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Setting up an office in the valley

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So – you’ve got your European start-up …

So – you’ve got your European start-up
running nicely; revenues are growing,
you’re hiring like mad, you’re being
courted by VCs and the local tech
press think you’re the best thing since
SpinVox. Well, SpinVox circa 2008, anyway. Ahem. However, like all big-thinking entrepreneurs you realise that there’s more to life than London / Paris / Berlin / Amsterdam. You’re thinking big.

Published in: Business, Technology

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  • 1. Setting up an office in the ValleyAndy McLoughlin, EVP Strategy, HuddleSo – you’ve got your European start-uprunning nicely; revenues are growing,you’re hiring like mad, you’re beingcourted by VCs and the local techpress think you’re the best thing sinceSpinVox. Well, SpinVox circa 2008, anyway. Ahem. However, like all big-thinking entrepreneurs yourealise that there’s more to life than London / Paris / Berlin / Amsterdam. You’re thinking big.You’re thinking the home of the multi-billion dollar exit and IPO. You’re thinking of a place wherethe cash flows like wine, where you can’t sit on the train without bumping into a highly regardedangel investor, where khaki is an acceptable form of evening attire. You’re thinking of Silicon Valleyand how you can establish your company as a major player out there. The only problem is that youdon’t have the faintest idea how to go about doing it.This was the exact situation that Alastair and I found ourselves in towards the end of last year. And,having never done it before and not having ready access to anyone who had, we had to learneverything the hard way. Here are some of the things we picked up. Enjoy!Don’t go in blindBy the time I finally moved out here I’d been visiting the West Coast five or six times a year for thelast couple of years. I’d stayed out for several weeks at a time and really tried to immerse myself inthe Bay Area’s start-up culture, get to know people and familiarise myself with the geography –work out which kind of companies live where, how to best go about getting between them and(important) areas to avoid. And, of course, have a chuckle every time someone mentions the areacalled the ‘Tendernob’ (the area between Nob Hill and the Tenderloin, fact fans). Hilarious.Location, location, locationThe Bay Area, encompassing everything from San Francisco and the East Bay down to Silicon Valley(Palo Alto, Mountain View etc) and San Jose, is a huge geographical space with oodles of variety. SanFrancisco is a big(ish) city and affords everything that a big(ish) city provides – great bars andrestaurants, parks, culture, architecture, homelessness and crime. Mountain View and Palo Alto arethe heart of Silicon Valley proper and home to companies like Oracle, Facebook, Apple and HP.These towns remind me of Reading, UK, with palm trees, though (this isn’t a good thing) and I feelthey lack soul, non-generic shops and decent places for the all-important post-work pint. However,if you’re looking at moving a several-thousand person company out here they’re probably the onlyway to go.For us, it was always going to be San Francisco. The buzz of the city is palpable (especially comparedto identikit business parks found further south) and the city’s SOMA district – with its vastwarehouses and loft apartments – is home to hundreds of start-ups, creative companies and socialmedia consultants. Throw a stone from anywhere in the district and you’ll hit at least one personcreating “x for twitter”. There are also great spaces available downtown, around South Beach and inthe Mission district.
  • 2. We’ve started by renting a small room from our good friends at UserVoice (see the previous pointabout building the network – you never know who’ll be able to help you out with cheap deskspace!)but are looking for a space we can grow into. Regus and other serviced offices provide flexibleoptions and there are a plenty of hungry real estate brokers who can help you find something morepermanent.Setting up shopIf you want to trade or hire in the US you’re going to need a US entity. The vast, vast majority of UScompanies incorporate in Delaware (regardless of where they are actually based) thanks to thestate’s generous tax benefits and well-defined body of case law. Once you have your Delaware Corpyou’ll need to get it ready to trade in the State of California. It’s probably best to get a lawyer tohelp with all of this as the paperwork will make your eyes bleed. Hiring a US team Once your US company is in place and ready to trade you’ll probably want to think about hiring. Hiring in the US is broadly the same as hiring anywhere else – don’t hire people you might hate, make sure they can do the job, use your network, avoid recruiters as far as possible etc etc etc.However, once you’ve found that dream candidate it’s not as simple as asking them to come in oneday one and start coding / selling / whatever. There’s a US employment contract, payroll andhealthcare to consider. Your lawyers (the ones that helped with the nasty company law) can provideyou with the first, we used High Street Partners for the second and then had to figure out what theheck to do about healthcare.Yep – healthcare. Back in the UK it’s all too easy to forget that some nations don’t provide freenational healthcare to residents. But healthcare in the US is a big deal and even if Obama gets hisway it’s going to be a long time before you can forget about factoring this cost into your budget. USemployees will expect healthcare (with vision and dental cover) and you should expect this to costaround $500 per month. That’s at least $500 per employee per month (plus more if you’re coveringspouse and kids) on top of the above-average salary you’re likely to be paying in the Bay Area. ThatSilicon Valley office ain’t looking quite so cheap now, huh?Working over thereFact: it’s very naughty to come to the US and work without a visa. You are allowed to stay for up to90 days, do business for your foreign company (partner meetings, client meetings, board meetings,conferences) and perhaps take a holiday. But you absolutely can’t work for a US company.If you want to work for your newly formed US company you’ll need a visa. And, like setting up theaforementioned company, this is a paperwork-intensive process where one slight error will void yourapplication so you’re best off finding a specialist immigration lawyer. There are several options foryour visa but (in our opinion) the best in terms of the time-to-apply / time-you’ll-be-allowed-to-stayratio is the L-1 intercompany transfer visa. Expect to wait at least a month and a half from when youfirst submit to your interview at the US embassy (unless you pay $1,500 for some kind of Easyjet-
  • 3. style speedy boarding pass, in which case you’re looking at 15 working days) and bear in mind youhave to be outside the US to apply and receive your visa. Entering the US during your visaapplication is technically allowed but frowned upon so if you are travelling make sure you have proofthat you’ll be leaving the country again shortly, a copy of your application and something provingthat you are indeed employed by a non-US company and are just visiting for meetings. Not to work.Oh no.