Go­ing global

Idealog - - CONTENT -

We are a New Zealand-based tech­nol­ogy com­pany and make soft­ware for the cloud. We are grow­ing into the USA as a mar­ket, both for cus­tomers and for po­ten­tial in­vestors. When I travel there, I am in two minds about whether I tell peo­ple I am from ‘Noo Zilund’, or just pre­tend to be from Amer­ica. What are your thoughts? Shy Kiwi

Dear Shy

Per­son­ally, I have a strong opin­ion here, but be­fore I share it, let’s look at the three pos­si­ble sce­nar­ios at play.

Firstly, it might be a dis­ad­van­tage, be­ing seen as a New Zealand com­pany. Peo­ple may not know any­thing about New Zealand, they may find you ‘cutesy’, they may even strug­gle to be­lieve that the land of the Hob­bits could be a place tech­nol­ogy orig­i­nates from. That’s the worst case.

Or, it might not make any dif­fer­ence at all. It may be largely ir­rel­e­vant and you’ll be judged on the qual­ity of your idea, in the coun­try that es­pouses a be­lief that assess­ment will be based on the ‘con­tent of your char­ac­ter’. So be­ing from New Zealand, or Tim­buktu, won’t make any dif­fer­ence if you have a shit-hot, or even just a shit, idea.

Or, it might be a bonus; an ex­tra sell­ing point. Your cus­tomers might see you as unique, dif­fer­ent, spe­cial. They may as­so­ci­ate New Zealand with pos­i­tive at­tributes and be see­ing the same press cov­er­age I am that shows we are a grow­ing orig­i­na­tor of high tech­nol­ogy, with plenty of ex­am­ples of suc­cess­ful New Zealand com­pa­nies to point to that cre­ate a body of ev­i­dence.

I’m firmly in the camp that be­ing from New Zealand can and should be an ad­van­tage AND the more com­pa­nies em­brace that, the bet­ter for ev­ery­one. A col­lec­tive story, well told, with good ev­i­dence and con­sis­tent themes, helps ev­ery­one’s sto­ry­telling. Sure, per­haps 20 years ago, it may have been a strug­gle try­ing to con­vince US (or any for­eign) in­vestor or cus­tomer that it’s cred­i­ble to be a tech­nol­ogy firm from New Zealand, but that is no longer the case. At worst, be­ing from New Zealand may be ir­rel­e­vant, but I firmly be­lieve the worst case is a myth, and I think the best case is more com­mon.

This doesn’t mean be­ing naive and ex­pect­ing your cus­tomers to do all the work though. Be smart. Get a good do­main name, a lo­cal ad­dress or phone num­ber, per­haps in time a lo­cal pres­ence. But this is to en­sure good cus­tomer ser­vice, not to hide your ori­gins.

And don’t be­lieve just me. In my re­cent re­search for up­com­ing book No.8 Recharged: 202 sto­ries of New Zealand tech­nol­ogy suc­cess, our com­pa­nies were see­ing it the same way. Tell your story proudly, walk in the foot­steps of the pi­o­neers who have gone be­fore and lever­age the as­sets and work of the New Zealand Story group to help you tell that story widely. I have a new tech prod­uct idea. I can’t tell you what it is, but I worry it’s too spe­cialised. I know a lot about a small area, and my prod­uct is go­ing to au­to­mate through SAAS in a very niche in­dus­try. Com­ing from New Zealand, is that a mis­take? Niche Ni­cola

Dear Niche

Another area I have a strong opin­ion on! Again, through the work of re­search­ing my new book, but also built on the ex­pe­ri­ences of the team at New Zealand Trade and En­ter­prise, I can tell you that not only is pick­ing a niche a good move, it is prob­a­bly the best move.

Com­ing from a small coun­try with a tiny do­mes­tic mar­ket, be­ing a gen­er­al­ist is a nat­u­ral po­si­tion for many busi­ness own­ers. From a skills and cus­tomer per­spec­tive, be­ing able to do any­thing for any­one is seen as a good thing for start­ing a small busi­ness. But scale that up, go in­ter­na­tional, even just to another close mar­ket like Aus­tralia, and you soon hit scal­ing is­sues. It’s not pos­si­ble to adopt the same ‘we can do ev­ery­thing’ at­ti­tude when you are stretched thinly, and you get squeezed on skills, price, ser­vice, prod­uct fit …

From look­ing at the busi­nesses grow­ing in­ter­na­tion­ally, the suc­cess­ful for­mula is to hunt out niches that are poorly served by other larger com­peti­tors. Even mi­cro-niches can have plenty of op­por­tu­nity if you think of the world as a po­ten­tial mar­ket. In­deed, with our small-scale com­pa­nies, fo­cus­ing on niches is re­ally the only scal­able model for growth.

How­ever, there are corol­lar­ies to this – and one has al­ready been al­luded to. You will need a big enough mar­ket to serve to get the rev­enue num­bers you can live on. Hav­ing a niche SAAS busi­ness help­ing pet groomers au­to­mate dog hair­cuts is great, but if you only fo­cus on one mar­ket, there are only so many doggy day car­ers who can be cus­tomers. So, you have to think niche (in terms of the prod­uct), but po­ten­tially global (in terms of the mar­ket).

This im­plies a few more con­sid­er­a­tions. You bet­ter have a prod­uct that can scale glob­ally with­out too much ex­tra ef­fort. Lan­guage, cur­rency, ser­vice, in­stal­la­tion – all these is­sues need to be well thought through in ad­vance. No point hav­ing a dog groom­ing SAAS prod­uct if it re­lies on you vis­it­ing ev­ery cus­tomer.

Be­ing in a niche means you have to be price-aware, but don't have to com­pete on price. That’s one of the ma­jor ad­van­tages of a niche-ori­ented busi­ness model, ver­sus a scaled-out gen­er­al­ist ap­proach. We don’t have the depth of re­sources to com­pete on price, to of­fer dis­counts willy-nilly, to adopt a ‘cost plus’ price model. You need to be able to price based on the value your cus­tomer gets – and ide­ally, with a well-cho­sen niche, that price will be a premium one.

So you also bet­ter have a re­ally good prod­uct – at least as good as any com­peti­tor, and with the fea­tures and ex­tras your cus­tomers want and need. That re­quires you to know your cus­tomers, and their unique sit­u­a­tions in­ti­mately. If you do, you have a strong com­pet­i­tive ad­van­tage. As I have writ­ten be­fore, the tools and tech­niques of a de­sign-led ap­proach help here.

It’s not easy, but the com­pa­nies who have done it be­fore show us that this nicheo­ri­ented busi­ness model can be a recipe for suc­cess. All strength to your arm.

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