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Bill : Hi, and welcome to soft land central the hub of market entry. So it’s my pleasure today to welcome at incredible team of attorneys from Osborne Clarke, just a fantastic law firm based in the UK and I’m going to say welcome to Jonathan Mills, Tim roses, and also William Devenish. Welcome guys, how are you?
Tim : Hi Bill. Good to be here.
Jonathan : Yeah, really good thanks I was just waiting for Wilwood to take himself off mute.
Will : Yeah, you think I would have got used to taking myself off mute, whilst we’ve been in lockdown Barsi not but thanks for having us, Bill. It’s great to be here.
Bill : Absolutely. Well let’s start with you. Well, Since you are unmuted. And can you tell us just a little bit about your background. It’d be great to give context. So as we as we get into our topics, folks know about what you do.
Will : Yeah, sure. I’ll let Tim give a bit more of an overview on Osborne Clark generally, But me specifically, I’m a UK qualified lawyer. I’m based in the San Francisco Bay Area, working out of our San Francisco, Palo Alto offices, and my role really boils down to two things. Firstly I counsel US businesses, predominantly VC backed high growth businesses on their expansion into new markets across Europe and Asia. And the second role that I perform for some larger clients is I effectively act as their external outsource international legal counsel, So a single point of contact for their international legal work.
Bill : That’s fantastic, so great, why don’t we go to Jonathan and then we’ll finish up with Tim and Tim can tell us more about Osborne Clark as well. So Jonathan, how about yourself.
Jonathan : Thanks. So I’m a real estate lawyer from London by trade, and back at HQ I advise on a variety of property related matters investment development. Real Estate tech and energy utilities. My specific focus is on the alternative residential markets so coliving student accommodation, Bill to rent or multifamily is like over here in the US, and assisted living and care. However, I’m currently based in sunny Brooklyn, and assisting Tim and the team on the ground, on the east coast. And my focus here is assisting US real estate businesses with a European operations. And so whether that’s existing business or similar to will sort of international expansion and growth and intends to be in the US, sort of fast growth part of the real estate business, whether that’s real estate tech or investors and operators in that alternative residential space,
Bill : fantastic, and I imagine there’s some really interesting things going on in real estate tech right now, for sure. Absolutely, yeah. And Tim, do you want to round us out here. Tell us about yourself and then and then about Osborne Clark.
Tim : Sure. Thanks, Bill. So I’m Tim Resendez VP, legal International, based in our New York office during the firm for about eight years now. I’m the only American lawyer in the firm as far as I know, because we have a very unique model, which I’ll go into a bit more depth, but primarily spent the past decade advising fast growing US companies, as they’re expanding outside the US, both for the first time, and they’re doing initial market entry projects so going and setting up an overseas sales office, and then in many cases we’re advising them as they’re doing multi market projects, expanding into new jurisdictions across the world, and then helping them as they scale up globally. I’ve been doing that for about 10 years and solely doing it for us based companies going outside the US, so it’s very much a niche in which we sit within the market, and being within timezone helps us be close to our clients to be understanding what a US companies needs are, how they take their legal advice how they’d like to operate, how we can best service them and then being super responsive because we’re in the timezone, so we’re working the same hours they are and and coordinating with lawyers around the world to deliver for them. So about the firm, it’s a unique platform in the US market where we don’t practice US law at all, but we’re good sized firm of about 1100 1200 lawyers spread across 25 offices, primarily in Europe, with offices across Asia as well. Do us offices in Silicon Valley and on the east coast as well. And we have this unique niche, we feel we’re only advising us companies primarily with international lawyers spread across the world on the ground and then us as the timezone advisors. And then we’re advising across a range of issues, whether it’s market entry projects where we all sit in the world, but also on bigger issues as companies scale up, whether it’s litigation, m & a, things like privacy laws around the world are becoming much stricter the regulatory environment, things like employment, helping them with day to day business issues as they arise. We work across a few sectors, I’d say in the US, tech is by far our largest so our tech media communications sector, which will can tell you just a bit more about that on the west coast, but then we do a lot in retail, life sciences, financial services, and real estate where Jonathan sits as well. And then the only other thing to mention is on the flip side, since we’re here on the ground in the US market, the majority of the firm’s clients sit somewhere else in the world, whether that’s the UK continental Europe or Asia, and when they come into the US market. We help them hold their hand a bit just to be helpful in the market, connect them with the right advisors, since we don’t practice we’re primarily, helping them navigate the US market, and it’s a nice value add for existing clients at the firm.
Bill : Fantastic. And, and well do you want to add anything on the that obviously you’re in the bastion of technology in Silicon Valley. Do you want to add anything on the types of clients you work with there and the practice and. So, yeah,
Will : Sure. So the practice is, is primarily, very similar to what what Tim has just described, and our clients typically technology businesses venture backed high growth company based in the Bay Area, although increasingly across all of the west coast so other markets that we see a lot of demand for Seattle, Santa Barbara Angeles and Denver and Colorado. And the team, the team here has been, you know, we’ve had offices in the Bay Area for 20 years now it’s our 20th anniversary this year of being in the US and we had a big party plant and then obviously that’s kind of gone out the window, due to the current situation that we will find ourselves in. But we were, we were one of the first European rule firms to come here primarily to advise those clients in timezone. And we’ve now got a really lean team that are in timezone that are able to provide the exact advice that our clients frequently want to be provided in timezone. So that’s effectively labor law advice, data privacy advice, corporate M & A advice and international expansion and growth advice, and then where we don’t have that advice and timezone as Tim alluded to what we do is we then add to that conduit for introducing our experts across Europe and Asia.
