General assembly: Dealing with international expansionPresentation Transcript
Best Practices forInternational Expansion Andy McLoughlin Co-founder, Huddle @bandrew
Stuff we‟re going to coverPart I Some backgroundPart II London, SF <> SF, LondonPart III Going eastPart IV Stuff you need to know and doPart V Questions
Part ISome background (or who am I and why am I here)
About meCo-founder and EVPStrategy at HuddleFrustrated designer andeconomistBased in London for 8yearsLiving in San Francisco forthe last 18 monthsLove start-ups, technology, greatfood, trying to fence, tryingto ski, outdoor alcoholconsumption
I founded a business called Huddle. We makecollaborative tools for the enterprise. We have 75 people across London and San Francisco. I‟ve made virtually every mistake possible as we‟ve grown.
Our timelineNovember 2006 – Founded business in London, based out ofmy bedroomApril 2007 – Huddle launched, move into first officeNovember 2007 – Raised $4M Series A. Hire like crazy.December 2007 – First business trip to the US.July 2008 – Move into new office. Approx 20 people.March 2010 – Raise $10M Series B. Start thinking about USexpansion. Hire like crazy again.May 2010 – Announce Series B. Have a big party. Dance a lot.Realise I have to re-locate. Panic.
Part IILondon, SF <> SF, London
After the music stops, the work starts… US incorporation Decisions on location Decisions on relocation and acquire visas for UK team Find offices Start hiring All whilst keeping the UK business rolling…
(re)location, locationDo Sand Hill Roadinvestors want the entirecompany to re-locate tothe west coast? Is thisfeasible?If not, what‟ s theminimum they‟re lookingfor in terms ofmanagement cover for aremote team?Case Study - Zendesk
Who should you send?
But, wait, why San Francisco?
A word (or two) on US visasCompany Submit Submits Petition Visa Embassy Passport Petition Approved Application Interview ReturnedApplication [day 45] Online [day 50] [day 55] [day 0] [day 46]
Submit application Begin hassling Lose temper andand begin „business attorneys cancel 1st trip‟ to US [day 0] [day 45] application [day 50]Application returned Learn colleague‟s with Request for Re-apply, paying for application Extra Information speedy processing approved. Have [day 51] [day 66] tantrum. [day 52] 3 month visa Submit Extra Application expires, leave USInformation [day 75] approved [day 102] quickly [day 89]
Part III Going East
No, not to Brooklyn
Why look to Europe?Talent (an alternative to $100k developers!)Huge addressable populationMajor cities home to key industriesMany growth economies in Eastern EuropeThe fine foods, culture, architecture and impressionablemembers of the opposite sexBut Europe is a big, fragmented place. Where to start?
Copenhagen, Helsinki, Stockholm
Deep dive on London Warning – this section contains stats and lots of text.
Why London? A confluence of industries and nationalities Fashion Advertising Media Legal Finance (OK, and I‟m a little biased)
Mandatory InfographicThe UK has Europe’s strongest inward investment track-record for EHQs. More overseas companies set up their EHQs in the UK than any other country – the UK is home to over half of all EHQs. Location of European Headquarters Projects, 1998-2008
Setting up shop2 real options; subsidiary or branch. Subsidiary is a separate legal entity from the parent company, usually with limited liability. Capital requirement can be extremely low, and there are no requirements for the board to include directors who are UK-resident or UK nationals. Chris Grew Branch (aka Establishment or Place of Partner, Emerging Companies Business) is owned and controlled by the US Orrick London parent company and has a presence in the UK. It is legally the same entity as the firstname.lastname@example.org „parent‟ company whereas all profits/losses of the UK branch are incorporated with the www.orrick.com overseas parent.Use an international law firm to do the work. Youshould be up and running in less than 2 weeks.
Employing in the UKThere is no employment at will, but UK labor law environment remains flexible,protecting both the employer and employee.Either party can terminate with 1 week‟s notice during initial 3 monthprobationary period.Thereafter 1 month‟s notice is required and 3 month‟s notice may be asked ofkey hires.UK employees accrue additional rights after 12 months of employment, afterwhich a simple procedure should be followed in order to terminate employees.Compared to the European Union average of 40.4 hours, full-time employees inthe UK work an average of 42.2 hours per week. Source: Eurostat, 2010The UK has a far less restricted system than our EU neighbours thanks to aunique opt out from the EU Working Time Directive which enforces a maximum35 hour working week in the rest of the EU. In the UK employees are allowed towork longer hours, with no restrictions on working hours, overtime and lesspublic holidays. This means more productivity for your company. Source: Investin the UK, 2010
International hiring 101Hiring in the UK is broadly the same as hiring anywhere else. Don‟t hire people you might hate, make sure they can do thejob, use your network, avoid recruiters wherever possible etc.
