Australia and Northern Europe are in the same boat when it comes to startup companies. We both have small home markets, and are a long ways away from the U.S., which seems to be the bullseye due to it being a big rich homogenous market full of customers and investors. With internationalization on our mind, we're taking a look at 99designs, the Australian-founded company that allows anyone to run a crowdsourced contest to get the best design possible for whatever you need. We used it to source our coworking space logo (which is goddamn gorgeous to us) and through the process we got in touch with Patrick Llewellyn, CEO of 99designs.
As a brief history, 99designs got its start actually as a spinoff of the SitePoint forums, where occasionally web designers would compete on fictional logos, just for fun. Eventually one day someone came in and basically said, "hey you guys like doing logos, so how about making one for my company?" SitePoint capitalized on that self-generated activity by starting 99designs and was able to internationalize quickly by harnessing their already-present U.S. traffic.
I've lately had many discussion on how the break from the Nordics & Baltics and make one's service or product really global. Just recently I had this discussion here at Nordkapp where I work, so it does not only concern software products but equally all the service provides with international ambitions.
For a technology startup this question focuses many times on the issue of whether they should pack their bags and move to the Silicon Valley or whether they should build a strong user base first at home. Another viable option might be to reach out to London, but then again, many think that will only slows you down in your quest to global market share and you should head straight to the eye of the storm where the battle for the critical masses are fought.
This is more of a ongoing conversation than something that can be answered with a clear Yes or No, but here are some thoughts to start with:
- If you know which market you want to get to think about getting a board member, an advisory board member or an investor from the market. Instead of trying to bombard firms operating in the given market with a requests for shallow partnerships or just opening an office there, by aligning someone's interest with yours ie. giving them a stake in your success you can instantly tab into their network of contacts. These people already know who are the people you don't want to work with, because even though someone might have a nice resume they also might have a bad reputation among the local players, which would make your market entry a disaster. And vice versa: They know exactly who are the perfect partners for you and you don't end up taking the one you happen to know from a Trade Show two years ago. To get these people on board you need to focus, do your research on who is the right fit with you, work hard, dedicate time to it and make the offer really worth their time.
- For any consumer technology startup, don't just visit US and get a sales guy in there. Move there permanently for a few years if that's the market you aim for. And if you're building the next consumer web service, that is most likely the market you should aim for to get the traction over competitors. That said, you should still cultivate your network back at home so you can also benefit from that and link other firms from back home to your new contacts. This goes for the time of high growth when you're just building your product, but especially for the time after you have made your millions. You can have a huge advantage by having a network in both ends whether you start another startup or decide turn into an investor.
- When choosing an investor, you want to be careful for not choosing some small local fund, because they might actually limit your company to reach its full potential since they'll hold you back in fearing that they might get squeezed out in the later investing rounds. Also, since cycle times for an exit are growing (what was an exit in 5 years, looks more like an exit in 8 years now) you need a big enough fund that can follow up without running out of money.
- Same goes for advisory board members: Some people active in the Finnish startup scene have voiced their concern about the quality of people present in many of the more informal investor get-togethers. You don't want some former technology company middle manager from the early 90's influencing your vision, because they advice you to take the path they are familiar with which more often than not is something different from going global from day one.
- Even though Silicon Valley is the epicenter of much of the activity in the consumer technology startup world don't only look at the US. Do see how fertile ground India, China or Asia might be for your product. When they all start to look good, remember to choose your battles. As a startup you have very limited resources and if you'd like to push through you need to focus your efforts.
What else should a startup consider when trying to go international?
Here's Jaiku founders' advice on how to choose between London and the Silicon Valley when building a successful startup (original post here)
Photo by oskay (CC:BY).
The Finnish based mobile community game builder Ironstar Helsinki has opened a new country for their Moipal virtual world - Brazil. Moipal is a mobile based game that is a mix of Tamagotchi and Facebook. You play the game on your own, but there are interactions between the players.
Joakim Achrén, the CEO, told us that on many occasions there are hundreds of Brazilian players on the US site which confirmed him they need a local site in Brazil as well. The community management is handled from Brazil, but the hosting and other technicalities are still handled from Finland, says Joakim. They are also working on many small aspects to make the service more localised, such as Samba parties at the beach etc.
Well, almost. In a press released yesterday, Apaja Online Entertainment announced that they will be launching a localised Belgian website of their Playray service with a partnership with Corelio and MTV Networks. At the moment their Belgian website is directing users to France or Netherlands, depending which language and social circle they enjoy more is asking users which language preference they enjoy (edited due to earlier mishap in the analysis - see comments).
According to Kim Lindholm, Business Development Director, the Belgian registrations in the French and Dutch services attracted so many Belgians that they had to build localised version of the service in Belgium. Despite being an area where languages mix with ease and people understand each other easily, there are a lot of differences between people in the BeNeLux countries and thus localising each service makes common sense in the long run.
A recent survey conducted in Playray revealed that the social aspects of the service are equally important to the casual games. This strengthens the latest understanding of the industry that social gaming is on the rise. Furthermore a third of new registrants are over 35 which also supports the broadening of the user base, in line with previous studies.
It remains to be seen how successful such a rapid expansion strategy is. Apaja's 2007 financial figures are still unpublished in the public listings, but looking at the 2006 results the company ran a loss almost equal to its annual revenue.
Disclaimer: I am a former employee of Apaja Online Entertainment.
Christoffer Nordström of Biznesport directed our attention to their newly launched project management and calendar service. The focus is on internationalisation as the service has been developed for the Finnish market from all the way back in 2003.
The service features many common functionalities such as discussions, filesharing, timetables, image commenting, mobile browsing and so on. Many of which are familiar from the 37 Signals' Basecamp application widely used around the world.
There are three different price groups to choose from; Basic, Professional and Premium. Basic membership costs 9 euros a month, Professional 39 euros and Premium membership 69 euros a month. There are also additional modules that make the pricing slightly more difficult to grasp as you can choose from Project module and Calendar module to be added to the package at 25 euros initial cost. Something that I'd really like to see included in the packages as they are usually taken for granted in the world of project management.
The service seems relatively good and usable at first, especially the use of e-mail through the service to collect all mails to one place might come in handy as might the ability to surf the service through a mobile handset. However, there is very little innovation in my opinion to make it stand out from the already crowded market. Furthermore, there are many open source alternatives to companies who look for cost savings and know a little more about installing these alternatives.
Biznesports internationalisation plans are yet to be seen, but we will definitely keep an eye on this company in the future as well.