After running marketing for the Canadian arm of Sun Microsystems for four years I thought I had all my ducks in a row when I transferred to its Mountain View headquarters in 1994. I was dead wrong! It took me another four years to understand and adapt to the paradox of a laid-back Dockers casualness behind which lay an intensely competitive and complex environment. Twenty years later, now working with offshore firms seeking to enter the U.S. TMT (tech, media, telecom) market, it is déjà vu.
There are two common myths about the U.S. tech market that can lead to trouble if not understood. Fortunately, there are seven habits of successful firms that, if adopted, will tilt the odds in one’s favor.
Two Myths about the U.S. tech market
Myth #1: It’s more than big enough. Accounting for 55% of worldwide software expenditures in 2012 there is no doubt that the U.S. is the destination market for many software companies. Yet its ample size belies the belief that uncontested white space abounds as evidenced by another 2012 statistic: there were 110,000 software vendors – 10,000 in the San Francisco Bay Area itself – competing for a piece of the pie.
Myth #2: It’s similar enough to our home market. Translating market-facing materials into American English is part of the ante for sure, but that is only the piece of the iceberg visible above the water line. What may seem like unimportant nuances can often represent make-or-break market decisions.
That 63% of software firms operating in the U.S. fail within 4 years underscores an important lesson: neither the extent of competition nor the degree of adaptation required to succeed in the U.S. market should be underestimated.
7 habits of successful newcomers to Silicon Valley
- They relentlessly build their network. As opportunities to find customers, suppliers and go-to-market partners often stem indirectly from referrals and introductions – even from a neighbor – it pays to build a roster of contact. Whether exchanging business cards at industry events, sending LinkedIn invitations or getting to know the other parents at the Little League contacts are gold. Everyone from the CEO down makes it a point of broadly cultivating relationships.
- They distinguish between today’s and tomorrow’s opportunities. While attracted to the enormous market potential in the U.S. successful newcomers do not confuse short and long term. They realize that their real near term target market is a fraction of the overall market, and belligerently focus precious resources on what they can truly compete for short term. As success is achieved they widen the aperture, ensuring that their eyes are never bigger than their stomachs.
- They obsessively study their ecosystem. They realize that knowing the landscape in which they operate inside-out is crucial. CEOs and their staff make knowing the “who” and the “how” of key players and practices in their industry a daily ritual. They develop an intimate awareness of the channels, competitors, regulators, industry and financial analysts, writers and bloggers, thought leaders and influential buyers who operate within line of sight.
- The CEO is ultimately the Chief Revenue Officer. They recognize the importance of generating initial sales and making every customer a satisfied referral customer. Their CEOs know that the buck stops at their doorsteps. They may be assisted by a large sales staff, but they do not delegate the revenue accountability. Their visible presence, involvement in and commitment to making every early stage customer win a showcase win sets them apart.
- Newcomers leverage resources of others in a win-win way. Market entrants typically do not have either the financial muscle nor resource breadth and depth to execute the essentials on their own. Whether it is identifying a Sherpa skilled at finding routes to market, tapping into huge digital distribution networks, or hiring a great tax attorney they know that seeking out the expertise of others – and rewarding them appropriately – will multiply their reach and effectiveness.
- They constantly tune their value proposition. A value proposition is not merely a 50-word statement about their offering. It is the embodiment of everything they do to deliver on the promise of an expectation for buyers – from product, service, credit terms, price, support, and methods of market outreach to hours of operation. The CEOs intuitively realize that what works well at home may not be a fit in the U.S. market. They are happy to adapt and have the courage to re-think the value chain for their offerings without being deterred by the sound of bells ringing from sacred cows.
- They are pathologically persistent. Successful CEOs recognize the inevitability of setbacks and even failures, yet are neither deterred nor disheartened by them. In an ecosystem as intensely competitive and filled with very bright people as in Silicon Valley it is unlikely that outcomes will match – or exceed – the plans carefully laid out in Excel spreadsheet simulations. In a country where Stephen King’s first novel was rejected by 29 publishers in a row, Colonel Harlan Sanders did not sell his now-famous KFC recipe until knocking on the 1,009th restaurant door, and James Dyson had to test 5,127 prototypes to get his bagless vacuum cleaner right there is much to be said for sheer, dogged persistence.
Being mindful of the myths of a market too big to fail and too easy to fit within, and adopting the seven habits of successful entrepreneurs coming to Silicon Valley, can establish the foundation for a successful enterprise.