More about Soft Land Partners and the Meetup schedule here
More about Dan Glazer and Wilson Sonsini here
Bill : Welcome to the soft land central podcast, your home for market entry knowledge and resources. Soft land central is brought to you by soft land partners, an online marketplace to help you find best fit resources for your market entry. Find them at softlandpartners.com. Welcome to the soft land central podcast and my name is Bill Kenny. It’s a real pleasure to have you with us today. We have an incredibly special guest Dan Glaser from Wilson Sonsini law firm. He’s based in London. The firm is global, based in Silicon Valley in San Francisco. Welcome, Dan.
Dan: Thanks for having me today.
Bill : Well, thank you and just to give a little bit of context to, to what we’re going to talk about today. Our podcast is listened to primarily by everyone from entrepreneurs who are looking to enter new markets cross borders and expand their business to trade and investment professionals and other types of support entities that are looking to help these companies succeed. And so the topic we’re going to get into today, certainly with the legal ramifications of, in particular entering the US and some of the things that companies will need to consider and navigate is really just spot on for, for this audience. So, again, thank you for being with us today, Dan, and I’m looking forward to hopping into our topics.
Dan : Sure thing.
Bill : Alright. So first, you know, obviously, we want to make sure the audience knows about you and about Wilson Sonsini. Certainly that will add quite a bit of context to our conversation, but do you want to take a minute or two and just sort of give us a little bit of overview on your Background you’ve been in London now I know for a few years, and then and also the firm.
Dan : Sure. Um, so the firm is you mentioned, Silicon Valley based law firm. We’ve been going since 1961, working with technology and life sciences and growth growth companies, through all stages of their lifecycle, literally from first incorporation up through IPO. And, beyond, you know, started in the valley, you know, expanded throughout the US to the different sort of, you know, venture backed tech technology hubs around the states, you know, and then formally came to London a couple years ago. And so I hit up the firm’s us expansion group, and I’m the founding partner of the London office. And you know, what our, what our London office does is it we sometimes think of it as augmented reality Silicon Valley, right? We’re a team of Americans in London, working with European technology and Life Sciences companies through all stages of the US lifecycle, right? launch scale, raise money and exit in the United States. You know, and sort of the, the inflection point of where we, you know, first meet me companies, typically in the UK or on the continent is come to us and say, right, you know, I’m launching in the US, or I’m selling into the US, I’m looking to raise money in the US, you know, what, what do we do next? You know, and, and that’s where we engage and, you know, not only, you know, try to provide legal advice, but also, you know, I think, a hefty dose of hopefully, you know, useful strategic and business advice as well.
Bill : That’s fantastic. And now, how long have you been with Wilson Sonsini?
Dan : I’m coming up in about four years now. I guess. It is You know, time flies.
Bill : I bet in that whole time in London or were you us base for a while
Dan : Commuting back and forth for a while. I used to joke that I was a for a long time I was a cloud based lawyer as a service platform, or a or a las platform, as you might refer to it as you know, definitely, I think an organization that was sad to see me formally moved to London was United Airlines. I’ll just put in a little, plug for them. They served me very, very well over the years, you know, commuting, you know, on a pretty regular basis to the UK. But, ya know, spent a number of years, you know, going back and forth, you know, sort of built building up the foundation for the formal launch in the summer. 18.
Bill : Oh, that’s fantastic. So, let’s start And talk a little bit about market entry companies and you know, in your work and helping European and UK based companies come to the US, what are some of the common mistakes that you see companies make in that process?