Bill : You know, we’ve known each other. The three of us now for a few months and the one thing I’ve really actually marveled at the way you all operate is the collaborative nature and you know how much you work through partners and and you really look for sort of trusted allies and advisors that that would help build value for your clients, it seems like a very much a part of the ethos of Osborne Clarke, but I see nodding head so yeah that’s really good. Does anyone want to make a comment on that at all.
Jonathan : Yeah, I think, I think you’re exactly right in the as Tim emphasize we don’t practice law in the US we’ve, we’ve got a fantastic network here, and can be incredibly useful as well said 20 years here now of building up trust in the market and building strong ties with, with other advisors and professionals. And even though we don’t practice US law, then there needs to be a USP around what we do and it’s very much that collaborative approach and that expertise in providing a solution to our clients to what is a fairly niche part of the market.
Bill : Fantastic. So in just to set some sort of frame where we’re going here. As you all know that the audience that we’re talking to today, certainly are going to be market entry and internationalizing firms and companies, as well as a community of trained investment professionals, and also other service providers. So, you know, I think the information that you all can provide about some of the things that you’re observing and seeing and helping companies with will be really helpful and I guess the, the first place I really want to start off with and, you know, maybe, Tim will start with you is, you know, when you think about the common mistakes that you see companies that are internationalizing from the US, make it you know what, what falls into that bucket of of common mistakes that you say,
Tim : Sure yeah there’s a, there’s a long list of mistakes I’ve seen over the years, but we’ve got an hour. I know we’ll come into some of the success stories as well which again draw some of those really best practices that we’ve seen emerge and I think it’s sophisticated generally in terms of this space that we all sit in as advisors in the cross border world helping companies as they’re navigating between markets. So generally speaking, I’ve seen a higher level of preparation and planning and research and understanding that the product needs to fit in the right market and then the approach needs to fit for the market and I think the thing I would emphasize there is, is being taking the planning and research aspects of this project, much more seriously than then, some companies have in the past so understanding what that market looks like knowing what’s important to you as a company, understanding what success looks like testing a lot of the assumptions to, and then being proportional in the market by not jumping fully in, if that’s not the right approach by dipping a toe, limiting your risk initially and saying okay we have our, we’ve done our research we know our market. We’ve talked to everybody, we know, and from that we’re going to go in and execute on this playbook, but the in a position where we’ve limited our risk from the outset, where if we need to pull back we can but also we’re in a position where if things are working, we can go and double down on that we have, you know the resource or the operational framework in place to be able to go double down on that. I’d say the the biggest issue is just a company that doesn’t plan ahead or assumes that the overseas market, or doing business in an overseas market is the same in the US, in many cases and a place like the UK where it is pretty similar, but it’s all just a little bit different, and knowing the nuances of that, even in a market it’s one of the easier ones to operate in, is really key for success, and if you’re maybe learning in the UK. As a starting market to see okay what works there, it’s a little bit different, okay, you know the words mean something a little bit different and this process a bit bit different to do things that then gets a bit more complicated as you continue expanding around the world so I think it’s just the planning, preparation, knowing before you go, and knowing that it’s going to be different, whatever it is and trying to figure out what those issues are that are gonna really crop up.
Bill : So, yeah, what did Winston Churchill say to countries separated by a common language. But so what you’re saying is, research is probably the biggest challenge or mistake, lack of of detailed research and testing, and then sort of localizing understanding local, whether it’s regulatory environment or legal environment or whatnot. But, but the ability to sort of translate your business structure into that successfully into that new market and having enough information to do that well, are those kind of the two big challenges you see,
Tim : yeah I think that’s right and localizing probably both in the, in the aspect of understanding that market and localizing your approach to it, but also localizing even your product and your people you know are the, if you’re selling into Germany. Do you need German people to sell into that market so localizing the approach for that market. And then looking at your product does that work do we need to add languages currencies if we’re talking software, You’re thinking about every market you enter around the world that product market fit, that you have in the US, you’ve established here before you go overseas. That needs to still work, and then the approach to really deploy that effectively in the market might need to change to be localized, you need to do that prep ahead of time in order to really do that effectively.
Bill : And, well, how are you seeing additional challenges or mistakes that some of the companies that you’re working with the maker or companies you have worked with in the past, make when they’re entering.
