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Expansion part 2: As you move.



Expansion part 2: As you move.

Carl Fritjofsson

This is a continuation of a 3 blog series about international expansion of startups. Something we spend a lot of time assiting our entpreneurs with at Creandum. The first post focused on what you can do to prepare before you go. In this second post I'm highlighting what to consider in the internal turbulent phase during the actual expansion. Most of the content relates to expanding from Europe to the US, but parts of it should still be applicable regardless of geographies. 

As mentioned in the first post, expanding operations into a new market is a lot of hard work. It will put tremendous efforts on the organizational structure and your team and business needs to be mature and ready enough for it. Again I want to repeat, don't expand too soon. But once you decide the timing is right and you flip the switch realize it will be a chaotic couple of months ahead and minimize friction by thinking through the following points. 

⛑ Fill in the holes. Before you started the actual expansion, you must have thought through what functions to build at the new location and what people from the management team are required to do so. Ideally this means one or more of the founders, and in case you're heading to the Bay Area it's hopefully non-technical functions (due to heavy competition for tech talent). But don't just leave. Keep in mind that leaving the home office will leave an empty whole in the organization. Things will not be the same in this office from now on. Therefore make sure to review all responsibilities that currently sits with the people who are moving, understand what of those things will have to remain locally vs being managed from the new location, and decide who in the home office to take over such tasks. Try to transfer these responsibilities during a phase before the move has happened. Be wary, as a strong leaders you may experience a hard time giving up certain responsibilities which are to remain at local, but it's critical to trust and enable to local team to take on and own the new tasks. Don't make a rookie leadership mistake and bulldoze over responsibility allocation.

💬 Over-communicate. The distance between your offices means a barrier for information to flow freely. This means much higher requirements on structured communications. And you will have to communicate a lot. And when you think you're communicating too much, you probably need to communicate a little more. It's never too much. To do this you first of all have to set up the organization to operate significantly more in writing. Things that aren't written down will by effect not transfer fluidly between the offices. The local water cooler fountain conversations should still be encouraged, but any discussions or decisions being made there have to be documented in writing and shared with the broader team. And, as mentioned in the previous post, this also goes for status updates and meeting minutes. The second component of this is making this information available and transparent regardless of office location. Using Slack or similar communications products as the primary destination can make wonders, and also adds an interactive layer to it. Thirdly you will also start relying a lot on online conferencing between the offices. Use video conferencing, not audio only, as much as possible because it not only forces everyone to focus on the meeting (you're being "watched") but seeing a person often also helps strengthen team spirit and the human bond between colleagues. And to further encourage team spirit and to lower the mental barriers between the offices it's also great to install a permanent Dropcam link between the offices where you can see each other and reinforce that you're in it together! And lastly you have to accept that asynchronous communications is slightly slower than what you were used to when everyone was in the same room. But remember to respect it, and do what you can to work around it by maximizing the work day overlap. Time zone differences between CET and PST means people in California will have to get up early and their colleagues in Europe have to stay a little later in the office. 

🍖 Beef up the team. For those who spearhead the expansion it can be a lonely endeavor in the beginning as they just moved to a foreign country leaving beloved colleagues behind. And you rarely have full capacity in the new location meaning you will start hiring quickly. When hiring in a new location there's a common tendency to over-hire in the beginning to quickly build scale. It's typically not a bad thing (clearly depends on organizational needs more than anything), although you have to have extremely high hiring demands on the first people you bring on. The biggest job you have as the team member leading the expansion at the new location will be to transfer culture from the original office. Hence hiring for culture fit becomes a core task meaning you have to truly ensure culture fit on your first hires. To help you do this, use the people in your first office to assist in the recruiting and interviewing. Even if it involves expenses flying people across the world. Using your original team not only helps identify the right candidate, but also effectively bridges the two offices together. And be sure that the people you’re hiring are filling an immediate need, e.g. don’t hire someone to do sales unless your product is ready for the market. 

📝 Lawyer up. Don't try to put someone internally to do the paper works. Things that may seem standard and easy in your home market can still be surprisingly complex, time consuming and bureaucratic especially in the US. You cannot do this yourself, and you don't have the time to learn. Most of it simply requires you to have good legal representation. Some of these things include setting up a Delaware company, drafting employment agreements and updating your Terms of Service. If you believe the US is your most strategic market and you are long-term committed to it, you may want to consider flipping the company to a US parent and creating a local employee incentive program (not recommended until post-expansion when you have validated the market with actual results). All these things require paperwork and solid lawyer assistance. And don't be cheap about it. Choose top tier legal firms who are well known in the startup ecosystem. They are expensive, but it's worth it. Try to negotiate fixed fees per project to avoid hourly charges adding up. And try to use standard legal frameworks. Anything custom you require will increase costs exponentially. And remember that in the US you have specialist lawyers across many different fields. The person to draft your employment agreements is probably not the same who sets up your Delaware company. Also make sure to get your employment visa stuff sorted before you settle in too much. E2, H1b, L1, O1 and so on. It's a jungle and it takes time but it's doable with the right legal assistance. Simply accept working close with lawyers as one of the pains and realities of operating a business in the US. 

🏃 Get ready to sweat. Get going instantly when you hit the ground. It's important to show you're making progress to the team members at home. If you haven't already get to know all potentials partners, recruiters, lawyers, etc. you may need. Stir up dust everywhere you can. If you come from Europe to the Bay Area you will also notice that you get access to some of the absolute cutting edge talent who live and breathe tech. By networking within that community you get healthy perspectives on your company and what it takes to make it in a world often many degrees more competitive than what you find in the safe arms of Europe. Also, keep in mind that in the US it's often rather easy to get first meeting as people are open and helpful. But now when you're here being relevant enough to build a long-term relationship and secure 2nd and 3rd meetings over time requires you to bring something to the equation. The equation requires you to be relevant and give back. Start planning that early and offer a helping hand as often as you can. Furthermore, if there's only a couple of you start working from a co-working space and give yourself time. Don't rush into the first office you can get. Real estate is a slow moving industry and getting an office in the Bay Area often means signing a 3-5 year lease. You don't want to mess that up. And if you're in the Bay Area you have to be ready to pay up. Commercial and private real estate is crazy expensive and salaries for top tier talent is many dimensions higher than you are used to. Get used to it. Finally, recognize the expansion is a huge personal experience for those who more over. It's critical to find a context and purpose to enjoy beyond the business. Don't neglect making friends, pursuing hobbies, working out, etc. Enjoy your new home! 

Again, the content of this post isn't purely based on my thinking and experiences. For some of the best startup inspiration make sure to follow these friends who all contributed to this article series: Patric of HansoftHeini of VivinoCaroline of Toca BocaChristian of FitbayOskar of NarrativeEmil of Neo TechnologyLouise of VintAlex of Omniata, and Jonatan of Lookback. I’m always available to connect and discuss on Twitter at @fritjofsson. 💪👊