Most of the Australian tech companies I've invested in want to expand globally, and the US is generally high on the list. They are either already attacking the US market or planning to enter in the next few years.
Aconex was already an international company with offices in Asia, the Middle East and Europe when we started building our US business, but success there required further reorientation. We had built a solid global culture, but in the US we needed a strong local American presence.
Our experience comes from an Australian context, of course, but much of what follows can be applied to a startup that is entering the US market from almost anywhere.
Australian tech companies need to go global
Almost every Australian tech company has to go global because the Australian market just isn't big enough to build large tech companies.
The US is often considered to be the world's most attractive market, but don't assume this will be your first geographic expansion. Great Britain, other countries in Europe, hubs like Dubai and Singapore as well as some large Asian countries can also be attractive for expansion. They all present their own challenges, but not to the same extent as the US. Hence, building your global DNA in some of these other markets first can help.
At Aconex, we didn't go to the USA first. We prioritized other major hardware stores and first opened offices in London, Hong Kong and Dubai (which was booming at the time), from which we built significant regional businesses. We expanded our global office network to more than a dozen cities before establishing a limited office in the United States, initially just to develop and maintain relationships with large American owners developing projects in other parts of the world.
When we took these first steps in the US, we found that there were few strong local competitors and that we had a clear market opening for the Aconex product. We decided to focus our investments on this opportunity and a few years later half of our executive team, including me, were based in the US and became our main growth engine.
In considering your international expansion strategy, it is important to understand where your investment, time and effort will be focused. Identify the markets that most closely match your goal and vision. Understand the similarities and differences in customer segments compared to Australia. Check the market fit of the product and assess the competition. Make sure that there are buyers for your product and that you can differentiate yourself not only from direct competitors, but also from neighboring players. Finally, make sure that the go-to-market plan you are using in Australia is working or that the changes required are well understood, limited and manageable.
Building our US business has been a multi-year learning curve for us as individuals and as a management team. For me there were five important lessons as well as countless tips that I took with me on the way:
Be ready to invest … a lot
With all the things you did not know at the beginning, you can be sure that building a US presence will take longer and cost more than you think. Despite everything you've learned in Australia, repeating that success outside of your home market can be a long, hard road. You need the capital – and access to future capital – to stay on course.
Time is the other investment that you need to be prepared for. While you no doubt faced challenges in the early days in Australia – think product immaturity or trial and error in your go-to-market strategy – the single-minded attention of the founding team can get you through. When venturing overseas, that attention is shared between international expansion and your home market that pays the bills.
The USA is a huge market. You don't have to win everything to build a strong, defensible position. The market is so much larger than Australia that even a portion of your current customer base can fuel a massive business.
Avoid the early Aconex mistake of trying everything. When choosing our target segments in new markets, we weren't as disciplined as we should have been in the early years. In Australia, we have overseen almost all types of construction projects, including large and medium-sized commercial, retail, high-rise residential, infrastructure (road, rail, airports and hospitals), and mining, oil and gas. In view of the strength of our domestic market in a small market, this made sense. We had a rapidly growing user base as people moved Aconex from project to project while moving, creating a strong network effect across multiple sectors.
In the US market, we initially tried to take the same approach, but found that we were too thinly diversified and could not reach the tipping point of efficiently building a solid user network. It wasn't until we started focusing on the segments where we had the greatest competitive advantage – infrastructure, mining, oil and gas – that growth really took off.
Within these segments, too, we found that further focusing is necessary. We have therefore identified the 100 largest building contractors and plant developers worldwide – many of them, of course, had their headquarters in the USA – and set ourselves the goal of at least one first sale to everyone within three years. This was a significant change in the way we work and from that point on it affected our decision-making, not just in sales and marketing, but also in how we prioritized product development and how we resourced and trained our customer support teams.
We called the initiative “The Big Focus” (in retrospect, maybe not such an inspiring name!) And followed our progress on boards in all of our main offices, on which we put magnetic logos for each new customer.
It is difficult to imagine how we would have been successful in the USA if we had not forced this focus on ourselves and the entire business.
