International Growth Is No Longer Optional for SaaS Companies
International growth has always been a blindspot for me.
Sure, the opportunity is jaw-dropping. 95% of the world’s population lives outside of the US and, naturally, many of them need software to power their working lives. Forward-thinking SaaS companies generate hundreds of millions of dollars each year from international markets. A few examples: Digital Ocean (65% of revenue), Twilio (50% of product usage), HubSpot (44% of revenue, up from 22% in 2014), and Salesforce (34% of revenue, i.e., more than $7 billion).
Yet international growth still seemed like something that wasn’t an urgent priority until Series D or even later, depending on the addressable market. It was something that companies could get to later when growth was starting to slow domestically.
Then I called up Chris Englund, VP of International Operations at ActiveCampaign, who set me straight. In his view, SaaS companies need to start planning for international growth well before they need it. And there are a set of concrete, relatively simple steps to get started.
Even as a private company with 750 employees, ActiveCampaign has managed to generate more than half of its 130,000 customers from outside the US. Chris plays a key role in building the international revenue engine including localization (translating the business into additional languages), international strategy (selecting markets and developing entry plans), and international operations (organizing implementation across cultures, time zones, and non-domestic offices). Previously he spent a decade at HubSpot—he was the company’s 176th employee—where he was one of the architects behind their extremely successful international expansion efforts.
Here are Chris’ top five tips for successfully accelerating international growth.
1. Start planning for international growth before you need it
“There are a lot of decisions you can make today that will set you up for a great deal of success down the road when the time comes for you to make some of those bigger moves,” Chris said.
He explained that the outward signs of international expansion (adding languages, opening non-domestic offices, etc.) are just the tip of the proverbial iceberg. The real heavy lifting is everything that has to happen beneath the surface in order to hold that tip up above water. Ultimately, international growth is just as much a business operations transformation process. It relies on systems, processes, and people embedded all across the org to make it successful.
In other words, the foundation of successful international growth is much (much) bigger than what you can see.
2. Hire for cultural and linguistic diversity early on
Diverse teams are good for business. As Chris explained, “More diverse product teams build better products for a more diverse user group. For example, if you’re talking about your roadmap, and no one in the room speaks another language, nobody will raise their hand for the importance of localization.”
But the benefits of hiring for cultural and linguistic diversity go beyond generalized increases in perspective and innovation. “You need to imbue multicultural knowledge into your core business strategy,” said Chris. “Develop people so that they can speak both the language of your company as well as, say, the national culture or language of the market you’d like to go into.”
“More diverse product teams build better products for a more diverse user group.”
For example, a company might hire a Korean-speaking Korean-American for an SDR role. That individual will develop organizational knowledge, product knowledge, and overall business knowledge. That same individual will already have intrinsic knowledge about Korean language and culture. So, when you’re ready to expand into Korea, you’ll have a team member who can make a valuable contribution to that international growth effort.
3. International success is built upon the foundation of a solid business model at home
Anyone who’s ever managed international growth will tell you there are a lot of moving parts—culture, languages, time zones, and many other details. To navigate these complex waters, you’ve got to have a solid product or business model and an incredibly strong culture of leadership development.
There are a few basic capabilities that are critical to building and maintaining the right kind of foundation. Optimally, your company will be able to do effective planning using a framework like OKRs or V2MOM. And you’ll have a clear sense of the company mission and what’s important to the organization at every level.
Having this clarity and consistency is absolutely necessary when you take things overseas. The folks in your international offices will be at a disadvantage simply by the nature of their location—so being able to offer them a really clear vision and set of objectives can go a long way toward keeping them aligned with overall efforts and supporting them locally.
It’s also important to create a culture of autonomy and empowerment. “This is another thing you can practice well before you go global—relentlessly devolving decision making to the people who are closest to the market or the customer,” said Chris. “Everyone needs to get used to this way of working, across all levels of the company.”
A culture of autonomy and empowerment helps a company overcome the challenges of working quickly across time zones. Say, for instance, that a customer has a problem in Singapore and emails a VP in New York. The reality of the time differences combined with the possible need for even the smallest amount of back-and-forth means that the issue may take a whole week to solve. This is obviously far too slow a response time.
4. Take international growth step-by-step
While the possibilities of international growth can be intoxicating, Chris strongly advises taking things slow. “Don’t try to do it all at once. Don’t open six offices at the same time or localize into 25 languages on your first try,” he says. “Try to take one thing at a time. True globalization requires a major lift from a lot of people at your company. It’s going to take some time.”
Chris recommends starting with something easy. Maybe start by localizing just your product into another language. Just going through this relatively small project will help acclimate your company to the process, and drive home that it’s never as easy as it sounds.
Chris also pointed out that it’s totally legitimate to begin selling into international markets from home. There are usually opportunities to work with customers who come in from other countries, but are willing to do business with you as an American company. If, for example, you have a lot of leads coming in from Latin America, you may want to carve out a dedicated sales team to specialize in converting those leads.
“True globalization requires a major lift from a lot of people at your company. It’s going to take some time.”
Even that kind of interim solution is a pretty big operational flex. “Having an America-based team selling into one particular region can actually cause a lot of changes across the organization,” Chris said. “But it will also lay the foundations for opening up even more markets in the future.”
Some of those seemingly small changes might include measuring marketing and lead generation goals by country, setting up your CRM with new lead rotation rules, and honing the sales engagement based on the nuances of the market.
However you proceed, communication and planning are the keys to success. You need everyone working together and aware of what other teams are doing. You don’t want your sales team putting a lot of time and money into opening offices in Japan only to find out that your engineering and product teams can’t support Japanese language users.
5. International growth has to be a priority from the top
If international growth isn’t a priority for everyone in the company, it just won’t work. While the path of least resistance is to sell exclusively to the domestic market, the fact is that something like 76% of global economic activity takes place outside the United States.
That’s a lot of opportunity, but you can only take advantage of it if your entire organization is aligned and committed to not only making the effort, but also doing it right. The trick is to over-weight (over-index/over-invest) in international, understanding that it will pay off over time.
International growth is no longer optional
In the not-too-distant future, being a truly successful company will require more than just making it in the rich OECD countries. You’ll need a product that’s relevant and marketable to a variety of fast-growing economies around the world. You’ll also need the capability to sell that product internationally in a way that’s efficient, effective, scalable, and profitable. Building that kind of operation isn’t easy, but Chris’s tips can help you get started on the right path.
It’s also worth pointing out that international growth isn’t solely about expanding markets and driving more revenue. It’s also about innovation.
As Chris told me, “These fast-emerging markets have an awesome lab for innovation. If you want to know where the next big thing is coming from, it’s probably from outside this country. That might scare some people, but it’s also a great inspiration to start thinking about how you could create something relevant for those markets.”