Pitfalls to avoid when expanding to the US

John Holt, Chair of Kiwi Landing Pad, shares a few pitfalls to avoid for companies who are thinking of expanding to the US.

3-minute read

Home to the world’s largest economy, a vast English-speaking population, and some of the most innovative companies on the globe – the US is often a target for Kiwi firms looking to expand offshore.

But while the sheer size and sophistication of the US presents huge opportunity, there are a number of pitfalls New Zealand companies can fall into when trying to conquer the market.

Tightly define your target market

Despite the many tech tools now at our fingertips, which seem to have made the world a smaller place, the tyranny of distance still hampers many Kiwi businesses when tackling the US.

Viewed from far away the US might look like one homogenous market, but in reality, its 50 states are more like 50 different countries – and each of these can again be segmented in a huge number of ways.

Often, however, we’ll see New Zealand businesses adopt a strategy of ‘going to the US’ – an approach I’ve heard likened to ‘trying to boil the ocean’ and one that can quickly prove fatal for a young company with limited resources.

As an example, an early business I co-founded and took to the US – HR software firm Sonar6 – initially defined its US target market as tech or biotech companies in the San Francisco Bay Area with 500 or more employees – a market segment that still contained 1,000 potential customers.

Help others help you 

Failing to nail down a specific US target market can also squander precious human resource.

There’s a strong ‘pay it forward’ culture among successful US entrepreneurs, particularly in the tech scene, who want to use their networks and influence to help fledgling entrepreneurs. However if that fledgling entrepreneur can’t identify and articulate a tightly defined market, their more experienced and time-poor counterpart will find it hard to offer meaningful assistance.

Stay close to the action

Proximity is another challenge for Kiwi entrepreneurs.  

At Kiwi Landing Pad our focus is on assisting high-growth tech companies, and we’ve seen some make the call to sink all of their limited resources into hiring expensive local talent, betting on the benefits of being able to tap into their existing networks and experience.

Our observation, however, is it’s a huge ask for even the most highly skilled US-based individuals to work remotely for a New Zealand company without regular contact with its founders. Being there, as they say, is everything.

Get networked

A final by-product of the tyranny of distance that I’ll mention is it can give a skewed view of US business culture – and what it takes to be successful in it.

The latest ‘overnight success’ story blazed across the covers of mainstream media may, in reality, have been the result of many, many years of the founders’ hard slog and previous experience, but that’s something you probably wouldn’t know unless you’re embedded in the local business scene.

That’s where Kiwi Landing Pad can help. Since it was founded in San Francisco in 2011, Kiwi Landing Pad has helped hundreds of high-growth technology companies expand into the US market by building a community of entrepreneurs dedicated to helping other entrepreneurs. And with the help of like-minded partners like BNZ, we’ll continue to help many more on their growth journey.

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