Time to reality check your plans to scale in the U.S. market?April 16, 2019
At MEET, we often refer to the dangers of viewing the U.S. market as a pot of gold at the end of a rainbow. Yet, we understand where this view comes from. With its vast market size, large pool of high-quality talent, and abundance of hungry investors, it’s a hard opportunity to ignore. Particularly when your company has a strong team and traction at home.
But sometimes we all need a reality check; something or someone that gives you pause, perspective, and practical guidance around how to sort fiction from fact, and where the best resources can be found.
Headquartered in London with an office in New York, Octopus Ventures operates as part of a venture capital investment group that manages over £8.5 billion on behalf of 50,000 investors focused on supporting entrepreneurs in three key areas: industry, money, and health.
Why do foreign companies need to reality check their plans to scale in the U.S. market?
Priscila shared, “a number of entrepreneurs start from the base assumption that it’s inevitable they will go to the U.S. Some see it as a rite of passage—that if you have ambitions to become a market leader and a global company you must go to the U.S.”
“While scaling to the U.S. market will be a step on the trajectory for ambitious global companies that want to disrupt a market, the data will also tell you that the U.S. is the graveyard of more companies than it is the bounty they expect.”
What was the inspiration for the Question the Questions Resource Guide?
“Question the Questions really came from this recognition that there are a number of assumptions that are made about the US market. It may feel familiar because of shared language, movies or news articles that constantly give you a false sense of confidence that it’s going to be a market like your own. In practice, this couldn’t be farther from the truth.”
For that reason, Octopus wanted the Resource Guide to be incredibly practical and “battle-tested.” “It’s about what works in the real world, in the wild, with some of the most talented people, because even those people struggle like crazy. That’s because what you’re up against is a really, really hard challenge.”
What are the unique risks to U.S. market entry?
For all the reasons why the U.S. market represents an unrivaled opportunity for foreign entrepreneurs looking to scale, Priscila warns of the double-edged sword. “In many cases, the U.S. may cannibalize your domestic product, create divisions in your team, and make you vulnerable in both your home and new market.”
Priscila isn’t trying to dissuade any of her clients from scaling in the U.S. Rather, her goal is to ensure they are prepared and approaching the endeavor with eyes wide open. For many foreign companies, U.S. market entry is absolutely the right answer. Timing is key and unfortunately, many companies operate under false pretenses.
She shared this common trend: “In the beginning, companies get really excited when they start to see some traction in their home market. Suddenly they feel like they can’t miss out on the opportunity to expand to the U.S.”
Key insight: Make sure that your impetus to scale in the U.S. market is not simply based on a desire for faster growth. Changing the geography of an underlying problem, as Priscila points out, will lead to even greater setbacks.
“Unless you understand exactly why it is that you’re not picking up the speed that you need, growth is not going to be faster in a bigger market. If anything, it might be even slower because now you’re diluted amongst all of the American and international startups.”
Priscila advises that firms take a step back and consider their reasons for scaling to the U.S. market. “Our role is to push on them to understand the real causes of their growth. And if it turns out expansion to the U.S. is a great option, we sit down and figure out how to execute correctly.”
There is no such thing as a free lunch. Investing in the U.S. is going to cost you something and you have to be ready for the trade-offs. We recommend you check out Question the Questions for a reality check on what it takes to scale successfully.
To hear more from Priscila about the challenges and best practices to U.S. market entry, check out our full interview: Reviewing Octopus Venture’s Treatise on U.S. Market Entry: “Question the Questions.”
For access to all of MEET’s webinar content on how to successfully scale your company in the U.S. market through trade shows and in-person events, subscribe to our YouTube Channel.
MEET (meetroi.com) helps international B2B growth companies soft land and scale in the U.S. through trade shows and in-person events. MEET’s processes help its clients ramp-up sales quickly and maintain a steady stream of high-quality prospects going forward. Contact Bill Kenney for a free, no-obligation consultation firstname.lastname@example.org or +1 (860) 573-4821