How Australian Tech Companies Can Think About Silicon Valley
I’ve been traveling to and working in the San Francisco Bay Area since 2005 and moved here in August 2016. I’ve seen over 100 Australian companies visit, move to or operate in the U.S. Here are a few things I’ve come to believe through my experience.
You can succeed there.
In case you’re wondering, it’s huge, challenging and competitive, but with effort, consideration and perseverance, you can succeed in the U.S. It’s also possible to do this while keeping your team in Australia. Many have done it. There is a path and there is help. Keep reading to find out how.
It’s very different.
USA is similar but also different in 100 small ways that add up. This means that PMF (product market fit) in Australia is not PMF in the U.S. My rule of thumb; For consumer businesses it’s 60-80% the same and for B2B companies it’s 30-60% the same.
It’s very big.
You really can’t comprehend this remotely. 25M Aussies. 325M Americans. There are 53 regions in the U.S. with over 1M people. You could get to $10M ARR without leaving California. Safesite from Brisbane had 5 clients in Australia after 12 months then moved to the U.S. 12 months later they had 500 clients in a single state and 12 months after that they were at 3,000 nationally. You can’t get that scale in most industries in Australia.
Just because it’s big doesn’t mean it’s easy. People work hard, get two weeks holiday (but often don’t take it), study hard and are very ambitious. You need to stay focused. Solve 1 problem for 1 type of customer with 1 solution in 1 geography with 1 biz model and 1 acquisition model. Get to $1M ARR then grow from there.
Venture capital doesn’t flow in the streets.
Don’t believe Techcrunch. Yes, there is more money, but there is also even more companies. The rounds are larger but often they are harder to raise than in Australia because the whole world is here. You also have 2nd and 6th time founders raising and they get blank cheques (or checks as they say here, and yes, people still use cheque books in the U.S…). If you do earn venture capital, you will most likely do it with a U.S. focused story and with your core team (including you) moving to the U.S. permanently.
Talent is very expensive.
This is great if you want a job. But I suggest you don’t bring your tech team over. Facebook will meet them at the airport and offer free food and a sign on bonus…) This is also great for Aussie companies. Build in Australia, sell in the U.S. This works and you can use R&D offset and EMDG grants. Perfect match. Also don’t underestimate your ability to poach a big name from a big company. Sell a big dream and you might just find a senior product manager for Slack joining your team for $150K a year and 10% equity (don’t be stingy, they have networks and experience that will make your business much more likely to succeed – plus they will bring their favourite team members too).
What are your options?
I’ve seen a few main approaches work:
1. Build local and stay local – forget big markets.
2. Build for Australia, make it a success and be happy with that. No shame in that and if you do, you can either start another one or build on it. Move to U.S. and stay there. As above, if you raise early you will most likely have to move, like Bugcrowd and Safesite. If you raise later then you can stay, like Campaign Monitor and 99Designs (though both have big offices in SF).
3. Build local, get big, then go global. Australia is too small for most businesses and rarely means you win the global market. Seek and Carsales did this. Stayed in Australia for 10 years, got to $1B value, then looked global.
[Sidebar] Let’s say two identical companies start in Australia and U.S. focused on their home markets. After the 3 years, the Aussie company will maybe have $2-3M in revenue, the U.S. company $10M. The Aussie company can raise maybe $5M, the U.S. company will raise $50M. The Aussie company will now find it very hard to get into the U.S. with that gorilla there. Maybe one day the U.S. company will buy the Aussie company.
4. Build local, sell global. This is the ideal. Hire the local talent (keeps government people happy) but sell into the big market. This is what BigCommerce, Freelancer, Invoice2Go, Campaign Monitor and Envato did.
Don’t spend your life wondering. Buy a ticket for about $1,800 (yes, United flights aren’t great but Qantas has good deals now too). Sleep on couches (not mine, I already have three kids but others should oblige) or stay at StartupHouse (started by an Aussie, nice work Elias.) Join Aussie Founders Network. Meet with five local Aussies for coffee at Red Door, Coffee Culture or even Starbucks (they have a flat white now). Come prepared, listen, follow up and you should get 10 intros to good people for customers or even investors. You’re not pitching, you’re asking questions and listening. You’re learning. You’re starting the process. You’re starting a journey of effort, consideration and perseverance because…
You can succeed there.
Thanks to our friends at StartupAus for giving us permission to share.