Home / Venture  / Bright lights, big business: Seven tips from a tech founder for breaking into the US

Bright lights, big business: Seven tips from a tech founder for breaking into the US

New Zealand is really good at delivering tech to the world, but to package and sell it as a world-class export product can be complicated. The United States is arguably the most sought-after English-speaking market for scalable tech enterprises, and also possibly the hardest to break into and gain a foothold. Having established SkillsVR, a global virtual reality skills training provider, in the US over the past 10 months, I can share the landmines to dodge and the absolute must-dos for success in the gigantic, complex American market – because when it comes to exportable tech (and many other sectors), if you can make it there, you can make it anywhere.

1. Be on the ground in America

If you are a founder/CEO who is serious about the US market, you have to be at the coalface. Company leaders don’t want to talk to a substitute or proxy, so I have to be in the meetings from a credibility perspective. Even more than that, Americans want to deal with companies that are truly embedded in this market. The needs of our biggest customers are often quite specific, and we found we couldn’t operate from New Zealand and sell into the US. We had to become a US company, registered and domiciled there, to be seen as a credible global business.

This is doubly important because our investor base is in the US, where funding rounds are more easily secured, and you need to demonstrate that you know the investor market, customer base, and development opportunities inside out. I have to think on my feet in the face of all sorts of weird and wonderful ideas from investors and CEOs, and I can’t delegate or delay these conversations.

2. But maintain your cost base in New Zealand

At 61 US cents to the Kiwi dollar, we can keep our costs down by maintaining our engine room and tech R&D in Aotearoa. Our sales and enterprise team is in the US, so we are close to the market and can be nimble and reactive. We can treat Australia and New Zealand as our petri dish, testing and trying things in a controlled, familiar environment before rolling it out to our customers. Maintaining a foothold in Aotearoa is also important for opportunities to partner with central government on large programmes – we have a long-time collaborator in the Ministry of Social Development – which is a much more complicated proposition in the US, where the federal government is enormous and every state has its own singular apparatus.

Read more: NZ’s tech HR departments battle major challenges as borders reopen

3. Understand the scale of the market and how you can serve it

New Zealand is really good at delivering tech, but to be world-class you have to have contact with and influence in the biggest markets – and for what we do, the US is the white whale. We have 15 customers there at present, which might not sound like much until you realise they each have at least 100,000 staff, and one has 2.3 million, close to the size of New Zealand’s entire workforce. At a subscriber rate of $2 to $10 per user per month, it is hugely rewarding commercially and professionally, in that we have a valuable impact on how our customer companies operate. We have now been in the US for 10 months and have trained 10 million people; we’re on track to get to 100 million trained in 2023. We could never achieve that in Australasia.

James Coddington.

4. Adapt your pace

The speed of business in the US is not the same as in New Zealand. Things can work faster in a smaller market, but in the US, getting to contract with a new customer can take three to six months, and you can’t rush it. I’ve learned to quash my impatience. Now we’re working with 72 potential customers, each with 100,000+ staff, and we’re focused on executing for them over the next year – not at our pace but at theirs.

5. Prepare for personal sacrifice

Related to being on the ground: I am still a Kiwi and my children live in Queenstown, which means I have no fixed abode; I live out of hotels in New York City, San Francisco, Auckland, and Queenstown. My 19-year-old is excited about the chance to live in New York that my work life offers, but my 11-year-old is making sacrifices along with me, because we’re not together all the time, and during pandemic restrictions we were separated for seven months at one point. When I am in New Zealand most of my business calls are between 1am and 5am. A lot of Kiwi founders still want the lifestyle here, but if you want to succeed in the US you have to make the commitment and accept that your life is going to be very different.

6. Stay in your lane

This may seem like illogical advice for a growth phase, but once you establish a reputation and customer base it is easy to fly off on tangents, especially as a tech company. For example, we were asked to do on-boarding for a large casino business, and though the cheque would have been in the millions, it would have tied up our tech team for six months and meant we would struggle to deliver to our core customer base. It takes a lot of courage to say no, but you have to learn how.

7. Get a really good lawyer

Every state has its own tax laws and systems. I learned the hard way, after I based myself in San Francisco, that California has the highest state tax in the US, and a 40 percent capital gains tax on the sale of resident businesses. Top-flight legal advice is incredibly expensive – US$2,000 to $2,500 an hour – but it is money well spent when you consider what’s at stake.

James is CEO of SkillsVR. It creates experiential education modules for industry using simulations, virtual reality (VR) and game learning experiences. The data behind game learning outcomes is impressive, delivering close to 98 per cent knowledge retention in much less time than traditional learning.

Review overview