10 commandments for U.S. expansion (approved by portfolio companies whoâve made it).
What weâve learned from our portfolio companies
XAnge has already enjoyed many success stories in helping its portfolio companies set up the US. Starting with Neolane, a marketing automation software company, which made that move back in 2007 and later got acquired by Adobe in 2013 on the back of a strong American commercial presence. More recently, in 2019, AB Tasty and 360 Learning opened their offices in New York, while Dolead launched its US operations from Boston. They will probably soon be as successful there as Dynadmics was, as it now generates more than 50% of its revenues in the US having started there in 2014, or Odoo, which now has 100+ employees in San Francisco & New York.
1. Do you have a US ambition ? We suggest you test it early
We have noticed that European VCs tend to advise their startups to wait for the Series B financing round before launching their company in the US. At XAnge, we believe the move should be considered much earlier, and can be done as soon as the Series A stage. The reasoning behind this is to avoid taking some early product strategy or recruitment decisions that will be harder to reverse later on. Common mistakes might include branding that is not âcompatibleâ with an International/English expansion or positioning the product marketing in a way that makes it harder to launch in the US. Having the opportunity to be confronted with the US market early on requires the startup to be extremely focused on its uniqueness and its messaging, two key differentiating factors.
2. US product localisation
Spoiler, translating does not work.
You need to think of your product and of its roadmap as being international from the get go, in line with your global ambitions. Think modular and adaptable to as many geographical areas. It can be simple things such as multi-language support, English taglines, or much more subtle topics such as fitting into the local culture.
"To sound like an American, itâs not just about the accent, itâs about the cultural codes. To be one of them, you have to spend time in the USA, even before settling down, to immerse yourself in the American culture (sports, TV channels, shows, food,...). This is especially necessary for recruiting, as French entrepreneurs will be implicitly tested on these aspects by the best candidates." - Emmanuel Schalit, ex-CEO & cofounder of Dashlane
Depending on your product-market fit, to be scalable across a variety of new markets, you will need to work on getting your product localisation right. Details matter in this regard in order to get the right tone of voice. In regulated markets such as fintech, medtech, cybersecurity you will also need additional material, often requiring legal support and specific content that make it more difficult to scale your business from day 1.
More specifically for the US, we often notice that end-users can prefer a product with both advanced functions yet a simple interface to support their core activity. As such they are focusing on the value created by the product and need to see the real business benefits for their own use-case.
3. Don't kid yourself on the budget required
You need to be realistic! The US is a single unified economy, yet as a country it is the size of Europe, roughly 4x Germany or 5x Franceâs population, with a large talent pool that is used to generous compensation packages and marketing budgets in proportion to its size. Making it with less than 1 million euros, is therefore not an option if you want to make a big splash there. The cost of setting up there has to be appropriate to what is at stake: In a way itâs like having a chance to play and win the Championâs League !
Here are an overview of the amounts of the fundraisings completed prior to US expansion by our portfolio companies for their first year in USA:
360 Learning | AB Tasty | DynAdmic | Dolead | Odoo |
9M⏠| 17M⏠| 5M⏠| 13M⏠| 10M⏠|
âThe US is twice more expensive than the UK but the ROI is 50 times bigger.â - Arthur Saint-PĂšre, CEO of Dolead
4. Traction needed before moving forward
The path to getting US commercial traction is very different from company to company. This is due to different competitive environments in each space, but also varying product positioning (from a âLow touchâ approach to a âhigh touchâ one, a direct sales vs an indirect one,...). In all cases, you must localize the product and the website very early on, as well as tune the marketing message with a distinct US flavor. Better to do this with native English speakers, preferably American. For early stage B2B Software companies, it is possible to bootstrap accessing the US market, by performing the localization & marketing while still in Europe as you can get US customers and inbound leads even before settling in the US. We have seen early customer traction and marketing surveys being down successfully in this way. Once you set up the US subsidiary, you are a step closer to a product-market fit !
5. Who gets to go?
From our experience and our portfolioâs, we know that to succeed there, one of the founders has to be physically present in the US. Period.
Why? Because launching the US is like launching a second startup. You will need someone who carries the company culture, remembers the hard setup times and how you first succeeded in your local market.
"You can not understand USA from France.â - StĂ©phane Bonjean, CEO of Dynadmic
"The first difficulty is that the gap between France and the US is big. The second one is that the first is always underestimated by the CEO.â - Nicolas Hernandez CEO of 360 Learning
6. East coast or west coast?
According to us, the nearest your US team is from your European team the better the outcome will be.
