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