Ellen Järnefelt | Natasha Salmi
Ready to take things to the next level with your startup? Global expansion offers a whole new set of challenges, as you iterate towards a global P/M fit. Here’s what companies like Checkout.com, WorldRemit, and Glovo who have quite a few expansions under their belts had to say.
Thinking of expanding your business into new markets? Numerous leaders from the ecosystem have spoken at Slush about how they turned their startups into global companies, and the tricks that helped them get there. While every company’s approach and product is different, here are five lessons that were shared on our stages to get you started.
Lesson #1: Before you expand, make sure you’ve built something that users really love
Lesson #2: Expand through experimentation and develop an expansion blueprint on the way
Lesson #3: Scale your culture with expansion “SWAT”-teams
Lesson #4: When hiring in a field you aren’t an expert in…ask an expert
Lesson #5: Take expansion shortcuts and include a locally relevant payment method
#1: Before you expand, make sure you’ve built something that users really love
Back to the basics. In the words of Gustaf Alströmer, partner at Y-combinator and former head of Airbnb’s growth team, “It’s sometimes very tempting to start doing growth things when you’re starting off with your startup. That can often go wrong. What you want to be sure of before you start accelerating the growth of your company is [that] you’ve built something that people really love.”
The Estonian ride-sharing unicorn Bolt did exactly this – they laser-focused on getting the business right in their home market in Tallinn for the first two years. In the words of Bolt Founder and CEO Markus Villig: “When we got it right, we almost immediately started to expand”.
But how exactly do you know whether you’ve gotten a product users love?
P/M fit is an elusive concept and hard to define, one important guideline may however be to focus on retention instead of top line growth. It may seem like you’re having constant new users but be wary of excessive focus on tracking revenue growth. It may look great, but as Alströmer says, “you can’t look at just the top line growth numbers, you need to look at the growth accounting or the sum of all growth numbers. How many new people are coming into my product? How many people stop using my product? How many people come back and start using my product again? What’s the sum of all that? That’s the number you have to look at.”
In other words, it’s all about retention. Casey Winters, CPO and growth advisor to companies of the likes of Reddit, Canva, and Airbnb, is an expert in converting first time users from one-time users into loyal customers. It should be one of your top product priorities to get the retention rate high before you expand.
- Laying The Foundation for Sustainable Growth by Gustaf Alströmer
- Fireside Between the Founders of Stripe and Bolt: Building Global Companies
- Casey Winters: Why Customer Onboarding is the Most Crucial Part of Your Growth Strategy
- For some more product insights: 6 Best Product Lessons from Slush Stages
#2: Expand through experimentation and develop an expansion blueprint on the way
Local and global P/M fit are two different things; once you’ve reached P/M fit in your local market you’ll need to build-measure-learn your way to a global one.
International money transfer service WorldRemit scaled incredibly quickly, growing to 140 countries in just 5 years. Their first Product Manager Alice Newton Rex, is an advocate of rapid expansion: “Launch early and learn. There’s no more impactful way to see what’s going to influence users in a new market than to actually get some of them using your product and to be able to see what’s performing and what isn’t.”
Once they saw how users responded, they were able to start optimizing and customizing their product to each local market. For example, this approach allowed WorldRemit to learn that to gain local users’ trust they needed to adjust their sign-up forms to offer the locally preferred style. New users didn’t always understand the UK format used by default in WorldRemit’s sign-ups and dropped the process.
The significance of experimentation as key to growth held true for Glovo as well, and allowed them to uncover some of the crucial differences in how their product was being used in different markets. Glovo’s offering of not just food delivery but everything in the store delivery (i.e. flowers, clothing, etc.) proved essential in Latin America, where people were more used to getting deliveries by phone. Since the value-proposition was already clear for locals, Glovo simply had to transfer these deliveries online.
Obviously, there’s a caveat – don’t be reckless.
WorldRemit first expanded into markets they had natural ties to such as Zimbabwe and Somalia where their founders are from, playing to their strengths. Similarly, Bolt recognized that the ride-hailing market wasn’t a winner-takes-all market. Instead of going in guns blazing, they carefully picked the cities to expand to.
Expanding too quickly can be a problem if done incorrectly and you don’t have local product-market fit. Wolt’s CEO and co-founder Miki Kuusi suggests doing only one expansion at a time: “otherwise you will be making too many mistakes – when you have figured out the expansion blueprint, then you can do many [simultaneously]”.
Once you’ve gotten your expansion blueprint down, go for it. New markets almost always have something up their sleeve for you in one aspect or another. The more sophisticated your risk-management and expansion processes are, the more certain you can be that you’re set up for success.
#3: Scale your culture with expansion “SWAT”-teams
Scaling culture should be a part of your expansion blueprint, by the way.
Checkout.com is growing exponentially annually. Guillaume Pousaz, the company’s Founder and CEO, emphasizes how important maintaining culture while scaling is. “If you have the right foundation of the business in the beginning you will naturally attract people, but if you don’t scale the culture that message, what people join you for in the early days, might just kind of disappear.”
According to Pousaz, Checkout.com is notorious for doing loads of interviews. In 2019 when Pousaz spoke at Slush, the company hired 30 people a month but every person was still interviewed by the top management. Pousaz underlines that they look for the “cultural fit” and are always “hiring with the heart”: if someone’s good but selfish they’ll give this person a pass.
