“Get help and advice from wherever it is on offer – not just the well-trodden paid-for services for immigration, tax and company formations; but the unofficial networks of friends and advisers who will be there when you need it most."
When Jos White co-founded MessageLabs with his brother, Ben, in Gloucestershire in 1999, the concepts of cloud and SaaS services were practically incomprehensible. To paint an appropriate picture, in 2000, AOL and FreeServe were blocking almost all of Europe’s CD printing facilities in a trade war to put dial-up internet access CDs through every letterbox in Britain. It wasn’t even a broadband world.
But it was a virus-ridden world, and the internet had created new attack vectors. Quaintly, the security industry was remarkably lax, still relying mainly on offline installs and updates. A whole decade before the cloud, the visionary MessageLabs was the world’s first SaaS security service. Specialising unsurprisingly in the most security-sensitive segments (finance, public sector), MessageLabs expanded into the US in 2001 after successfully signing a deal – from the UK – with the Federal Reserve.
The right time to jump: clients and product-market fit
Security is, of course, an easier sell than some services – especially when the product is transformative. But Jos has identified several success factors for businesses expanding to the US. The Federal Reserve deal, for example, came off the back of local success with the Bank of England. “We had a handful of names who were prepared to be early adopters before we had any presence in the US”, says Jos. “It’s a really good way to seed a new market and get a sense that it’s going to be similarly responsive to your home market”.
That’s by no means guaranteed. Jos says, “We were overeager to get into the US and so we expanded in the wrong way in 2001. The lesson is, you need to have product-market fit in your home market before you start to think about any growth strategies.”
Product-market fit means:
• A clear value proposition
• A defined customer segment evidenced by a representative group of customers
• Established pricing which yields a good margin, with customers happy to pay those prices
Only with product-market fit in one territory should you try to scale to another – particularly the US, where the culture will be challenging. “The US market is a huge opportunity but it’s also more demanding and competitive than any other”, says Jos. “To be successful there, the whole organization needs to step up a gear and increase its work rate. My experience in the UK particularly on the product and engineering side, was that we didn’t have a ‘do whatever it takes’ culture. We were working more to the timesheet. That’s changing now, but even so, the US is much more motivated. And that’s important, because if you’re not competitive in the US, eventually your US competitors will just roll you over: if you don’t learn to win on US terms, you’ll certainly be wiped out when a US player brings their business savvy to the European market.”
“You can use that fear as a launch pad to encourage the whole organisation to step up”, he continues. “It takes a long time to change a corporate culture, but you can use US expansion as a trigger to inspire your team to help you build a valuable and competitive business – it’s an opportunity to hit a reset button on both your UK and US team expectations.”
Hit the reset button: a new evolution of the business
That US team should include all the elements of a mature sales operation, depending on the nature of your product (enterprise v. consumer, for example, will see some differences).
It’s not sustainable in even the medium term to have a US sales team, but with support still located in Europe (especially on European hours). “A credible organisation needs more than just sales people”, says Jos.
“Americans want to know that there’s going to be customer support teams in their time zone. They want localised marketing, product teams feeding requirements back into your core engineering work, and customer success so that you can be seen to have skin in their game. It’s a big commitment, financially.”
Jos sees this commitment as a chance to refresh (which may actually mean ‘completely revise’) your brand and marketing approach. “We became ‘the world leader’ in cloud-based email security”, he says, “headquartered in New York and London’. Position yourself as a global business, and even though it may be emotionally painful, put the US at the centre. You don’t have to completely lose touch with your roots, but make sure that your messaging and brand fit with the US market as the priority.
Building a brand in a new territory
It takes time to build a brand, and it takes time to mould it to other territories. But you can leverage other people’s heritage to gain extra traction. “One of the best ways to build a brand, particularly when you’re new to market is through third party endorsement. There are four key groups: customers, partners, well-established journalists, and analysts. If you can get credible, US- facing names to say good things about your brand, it can really accelerate your position in the market.” MessageLabs did a remarkable job of crossborder reputational sales: with the Bank of England under its belt, the business sold its services to the Federal Reserve by saying ‘We’re good enough to protect Tony Blair’s emails’; and then sold its services to other US companies by saying ‘We’re good enough to protect Alan Greenspan’s emails’. Similarly, whenever a virus outbreak hit the news, MessageLabs was able to offer credible real-time intelligence to the press, which again led to exceptional PR.
Finally, Jos says you should get help and advice from wherever it is on offer – not just the well-trodden paid-for services for immigration, tax and company formations; but the unofficial networks of friends and advisers who will be there when you need it most. “In a home market, we all have people that we can turn to. We build those networks up over time. But when you enter a new market with just your suitcase, you can feel very isolated. So take the time to nurture a small number of advisors – maybe a European founder who’s been successful in the US, also someone who’s US-based on the go-to-market side, maybe some product or finance help. Buy them dinner every month, and keep that subject matter expertise close to you. It won’t cost much, and it will really help you navigate the challenges.
• Establish product-market fit at home before considering a move to the US.
• Use your move to the competitive US environment to force your local team to up their game.
• A US SaaS sales team must include the full breadth of customer success. This will build your sales success and feed your engineering roadmap, too.
• Revise and grow your brand when you migrate, with customers, partners, the press and analysts.
• Get advice from everyone you can: professionals, your network and mentors.