Entering the USA market
The recent announcement of NewVoiceMedia Ltd (NVM) being acquired by Vonage for $350m in cash has prompted me to reflect on the last 5 years of working with this great company and great team.
When we invested in January 2013, NVM was a clear market-leading provider of cloud contact centre solutions in Europe. The team wanted to raise capital to specifically enter the USA market - always a tough ask and one of the largest drivers of investment for European SaaS companies.
Many companies fail in this endeavour - so I wanted to share with you a short manifesto for success based on 20 years of watching and hopefully learning how best to enter the USA market:
Pick the East Coast as your entry point - please. Those 3 hours between East and West Coast make a tonne of difference, travel is easier and (assuming you're a B2B business) you have more customers on your door step. Going to Silicon Valley first is not impossible but be prepared. Its expensive - indeed painfully expensive; there is little employee loyalty; and you probably have little brand to attract quality talent. Become a beast in the East!
Be prepared to move. Having a founder or a member of the senior executive team move and lead the expansion in the USA is a must. Relocation doesn't need to be permanent but move for a good period of time. The move helps transfer: your culture; product knowledge and operational expertise. It also helps you recruit way better. Indeed the simplicity of communication back to HQ is eased if you truly know the people on the other end of the call. NVM started to kick ass in the USA when senior executive management moved to San Francisco. In the end we had CEO, CFO, and CPO all based in the USA. Its great to see our portfolio companies like Content Square, Nexthink, Starleaf, and FeatureSpace embrace this point with real success.
Become American. The reality is America is vast and requires true localisation to succeed. In Europe, we know how difficult it is to enter other European countries only an hour away. American is no different: change your product and marketing message accordingly and embrace the great USA.
Be prepared to make mistakes especially with hiring. It is tricky to hire well in your own country - way more complicated in the USA. This is especially true in the area of sales. Honing your judgement skills in a new culture takes time. You will get it wrong so be prepared, and make changes fast. If it's not working - change!
Raise a bucket load of fire power. Perhaps I have a slightly vested interest, however it is a costly endeavour to get right and it will take longer than you hope. Finance is a competitive advantage so take it on board and use it wisely when expanding into the USA.
At Highland Europe we’ve dedicated our careers to helping European technology companies scale globally – and getting established in the US market is one of the hardest parts of that. NVM made mistakes on the way but ultimately its delivery in the US was instrumental to the outstanding outcome the team achieved. If you’re thinking of entering the US market please get in touch – whether you’d like advice, capital, or both. Thanks for reading.€