Understanding the US Market

Jorge Zavala

CEO

TechBA – Silicon Valley

September 2008

Agenda

I. The Silicon Valley – Environment & Ecosystem

II. Expanding into US – Common Mistakes

III. The Effective Process

I. The Silicon Valley

Facts about Silicon Valley

2.4 M population 40% of population is foreign born 40% with least a bachelor’s degree 23% speak Spanish Maintains 35% of the U.S.’s entire venture

capital resources. 11% of all U.S. patents generated here

San Jose Fact Sheet

Largest city in the 9 county Bay Area 3rd largest city in California 10th largest city in U.S. Population: more than 1M Around 7,000 high-tech companies

Silicon Valley = Innovation Environment• Rewards risk and accepts failure• Results-oriented• Smart and creative workforce• Industry clusters• Intellectual capital abounds with universities and

national research institutions• Collaboration between government, private industry,

development community and academia

II. US Expansion Process: Common Mistakes

Common New Market Expansion Issues Company establishes operations in a new market

only to pull out less than 1 year later Company does not meet sales goals Staff does not assimilate into the local

business culture Marketing message is not right or not tailored to the

local market Selling on the basis of “we are low-priced” rather

than “we deliver good value.”

How Does This Occur?

Lack of preparation Little market development or research Minimal company-wide planning or goal-setting No company market entry team created

Lack of consideration for differences in culture, communication patterns and buying habits

Underestimating market complexity Underestimating the competitors

U.S. Business Culture

Business and legal structures are rigid. Deal terms and pricing take priority over

personal relationships, most times. In general, U.S. buyers:

respect achievement, success, wealth respect punctuality and accuracy respect adherence to instructions are very competitive have very short attention spans

Common Sales Mistakes

Not understanding the market

Unclear value proposition / message

Lack of a sales process

Ineffective hiring of sales representatives

Not selling value to the prospective customers

Effective Preparation for Growth Conduct market research

Validate your message and refine the value proposition Make changes to your product or service Create marketing materials or modify existing ones Obtain government approvals, permits Protect the intellectual property Hire consultants, advisors or employees Establish a viable customer support strategy

Create a Market Entry Success Team Who participates in this team and why?

Representatives from every functional group in your company

Sales, marketing, engineering, support, finance, operations, legal, services, strategic alliances, business development, and perhaps more….

Plan Accordingly

Staffing Capital investment Realistic sales goals Realistic timelines Reassess every 90 days

Never Underestimate…

Cultural differences Language differences How relationships develop Business style differences Negotiation style differences Sales cycle vs. the buying cycle Complexity of the market Competitors

III. The Effective Process: How to get inside Silicon Valley

The Effective Process

1. Find the “best” product or service 2. Analyze your market 3. Define a clear marketing strategy 4. Get a proof of concept and sales strategy 5. Tune your company to scale 6. Get the the right team to execute 7. Establish a Clear Legal structure 8. Set high entry barriers (IP protection) 9. Have a clear future path (permanent innovation)

1.The Product or Service Solves a big problem (Fills a gap)

Must have vs. Good to have vs Nice to Have Has a large and growing market Sustainable competitive advantages Scalable High entry barriers

Complex technology Intellectual property protection

2. The Market

Find out Size of the market , and how it is growing : (trends)

according with known analysts. Identify segments Who are the main players: competitors, distributors,

influencers per segment Client’s key decision factors per segment Your competitive advantage

3.Go to Market Strategy : Segments ( verticals?) Pain ?: different for different segments Decision maker ? Key decision factors? Biz Model: For example:

Rent or sale ? Price (not based only on cost) VALUE Channels (Distributors, internet?) Marketing Materials and Public Relations

4. Sales strategy Find out where to find your clients (events) Where to find your partners/channels How to open the door (communications) Get your beta clients Get your first paying clients in the segment you are

focusing on ( references) Plan your expansion ( Channels? Partners? Sales

people?)

5.Scalable OperationsPlan how to SCALE your business (productivity per

employee) Lead generation and follow up ( website) Channel support and training( Webex, Interwise) Local and remote client /partner support

( e-learning) Pre-sales Post- sales

Sales ( Internet? Amazon)

Value of the Knowledge (Wealth per capita – from $1M to $22M)

SV Corporations – market value vs. number of employees Cisco (1984) - US$147B – 50K employees - $3M/employee Google (1999) - US$130 B – 5.7K employees

$22M/employee Intel (1968) - US$118 B – 102K employees

$1.2M/empoyee

6.The TEAM Local CEO ( serial entrepreneur) Business Development / Marketing & Sales

VP with strong Knowledge of the market The CTO The Lawyer Strong Board of Advisors Strong Board of Directors

7. Legal structure in the US

Subsidiary, independent or head quarter? C -Corporation or LLC Where ? Delaware- California – Florida? Agreements ( employees , client licenses ,

distributors, contractors) Stock options plan

8. Protect your Intellectual Property Patents in the US( protect the idea )

Provisional patents Copyrights ( protect the form- software) Trade Marks, logos etc( registration) Trade secrets ( coca-cola) restricted areas Non Disclosure Agreements (NDA)

9. Clear future path

Product Road Map (innovation) Sales and revenue forecast (3-5 years) Operational needs Financial needs

Bootstrapping or Investors? Financial exit

Acquisition – Potential buyers IPO

The Effective Process ( Summary)

Unique product for a big, growing market Clear marketing and sales scalable strategy

that lets you penetrate the market in a short time frame

Clear future path (permanent innovation) The right team to execute Clear financial projections & needs

Thanks!

Q & A