How to expand into a new country: lessons from two scale-up leaders

Expanding abroad looks like a straightforward way to grow: the product works at home, so it should work in the next country. In practice, a new market is a new buyer, a new language and often a new way of buying. In our podcast, Inside the Growth Engine, two founders who scaled internationally told us where it went wrong and what they would do differently.

Short answer: Test a new market cheaply before you invest. Validate that people convert, find a local leader with the right language and culture, and then commit fully or not at all. A half-hearted entry run from head office tends to be the most expensive option.

Validate before you invest

Steve Declercq, co-founder of Bizzy, says the mistake he and his co-founders made was going international with “bells and whistles” before checking conversion. In hindsight they should have validated it for around three months first and only then made the investment. Skipping that step cost the company a lot of money. He adds that the company and product were not ready yet and that they were not always the right people for that stage.

The practical lesson: treat the first months in a new country as an experiment with a clear question. Do prospects there respond, book meetings and convert at a rate that justifies the investment? If you cannot answer that with data, you are not ready to hire a local team.

You also do not need a presence everywhere on day one. Declercq notes that one Walloon salesperson, who partly works in Flanders in English, converts at a similar rate. His conclusion: up to a certain threshold you can serve a market from your home office, and the idea that you need local presence everywhere is shifting.

Pick the right first person

Jan Hollez, co-founder of Deliverect, calls the person who opens a new market a launcher. A launcher is commercially driven and entrepreneurial enough to work alone in the trenches at first. Hollez says that kind of person is not easy to find: those who are only commercial often fail to build a team, and those who can build teams often do not want to do everything themselves at the start. Launchers also carry the company culture, so a new office feels like the same company.

Before entering a market, Hollez’s team looks at how many delivery platforms are active, what customers can pay and which cities can make the difference. They conquer a city before a whole country.

Germany and Mexico: two ways to get it wrong

Hollez names Germany as a market that never went smoothly. Customers were more sceptical about software as a subscription, selling had to be done in German with local people, and running it from Belgium did not work. His reflection is that you need much more time, energy and money to make such a market work, and that you either put real force behind it or buy a local player.

Mexico shows the opposite mistake: entering a bit too opportunistically, after which the team struggled for a long time. The plan to add development there was also less successful, because developers had to speak English to work in a global team, and in the end they cost almost as much as in other locations while sitting far from the rest.

Culture will not copy and paste

Daan De Wever, co-founder and CEO of Dstny, grew his company through many acquisitions across countries. He says he does not believe in one company culture: regions and countries look at work differently. What you can do is set a framework that explains what the organisation stands for and accept that cultures differ within it.

Questions to answer before you open a market

• What is the evidence that people in this market buy, and at what conversion rate?
• Which cities or segments can make the difference first?
• Who is the launcher, and do they speak the language and know the buying culture?
• Will you commit fully, or is acquiring a local player the better route?
• Which functions can stay central? Hollez argues that keeping marketing central is easier to measure and control, while local teams execute.
• What would make you stop?

Where to start

Pick one country and write the three or four numbers that would prove the market is worth it, such as meetings booked, conversion and cost to acquire a customer. Run a small test for a quarter with a named owner. If the numbers hold, invest. If you want an outside view on your commercial model before a launch, a Growth Audit looks at it with you, and a growth partner can help run the experiments. See also how to treat changes as experiments rather than campaigns.

Hear it from the people who do it

• Jan Hollez on opening markets, launchers and Germany, around 38:00
• Steve Declercq on validating before investing internationally, around 45:00
• Daan De Wever on culture across countries, around 37:00