Understanding the US Market Jorge Zavala CEO TechBA – Silicon Valley September 2008
Understanding the US Market
Jorge Zavala
CEO
TechBA – Silicon Valley
September 2008
Agenda
I. The Silicon Valley – Environment & Ecosystem
II. Expanding into US – Common Mistakes
III. The Effective Process
I. The Silicon Valley
Facts about Silicon Valley
2.4 M population 40% of population is foreign born 40% with least a bachelor’s degree 23% speak Spanish Maintains 35% of the U.S.’s entire venture
capital resources. 11% of all U.S. patents generated here
San Jose Fact Sheet
Largest city in the 9 county Bay Area 3rd largest city in California 10th largest city in U.S. Population: more than 1M Around 7,000 high-tech companies
Silicon Valley = Innovation Environment• Rewards risk and accepts failure• Results-oriented• Smart and creative workforce• Industry clusters• Intellectual capital abounds with universities and
national research institutions• Collaboration between government, private industry,
development community and academia
II. US Expansion Process: Common Mistakes
Common New Market Expansion Issues Company establishes operations in a new market
only to pull out less than 1 year later Company does not meet sales goals Staff does not assimilate into the local
business culture Marketing message is not right or not tailored to the
local market Selling on the basis of “we are low-priced” rather
than “we deliver good value.”
How Does This Occur?
Lack of preparation Little market development or research Minimal company-wide planning or goal-setting No company market entry team created
Lack of consideration for differences in culture, communication patterns and buying habits
Underestimating market complexity Underestimating the competitors
U.S. Business Culture
Business and legal structures are rigid. Deal terms and pricing take priority over
personal relationships, most times. In general, U.S. buyers:
respect achievement, success, wealth respect punctuality and accuracy respect adherence to instructions are very competitive have very short attention spans
Common Sales Mistakes
Not understanding the market
Unclear value proposition / message
Lack of a sales process
Ineffective hiring of sales representatives
Not selling value to the prospective customers
Effective Preparation for Growth Conduct market research
Validate your message and refine the value proposition Make changes to your product or service Create marketing materials or modify existing ones Obtain government approvals, permits Protect the intellectual property Hire consultants, advisors or employees Establish a viable customer support strategy
Create a Market Entry Success Team Who participates in this team and why?
Representatives from every functional group in your company
Sales, marketing, engineering, support, finance, operations, legal, services, strategic alliances, business development, and perhaps more….
Plan Accordingly
Staffing Capital investment Realistic sales goals Realistic timelines Reassess every 90 days
Never Underestimate…
Cultural differences Language differences How relationships develop Business style differences Negotiation style differences Sales cycle vs. the buying cycle Complexity of the market Competitors
III. The Effective Process: How to get inside Silicon Valley
The Effective Process
1. Find the “best” product or service 2. Analyze your market 3. Define a clear marketing strategy 4. Get a proof of concept and sales strategy 5. Tune your company to scale 6. Get the the right team to execute 7. Establish a Clear Legal structure 8. Set high entry barriers (IP protection) 9. Have a clear future path (permanent innovation)
1.The Product or Service Solves a big problem (Fills a gap)
Must have vs. Good to have vs Nice to Have Has a large and growing market Sustainable competitive advantages Scalable High entry barriers
Complex technology Intellectual property protection
2. The Market
Find out Size of the market , and how it is growing : (trends)
according with known analysts. Identify segments Who are the main players: competitors, distributors,
influencers per segment Client’s key decision factors per segment Your competitive advantage
3.Go to Market Strategy : Segments ( verticals?) Pain ?: different for different segments Decision maker ? Key decision factors? Biz Model: For example:
Rent or sale ? Price (not based only on cost) VALUE Channels (Distributors, internet?) Marketing Materials and Public Relations
4. Sales strategy Find out where to find your clients (events) Where to find your partners/channels How to open the door (communications) Get your beta clients Get your first paying clients in the segment you are
focusing on ( references) Plan your expansion ( Channels? Partners? Sales
people?)
5.Scalable OperationsPlan how to SCALE your business (productivity per
employee) Lead generation and follow up ( website) Channel support and training( Webex, Interwise) Local and remote client /partner support
( e-learning) Pre-sales Post- sales
Sales ( Internet? Amazon)
Value of the Knowledge (Wealth per capita – from $1M to $22M)
SV Corporations – market value vs. number of employees Cisco (1984) - US$147B – 50K employees - $3M/employee Google (1999) - US$130 B – 5.7K employees
$22M/employee Intel (1968) - US$118 B – 102K employees
$1.2M/empoyee
6.The TEAM Local CEO ( serial entrepreneur) Business Development / Marketing & Sales
VP with strong Knowledge of the market The CTO The Lawyer Strong Board of Advisors Strong Board of Directors
7. Legal structure in the US
Subsidiary, independent or head quarter? C -Corporation or LLC Where ? Delaware- California – Florida? Agreements ( employees , client licenses ,
distributors, contractors) Stock options plan
8. Protect your Intellectual Property Patents in the US( protect the idea )
Provisional patents Copyrights ( protect the form- software) Trade Marks, logos etc( registration) Trade secrets ( coca-cola) restricted areas Non Disclosure Agreements (NDA)
9. Clear future path
Product Road Map (innovation) Sales and revenue forecast (3-5 years) Operational needs Financial needs
Bootstrapping or Investors? Financial exit
Acquisition – Potential buyers IPO
The Effective Process ( Summary)
Unique product for a big, growing market Clear marketing and sales scalable strategy
that lets you penetrate the market in a short time frame
Clear future path (permanent innovation) The right team to execute Clear financial projections & needs
Thanks!
Q & A