Dan : So, you know, I think the first decision I think a company needs to make coming out of the UK or Europe when, let’s say expanding to the US is, you know, what, does us expansion means, in this context, right? Does it mean selling in remotely to, you know, to American customers or selling to American American users? Does it mean hiring contractors just sort of fly the flag for you in the United States to identify opportunities? Does it mean you know, hiring local employees and setting up you know, local us operations? Does it mean relocate Let’s say UK, your European employees over to the US, does it mean buying a US company? Right? Does it mean, let’s say, entering into some sort of exclusive distributor relationship or partnership with an American company, where you’re, you’re working with that company to get into the US? Right? You know, it’s, important to sort of define the go to market strategy at the very, very beginning. You know, we certainly see companies who I think, sometimes get a little bit too Gung gung ho and say, right, you know, we have to create this massive US presence, but actually, from an ROI standpoint, they would do a little bit better, maybe taking a different approach. And I think that that kind of leads to, I think, the one of the most common mistakes that we see, with the companies coming out of the UK and Europe going to the US That is that, you know, I think some of them go too quickly. And some of them don’t go quickly enough. And and I’m going to sort of level set by saying, what I mean by that is when that when the company decides to formally launch us operations, right, and typically, that’s some combination of hiring local us employees and, and potentially supplementing that with employees who they send over from from HQ in the UK or Europe. And what I mean by going too, quickly, is especially in the tech space, we come across a lot of companies who say, right, I gotta go to the US launch with us because I’m a tech company, therefore, I need to go to the United States. Right. And, and, and I do think that for companies who haven’t yet built a US business before, haven’t had experience in the US, there’s some times obviously not not all companies, but sometimes some some companies there’s this perception that you know, the streets in the US are paved with You see gold, you know, if it works in the UK or Europe, it must work in the US, all we need to do is get over there. And, you know, the millions and zillions will be ours. But actually, you know, having success in the UK or Canada or the European market is no guarantee and very often not even necessarily a predictor of success in the US, you know, for any number of reasons, not the least of which is that, you know, the US is, not only is it a different I say, you know, business and consumer market than than the UK and Europe but it’s many different markets in you know that, you know, what companies will and what individuals will buy in the northeast is not necessarily the same as what they’ll look for in the southwest or the Northwest, right. And, you know, what we find is a much better predictor of success is when the company is pulled into the United States by customer traction and user growth. And then it follows that up by launching operations as opposed to launching operations, and then basically trying to figure out whether or not there was product market fit there. In other words, and let me sort of summarize that is that generally speaking, you want to be pulled in by product market fit, and then go scale from that, as opposed to going to the US and then trying to figure out whether you have product market fit in the first place? Right. The latter approach is sort of fraught with risk in terms of wasting time and money and effort. So that’s kind of what I mean about sort of going too quickly. Right. But then there’s the other another type of company and we’ve seen this over the years, which I’m not necessarily I’m not sure that we would have seen this coming initially is that there there are some companies that do have that product market fit and and launch in, in in the states and and And begin to trade there and do business there. But ultimately, don’t move quickly enough and don’t scale quickly enough and move aggressively enough to compete with American competitors. Right. And I do think, on average in the United States, especially among venture backed companies, you know, where on average the venture rounds tend to be a little bit larger than in Europe. There’s, there’s the sense of, you know, scale quickly, you know, spend money aggressively if you have to, even if you’re a loss making business in order to capture market share, right. In other words, as you know, as I think we’ve seen over time, on average american companies will aggressively spend if there is ROI. And I think that that is not necessarily always the case in Europe, I think, especially because there’s a little bit more historical historically, at least it’s changing significantly, but historically, there’s Been a little bit more of a focus, I think in the investment community on hitting profitability or hitting breakeven, a little at an earlier stage in the company’s life cycle relative to, let’s say, on average the investment community in the US. And that leads to, I think, an approach to company building that focuses a little bit more on, you know, on, you know, hitting profit, profitability, right, not necessarily spending based on ROI but but spending based on how close are you to profitability. And if you’re going in competing with American companies that are spending aggressively, you know, you and one of the things that we’ve seen is that some companies coming out of the UK or Europe can get overtaken by American companies that are moving quickly and and a little bit more aggressively.
Bill : That makes total sense. The idea that Yeah, going in too quickly before you have sort of customer demand or demand centered market entry and then not going in quickly enough. Having somebody else essentially eat your lunch. When you open this you talked about I thought it was really intelligent about the idea of, you know, what is market entry or us expansion? mean? Is this something that you help your clients sort of work through? Because I would imagine some come and we see this is that they, you know, you ask a question like that. And in some cases, you get sort of the deer in the headlights or kind of a confused sort of response. And is this something that you help your clients sort of rationalize and begin to understand for their own strategy building?