Will : Yes. So there’s two, there’s two things I probably add to what Tim says pletely agree with everything that he’s mentioned, is, and one of them’s slightly connected is actually understanding the culture and knowing the market that you’re going into just from a cultural perspective, we’ve seen it time and time again where, you know, one of the biggest decisions to make, is do you send a US national understands your business into that market to try and grow the market, or do you hire someone locally that understands the market but doesn’t understand the business to try and grow the business. And actually there’s probably no real right answer there in terms of, You know it’s not a one size fits all, it’s, it’s an approach that will vary by company. The ones that we’ve probably seen though that have been the most success have been those that have taken that kind of hybrid approach of doing both, or they’ll send a senior person that’s worked at the company for a number of years and I think realistically they probably do have to be relatively senior, we have seen some companies that have sent very young people over. Great, you know, when I was 2324 I would have loved to be given an X pack package and sent over to London, or vice versa sent to New York to live for four or five years, but I think they do need to be relatively senior and understand the culture, but then also make sure that you hire a really good general manager within the country that you land in that understands how, how the market works because there are nuances, Tim’s kind of alluded to, you know if you’re going into Germany. Do you really want to be trying to sell into that market with our understanding the German culture. The second thing I’d say is here on the regulator’s radar when you want to appear on it, it’s very very easy on illegal possession. A accidentally. And, you know, creating a presence in a new jurisdiction without intending to. And that has not gone tax and legal consequences. So we kind of often say, you don’t want to be an accidental tourist. That’s where the planning comes in right, it’s really simple to just say, you know, we’re just we just put someone on the next flight from SFO over to Frankfurt and they’ll go out on the market, you know, on a tourist visa and no one really care. But unfortunately the authorities didn’t care. So it’s about planning that and and, and, and really appearing on the market when, when you want to appear, not by accident. On the radar.
Bill : Yeah, that makes a lot of sense. So Jonathan, with, with real estate, I would imagine there are some really unique things that you’re looking at in terms of how companies are, you know, sort of, what challenges, real estate companies see are there some unique things that are going on in real estate that would be good to chat about from a standpoint of, where, where the challenges are.
Jonathan :Yeah. So what’s interesting in terms of real estate that doesn’t necessarily appear across some of the tech verticals and software businesses that we work with is that, as opposed to having a fantastic product, it’s usually a plan and a deal that will take a real estate company into other jurisdictions. So yes, there’ll be very good at what they do in the US, let’s take a multifamily business for example, a multifamily developer operator, fantastic in the US and not even, they have to have the layer that will, and Tim mentioned which is knowing their market, understanding their product how that fits in that market. But then also there’s, there’s the next part of what is their customer base their customer base is people who want to live in houses it’s individual people, it’s homes. What makes people’s lives tick we’ve particularly seen that performance across the real estate market during the pandemic and so it’s slightly different in the market is there but it’s how you tailor your product to that market. That then brings you success. And that’s why generally real estate businesses will be slightly more tactical with their move into new jurisdictions and it will likely be done with a partner, or with a particular deal in mind, a particular location that they want to focus on that they feel their product fits best. So for example, in the UK is it, do they go to London where maybe their target audience largely sits and there are large sums of capital, but in fact there’s their product fit a lot better. In one of the secondary cities where perhaps land prices are slightly lower development costs are slightly lower, and margins therefore could be slightly higher, or the tolerance and risk baked into their move is then there’s a touch more fat they’re slightly higher numbers and percentages to play with. Whereas, On the flip side the similarity to what Tim was saying is, is the real rise we’ve seen in real estate tech, which is only going to be pushed on by the pandemic as people see the need for not only technology like that is pandemic specific like touches access and things like that, but just driving efficiencies into a market that may well struggle. Post lockdown being loosened so the real estate market where margins and numbers were fairly tight anyway, is there now a need and yes there is a need for, for efficiencies further efficiency to be driven into the, into the model biotechnology and then you’re coming up against companies with a more software focus their software companies that are selling into the real estate vertical. And so then it becomes a product supply as opposed to a deal player or a market play, and so there really is a big cross sector and we sort of straddle, all aspects of the market across one clock, not only in terms of sort of European specialism, but also in terms of helping us businesses to overcome their teething pains in terms of growth and expansion as well.
Bill : Interesting. So, when you’re talking about, sort of plan or deal centered. I would I guess what the words have popped up in my head, is that it at least in some cases, some of these real estate opportunities in the international opportunities are demand driven in other words there’s, they’re really trying to identify what which I suppose, in most cases. All sales are demand driven but before you go and buy or invest in building a new complex or buy an existing set of buildings. It’s really making sure that the renters are there, the customers are there to fill that space. Is that part of what you’re seeing is, is that from a solution standpoint or overcoming the mistakes is, that’s what people are doing is really validating the demand before going
Jonathan : yeah, you’re absolutely right and there are a couple of key asset classes at the moment which which there is particular demand for, and it’s demand that was building. In any event, and is heightened by the pandemic on the lockdown so it’s areas like industrial and sort of related e commerce a lot more delivery going on there was previously the whole infrastructure business around that is growing exponentially. And that’s become an incredibly hot market but then you look at other areas that the pandemic has shone a light on, particularly, taking the conversation back to housing, and, and Tim and I work quite closely in this sector but it’s co living, the sort of Co living movement and which is particularly large in the US and New York, in particular, and it’s there are operators that are looking at other markets, so that they can overlay the business that they have here and the expertise that had built up over a common product and a common ideology. In other key locations that have won the demographic, but also the underlying requirements for those businesses and so, for anybody on the, on the listening in and doesn’t isn’t aware of Co living or how it works is essentially people phrase it as institutionalized room sharing, which I think is to do a slightly service it’s, it’s a branch of of multifamily, wherein, individuals will live together in apartment, they will share common facilities, and in living in that way and the demographic that it tends to attract which is generally sort of aged 25 to 35, usually grads, or start positions in white collar businesses, though, that’s the sort of target demographic and in living in that way, it also fosters sort of relationships and community in a communal way of living as well. And it’s become incredibly popular, not only as a way of living but an affordable way of living in the US, and it’s very much catching on in parts of Europe and catching on because there is demand for an affordable solution to what is a housing crisis in, in many key European cities as well.
