How to Launch in the US


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The presentation given by Jos Scheffelaar on how to launch in the US.

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  • There are many challenges The intention of this session is not to scare you, but to indicate some of the problems you should avoid to be successful The US is still one of the best places to start a business. There are plenty of entrepreneurs who are willing to take the risks. You have some advantages, product; some disadvantages: US startups have contacts. You are in a new market, and for all practical purposes you are a US start up. Compare the accumulated knowledge in your company about how to do business in the UK: incorporation, finance, tax,Human Resources, benefit, marketing, sales, industry contacts Then think about what it would take to start your company all over again, without knowing everything that you learned over the years. The intent of this session is to give you a high level understanding of what is involved in successfully entering the US
  • This is a depiction of how many American think about their world. There is some truth to this US-Central; not very interested in how the rest of the world lives and thinks
  • Avoid one airline towns Immigration: rules for intra company transfers have been tightened.
  • How to Launch in the US

    1. 1. Entering the US Market: Top 10 Reasons Companies Fail The US market offers tremendous opportunities for technology companies… … but it is a complex place to do business © 2009-2010 Launch in US Alliance Jos Scheffelaar, CEO
    2. 2. Jos Scheffelaar <ul><li>Graduated from TU Delft, Electrical Engineering </li></ul><ul><li>First job: Stationed in the US near Philadelphia for the SWIFT international banking network </li></ul><ul><li>Via Brussels, Copenhagen, Tulsa (Oklahoma), Atlanta (Georgia) and Tokyo (Japan) to Boston. </li></ul><ul><li>Gradually transitioned from Engineering to Business </li></ul><ul><li>Since 1990 in Boston: data networking, network security, internet services, software services </li></ul><ul><li>Started Launch in US Alliance at the end of 2009 </li></ul>
    3. 3. Launch in US Alliance <ul><ul><li>All the core services in one place </li></ul></ul><ul><ul><ul><li>Market assessment </li></ul></ul></ul><ul><ul><ul><li>Market strategy </li></ul></ul></ul><ul><ul><ul><li>Sales & marketing </li></ul></ul></ul><ul><ul><ul><li>Human resources </li></ul></ul></ul><ul><ul><ul><li>Financial & tax </li></ul></ul></ul><ul><ul><ul><li>Legal </li></ul></ul></ul><ul><ul><ul><li>Office space </li></ul></ul></ul><ul><ul><ul><li>Etc... </li></ul></ul></ul><ul><ul><li>The Alliance assembles a team of experts meeting the evolving needs of each specific client </li></ul></ul>© 2009-2010 Launch in US Alliance
    4. 4. © 2009-2010 Launch in US Alliance Sponsors & Partners
    5. 5. Outline <ul><li>US Market – the Rewards </li></ul><ul><li>US Market – the Challenges </li></ul><ul><li>Roadmap for Success </li></ul><ul><li>Conclusion </li></ul>© 2009-2010 Launch in US Alliance
    6. 6. US Market – the Rewards <ul><li>Largest single market in world (by GDP) </li></ul><ul><li>Global source of business innovation </li></ul><ul><li>US economy is recovering </li></ul><ul><li>Success in the US market drives up company valuations </li></ul><ul><li>The US is still the Land of Great Opportunity </li></ul>© 2009-2010 Launch in US Alliance United States $14,440,000 China $7,992,000 Japan $4,340,000 India $3,304,000 Germany $2,925,000 Russia $2,271,000 United Kingdom $2,236,000 France $2,133,000 California $1,846,757 Italy $1,827,000 Canada $1,303,000 Texas $1,223,511 New York $1,144,481 New England $763,683 Florida $744,120 Netherlands $673,500 Illinois $633,697 GDP in Millions of USD (2008) (European Union $14,940,000)
    7. 7. GDP by US State © 2009-2010 Launch in US Alliance Italy Canada India Netherlands Turkey Poland Sweden Saudi Arabia Norway Greece Austria Denmark Argentina Switzerland South Africa Finland Ireland Thailand Columbia Portugal Malaysia Czech Republic Nigeria Israel Chile Philippines Pakistan Egypt Hungary Kuwait Kazakhstan New Zealand Vietnam Angola Bangladesh Croatia Belarus Sudan Syria Sri Lanka Bulgaria Latvia Uruguay Guatemala Yemen Estonia Luxembourg Lithuania Peru Libya
    8. 8. Regional Differences © 2009-2010 Launch in US Alliance Source: Boston Globe
    9. 9. US Market – the Challenges <ul><li>Introduction </li></ul><ul><ul><li>The US market is brutally competitive </li></ul></ul><ul><ul><li>There are no special considerations for international companies </li></ul></ul><ul><ul><li>International companies must follow the rules for doing business here </li></ul></ul><ul><ul><li>International companies generally do not have professional networks or name-recognition in the US </li></ul></ul><ul><li>Biggest problem: </li></ul><ul><li>Knowing what you do not know </li></ul>
    10. 10.