Dan : Yeah, I mean, I think that it’s, it’s an important part of the first discussion or two that we have With companies when they when they say that they want to, you know, go to the US and attack the US market is to figure out, you know, what is there? Hope for, you know, an end game, right, I’m sure. But also I mean, and also, I mean, you know, what are they able to do in the near term as well. And I think the good thing at this point, having worked with certainly spoken with and worked with hundreds, if not thousands, of companies over the past, you know, several years is, is that there’s a little bit of pattern matching, right? That if a company comes in, let’s say very early stage, let’s say it’s just come out of an accelerator, right. in London, and says right, I want to go raise my my seed round, in the US from US VCs, well, that leads to a discussion where the reality is Is that if they’re committed to that, really what they’re saying is they need to build the business in the United States, and you probably need to move, you know, some portion, if not the entirety of the executive team, to the United States to do that, right. It is extremely hard. And, you know, we have the data to back it up is extremely hard and rare for a US only investor, VC investor, to lead a seed round into a UK on only company, right. I mean, a true cross border round. You know, at that stage, it’s a decision point and discussion, we’ll have a company like, you know, how committed are you to this? And if you are super committed, you know, that’s it, it’s us are busted at seed, you know, you probably need to look seriously, I’m moving to the US. You know, whereas let’s say a little bit later stage, let’s say that they’re, you know, raised a few million heading toward a series A, and the discussion is, you know, we’re starting to get traction in the US. We’re selling information. You know, we we have a contractor who’s doing well, we need to, we need to hire a team in the US, then it’s a discussion of Okay, well, you know, let’s talk about what the capital requirements are to build out, let’s say a US sales team, you know, in the different administrative aspects, logistical aspects of launching in the US, you know, given what you’ve done today, given what what your what your network is, the profile, the company doesn’t make sense to, let’s say, raise that round of funding in the UK, does it make sense to raise that round of funding in the US? You know, another company might come in and say, Listen, you know, we’re selling products in the United States, and I’m thinking about us expansion, and we’ll talk it through and actually, there’s no reason to set up us operations they you know, they’ve got a nice pipeline, sale, sales pipeline going selling and remotely all they really need is just a, you know, US facing web website that that reduces friction right among us. US customers, US buyers. So, while I’m not going to say that, you know, that each, you know, each company is unique. I mean, there’s certainly patterns that we see. And they’re sort of, I would say, let’s say six or seven different broad categories of companies that we would see in terms of where they are with their sort of Euro us expansion and fundraising path.
Bill : And, and with each of those six or seven, I’m sure there’s some uniqueness for each company, but that there is a bit of it sounds like a bit of a template, or, yo, yeah, I don’t mean to sound so formulaic, but that there’s a little bit of a standard, it sounds like you can go to for those, those patterns.
Dan : Yeah, I mean, that there, certainly is, I mean, at this stage in terms of, you know, working with companies, we can kind of fall back on, on a fair bit of have data and say, Well listen, you know, these, here’s, you know, a few few dozen companies that were similarly situated. And, you know, and this is what they found work for them. So here’s something that you may want to think about, right? And then we’ll sort of drill down and go through, you know, what the similarities are, but also what the differences are. Right. You know, in the end, you know, it ultimately depends on what the product offering is, what the, what the executive team looks like, how much capital that they have, but ultimately, you know, it’s not it’s not reinventing the wheel and I think that that’s actually something that we find puts companies at ease is that on the one hand, the decision to come out of the UK or in Europe, and you know, jump across the pond, you know, as they say and begin the business, or extended the business to arguably the most competitive But potentially my most lucrative and, you know, economy, business environment, the world, it can seem pretty daunting. But on the other hand, you know, when you sort of talk it through and you realize that, you know, hundreds of companies have faced similar issues and have, you know, gotten through this and succeeded. That actually can be pretty, pretty, pretty comforting,
Bill :Huh? that’s a really I think, sage way to put it. Yeah, having that almost I’m a sailor so I think of navigating right and in sailing their way points. There are lighthouses and various references that allow us to navigate and we can only do that because someone has been there before us.
Dan : That’s right. And yes, it’s a well traveled path. Right and there are markers a lot along the way.
Bill : Yeah, it, they’re not as obvious but but they’re there if we’re looking right. So well, and I think that’s a perfect segue actually into sort of, you know, that particular point. And I know, you can’t talk about specific clients by name, but I was hoping we might be able to talk about, you know, sort of Company A, in this, you know, whatever industry had this fact pattern and, and here’s here was the playbook or, or what not that worked for them. But are there some example, hypothetical companies, and we may talk about that? You’d say got it, right. And we talked about mistakes. So let’s, yes, positive side of the ledger.
