FOWA 2010 - Fighting and Thriving in the Valley

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Presentation from FOWA 2010 discussing tips for European businesses doing business in Silicon Valley.

Presentation from FOWA 2010 discussing tips for European businesses doing business in Silicon Valley.

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  • Thank you Andy! This has saved me lots of time - very helpful!
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  • Great presentation!
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  • great presentation @bandrew!
    i've done this in the DC area, I'd recommend to get a good accountant to do the company and personal tax returns (yes, in the US you get returns) for the foreign personnel.
    time frame for the process can be 6-12 months!
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  • Tips on opening office in sfo
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  • Thanks for sharing your experience. Even useful for non-UK Europeans.
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  • So, the focus of this presentation is fighting and thriving in the Valley. How can a UK business prosper and set up shop in a Valley? In this presentation, I’m going to give you some tips on how to navigate the land where the cash flows like wine, where you can’t sit on the train without bumping into a highly regarded angel investor and where khaki is an acceptable form of evening attire
  • Last time I spoke at FOWA I was given the title ‘surviving outside of Silicon Valley’ and discussed, not just surviving, but prospering outside of the Valley. In London, and more widely Europe, start-ups certainly can prosper. We have access to a thriving technology community, brilliant talent to build our teams, access to customers and access to money. In short, we have everything we need to build an incredible business right on our doorstep.
  • We have access to a thriving technology community, brilliant talent to build our teams, access to customers and access to money. In short, we have everything we need to build an incredible business right on our doorstep.
  • However, at Huddle, we’ve always had the mantra ‘go big or go home’. We’ve always believed that European start-ups can make it on the global stage and there is no need to stay in London/Paris/Berlin/Amsterdam just to prove that Europe can have its technology champions too
  • Thinking big, we recently announced that we were taking our great British company global and taking the fight to the Valley. With $10.2 million of Series B funding, we’ve opened our US offices in San Francisco and we’re rapidly expanding our team.This won’t be applicable to every business – we’ll come back to this
  • Talk about my many trips to SF, richardmoross in 2008, 3 month visa for ‘meetings’Type of startup – fashion, music etc
  • By the time I finally moved out here I’d been visiting the West Coast five or six times a year for the last couple of years.  I’d stayed out for several weeks at a time and really tried to immerse myself in the 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 area called the ‘Tendernob’ (the area between Nob Hill and the Tenderloin, fact fans).  Hilarious.
  • Follow angels, vc, companies you admire
  • Silicon valley is the Mecca for tech – Google, HP, Apple, Oracle, SiebelMultibillion dollar exits and IPOsAngelgate @ Bin 38Esther Dyson caltrain story
  • San Francisco is a big(ish) city and affords everything that a big(ish) city provides – great bars and restaurants, parks, culture, architecture, homelessness and crime
  • Mountain View and Palo Alto are the heart of Silicon Valley proper and home to companies like Oracle, Facebook, Apple and HP.  However, if you’re looking at moving a several-thousand person company out here they’re probably the only way to go.I feel they lack soul, non-generic shops and decent places for the all-important post-work pint. 
  • The buzz of the city is palpable (especially compared to identikit business parks found further south) and the city’s SOMA district – with its vast warehouses and loft apartments – is home to hundreds of start-ups, creative companies and social media consultants.  Throw a stone from anywhere in the district and you’ll hit at least one person creating “x for twitter”.  There are also great spaces available downtown, around South Beach and in the Mission district. Access to caltrain.
  • Anyone who has worked at home for any length of time from home... (sauna story)Uservoice form Scott and Rich’s apartment
  • Dogpatch labs – “ a frathouse for geeks” – pier 38
  • Kicklabs – office space and mentoring for early stage companies. South Beach.
  • Citizon space – co-working: the best elements of a coffee shop and a workspace
  • Regus – where we are – same building as twitter. V hot area.
  • SOMA central – startup friendly space next to the ball park in SOMA. Basically – there’s a TON of great spaces for you to set up and work in the city and be surrounded by other startups.
  • If you want to trade or hire in the US you’re going to need a US entity.  The vast, vast majority of US companies incorporate in Delaware (regardless of where they are actually based) thanks to the state’s generous tax benefits and well-defined body of case law.  Once you have your Delaware Corp you’ll need to get it ready to trade in the State of California.  It’s probably best to get a lawyer to help with all of this as the paperwork will make your eyes bleed.There are pros and cons of cost for equity- like lower upfront cost to you, but then locked into the lawyer and also potentially gave away valuable equity.
  • Both have Offices in SF that you can use for meetings, interviews, pretending you’re bigger than you actually are
  • Unlike the US, setting up a bank account in the US is actually quite simple.They aren't the best bank, but for the simple remote stuff it was good.  HSBC might also be a good option. 
  • Talk about coming and going, Ben Way,
  • H1-b is one yearL1-A is up to 7 years, can be extended in countryO-1 is for people like scottrutherfordThere are several options for your visa but (in our opinion) the best in terms of the time-to-apply / time-you’ll-be-allowed-to-stay ratio is the L-1 intercompany transfer visa.
  • Regardless who you use, don’t be put off by an initial consultation fee. This is standard and will help the attorney work out which visa is exactly right for you.If you can’t afford the attorney’s fees you probably shouldn’t be looking at expansion anyway.
  • Expect to wait at least a month and a half from when you first submit to your interview at the US embassy (unless you pay $1,500 for some kind of Easyjet-style speedy boarding pass, in which case you’re looking at 15 working days) and bear in mind you have to be outside the US to apply and receive your visa.  Entering the US during your visa application is technically allowed but frowned upon so if you are travelling make sure you have proof that you’ll be leaving the country again shortly, a copy of your application and something proving that you are indeed employed by a non-US company and are just visiting for meetings.  Not to work.  Oh no.
  • Social security = credit = mobile phone on contract etc
  • Unless you’re hiring engineers in SF, in which case you’re screwed.
  • People in the US - especially the Valley - are a lot more savvy when it comes to their equity options.  In Europe, people tend to work for cash compensation and are happy with that.  There is a lot more flexibility in terms of what you offer employees here, but they also know their market value.  Typically you will have to have a more generous option pool in the US.  Bonuses, probably not expected quite as much.  
  • People - especially engineers in the Valley have been very well taken care of and expect to be pampered...the more you can throw into the benefit the better off you'll be at recruiting.  This means amazing heathcare, lots of food in the office, free lunches and dinners, gadgets, Aeron chairs, etc... 