Bill : Interesting, yeah and sort of to your besides the real estate side the real estate technology. It seems like they’re probably some really good solutions that would either be available already in that space or coming in terms of matching co livers and so on. There must be
Jonathan : No you absolutely right, it’s a, it’s a part of the real estate industry which is uncommon for real estate is actually laden with technology. And so when you meet our clients in the area and you have discussions you won’t be speaking to a head of real estate, and a head of a certain area of the US or someone from their employment team, you’d also be sitting with someone from the tech team a head of product, there’s, there’s such a tech layer into the efficiencies that they tried to build into that business to be able to offer the affordability that they can. The, As you say, there’s very much several different layers that come into the business and several different platforms at play as well.
Bill : One more quick question for you, it may not be super quick but is just thinking about the technology companies that you’re working with and that you see in the marketplace, you know what are what are your outlines some of the challenges and really the market opportunity right now with technology creating some efficiencies, and you can see them from maintenance to to access and all those types of things but, you know, we think about some of the challenges those companies have in in market entry, what are some of the sort of direct actions that that you all help with to overcome those challenges.
Jonathan : So I think that the first intimin will have both touched on it is the first thing to understand and absolutely understand that any, any market entry or expansion into new markets is that the market is king, is, is understanding how you fit into that market not necessarily how you’re going to change that market. I think so understanding the market that you’re getting into and how your business fits within it. And the interplay with the demand that you’re expecting, and the demand that actually exists and how it exists is really key in terms of what we do to advise businesses I think it’s the first thing is to understand the breadth of the task at hand, and understanding how many different parts already existing in your US business. And so some of the things that we bring to the attention of a client as to Will’s point earlier some people see international expansion as putting a guy on a flyer, who’s particularly in tune with your business putting them on the ground and having him arrange 10 meetings a day with the people in whichever sector, he’s focusing. Whereas, in actual fact, there are so many key considerations that are not even necessarily legal considerations, but it’s things like advertising marketing localization of contracts, IP brand and data management and protection. People is always a big one. Not only is his talent key to growing a business but making sure you understand the market that talent sits within is key. So, employment at will, in the US, that doesn’t exist anywhere else so it’s understanding what does exist in the market that you’re moving into, then there’s obviously regulation on top of that regulation of your particular market tax issues. Something that Tim and I were speaking about recently, we see people put these incredibly complicated tax offshore structures in place, that costs hundreds of 1000s of legal and professional dollars to tie up and finalize, but that company is not going to be profitable for five years. And so it’s almost a front end waste of money that you’re really not going to see any benefit from for a number of years so it’s, it’s, we always advise to not only to think about the market and always think local but also to think, early as well to Tim’s point earlier, it’s all about planning and making sure you understand the task at hand and how many different moving parts there are.
Bill : I love your statement, the market is king, right and that sort of all the planning comes from that it just a, it seems so simple but I guess an observation, very few people observe that because they’re used to this Steve Jobs model where Steve Jobs had his, his ability to sort of create markets with this force of well but there probably was only one, one person that in our lifetime that probably had that force as well so
Jonathan : I think that’s why we have disruptors as well because it happens, it’s so few and far between the companies really do change a market or the way that a market operates as a very bright light is shone on them.
Bill : Yeah, that makes sense. So, Tim. Let’s pop back over to you and you know one of the things you had talked about was, was research which, yeah, we certainly, in talking to so many folks see that as sort of a very common challenge that companies that are internationalizing have but what are some of the things that you all do to help companies, whether it’s directly with the research or or indirectly to sort of support, making sure the research happens. So that, to Jonathan’s point that the risk is reduced to, as companies globalized what, what are some of the steps that you would take.