Dan : Yeah, so actually, you know, I’m happy to sort of lay out the, the view, let’s say, the most common playbook for a company, let’s say, you know, I mean, I’ll be there. Coming out of UK or Europe, I’ll set up a straw man. Right? And, and, and sort of play that out and and I think the most common company that we might see let’s say is a is a b2b SaaS company let’s say a b2b SaaS company coming out of London um that is let’s say between seed and series A and has been and after its seed but but before its series a round is getting some traction in the United States selling in remotely right and and here’s here’s how we would sort of see that playing out right is that is that at first there would be periodic sales here and there. Let’s say from the executive team attending conferences or otherwise going through their network and or maybe because their existing UK your your European customers have got us operations one way or the other, they start building up a pipeline of customers. had a bit of revenue out of the United States. And at some point they realized that actually we’re going to get even more opportunities if we’ve got someone on the ground flying the flag, but we don’t necessarily have the budget or the certainty yet that you know, to hire a US team, right. So then the middle ground that will often see in that context is hiring part time contractor right sales agent in the United States, who was out there identifying deals and helping the company scale a little bit in the United States. Right. And that’s, you know, that contract or that that sales agent, you know, can be retained out of the UK company, right. You don’t need to set up full blown us operations, full blown us structure in order to do that. But at some point after that, hopefully the company has identifies even more opportunities and says, you know, what, we really are being pulled into the US. There’s clear traction now, we want to go out and hire a proper us sales team and set up more formal operations. And at that point, right, the capital requirements to hire, you know, US team, given, given on average, the higher US salaries relative to the UK and Europe generally leads the company at that point, let’s say to go out and raise a series a round. In other words, and this is actually a very common discussion that I have here in the UK and in Europe. On average, the US expansion round of venture capital tends to come from the UK or Europe, in not from the US, right. In other words, on average, US venture capital financing tends to follow from us commercialization, not the other way around. Right. And I think that is something that’s not always self-evident, but that’s certainly something that the data has sort of born out is that it’s usually after the company has launched and scaled in the US that that the US venture capital tends to tends to follow. So let’s say the company then raises around capital from let’s say from UK investors for the purpose of expanding to the US and then we’ll take that capital and then look to recruit and hire let’s say a local US team and maybe send some people over from HQ as well. And I will say that, in our experience, we’ve seen us teams set up at all different ways like only local hires only only transferred hires. I think on on average, what we’ve seen is the most likely to succeed is when you combine local hires, who are familiar with the US market with individuals who have sort of the the DNA of the business right from from HQ, and especially when helpful is If you can send, you know, the first couple hires, who you have in the US, let’s say over to HQ, and have them spend, let’s say, a couple of a couple a couple of months at HQ and get them truly integrated within the business and then send everyone over, over together. Right. and, you know, and I think at that point, the the the administrative or logistical playbook, you know, tends to be assuming that let’s say you’re starting with a UK limited company at that point, you know, you tend to set up, let’s say, a Delaware C Corp, a wholly owned subsidiary of the UK parent company, right. And you employ the US employees through that Delaware C C corporation, and you bring them in on employment documents that are appropriate and tailored for the relevant states that you have employees. In other words, if you have New York employees, you would have New York employment documents, if you Florida employees, you know, Florida documents, right? But they’re all hired out of as the employees they’re all hired out of state. You’re new Delaware Corporation. Right You would then you’d set up a US bank account, you would set you up and you would get a US tax advisor to help with things like getting your employer identification number. And you know, your IRS tax filings, you would, let’s say extend your business insurance from, let’s say from from from the UK to the US to ensure that your business activities in the US are covered. And then you would figure out HR and in admin, things like payroll, retirement benefits, health insurance, and one very common approach and it’s not universal, but I would say a common approach for, let’s say, seed series A Series B back to companies going into the US on the HR front is to use what’s called a professional employer organization, where they’re they’re they’re co employing the employees, together with Delaware’s subsidiary, and then The the PEO is, providing, you know, health insurance and retirement retirement plan and in payroll and the like, and, but those are the main areas right? So is legal tax insurance, banking, and HR and admin, you know, and I guess I would also throw in immigration, if you are sending anyone over from HQ. You know, I think, you know, we hit it a little bit different now, you know, from speaking in the COVID-19 environment, but I think historically, we had been seeing, you know, work work visas, about four to six months, it would take So in terms of planning, if you’re sending anyone over, you know, sort of think ahead, four to six months in order to get the visas over the line, but the other items, you know, the legal tax insurance, etc, that all that work can be done in typically in a matter of weeks.
