Optimizing Global Growth: A Software Startup’s Solution

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Yin L. Yin is a founding member and the COO of Compas Global, a three-year-old Silicon Valley provider of enterprise software that lets companies view, analyze and plan their global growth strategy on one aggregated dashboard. Yin has led international business development, partnerships and operations positions at various startups across the smart grid, solar and geospatial data visualization industries. Earlier, she was a project leader at the Boston Consulting Group, based in Berlin and Beijing, advising Fortune 500 companies on their international growth strategies. Yin recently spoke with Knowledge@Wharton to talk about opportunities in the B2B, software-as-a-service (SaaS) space.

An edited transcript of the conversation follows.

Knowledge@Wharton: What was the inspiration behind Compas Global? What problem or opportunity were you trying to address?

Yin Yin: Compas was founded with the premise of helping technology companies do global expansion in a more structured and efficient way. Our CEO and I had worked together at different tech companies, always in the role of international business development. We saw that a lot of these technology companies had vast opportunities outside of their home markets, especially with the advent of cheaper computing power and the ability to put your product and service online.

We deal mostly with B2B SaaS companies. You automatically are globally available from day one. So it has fundamentally changed the thinking around being international. It’s no longer, ‘I’m in my home market, and then I make a conscious decision to set up a subsidiary or send some people to particular markets.’ Rather, from day one, you could have people downloading or signing up for your services in geographies that you never did any marketing in. And so what we saw was companies really going global, almost by accident, and then needing to address the more complex requirements of being a service provider or a software company to satisfy the varying demands of a more diverse customer base.

What we wanted to do is help companies who are in the growth stage — so not too early. We don’t work with companies who are in the product/market fit phase, and not companies who are large enough to maybe have one person or even a small team dealing with international. [Our clients are] in that growth phase, where they know they have to think ahead. And they want to kind of get the proverbial horse in front of the cart and make sure that they don’t become the type of company that’s only reactive to global. They try to control the way in which they serve customers and the way they allocate their limited resources to do that.

“Compas was founded with the premise of helping technology companies do global expansion in a more structured and efficient way.”

So we started off with a framework to look at, first of all, the company’s internal readiness. So let’s look systematically. What will it take for us to be successful? What are the right criteria? Let us rate them. Let us evaluate ourselves, and look at ourselves in the mirror. Let us ask ourselves the question, are we even ready to become a full-blown international company? Yes or no? Which aspects will require more investment going forward?

And then we look at which geographic areas have the most potential for us. We look at two dimensions. One is the market itself. How ready is it for our product or service? The other dimension is, for this market, are we ready to be successful there? Yes or no? This allows company executives to compare [geographies as] apples to apples and avoid the situation in which we either, I call it “play whack-a-mole,” where “Oh, there’s a customer who wants us to localize in this language.” Boom. Okay. Let’s go. And then “there’s another partner who wants to sell our product and service in, let’s say, the Middle East, but we really don’t have any clue.” So, “let’s check it out!”

You can do that for quite a while but, eventually, you’re going to reach a stage where you can no longer scale, right? You’re making decisions sort of off the cuff. And what often also happens, if you have folks outside of your home region, they get quite isolated. It’s the person who has the ear of the CEO or is walking the halls who has more influence. We don’t want to have a situation where whoever screams the loudest gets the resources. We want to bring it all together in one place. And when it comes to execution, we also have modules in our software that will help them track, “Well, where should we make the investments?” And again, be able to compare apples to apples and track the progress in the various geographies.

So, all in all, it’s a software tool to help companies and the executive teams stay structured around how to think about international and make the process of aggregating, visualizing, and then making decisions about international or about global generally much easier than they could with disparate software. For instance, having PowerPoint decks here and some Excel sheets there or lots of knowledge about particular markets still captured in different people’s brains and never really documented anywhere. We provide the one-stop shop or single source of truth for everything around international. That’s our real aim.

Knowledge@Wharton: Could you walk me through how a company might actually use this product to evaluate different opportunities to go global and how the decision-making process works?

