European Expansion Lessons From Tech Companies

科技公司的欧洲扩张经验

2020-08-01 23:41 Lingua Greca

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I was excited to open up a new research report from Frontline Ventures on the topic of European expansion. Their research looked at 300,000 expansion-related data points from 175 B2B software companies expanding into Europe over the past 15 years. They also conducted interviews with more than 20 heads of European offices at B2B SaaS companies. In this post, I’ll provide a summary of relevant findings for readers of this blog. I’d also encourage you to read the full report, Global Ambition: How B2B Software Companies Win and Lose in Europe. European Expansion Is Part of the Classic IPO Path The Frontline report flags an important finding for tech company CEOs and other company executives. The researchers found that most US-based SaaS companies should derive 25 to 35% of their global revenue from Europe by the time they go public. For a typical IPO candidate in the SaaS space, this means approximately $80M of ARR should come from European markets by the time they go public. I believe this is a very important finding. I’ve written before that SaaS companies are destined to be global. But those that are headed toward an IPO would be well-served to think about how much revenue they will need to obtain from Europe in order to hit that target range. This way, they can facilitate their global expansion in a more precise and strategic way. Overall, when it comes to an IPO path, the European revenue range is not so critical as a quantitative value. Instead, the value matters due to what it says from a qualitative perspective about the company’s viability. The strength of its business fundamentals are what matter most. When a SaaS company hits that “magic number” of 1/4 to 1/3 of global annual recurring revenue (ARR) from Europe, it clearly has more solid sea legs. Having a good percentage of revenue from Europe says to investors, “We’ve figured this out in more than one country. We can scale globally and address key markets.” Hitting that recommended range of ARR from Europe is basically another proof point of a solid business foundation. It’s a reassuring sign for investors to know that you’ve achieved product-market fit in markets outside of your home country. Investors know that international markets are critical to drive sustainable and continued revenue growth for tech companies. (Related: See the Biggest SaaS companies and How Many Languages They Offer) Early European Office Mix: 60% Sales and 40% Engineering Roles The Frontline report also explains that most tech companies do not embark on a European expansion initiative just for sales opportunity alone. This runs counter to the prevailing narrative. Often, the first story you’ll hear about with tech companies and new international offices is that they are hiring sales people. But most successful tech companies build both sales and engineering teams simultaneously. This starts from their earliest office opening. Frontline looked at the composition of SaaS companies at the point in their European expansion when their local Europe-based offices had 15 employees. The graphic above from their report shows the breakdown. It confirms that most tech companies “land” in Europe with a certain “sweet spot” ratio. 