Transcript

  • 1. Fighting & thriving in the valley
    Tips for UK businesses going west
  • 2. My name is Andy McLoughlin
    Co-founder Huddle.com
    Organiser DrinkTank events
    Spent the last 6 months in SF
  • 3. 2 years ago
    SpinVox were the #1 start-up in the UK
    Paul Carr was still drinking
    Tweetmemewas a Fav.or.it side project
    Dopplr were still independent and growing
    A twitter clone won TechCrunch50
    Huddle was a small handful of people based in South East London
  • 4. I spoke at FOWA ‘08 about ‘surviving prospering outside the valley’
    http://www.flickr.com/photos/thecodefarm
  • 5. I argued we have everything here we need to prosper...
  • 6. So if Europe has everything we need, why do I find myself in San Francisco?
  • 7. For Huddle, it was a combination of factors:
    Our new VCs are there
    Our big partners are there
    Our customers are there
    A strange desire to take on the Americans at their own game
  • 8. It was never a wholesale move
    }
    Co-founder
    Product and engineering
    Marketing
    Global sales
    Huddle will always be a UK start-up
    London
  • 9. The good thing is, doing business in the US is easy!
    ... right?
  • 10. Not quite. But it is do-able.
    (and with a team of 12 in SF, here’s the stuff we’ve learnt along the way...)
    .
  • 11. Do you really need to be there?
    ?
    This should be the very first question you ask yourself.
    Is it really worth the time, expense and distraction?
  • 12. Don’t go in blind
    Flights are cheap so get out there
    Immerse yourself in the start-up culture
    Familiarise yourself with the geography
    Meet people
  • 13. Great events to meet other start-ups, angels and VCs
    SF Beta
    SF New Tech
    Startup2startup Dinners
    SuperHappyDevHouse
    Plancast.com is your friend!
  • 14. Useful conversation starters when meeting Americans
    Angelgate (or “I wish Ron Conway was my dad”)
    Tyranny of high fructose corn syrup
    “Trader Joe’s is awesome!”
    Hand sanitizer
  • 15. http://gapingvoid.com/2008/08/05/silicon-valley-map/
    Gaping void silicon valley
    Navigating The Bay Area
  • 16. Google map – SF to San Jose
    San Francisco
    (hipsters and winos)
  • 17. Google map – SF to San Jose
    Silicon Valley
    (khaki and Googlers)
  • 18. It’s kind of like Reading
  • 19. (but with sunshine and palm trees)
  • 20. Still intrigued (or love Reading)?
    Read Paul Graham’s latest blog post on ‘Where to find Silicon Valley’
    http://paulgraham.com/seesv.html
  • 21. Borrowed from http://www.orkposters.com/sanfran.html
    For us, it was always going to be San Francisco
  • 22. Office space
    Surplus of space in SF so ask around!
  • 23. Office space
    Surplus of space in SF so ask around!
  • 24. Office space
    Surplus of space in SF so ask around!
  • 25. Office space
    Surplus of space in SF so ask around!
  • 26. Office space
    Surplus of space in SF so ask around!
  • 27. Office space
    Surplus of space in SF so ask around!
  • 28. Location sorted. You’re on your way!
    Create US entity
    Register to trade in State of California
    US banking
    Visas
    Hiring + benefits
  • 29. Regardless of where you trade, incorporate in Delaware
    Generous tax benefits, well-defined body of case law
    Suck up the cost and get a lawyer to sort this
    Valley lawyers often willing to defer costs until VC financing and trade cost for equity
  • 30. Great lawyers on your doorstep
    Chris Grew
    “the American one”
    www.orrick.com
    Barry Vitou, Danvers Ballieu
    “the ones that do Bootlaw”
    www.winston.com
  • 31. NOT ACTUALLY RELATED
  • 32. US banking for the business
    Great things about SVB
    Set up the account from the UK
    They’re connected to everyone in the valley
    Regular networking events
    Shit things about SVB
    • Their banking interface was created by Satan himself
    www.svb.com/accelerator
  • 33. US banking for you
    Opening a personal US bank account is easybut getting credit isn’t
    Every ATM charges a fee
    The answer = HSBC Premier