Yin: Absolutely. We are a software company. But just like many other enterprise software companies, we have professional services as well. So we have a combination of software and services. We help the customers’ executive teams walk through a standardized on-boarding process. And that’s something that I’m responsible for as head of customer success. We’ve tried to make it very standardized, so that we can continuously improve upon that process, based on what we learn from customers.

Generally, it works like this: We get referrals through our current customers or private equity companies or even VC firms, whose portfolio companies are embarking on this global journey. We start off with talking to the CEO, because unless global is on the CEO’s agenda, it doesn’t make sense for us to come in yet. It needs to be one of the top priorities for the company.

Then we work with someone who will likely be the executive sponsor — wherever in the organization global sits. That may be on the sales or business development side, sometimes marketing. We sit down with these individuals or a core team of people and try to understand their business. [Then we] do this readiness exercise: What will it take for you to be successful as a global company, not just one serving your home market? Let’s think about what areas. Do you even have the support of your shareholders, for instance? That’s a starting point. How experienced is your executive team across all functions to lead this international growth?

Then, function by function, we also think about, well, do we even know how to bill customers in this particular geography? Have we done our homework on how to optimize our tax structure? How about our engineering team? Do they have experience in building a product that is not just localized in terms of language, but really internationalized to meet the requirements for certain markets?

Knowledge@Wharton: How do you collect this information?

Yin: We do this exercise usually as part of a workshop, to be very interactive. We want to have representation from all of the different functions. That also stems from our experience that international oftentimes is just the person who kind of owns international and has to carry the burden of executing that as well as to fight for resources. [But] if you are a global company from day one, all the different functions should have dedicated resources, at least partial resources for global, and should be engaged in the discussion around global.

We want to try to provide transparency as well. So we run this workshop. We use our software to capture their thinking, and that’s both in terms of quantitative ratings, one to 10. We’re not trying to make something super-complex here. We try to capture their thinking and also their comments. So give us color about why you rated it a two, versus why you rated it a seven. And our software will visualize it, first of all as an average of the entire team and also show them on a different screen the variation in opinion for one particular criterion.

That’s usually super-shocking to them, because they say, “Hey, we’re a very close-knit executive team, we talk every day.” But then you’ll see there’s a delta of seven, eight points. And that’s really normal, because oftentimes when we hold this workshop and moderate these discussions, it’s the first time that the executive team has sat down and talked about only the topic of global, right?

It’s not just “How do I react to this particular one-off, customer request?” In the medium-term, let’s say a three-year horizon, are we able to handle that international business in many more geographies? That’s usually the first step. Then we’ll know, okay, where are you relatively weak? Where are you relatively strong? We’ll also sit down usually with the CEO and say, “Well, what’s your goal?” Where do you want to be in terms of all these different criteria? We restrict the number of criteria to 10, because we don’t want to create that much work.

Knowledge@Wharton: So you try to very much streamline things?

Yin: There’s this misconception that the more data you have, the more accurate you are. We don’t want to create that false sense of precision, so [we have] 10 criteria. Everybody rates them. And we encourage the team to update their ratings on a monthly basis. Let’s say we hire a new chief marketing officer, and this person happens to have a lot of global experience. That’s awesome, right? That should bump up the rating quite a bit.

We can then track what has gone up — or sometimes gone down. Let’s say we run into some non-payment issues with some customers, and so suddenly we might not have the resources available to fund our international growth, because going global costs money. And you won’t see returns maybe for another two years or so.

“From day one, you could have people downloading or signing up for your services in geographies that you never did any marketing in.”

So that’s our baseline. And then we’ll usually work with a smaller group of people to identify which countries or clusters are the best candidates to potentially go after. That might not mean putting any people on the ground, depending on what the product is.

Some of our customers will go with a 100% channel model. They don’t need to actually invest in hiring a person. That situation is great, because then you don’t have to deal with local labor laws and all that. But we’ll work with whoever is the most qualified to help evaluate these market opportunities. Usually these will be sales or business development people who are on the ground, the frontlines, and who know the customer. A lot of the salespeople will come from larger shops. They’ve worked for the SAPs or Oracles of the world and they’ve dealt with international customers before. Even though it might not be in their current job, they have a lot of knowledge about this. And every single customer we work with, we discover this treasure trove of knowledge that was never documented. So people are surprised. “Oh, I didn’t know so-and-so had this experience. We never talked about that.”

