A global startup versus what? You might ask. 

With myriad definitions of startups floating around the ether these days, defining what we mean here is worth our while. For the purposes of this article, and generally speaking, a global startup is a venture in which innovation and internationalization processes are intertwined. 

In English: going global means pioneering, growing, and operating with multiple marketplaces and sources of supply immediately, instead of testing and validating with isolated offerings before launching in multiple locales.

Building a global startup can also be described as what it’s not. It’s not developing and validating a product in a localized country or region, in order to test its viability on a small scale. 

It’s the opposite of a startup being launched in its domestic market. And while early on, the founders may (and often are well-advised!) to plan to hit a beachhead market, for a global startup this isn’t restricted to a particular geography.

Why doesn’t everyone go global from the get-go?

‍

Startup CEOs and managers often make the mistake of focusing on the ideas and capabilities of their localized markets, rather than focusing on the international market. One reason for this is that the potential market targets they could reach locally, might seem more approachable or impressive in relative ‘size.’ For a new startup founder, it might be easier to capture a majority of a smaller, local beachhead market - which looks great on paper - but can actually be a false win. 

Not only is the actual size of what your market size misleading compared to what a smaller statistic would entail on a global scale, but more importantly, it reduces the integrity of a company’s win in terms of learnings. 

While it comes with its own set administrative and localization challenges, growing with a multi-market strategy can create an even stronger foundation for your venture at two levels. Technologically, global companies open themselves up to possibility, competition, international diversification and scientific cooperation. Socially, they open themselves up to understanding and accommodating diversity.

Starting from the comfort of your own home

Startup teams that are inherently put out to risky situations and problem-solving experiments might also prefer the comfort of starting out in a familiar marketing and sales culture. One of the assumptions is that potential customers are more comfortable purchasing from someone they can personally identify with - who is able to make a more persuasive case in the local language or locale.

But as Eric Ries, author of The Lean Startup, puts it:

‍

Consider the local Hungarian ecosystem with regards to this question:

Based on Startup Hungary's Hungarian startup report, 37% of startups focus solely on a local market, with plans to expand in the future. Many plan to expand to new markets, but feel their product isn’t ready, or want to validate locally first.  

What’s more, many young companies set a goal of getting strong enough market penetration in their native market - perhaps so they won’t even have to bother with a multi-market strategy. 

Here’s where that theory doesn’t quite check out.

The case for going global

Planning a global startup is, in essence, strategizing your business in order to capture a larger business opportunity, an expanded customer base and new markets - without significant retooling of your solution.

Plantcraft, an international startup founded by two Hungarian founders, immediately targeted an international target market, honing in on the US to launch their product line of nutritional meat substitutes. Their reasoning was both economic and values-based: the size of the US market would allow the business the possibility for future rapid scaling without additional retooling, and it would also astronomically increase the size of their environmental impact potential from what it would be in Hungary alone.

Meanwhile, BrokerChooser, an international stock broker comparison site, also strategized globally from day one, using the local market as a sandbox. Their service covers online investment, which is inherently a global issue, so the decision to go international was evident.

‍

The startup advantage

‍

Startups are uniquely positioned to grow with a global mindset, due in large part to the low-overhead costs and agility that their business case affords them.  Most of the time, validated SaaS startups will even already obtain a percentage of revenue from international customers at an early stage, without intentionally making a major international push. 

Unlike traditional companies, SaaS businesses can use their own web-based sales and distribution data to analyze the geographic breakdown of traffic and conversions from their sales history. This means that they don’t have to conduct extensive market research to determine the potential market for each country before making a decision on the next target market for expansion - securing expanding startups with massive cost-savings and a potential head start in the process.

What’s more, both the motivation and the potential rewards for startups going global are significant, especially for startups launching from smaller countries. Businesses in regions with a population of less than, e.g. 50 million do well to think internationally from an early stage in order to plan for scalable growth. Founders in the US or China are inherently positioned to build a billion dollar business while focusing 100% on a home market, though in the long-run, they might struggle to adapt their product or business model to a new target market.  

Let’s get to it.

‍

‍

Consideration 1: Determine a profitable industry you have the expertise to innovate in - and position yourself on the global market

Before you do anything, cross-check the industry you are looking to work in and the solution you have in mind. Take into consideration cultural norms, climate, resources, consumer spend, and more.

Companies with tangible products or on-the-ground services will have a longer due diligence process here, as they analyze the needs and opportunities inherent in a given TAM (Total Addressable Market). 