    Free, instant transfers between international accounts, all ATM fees repaid, credit card based on UK credit
    Accounts can be opened from the UK
  • 34. Company sorted! Let’s go to work!
    Create US entity
    Register to trade in State of California
    US banking
    Visas
    Hiring + benefits
  • 35. FACT
    It’s very naughty to come to the US and work without a visa
  • 36. You are allowed to stay for up to 90 days, do business for your foreign company (partner meetings, client meetings, board meetings, conferences) and perhaps take a holiday. 
    But you absolutely cannot work for a US company. Oh no.
  • 37. Many visas, many options
    There are a ton of options (including temporary and student visas) but the most popular are:
    H1-B (Highly skilled migrant)
    L1-A (Intercompany transfer)
    O-1 (Alien of extraordinary ability)
  • 38. Hands up who likes filling in forms?
    Visa applications are paperwork-intensive process and one slight error will void your application so use an attorney!
    April Nakanishi
    Dunbar Harder, PLLC
    One Riverway, Suite 1800
    Houston, Texas 77056
    www.dunbarharder.com
  • 39. Standard L1-A process
    • You must be outside the US to apply
    • 40. You must attend the local embassy in person
    • 41. Entering the US during the visa application is allowed but frowned upon. Make sure you can prove the trip is temporary!
  • My L1-A hell experience
  • 42. Approved Petition
    +
    Passport with L1-A
    +
    Stamped I-94
    =
  • 43. It’s business time
  • 44. Making your first US hires
    Create US entity
    Register to trade in State of California
    US banking
    Visas
    Hiring + benefits
  • 45. International hiring 101
    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 etc.
  • 46. (but if you do need a recruiter)
    Connery Consulting (conneryconsultingllc.com) have staffed for Salesforce.com, Zendesk and many others.
  • 47. Gross generalisation #1
    Hiring in the US is easy
    True!Firing is also easy. Get at-will contracts from your lawyers. 3 month probation period and let go if not working.
  • 48. Gross generalisation #2
    Valley people are more start-up savvy
    True!It’s all about the options pool. Bonuses less common. 15 days vacation. More flexibility but people know their market value and expect to be looked after.
  • 49. Gross generalisation #3
    British humour is always acceptable
    False!Keep it out of interviews. No bad taste jokes. Don’t ask people their age or personal questions. If you think it might be inappropriate, it probably is and you may get sued for it. Just don't.
  • 50. Gross generalisation #4
    A great package of extras is expected
    True!The more you offer, the more attractive you will be. This means amazing healthcare, lots of snacks in the office, lunch and dinner provided, Aeron chairs...
  • 51. Actual start-up snack room
  • 52. NTK: US healthcare
    Healthcare with vision and dental is expected
    This will cost around $500 per employee (extra for spouses and children)
    Even the best health insurance only covers 90% of cost of an accident
    Most popular plans in CA are Anthem Blue Cross, Blue Shield, Cigna, Kaiser
    We chose Anthem Blue Cross EmployeeElect (with $20 copay)
    Use High Street Partners to coordinate
  • 53. The other stuff: US payroll, social security, IRS etc
    Like company formation and healthcare, don’t even bother doing this yourself. It’s a massive, massive distraction.
    Again, High Street Partners (www.hsp.com) are recommended.
  • 54. The stark reality is setting up in the US is bloody expensive
    $50k to get a team up and running (visas, flights, office, accommodation, payroll, taxes, incorporation)
    10% of this cost to cheat 
  • 55. Communicating with London
    You get up earlier (7am starts are normal)
    UK team work later
    VOIP office phones
    Rebtel for cheap calls via your mobile
    Weekly team stand-ups with video conferencing
  • 56.
  • 57. Thank youAndy McLoughlin@bandrewSlides online at www.slideshare.com/bandrew Thanks to Stephanie Robogeisha, Scott Rutherford, Bastian Lehmann and Alicia Navarro for their tips