Nicolas Dessaigne, ex-CEO @ Algolia admitted after having settled on the West Coast that, if he had to do it again, he would choose the East Coast.
"It's the worst challenge [the 9-hour time difference] we've had to face." - Nicolas Dessaigne, CEO @ Algolia
"Even if there are fewer and fewer penalties for going to the West Coast, I would recommend to be as near to the European teams as possible. On a day-to-day basis, it has a huge impact on the ability to maintain the corporate culture." - Emmanuel Schalit, ex-CEO & cofounder of Dashlane
Decision matrix
Here are important factors to consider when choosing where to land:
Within XAnge Family, there are ...
7. Admin stuffs, donât do it quick & dirty
Choices that you will make today can have huge impact later.
For example:
- Incorporation of your subsidiary : You can do it in 3 clicks today online but it will take 3 months to change it later,...
- Bank account: Contrary to what you might think, the US banking Market is not as mature as the French one is. Having a commercial Bank advisor IS important to untangle stuff. Check our Bank Checklist here:
đïžBonnes pratiques et Ă©checs lors de l'ouverture du marchĂ© U.S.
- Intellectual property: How do you exchange value created between France & US? It can be massive in terms of tax if not addressed from the beginning.
8. Playing hard on the hiring game
Before saying anything else, just assume that you WILL make hiring mistakes. Itâs inevitable.
"Americans are outstanding salesmen of themselves, during the interview the most introverted accountant is standing on the table.â - StĂ©phane Bonjean, CEO of Dynadmic
But good news, there are ways to make fewer mistakes by multiplying cases studies, reference calls, and scorecards ...
And remember that local hires will help you clear the cultural gap and sound like a local company.
9. Be bold on selling and marketing
The act of âsellingâ is much more straight to the point than in Europe, using your unique selling process as a guiding light. Sales teams are organized according to the sales funnel (BDR, SDR, account management, ...).
Thatâs why you must use the best methods and techniques to drive leads and sales, such as having ample impactful content, mastering outbound calling, sharpening your SEO results to near perfection, adopting social selling techniques, using sales chat on your website, train your team to succeed in the fast US environment, and aligning your sales and marketing teams.
((Le mĂ©tier de commercial aux Etats-Unis n'est pas le mĂȘme qu'en France : les mĂ©thodes et les profils des commerciaux sont diffĂ©rents.))
- Sales of up to 50K⏠can easily be done remotely ;
- Meetings last only 20 minutes so you need to be very focused;
- Sales teams are not multi-tasking. Sales team are fragmented according to the sales funnel (BDR, SDR, account management, ...) ;
- Sales teams need sales materials: case studies, call & demo script, social proofs, ... an entire sales playbook.
âIn the US, there is business everywhere! You should not hesitate to move away from the big cities. You have to explain to your prospects that you are the best, show them that it would be a professional mistake not to work with you. During a Sales pitch, we only talk about efficiency and money, we never explain how it works. Prospects don't change for the sake of change, they clear needs ROI/benefits.â - StĂ©phane Bonjean, CEO of Dynadmic
And successful marketing is the same! A US website style must be short, straightforward and crisp. Branding is also key because US people are very sensible to it.
For example, Dolead worked on its US marketing assets with a specialized agency and a 90K⏠budget. It was an essential investment that has helped them close up 47 clients in ((9)) months.
"They're big fans of social proof. They love everything about rankings, comparators, ... all that part that comes with reassurance." - Nicolas Hernandez, CEO of 360 Learning
10. Switch from being HQ-centric to becoming a global company
You have to think international from day 1: if you know your company will expand internationally one day, then your team, your product, your marketing, all have to be planned as international from the onset. That means:
- Hiring English speakers even if they work in Europe ;
- Adapt you product to be compatible with several languages and different country needs ;
- Listen to your US employees, they know more than you on how to sound local ;
- Donât think your HQ country as the center of your company. Your management has to be a mirror of your international presence.
"In the New York office, we asked the entire team, French speakers included, to speak only English. As soon as someone spoke in French, they had to put $1 in a piggy bank. This is very important to maintain the company culture and team atmosphere. Employees who don't speak French may worry about French discussions and misinterpret them. I myself was very careful not to speak French and to try to appear as American as possible to set an example." - Emmanuel Schalit, ex-CEO & cofounder of Dashlane.