So think about how you address your customers by segment and region in order to increase this initial focus. Pick a sub-segment of the US market where you really differentiate yourself from your competitors. Then identify a region where these target customers are concentrated: New York for real estate or finance; Texas for Oil and Gas; Denver for mining.
With California, Texas, and the Northeast all individually having much larger markets than Australia, given a strong product market fit, there will be more than enough demand to build a large, successful US business.
Build a global team
I've already written about the importance of building a strong leadership team, establishing a common culture, and so on. These become all the more important as you move into international markets. Whether the US is your first foray or the latest on your list, there are several things you can do in this area.
If the US is to grow into a big business, and not just a foreign office, you have to put senior executives there. This often means moving one or more founding teams. In our case, Rob had spent some time in London in the early years of Aconex. I then moved to Silicon Valley to support our focus on the US and soon other key global roles such as our CMO, CFO and COO were also based there. While leaving your senior executives in Australia might be a viable strategy for other overseas markets, you cannot and expect to win in the US.
Our approach was to build a beachhead by moving our Melbourne Marketing Director to San Francisco. This enabled us to set up an office, recruiting some local positions and – helpful – shifting our marketing thinking from expanding an existing customer network in Australia and other strong markets to fast greenfield growth in the US.
In the course of time we have also moved staff between teams for short or long-term assignments. This meant that Australian employees were given the opportunity to spend time in the US, which helped with knowledge transfer to the newer US team. But the benefits flowed both ways as many of the employees at Australian headquarters were connected to growing US business and avoided thinking in the traditional “Australia only” approach.
We were fortunate to have a well-established corporate culture before we attacked the US. It was based in Australia in many ways and built on openness, a lack of hierarchy, a direct communication style and a "no BS" attitude. We found that it appealed to potential hires in many parts of the world and served us well over the years with just a few tweaks.
We knew that US jobs are more formal and rigid than Australia, and that Australian humor (like sarcasm) doesn't always go down that well. But I felt like we could always keep the best parts of our direct and informal Australian style of working without crossing borders.
Hiring local people is good advice no matter what country you do business in, and the same goes for the US. There are many reasons to hire American staff. While Australians tend to be well received there, customers are more likely to buy from locals, who also have market knowledge, relationships and credibility that would otherwise take time to build.
Setting up a company in the USA gives you the opportunity to relocate the main administrative functions there, if this makes sense. For example, I believe that American marketers are generally more experienced and better educated than Australian marketers. We took the opportunity to build several global marketing positions there, found a strong talent pool, used digital marketing tools that were not widely available in Australia at the time, and refined our messaging by being close to key US customers.
We also embedded a standard American sales model and processes that made it easier to hire and involve salespeople.
For many years we did most of our software development from Australia – we had a strong team there and a relative cost advantage. But finally we used an acquisition in the USA to set up a development team in San Francisco as well.
One way to quickly improve your company's understanding of the US market is to add Americans to your board of directors who have relevant US experience in your industry, venture capital, and advisory services such as legal and financial services. Following the Francisco Partners investment, five of our seven board members were US residents. This extensive local market experience has been invaluable in validating our strategic fitness in the US and in providing expert input to our go-to-market planning and support operations.
In this blog post I talked about the importance of personal encounters when returning to the office after COVID. The same argument applies (COVID approval) for bringing people together in an international company. While travel is expensive, time together as a global team is vital and therefore must be an integral part of your investment in the United States. At Aconex, our board of directors met at least twice a year (often more often), our leadership team met two to three times a year for strategy and planning of offsites, and we brought our functional teams together every 12 to 18 months worldwide.
In addition to physical travel, coordinating processes and communication across the company, and even simple things like national teams working together on weekly video calls, you can keep a global team together and help you work together as one company.
For example, if your leadership team is split between Melbourne and San Francisco, the “home office” needs to understand that it is no longer the only hub supporting the spokes. To be successful in the US, the focus must be shifted from Australia and important decisions should no longer be made there alone. We always joked that our HQ at Aconex was seated 24A somewhere over the Pacific (it certainly wasn't seat 1A – we weren't flying in business class when we were building in the US!).
We have also tried to network and strengthen supraregional management teams. This created some inefficiency in decision-making, but it was critical that the US team be involved in decisions that affected them and that their voice be heard more widely within the company.
