- Here you go some benefits of developing such a playbook
- When is the right time to expand?
- APAC Expansion: When to expand your business?
Once you start planning your business’s expansion to Asia, there are factors to consider before going global. In turn, our advice for you is to work towards developing a playbook your team can follow and iterate on.
Each business model requires a different playbook; some companies like Uber have business models requiring city by city expansion. On the other hand, many SaaS solutions look holistically at new markets on a country-level, or even regionally.
In both cases, you must prepare a playbook that serves as the single source of truth. Covering the latest learnings and factors to consider before going global so your company can expand effectively into new markets.
Here you go some benefits of developing such a playbook:
- Helps you avoid repeating mistakes
- Breaks down who is responsible for what
- Empowers distant teams to make quick decisions
- Allows you to launch multiple markets at the same time
- It's a living document consolidating all new learnings and iterations
Unfortunately, it isn't easy to develop a playbook that would work for every business and market. Some models require heavy investment and a workforce on the ground; others can have a remote first strategy.
We have written this article as a point of departure for your expansion. Our team is sharing learnings gained through helping hundreds of businesses to expand to the Asia Pacific region. Having said that, at times, our advice might be irrelevant to your business as it comes to your specific factors to consider before going global. Feel free to adapt our advice where necessary.
When is the right time to expand?
There are two schools of thought on how to know when it’s time to expand your business:
- Traditional expansion – launch your product, reach product-market-fit, scale the business in your home market, and only then start expanding.
- Test new markets early – with the rise of the internet, startups can reach international markets almost immediately.
APAC Expansion: When to expand your business?
Reputation Defender case study
As Michael Fertik, founder of Reputation Defender told the Harvard Business Review:
“I think it’s critical for companies — including and especially young businesses — to go international earlier, rather than waiting five, seven, or 10 years. That was a decision we made for our company, Reputation.com, and it was the right move. It opened some good revenue streams for us and, almost more importantly, helped surface rich cultural intel about our products and what offerings would appeal the most in which markets. As a result, we were able to intelligently redirect resources to capitalize on the countries with the most initial promise for us.”
At a recent webinar by Stripe, the chart above got introduced, arguing that 89% of unicorns have to expand into global markets by the time their valuation hits $1B. The days when tech companies are focused on one market are beginning to disappear.
Perhaps a third approach is Steven Carpenter’s rule of thumb, where he advises startups to expand when 25% or more of their business is coming from international markets.
In our experience, startups originating in APAC are in favor of the second approach and tend to test new markets almost immediately after launching a product.
While startups from more developed and distant markets like European countries, Australia, or North America would rather wait for five, seven, or ten years before expanding overseas.
Both approaches have merits, but it always depends on the unique circumstances of your business. After all, it might be suicidal to start expanding your product if you are struggling to fundraise and are running out of cash.
Having said that, technology startups have a considerable advantage when it comes to selling globally. The nature of tech products allows for quick adoption and scale.
SurveyMonkey case study
To illustrate this point, consider MonkeySurvey’s example as the company was international from the very beginning. In 2013, Dave Goldberg, CEO of SurveyMonkey, gave an interview to emphasize the benefits of global expansion.
Golberg said that once the company committed to its international strategy, SurveyMonkey’s organic growth accelerated dramatically.
“If you have a product business and you aren’t focused on international, you are missing out on two-thirds of your potential customers.” Dave Goldberg, CEO of SurveyMonkey
If you are in doubt whether it makes sense to grow internationally or not, consider the following factors before entering a foreign market:
- Increase your monthly recurring revenues (MRR) in a new geography
- Your growth at home is decreasing
- When 25% of your revenue comes from international markets
- Increase in the number of support tickets from non-English speaking markets
- Your product does not require heavy localization, and you have reached product-market fit in your home market
- Your business demonstrates geographical network effects, i.e., the more the markets, the stronger the network effect
- You acquire most of your clients via online channels
- Increase of the number of sign-ups/leads in a new geography
- When a competitor is replicating your model abroad (think of how Airbnb took on Rocket Internet and became a global company to crush the competition)
This article was developed as a part of a series of articles on the topic of how startups expand globally. The series will roughly go in this order:
*1: Factors to consider before going global
*2: International expansion strategy framework
*3: Research and build market hypothesis: Define / Refine your market and target audience key hypothesis
*4: Validation: Test key assumptions by outsourcing business development efforts on the ground
*5: Double down: Consider setting up a foreign representative office
*6: Market-product fit: Hire first people on the ground
*7: Global trade compliance: Company formation and licenses
*8: Global recruitment strategy: Focus on recruiting great talent, then secure an office space
*9: Repeat: Add all learnings to your playbook and focus on the next market
*10: Where do companies go wrong when expanding to Asia? Tips on how to avoid international expansion failures.
Subscribe to our newsletter to receive each post. If you are interested in learning how to put these frameworks into action on a detailed level, consider contacting our team at Greenhouse here.