International market-expansion can often prove challenging as cultures, languages, market conditions and governmental regulations need to be understood and adhered to by companies.
Although these difficulties may exist, many European founders have gone on to reach great success despite them. In an interview, EU-Startups.com spoke with these entrepreneurs to find out more about their expansion journey and key takeaways.
Christian Kroll, Founder and CEO, Ecosia
Ecosia is ‘the search engine that plants trees’. It considers itself a social business, claiming to be CO₂-negative, supporting full financial transparency, and protecting the privacy of its users (Ecosia.co).
CEO Chrisitan Kroll, believes that successful expansion rests on three separate pillars: team, marketing and investment.
“Team: In any case, you should hire people from the country you want to expand into. Otherwise, you will probably lack an understanding of the market. In addition, the people should be excellent generalists, in my opinion, since many different tasks await them. After all, expanding into a new market is almost like creating a new startup, so you need pragmatic people with a sense of entrepreneurship.”
“Marketing channels: The marketing mix can be completely different from country to country and this is something to figure out for each market. (e.g. Influencers worked well for us in France, but not at all in the US).”
“Investment: I would not underestimate the investment costs associated with market expansion. It is not only the cost of employees but also many other costs (translations, press agency, …) and in addition, you also bring some complexity into the house. I often see that companies should better concentrate on one market first instead of expanding like crazy.”
Jonathan Kurfess, Founder and Chairman, Appinio
Hamburg-based Appinio ‘‘empowers decision makers through real-time access to consumer opinions. As the world’s fastest market research solution, Appinio collects millions of answers globally from specific consumer groups – every day. We help over 1000+ global companies through our all-in-one survey platform to validate decisions in minutes and really put customer-centricity into practice’’ (Appinio.com).
According to Jonathan, it’s important to do your groundwork: make sure you have the right person in the right market.
“Nail it before you scale it. When you expand to a new market you either have to go there yourself as a founder or you need to find and hire a founder-type of person. Not a manager! The person needs to be scrappy, persistent, have a no-f**ks-given attitude and does not think it is beneath him/herself to do also the less-interesting tasks. Experienced managers do not know how to build things from the scratch.”
“It is furthermore important do start with a small team that succeeds in building traction – we have started with a “pizza box team” which consists of the Country Manager, Marketing, Sales and 1-2 Business Development people. All supporting functions came from HQ. We learned that it pays off to give Country Manager P&L responsibility and then incentivize them on EBITDA performance – then they rock the boat.”
Daniel Garnitz, Founder and CEO, Faaren
Founded in 2018, Faaren is ‘‘a B2B SaaS that enables automotive companies like car dealerships, OEMs, leasing banks, rental companies and fleet companies to offer digital car subscription services on their own. FAAREN offers an end-to-end system from white label solutions, dashboards and all digital necessary processes that companies need to have in place in order to offer car subscriptions’’ (Faaren-group.com).
Garnitz notes the importance of building strong networks within a company’s target market and allowing for potential bureaucratic delays.
“I think the most important is to build a strong network – a successful expansion will heavily depend on it. The rest are formalities, which typically take so much more time than we assumed. For example, we set up our US Inc. parallel to hiring our first staff, which resulted in the fact that we could not pay them the first months because it took forever to get our company’s tax number… So make sure you calculate a lot more time than you’d normally do – it will take longer!”
Jacob Haeger, Marketing Lead EU Expansion, PLEO
Series-C funded Pleo has been making workplace expenses simple since 2015. The Swedish Fintech startup “offers smart payment cards for employees to buy work-related products while keeping the company in control of spending” (Pleo.io).
Haeger states that establishing a product market fit is one of the most important factors when broadening horizons into a new market.
He affirms: “When you enter a new market you no longer necessarily have product market fit. A new market may look similar on paper but even very small differences in habits, regulations, languages or software use can undermine your value proposition. Don’t assume you need to adapt to everything in the market, test and learn, but also don’t go and commit to a large launch with dedicated headcount until you’ve established that fit. Be patient until you do.”
Robert Heinecke, Founder and CEO, Breeze Technologies
Formed in 2015, Hamburg-based Breeze Technologies UG is ‘‘a technology leader for air quality sensors, air quality data and air quality analytics software. The company leverages the internet of things and artificial intelligence to help cities and businesses create better clean air action plans and a more liveable environment’’ (breeze-technologies.de).
Heinecke states the importance of creating pilot projects in order to analyze various markets simultaneously.
“We have had very good experience with looking at several interesting markets at the same time and searching for pilot customers. Once you have found a pilot project in the new market, you can – assuming the appropriate project size and constellation – work with the organization as an anchor customer, create a reference and use it to approach the next batch of similar potential customers. The advantage with this approach is that you can evaluate several markets directly in a relatively resource-efficient way.”
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