    11. 11. Business Culture <ul><li>US is a multi-cultural society </li></ul><ul><ul><li>used to dealing with people of different cultural and ethnic backgrounds </li></ul></ul><ul><li>Europeans generally well received </li></ul><ul><li>Easy to appear to be American </li></ul><ul><li>Strong Buy-American bias in certain industries (defense, local community procurements) </li></ul>© 2009-2010 Launch in US Alliance
    12. 12. American business etiquette <ul><li>Short-term focus: </li></ul><ul><ul><li>Time is money </li></ul></ul><ul><li>Bottom-line orientation </li></ul><ul><ul><li>What’s in it for the company? </li></ul></ul><ul><ul><li>How can I shine within my organization? </li></ul></ul><ul><li>Be positive and outgoing </li></ul><ul><ul><li>First impressions are important </li></ul></ul><ul><li>Hard-nosed </li></ul><ul><ul><li>Being assertive is expected </li></ul></ul><ul><ul><li>Negotiations can be tough, but usually fair </li></ul></ul><ul><li>Be persistent </li></ul><ul><ul><li>Perseverance is required for initial appointments </li></ul></ul>© 2009-2010 Launch in US Alliance
    13. 13. US Market – 10 Challenges <ul><li>Marketing Issues </li></ul><ul><li>Poor segmentation analysis Insufficient Marketing & Sales budget Weak value proposition Unsophisticated pricing philosophy Using formula that worked in Europe </li></ul><ul><li>Other Issues </li></ul><ul><li>Not outsourcing Hiring the wrong talent Making the product perfect Location of first US office Know what you don’t know </li></ul>© 2009-2010 Launch in US Alliance
    14. 14. 1. Poor Segmentation Analysis <ul><li>Because of its size, the US market has more segments in a particular industry than any single European country </li></ul><ul><li>Europeans segment by culture </li></ul><ul><li>Result: not knowing who your customer really is in the US and too many potential markets </li></ul><ul><li>Recommendation: think about the US opportunity strategically. Need market research to define initial market segments. Refine after 3-6 months. </li></ul>© 2009-2010 Launch in US Alliance
    15. 15. 2. Inadequate Marketing & Sales Budget <ul><li>European companies are used to bootstrapping </li></ul><ul><ul><li>If VC funded, they get money in smaller increments. </li></ul></ul><ul><ul><li>But: You need to think BIG in the US! </li></ul></ul><ul><li>Even with proper segmentation, still very expensive to reach the right audience </li></ul><ul><ul><li>PR agency, analyst relations, multiple regional trade shows, advertising etc. </li></ul></ul><ul><li>Spend money wisely </li></ul><ul><ul><li>Get insight from trusted advisors </li></ul></ul><ul><ul><li>Create a realistic budget (it WILL shock you!) </li></ul></ul>© 2009-2010 Launch in US Alliance
    16. 16. 3. Weak Value Proposition <ul><li>What is the: </li></ul><ul><ul><li>Unique Selling Proposition (USP)? </li></ul></ul><ul><ul><li>Return on Investment (RoI)? </li></ul></ul><ul><ul><li>Cost of Ownership (CoO)? </li></ul></ul><ul><li>Case studies and White Papers are required </li></ul><ul><li>Need crisp , hard-hitting articulation of Value Prop for various audiences (“Pitch”): </li></ul><ul><ul><li>Based on US environment </li></ul></ul><ul><ul><ul><li>Competitors, pricing, desired features </li></ul></ul></ul><ul><ul><li>Customers, distributors, potential employees, business partners, investors </li></ul></ul>© 2009-2010 Launch in US Alliance
    17. 17. 4. Simplistic Pricing Policies <ul><li>Prices often “translated” from local currency into US$ </li></ul><ul><li>Understand intrinsic value and charge accordingly </li></ul><ul><li>Software pricing especially complicated </li></ul><ul><li>Beware of transfer pricing traps </li></ul><ul><ul><li>Take into account value created in US </li></ul></ul><ul><ul><li>Get advice from a global accounting firm BEFORE setting transfer pricing </li></ul></ul>© 2009-2010 Launch in US Alliance
    18. 18. 5. Using European Marketing Formula <ul><li>What worked in Europe will not work in the US without changes </li></ul><ul><li>Target the needs of the selected market segments </li></ul><ul><li>European reference customers are (almost) useless </li></ul><ul><li>Re-write all sales collateral and especially the website together with American industry experts </li></ul>© 2009-2010 Launch in US Alliance
    19. 19. Using European Formula © 2009-2010 Launch in US Alliance
    20. 20. 6. Outsourcing <ul><li>Budgets often contain full-time positions for HR, accounting, marketing, etc. </li></ul><ul><li>This results in a misallocation of funds </li></ul><ul><ul><li>unnecessary overhead </li></ul></ul><ul><ul><li>compounds the underspending in Marketing & Sales </li></ul></ul><ul><li>Most functions can (and should be) outsourced </li></ul><ul><li>Done right, the company will look and react like any other nimble US start-up </li></ul>© 2009-2010 Launch in US Alliance