Understand customer differences
It may seem obvious, but it's important to understand from the beginning how American customers are different from your Australian customers.
You should take some effort to understand:
Who are the decision makers for your product within the customer organizations?
How do you shop or make purchasing decisions?
How do you perceive your problems and the available solutions?
And how do you communicate the unique selling points and the value of your product in such a way that the customer is most easily addressed?
In the case of Aconex, we found that while Australian customers appreciated the benefits of teamwork on a project, Americans were more persistent and much more interested in being in control of their project. It took some time, but once we did it it made a difference in how we position, market and sell the product. It underscores the importance of senior executives in the US, interacting with customers, and the ability to question accepted wisdom from other regions.
Day after day, most Americans only deal with American companies. To make it easy for your customers, you need to look and act like a locally based company. So locate everything you can as quickly as possible:
Starting with the website, there should be a US version that is localized for US visitors. Customer testimonials, case studies, video testimonials, images, customer logos, and everything else on your website should refer to the United States.
All of your primary support materials – sales presentations, customer support documentation, videos, etc. – should also be located.
Use American English in everything. Australians understand that "optimize" is the US spelling, while many Americans simply view "optimize" as incorrect.
Use a US cell phone. An international mobile number will confuse some of your customers.
Also adapt the job titles to the local understanding. Although there is a vote on C-level roles, nobody there knows what a managing director or general manager is or does. Titles like Vice President (VP), Senior Vice President and Executive Vice President may not roll out of the Australian language, but they are necessary to attract good candidates and to properly position your employees.
Finally, a few tactical tips
In addition to these five most important lessons, some other points should be noted:
I found Americans to be more hierarchical than Australians. Even if you are not lacking in confidence, you may need to encourage your employees to argue with the CEO and other executives and push them back – something that is rarely an issue here in Australia! And I learned that American executives generally do not like it when other managers intervene in their function – for example, commenting in board meetings or "diving in" to work cross-functionally with members of their team.
Speaking of self-esteem: When hiring Americans, it can be difficult to find out how strong a candidate actually is. I found that candidates at all levels were very eloquent and presented well and really shared their background and experience. So everyone seemed great at first. The main thing is to be ready to go deeper with questions.
Americans (perhaps more precisely, Americans in Silicon Valley) often use a “playbook” – a standard or systematic approach based on previous experience. For example, marketers want to use the SaaS Marketing playbook. This can be helpful because you don't have to reinvent the wheel and want to hire people who know what they are doing. However, you need to make sure that the elements of the playbook – strategy, initiatives, and processes – align with your overall business strategy and support your go-to-market approach. It is worth checking this on the basis of the first principles.
Remember that American language and humor can be different. They don't use sarcasm often and they certainly don't make fun of each other as the Australians do. And although we are exposed to the American language all the time, some of our words and phrases (think "a fortnight", "corridor" or "spit on the doll") are answered with blank looks.
Reinforce the "rah-rah" factor in your internal communication. Even if Australians could call BS about too much rah-rah, your communication will be too inconspicuous, as might be the case in Australia, not stimulating the American team.
Design your Employee Share Option Plan (ESOP) to ensure tax treatment is optimized for both Australia and the US and seek tax advice to help structure relocation packages.
You must have strong private health insurance for employees in the United States. That is expensive.
Proactively schedule internal meetings in different time zones and vary early morning and late evening calls across the team so that the load of calls from outside of business hours is evenly distributed.
The question of time zones was a particular personal challenge for me when I was living in the USA, but with a large team in Melbourne. The family was also affected.
After the weekend, Melbourne would go online on Sunday afternoon US time. I had to learn to set boundaries, either to work on Sunday afternoons or to have expectations of the team in Melbourne. Sometimes I planned to go out early on Friday just to have a little more weekend when I knew I would be needed on Sunday.
Winning your US market is a huge win. It will position your company for global success and create significant value for shareholders. It's a tough road to go, however, requiring long-term commitment to material investment, significant personal and business perseverance, and a clear understanding that the US is not Australia. Go wide open your eyes.
Entrepreneur and technology investor Leigh Jasper is CEO of Saniel Ventures and Chairman of SecondQuarter Ventures and LaunchVic.