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(By Robert Chew, Council member, SID)

It has never been easier to reach the global consumer, but the competition is intense. Learning from those who have – as well as those that did not – can help startups with global ambitions scale.

The growth of a global middle class is one of the great outcomes of globalisation. With the proliferation of digital devices, internet access and social media,
reaching out to this demographic has never been more efficient than it is today. Consumer tastes and habits are converging globally, and consumers are becoming increasingly savvy of what is available to them from around the world.

The promise of and seemingly easy access to a global audience has led many startups to have outsized ambitions of becoming a global player quickly, a position which once only established companies could dream of.

However, the global arena is intensely competitive. Companies need to scale at speed to satisfy the demanding global consumer. Tech startups that fail to scale up fast or appropriately risk becoming zombie startups.

Expert observers who have looked at those who have succeeded (think unicorns and decacorns) and the many more casualties who litter the global arena have crystallised some lessons for building a global startup.

Company purpose and universal need

First, a startup should begin with a clear company purpose. And since we are talking about globalisation, they should have an audacious global vision to fulfil a universal need.

One could use Google’s Larry Page’s toothbrush test as an initial qualifier: “Is it something you will use once or twice a day, and does it make your life better?” This approach looks for usefulness for the many.

A business with a market potential of one billion allows for error and time for it to scale.

Basics and launch

Before worrying about scaling the startup, startups should ensure that the fundamentals are fool-proof. Rushing in to scale because of the pressures to move fast may prove fatal. According to Startup Genome’s survey of over 3,200 startups, 74 per cent of failures can be explained by premature scaling.

It is important that the product delivers positive results when it is launched. A functioning product supported by a customer-responsive organisation is critical to sustaining a product launch. A successful launch is the first step towards building a brand and helps to build solid foundations for subsequent scaling.

Right people and culture

A business is scalable only when it has the right people on board.

A startup should focus on hiring quality over speed. It should hire great managers early. This is important to building a core leadership team that will allow the rest of the team to flourish. The people it hires should be team players who are not afraid to roll up their sleeves. The words “That is not my job” should not exist in their vocabulary. Startup personnel should have multifaceted skillsets, or skills that can be transferred from one task to another.

A strong company culture is a great reason for potential hires to join a company. Millennials are keen to work in companies that are committed to ethics and values. However, there is no one right set of values. For some technology-driven companies, it is about a culture that loves engineers, for others, the culture is one of
collaboration.

Maximum automation

A tech startup that is labour intensive is not scalable.

Startups should look at development and production tools, establish a product development capability and a problem resolution system, and build an infrastructure to manage growth in the volume of transactions, while ensuring security and resiliency.

Going international

To scale beyond domestic markets, startups must be systematic about moving from a local operation to international markets.

The question of how one structures a regional or international operation becomes relevant. The answer varies, depending on the types of product, sales and service support required to go to market.

For some businesses, direct sales and support teams would need to be in close proximity to local customers. In such cases, companies like Google and Facebook created small teams from headquarters and sent them to new regions, tasking them with hiring a local team and growth. This is a good way to preserve and export the company culture and ensures brand consistency globally.

Mentors

One final bit of advice for startup executives as they scale their businesses is to get a mentor.

Mentorship is the secret of the highest profile achievers in business and tech, and yet it is under-utilised in this part of the world.

One thing which Apple’s Steve Jobs and Google’s Larry Page have in common is that they had a mentor, in fact, the same mentor – Bill Campbell. Campbell served as Jobs’ sounding board during one of the most resounding corporate turnarounds as Apple redesigned its Mac and then rolled out the iPod, iPhone and iPad to
emerge as the world’s most valuable company.

Campbell also played a role in Google’s success. Campbell worked with former Google CEO Eric Schmidt and co-founders Larry Page and Sergey Brin, to help them work out their early differences and eventually forged one of the most successful partnerships in corporate America.

Scaling globally

When you think about it, many of the steps required to help startups scale globally are as fundamental as those needed to grow businesses domestically – it is just that it is often much more intensive and exhilarating.

 

This article first appeared in the Q2/2018 Issue of the SID Directors Bulletin published by the Singapore Institute of Directors.

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