When Airbnb launched in Europe in 2011, their first move was to acquire German competitor Accoleo, establishing their first European office in Hamburg, Germany. This acquisition came after a mega funding round of $112 million at a $1 billion-plus valuation.
Startups like Airbnb and Uber were founded on disruptive ideas that provided unique, alternative solutions to existing needs in the market. For a disruptive startup concept, their unique business model is their most significant asset. By the time Airbnb entered the European market, they already had major competition from other local clones including Berlin-based 9flats. At this stage of expansion into a new market, Airbnb's best option was to acquire an existing competitor to utilize their infrastructure and market knowledge.
But what if startup founders in the US start looking to expand into international markets at an early stage? For innovative startups like Raise.me, early expansion plans are crucial to capitalizing on emerging markets. It can certainly give them an early mover's advantage over firms like Rocket Internet, whose business model is identifying successful US internet ventures and replicating them internationally.
Gathering local insight is the first step to entering a new geographical market. The best way to do that is by engaging local, on-ground resources who can provide valuable intel on how the market works. A good starting point for this would be to look at geographically dispersing the team to look out for the best talent available across the world. With the technology and infrastructure in place, startups can manage remote team settings and get the best value out of them. This approach also helps startups fight the serious talent gap that exists in the industry for high-quality resources. At the same time, a geographically diverse team can bring a global viewpoint into the startup culture at a very early stage, building a vision for the ultimate goal - to scale globally.
The recent case of Uber clearly suggests that startups are failing to adapt to challenges that developing markets offer when looking to scale in high growth alternative markets. A lot of this comes down to the lack of local knowledge. If a startup is out there to disrupt an industry, it is inevitable that at some point they will have to cross borders and seek traction in global markets. With a global point of view on the ideas table, the startup can include geographically diverse feedback while their business model is evolving at the early stages. They can start scaling the business globally through trusted team members in different geographical locations where they can build teams around those initial employees that will offer them all the local knowledge needed to adapt a business model locally. This ultimately helps the startup save opportunity cost of entering late, and avoiding the need for value acquisition as the only way to create market space for a business model which they introduced to the world in the first place.
Startup founders must move out of their comfort zones and embrace global diversity as a scaling requirement. This will help them envision how their business will scale globally, and manage a global brand localized to meet all kinds of geographical market needs.