SaaS and digital products, on the other hand, face less geographic restrictions. Not only does their deployment to new markets come with exponentially low local infrastructure costs, it can also be largely anonymous and remote at the start. While a strong expansion into a new market may require you to hire a local team to grow more effectively, the location-independence and anonymity of a virtual startup allows you to take the first sales and marketing steps in your expansion from your home country. 

Here’s how Plantcraft approached this:

Csaba Hetenyi of Plantcraft, explained their TAM research process in making the decision to launch in the US. Their USP, a nutritional meat substitute, aimed to provide a ‘3rd generation’ alternative to the industry with a hook that made investors look twice. Instead of substituting meat with highly-processed, chemical substitutes, they created products with a much higher nutritional value than their competitors. This singular VP differentiates them in the market to both consumers and investors.

‍

The team also spent a lot of time determining the food product niche they are working to crack. A lot of research went into exploring the different meat substitute markets globally before they zeroed in on ‘deli meats’ as a plane that’s overlooked and undervalued.

How BrokerChooser approached this:

BrokerChooser noted that their target audience is similar in most locations - be it Hungary, the UK or the US. So to validate their product, they created a Hungarian webpage and asked local brokers whether they were willing to pay for leads. As the results were deemed positive for customers and brokers after 5-6 months, they closed the English webpage and opened the Hungarian one.

“Product market fit is a key point where many startups fail. You should consider in advance whether your local market is the same as the global market. If you have a product fit for your local market and then you try expanding it to a vastly different global market, it may result in your product not fitting to the global market. You can use the local market for experimenting, but I would recommend that you don't spend too much time with this phase if you want to go global,” advised Linda Laszlo, Head CMO at BrokerChooser.

‍

‍

Once you’ve established a solid industry and product where you can apply unique expertise, ingrain a global mindset into the foundations of your business. Create a mission statement that clearly defines your position to reach customers around the globe. 

‍

• Plantcraft: "Offering a safe alternative to harmful, processed meat products.”
• BrokerChooser: "We make brokers comparable by using the same methodology to review them."

Build a globally minded brand around this mission statement, with an eye for future growth. Infuse your mission, vision, and values with this approach from the get go, so that it sets the goalposts for future branches and regional offices down the line.

‍

Consideration 2: Build a globally minded business strategy around product development and go-to-market strategy

Once you’ve got your mission statement, industry and niche in check, it’s time to put brand essence into business practice. Craft strategies and KPIs that are measurable and geared towards global success.

John O’Farrell, general partner at A16Z offers the following guidance and questions to shape your direction:

1. What countries will we focus on? Strategize your expansion around countries that will generate the most return with the smallest investment. For example, think about expanding next to countries that have the same language and similar consumer preferences to your original market. 

2. What product(s) will we launch? In most cases, your product will require customization depending on where you plan to launch next. Ensure that your product caters to that specific market, and addresses local language, legalities, and cultural norms.

3. What’s the go-to-market strategy? Each country you expand to will come with its own set of challenges and requirements. For example, if you are a mobile company, then partnering with a mobile operator is your best choice. If your company provides enterprise software, you may need to hire a direct sales force.

4. What’s our operating model? Your operating model should be based on the functions you plan on managing centrally, and which you plan on managing locally. The amount of autonomy you give to local offices will be determined by your company’s business and revenue models, your products, size, and marketing strategies, so don’t forget to give your operating model extra attention.

Consideration 3: Scale glocally

With the unbelievable amount of globally available tools at your fingertips, you really could establish, hire, and scale a global company from an island off the coast of Canada, if you wanted to. Use the advantages of the information economy to localize a global company with a local team.

Company communication — which previously put emotional and technological barriers up for global companies — has become far easier to make this an attainable goal for bootstrapped ventures. 

Today, 1.75 billion people, a quarter of the world’s population, speak English.  And now you can reach them via any number of messaging platforms that were heavily popular before - and since the pandemic, absolutely indispensable. Zoom, Slack, Meet are all installed and adopted in global markets, with heavy investments made by each company on quality and speed.

The pandemic also greatly boosted building remote partnerships in different locations, without having to pay fees associated with travel and accommodation. Investors, business partners, and influencers are no longer distrustful of hopping on a virtual meeting to discuss collaborations - in fact, just as your world is opened up to new opportunities with global demand, so has theirs.

Translating and localizing has gotten a great boost with tools like Transifex, globally available translation firms, or even your own personal low-cost translator acquired via Upwork or LinkedIn. Same goes for finding local ambassadors or teammates - cold outreach from credible profiles have been made in environments like LinkedIn, making it trustworthy to tap into freelancing and digital nomad culture and the services its participants offer. 

This allows you to forego building a full-fledged boots-on-the-ground office and team to test your product in a new market, keep costs down and validate quickly.