…Ash Ashutosh, of Waltham, Mass, is an example of a U.S entrepreneur who is targeting overseas markets from the get-go. He previously built two companies—AppIQ Inc. and Serano Systems Inc.—but in both instances he waited until he had about two years’ worth of U.S. sales under his belt before bringing their products — data-storage technologies—to marketplaces outside the U.S.
At the time he founded those companies, both over a decade ago, the U.S. was far and away the biggest market and the investment needed to set up an office and hire staff outside this country was too substantial for a startup to contemplate. With his latest entrepreneurial effort—a data-storage software company called Actifio Inc.—he figured he should just begin to sell software abroad just a few months after launching.
Now, two and a half years later, Actifio is seeing half its 2012 sales come from places like Hong Kong, Austria, Singapore, Germany, Thailand and Japan. More than one third of its 196 employees are based overseas. Mr. Ashutosh is focused on setting up in India and China next year and is eyeing moves to South Africa and South America. “There was a time where the U.S. was the biggest market by a long shot,” he says. “The others may not be as big, but many are growing faster.”
Mr. Ashutosh and his team rely on two decades of experience, as well as data from industry analysts, to decide which markets to tackle next. But by far the most important factor is whether they have found a person with the right knowledge and expertise to run its local operations.
In some markets, Korea for example, a company must demonstrate that it will be there long-term, he says, because many potential customers had been burned by other companies that had set up shop, only to pull out their employees when a region didn’t live up to expectations.
Europe also presents a problem, with the hodgepodge of laws, languages and cultures that make up that continent, including unique employment laws that are generally far stricter than what companies face in the U.S. Regulations also differ from country to country with regard to where and how data can be stored.
The nuances of each market, both culturally and legally, mean that managers will have significant latitude in how the operation is run. For a startup to have success in its international ambitions, it has to set up processes and controls that are similar to those found at major corporations.
There can be a tough balancing act in giving international managers the leeway to use their skills without going off the rails, he says.
“In everything about how you build a company you assume there’s going to be a distance,” said Mr. Ashutosh. “I cannot emphasize enough how many nooks and crannies of the business this permeates.”