I gave a talk to our portfolio companies on expanding into the US and I thought it would also be worth turning into a blog post.

Background

I co-founded MessageLabs in 2000 in the UK with my brother Ben. In 2002 I moved to NYC to lead our US market expansion. I thought I’d be there for a couple of years, get things set up, and move back. But, 14 years later, here I am still in New York!

This is not untypical for people moving to New York and indeed the US generally. There is so much opportunity and excitement here. If you are growing a business and wanting to open up a new market, and indeed wanting a new adventure in your life, there is really no better place to be and it can really take hold of you.

I moved to New York in 2002. I then managed to persuade three senior people from the UK to move with me. The agreement was that if I could persuade them to come then I could have them.

Building a market presence in the US was a very steep learning curve and we learned a lot about ourselves and about the business. We definitely made our fair share of mistakes, many of which I think back on now and it brings a smile to my face. But ultimately it is the mistakes that you learn the most from.

Ultimately the US made the whole company stronger and became our largest market. By the time we sold MessageLabs to Symantec in 2008 for $700m we had around 120 people in the US and more customers than in any other country.

These are some of the key lessons I learnt from this amazing experience:

Timing

You need to have product market fit in your home market before you think about entering the US. That means you have clarity and alignment in your value proposition, your pricing and your customer segment. There needs to be representative group of customers that provide the evidence for this. This gives you the foundations you need to efficiently scale into other geographies.

I also think that you can ‘seed’ the US market even before you get there. There will usually be US based companies that are connected to a home market customer in some way and are also prepared to be an early adopter and take on your product without local support. We were able to do this a few customers (including the Federal Reserve) and it made a big difference to our ability to enter the US market with some momentum. It gives you the confidence that the US market is also receptive to your product proposition, provides reference customers from the start and generally instills confidence that you can be successful in this market.

East vs West

This is a question that I get a lot. We decided to base ourselves on the east coast in New York. The thinking here was that we would need to work closely with the UK on many levels and that the timezone and travel time on the west coast would be too difficult to work with. We decided on New York, as opposed to Boston, because our main industry sector was financial services and also one of our investors was based here. I was also always very biased in favour of New York because I love the city!

Looking back on it now New York worked well for us. In trying to weigh up the pros and cons of east coast v west coast my conclusion is that on an operational level the east coast was great; it meant we could work closely with the UK and also gave us a good base from which to expand across the rest of the US market.

But I think on a strategic level, we missed out in some ways by not being on the west coast. The truth is that the vast majority of big tech companies that you might want to partner with or be acquired by are in the valley. You can make frequent trips out there but it’s not the same as being there full time and I think this held us back in some ways.

It’s difficult to quantify the value of east coast v west coast and you can definitely be successful in both but I think it’s worth thinking it through in this way.

Brand

Entering the US market is definitely a good opportunity to refresh your brand and the way you present yourself in the market. There are various ways you can present your company as a major global player rather than a start-up based in the UK. Messaging such as being a global company with offices around the world and emphasising the scale of investment and resources you have in the US is important.

I also think that it is very expensive and generally not a great return on your investment to try to build a big brand independently in the US as a non-US company. My belief is that you are much better off ‘standing on the shoulders of giants’ and leveraging third party endorsement as much as you can. The key third parties are customers, partners, media and analysts. It's worth investing the time to build strong, credible relationships with leading brands in each one of these groups and use them as much as you can in your sales and marketing activities. I believe this will be much more effective and deliver more for your money than trying to build your brand in isolation in such a big and expensive market.

Advisors

In such a large, challenging market it’s worth investing the time to put together a small group of advisors who you can turn to for US specific advice and support. People who have experience of what you are going through and can cover different areas such as GTM strategy, recruitment, raising money etc. will be really valuable in helping avoid mistakes and executing more effectively.

You could decide to give a group of advisors share options to ensure they are engaged or you could keep it less formal and just buy people a nice dinner every few months. There are different ways to do it but the important thing is you are able to find people who you trust, who have proven experience in building businesses in the US and who you can call on from time to time.

Turbo charge your culture

The US is the largest, the most demanding and the most competitive market out there. At the same time the vast majority of the world’s largest tech companies were founded in the US and know what it takes to serve this market and grow into multi-billion dollar businesses.

There is a very distinctive mission based culture in most US based tech companies. They are inspired by their predecessors and the size of the opportunity in front of them. My sense is that European companies often struggle to match this ‘do whatever it takes’ culture and that this can put them at a disadvantage that is more acutely felt once you enter the US.

This is an opportunity to raise your game across the company. You can make it clear to everyone what you need to be successful in the US and where the competition is strong. When you enter any new market you have to be even better than the competition who have ‘home field advantage.’ When everyone understands what it will take to be successful in the US and also how big the opportunity is, if you get it right, this can be (and needs to be) a strong source of inspiration for your team.

So those are my key lessons learn’t. I’d love to hear feedback as to whether these match up to other people’s experiences in the US and also it would be great to hear about other lessons learn’t that we can add to our list.

Posted by Jos White, Partner, Notion Capital.