Tim : Yeah, I think that it’s all about that risk mitigation that we’re talking about the market being king, I mean mistakes are going to happen no matter what, no matter how much planning you put in place. I think we’ll come on to it but, you know, mistakes happen but the macro environment might change, we’re in a global pandemic right now so whatever your plan was, it’s probably changed by now or your, your playbook will need to adjust as things change and so it’s always about doing the research but then being nimble and flexible. In order to deal with that as it comes up. What I like to recommend in terms of the research is talk to everybody you know so let’s say I’m at a fast growing tech company and they say okay, Tim, you’re off, you got to go figure out how we’re gonna go set up in this market drive revenue be successful. Lay the structural framework and operational side of the business to be successful. Start talking to absolutely everybody you know that’s ever done this before, whether it’s at peer companies in your particular sector in your area. Advisors like us that have done it before and can obviously help advise around the pitfalls, help set, what a plan should look like. A lot of what we do is actually for companies, especially in retail or consumer products when they’re really going into the market and they need a proper launch plan other than just, We’re gonna hire a salesperson hopefully they’ll be successful, is they put in a fully scoped market entry plan that covers the legal aspects of it, but also touches on a number of other things that probably fall more into the camp of accountants, tax advisers people like that that can help on some initial structuring but also ongoing operations people that can help on payroll and HR, Jonathan touched on the people being important, and will mention talent as a key to success. Banking is a common pitfall we find around the world setting up bank accounts and being able to be operational is a big big challenge so talk to whoever your current bank is see if they can help you over in that market. If they can’t. Who else could you be using there and start early because the timeline for that can take a significant amount of time, but then in terms of the the market I think that’s also talking to either other advisors or consultants that specialize in this looking at where your, your, either competitor companies or pure companies are what markets are they in, how have they deployed their solution into that market. Now, how many people do they have there. How long have they been there, ring somebody up if, if you have a connection on LinkedIn that looks like they’re involved in that to see what you can learn so it’s it’s really anything and everything and then I think just being systematic about it, to see okay here are, here’s our playbook we’re putting together our launch plan or strategy. Let’s validate this, and it could change based on both those initial pieces of research, but then also what you see on the ground so if you deploy into a market, you’ve had a sales team on the ground for a year and you haven’t seen much revenue yet. It could be the market, it could have been lack of planning, but it could also just be well that market the sales cycle is 18 months instead of six months as you might be used to in the US, which we see a lot in software, you know b2b software sales in continental Europe, for instance, common pitfall, somebody will walk away, either blaming lack of preparation or the market, but in many cases it’s it really is, knowing that market knowing that in advance, but then also being nimble enough to test, test that if it doesn’t work, figure out what the issue is it’s kind of that that tech philosophy about failing fast, there’s going to be issues that will trip you up no matter what it is, prepare in advance, stay nimble as the market changes or information comes to light, then be able to quickly pivot and change into something that you think will work and keep testing that and test the assumptions around it too. We’ve seen her initially set up or still advising them on a number of issues and there’s everybody’s still figuring it out and we just had a curveball of a global pandemic that changed the entire playbook for how you go to market how you operate, whether it’s domestically or overseas so always be issues, no matter how much preparation you have nothing
Will : other thing just that. Is that the way you enter the market will vary depending on which country you’re going to. So, we’ve had some really good examples of clients over the year, for example, obviously we can’t name names, but it’s a technology company that works in the travel sector, they decided to enter one market in continental Europe by acquiring a competitor, then decided to enter the UK market by essentially sending over that senior person that I was talking about earlier, and understood the company culture. Then, working with the general manager in the UK to build, to build the business organically. So there’s a number of different approaches to take, depending on which market you’re going to, so don’t just think, oh, because we’ve had success in Germany, for example, that automatically means we’re going to have success in Italy, you’ve got to be as Tim said you’ve got to be nimble and flexible around.
Bill : That totally makes sense. Thanks, thanks for hopping in with that well and, you know, actually, maybe take both of those points because I think that the notion of, of having hypotheses and testing, and making sure that you’re investing, sort of, as it makes sense to invest, makes a lot of sense and I guess I’d love, in any of the three or all of the three you can react to this is where does, where does ego, come into this formula because it seems, if we all see people who are working on testing assumptions, and others who sort of have their plan and they sort of go in, you know, like they’re going to Las Vegas, pushing all the chips to one color, and you know, and off they go. So how does, where does ego come into this notion of globalizing and how have you seen sort of companies manage that well. Anyone.
