CHAPTER TWENTY-EIGHT

GOING GLOBAL

In Chapter 15, I discussed the challenges of managing remote offices and employees and the advantages of keeping your team in one place for as long as possible. Now, I have to qualify that: it's just as important to be close to your customers as it is to be close to your colleagues. Once you develop an international presence, or even a major customer base in a particular location, you should start thinking about having a local presence. Just be sure to do it right.

SHOULD YOUR BUSINESS GO GLOBAL?

Not every business needs to global. If you're a business-to-consumer (B2C) company, it may not get you anything: customers don't expect much in the way of personal contact with employees from Facebook, Twitter, or Evernote. You may need some level of in-language customer support but that can be done from anywhere.

It's very important if you're in a business-to-business (B2B) company. In fact, it's almost a truism of sales: Germans like to buy from Germans. The French like to buy from the French. Canadians like to buy from Canadians; French Canadians like to buy from French Canadians and Americans like to buy from Americans! Put your salespeople where the customers are. (One exception to this rule is that customers of freemium software products don't expect a significant amount of interaction with the companies they buy from.)

HOW TO ESTABLISH A GLOBAL PRESENCE

The simplest way to establish a global presence is through M&A, which I discuss in detail in the next chapter. Buy your biggest resellers (who are already somewhat aligned with your company) or buy local competitors (who are already doing largely what you're doing). This pattern is so common that plenty of foreign entrepreneurs have built businesses out of starting knock-off local competitors to U.S. companies, on the assumption that the company they're copying will acquire them. If they did a decent job of it, why not? While international expansion through M&A can be expensive, it comes with revenue, customers, local operations, and local leaders.

Sometimes, neither of those options is available: you have customers (or potential customers) in a new market but no resellers or competitors there. Given how difficult it is to start a local office absolutely from scratch, some CEOs are tempted to buy tangential companies and repurpose them. The assumption is that the infrastructure is there—developers, algorithm experts, manufacturers, what have you—and repurposing is simpler than hiring a team from scratch. I would never understate the extent of the hiring challenge (see Chapter 10) but retraining isn't any easier and is often impossible, like teaching a cat to bark. The similarities you're looking for may be the wrong ones: a Java developer is a Java developer but maybe it's more important to have a developer who knows your industry, even if they're specialists in .NET. Or vice versa. You won't know until you have pulled the trigger—and bad acquisitions are very expensive mistakes.

When there isn't an appropriate M&A opportunity, the best approach is probably the (seemingly) hardest approach: starting the global office on your own by hiring from the ground up.

OVERCOMING THE CHALLENGES OF GOING GLOBAL

Our first two new countries, France and the UK, were really tough to launch. We had really limited brand recognition abroad and we had no network to tap into either for hiring or checking references. As a result, we ended up turning over our first two country managers within a year or two, which really set us back. Early employees in those two countries also had to deal with a very “do it yourself ” environment—everything from office space to phone systems, to computer setup, to health benefits. We have gotten the routine down now and we are much bigger and better known outside the United States, so we were able to launch newer markets like Brazil and Australia a lot more smoothly, with more infrastructure and back-office know-how.

These are the two main challenges to going global and some things you can do to overcome them:

1. If you can't buy something, it's like starting a new company. This isn't just true of the obvious challenges of running a company: gaining market traction, finding the right talent. When you're in a new context, all sorts of things that you largely take for granted in the United States—or pass off to your lawyer or accountant—become major headaches: local regulations, payroll, labor practices, tax structure. In some countries, this is difficult enough that you want to avoid them as long as possible. My short list is Japan, China, Russia, and Belgium, though there are days where running an operation in Brazil feels equally cumber-some and even France and Germany have their own issues.
2. Hiring is hard; long-distance hiring is much harder. Most of the tools you have to overcome the hiring challenge at home aren't available abroad. You have no local network to draw on. You're not in that location long enough to take meetings that “get people on the bus.” Your reputation, as good as it is at home, probably hasn't traveled to Ecuador or Australia. Checking references when there's a language barrier can be nearly impossible. There's no choice but doing this the hard way: spend a lot of time at your new office and make every effort to have a senior member of your team move there full time—if only temporarily. Remote offices in different states are challenging enough; that challenge is magnified many times over in different countries.

BEST PRACTICES FOR MANAGING INTERNATIONAL OFFICES AND EMPLOYEES

Once you decide to open (or explore the possibility of opening) an international office, there are a few things you can do to make it happen as smoothly as possible:

• Send executives from headquarters to establish the presence and hire the first people. I have a confession: we have never been able to pull this off at Return Path. With every international office we have opened—in Europe, Asia and so on—we have tried to find a local executive who could move to the new location, set up shop and operate the office, if only temporarily. It's never worked out for us but we're going to keep trying. The companies I know that have done this swear by it.
• Set clear expectations with new hires. Whether or not you do this, make sure you make it abundantly clear to the first several employees you're hiring in a new country that they need to be comfortable wearing multiple hats and dealing with some messiness for a long time.
• Be smart about local laws and business customs. Each country has its own everything, from its tax code to its employment laws, to its typical start times and lunch breaks. Don't assume that because you're an American company, everyone else will play by your rules (though by and large, you should be able to insist on English as your official business language for internal communications). Find an expert—they're out there—to help you establish everything from local payroll to client contracts. Be especially wary of local business customs. Showing up at a meeting without a gift or a tie when your counterparts have those is a minor infraction and easily forgiven. A major infraction can get you in trouble with the federal government; make sure you study up on the Foreign Corrupt Practices Act (FCPA).
• Phase in remote offices gradually. Don't be hasty when opening a new physical office. You might find after a few months that the team or sales opportunity you were trying to accommodate isn't going to pay off and you don't want to be stuck with tons of infrastructure and a 10-year lease. Start by letting people work from home. When you get to the point where two to three people would come into an office every day, get a short-term rental in a managed office or co-working space. Get your own office only when you have between 10 and 15 team members in the new location. By that point, it's pretty clear that you will be there for the long haul.
• Find a cultural translator. One of the main reasons you will be opening new offices is to serve new cultures. You can't do that without someone who knows the ins and outs of the location you're expanding to and can communicate them clearly to the rest of your team. Even if it's someone who reports only to you, it's important not to feel out of touch with an entire office.
• Do more frequent check-ins. If you check in with local employees once a week, check in with remote employees at least twice. A quick phone call to see how things are going is a good use of travel time. Remember, at your home office, formal check-ins are probably supplemented with ad hoc meetings. That's not the case with remote employees, so it's important to be more vigilant.
• Use video extensively. Skype is good. Serious videoconferencing setups for conference rooms are great. Desktop videophones rule. Use all of them. Too much important information is lost over email or on the phone.
• Use a consistent set of collaboration tools. To reduce friction among your various teams, it's important to choose a single set of collaboration tools and stick with them. If you don't, your employees will waste thousands of hours on the mechanics of collaboration, rather than just collaborating.
• Beware diverging cultures. It's not just important to have a strong company culture; it's important to have just one. Don't allow multiple offices to devolve into “us versus them” scenarios. Travel to your offices on a regular basis and rotate people through them as much as possible. This helps create human connectivity and foster a unified company culture. Please note that many of these best practices also apply if you acquire a company abroad—like exporting an executive and doing more frequent check-ins. Unless the company you acquire is quite large, you will want to do more, not less, to integrate them into your organization than you would if they were local.

Startup CEOs want to change the world and this often entails the challenge of expanding your reach into new parts of it. It's difficult, frustrating and, often, very costly. If you want your brand to have global reach, you will need a global team.