Recently, during trips to Brazil, Saudi Arabia, and the UAE, discussions on how a startup should scale across markets were recurring topics. In the book “Out-Innovate,” it is mentioned that the best startups are “born-global,” which means they are built to scale across markets from the beginning. However, this approach may not be suitable for every startup, and there are seven questions that startup founders should ask before going global.
The first question to consider is what being global means to the startup. Being born global can manifest in various ways, such as expanding to a similar country or pursuing a regional strategy. It is essential to define what being global means for the specific situation of the startup before proceeding with a global strategy. Additionally, it is worth noting that some startups may be born global in terms of their team, building a remote-first organization with talent from around the world.
Another critical question to ask is the reason behind wanting to go global. Whether it is due to a small total addressable market, a defensive maneuver, or personal motivation, the rationale for going global can impact the success of the expansion. Understanding the size of the market and the potential trade-offs between deepening market presence locally versus expanding internationally is crucial in defining a global strategy.
The nature of a startup’s network effects also plays a significant role in determining the need for a global strategy. While businesses with global network effects may benefit from expanding internationally early on, those with more local effects may focus on establishing a presence in specific regions. Companies serving global clients may be naturally pulled towards international markets, while others may need to actively push for global expansion based on their target audience and business model.
The barriers to entry for international expansion, such as cultural differences, language barriers, and regulations, should not be underestimated. It is essential to assess the level of readiness within the organization to navigate these challenges and build a culture, product, and vision that are global. Scaling globally requires careful consideration and preparation, as it can be both a strategic advantage and a necessity for startup growth.
In conclusion, going global is a decision that should not be taken lightly, and startups need to evaluate their readiness and strategic alignment before expanding internationally. By asking these seven questions and considering various factors such as market size, network effects, and organizational readiness, startup founders can make informed decisions about scaling across markets. Ultimately, understanding the implications and trade-offs of a global strategy is essential for long-term success in a competitive market.