60% of their roles focused on customer-facing activities such as sales and customer success, while the other 40% are focused on product and engineering. This is another very important finding from Frontline’s research. In the early days of expansion into a new country, the “founding team” behaves very much like a start-up. For an early-stage international office to succeed, Sales and Product teams must build a solid communication channel. This is especially true if the person leading the local office does not have much past direct experience with the product or the general tech category. In addition, as a company pursues European expansion, it becomes more and more important for companies to have local costs incurred directly in the countries and regions (and currencies) they are operating in. This can create a natural hedging effect and limit exposure to risk. Planting employment seeds early in two of the largest teams at most SaaS companies can create a foundation. Companies want for those teams to grow bigger over time. Also, linking the cost basis directly to the size of the install base can help increase the likelihood of a healthy LTV:CAC ratio. When to Expand to Europe? Post Series B and 8+ Years from Founding I looked at the chart below from the Frontline report with great interest. Many companies wrestle with the question of when to open their first European office. The researchers found that companies are better funded today when they start on their European expansion initiatives than they were about a decade ago. Frontline also found that businesses are waiting a bit longer than they did in the past. Most companies are waiting until they are beyond their Series B raise to begin European expansion. Lately, they are holding off until they are about 8+ years from their founding. Not long ago, they opened up those offices at an earlier point, at around year 6. How can you get the timing right? How do you know when to open up a European office? Or, should you just grow in Europe from outside of Europe? These can be a very difficult decisions to make. International growth in general is not for the faint of heart. Opening up new offices is a next-level undertaking. You’ll need to change up your operations considerably and introduce more complexity into your business. Companies must devote significant time, commitment, and resources to making any European expansion a success. Local growth usually comes at the expense of devoting attention to other things. For example, you might de-prioritize domestic growth or expanding product footprint. Timing is key when entering new markets. European expansion becomes harder as you get bigger for many reasons. When you are well-funded and growing fast is precisely when you want to start looking at European expansion opportunities. As you get bigger, you might have less cash to burn, or you might need to keep a closer eye on the ROI time horizon. When you’re in earlier phase of expansion, it’s easier to get approval for the outlays of cash required to set up an office. Also, very often, your business won’t even feel the impact of these early decisions until you start to scale. The later phase, a few years after you first open up offices on