This is the first part of a blog trilogy called "Conquering the US". This post is focused on the essential consideration, "Why"? Your reasoning for wanting to conquer the US market is essentially your point of departure, when deciding whether or not to enter the US market.
"Should I stay or should I go?" is the first part of a trilogy of blogposts, which sums up the take aways from the "Conquering US" Panel discussion at this year's TechBBQ in Øksnehallen. Our very own Partner, Niels Vejrup Carlsen moderated the panel discussion, which featured none other than Theis Søndergaard, Co-founder of Vivino, Mik Strøyberg, founder of Lemonsquezze and Jesper Lindhardt, former CCO of Trustpilot.
It is no secret that many tech startups want to conquer the US market – and there a plenty of good reasons why:
- It’s a giant market – and seems reasonably homogenous
- If you can make it in the US and get attention from US buyers – exit valuation will be higher
In Silicon Valley and a few other hotspots, you will find:
- Loads of capital and very well connected and knowledgeable investors
- World class development and entrepreneurial competence
- A kick ass / winner takes it all mentality
However, you should be aware that if you move to the US to conquer the American market, you will be 1 out of 10.000 struggling entrepreneurs trying to make it big versus 1 out of 100 in Denmark. With that said surely there are examples of companies who made it, companies like Zendesk and Unity.
Our recommendation would be to stay in Denmark, grow strong locally and then move into the US market, but hey, we are also just a local VC looking to get our hands on the great Danish startups, so we thought that we would ask some great entrepreneurs, who have hands-on knowledge with regards to conquering the US.
The panel was gathered to discuss the matter of entering the US market as a startup and the various implications to consider before taking this step. The three main topics of the discussion were "If, when and how?", which also represent the base of this blog trilogy. As we were largely impressed and inspired by many statements during the discussion, we thought we would share as many of the useful tips from the competent entrepreneurs on the panel.
From left: Jesper Lindhardt, Mik Strøyberg and Theis Søndergaard.
Theis Søndergaard is CPO and co-founder of Vivino. Vivino split, early on, into a DK based product development unit and a commercial HQ in San Francisco. This enabled them to tap into a fantastic US network while at the same time having a strong loyal home base – at the price of organisational complexity.
Theis Søndergaard, Co-founder of Vivino:
"For us, it was not really a question of conquering the US or not - because as soon as we had launched the app, the US was our biggest market."
Being present and having a HQ in the US was obvious for Vivino, but as Theis stated, Vivino chose San Francisco as their US HQ for all the wrong reasons."We were told that Napa Valley and Silicon Valley was the place to be for wine startups, which was "bullshit", we could just as easily have done it from New York or Boston".
Vivino also wanted to raise US capital as they thought that it was necessary. However, while Vivino did end up raising tons of funding, none of it came from the US, it was all from Europe. Another more practical headache for Vivino was the time difference, which they ended up spending four years trying to make work.
Theis explained that choosing San Francisco was based on a failed logic. Theis emphasized that the first thing you need to do is to be sure about "why" you choose to move your business to the US and also "why" you choose a specific location.
Mik Stroyberg, former CEO of NYC-based Lemonsquezze shared some of his learnings from having helped more than 55 companies enter the US; among others Joe and the Juice and Falcon Social.
He stressed that fact that "Don't go just because you want to be in the US!"
He furthermore explained that you should pay particular attention to these things:
Be aligned in management
You should be very aware of your benefits being in the US market.
Be prepared to face the fact, that the US has a lot more complicated legal system.
You are not ready, if you don’t know what you are selling. You have to be able to follow up on sales, scale wise.
Jesper Lindhardt has worked with sales and sales management in both corporate and startup settings. Jesper was as CCO in Trustpilot from 2011 till now and has been instrumental in building Trustpilot’s commercial organisation and scaling the company to a large international player with a strong US presence – from a DK home base.
"We had a strong position in the European market, bu we wanted to see if we could grow into the strong ambition of becoming a global player."
Jesper argued, how conquering the US as the dominating market is essentially a necessary matter to become a global player. To determine Trustpilots incentive to enter the US market, they did a lot of research. They also tested out the market to make sure that the competition was reasonable. As Jesper stated: "For us it was not really a necessary matter from a funding point of view but more in terms of a presence and market domination point of view. "Jesper Lindhardt, former CCO of Trustpilot
Some of the key takeaways from the discussion on "why" to enter the US market:
1. Determine the desired outcome of a US market entry
2. Validate the market in terms of your specific
business model and competitive position
3. Ask yourselves if you have the resources and willpower to conquer the US market
Read more about "When" and "How" to conquer the US market in the following two parts of this blog trilogy - "Conquering the US" coming soon.
The information brought in this blog trilogy are subjective observations from the panel members and not necessarily aligned with the companies, which they represent.
Are you pitching to investors? It might be a good idea to download our pitch deck template below!