Market-Product Fit

Reaching market-product fit is the point in time when you feel confident that the newly tested market will work great for your product. It's hard to measure it in a quantitative manner, but you can pay attention to these market-product fit metrics:

  • Traffic coming from that market, and direct traffic in particular
  • High Net Promoter Score (NPS) from customers in that market
  • Revenue growth
  • Intuition

When all metrics are up and to the right, you will need to recruit your first hires. Do consider that your recruitment playbook might not be terribly effective as you will deal with cultural differences at every step. Take your time and hire wisely because most fast-growth markets in Asia face talent shortages. The tech-sector grows faster than the educational system can adapt and train people. In fact, a recent report by RGF International Recruitment Talent in Asia surveyed 3500 employers across 11 markets discovered that over 50% of Indonesian employers struggle with a talent shortage.

Another study by Monk’s Hill Ventures, and Slush Singapore, discovered that 90% of respondents believe the skills gap is a major issue. The study surveyed more than 100 key players in the regional startup scene.

The main challenges we have observed are the following:

  • Few suitable candidates, especially in technical fields like software engineers.
  • The lack of qualified candidates drives salaries up. Software engineers and digital marketers often command salaries three to five times higher than the median wags in Southeast Asia.
  • Job-hopping, we have personally assessed thousands of resumes and have noticed that a significant portion of all candidates stay for about 1 year before moving to a new job.
  • Most employees do not understand ESOP, which is a crucial strategy for attracting early employees to any startup.

Back in the days, the Chinese startup ecosystem coined the phrase "Sea Turtle", explaining Chinese citizens who have returned to China after studying abroad for several years. Lately, the same approach has gained popularity across Southeast Asia too, and most foreign businesses quickly learn the benefits of hiring sea turtles.

If you can tap into a community of such people, you will be able to quickly build a capable, culturally intelligent executive team that will give you an edge when growing your business.

Even if you can locate communities of relevant people, you will need to invest efforts in getting the right culture fit.

Most foreign companies send core staff to live and work on the ground for the first year during their market-product fit testing. The new market must be considered as a startup within the company. In that way, you can control spending and get people with the right mindset with a strong bias for action.

Dropbox case study

“It was important for Dropbox to ensure that the culture of the international offices was not exactly the same but shared the same core values as what we had at SF. A key element on how we chose the initial landing team was that they'd all be long-time Dropbox employees and excellent culture carriers for establishing that first office and onboarding its first hires." - Chen Li Wang, Head of Product and Business Operations at Dropbox

In the early days of the expansion, there will be much work to do around recruitment, traction, managing local vendors, and complying with the legal system. Each new employee will end up having quite a bit of responsibility, often outside what they sign for. To navigate the local complexities and instill your business's organizational culture, it's recommended to send a few people on the ground.

Key takeaways

  • To understand if you have Market Product Fit, pay attention to your Net promoter score (NPS), direct traffic, revenue growth and intuition.
  • Be aware of potential talent shortage.
  • Your first hires are very important, pick them wisely. Sea Turtles are a good place to start.
  • Manage the expansion as a startup within the company.
  • Send a few people from your headquarter to instill your company culture.

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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.

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