Oftentimes, because we are very focused on B2B SaaS, we have quite a bit of experience that we can also contribute. But, we’ll be pleasantly surprised at just how much knowledge there is. And by doing this process in a standardized way, we’ll also discover where the holes are in knowledge, in expertise. The good news is because our CEO Carlos Ramon has been doing B2B SaaS international for a quarter of a century, our collective team will know someone to whom we can point the customer, or make introductions. So that’s also part of our value-add. We save you time, because we’ll know where you can find that information.

In the end, aggregating all this data, we’ll have it hosted in the cloud, so everyone on the team can actually go and see it. Say that you were in a completely different function but you happened to attend a conference in a geography that you’re not familiar with. Say you’re going to Singapore. You can then just go log into Compas, pull up Singapore and see what the rating is, what the recent comments have been of all of your colleagues. Conversely, once you finish your week in Singapore, you’ve met 25 different people, learned quite a bit about what the local situation is like, you can then go in there and add your comments. It’s aggregated in Compas, instead of what usually happens: the person will, on the plane ride back, write an email. You have all these bullet points. You had a great time. You learned about all these people. You send the email to your team. Half the people don’t even open the email. The other half glances over it. “Okay, thanks so much.” And then it just sort of disappears into the vortex of your inbox.

We don’t want that. We want to be able to aggregate it all in one place. The software will take a snapshot every month and save that. You can then go back in the timeline and see how your ratings have changed over time and how much additional knowledge you have gained.

Another benefit is through the on-boarding process. We know what’s our overall readiness as a company, where our growth clusters are going to come from. And there is also where we assist them in helping do the interpretation of the visualization and where are we currently. So let’s look at the stats and figure out where we are already getting traction, because in the end the decision we want to make is this: What do we do? Where do we put our resources?

In the process of doing that — it usually takes six weeks to eight weeks — we work with the executive team and come up with those decisions. And then the culminating event is usually where they present this version 1 of their global plan to their board.

Some customers are more advanced. They bring us in because they’ve been very global already but have been doing it more ad hoc. We help them sort of regroup, and so it’s no longer global plan version 1, but say a global acceleration plan. So it is a slightly different stage, but they still want the structure.

Knowledge@Wharton: How accessible is the software?

Yin: The software itself is very easy to use. You need zero technical knowledge. So it’s rating things, writing comments, seeing the visualization, making annotations on top of that. But it’s really the interpretation that’s important, and we also help them get into a rhythm of talking about international. For instance, some of the pieces, some of the modules of our software, are used on a weekly basis, let’s say, in an international operational meeting that a few members of the team have. Then you track the progress.

When we work with the teams, because it’s the growth stage, things change all the time. We usually work pretty intensely with them for the initial on-boarding period. Afterwards, they have the option to retain us for, let’s say, another six months, just part time. We still participate in some of their executive discussions, sort of help them be disciplined about it. But our goal is not to be a consulting company. I have a lot of affection for consulting companies. But our model is different. We don’t want to get into the account and hopefully never leave. We want to just transfer the knowledge. The point is to make what used to be a very black box process more transparent and sort of break it down into the constituent parts, so that it’s easy for folks to participate.

One more thing I want to mention is that our customers are usually very enthusiastic about participating in this process. That’s what’s needed, because in the end, global is a very sexy term. Everyone wants to be a global company, but on a day-to-day basis, that means [you] have more work to do. [Your] job has suddenly become more complex. You will now have to get up in the middle of the night to take some call from somebody in Asia. So we have to strike the balance between making it exciting, but also making it very realistic about how much work it will take and really spelling that out so that everyone is aware. We don’t want to have surprises and then fire drills. It doesn’t matter if the executive team and the shareholders really see potential value in pursuing that. We want to take the entire team along and help create the participation.

Knowledge@Wharton: Who is your typical customer?

Yin: We work with B2B SaaS companies who have usually annual recurring revenue of $5 million and above. Somewhere between $5 million and $100 million. They’ll usually be as small as maybe 30 to 50 employees, up to 250.