Jonathan : Yeah I’ll, I’ll chip in on this, I think. I’m sure it’s changed over the years as the risk profile of going international has changed and is seen as a riskier move because markets are so different. But I think a CEOs ego will always be tempered by its investors. And so we find in a lot of circumstances now particularly the clients we work with. Yes. The venture, the sort of the venture investors are very keen to obviously make money on their investment, but they’re also very keen to protect their investment, particularly in the sort of the economic cycles that we’ve had over the last sort of 20 years. And there’s a lot more careful thought and planning, comes from an investor side now whereas, sort of in the 2000s, there was always the joke that then venture backers were pushing these tech companies into Europe as fast as they could to double down on their, on their results and to double down on their investment. But now the VC companies that we work with, or that we speak with in the US market. And our reserve reserved is the wrong phrase but they’re very tactical and methodical about how they go about their business, and they’re very careful with their dollars and they look to very much understand the US business and how that works. First, Before then looking to push anybody into new horizons and new jurisdictions that will, the, the CEOs remit, I would argue will be tightened and the new shorter than it was post COVID as well. Again, particularly some of the areas that venture capital money was focused on pre COVID. Some areas have taken quite a large hit, as in the pandemic so particularly, that sort of leisure leisure and hospitality sector, where we’re seeing real heavy layoffs, not that people won’t be willing to invest in those areas, or that product doesn’t fit in new markets, but it will be a very careful, very meticulous process that that sits behind any new market entry I think
Tim : the I think the only thing I would add there is that the global pandemic has a way of kind of knocking that hubris out of you, that we see when times get frothy when the VC money is flowing, and I’ve one example I remember was seemed like an ego driven move by a US company that had a German competitor, they were a product company had raised two or 300 million at the time. And so we’re gonna go acquire them we’re gonna scale up and do this massive operation, I think they hired something like 200 people within a year which, that’s not how it’s typically done, you know that’s kind of the opposite the approach we’ve been talking about about being proportional knowing the market testing it and then growing. And that was one that really crashed and burned it it’s it’s a, it was during a time when a lot of companies were coming out of the financial crisis, we were a few years out and most companies are I think right where we are, where it’s okay there’s some optimism, there’s gonna be some growth and we’re going overseas to chase revenue. We have investor support but it’s also tempered, we’re not in the market that’s growth at all costs right now. It’s okay what’s working, what do we need to do to change. Look, can we do overseas, that’s different than we’re currently doing it or do we need to start looking there. But I have seen those examples, especially when times are very very good and it’s just go into a new market put a team on the ground. And for us, we’ve seen some of those examples where it might be a regulated market and you should be working with, let’s say the local government or understanding the regulatory market there to make sure your product is going to work instead of just kind of going in and taking off taking things on and then hoping it all works out as things shake out I think we’re, we’ve kind of pulled back from that which that very growth at all costs, kind of a phase and so hopefully as Jonathan was saying with the VCs re evaluating current investments and thinking where it makes sense to double down or, or continue pushing those those forward I think we’re in a pretty good environment right now where we’ve all had to reassess our businesses, all of us. And what’s working and what’s not and so that kind of takes the ego out of it you know we’ve all everybody kind of gets knocked knocked down even if you’ve been one of the few very very successful companies in the current environment I think we’re all dealing with the new environment and shifting whatever that happens to be, whether it’s domestically with our, our domestic business or how we’re doing things overseas.
Bill : So, well, let’s shift over to you and maybe there’s a, and I know you can’t talk about specific clients but is there an unnamed clients or a case study that you’d like to share of a client that you’ve kind of really feel did it well in terms of their sort of move from the US into the European market.
Will : Yeah, sure. So, you know, there, there are a number of examples, but one that, and I’ll let the others chip in with their examples as well, but one that one that particularly springs to mind is a company, Silicon Valley based technology company that we’ve helped for a number of years that have just gone about things in that methodical planned way, you know, the CFO has been at the forefront of the international expansion drive alongside the General Counsel to working in partnership together, both having worked at previous companies where they helped scale internationally. And that experience really helped. So, I think, you know, we kind of touched on it earlier but making sure that we build a team, a team that has the experience of international really helps as well. And then what they’ve done is they’ve they, they’ve, they’ve, they’ve gone into 678 jurisdictions now and they’ve got that roadmap, right, and that roadmap is now flexible enough to appreciate that by going into an Asian jurisdiction versus South American jurisdiction, there’s going to be some slight changes that need to be made, but they know they’ve got that they’ve got their ducks in a row on everything, you know, they’ll send a, they’ll send a country manager. Across the from the West Coast that understands the company culture, they’ll, they’ll meet that General Manager higher as well, locally, they’ll start building out sales, they’ll make sure that they, that their tax, tax side of things is all well laid out, they’ll make sure they create an entity, locally, rather than, you know, creating a branch, which obviously has its own mess versus using contractors, which is super tempting when you’ve got someone in the C suite, saying, we need to be in the, I don’t know Spanish market yesterday. So, hire all these people sales people as contractors. Well we all know the issues, or if you don’t know the issues there’s various resources you can go to but there are a number of issues around using contractors internationally, pretty much same issues that you get in the States. So, they really thought about it and they’ve taken the time to create that roadmap and make a flexible roadmap, and I think that meant they had real success internationally. Another example would be going back to my earlier example of companies that will appreciate the different markets need to be treated differently. So I think that’s another trap that we see a lot of people fall into, they’ll go, Hey, we’ve been fantastically successful in the UK market right, so now we’re going to go into France and don’t really take into account that, you know, despite the fact that the closest point there’s only 20 miles between the two countries across his tiny bit of water, there’s actually huge differences in the culture and how businesses operated there. So I think that’s really important is being able to pivot and have that flexibility really to go, Okay, well we’re going into France but we’ll do buyer and acquisition, rather than buy organic growth, or whatever it may be, or JV. So there’s a whole way of approaching this slightly different but it all comes down to being plan, and having the flexibility to change your plan as well as you’re growing and going up, which just comes back directly to Jonathan
Bill : make sense so it really all starts with leadership, and having the right team in place which, which totally makes sense. I’m a sailor so always good to have the right Skipper or captain. So, and Tim, how about you I have a client that you particularly think of that, got it right.
