Why USA?
The United States is the world’s largest economy, and it accounts for nearly 25% of global economic output. For most B2B technology firms, the USA represents more than 50% of the business potential. In addition, it represents access to a large market, AND access to growth capital, AND dynamic M&A opportunity, so all this makes the USA a very obvious and must-have part of the growth strategy for all B2B technology companies with global demand.
There are many who are predicting (2023) USA’s decline. Ah, do not believe any of that. Let’s take the US dollar. Some argue that foreign central banks are losing interest in the dollar. The stats that are referred to is that the dollar has fallen from 70% share of the world’s currency reserves to 60% in the past 20 years. In the big picture, it does not matter. EUR is still at 20% and China’s Yuan? Its share has dropped to its 16-year low, 2.6%. What about the inflation rates in 2023? USA 3.2%, Sweden 9.3%. What about venture funding? USA $245 billion, which equals the rest of the world combined. So, really, no worries, USA is doing just fine.
Can you build a $100 million B2B technology company without entering the USA? Of course, it is possible. But the probability of success, in maximizing your business potential is higher in the USA than anywhere else – simply because that is where most of the B2B customers are, even globally speaking. For a competitive B2B technology solution, USA presents a homogeneous market where any new industry best-practice is adopted rapidly nationwide.
Another factor making US market entry an attractive option is that U.S. business culture and language is often already familiar to the average European business professional. Management’s learning curve in building successful strategy is therefore relatively short compared to many European or Asian countries, where the cultural and language barriers (20+ languages in Europe, 50+ in Asia) may introduce friction to the market entry, making it slower and far more expensive than in the USA.
Ideal profile for a fast scale-up in the USA?
When I see a foreign B2B technology company entering the United States, a Tolstoy quote comes to mind: “Happy families are all alike; every unhappy family is unhappy in its own way.” This could be turned into an observation about the US Market entry: “Successful companies look all alike; every unsuccessful company has failed in its own way.”
But so what is the optimal profile of a B2B company for the fastest scale in the USA? Here is one criteria. In short: B2B business models built around well-productized solutions, with modular components, and simple setup at the customer installation, become more repeatable (cookie-cutter at best), and are therefore the obvious winners for fast scaling. So, if it is repeatable and scalable, and you have evidence of adoption and growth, you may have a very good candidate for entering the US market. It also reduces your risk greatly, if your business has reached a product-market fit already in Europe before entering the USA. This typically means roughly $1 million annual revenue with healthy double-digit growth. There are exceptions, for example if the company has an innovation that is a patented high-impact technology break-through in its market sector, then even lower revenue can act as a validation for starting the expansion.
At the other extreme, business models that are delivering generic engineering services and project work, where every sales transaction is different, will typically struggle in the market entry. To enter USA with these business models will require boots on the ground from day one. It is not easy to build a large-scale engineering project business in the USA over Zoom. And those engineering and development services that CAN be scaled remotely, such as Software Development, have already become extremely competitive global markets, where the low cost & high-skilled engineering labor from India and China is often difficult to beat.
Takehill guidance – the fastest-to-scale company profile in USA:
a company with a repeatable product or solution, that has a clearly defined differentiation, quantifiable customer value (ROI), and already has a growing annual sales beyond $1 million.
