| Have your ever heard (or thought) the | | | | decides to dip the company's toe into |
| following? "We're a startup software company. | | | | international markets. Where do they go |
| We'll attack our home market first, then | | | | first? Why, the UK, of course! It "feels" the |
| think about international markets."Wrong | | | | most like home. And indeed, it is. The UK is |
| answer! (In most cases, anyway). I work with | | | | the SECOND MOST COMPETITIVE and sophisticated |
| a lot of startups, and I hear the above all | | | | market in the world. To add to this misstep, |
| too often. Especially when the founder or CEO | | | | although the UK is officially part of Europe, |
| comes from a technical background. But this | | | | from a cultural and marketing/distribution |
| attitude is very unfortunate, and in some | | | | perspective, it is quite different. So this |
| cases can stunt or kill a company that should | | | | initial step doesn't even provide quite the |
| have otherwise made it.That's because there | | | | learning experience you'd like when moving on |
| is low-hanging fruit outside of your home | | | | to continental Europe.Let's get back to that |
| markets, my friends. And if you leave it out | | | | unique attribute of secondary markets, the |
| there long enough, your competitors will grab | | | | ability to find good partners. I've |
| it instead of you. I've sold an incredible | | | | highlighted partners because it is so |
| amount of software in secondary markets such | | | | important to find the right partners and |
| as Australia, New Zealand, Norway, Denmark, | | | | treat them well. What you are looking to do |
| Finland, Sweden, Switzerland, Netherlands, | | | | is find someone to ACT ON YOUR BEHALF in this |
| Belgium and others. In the early 90s, I | | | | local market. Someone who will put out the |
| started up a group marketing a new Systems | | | | effort, spend their own capital, and be just |
| Management product. By the middle of our | | | | as committed to the product's success in this |
| second year of operation, over 40% of our | | | | market as you are in your home market. This |
| revenue was international, all while spending | | | | isn't easy to do, but the payoff is high if |
| just a fraction of our marketing budget | | | | you get it right. Find the best potential |
| outside of the US. Let's look at the | | | | partner, then structure the deal to get them |
| specifics of US-based software startups.US | | | | excited. Give them high discounts, provide |
| startups can access this low-hanging fruit | | | | extensive sales and technical training. Do |
| relatively easily for a number of reasons. | | | | give them at least a short term exclusive. |
| First, in the software business there aren't | | | | Set the deal up so that they aren't competing |
| the risks and costs associated with inventory | | | | with other distributors of your product or |
| that you would find in a manufactered goods | | | | even you--just your common enemy, the |
| business. The costs and risks are still | | | | competition. If you do this right, you will |
| there, but they are greatly reduced to the | | | | have created an order/revenue generation |
| extent they aren't a strategic issue. Next, | | | | machine that will work for you for years to |
| most of your startup competitors have the | | | | come--with very little ongoing investment. |
| attitude of the first paragraph, and are | | | | And might even be humming away while you're |
| contentedly pounding away at their home | | | | still investing and pounding away trying to |
| markets. Next, it is far easier to adjust | | | | get established in your home market. This is |
| prices to local markets and set up | | | | contrary to what many will tell you, but it |
| segmentation fences through localization in | | | | is true. I have done it many times across a |
| the software business, than it is in a | | | | variety of markets and products. I could |
| hardware business. In addition, if you are a | | | | write about this topic almost indefinitely, |
| US-based company, there will be some overflow | | | | and of course, the devil is always in the |
| effect from your US marketing efforts, since | | | | details. But I'll stop here. Tell me what YOU |
| the US is the center of the software world. | | | | think!Phil Morettini is the Author and |
| And last (but definitely not least) is the | | | | President of PJM Consulting, a Managment |
| unique attribute of secondary markets: the | | | | Consultancy to Software and High Tech |
| ability to find good distribution Partners. | | | | Companies. PJM Consulting executes special, |
| Partners that have a head start in their | | | | strategic projects and can also supply |
| markets, existing momentum that you can | | | | interim senior management in General |
| leverage.We'll come back to this last point | | | | Management (CEO, COO, Division Manager), |
| in a minute. But first, let's go back to our | | | | Product Marketing, M&A, Distribution Channels |
| typical US-based software startup. This CEO | | | | and Business Development. |
| is rather bold compared to his peers. He | | | | |