the ground in region, is when international feels heavier and harder. The bigger you get, the more those early decisions and complexity actually can cause your business to strain at the seams. The Five European Office Readiness Questions Every CEO Should Ask Deciding when to expand with a European office can be tricky. Frontline offers five questions a CEO can ask as a European readiness test: Is the US business humming? Are we well-funded? Is there demand from Europe? Is my exec team strong and deep? Is globalizing the company a top personal priority? Frontline believes the CEO should be able to say “yes” to all five questions before they expand. Often, companies expand too late out of fear. They use the “growing US market” as a way to rationalize and procrastinate. Note especially question #5. The authors share an important observation. Google decided to prioritize international expansion even though their US business was booming, because it was a top personal priority for the CEO. CEO conviction is the single most important enabler of international expansion. If the CEO truly believes that international growth matters for global success, everyone more easily aligns to support international expansion. It helps if the CEO has direct experience with international growth too. Best of all is when the CEO has lived abroad or actually hails from another country. European Engineering Talent Matters Hugely for Size and Future Scale Engineering talent matters for other reasons beyond just the founding team mix. Engineering talent availability is often a major factor in deciding where to set up a company’s international office. Frequently, it’s heavily weighted in the criteria used for an international office selection. The current pandemic has highlighted the importance of remote work. But companies still have to take into account employment law and corporate tax questions. This decision needs to be made at the country level and city level. Office decisions cannot be made just at the “Europe” level. The decision of where to put an office can depend not just on current tech talent availability. It also hinges on the country’s long-term commitments to producing tech talent. As a recurring theme here, the bigger you get, the more these early choices matter. Also, Frontline points out that US companies often run into the “Bay Area bottleneck” with engineering talent. Sometimes, having an additional location in Europe can offer hiring advantages. Grow engineering teams in cities with lower levels of competition, and you can grow faster. US-based engineering leaders will have to deal with time zones. However, the pros usually outweigh the cons, especially as the company gets bigger. Having engineering talent directly in your European offices matters for another reason. Put more Product team folks Europe, and they can influence important web application localization details. US-centric product design inhibits international expansion. The truth is, internationalization matters hugely to global success. To truly get your global product groove going, place engineering talent directly in your first European office as early as you can. Strategy Often Doesn’t Enter the International Picture Until Later On The Frontline report also states, “We find the majority