The hidden costs of scaling internationally: Orkut and 3 other successful entrepreneurs on what it takes to go globalBinjal Shah
Orkut Büyükkökten, Founder of Orkut.com, spills the when, where, how and why of going global - and the heavy price you're going to pay, literally and figuratively, when you scale internationally.
“You must dream about changing the world,” said Orkut Büyükkökten as a clarion call in a rather special closed-door event convened at The Garage - a swanky new co-working space in Lower Parel, Mumbai - for entrepreneurs from the length and breadth of Maximum City, to talk about the admittedly special role they play in India’s growth story.
Addressing Indian startups one last time on his three-week tour in India to promote Hello, his latest stride in social networking, Orkut Büyükkökten is quite possibly at the brink of giving the world an encore of the accidental raging success that was Orkut.com – an early social network that was floated on a single computer and froze when it amassed an unprecedented number of downloads worldwide within mere days of being made live. Therefore, quite fittingly, the stakeholders of the startup ecosystem who wished to take a leaf out of his book were imparted the following wisdoms on what it takes to scale internationally, by the panel that was also graced by Navin Honagudi of Kae Capital, Swapnil Shinde of Dhingana and Mezi fame, and Anubhav Tewari, President of Jetsynthesys:
So, what does it take to go global?
Being an entrepreneur is all about being above the average human being, according to Navin. “If I would have heard some of these current numbers in India three years ago, I wouldn’t have believed it – but those stories are real, and those companies that took that chance are now profitable. Foresight is there. India is at an inflection point when it comes to mobile spend, penetration, revenues. We have missed so many companies by writing them off as niche; looking at the numbers now, they made it. The real art is seeing what no one sees, and anticipating how it will be five years hence,” he explained.
An obvious but often undermined cog in the machine is growth capital. Expansions are a capital-intensive affair, what with the obvious and hidden – explained later in this article – costs involved in the grand step. Therefore, with the right amount of runway and the right kind of partners, one could create the right kind of situation where they can start exploring international markets.
When and why should one go global?
- Don’t expand just for the sake of being “global”
“Expanding global just to play the global game, before there is a need, is a bad scenario,” Anubhav opined.
Orkut agrees. “Some products may have the advantage of being consumable from anywhere. But, you must be focused on certain markets and benchmark your practices against those – when it comes to model and monetisation,” he said.
- When there is an underserved market
“You can take anything global if there is a need. Don't go global for the sake of it,” cautioned Navin.
Swapnil illustrated this through InMobi's example, stating that they aborted mission when they saw a saturated market that assures adoptibility, and decided to seek an undeserved market instead, that guarantees opportunity. “When Inmobi was considering expanding to the US, they saw that the market was completely saturated with Google. So, they looked toward Southeast Asia first, and waited for capital and the opportune time to scale to the US,” he said.
When to go global?
- After a successful experiment in your homeground
“Go deep into one country. It is important to win in one country, and then take it to markets similar to the one you launched in, find the next best country, where you can find success with a similar blueprint,” said Orkut.
How to go global?
- Know your audience
The lines have blurred between borders and continents – and especially with a product like a social network, it is hard to contain it to just a specific region. But, according to Orkut, no matter how rapid your expansion might come to be, it must go hand-in-hand with customisation and nuance. “A startup needs to be constantly mindful of their target audience first. It is important to be local and sense community culture at the respective place. An example of a nuance is the way Tinder might be called a hookup app somewhere, but a dating app somewhere else,” he added.
Swapnil expanded on the importance of keeping in mind one’s target audience. “In the consumer pyramid, we knew we were serving the top one percent. Even when we cracked deals with Amex and Citi - big players that can give us scale - we were targeting only their platinum and gold members, as that's the segment we are targeting all over. Once you get your unit economics right, scale and replicate. For example, Flipkart is solving a problem that has already been solved in the world, therefore they are treading cautiously with expansion outside of India,” he added.
- Get a good sales team
“Lot of entrepreneurship make hypotheses about international market, while sitting in Pune. They then shut down saying that their sales guy wasn't good. Your sales effort can't be shoddy. Indians can't not ‘build’ good products - Indians can't ‘sell’ good products. So, invest in a good sales team. In fact, if you have two co-founders, one of you needs to relocate to the other market you are serving,” Anubhav advocated.
- Find a local partner
Anubhav also suggested investing in a local partner. “A path you can employ to bolster your expansion is finding a local partner, acquisitioning another company. Management is cumbersome, and consumer behaviour is different everywhere. So, going global through an acquisition is a good strategy,” he said.
- Be agile
It always helps to be willing to adapt. “While people often spare wisdoms like, ‘stick to your passion’, I particularly liked what Swapnil said and did. He pivoted four times to get the perfect product-market fit in two years. So, you don’t need to have a solution, you need to have a mission. Stick to the mission, and the solution will arise out of listening to your consumer. Be agile. The real solution can't be created in your first meeting at a coffee shop,” Anubhav said.
- Find investors who can be friends and partners
Startup journeys and business liaisons need to be more personal than one would imagine. “You need investors who will have a beer with you in the evening, not just meet you in shiny offices,” Anubhav added.
What are the hidden costs of going global?
- “Opportunity cost”
“There are unseen expenses beyond team, market research and tech; for example, engineering manpower to customise your product for the global market, travel cost etc. However, the biggest is the ‘opportunity cost’, because you might suffer in your own original market in the hopes of making it big somewhere else,” Swapnil said.
- “Figuring out cost.”
According to Navin, the “Figuring Out” cost is the loftiest. “You have to dig and you don't know what direction the gold is. And then give yourself a couple of years, at least, to reap the fruit,” he added.
- “Your social life”
Swapnil busted the whole work-life balance myth, stating that for the most part, you will be consumed by the thirst to make your business succeed, and it will be extremely hard - if not entirely impossible - to have other priorities at the time. The sooner an entrepreneur accepts that, the more poised they will be to take on this long, hard and oftentimes lonely journey. “Entrepreneurship is a wounded experience, but it will, hopefully, be rewarding to you at the end of it all,” he explains, bringing the session to a close.