Bill : Cool. So you And I certainly you mentioned COVID-19. And yeah, it’s certainly very timely today and topical. Are you seeing in this first sort of step in the process you had mentioned for that straw man company was the idea of hiring a sales agent to sort of validate market demand and begin building the client base or to augment what’s being done from corporate. Are you seeing more? You know, I think that’s always been a strategy. But are you seeing more of a shift to that in the sort of in the, you know, in the last two months as we’ve sort of grappled with this pandemic, and indeed, when I guess what do you expect, you know, in that space over the next six to 12 months will there be more of a shift to that strategy for, for many companies for
Dan :Yeah, I mean, I think almost necessarily that there’s going to have to be you know, I certainly a common discussion I certainly would have with with companies of the past few years is that there would be somebody, very often the CEO or head of head of sales, let’s say back in, the UK in Europe who was regularly traveling, I mean, you know, a couple times a month even to the United States, to you know, when, when new customers to negotiate deals, go to conferences, etc. And that was and that was how they were starting to build up presence right and brand recognition in the US. Right now that that’s not really possible. You know, travel is certainly curtailed in person meetings are curtailed. I mean, You know, speaking now and April 2020, that strategy is in the short term not not really viable. Is it going to change? You know, we get by by the summer, you know, can founders get back on that plane from Europe and go to New York and go to the valley, and meet me customers and raise capital? I don’t know. Right. In the meantime, you know, that we’re, those companies are going to have to leverage you know, local us hires local us contractors, and they’re going to have to leverage you know, the, you know, remote video video facilities. You know, one thing that we’re already seeing and I think this is just been an interesting dynamic is, you know, one of the friction points let’s say if you’re a non US company, going in and let’s say selling into the US is the sense by the American customer that, you know, you really need to be on the ground in the US. But it’s funny because no matter if you think about it, in some respects, nobody is on the ground. Right right now, right, because we’re, whether you are technically a domestic based us business or you were not technically a domestic US based business, we are all in some respects remote. If we were even if we are in the same city. And I and I can tell you, I’ve seen a few enterprising companies, you know, use that to level the playing field right now, if you are, let’s say, a European company that is willing to work us hours. And let’s say have a US facing website that has a US phone number in it, all of which you can do, you know, from Europe? Well, you know, what’s the difference between the company that’s based in New York and the company that’s based in Berlin at that point, right. There isn’t necessarily any You know, any difference, and then it comes down to, you know, who’s got the more compelling offering. Um, and, and so, you know, it’s, you know, it’s one of those situations where where you can sort of see, strangely enough, a little bit of a silver lining or at least an opportunity, you know, if you are a non US company is is that you can use this as an opportunity to level the playing field and, and maybe take off the table the question of geography and place the focus more squarely on competing with American companies based on the quality of offering.
Bill : Now that makes total sense. And, yeah, it’s it, you know, I guess, as we thought about it, too, and I love your thoughts on this as it you know, it certainly seems reasonable that borders will open up in stages, you know, whether that’s in our country or inter country Yeah, certainly, you know, the, from certainly opening up the UK will probably be a different date than opening up the UK access into certain countries in Europe. And likewise, any country’s access into the US as well. And you know, even now, you know, going from one state to another, and in the US, even if you know you’re visiting your parents or anything like that, is it depending on the state is you may get stopped at the border and asked about where you’re going. And it’s certainly seems logical that the opening of borders will be staged. And so the strategy you’re talking about the idea of sort of mirroring a US presence hack, you can even get an address easily today with so many coworking spaces. And you know, kind of the nominal cost of having a an address but that notion of mirroring US presidents or whatever country that you’re entering. It certainly makes a lot of sense. And it’s probably not a bad long term strategy, as well.
Dan : Yeah, I mean, it really does, you know, remains to be seen, whether this is the beginning of a change in Dynamics where we really are in a good we do we really do get more comfortable, you know, transacting business and building relationships. That really is what it is, right? and building relationships over, you know, over over over video. Right. And, you know, and the more effective that a company can, can be at that about conveying, you know, its potential value add to its customers. I mean, that’s a huge echo. It’s a huge financial advantage, right. It’s a huge scaling advantage. That company makes May able to have, you know, and that’s why the you know, the current environment could end up being pretty six in your fans, you know, opportunity, I mean an opportunity to try out new business models. You know, it’s you know, as they say Necessity is the mother of invention. And it would not surprise me at all if, you know, one of the long term outcomes of, you know, of the environment that we find ourselves in is that we do switch to evolve, let’s say into different models of transacting business and building relationships.
Bill : Yeah, no makes total sense. And yeah, as you said, time will tell, we’ll see. And I would imagine there’ll be some variability based on industry and so on as to what the customer will accept and, and demand to transact, I suppose. So, you have a very unique view and unique position. As the head of Belson, Sienese US market expansion practice, and I’d love to get your thoughts around what is sort of unique or different about the US market versus the companies that are currently doing business in Europe? What should companies expect when they come into the US? What are kind of the top things that are different?
