10 Commandments for US expansion

Let me start by saying that US expansion of a British or European company is very very hard.   And there is no way I can possibly cover the complexities of such a move in a single blog post.

What I can do, however, is give you some key things to think about before you make the big move. Or give you some things to consider after you’ve made the move!

Over the past 15 years, I have taken three UK companies to the US, two as founder and CEO and one I joined as a CRO.  Each time I employed a different strategy and thankfully, all had varying levels of success.  I also raised over $100M from US VCs.

Anyway, backslapping over, I just wanted you to know that I have a lot of experience in this area as an entrepreneur and exec.

I now coach CEOs at over 25 venture-backed companies and in this privileged position, I am seeing some patterns emerge when it comes to US expansion.   My overriding observation is that most European companies (let's include the UK in that group for simplicity!) don't have any idea what they are signing up for.

As the old saying goes, they are bringing a knife to a gunfight.

Let me be super clear - you are entering the hardest, most competitive market in the world, filled with US teams working 60-plus hours a week (and hardly ever taking a holiday) that have ALL the advantages of growing up and building networks in their own country.  They fundamentally know how to attract US investment, run US companies and attract US talent.  They have had unprecedented commercial success and the resulting ‘knowledge flywheel’ where trillion-dollar companies throw off hundreds if not thousands of new entrepreneurs, is the envy of the world.   And their default ambition is to create globally dominating companies.

And they are REALLY good at it.  According to the recent Atomico State of The European Tech report, the total value of ALL public and private companies in Europe is $3T. That's 1 Apple. Or 1 Nvidia. Or 1 Microsoft. And we haven't even mentioned Google, Meta, Amazon or Tesla.

So with that rather long scene-setting -  here are my 10 ‘US Commandments’

1 - Know why you are expanding there.

Sounds crazy, but it fundamentally impacts your strategy.  If winning the US market is the number one priority for your company, then you need to go all in. That means raising your series A or B from a US investor and the CEO moves there.

Or start there, as I did with my first company called Ceros back in 2012.  We raised seed money in NY, moved there, and built the company as a US-focused business  (we sold half of it to a PE firm for $100M in 2020).

If the US is simply a market to get some traction in, you can go more light touch and the bulk of the exec team can stay in the UK / EU.

2 - For the love of God make sure you have product market fit before you go.

Assuming you are already making decent revenues and you have PMF in the UK, test if you have it in the US.   The product may fit, but maybe the messaging needs to change?   I have a healthtech client and the messaging in a market where healthcare is a business is dramatically different to Europe where it’s taxpayer payer-funded.

3 - Do as much as you can from the UK

It's so easy to sell into the US from the UK.  Get traction before you go.  Build the case.  If you are looking to raise in the US, then US traction is paramount to that story.   Do it without going to the expense of setting up a US subsidiary and hiring out there.  Your SDRs can start prospecting into the US in the afternoons, your UK AEs can then close that pipeline.   You can then create US case studies so when you do make the move you have US case study collateral to support the future team there (UK case studies will have zero value).

Note: One myth I sometimes hear is US buyers only like buying from fellow Americans.  This is plain wrong. As cliche as it sounds, the British accent is an absolute weapon in the US, no matter where you go, they love to hear it.  You are perceived as more intelligent and they will buy from you all day long!  I had a sales call once where the prospect actively said she didn't want the call to end because of my accent!

4 - Make sure you have enough cash

US expansion is CRAZY expansive.  To give you one data point, an enterprise AE in Silicon Valley will set you back $500k OTE.  CEOs will have to get their head around this - and you can't scrimp and save - your well-funded competitors won't be.

5 - Share options parity

This one actually triggers me for some reason.   And shows breathtaking ignorance when it comes to US expansion. You MUST have a standard US-style share options plan or you won't be able to hire anyone decent.  And even junior employees know what that looks like in the US.

Simply:

• Options for every employee
• 4 years vest
• 1-year cliff
• You retain your vested options if you leave (post cliff obviously)
  

There. Simple. Why oh why do European companies keep screwing this up?  They hit the US and then have complete hell trying to change UK / EU plans to match the US standards or worse, end up with two totally different plans which creates a nightmare culturally.

Remember, you may not have much direct competition for your product, but everyone is competing for talent.

6 -  Partners and bureaucracy

It's critical you have the right partners to support your expansion to the US.   The main ones are your law firm, your accountancy firm and your payroll and healthcare partner.    The latter will manage an incredibly complex health insurance landscape that will baffle any Brit.   And given you are entering probably the most litigious environment on planet Earth, getting a great legal partner is paramount.  Did you know - in the US if you are sued but win a court case, you still have to pay your own costs, unlike in the UK!

I won't promote any company here, but you can hit me up at [email protected] and I’ll be happy to share the best advisors in the US.

Note - when setting up your HR ‘stack’, healthcare is critical, but so too are 401ks (pension plans).  We lost prospective talent because we didn't get this set up quickly.

7 - Org structure

This could be a series of posts but I’ll keep it brief.  If your product or service is the same in all countries and you want to keep control of global pricing, then you need to employ a centralised organisational structure, with a global CRO and CMO and VPs or sales under them in each territory you are in. So maybe UK CRO, US VP Sales.

Most companies fall into a decentralised structure (I did this!) where you hire the ‘Head of the US’ and they build a GTM team with the dreaded dotted line back to the UK CRO.  It becomes a nightmare where you lose control of the GTM and even pricing.  Oh, and your culture too.

8 - Raising Capital

Again, this could be a series of posts.   But generally speaking, either go early by essentially starting in the US and raising there, or go late, which means your Series B.   Seed gets you to traction, your A helps you scale revenue in the UK and US, and then the B in the US based on strong US traction.

Raising a seed round from US VCs from the UK with no US story is next to impossible.   Remember, US VCs have an abundance of choices on their doorstep.

9  - Present as American

We are used to seeing prices in dollars and buying from what we know to be US companies.  The reverse, not so much.  Present as American as much as you can - at my last company I mandated that we use American spelling on everything as default.  Same with our pricing page, dollars as a default in case the IP geo-targeting didn’t work.

Sneakers, not trainers. Sweaters, not jumpers!

10 - Codification

Finally, pretty much all US companies have ‘codified’ their businesses, think mission, vision, culture and values. It's important you have also done this as prospective employees will expect it and you will be at a disadvantage for not having this in place.

So there you have it.  My 10 Commandments.  US expansion is not for the faint-hearted, I implore EU companies to fundamentally understand the challenges you are about to face.  What breaks my heart is when I see EU companies screw up the basics that are fully in their control which makes the hardest challenge in business even harder.     Think share options, org structures and not working with the right partners.

However, if you give yourself every possible advantage you can, then with a bit of luck, great execution, and a serious dollop of product market fit, you could dominate your category in the US.

Best of luck!