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Founding a business is never easy. Navigating your way through the administrative and bureaucratic process can be cumbersome and daunting. There are common misconceptions and traps to be aware of when setting up a business in the United States of America. To avoid the pitfalls, expat NZ entrepreneu Graham Dockrill looks at six basic steps to help Kiwis found businesses in the US.


 
You can make it big in America, you can also fail big.  Based on my experiences, I’m going to share some valuable lessons when foreign founders embark on their USA adventure. It’s undeniable that foreign-born entrepreneurs have made and continue to make huge contributions to the US economy, building great companies such as Apple, Tesla and SpaceX that have enriched billions of lives (Steve Jobs was of Syrian decent, Elon Musk is from South Africa).

Research undertaken by the Wall Street Journal found that over 50 per cent of the highest valued start-ups in the US — 44 total valued at more than $1B — were created by immigrants. Acknowledging these contributions, the National Venture Capital Association is actively pushing for the smooth passage of the International Entrepreneur Rule, despite the Trump administration’s intention to scrap it.

The current political climate is uncertain. However, uncertainty is always a catalyst for opportunity and innovation.  As a foreign entrepreneur, I have taken considerable calculated risks in setting up and growing a business in the USA.  For any foreign entrepreneur, the stakes are high. Like me, they will risk everything to bring their businesses to the innovation capital of the world. They understand that to succeed in America represents the opportunity to make a bigger impact, and the impressive stats from the Wall Street Journal reinforce the desire to innovate and take risk.

Inherent in any business opportunity are not only hundreds of mission-critical decisions and responsibilities, but also risks, big and small, should the entrepreneur make the smallest misstep. Foreign-born entrepreneurs need to be prepared to seize the opportunity and avoid the pitfalls that have ensnared those preceding them.

My understanding of how to grow a business in the USA is through life experience. I have had as much failure as success. I have worked in Silicon Valley, visiting San Jose, Palo Alto and San Francisco for many years servicing clients remotely and undertaking some unique projects and initiatives.Underlying this real-life experience are academic learnings that are both pertinent and essential in understanding how the ‘system’ works.

While knowledge is power, so are connections, none more so that the ones you make at Ivy League schools in the USA.  I’ve been fortunate enough to attend the Anderson School of Management Global Access Programme (GAP) under Professor Bob Foster, and several Harvard Executive Education Programmes including Aligning Strategy and Sales and Launching New Ventures. All were lectured by world renowned professors and academics.Combining academic learnings with life experience is the key to success.

My company, Citrus Tree Consultants, helps businesses navigate the complex and literally foreign territory that is the USA. It is this territory that has provided me with a very personal perspective of how founders manage the transition. It’s not an easy process, with permutations of complexity and many underlying trends of what to do and what not to do.Below I offer some advice for foreign entrepreneurs wanting to enter the USA.

 

 

1. Don’t come to market without a long-term vision

The USA economy is massive. Their GDP was estimated at $18.46 trillion in 2016 –  the world’s largest.  If you’re aiming for the US market you need to step up to meet the competition and fight for every customer and project.

The number of unicorns is staggering – 98 companies valued at a combined $372 billion according to CB Insights. The terms ‘decacorn’ and ‘hectocorn’ are now used to describe companies worth more than $10 billion and $100 billion respectively. The sheer number of unicorns, the immense size of US funds, and the staggering sum of investments made ($58.5 billion in US venture capital funding in 2016) creates a perfect storm for international entrepreneurs who often come from smaller, local ecosystems.

It’s very easy to aim low and not aspire to achieving unicorn-like greatness. For New Zealand entrepreneurs it’s confrontational on several fronts.  Firstly, we’re understated and don’t like to talk a big game (even if we are thinking it). Secondly, we’re conscious of ‘tall poppy syndrome’ (a perceived tendency to discredit or disparage those who have achieved notable wealth or prominence in public life).  Thirdly, we’re conservative about failure and the stigma associated with it. This is in contrast to Silicon Valley where failure is a badge of honour before hitting the home run.

You need to leave the home town mind-set and ambitions behind. An entrepreneur’s definition of success should be shaped by the environment in which he or she plays in and in places like Silicon Valley that environment is fast-moving, disruptive, and the stakes are high. When foreign founders arrive in the US, they need to be ready to step up their game and face the competition for the long haul.
 

2. Be present

This is a very simple conversation: you need to be in market.  You need to be here.  All founders understand the need to expand to the US market but often don’t believe they need to be here physically. So they create a work-around system, faking the phone lines, having a ‘mailing’ address and not having a presence.

