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Going International as a Startup
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By Ryan Buchanan

If you are a business person and have not read Thomas Friedman's book The World is Flat you are missing the boat. All of us have been bombarded by the same message in the press: "Be very afraid of the economic might of China and India." It wasn't until I read example after example in Friedman's book that I fully comprehended the opportunity lost by not thinking globally.

However, Friedman's examples of American companies skewed towards larger corporations, not startups. It's expensive to enter a new market (especially abroad) and if you don't time it right, it can kill your company. So when is the right time to "go international?"

A couple of days ago, I was on a flight from Portland, Oregon through Washington DC to Amsterdam. I was reading The World is Flat, then set the book down and started chatting with the guy next to me. His name was George (but pronounced Giorgi in a Bulgarian accent) and was taking his wife and daughters on vacation to see their extended family in Bulgaria.

George proceeded to fill me in on his experiences which could have come straight out of Friedman's book. When the Berlin Wall fell in 1989, it was a great thing, but many Eastern European countries suffered soon from hyper-inflation. By 1994, the Bulgarian economy collapsed as the price of products fluctuated dramatically every hour. (Imagine buying milk for twice as much in the afternoon as what it cost in the morning.) He left Bulgaria for the U.S. in '94 and joined Worldcom as a software programmer, then went to work for AOL in Northern Virginia. For the past year or so, he started a side IT consulting company with a partner where he fulfills open source software projects for federal government contracts. His main differentiator is 30 percent to 50 percent lower costs because he uses talented but inexpensive Bulgarian programmers. Fascinating! In George's case, he went international immediately as that is the core differentiator for his business.

For our company eROI, the large majority of our business is in the U.S. In fact, most of our revenue still comes from within Oregon, but we've aggressively entered in new markets in Seattle, Bay Area, L.A., New York, DC, Chicago, and that revenue mix is changing dramatically to be more evenly distributed throughout the U.S. We have clients from Canada, UK, France, and Japan, but those were all through U.S. contacts. We only recently landed our first client and primary client contact that are both based abroad (in the United Kingdom). Despite the unification of Europe with the advent of the euro, the language barrier is very real and it seems only practical to enter into English-speaking markets like the UK and potentially the Netherlands. I'm writing this from Amsterdam now and have met with a potential agency partner/client, but they want someone based here (or who will visit very often) to do business with us. I'd love to enter the Amsterdam market for the sheer purpose of having an excuse to visit here, but I'm afraid that those visits would rack up some BIG costs and that it would take a while to build the sales pipeline here.

Until I get better advice, I'm going to follow my gut and only "enter international markets" that we can sell into from home first. Please comment on this blog posting to voice your opinion.

Ryan Buchanan is the CEO of eROI.

Ryan Buchanan is the CEO and Founder of eROI.
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