    21. 21. Outsourcing Support Functions Executive Recruiting © 2009-2010 Launch in US Alliance Sales Marketing Strategy Legal Accounting Web Design IT Support Logistics Lead Generation Financial HR Public Relations Market Research Channel Strategy Marketing Communications Pricing
    22. 22. 7. Hiring the Wrong Talent <ul><li>Once the decision is made to expand in the US, European companies often move too fast </li></ul><ul><ul><li>Trade show contacts </li></ul></ul><ul><ul><li>Referral by business partner </li></ul></ul><ul><li>Hire LOCAL sales & marketing talent </li></ul><ul><ul><li>Familiar with US methodologies </li></ul></ul><ul><li>But find the right people </li></ul><ul><ul><li>US sales professionals are experts at selling, which includes selling themselves </li></ul></ul><ul><ul><li>Search firms provide a valuable filter </li></ul></ul>© 2009-2010 Launch in US Alliance
    23. 23. 8. Making the Product Perfect <ul><li>Many European tech companies strive for perfection </li></ul><ul><li>That takes time (and money) </li></ul><ul><li>US companies make the product “good enough” </li></ul><ul><li>Sell sooner, realize cash flow sooner </li></ul><ul><li>Quality is important, but perfection is too costly </li></ul>© 2009-2010 Launch in US Alliance
    24. 24. 9. Location of First Office <ul><li>Typically decided without much thought </li></ul><ul><ul><li>Hometown of the wrong talent that was hired in a hurry </li></ul></ul><ul><ul><li>Plant of the first US customer </li></ul></ul><ul><ul><li>California (Hollywood effect) </li></ul></ul><ul><li>Boston (New England) is tough to beat </li></ul><ul><ul><li>Great talent pool, easy access to Europe, little congestion </li></ul></ul><ul><li>West Coast HQ only recommended if overwhelming industry need </li></ul><ul><ul><li>9-hour time zone difference with Central Europe </li></ul></ul>© 2009-2010 Launch in US Alliance
    25. 25. 10. Know What You Don’t Know <ul><li>Would you climb Mt. Everest without a Sherpa? </li></ul><ul><li>Why try to conquer the US alone? </li></ul><ul><li>Low cost and lack of red tape involved in starting a US business does not mean it is easy </li></ul><ul><li>Perform an audit </li></ul><ul><ul><li>create a functional map of your areas of US expertise </li></ul></ul><ul><ul><ul><li>Marketing, Sales, Distribution, HR, Legal, Tax, etc… </li></ul></ul></ul>© 2009-2010 Launch in US Alliance
    26. 26. Opening a US office <ul><li>Select US location </li></ul><ul><ul><li>Maximize overlap of business hours with headquarters </li></ul></ul><ul><ul><li>Presence of talent, target industries </li></ul></ul><ul><ul><li>Major airport nearby </li></ul></ul><ul><li>Find office space </li></ul><ul><li>Establishing a US legal entity </li></ul><ul><ul><li>Incorporate, what state? </li></ul></ul><ul><ul><li>Operating Agreement </li></ul></ul><ul><li>Open a US bank account </li></ul><ul><li>Accounting, financial reporting, tax </li></ul><ul><li>Bringing over European staff </li></ul><ul><ul><li>Potential immigration issues </li></ul></ul><ul><li>Hiring first US staff </li></ul><ul><ul><li>Recruiting, employment agreement, payroll, benefits </li></ul></ul><ul><li>Conducting first business transactions </li></ul><ul><ul><li>Business agreements under US law (pick your state) </li></ul></ul><ul><li>Business insurance </li></ul><ul><ul><li>Product Liability </li></ul></ul>Many of these functions can be outsourced, at least initially
    27. 27. Conclusion <ul><li>Do your homework before entering the US </li></ul><ul><ul><li>Know what you don’t know </li></ul></ul><ul><ul><li>Double sales & marketing budget % compared to your home market </li></ul></ul><ul><li>Hire US sales & marketing executives </li></ul><ul><ul><li>Minimizes cultural issues </li></ul></ul><ul><ul><li>Gives immediate access to their professional networks </li></ul></ul><ul><li>Focus on your core business </li></ul><ul><ul><li>Outsource non-core functions as much as possible </li></ul></ul>© 2009-2010 Launch in US Alliance
    28. 28. Observations by a European in the US <ul><li>Business Culture </li></ul><ul><ul><li>Some key words: Language; decisiveness; risk taking; awareness of legal risks; not openly sharing opinions; service-oriented; competitive; leading edge </li></ul></ul><ul><li>US professional environment stimulates entrepreneurship </li></ul><ul><ul><li>Regular employment is not without risks </li></ul></ul><ul><ul><li>Low threshold for establishing a company </li></ul></ul><ul><ul><li>Many networking opportunities </li></ul></ul><ul><ul><li>Opportunities to get funding for good ideas (Angels, VCs, Self Funding) </li></ul></ul>
    29. 29. Questions? © 2009-2010 Launch in US Alliance Jos Scheffelaar [email_address]