Dan : Um, yeah, no, I mean, I think that first, you know, don’t expect that the US is a single homogenous market, right? I was saying this before is that you know, the way that you trade, the way that you interact, right and transact business in New York won’t be the same necessarily, as in Silicon Valley isn’t necessarily at Atlanta, or Dallas or Chicago. Whatever, you know, so understand that when you talk about doing business in America, it’s actually it’s like saying doing business in Europe, right? The way that you do business in Germany is not the same as the way that you necessarily do business in France or Switzerland, Netherlands, etc. I mean, I think one one thing that I think a bit of feedback that we get from UK and European companies is that they are, I think, often pleasantly surprised at how open Americans are to do it doing business. You know, I think on average, you know, American buyers, American customers, when they find something that they think provides value, and that they will move relatively quickly, right. Again, this goes back to the sort of ROI point I was making in a slightly different context earlier, that if American companies see that You can provide a value add, you know, they will seize upon that. But, you know, I think also, and again, this is feedback that we’ve gotten from many UK and your European companies is that, you know, on average american customers want to see American buyers want to see American reference points, American proof points. I mean, I’ll tell you, I’ll give you an anecdote that, you know, that I always get a chuckle out of, which is that there’s a company we know that came out of Europe sort of sells, into banks, right. And they did; they’ve done a roadshow in the US when they first went out there. And, and when they got to the slide saying that their reference customers, we’re let, I’m just gonna pick 3 names right? Route, let’s say city, JPMorgan and Wells Fargo. Right? They would tell me that the feedback was that they would get some variation. The question of Well, do you mean, JPMorgan and Wells Fargo and city in Europe? Or do you mean in the US? And when they said in Europe is that the feedback was well, that we, from the tone of the conversation change to we might as well have said, you know, Waitrose and Tesco and Sainsbury’s, right, three, three UK specific grocery chains, right? That it really, you really have to prove yourself as a company in America. Right that and I think that is often a bit of a frustration and somewhat of a surprise to a lot of companies coming out of Europe. Is that because America is so big and to some extent, to some extent, self sufficient. Clearly not entirely. But to a large extent, there’s a lot of what America needs is within the borders. You know that there is a, on average, a sort of special focus right on having a one on having proven a company if you’re the seller, having proven your bona fides already in the US market. And so that’s something that we try to stress to companies going in is that you really want one want to try to build out your US credentials as quickly and as robustly as possible.
Bill : That makes sense. So, are there differences? I would imagine there are significant legal differences, whether that’s in company formation or transaction, any of the type of business law and regulation that you know, would be sort of highlights for major differences between the UK and US.
Dan : Yeah, I mean, there’s one overarching difference, which I think comes as a big surprise to companies coming out of the UK and Europe and relative to the US. And that is, and it seems like a fairly obscure point, but but it actually ends up being pretty meaningful is that in the UK, in Europe, if there is a legal dispute that goes to court, right, the loser in that dispute, pays both sides legal fees, which is a huge disincentive to actually going to court right because because if you if you’re not 100% certain that you’re gonna win, you know, you you you could you’re you’re taking a big risk that you could walk away, not only having lost but having paying both sides costs or a good portion of both sides costs, and that’s a pretty expensive undertaking. In the United States, however, right? Even though The most part with very limited exceptions, even if you win in a court case, right, you pay your own legal fees. And what that leads to is a situation where you do not want to be in a position where someone who has was better funded than you, who has more resources than you has the ability to leverage exposure that you might have to them. Right. And what that means is, practically speaking, is that you end up taking legal advice in the US on a problem avoidance basis, whereas in the UK, in Europe, you generally taken on a problem problem solving basis, right? The way I sometimes describe it is as follows right in the UK or Europe, it’s like calling a plumber, right? If you have a leak you might try to fix it yourself. Right? If you can’t fix it yourself, you will call a plumber in the United States, by the time you discover the leak, very often it’s too late, your apartments already flooded. Right? And there needs to be a there’s a real premium placed on preventative maintenance and ensuring that you don’t have the leak in the first place. That is something that is very, it feels very foreign, we find to companies outside the US in the US. It’s the nature of doing business. Right? Because that’s the council and company have very close relationships in the US on average because you know, the legal counsel is very often thinking commercially and strategically right which is a how do we help the company achieve its business objectives while managing risk? And on the commercial side, I think there’s a real focus on unbalanced by commercial and business teams in the US that yes, you know, we know we want to go off to the business objectives but we also have to get legals input as well to make sure we’re doing this in the most efficient manner to manage risk. And I think in the UK and Europe, there’s a little bit more of a harder divide, right, which is that on average, the business people, the commercial people tend to handle the business, the commercial and the legal tend to handle the legal beat because, you know, it is a somewhat less risky environment from a legal standpoint, in Europe
Bill : There’s tend to be more mediation in Europe than or or more in the US.