of companies end up in Europe by stealth, not strategy.” As they explain, an entrepreneurial sales rep based in the United States will start booking deals in Europe. Or, an early employee will live out their dream of moving to another country. Sometimes, an early acquisition leads to a presence in Europe. But it’s less common for a tech company to make a strategic decision to go into Europe. It often happens in a more ad hoc way. Their findings match perfectly with my own observations. Companies expand internationally for many reasons. A founder or C-level connection leverages a connection in a given part of the world. A partner opens up opportunities in a new country. The CEO admires some other company that did well there. Many companies also react to demand or “market pull” by entering the market. So, the theme that Frontline highlights here is on point. I speak frequently with a dozen or so international expansion leaders at US-based tech companies. At most of these companies, early expansion decisions are not based on a thorough understanding of the markets a company wants to target. It’s even less common for them to be informed by a comprehensive strategy. Very few companies use even a simple 2×2 international expansion model like this one. The ones with a more evolved strategy are even less common. Companies below the US$500M revenue range are often figuring it out as they go along. Why does strategy matter? Imagine how much faster these companies could grow if they made these choices a bit more thoughtfully and intentionally, earlier. US-based companies that do decide to make international moves often “get to yes” quickly. But, they then move into a market with what I would describe as a “brute force” approach. They rarely do the necessary market research to truly understand what the local customer really wants. Knowing local realities would enable them to sell to them more quickly and easily. Don’t fail do your homework in a rush to get started. You’ll grow at a less aggressive pace than if you go in with a well-informed growth strategy. A solid strategy tends to be more common at a bigger company that is more mature. Bigger companies simply can’t afford to take the same risks as a company can when they are smaller and have more cash fluidity. The pace matters. It can dictate how fast a company will cross the IPO finish line. An IPO is also a starting line for the next phase of growth. See Europe for What It Is: A Critical Lever for Top-Line Growth I asked Jamie Bristow, the lead researcher for the report, to comment on what surprised him the most about the research. He and the Frontline X team have worked closely with companies expanding to Europe over the last 20 years, as both investors and operators. They found that their research mirrored a lot of their own direct observations over the years. “We were pleased to see a lot of the learnings and experience picked up on the ground validated in the analysis,” Bristow noted. However, while they expected some reaction to Brexit, they were surprised by the degree to which it affected companies’ expansion plans and how much it caused them to miss out on market opportunity. “We had been working with companies that were hesitant about expanding following the vote. But the drop in