You not only have to attract the right kind of people but also create an environment where they can prosper. Klarna’s Co-founder and CEO Sebastian Siemiątkowski emphasizes the value of finding the right fit, especially for the employees: “You have to attract passionate people, give them the right environment and space, and allow them to be creative”, he says and adds, “For them, it has to be crystal clear what they’re doing, what we are doing [as a company] and why, and for them to have ownership”.
Then how do you scale culture? To sustain culture, Wolt’s Miki Kuusi recommends starting slowly, then picking up speed. Going from 80 to 200 doesn’t feel so different from going from 250 to 700 within 12 months, if you’ve built the foundation well. “What has surprised me constantly is how well you’re able to bring similarly minded people to the company, if you build up the processes right, how you recruit people; even in very weird places.”
Kuusi has two particular tips:
- Build an expansion team. Wolt has an expansion “SWAT”-team of 12 people only working on recruiting, onboarding, and training people in new countries they set up. Their ability to find people that really feel like Wolt and want to do things in a similar way is crucial for scaling culture while expanding.
- Use existing people to hire for the new roles. Having operations in 19 countries like Wolt did in 2019 when Kuusi talked at Slush means you have almost 19 of everything, whether that be operations managers, marketing people, or general managers. Use these people to hire new people.
- Founder Story: A Bootstrapped Unicorn, Checkout.com
- Scaling the Experience: Fireside Chat with the Co-Founder of Klarna
- Founding CEOs of Wolt & Smartly.io reflect on the first five years of expansion
- Fireside: Miki Kuusi, Co-Founder and CEO of Wolt – From Launch to Unicorn in 5 years
- Soaked by Slush Episode #20 Sofia Nunes | How to feed and grow culture
#4: When hiring in a field you aren’t an expert in…ask an expert
Kuusi’s second tip brings us to one obvious insight: you don’t know what you don’t know. Successful expansion is to a large extent tied to your personal growth and ability to build a successful team around you. Niko Bonatsos, Partner at General Catalyst, aptly points out that as a founder “the job description changes every 6 months” so you need to ask yourself, “what do you do to invest yourself?”.
In his experience, the best founders in his portfolio companies, like Stripe and Livongo, understand that they don’t know everything and they need to constantly improve themselves. As companies scale, founders can no longer do it all – nor should they. In Bonatsos’ experience, good founders ask advice from business coaches, advisors, or have mentors who’ve ‘been there done that’.
When hiring specifically, they work with advisors in all the functions they need to hire and ask simple questions like “Hey, I’m going to hire a VP of engineering. What are the mistakes that I’m probably going to make that I should be aware of?” as Bonatsos describes, and highlights that you should use domain experts’ help in the interview process. This applies more broadly when hiring for new markets. You don’t know the market well, so asking local experts to help make that first hire can prove essential.
The timing of hiring also matters
When asked what teams that have scaled well have in common, Bonatsos underlines the importance of putting energy into hiring early enough. “The biggest mistake I see is people who don’t enjoy hiring, so they put it off. They think that their board is going to do it for them, or that a recruiter is going to do it. And it never really happens.”
Your procrastination will come and get you in the long run – if you put off recruiting for too long you’ll eventually face a lot of bottlenecks down the line when you and other founders can’t anymore cover all the functions needed for expansion and scaling. So also ask for that expert advice in hiring sooner rather than later.
#5: Take expansion shortcuts and include a locally relevant payment method
WorldRemit has a wealth of experience when it comes to expansion. Their former CPO Alice Newton-Rex drafted the usual laundry list of expansion tricks that can get you going with a blueprint:
But with limited time and resources, what are the things you really need to focus on? All items on the laundry list are relevant for creating a truly local feeling product, but not all of them will be deal breakers that will prevent users from getting started with your product. Newton-Rex urges founders to take shortcuts and focus on the ones that are actually going to move the needle.
- Be opportunistic: use your existing knowledge to your advantage in picking first markets to expand to. Do you for example have in-house cultural knowledge of certain markets more than others?
- Find a learning foothold in a new market. You can test your product’s chances for survival without launching the product itself. For WorldRemit this meant that on certain markets they first focused on selling airtime or phone minutes, which had similar characteristics. This allowed them to see whether their product could take off before taking on the tightly regulated money transfer business.
- Partner with local brands. Creating strategic partnerships with local brands can quickly build trust in your brand by association.
- Ruthlessly prioritize user experience improvements. Simple as that!
Over everything, however, Newton-Rex emphasizes the importance of locally relevant payment methods: “If you don’t offer locally relevant payment methods, your product is sure to fail.” This may sound niche, but every company has payment involved at some point. Offering the most convenient payment method is absolutely essential when acquiring users in new markets.
In fact, offering a locally preferred payment method turned out to be more important than having your product available in the local language. WorldRemit customers could go through the entire complicated sign up process but decide not to use the service when they weren’t offered a payment method they were comfortable with. Moreover, once WorldRemit adjusted their approach and offered the right payment method, those who had begun the signup process and dropped off would return and complete it.
In a whole different realm, food-delivery service Glovo’s CEO and co-founder Oscar Pierre learned the same lesson when launching in Latin America. Latin American people prefer paying in cash. Glovo had no cash option on delivery, and eventually had to pull back. “We had to develop cash [payment options] almost overnight”, Pierre remembers.