Tim : Yeah, sure. I think I’ll bring up one that helps hammer home that point about preparation, planning, using data understanding the market before you go, that I think helps to eliminate that a bit. The one I have in mind was a fast growing venture backed direct to consumer apparel company so originally they started just selling online by E commerce domestically in the US, as that was successful, they put in, pop up shops in the US, in kind of key cities, and then we’re using that to build the brand across those markets. And so when they started to look outside the US and that’s a typical trajectory we see its product into the US market, see some success, raise another round of venture round off the back of that in order to okay drive that more widely across North America and then also look to for the markets, let’s say Europe. So what they did is they’ve set up the entire ecommerce distribution and the marketing to go after the European market and the Asian markets to see okay, we think we can be successful. We don’t know exactly where yet where our key markets will be, but we’ll set up the E commerce layer the business so that we can fulfill products, and be able to service those markets, and then have a mark the marketing machine turned on so we can go into the market, and wherever we see that demand will then we’ll go, go and double down on that. So it’s a nice business to be in where you can set up the commerce layer, build revenue overseas, start to see where it’s working and where it’s not. And amazingly, there were some surprises. It wasn’t the the places around the world you would have thought it would be the, You know the trendy apparel company would be going and so then they would set up, pop up shops initially so that’s dipping the toe in the water to not commit to a long term retail lease, but to put a pop up, do some brand building, have a new distribution channel in the market. And then if that itself was very successful, then go double down on that, take a longer term release brick and mortar, because they had enough learnings from that to know what worked in that specific market. And so utilizing that we put together the whole kind of launch plan for these markets and then we’ve been executing along the way, when we hit certain metrics in terms of demand and saying, Okay, now it’s time to go, let’s figure out what the next stage is whether it’s turning on E commerce doing pop ups doing full scale brick and mortar, and then maybe taking it to the next level with more marketing or product line extensions and things like that overseas. So that was a really interesting one where it was all database and demand driven, but in a way that was able to test the market and then really double down and scale up off the back of it.
Jonathan : It’s a really interesting point in just just exemplifying how data and data analytics are coming into this process more and more. There is, if you understand how to build it there is a wealth of data that you can pull together to educate your entry into new markets as well and that can be invaluable.
Bill : And I would imagine to that point Jonathan is that it’s also, you know, what are you putting out there that you’re testing, so if you know in are you doing, you know, A B testing so you’re getting that comparatives I mean, like to Tim’s point. The company went in to sort of broadly into Europe and saw, you know, essentially, where the demand was and made, and made decisions based on that but yeah I think being, it really seems very intriguing to have that ability to, especially the digital platforms to be able to get all that data and and make those demand based decisions, but is there a an example you want to share, Jonathan in terms of clients you’ve worked with and some of that got it right.
Jonathan : To be honest I think that guys have covered off a lot of the examples that, that I would have used or spoken to something else I think we’ve touched on tech, a lot, and the future of developing an expanding business in the way that we’ve been discussing, but one thing that I wanted to touch on which is, sort of, as old as, as business itself but often gets lost in the landscape at the moment and something that we really like to do Osborne Clarke, and you touched on earlier bill in a collaborative way that we like to go out of business, but we really like to share our network with clients to make sure that they can scale and grow in a, in a curated way with the correct advisors around them. And, unlike either smaller law firms or other businesses in the internationalization space and the growth and expansion space, we tend not to have any exclusive relationships with other partners to force our hand in a certain direction, but we tend to always be looking for sort of best choice and best in breeding partners to recommend to our, to our clients is There’s nothing. There’s nothing more powerful than being able to open up a part of your network that can help an assist with the growth of that business at no cost as well. And so taking a real estate example. A lot of our clients that come in from the US or real estate tech businesses they’re selling into a real estate vertical, whereas Osborne Clark. Unusually for a law firm a higher portion of our revenue, particularly in the UK comes from real estate. And so we’re very well placed to make introductions, and to introduce to potential new partners and potential new customers as well, which is something that is obviously not free in terms of time but, but is of no cost to us, and generally is well received on all on all sides and really having the right partners. Just like having the right advices is crucial to an efficient scaling and expansion of business.
Bill : Well, that that’s actually the perfect segue to my next question, which, you know, I think I met Tim first of the three of you and it was funny when he had, when we started this organization soft land partners, and it was, I think I got about half the explanation out of what it was we were trying to do and he said, I’m in. What was it you’re doing again. But it was that sort of acknowledgment I think exactly of what you’re talking about that the network and that appears and resources that we can bring to bear for our clients is critically important. And, and, ultimately, now when our clients grow. That’s going to be, that’s good for everybody. Essentially, and their successes is good for everybody but yeah, I’ll direct this question to Tim first and just maybe to shift gears for a moment and just talk a little bit about what is it at Softland and partners that that got you excited and interested when you kind of first heard about it, how do you how do you see that sort of fitting what what you all are looking to do in your ethos.