expansions was more significant than we expected,” Bristow explained. “This is a huge missed opportunity for the companies that shied away, caused by perception of problems rather than reality on ground.” European expansion can be a daunting proposition for US companies. They may be sitting on the fence to begin with. These firms might fear their businesses are not yet ready. So, Brexit might give a wavering company additional reason for pause. I asked Bristow for his most important takeaway from the research. He highlighted, “The size of the market is often underappreciated by CEOs considering expansion. Europe is typically the biggest growth lever that the company hasn’t started pulling.” He emphasized the difference a well-executed European expansion can make to a company’s top line, “Well-run B2B software companies derive c.30% of global revenue from Europe at IPO.” There are many other gems for US-based tech companies in the Frontline report, too many for me to cover in a single blog post. I found myself reading with interest and nodding in agreement throughout as I walked through their analysis. The research discusses Brexit, COVID-19 impact, where exactly (which cities) to put an office in Europe, types of early hires to make, and many other important considerations that too many companies end up learning the hard way. For that reason, I encourage you to check out the full report, but especially if you’re a tech company executive with international expansion on your radar, or your SaaS company plans to pursue an IPO path someday. It’s far easier to accomplish these milestones if you learn from these findings and follow the lead of the best SaaS companies that have already “been there, done that.” Tweet WhatsApp Email Print
我很兴奋地打开了一份来自Frontline Ventures的关于欧洲扩张话题的新研究报告。 他们的研究考察了175家B2B软件公司在过去15年中向欧洲扩张的30万个扩张相关数据点。 他们还采访了20多家B2B SaaS公司的欧洲办事处负责人。 在这篇文章中,我将为本博客的读者提供一个相关发现的摘要。 我也希望你能完整读完报告,全球雄心:B2B软件公司在欧洲的输赢。 欧洲扩张是经典首次公开募股路径的一部分 Frontline的报告为科技公司的CEO和其他公司的高管指出了一个重要的发现。 研究人员发现,大多数总部位于美国的SaaS公司到上市时,其全球营收的25%至35%应该来自欧洲。 对于SaaS领域一个典型的IPO候选人来说,这意味着在他们上市时,大约8000万美元的ARR应该来自欧洲市场。 我相信这是一个非常重要的发现。 我以前写过,SaaS公司注定是全球化的。 但那些准备走IPO的公司最好想想,为了达到这一目标区间,它们需要从欧洲获得多少收入。 这样,它们就能以更精确和更有战略意义的方式促进其全球扩张。 总体而言,在IPO路径上,欧洲营收区间不如量化值那么关键。 相反,价值之所以重要,是因为它从定性的角度说明了公司的生存能力。 其业务基础的实力是最重要的。 当一家SaaS公司从欧洲获得全球年度经常性收入(ARR)的1/4到1/3这一“神奇数字”时,它显然有了更坚实的后盾。 有很大比例的收入来自欧洲,对投资者说,“我们已经在不止一个国家发现了这一点。 我们可以在全球范围内扩展业务,并开拓关键市场。“从欧洲达到推荐范围基本上是稳固业务基础的另一个证明点。 对于投资者来说,这是一个令人放心的信号,因为你已经在本国以外的市场实现了产品与市场的匹配。 投资者知道,国际市场对于推动科技公司的可持续和持续收入增长至关重要。 (相关:查看最大的SaaS公司以及它们提供的语言种类) 早期的欧洲办事处组合:60%的销售和40%的工程角色 Frontline的报告还解释说,大多数科技公司在欧洲扩张并不仅仅是为了赢得销售机会。 这与普遍的说法背道而驰。 通常,你听到的第一个关于科技公司和新的国际办事处的故事是他们在雇佣销售人员。 但大多数成功的科技公司同时建立销售和工程团队。 这要从他们最早的办公开始说起。 Frontline研究了SaaS公司在欧洲扩张时的组成情况,当时他们在欧洲的办事处有15名员工。 他们报告中的绘图显示了详细情况。 它证实,大多数科技公司“登陆”欧洲都有一定的“最佳地点”比例。 他们60%的角色专注于面向客户的活动,如销售和客户成功,而另外40%则专注于产品和工程。 这是Frontline公司研究的另一个非常重要的发现。 在向一个新国家扩张的初期,“创始团队”的行为很像一个初创企业。 对于一个早期阶段的国际办事处来说,销售和产品团队必须建立一个坚实的沟通渠道。 如果领导当地办事处的人员过去对产品或一般技术类别没有太多直接经验,则尤其如此。 此外,随着一家公司追求欧洲扩张,公司在经营所在国家和地区(和货币)直接产生的当地成本变得越来越重要。 这可以产生一种自然的对冲效应,并限制风险扩大。 在大多数SaaS公司最大的两个团队中,尽早播下就业种子可以创建一个基础。 公司希望这些团队随着时间的推移不断壮大。 此外,将成本基础与安装基地的规模直接联系起来有助于增加LTV健康发展的可能性:CAC比率。 什么时候向欧洲扩张? 后B系列和成立后8年多 我饶有兴趣地看着下面这张来自前线报道的图表。 许多公司都在纠结于何时开设第一家欧洲办事处的问题。 研究人员发现,与大约10年前相比,如今的公司在开始欧洲扩张时获得了更多的资金。 