At Blackbird Ventures we have a focus on businesses which are forming in Australia, but are attacking a global market from day one. By global day one, we really mean GLOBAL and we really mean DAY ONE! We do not mean, “we’re focussing on the Australian market, then going global”. We do not mean, “we could be global but we want to stay close to our initial customers to learn the business”. We do not mean, “it has global application but we have lots of contacts here so we’re going after them first”.
It truly means I’m going to build my product in such a way that it can be sold all over the world from the day I release it. I’m going to learn to sell across multiple regions, and my customers are not going to know or care if I’m Australian. Most of my initial customers will be overseas.
If you do want to create a global business, here are five reasons you should do this day one, rather than focussing on the Australian market first.
The learnings are very different and will take you in a different direction
If you decide to focus on the Australian market first, you’ll naturally build your business and your product in a certain way because you are close to your market. You’ll go and talk to people directly to sell your product and learn how they use it. You’ll learn how to optimise this form of selling and learning.
But if you dare to sell your product to the globe day one, you won’t be able to run around and sell it in person . You won’t be able to sit down with a potential client, gather their user requirements and learn how they use your product.
You’ll have to find a scalable customer acquisition model, often one that requires no face to face meetings. You’ll get focussed on user metrics to learn how people research, find and use your product. You’ll probably even design the product differently, so it can be efficiently found, setup, trialled and sold to people you’ve never met. This focus and the subsequent learnings will set you on a very different course than if you start in Australia first.
Canva is a great example of being global day one. Canva has acquired over 2.5m users in less than two years since launch. The team has done an amazing job of content and digital marketing at scale to build a user acquisition engine that’s driving over 20k new users to them every day. Their product and business would be very different if they’d focussed on getting it right in Australia first, running around and signing up local businesses to use their product, sitting down with them and getting their feedback.
You never have enough resources to go global
Let’s say you decide to play it safe and focus on Australia first, and that you get your business humming along in the Australian market. You’ve built $2–3m annual revenue in Australia in the first couple of years — you’ve done well! It’s now time to expand overseas.
At this size of business you’ll almost certainly still be severely under-resourced. You’ll want to put resources into an overseas market, but you’ll still be struggling to meet the requirements of your Aussie customers, and those customers are the priority … keep them happy, they pay the wages!
So you never really get to focus on overseas expansion like you want. Plus you’re starting from scratch with your learning about selling to a global market, and you’ll probably have to make big changes to your sales model and your product to make it work.
This is one of the barriers to global success from Australia. By starting Australia only, you’re often optimising for a small business (which is absolutely fine if that’s what you want).
Larger scale funding needs to come from overseas
Much has been written about the lack of venture capital funding in Australia. While the angel stage is now fairly well funded by high net worths, there is still an undersupply of Australian capital for raising the large amounts needed to build big businesses.
Most of the successful Australian tech startups have raised their larger rounds of capital from offshore sources. If you’re not global, these funding sources are rarely interested. If you arrive in Silicon Valley with a million dollars or so of revenue from Australia only, they’ll discount that heavily, decreasing your valuation and your chances of getting any investment at all.
It’s really tough to raise capital from Silicon Valley to take an Australian business global and there’s very little capital here to help you. This might change but it’s something you need to work with at the moment.
Because you can now do it!
Digital marketing channels (SEO, SEM, viral loops, blogging, etc) are now mature enough that you can build revenue streams of $100s of millions per annum from global markets with small teams sitting anywhere in the world. Even the most serious enterprise software is being sold this way. You no longer need to be close to your market in the early days to prove out product market fit (this might change as you get to serious scale).
Just as Atlassian, Envato and Campaign Monitor have done it, you can too.
I’ve left the most obvious one to last. Australia is estimated to be under 1.5% of global GDP, so you’re missing a huge market if you only focus on Australia. A startup has limited time. Get to the that big market as fast as you can!
My usual disclaimer
Like all startup advice, take this with a grain of salt. Businesses that dare to be global day one are our passion at Blackbird, but there are many ways to build a great business.And of course the best founders usually break all the rules!
Come along to the Sunrise Conference on 25th May 2015 in Sydney and learn from 9 hugely successful Aussie founders, some who dared to go global day one (and some who didn’t). Learn in detail about how they solved pivotal challenges in the first few years to build businesses worth hundreds of millions of dollars. www.thesunrise.co. You can get tickets here. If you want a discount code, direct message me on twitter (@rcsbaker) and I’ll send one across.