(but if you do need a recruiter) Dan Hyde of Erevena (basedin London) has helped us find several key people (CTO, VP Sales, Marketing Director) over the last few years. www.erevena.com
Working in the UK (i) FACTIt‟s very naughty to come to the UK and work without a visa
Visiting the UK for businessUS nationals can seek entry as a business visitor from an immigration officer at a UK port of arrival.A business visitor can: Go to meetings and trade fairs, buy goods and negotiate contracts with UK businesses Go to conferences and seminars as a delegate Find out about, check the details of, or examine goods Undertake training, as long as it is classroom-based instruction or limited to observation onlyBusiness visitors cannot: Take paid or unpaid work Produce goods or provide services in the UK Sell goods and services to members of the publicTo qualify as a business visitor, an applicant needs to satisfy that he/she: Intends to transact business directly linked to his or her employment abroad Normally lives and works abroad and has no intention of transferring the base to the UK, even temporarily Receives a salary from abroad (but may get reasonable expenses to cover travel and subsistence during the visit)
Working in the UK (ii)If you intend to spend long periods of time working in theUK you‟ll need a visa.I have literally no idea how the UK visa system works butif it‟s even half as painful as the US system then use aspecialist immigration attorney in the UK to assist youwith your application.
UK banking for your businessGreat things about SVB Bad things about SVB Set up the account from the US Their banking interface They‟re well connected to was created by Satan the Tech City people himself Shai Goldman is on the ground in NY Also consider HSBC (for both business and personal banking) as hundreds of
Office OptionsCo-working spaces such as Techhub, TheTrampery, White Bear YardFlexible office spaces with The Workspace Group, RegusAsk people you know if they have spare desks – even bigcompanies start this way.
Other things to be aware ofBudget 1/3 of salary for additional taxes and nationalinsurance.You don‟t need to worry about healthcare – this iswrapped up in the national insurance cost. This isgenerally the case in most of Europe.By law, a pension scheme (i.e. 401k) must be offeredbut the company doesn‟t need to pay into it.Generally, people are less motivated by stock andmore motivated by salary. Why? London is anexpensive city to live in and there isn‟t the same heritageof big technology successes are there is in the US.
London MeetupsThere are hundredsof meetups every week in London forpeople working in tech and media, or interested inentrepreneurship.The best are DrinkTank, Minibar, YC HackerMeetup, Silicon Drinkabout
Useful conversation topicswhen talking with Londoners“What about this weather we‟re having?”“How was your commute in today?”“What about this weather we‟re having?”“Fancy a pint?”“Looking forward to the Olympics? No, meneither.”“Yeah, I totally preferred Shoreditch before thesuits moved in.”
Part IVStuff you need to know and do as you grow
What / who to move abroad?What‟s the purpose ofthe new office? Sales?Engineering? Customerservice? A mish-mash ofall of them probablywon‟t work well.Do you have a seniormember of the team (afounder, ideally) whocan form the nucleus ofthe new office?
Dealing with the divideDistance breeds mistrust; if you can‟t see what someone is doingyou‟re probably going to assume they‟re doing nothing!Everyone hates process (documenting stuff, filling in forms, regularmeetings) but without some process everything will begin to fallapart. Define a simple process for stuff and try to stick to it.Reply to email from the other office as priorityOver-communicate, over-communicate, over-communicate! Internal email newsletter Always available by IM – try to cut down on email traffic Policy for cascading information downMake the distance as small as possible Regular company all-hands video conference New joiners introduced weekly by video Internal Facebook group for gossip, sharing fun stuff US team flown over to UK for induction and Christmas party
Finding a team structure that worksAs you grow, reporting lines become important (especiallyso as you grow internationally)Don‟t hire and just hope for the best - „water finds its ownlevel and staff will work out seniority‟ doesn‟t work.It‟s likely staff will report into someone in another officeAppoint a GM in each remote office for day-to-daymanagementLook at implementing OKR (objectives and key results) fora lightweight way to keep people focussed
Changing your working dayI start in the office at 8am, although I first read email inbed at 7amThe London team work later, and often take calls fromhome at 9pm (after the kids have gone to bed)8am – 11am is reserved for communicating with LondonPut regular catch-ups with your team on calendar andstick to them. Non-attendance punishable!Skype is your friend – make sure everyone has it openand a web cam installed
Maintaining company culture
Useful Online ToolsRypple – staff management and rewardYammer – micro blogging and communications platformShoeboxed – expense reportingTripit – travel managementNotable – product / design reviewGoToMeeting – the most reliable tool for conferencing we‟ve foundTeamly – action and performance managementPipedrive – lightweight CRM that doesn‟t suckSpotify – create a shared playlist all offices can collaborate on andlisten to
Knowing what you now know Ask yourself: do you actually need aninternational presence? Could it all be done from the US?Doing it properly (i.e. incorporating a company, associated legal fees, renting an office, hiring staff, visas for key USpeople, relocation costs) is likely to cost at least $100,000.Doing it cheaply (regular travel, sofa surfing, desk squatting) could cost as little as $5,000 per year.
However, the distance doesn‟tnecessarily have to be a bad thing…. My co-founder
Thank you! (Part V – Questions)Thanks to Mike Butcher (TechCrunch), Chris Grew (Orrick) and Helen Moore (UKTI) for their input.