Frontline还发现,企业等待的时间比过去长了一点。 大多数公司都在等待,等到B系列融资结束后,才开始在欧洲扩张。 最近,他们一直拖了8年多的时间才成立。 不久之前,他们在更早的时候,大约在第六年的时候开设了这些办事处。 你怎样才能把握好时机? 你怎么知道何时开设欧洲办事处? 或者,你应该从欧洲以外的地方发展欧洲吗? 这可能是一个非常困难的决定。 一般来说,国际增长不适合胆小的人。 开设新办事处是下一个层次的事业。 你需要大幅改变操作,并将更多的复杂性引入到业务中。 公司必须投入大量的时间,承诺和资源,使任何欧洲扩张取得成功。 本地的增长通常是以把注意力投入到其他事情上为代价的。 例如,你可能会取消国内增长或扩大产品覆盖范围的优先级。 进入新市场时,时机是关键。 由于许多原因,当你变得更强大时,在欧洲扩张会变得更加困难。 当你资金充足并快速成长的时候,正是你想开始寻找欧洲扩张机会的时候。 当你变得更强大时,你可能会消耗更少的现金,或者你可能需要更密切地关注投资回报率的时间范围。 当你处于扩张的早期阶段时,设立办事处所需的现金支出更容易得到批准。 而且,很多时候,直到你开始规模发展,你的企业才能感觉到这些早期决策的影响。在你第一次在当地开设办事处的几年,这一后期阶段是国际公司感到更加沉重和艰难的时候。 你的规模越大,那些早期的决定和复杂性实际上就会使你的业务陷入困境。 每个CEO都应该问的有关五个欧洲办公室问题 决定何时扩大在欧洲办事处可能是一个棘手的问题。 Frontline提供了五个CEO可以问的问题,作为欧洲的准备测试: 美国生意兴隆吗? 我们资金充裕吗? 欧洲有需求吗? 我的执行团队是不是很强大并有深度? 公司全球化是个人的头等大事吗? Frontline认为,在这五个问题扩展之前,CEO应该能够对它们全部说“是”。 通常,公司扩张太晚是出于恐惧。 他们利用“不断增长的美国市场”作为合理化和拖延的方式。 特别注意问题 #5。 两位作者都有一个重要的发现。 尽管美国商业蓬勃发展,谷歌还是决定优先考虑国际扩张,因为这是首席执行官个人的头等大事。 CEO的信念是国际扩张最重要的因素。 如果首席执行官真的相信国际增长对全球增长至关重要,那么每个人都更容易联合起来支持国际扩张。 如果首席执行官也有国际增长的直接经验,这也会有所帮助。 最棒的情况是首席执行官住在国外或实际上来自另一个国家。 欧洲工程人才对规模和未来的规模至关重要 工程人才之所以重要,除了创始团队的组合之外,还有其他原因。 工程人才的可获得性往往是决定在哪里设立一家公司的国际办事处的一个主要因素。 通常,它在国际办公室选择的标准中占很大比重。 目前的疫情突出了远程工作的重要性。 但企业仍然必须考虑到雇佣法和企业税收问题。 需要在国家层面和城市层面作出这一决定。 办公室的决定不能仅仅在“欧洲”一级作出。 在哪里设立办公室的决定不仅取决于当前科技人才的可获得性。 这也取决于中国对培养科技人才的长期承诺。 作为一个反复出现的主题,你越强大,这些早期的选择就越重要。 此外,Frontline指出,美国公司在工程人才方面经常遇到“湾区瓶颈”。 有时,在欧洲拥有一个额外的工作地点可以提供招聘优势。 越是竞争水平较低的城市发展工程团队,你就成长得越迅速。 驻美国的工程领导人将不得不处理时区问题。 然而,利通常大于弊,尤其是当公司变得更大的时候。 在你的欧洲办事处直接拥有工程人才还有另一个原因。 把更多的产品团队成员放在欧洲,他们可以影响重要的web应用程序本地化细节。 以美国为中心的产品设计抑制了国际扩张。 事实是,国际化对全球成功至关重要。 要想真正让你的全球产品走上正轨,请尽早将工程人才直接安置在第一个欧洲办事处。 战略往往在以后才进入国际视野 Frontline的报告还指出,“我们发现大多数公司在欧洲的最终目的是暗中进行而非策略性的。”正如他们解释的那样,一位驻美国的创业型销售代表将开始在欧洲预订交易。 或者,一个早期的雇员将去到别的国家实现他们的梦想。 有时,早期的收购导致在欧洲的存在。 但科技公司做出进军欧洲的战略决定并不常见。 它经常以一种更特殊的方式发生。 他们的发现与我自己的观察完全吻合。 公司在国际上扩张有许多原因。 一个创始人或C级连接利用了世界上某一特定地区的一个连接。 合作商在新的国家寻求机会。 这位首席执行官钦佩其他一些在那里做得很好的公司。 许多公司也通过进入市场来应对需求或“市场拉动”。 所以,前面在这里强调的主题是切中要害的。 我经常与十几家美国科技公司的国际扩张负责人交谈。 在大多数这样的公司,早期的扩张决策并不是基于对一家公司想要瞄准的市场的透彻了解。 对于他们来说,了解一个全面的战略是更不常见的。 很少有公司像这样使用哪怕是简单的2×2国际扩张模式。 而那些具有更多进化策略的人就更不常见了。 收入低于5亿美元的公司往往会在发展过程中发现问题。 为什么战略很重要? 想象一下,如果这些公司能更早,更经过思考,更有意地做出这些选择,它们的增长速度会有多快。 总部位于美国的公司,如果确实决定采取国际行动,往往很快就会“同意”。 但是,他们随后进入了一个我称之为“蛮力”的市场。 他们很少做必要的市场调查来真正了解当地客户真正想要什么。 了解当地的实际情况将使他们能够更快,更容易地向他们销售产品。 不要急于开始就忘做功课。你的增长速度会比你采用一种见多识广的增长策略时要慢一些。成熟的大公司常常会采取更稳健的战略。规模较大的公司根本承担不起与规模较小,现金流动性较大的公司一样的风险。 节奏很重要。 它可以决定一家公司将以多快的速度跨过IPO终点线。 IPO也是下一阶段增长的起跑线。 看清欧洲的本质:高端增长的关键杠杆 我请该报告的首席研究员杰米·布里斯托评论一下这项研究中最令他吃惊的是什么。 在过去的20年里,他和Frontline X团队以投资者和运营商的双重身份与向欧洲扩张的公司密切合作。 他们发现他们的研究反映了他们自己多年来的直接观察。 布里斯托说:“我们很高兴看到大量在实地获得的知识和经验在分析中得到验证。” 然而,尽管他们预计英国脱欧会有一些影响,但他们对英国脱欧对企业扩张计划的影响程度以及导致企业错失市场机会的程度感到惊讶。 “我们一直在与那些在投票后对扩张犹豫不决的公司合作。 但扩张的下降比我们预期的要显著。“布里斯托解释说。 “对于那些逃避的公司来说,这是一个巨大的机会,原因是对问题的认知,而不是实际情况。” 对美国企业来说,欧洲扩张可能是一个令人望而生畏的话题。 他们可能一开始就持观望态度。 这些公司可能担心他们的商业业务还没有准备好。 因此,英国脱欧可能会给一家摇摆不定的公司提供更多的修整理由。 我向布里斯托要了他从研究中得到的最重要的东西。 他强调,“考虑扩张的首席执行官们往往低估了市场的规模。 欧洲通常是该公司尚未开始拉动的最大增长杠杆,“他强调了一个执行良好的欧洲扩张可以给公司的收入带来的不同,”运营良好的B2B软件公司在首次公开募股时可从欧洲获得全球收入的30%。“ Frontline报告中还有许多其他值得美国科技公司借鉴的地方,内容太多我无法在一篇博客文章中涵盖。 我发现自己饶有兴趣地阅读着,并且在阅读他们的分析时点头赞同。 这项研究讨论了英国脱欧,新冠病毒的影响,在欧洲设立办事处的确切地点(哪些城市),提前招聘的类型,以及许多其他重要考虑因素,太多的公司最终都经历了艰难的学习。 出于这个原因,我希望你看完整个报告,特别是如果你是一个关注国际扩张的科技公司高管,或者你的SaaS公司有朝一日打算走IPO之路。 如果你从这些发现中学习,并跟随那些已经“去过那里,做过那件事”的最好的SaaS公司的领导,那么完成这些里程碑要容易得多。 推文 WhatsApp 电子邮件 打印

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