Rocket GTM 🚀 - The double edged sword ⚔️

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(Estimated read time: 2-4 minutes)

The Double Edged Sword ⚔️

Leverage

The last four years have been a rollercoaster of learnings for me at Spendesk. One lesson I've learned the hard way is that leading a global expansion with a well resourced HQ is both a blessing and a curse.

Yes, you can leverage a lot resources. But leverage is a double edged sword.

At Spendesk, we recently raised $120M in our Series C. That's a lot of cash. We also now have over 300 employees. That's 15x more than when I started four years ago.

With all that money, and all those resources the US expansion team has access to resources that many would envy. In fact, this was one of our key selling propositions when hiring new employees

"The US expansion team is like a startup within a startup. You get all the growth, learning, and upward mobility of a seed stage company but with the resources and clout of a Series C scale-up. More fun, lower risk."

This is true.

But this leverage comes at a price.

The Double Edged Sword of Leverage

Just like trading on leverage, your profits are amplified but so are your losses.

You may have a fifteen person marketing team, a war chest of cash, and a pretty robust product. But a new market means new beginnings and a lot of the work you'll need to start from scratch.

At this point depending on HQ for resources can become your downfall.

Leveraging your marketing team will depend on their priorities. What product gets built will depend on your core market's business goals. How much help you get from your teams back home will depends on their spare capacity and bandwidth.

Sure, you may have an outsized impact when you work together, but when your objectives don't align your progress can grind to a halt.

This is what I call 'The Dependency Problem'.

When we first launched in the US we we didn't have a local product team.

"No problem!" We said.

We had a huge product team back home that were killing it in Europe. They allocated 5% of their bandwidth to US projects and allowed us to build a fully adapted MVP (minimum viable product).

Leveraging our product team came in super handy. When they worked on features that were important to our core markets they shipped high quality product quickly. We benefited greatly from this in the US. This is the positive side of leverage.

But when our goals were not aligned, when our core markets shipped features we didn't need in the US, product development drove to a halt. This is the downside of leverage.

Dependency.

Solving 'The Dependency Problem'

To solve this problem we hired a product and engineering team purely dedicated to US projects. We became autonomous and agile overnight. Product was shipped quickly and we could iterate on customer feedback with lightening speed.

The cost of being highly autonomous is having a smaller impact. You have less resources to play with but you go fast. To get those highly leveraged outcomes you must give into dependency and leverage HQ. This can be slow and painful, but sometimes the outsized returns are worth it.

So how do you choose?

When should you be fully autonomous and when should you leverage existing resources?

"If you want to go fast, go alone. If you want to go far, go together."

For the most part Go-To-Market motions are about speed, not distance. You're looking for small, quick wins that compound over time. Therefore building a fully autonomous team is usually the best option.

However, you'll have a tough time getting the board's approval if you're still pre-product market fit. As the saying goes "you don't build a house on quicksand" and likewise you shouldn't over invest in a new market before validating product-market-fit (PMF).

"If you haven't validated product market fit in your new market you should optimize using existing resources instead of hiring locally"

What about if you've already got PMF? Should you go crazy and rebuild sales, marketing, product, and engineering locally? Probably not.

There are two factors that go in to deciding whether to hire locally versus leveraging existing teams:

1. How aligned are your current goals with HQ

2. Do you need small quick wins or are slow big wins ok

How aligned are your goals with HQ

When your goals perfectly align with those of your core markets then leverage is powerful. The problem is they rarely overlap, and when they do it probably won't last for long. When your goals don't overlap it's better to hire locally.

Let's say you are a German company with a German blog, and you're expanding to the US. Writing an English first blog is not going to be the top priority of your core market. Therefore hiring a local American blog writer would be a wise move.

Small quick wins versus slow big wins

When you need quick results you need autonomy. Quick results mean smaller sized however. You may be increasing traffic to your website, or building a new pitch deck. These items tend not to need the backing of HQ and can easily be done with the help of a local team.

But let's say you're eyeing up channel partnerships as a potential acquisition channel. You have a partnerships team back home who take care of this in your core markets. Should you hire a local partnerships person along with your new marketer? Probably not.

Channel partnerships are usually a scale play. They come later on. They're long and slow to build. Hiring a local partnerships person would have a small impact towards a long term goal. Far better to leverage your partnerships team back home by investing now for a future big win.

Wrapping it up 🌯

In the end choosing dependency versus autonomy is down to two things; the alignment with your core markets and your need for short term results.

When you have low alignment and a high need for quick wins, hire locally.

When you have high alignment and a low need for quick wins, leverage what you already have.