Dan : I think on on on average, what you see, and actually, I’m going to sort of summarize it by making a point that I sometimes make, which is I think in in the UK and Europe, and I’m going to preface this by saying this is a massive generalization, right. But I do think that on balance, the backstop in the business related Ship tends to be, let’s say the personal relationship, right between the two companies in the US the backstop very quickly becomes the legal system more quickly becomes the legal system. And that’s a very different model of doing business. And it’s funny because I often get asked, well, which one’s better? And I don’t, it’s not a matter of being better or worse, but it is important to recognize that it’s different.
Bill : Right? I mean, again, as a sailor, it’s all about navigation. Right? Yeah. Well, waters are in, right, where the rocks are and the hazards. So are
Dan : We Yeah, we see this play out a lot on let’s say, negotiation of contracts with us. counterparties. And I think, again, gross generalization, but I think on average, we do tend to see American companies negotiate contracts, you know, they will draw out negotiate contract negotiations on balance, let’s say a bit longer than then the equivalent company in the UK for your might. And I think, you know, experience having worked in between the Europe on the one hand and us and the other I think, looking at it, it’s because the risk of that contract being focused on a word word by word basis, right, the likelihood of having to go back to the very specific legal language of the contract, and lying on it is much greater in the US because of that. Not even litigation environment, but risk of a litigation environment, you know, then that leads to a much greater focus on the very specific language of the contract. Let’s say that it does, and certainly in the UK or Europe because again, if the relationship between the companies is the backstop, then little bit more often, you know, they’ll be able to work it out or not. necessarily based on, you know, on a granular reading of the, of this specific language, the contract but in the broader context of their business relationship.
Bill : Yeah. That’s great. No, that’s perfect. So I seem to be going to the nautical metaphors today, but sort of thinking about navigating this process. And, you know, obviously, having a resource like yourself is invaluable to companies. But how do you find and what’s, you know, you mentioned early on when, you know, there’s sort of the range of types of companies that you work with. But when is it best for companies to seek your help?
Dan : Yeah, I think we, we most often start engaging with companies in the UK and Europe, where they see the Do us and sort of the, you know, the near to mid term future. I mean, now in fairness, I mean, there’s some companies I think we probably first met three years before they launched in, you know, in the US and but we build up that relationship over time. But I think where we kind of most typically, most formally in engages was when a company comes to us and says, right, we’re being pulled into the US by customer traction. You know, we’re starting to negotiate some US contracts for looking at hiring people in the US, let’s say sometime in the next three to six months or so. That’s, that’s usually what we have, you know, a little more formal engagement. But we informally start engaging with companies from even pre seed stage onward. I mean, if only to sort of talk about, you know, what our experiences are with raising capital, right, you know, on both sides of the Atlantic, or you know, just You know, building a business or building a team, I mean, what I mean, one of the things that that, you know, comes from being, you know, being in an a valued firm, but if we see the same dynamics in any of the big tech hubs, like a New York or Boston, Seattle cetera, you know, is that, you know, having worked with so many different companies over time, we start to get a sense of, you know, how you build a company, and, and can at least provide a little bit of guidance on Well, you know, this is what has worked well. You know, for, you know, other, you know, these several dozen other companies that we’ve worked with, you know, give you some suggestions here introduce you to, you know, companies, you know, we’ve done this successfully or, you know, we’ve negotiated, you know, X number of venture capital financings, here’s a couple of investors who you know, who might make sense you may want to go try to connect with them, right? And we try to try to be helpful, outside of just strictly you know, the the legal arena and And, you know, and provide as much sort of value as we can even for a fair bit of time prior to more formally engaging, let’s say on a US fundraise or a US setup or us, you know, contracts, etc.