If it’s impossible for you to be located in the US full-time throughout the market validation phase you can hire someone to represent the company on behalf of the CEO. Having a person on the ground who usually bears the title Business Development, VP Partnerships, VP of Customer Success, or other vague combination works.  This is the strategy I use to great success. It’s an easy and inexpensive way to test your offering without a large financial commitment.

This should not be used as a long-term strategy however. I’ve seen this kind of set-up repeatedly (and disastrously) fail. If used for the long term, the business development lead is completely isolated from everyone else in the business. They’re given directions remotely and often end up having no insight into how or why decisions are made before meeting with customers, partners, or investors.

In contrast to this, my success with any company is establishing the ‘beachhead’ and once enough momentum has been generated, we bring in additional support. This is the case for the work we did with New Zealand success story HedgebookPro where the CEO relocated after the beachhead market had been established.

I sincerely believe the founder needs to be physically present in the US — that’s a deal breaker. With the trust of the company behind them, the founder is the only person who should take meetings, do product demos, talk to investors, and ultimately make decisions on the ground.
  

3. Focus on the market

All founders at early-stage start-ups are extremely product focused – often to their detriment (it can be a blessing and a curse!). Often the team is small and the lack of salespeople in the team leads to the ‘geek’ talking directly with customers (and sometimes a language barrier is at play). The focus then becomes making the product perfect.

Success in the US is driven by clear articulation of the problem being solved and for whom.  It’s not about the product, it’s about the solution, and the resulting financial gain that will come from it. That transition — from thinking about the product to thinking about the customer is difficult to do, but it’s crucial.


 

4. Beware of ‘fake news’

This is one of the hardest traps to detect. The entrepreneurial spirit is very much alive and well in the US. When foreign founders come to the States, they immediately buy into the positive encouragement and validation, and why wouldn’t you?  It’s so encouraging to hear such great encouragement and positive feedback. The reality is, this can often be ‘fake news’ which, as we know, the US has in abundance.

Often this comes from players in ecosystems indirectly involved in their domain, whether other start-ups, industry associations, and even accelerators and innovation labs sponsored by big brand-name companies. The people who have the biggest pain are the ones you need to talk to most. In the early stages, the real feedback is from customers and customers alone.
 

5. Nobody cares

I have had notable success in my home town and modest success in New Zealand – enough to secure an Entrepreneurial Green Card.  But the reality is, I’m not Elon Musk (although I do like space rockets and Teslas) and I’m not the next Michael Jordon (though I still cling to that dream – ‘Magic Dockrill’).

It’s somewhat disconcerting when a foreign-born entrepreneur walks into a meeting with either a potential investor or customer and boasts about the number of partnerships or customers they have back home. The reality is, no one in America cares what you did outside of America. Confidence, patience, and a certain degree of humility are key to establishing trust and long term relationships in the US. 
   

6. The red tape is four inches thick

The world is full of good idea, and the red tape to stifle it. It’s worth reiterating that just because a product worked in your home country doesn’t mean it can be reskinned and repeated in the States.

My advice is to initially stay clear of highly regulated US industries like banking and finance, healthcare and insurance. You need to do your homework on the types of certifications and compliance protocols needed at the local, state, and national level. Regardless of what you do, always go for the low hanging fruit, especially when undertaking market validation. 

 
You can make it big in America, you can also fail big. Based on my experiences, I’v shared some valuable lessons for foreign founders embarking on their USA adventure. It’s undeniable that foreign-born entrepreneurs have made and continue to make huge contributions to the US economy, building great companies such as Apple, Tesla and SpaceX that have enriched billions of lives (Steve Jobs was of Syrian decent, Elon Musk is from South Africa).

ON GOING GLOBAL

If you enjoyed this article, you’ll probably also like these others from Our Stories:

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Setting up a business in the UK can be complex and there are pitfalls that you need to be aware of.

Graham Dockrill advocates that procrastinating and going slow makes you more creative.

AUTHOR

GRAHAM DOCKRILL

Graham is an entrepreneur with over 20 years experience in the information technology sector and founder of several hi-tech start-ups. He is currently the President of Sales for Citrus Tree Consultants, a global business consultancy and President of Client Relations at WhosOnLocation, a visitor management software startup based in Wellington with global clients. Graham is also a strategy and client relationship advisor for many startups in New York and the United Kingdom.

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Part 12