk
Reference accounts (in-industry)
Penetration/Build preference
Branding/Credibility
Leadership Heavy
Highest (price elasticity and growth)
Improvement of market “fit” (Stabilized support)
Tolerates “unknowns”
Maturity Late Majority
20-35%; 3 –5 years
Shakeout/consolidate
Price & ROI aware Risk mitigation Competitive
mandate
Cut cost/max. efficiencies
Customer loyalty defend position/
Cash cow
Reinforcement of brand
Moderate High (volume-
driven economies)
Maximize differentiation
Prefer a “known”
Decline Laggards
Falling numbers Price sensitive Risk averse
Niche ownership/exit strategy
Relationship-driven (predominantly Sales)
Minimum
Minimum
Falling
Workhorse model/line
extension/ Price cuts
Don’t care
Lifecycle evolution and marketing mix
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How long is your sales cycle?
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What we’ve seen fail
• “Shortcuts” – consultants, distributors, commission only reps
• “Budget” approach – send over an engineer for 6 months, expect sales
• Trying to sell existing product/service, without local market analysis
• Recruitment of uncommitted local talent
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What we’ve seen work
• Committed local as part of founding/early team
• Treat as Startup not sales expansion • Detailed, hands on market evaluation • Identification of key reference customers • Localization of product & positioning • Investment in time & resources to acquire
target reference customers
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Example - Transitive • Transfer of Applications across Platforms • Founded in 2000 • US market seen as Strategic Imperative • Initial funding from Pond Ventures • Creation of HQ in Silicon Valley 2001/2002 • Follow on funding from Crescendo & Accel • Acquired Apple as first customer 2005 • Silicon Graphics & IBM now incorporating
Transit into their product offerings • Wrike, Ephox, others, similar
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What if looking for funding too?
• Need to establish US based HQ – no ifs, ands, or buts……
• Lots of local competition – over 6,000 business plans at any one time
• Are you really fundable?