If your company is planning on going international, then is it better to launch outside of the US? Should you first take a look at the international landscape before setting up an office in the states? We wondered about this topic for a while before asking ten experts what they think. Here is what startup leaders answered when we asked: Is it better to launch outside of the United States?
We had to think globally from the beginning—which meant we weren’t limited when it came time to expand.
If your target is US, there is no real upside other than cost of operation. Population is just a dumb number. Reaching a critical mass is so much harder in Asia compared to the US.
If your target market is Asia or someplace else though, it used to be the case that you launch in the US and expand to your actual target. That is no longer the case.
I think it’s believing the ideology of global takeover more than expansion or considering it only as Plan B. Broader market, wider network and diverse feedback is more valued than just a regular scope from the American market. It’s only my personal opinion. Actually your question is very intriguing since this is not always the case. Usually, startups are more geared to specific locations where the founder is located. Enhancement and expansion comes in as second nature to some people if not all.
If you have a solution that you don’t have to be physically in a location to sell you really can work from anywhere. US tech hubs like New York and San Fran are expensive. You can live somewhere else for the fraction of the cost while you get your business or the group and bootstrap it. For example, if you have a food mobile app that targets restaurants city by city – you will want to be in the US eventually in specific markets. But if you have a SaaS product, you can still have all of your sales come the US and not actually be there (since your sale happens online).
As I see, the economy is very strongly recovering in US right now, the dollar is at a high valuation, and the technology market is a bit crowded, on the other hand many countries need simple tech solutions and have a lot of resources to pay good money for it, with cheaper installations and employees. As an investor and entrepreneur I see good opportunities in both places.
Listen to this podcast from Start-Up Grind.
It’s a talk Dave McClure gave on the potential of international markets. He talks about international vs US throughout the talk, but specifically near the end of the talk a guy in the audience asks a question similar to yours – but I think Dave’s response answers your exact question perfectly.
A number of peers have done this, and the rationale is always the same – the US market is their most valuable target audience, and they want to get the operational kinks out in other markets.
Good idea, right? You can figure out the right technology needed, and fine tune your value proposition.
This appears to be solid logic, but a superficial analysis of a market is just that. The US market has very unique needs, and while there are a number of markets that appear to be similar but smaller (Australia and Canada for example), they in actuality are quite different (Target and Sears found this out the hard way).
So before you do try this method out, ask yourself if your product has general issues to be tackled (tech, logistics), or structural issues (value proposition, margins).
I think that there are 2 different things here:
Less competition in not so well developed markets make it easier for you to test and understand your customer. When you have multiple substitute products/services, which may happen frequently in the US, it gets harder to see what’s ahead, what works and what doesn’t.
On the other hand, a less developed market offers you a bigger challenge, specially when it comes to customer developent, and that is directly correlated to having less competition.
My conclusion is that companies might look at less developed market as a blank paper on which they can better explore and understand early market dynamics, so that they can reach the US with a sharper product.
There are a few key reasons why Argentina is a great place to have a startup. There is A LOT of talent and companies such as Mercado Libre, Despegar, and Globant have found success here. Another reason is that since there are not huge technical teams such as Google, Facebook, Twitter, Intel, etc, it’s easier to compete on a bigger scale with lower costs.
By founding Ironhack in Madrid, Spain, we were able to achieve proof of concept in an increadibly cost effective manner thanks to 1) having access to affordable tech talent 2) enjoying low cost of living and 3) being granted subsidized and non-recourse gorvenment loans.