Dan : I would imagine to beyond your the institutional knowledge that you’ve gained and personal knowledge that you’ve gained in working with market entry companies, that knowledge being very important. I would imagine there are also a whole host of resources, sort of beyond Wilson Sonsini, that you’re able to, as needed, connect your client companies to who can support them, whether it’s with their accounting needs or any other types of needs as well. Yeah, no, I mean, and that’s something that we’ve, we’ve sort of taken great care to to build up over over to over time. is, you know, we actually have a US expansion checklist that we go through with companies, you know, and we’ll go over with them, you know, immigration and tax insurance, banking, HR and admin, government support, right real estate, property personnel, and, you know, at a high level, you know, go through them, the main issues there, obviously, you know, we’re not a bank, we’re not a tax advisor, etc. But at least, you know, flag that these are areas that they need to cover off and you know, over time we, we’ve built up, you know, really nice relationships with with others who work on in those other spaces and, you know, are sort of happy to, you know, to, you know, make those connections where, wherever possible, you know, I mean, on an informal basis, right, I mean, if we didn’t just happen to know people who did good work in this area, that would be a real weakness. I will I will say, you know, one of the things that we definitely try to go out of our way to do is The the company that the one of the things that a lot of the the European countries, the UK on the continent have gotten where they’ve gotten right, I think do a really nice job of is provide government resources both in in market or back in the home market, right, whether that be the UK or on the continent, and in the United States, like for example, you know, it’d be if it’s the United Kingdom, it would be the Department for International Trade, which is the government’s UK government’s economic development organization. And they’re, they’re obviously not not only in the UK, but they’re on the ground, I think 12 or 11 or 11 or 12 major cities around the US with teams who help UK companies, you know, succeed in in the US as well as helping US companies go to the UK, and all of the all of the the major European countries has have similar economic development organizations who can help companies, you know, come out of come out of Germany. Come France, come out of the Netherlands etc, you know and succeed on the ground in the US and we always want to make sure that there that the companies we work with are plugged in those organizations.
Bill : Hmm. That makes Yeah, that’s just perfect and yeah DIT UK ti t is they really stand out for a trade and investment organization I at least from the ones we’ve met there, they really are spectacular is so you know, in obviously, as you’re as prospective companies are meeting you they’re asking probably a variety of questions, but what’s the kind of the one question that you that you rarely hear or never hear, but you wished more companies asked Well, they can’t all be easy questions.
Dan : Um, you know, I think, yeah, okay. The question that I sometimes get, but don’t I think get asked often enough. You know is, you know why? Why does everybody go to New York? Does it seem or Why does everybody go to Silicon Valley and where else in the United States? Does it make sense to go and why? Right. And I do think that there is a significant percentage of the companies that we see coming out of the UK in Europe who, you know, go to, you know, either New York or the Or the Bay Area, and those are great choices. But I also think, in retrospect, after having talked to companies, let’s say years later, that I think that a lot of them wish that they had taken a little bit more time to think through different options. Right. And, you know, that, that there are major centers around around that around the United States, that that may make sense for a particular business and one of the things that we try to do is walk through with with companies, you know, sort of the sort of the considerations that they should be keeping in mind when deciding where to launch in the US, right. So think things like proximity to HQ, back in Europe, you know, the cost of doing business in that particular area, the, let’s say the state and local government incentives for setting up you know, the type of talent that might be a bit available, the proximity to investors, the proximity to customers, you know, the proximity to potential future requires, right, there’s, you know, numerous different factors and then the sort of eight or so that we typically highlight that companies should be thinking about about where to go in the United States. And that may lead them to the Bay Area or New York and that’s great, but it also may lead them somewhere else. And I and I think that the companies think that have been happiest with or maybe I’ve had the smoothest market entry are the ones that spent a good amount of time asking the question, why am I going to this particular place in the US and is it the right place and where is the right place to go?
Bill : See, and you’re worried about that question, but you hit it out of the park. That was perfect. No, it I think that was just an absolutely great way to really even summarize our conversation in terms of, you know, you have you have to keep digging to sort of figure out the right path and the path and the you know, whether it’s geographically where to locate or whatnot. It’s really a discovery process for every, company and there is you’ve identified so many really good choices, but probably shortlist for for every company in terms of where they should, where they should be and where they should grow. So how do people get a hold of you? If folks listening would like more information on your practice and maybe working with you? How do they get a hold of you?
Dan : Um, so I should be pretty easy to find. Yeah, now, if you just Google my name, you’ll, come up with my page on the Wilson Sonsini website. My emails they’re in contact, contact me by email and I’m also on LinkedIn. And, ya know, for companies looking to you know, launch scale raise money exit in the US that’s what we do. And certainly happy to, to have a discussion.
Bill : Perfect and I’m gonna we’ll make sure that your links are on all the on everything that that we post whether YouTube or podcast or whatnot so it will make it even easier. Well good. Is there anything in closing, Dan that you’d like to make sure people know or share?
Dan : Um, yeah, look, I mean, the US is an incredibly exciting market to build a business. You know, the upside of getting it right in the US and partnering with a top tier US VC fund, working with fantastic companies. There is just is unmatched if it’s the right place to if it’s the right place for your for your business. Yeah, I mean, it makes all the sense in the world.
Bill : Fantastic. Well, thank you so much for being with us. I’m gonna stop the recording, but really, really appreciate your time and being with us.
Dan : You got it. Thanks for having me. Appreciate it.
Bill : Our pleasure.