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Dear David: how to take our tech to the world

Dear David: how to take our tech to the world

Idealog's agony aunt, David Downs, answers your burning questions about the pros and cons of playing the New Zealand card in overseas markets and whether focusing on a very specific niche is the best approach if a New Zealand company hopes to go global. 

We are a New Zealand-based technology company and make software for the cloud. We are growing into the USA as a market, both for customers and for potential investors. When I travel there, I am in two minds about whether I tell people I am from ‘Noo Zilund’, or just pretend to be from America. What are your thoughts?

Shy Kiwi

Dear Shy,

Personally, I have a strong opinion here, but before I share it, let’s look at the three possible scenarios at play.

Firstly, it might be a disadvantage, being seen as a New Zealand company. People may not know anything about New Zealand, they may find you ‘cutesy’, they may even struggle to believe that the land of the Hobbits could be a place technology originates from. That’s the worst case.

Or, it might not make any difference at all. It may be largely irrelevant and you’ll be judged on the quality of your idea, in the country that espouses a belief that assessment will be based on the ‘content of your character’. So being from New Zealand, or Timbuktu, won’t make any difference if you have a shit-hot, or even just a shit, idea.

Or, it might be a bonus; an extra selling point. Your customers might see you as unique, different, special. They may associate New Zealand with positive attributes and be seeing the same press coverage I am that shows we are a growing originator of high technology, with plenty of examples of successful New Zealand companies to point to that create a body of evidence.

I’m firmly in the camp that being from New Zealand can and should be an advantage AND the more companies embrace that, the better for everyone. A collective story, well told, with good evidence and consistent themes, helps everyone’s storytelling. Sure, perhaps 20 years ago, it may have been a struggle trying to convince US (or any foreign) investor or customer that it’s credible to be a technology firm from New Zealand, but that is no longer the case. At worst, being from New Zealand may be irrelevant, but I firmly believe the worst case is a myth, and I think the best case is more common.

This doesn’t mean being naive and expecting your customers to do all the work though. Be smart. Get a good domain name, a local address or phone number, perhaps in time a local presence. But this is to ensure good customer service, not to hide your origins.

And don’t believe just me. In my recent research for upcoming book No.8 Recharged: 202 stories of New Zealand technology success, our companies were seeing it the same way. Tell your story proudly, walk in the footsteps of the pioneers who have gone before and leverage the assets and work of the New Zealand Story group to help you tell that story widely.

I have a new tech product idea. I can’t tell you what it is, but I worry it’s too specialised. I know a lot about a small area, and my product is going to automate through SAAS in a very niche industry. Coming from New Zealand, is that a mistake?

Niche Nicola

Dear Niche,

Another area I have a strong opinion on! Again, through the work of researching my new book, but also built on the experiences of the team at New Zealand Trade and Enterprise, I can tell you that not only is picking a niche a good move, it is probably the best move.

Coming from a small country with a tiny domestic market, being a generalist is a natural position for many business owners. From a skills and customer perspective, being able to do anything for anyone is seen as a good thing for starting a small business. But scale that up, go international, even just to another close market like Australia, and you soon hit scaling issues. It’s not possible to adopt the same ‘we can do everything’ attitude when you are stretched thinly, and you get squeezed on skills, price, service, product fit …

From looking at the businesses growing internationally, the successful formula is to hunt out niches that are poorly served by other larger competitors. Even micro-niches can have plenty of opportunity if you think of the world as a potential market. Indeed, with our small-scale companies, focusing on niches is really the only scalable model for growth.

However, there are corollaries to this – and one has already been alluded to. You will need a big enough market to serve to get the revenue numbers you can live on. Having a niche SAAS business helping pet groomers automate dog haircuts is great, but if you only focus on one market, there are only so many doggy day carers who can be customers. So, you have to think niche (in terms of the product), but potentially global (in terms of the market).

This implies a few more considerations. You better have a product that can scale globally without too much extra effort. Language, currency, service, installation – all these issues need to be well thought through in advance. No point having a dog grooming SAAS product if it relies on you visiting every customer.

Being in a niche means you have to be price-aware, but don't have to compete on price. That’s one of the major advantages of a niche-oriented business model, versus a scaled-out generalist approach. We don’t have the depth of resources to compete on price, to offer discounts willy-nilly, to adopt a ‘cost plus’ price model. You need to be able to price based on the value your customer gets – and ideally, with a well-chosen niche, that price will be a premium one.

So you also better have a really good product – at least as good as any competitor, and with the features and extras your customers want and need. That requires you to know your customers, and their unique situations intimately. If you do, you have a strong competitive advantage. As I have written before, the tools and techniques of a design-led approach help here.

It’s not easy, but the companies who have done it before show us that this niche-oriented business model can be a recipe for success. All strength to your arm.

By day (and the occasional night) David Downs is general manager, services, at NZTE. He is currently battling cancer and preparing for the release of the upcoming book he has written with Dr Michelle Dickinson on New Zealand technology called No.8 Recharged, to be published by Penguin books.