Tim : Absolutely. So, it’s interesting, I’ve been in this space for almost 12 years now. It was previously with a foreign government economic development agency so came from that side to get into the industry with a legal background and so then ended up back at a law firm but didn’t a fleet cross border practice so I’ve seen it from a few different sides, but I’ve never seen an organization that’s focused on bringing those type of networks together the service providers advisors like us, that help execute on that the government’s that are attracting investment, the companies in the space that are interested in international markets and are doing cross border business. There’s a whole ecosystem out there that I think we’ve all kind of come across or met various people within it, but we’ve never really had a focal point, whether that’s in a specific market in New York where I said or Silicon Valley where we’ll is. That’s really brought it together in any cohesive way, I think that’s, that was the thing I got excited about because the network is so important we are never the only advisor, our clients are working with or even talking to, we’re always going to be working alongside people and many times it’s people we’ve come across, but in other cases there are people that we can meet that can be helpful to our clients or that we can make helpful referrals to people in the network, and help kind of spread that out because we, we add more value to our clients by leveraging our network, and if we can have that network that’s very validated we have strong relationships, and we can team up to advise companies in the space that works really well and I feel like Softland partners has been a good way to bring all that together in a way that it never has and I know we’re still at the beginning stages of it but it’s, it’s been great to see everybody come together and that’s why I think I introduced you to well and now, Will’s a chapter leader and in San Francisco. Well, that
Bill : was my next question is at what moment did well become so crazy that he said all right. Is it a good idea, but how do I run the San Francisco chapter so well, that thanks for number one for taking that on. But what was it, obviously it’s a sort of a whole nother level of commitment to say, I want to I want to sort of lead a chapter and take that on. But what was it about the promise if you will that made that interesting for you.
Will : I think having operated in this space for a while, it’s the fact that we’ve heard a lot of horror stories also about people they get suckered in possibly to a really slick sales pitch, and then they end up spending, you know, they want to they want to expand quickly and they end up spending hundreds of 1000s or 10s of 1000s if not hundreds of 1000s of dollars expanding, and it, and it’s just not successful. And when you get down to it and you start speaking these people it’s just because they’ve not had the right advisors around them. And so to have that group really, especially in Silicon Valley where, you know, every venture backed company is really looking to eventually go international. Sooner sooner probably rather than later, to have that kind of resource where you know they’ve got the comfort of knowing that there was a network of curated professionals that have all got experience of operating in this space. and, you know, be able to really take advantage of that and understand that all these people that are surrounding them or these intermediaries and service providers that are supporting them have all been there, done that, the experts in that field. And then effectively you know there’s this myth isn’t there the international expansion has this crazy headache that you know is going to soak up time and it’s going to cost you a lot of money. And the reality is, you know, I think we would all say, the four of us, and also all of these periods that belong to this offline community, there doesn’t have to be like that. As long as you get the right people around you think that’s a great thing it’s bringing cellphones bringing all of those right people together to help companies succeed International.
Bill : You took the sort of the words right out of my mouth. I mean, it’s funny, the thing that actually catalyzed us the start soft land partners was a client of ours from Australia who spent $1.2 million on two failed us market entry attempts, and, and actually got connected to a few bad actors and, you know from 10,000 miles away, It could have been, you know, it could have been unintentional bad actors but, you know, still, it just the, the horror stories around that were just horrific. I mean it couldn’t it couldn’t have been worse. I’m amazed that you know that they agreed to a third attempt. But, but, Thankfully, they’re doing whatever. But, yeah, it’s, it’s, it doesn’t have to be hard for sure, but it’s great to hear your comments and Jonathan you’re not only involved in New York in, in the Boston chapters but you’re soon to be moving back to London to get involved in that community so what what are your thoughts about kind of what kind of values that that you see coming from some of the relationships, you’re creating
Jonathan : Except Yep, spreading myself very thin. Know what I really like about Finland and without naming names. When comparing to other similar groups is that it’s growing very organically, in that it’s not. It’s, there’s not a threshold that you need to meet to be a member, it’s just an interest in, and to be part in the international expansion community which is a great tool for us Osborne Clarke because we have, even with outbound clients is a variety of sizes of clients with different ambitions and, and scale to their growth. Same with our clients as Tim mentioned we act as a conduit for our clients coming into the US market as well to introduce them to people, and we need to know, a really good cross sector of the market, so they need accountancy advice, do they need to go to one of the big four who will know people do they need to go to a middle market firm or do they need a fairly local practice because actually their version of international expansion is selling online into the, to the US market, and they just need a bit of help to make sure they’re not falling foul of anything local. And so that is that cross sector and legal advice is the same. There’s somebody need a big international practice to help them, or, in fact, they opening one small retail store in Chicago. And so just need a local firm to help them with their leasing is a trial product for them, they don’t want to pay 10s of 1000s of dollars in fees, and so for me and I the guys agree it’s, it’s a really nice cross sector of people that are passionate and interested in sort of our focus area that I’ve really enjoyed about Softland.
Bill : Oh cool, well, well thank you thank, thank you all for those comments and it’s I couldn’t be more excited and tickled to be to be working with you, each of you. You have you guys have shared over the last 60 minutes of sharing an incredible amount of wisdom, and, and just, I think sage advice, and thank you all for that. It’s been great. So, any parting thoughts any just 10 Second Thoughts anyone wants to share to sum things up, we’ll take that as a no I see all the mark mics with red marks so I’m going to sign us off, please come back to our next webinar, and podcast, just like us, and we’ll make sure that you’re in the know on all the next great content so I thank you all for being with us today, and we’ll see you real soon. Wonderful.