Comments on: When entering the US market, think about the cost http://matteofabiano.com/2009/12/10/when-entering-the-us-market-think-about-the-cost/ www.matteofabiano.com Tue, 27 Sep 2011 16:56:09 +0000 hourly 1 http://wordpress.com/ By: Maria Pienaar http://matteofabiano.com/2009/12/10/when-entering-the-us-market-think-about-the-cost/#comment-261 Wed, 06 Jan 2010 17:43:53 +0000 http://matteofabiano.com/?p=215#comment-261 I have been working the last 4 years with international companies entering the market and agree with Matteo that one of the biggest issues is the gross overestimation of what it costs to set up in the US. In order to understand the cost, it is important to spend time in the US to understand the market opportunity and perhaps work with a local consulting team that can bring strong strategic resources to work with you on a market strategy. In my experience, a large number of companies’ approach is to hire cheapest sales resource for hire, and don’t manage the resource properly. Then go through a subsequent replacement strategy of the sales resource for hire and still see unsatisfactory results. This can cost a lot of money whereas doing some upfront investment with a good market strategy company can help mitigate the risk, help understand the cost and help you plan and budget properly for entry. The main point is to budget properly for market entry.

]]> By: Matteo Fabiano http://matteofabiano.com/2009/12/10/when-entering-the-us-market-think-about-the-cost/#comment-257 Sun, 13 Dec 2009 18:43:16 +0000 http://matteofabiano.com/?p=215#comment-257 Massimo, thanks for the comment. Indeed you should consider to move/bring a team in any case, as there is no substitute for direct management attention in the environment you are operating in. However as you point out, the OVERALL proposition requires a significant investment. Big market, big opportunity, big risk.

]]> By: Massimo Sgrelli http://matteofabiano.com/2009/12/10/when-entering-the-us-market-think-about-the-cost/#comment-256 Sun, 13 Dec 2009 08:46:27 +0000 http://matteofabiano.com/?p=215#comment-256 Hi Matteo,
what about bringing your team with you from your country (Italy in my case)? The costs would be definitely lower, don’t you think?
In any case after just 2 weeks in the Bay Area have been impressed by the overall costs. Everything is very very expensive, and the closer you get to Palo Alto, the more you pay.

]]> By: matteofabiano http://matteofabiano.com/2009/12/10/when-entering-the-us-market-think-about-the-cost/#comment-255 Fri, 11 Dec 2009 19:17:12 +0000 http://matteofabiano.com/?p=215#comment-255 Ale, thanks for the comment!

True, equity comp offsets upfront cash. Either way, however, owners/founders must come to terms with an investment (giving away 5% of your company is a significant investment) the size of which I am not sure they are fully conscious at the start.

My example was just meant to give food for thought. In fact you may run your company here without hiring any local management at all. But the premise, that the focus, effort and resources required are often underestimated, applies nonetheless and I will explore this more in future posts.

]]> By: Ale http://matteofabiano.com/2009/12/10/when-entering-the-us-market-think-about-the-cost/#comment-254 Thu, 10 Dec 2009 18:30:08 +0000 http://matteofabiano.com/?p=215#comment-254 Matteo,

you probably underestimate (or I do overestimate) the power of sweat for equity. I hardly believe that a CMO will get 100% of his compensation in cash and I probably consider a $100k cash payment coupled with $150k (5% of $2M pre-money company closing a round of $1M); when getting 1M round you’ll have the cash needed to bring your company to the next stage ($5M round B) and so on.

I’d be more focused on the need of having full time trained people being 100% of their time in Silicon Valley to help w/ mgmt & sales issue

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