Move Thoughtfully and Create Things: Stripe’s 4 Steps to International Expansion
At Stripe, we build infrastructure that allows internet businesses big and small to accept payments from anywhere. The businesses we serve are either global, or on a path to it, so Stripe has to be global too. As of 2019, we’re live in more than 30 countries from Estonia to Japan, and as we expand our platform becomes exponentially more powerful for our users. That’s why international has been key to our strategy from relatively early on.
I joined Stripe in 2014 (initially in London) to build out our first international markets in the UK and Ireland, and then in New York where I set up our East Coast office and commercial operations. I’ve had the benefit of a front-row seat to Stripe’s growth and expansion into new markets.
Despite what the business books might tell you, there’s no playbook for new market entry. Technology companies who’ve attempted cookie cutter internationalization have generally failed. In payments, that’s even truer than anywhere: payment methods, financial behaviors, banking ecosystems and businesses are intensely cultural. Every new market has given rise to countless considerations and almost as many variables depending on your product type, business model, customer segments and other company-specific elements.
That said, there are four core steps to doing it right: Where, Who, How and What.
Step 1: WHERE – Identifying the Right Market
One of the biggest mistakes companies make is to have their expansion strategy guided solely by market size. This is a case where bigger isn’t always better. Instead of focusing on generic factors like the size of the market and the GDP, it’s more effective to pay attention to signals that are specific to your business model.
For instance, at Stripe, we look at things like how many GitHub users there are in a particular market. We consider how many people have logged into our dashboard from IPs in a given country. We do some research to identify how many funded startups exist in the area, and what percentage of consumers are buying things online. These signals are much more relevant and meaningful to us and help us define the actual latent demand for our product.
You also want to pay attention to all the nuances of a market—things like language (as both an advantage or a challenge) and regulation. Many young European companies lean toward Germany as an expansion target because it’s the largest market in the EU. However, it also has more complex regulations than other European markets, something that can create significant cost and reduce execution speed, particularly for small startups.
Don’t worry too much about local competition. Most companies find that once they’ve gathered a certain amount of momentum, it creates a natural gravitational pull for customers. As your reach grows, your prospects will be more incentivized to partner with you in order to expand their own footprint. If your product is good, customers will come. A local competitor with a limited offering can only hold you off for so long before they too face the choice of going international or becoming irrelevant.
In short, don’t be distracted by the big prize or fall into the trap of doing what everyone else is doing when it comes to choosing where to go next. You need to assess each opportunity through the unique lens of your specific business, and make your decision from there. There are a lot of under-appreciated markets out there.
Step 2: WHO – Assigning and Hiring the Most Effective Team
Once you know where you’re going, it’s time to figure out who will take you there. Your new market is kind of like a startup – the first ten people you bring in can make or break your business’ trajectory. As with your destination, you need to choose carefully.
We have found that a “landing team” approach works really well. Over the years, we’ve iterated on the makeup of these teams. Today’s four-person landing team includes:
- The market lead: This is the person who holds overall responsibility for the expansion and is the primary decision maker for the team. You should hire them first.
- A growth/salesperson: This person’s focus is on finding customers and growing the business. It’s a very broad sales role to help build traction with customers.
- A success/service person: You will also need someone who will be responsible for interfacing with and supporting existing users in the market.
- An operations person: This person’s role is to constantly monitor customer and product activity to uncover any problems, prioritize product improvements and then figure out how to fix them.
In the beginning, it’s a good idea to start with pretty generalist profiles for these roles. After all, it’s a small team with a lot of responsibilities, so it just makes sense to assign people who are good at (and interested in!) a lot of different areas. Once the team is more settled and has begun to find the local product-market fit, you can start the gradual process of building out a more specialized team.
It’s important not to hire too many too soon. The landing team needs to get things set up properly so that the underlying support structures are there before you grow the team further. The longer they do the early generalist roles, the better your understanding of the specialized roles and profiles they’ll be best suited to. When you do decide it’s time to hire, there are two key ideas to keep in mind:
A balanced team is a more effective team
While this may seem like common sense, it’s easily overlooked in the rush to staff up a new location. For best results, try to build a team that includes a good mix of existing employees and local talent. The existing employees will help to seed your company culture in the new office, and also bring a wealth of internal knowledge about your products and services. Local talent will help you find your way more easily in a new country, and can provide valuable insights into local trends, customs and markets.
Adapt, don’t lower, your hiring bar
Hiring in new markets is tricky. It’s right to adapt your criteria to the nuances of the market, and brand awareness will be low, so attracting top talent is hard. It can be tempting to lower your bar. But hold out. It’s critical to long-term success to hire the right people, especially in the beginning. Similarly, be sure to hire diversely from the start as not doing so early will make it incredibly difficult to do later on.
Step 3: HOW – Balancing Independence + Integration
One of the reasons it’s important to hold out for the right team is that you want them to run fairly autonomously. Avoid slowing down the landing team with multi-time zone conference calls or complex signoffs. Put that one lead person in charge and empower them to make their own decisions about how to grow.
That said, it’s equally important to ensure that everything on the product and engineering side is tightly integrated. At Stripe, we originally housed all our engineers in San Francisco. As we’ve expanded, we’ve decentralized, and now have engineering hubs in Seattle, Singapore, Dublin and our most recent addition—a remote team. These teams help a lot in terms of being tuned into local context that can get lost in translation. Your product and engineering teams don’t need to be based in market, but it is important to ensure that sufficient capacity is reserved for market localization. This model is a powerful way for us to prioritize and build out the right localizations more quickly and efficiently.
Finally, while you want your local teams to operate independently, you also want to build strong office-to-office relationships. When a new office first opens, you’ll want to encourage new folks to spend time at HQ getting to know people, immersing themselves in company culture, gathering product knowledge and wrapping their heads around the global market and customer base. The same goes for the executive team, who should be out visiting new offices, even just for a casual quick stop. When they do, ensure they set aside time to connect with the office, for example by hosting a Q&A session, happy hour or skip-level 1:1s.
Step 4: WHAT – Setting the Right Goals
Wherever you land and whoever you hire, it’s important to be realistic about what you want to achieve and when. Once you’ve figured that out, you need to be sure that everyone (in-market and at HQ) is aligned. In my experience, setting overly over-ambitious or fixed targets before you’re on the ground doesn’t help anyone. Each new market is a first time. You don’t know how your product will transfer to the new market until you get there.
The truth is that it takes a long time to do these things right and build a sustainable business. And that’s the most important question you can ask: Are you building a sustainable business? Your goal shouldn’t necessarily be to sweep up as much easy business as possible—using low prices to lure customers in—because a year later you’ll be dealing with major churn when you have to reprice them all and you’ll be back to square one. Instead, you want to build things in a way that you can sustain over the long term.
Part of what makes it possible to achieve longevity is to be strategic about replicating your success in other places. While each new market will require a custom strategy, that strategy shouldn’t deviate too far from what’s worked for the rest of the company. For one thing, major departures in how you handle one market versus the rest of the company will create friction later on in terms of which products need to be built and how things get done. Similarly, you shouldn’t feel like you have to reinvent the wheel every time you open a new market.
The bottom line:
- Base decisions on information that is relevant to your specific business, not what everyone else is doing
- Maintain high standards for new hires—no exceptions
- Empower the teams in new markets to run autonomously, yet in alignment with HQ
- Coalesce the company around meaningful, realistic expectations.
International expansion is never easy, but following these guidelines will hopefully reduce some of the pain and help you succeed.
So many companies today are worried about how remote employee policies are affecting the security of their online networks. Learn how you can properly protect your company’s security, both at home and in the office.