“Do we even know how to bill customers in this particular geography?”

Knowledge@Wharton: And are most of your customers U.S.-based, or are they global, as well?

Yin: Both. They’re global, as well. Because we are based in Silicon Valley, most of the customers are U.S.-based and around the Bay Area, but we have a customer right now in New York, one in Louisiana, we have customers in Latin America and Europe, and as of a couple of months also one in Australia. Currently we’re working pretty actively with about a dozen of them, and they’re expanding from wherever they happen to be to wherever. Again, it’s global from day one sometimes. They don’t have the luxury anymore to pick and choose where they want to go. They have to make sure to be able to, for instance, bill from whichever geography and anticipate further traction in large markets. And sometimes make some hard decisions. For instance, all the time we deal with companies who ask, “Why aren’t we in China? Why aren’t we in India? Why aren’t we in Japan? It’s such a huge B2B software market.” That’s all true, but in the end the question is, what’s your time horizon? How much funding do you have available? And what is the opportunity cost?

Sometimes it’s very easy to pick the first few countries. But then what’s in the next phase? That’s really difficult. We’ve also dealt with companies who’ve very successfully built businesses in, say, Brazil. This is less on the B2B side, but B2C. Brazilians are all over social media. They have a great propensity to spend, which is a huge surprise to a lot of people. We used to have a customer who was able to charge more for their app in the Brazilian Apple app store than in the U.S. That’s shocking to most people. So it might not have made sense for them to invest the money to go into the U.K., but rather concentrate on their home business in Brazil.

We have a lot of surprising cases like that. In the end, it’s really helping these companies tell a good story in a succinct way that they wouldn’t otherwise be able to do because they have their hands full. They’re already running at 100%.

Knowledge@Wharton: How do you help your customers define their own markets? How far have your customers progressed on their path to going global?

Yin: We begin by evaluating what we call the TAM — total addressable market. We work usually with the business development lead or the sales lead, and they have a pretty good idea. It can be as easy as the number of Forbes global 2000 companies in a particular market. If, for instance, they’re B2B, and they want to sell to the big multinationals around the world, that’s it. Literally, that’s what we use for one of our customers.

Another one may be way more specific, it depends on what industry they target. We worked with one company that sells to utilities. There, they just pull up an industry report. Usually the definition of the TAM is not the part where they necessarily need a ton of our expertise. They usually have a pretty good idea about what that is. It’s evaluating whether this market is ready and are they at a stage where our software will help them figure out how to compare apples to apples?

Your second question is at what stage, or how far are they along in the global journey. The first thing we usually ask them is, how many users or how many customers do you have in these various geographies, and what are the trends? Some of the products are more traditional B2B sort of enterprise type of sales. In that case, they can just count the number of customers they have. We also work with some companies who, before the launch of a product line, want to figure that out, in anticipation. Because again, it isn’t really about us being in particular geographies, but us needing to think ahead of time, “Hey, my product eventually will likely need to support x-number of not just languages, but perhaps even the fonts have to be non-Latin. Or we have to be able to support our website from right-to-left script, in Arabic, for instance. Sometimes the companies just don’t think about it.

Knowledge@Wharton: You have a very interesting vantage point of looking at how different companies think about going global. What are some of the biggest mistakes that you have seen companies make about how they think about their global expansion?

Yin: We have a list of the 10 biggest mistakes that our CEOs commit. I’ll just go through a couple of them. One is not really dedicating enough resources towards global in general. Because it’s very easy to go pick the low-hanging fruit. And you have this sort of return curve, where it’s free money, because people are signing up all over the world. You have folks that speak English. So it’s great. So the curve goes up. But then eventually you hit an inflection point. Your customer success team starts getting a ton of pings about things that are wrong or that are not supported, and [you get] requests from your customers to localize, for instance. And then you have to scramble to meet those demands, if you choose to do so.

So that’s one mistake. Leaving it to sort of, “Oh, let’s just get my junior employee, mid-level person, to just handle it in the meantime.” Fine. Again, depending on the stage you’re at, that may make the most sense. Let’s go play whack-a-mole for a while. But it’s not a sustainable solution.

