Mike Casey :: Random thoughts on Startups

All the guys involved in GradConnection have just finished a big two day work shop to define our strategy for the next financial year. To be honest it was great fun, having a good laugh, with a good bunch of mates. I have never associated business with pleasure nearly as much as I have over the last couple of days.

The big topic of discussion was around when we should look at expanding our technology beyond the current New Zealand and Australian markets that our company operates in. Something I never thought I would be doing a couple of years ago when I was still a graduate myself.

Essentially there is a big carrot. Overseas markets are larger and the budgets are bigger. Here are some key points we came up with

• Brand Penetration - look after the market you are in, they should always come first no matter what. Only expand when your brand is strong enough not to require a founder 100% of the time.
• Business Development, by team members that are not founders of the company only works well when your brand is known and established.
• Overseas markets are hard. Just because you are established in one market does not mean you have a greater chance of success in another market.
• Never use operational budget in one market for expansion into another.
• Companies that operate in different markets are much more valuable to investors and acquirers. This is because your model is proven to work with different establishments, cultures and currencies. It makes the potential for further expansion much more realistic.
• A sale in one market can directly lead to a sale in another market, especially when dealing in B2B sales with international organisations.

If you have ever read Crossing that Chasm you will know about early pragmatists vs conservatives. I would suggest that you would only want to look at overseas expansion once you are well etched into the conservative part of the market.

All in all I am incredibly fond of the market in Australia, and the people I have met during my time on GradConnection. These sorts of decisions are not all about money. They include lifestyle, friends, family and personal growth.

Today was a first for me, as we were contacted for the first time by a VC firm in California to talk about our company. It was a pretty interesting experience, and one that I am hoping we will get to repeat a few times this year. To summarise, they really liked what we were doing and where we are heading at GradConnection but it is still too early for them to invest in us.

What it did make me realise was 

• The VC market is huge, this VC fund had 800 million USD alone and there are hundreds of similar firms
• Private equity VCs are the best - not at mercy of interest rates
• Be responsible with your growth - don’t jump before you can swim

When it comes down to it, if you run your company well, people will want to invest. The point is that you must have a well defined strategy for this investment. It is easy to bleed money and when you are being offered lots of money it pays to have thought about how you are going to spend it.