Cracking the US market – A guide for Kiwi tech companies: Part 2

Idealog talks to three unique Kiwi businesses that have taken — or are in the process of taking — the big, stateside plunge, to get three different perspectives on just what obstacles you'll face when you take a crack at the precious US nut.

[Check out the first instalment with ATEED's Patrick McVeigh, here.]

Idealog: How did you know it was time to take a shot at the US market? Is it something that evolves naturally, or was it something you had your eye on from the very beginning?

Ivan Seselj, CEO, Promapp: The States was always an obvious target for us. We’d been thinking about it for years. It’s a big market and a big opportunity, so you go where there’s a need. After our first month in the [US] market, that need has been confirmed, so we’ve got two people on the ground there now. We’ve recruited a chief marketing officer with North American experience, we’ve got the funds and were doing it properly.

Chris Lindley, CEO, Foundation Footprint: It’s always been front of mind for us. We grew from about 2010 onwards, and in 2011 we bought on the National Australia Bank [as a client] and started managing their global carbon footprint. That was out first global company and that gave us reference customers around the world that we then leveraged, so we’ve been growing [with established reseller partners] there since then.

Waynne Dartnall, CEO, Performance Lab: We’ve been here about 10 months, but we’ve been working in the market for about three years, as the product development matures. There’s been a lot of preparation going into it: checking the feasibility of the market, seeing how the story resonates, lots of trips, getting in front of customers and testing the message. We’d done a lot of testing, users demonstrations, people had said 'hey, if you can deliver that we’ll buy it'.

Idealog: What kind of challenges does a business face getting into the US? Are they receptive to Kiwi companies setting up shop there?

Chris Lindley: I think attitudes in the US are different. There’s a hell of a lot of positivity in your typical American company. I see a lot of hype with US companies which I think is something that New Zealanders don’t do, but should do a lot more of, because hype sells. Of course, you’ve got a lot of companies that, when you start looking behind the kimono, there’s not a lot behind there, but the hype makes you sound fabulous; it opens doors and gets you customers.

Waynne Dartnall: We look at the US as a little bit like being in Europe. It’s not 50 states, its 50 countries. They have different state laws and each one does business differently, but, really, business is the same everywhere, so I wouldn’t rate doing business in the US as any harder than doing businesses London or Europe. People are approachable and are open to new ideas, however the basic business principles of needing to be talking to the right person, in the right place, at the right time still hold true over there.

I’ve definitely found that US companies do like to deal with people that are based in the USA, even though a lot of communication is still done via the phone, email and Skype due to distances and time zones. But being a Kiwi hasn’t been a problem.

Idealog: How important are Kiwi support services to those looking to make the jump? Have you relied on any Kiwi organisations to help you make the move?

Ivan Seselj: We’ve been working with NZTE. They’ve earmarked us to keep an eye on which has been great. They’ve been setting us up with advice and connecting us with companies who are already there. I went over there and talked for two hours with Scott Barrington from Modlar. His advice was invaluable. We met with Results.com, another Kiwi company going well in the States. There are a bunch of Kiwis in middle of San Francisco, so they’re a great resource.

Waynne Dartnall: We have. In New Zealand, NZTE have been a great support and a great source of information, and have been excellent for steering us in the right direction.

Chris Lindley: We spent some time in The Icehouse here. It was expensive being there, but were weren’t really sure of the value we were getting. This was around 2007. We weren’t funded – I was bootstrapping — so it was expensive. They’re all about putting processes in place, and at that stage we just didn’t need that. We didn’t need a sales pipeline, we needed to make sure the product worked. It was good information, but not information we could put to use at the time. We’ve talked to few others but haven’t subscribed to any of them.

Idealog: How much red tape is there when it comes to basic setting up?

Waynne Dartnall: That’s definitely something that shouldn’t be underestimated, because there is a lot to do, and not just around visas. Accommodation, bank accounts, credit scores and leasing cars — it can get complicated. That’s a great example of where NZTE has helped enormously. They’re great at saying ‘This is what needs to be done; this is what doesn’t’.

Establishing yourself in the USA, like any other international expansion, takes time and there are a number of steps you need to follow because there are many federal and state regulations that effect how and where you incorporate, register for business, employee people and interact with your New Zealand company. It’s important that you get pragmatic advice from tax and legal counsel that has real experience gained from doing this previously with a NZ company of similar stage and size, and NZTE can help there too.

And you’ve got to do all this preplanning before you get there. Don’t try and work it out when you get there.

What’s the key to getting noticed in such a big marketplace? What worked for you?

Chris Lindley: We knew we had to get noticed, so we started by looking at publications. From a ‘getting noticed’ perspective, content is king. Press releases about anything are good; if you can win a competition from a reputable source, that’s great. Leveraging existing customers, getting referrals, and just getting your name out there is important, and for that, content is king. Use the agencies that can help you get you out there and make sure your image online is crisp. Having a great website is important and so many New Zealand companies have the crappiest websites.

Ivan Seselj: We do a lot of case studies and that’s been our most successful marketing in the States so far. A case study on how a power company in Australia turned around their whole culture — that’s good content for us. If you produce meaningful, useful information that people want to read, it works.

Idealog: Is there a secret to making it work in the US? Or is it just a case of doing the basics well?

Waynne Dartnall: It’s important to recognise that every business experience will be different based on the individual market, stage and funding, and there is always a danger in basing your decisions on someone else’s experience. There is no substitute for getting over here and doing your own research! There are no short-cuts.

Again, get over here and do your research before you move. Don’t forget the basics, because the business fundamentals are the same in the USA as anywhere else. Who will buy your product? Does anyone want it? Are you relevant in this market? How will you price your offerings? How will you sell? Where will you base yourself? Who is your competition? Who can you partner with? You can answer all of these questions through several well organised trips over here – before you commit to the time and cost of moving here.