Another one is not involving all the functions in the discussion. Everybody nods their heads, and of course that makes sense. But in reality, it’s difficult. It takes a lot of managerial discipline to get everyone around the table on a regular basis to talk about it.

But let’s say you’re successful and we go after a particular market and we close this big, multinational customer. That’s great news, right? The best thing that can happen to this company could also be the worst thing that’s ever happened to this company, because you’re not equipped. The customer says, ”You know what? We want to roll out your software in our 25 global subsidiaries. By when can you do it?” And here’s [their] suggested rollout plan, which is always way faster than the organization can handle.

“There’s this misconception that the more data you have, the more accurate you are.”

That’s where our way of thinking about it and prioritizing the geographies can come in handy, because then you’re not scrambling. You can open up a dialogue by saying, “Hey, look, here’s our analysis. We’ve already anticipated your question about this, and here is our readiness for these particular markets. We think that this batch, we can deploy by the end of the year, no problem. But these ones will require more investment, and here are the potential issues. We want to avoid situations where you have good news that turns into, in the end, bad news. And then, it becomes a real scramble.

Take China and India. It’s the basic mistake of confusing population with total addressable market. I’ll just leave it at that.

Then sometimes what we also see is you have a lot of enthusiasm for international, and you involve all these people, but after a while, you sort of go back to the old ways of doing things. In the meantime, you have competitors eyeing the same markets. That’s something we really try to emphasize: to build this regularity in looking at this data. And that’s where using software is very useful, so you don’t have to deal with these big, cumbersome or disparate files anymore. Instead, everything is just in the cloud, and it automatically updates.

Knowledge@Wharton: Are there any other mistakes that companies should guard against?

Yin: Another mistake that companies often make in the process of going global is they think very near-term and don’t actually build out a full financial plan. For the types of companies we work with, you often have an exit horizon. We’re not dealing with large multinationals. We’re dealing with companies who are usually VC or PE funded, and so sometimes it doesn’t make sense to invest or enter particular markets because it takes so long for the return to actually show.

I’ll just conclude with speaking of competition. I think U.S. companies think, we in Silicon Valley are at the very forefront, cutting edge on everything. And that’s not really true anymore. The innovation hubs have sprouted all around the world, and there are competitors in all the regional markets that are trying to do what you’re trying to do, and sometimes doing it better than you. We have to expand the view on whom we are competing against. It’s not just other U.S. companies trying to expand outside of the U.S., but local competition [in overseas markets]. And if we don’t go into their area, they might come to us. How many Latin American, Chinese, Indian, Middle Eastern companies, Israeli companies are looking at the U.S.? For them, coming to the U.S. is the ultimate market to conquer. We no longer have the luxury of just sitting back and saying, “Hey, I’m a U.S. company. Everybody will love my brand, and I can just go wherever I want to.” That’s not true. The competitive situation has really changed. So we’ve got to be on our toes.

“The best thing that can happen to this company could also be the worst thing that’s ever happened.”

Knowledge@Wharton: Thinking about Compas Global itself, where do you think the company will be in the next few years?

Yin: The last year we’ve really made a lot of strides in, first of all, doing our own homework. How are we going to run ourselves as a global company? We have a core team of three people here in Silicon Valley; the software engineers are actually located in South America. We are, by nature, a global company, and we have customers all over the world. What we have to continuously think about is, how do we scale as a company?

We can try to codify the science part in software as much as possible, but we’ve learned through the last several years of running the company that customers want us to come in and help them. So the demand for [professional] services is actually quite high. Then it becomes, how do we alleviate our internal bottleneck because there’s not that many of us who have lived in three different continents and have work experience in all these different areas.

The model that we’re striving towards is to build what we call the Navigator Program. If I’m the main person advising my customer, I’m the Compas Navigator. We want to create a program whereby we can get more people trained on our framework, but these folks will have complementary expertise in something related to global. We’re getting to that stage where people are now realizing, “Actually, the way we’ve been doing things can be more automated and more streamlined. And yes, what Compas has built does make sense for us.” But we have to continue to still educate folks on that.

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