Best Practices for International

Expansion

Andy McLoughlinCo-founder, Huddle

@bandrew

Stuff we’re going to cover

Part I Some background

Part II London, SF <> SF, London

Part III Going east

Part IV Stuff you need to know and do

Part V Questions

Part ISome background (or who am I and why am I here)

About me

Co-founder and EVP Strategy at Huddle

Frustrated designer and economist

Based in London for 8 years

Living in San Francisco for the last 18 months

Love start-ups, technology, great food, trying to fence, trying to ski, outdoor alcohol consumption

I founded a business called Huddle. We make collaborative tools for the enterprise. We have 75

people across London and San Francisco. I’ve made virtually every mistake possible as we’ve

grown.

Our timeline

November 2006 – Founded business in London, based out of my bedroom

April 2007 – Huddle launched, move into first office

November 2007 – Raised $4M Series A. Hire like crazy.

December 2007 – First business trip to the US.

July 2008 – Move into new office. Approx 20 people.

March 2010 – Raise $10M Series B. Start thinking about US expansion. Hire like crazy again.

May 2010 – Announce Series B. Have a big party. Dance a lot. Realise I have to re-locate. Panic.

Part IILondon, SF <> SF, London

After the music stops, the work starts…

US incorporation

Decisions on location

Decisions on relocation and acquire visas for UK team

Find offices

Start hiring

All whilst keeping the UK business rolling…

(re)location, location

Do Sand Hill Road investors want the entire company to re-locate to the west coast? Is this feasible?

If not, what’ s the minimum they’re looking for in terms of management cover for a remote team?

Case Study - Zendesk

Who should you send?

But, wait, why San Francisco?

A word (or two) on US visas

Company Submits Petition

Application

[day 0]

Petition Approved[day 45]

Submit Visa

Application Online [day 46]

Embassy Interview[day 50]

Passport Returned [day 55]

Submit application and begin ‘business

trip’ to US [day 0]

Begin hassling attorneys [day 45]

Lose temper and cancel 1st

application [day 50]

Re-apply, paying for speedy

processing [day 51]

Learn colleague’s application

approved. Have tantrum. [day 52]

Application returned with

Request for Extra Information

[day 66]

Submit Extra Information [day

75]

3 month visa expires, leave US quickly [day 89]

Application approved [day

102]

Part IIIGoing East

No, not to Brooklyn

Europe!

Why look to Europe?

Talent (an alternative to $100k developers!)

Huge addressable population

Major cities home to key industries

Many growth economies in Eastern Europe

The fine foods, culture, architecture and impressionable members of the opposite sex

But Europe is a big, fragmented place. Where to start?

Paris

Copenhagen, Helsinki, Stockholm

Dublin

Berlin

Deep dive on London

Warning – this section contains stats and lots of text.

Why London? A confluence of industries and nationalities

Finance

Legal

Advertising Media

Fashion

(OK, and I’m a little biased)

http://borg12345.deviantart.com/art/Language-Barriers-184440424?q=gallery%3Aborg12345%2F24658983&qo=1

Mandatory InfographicThe UK has Europe’s strongest inward investment track-record for EHQs. More overseas companies set up

their EHQs in the UK than any other country – the UK is home to over half of all EHQs.

Location of European Headquarters Projects, 1998-2008

Setting up shop2 real options; subsidiary or branch.

Subsidiary is a separate legal entity from the parent company, usually with limited liability. Capital requirement can be extremely low, and there are no requirements for the board to include directors who are UK-resident or UK nationals.

Branch (aka Establishment or Place of Business) is owned and controlled by the US parent company and has a presence in the UK. It is legally the same entity as the ‘parent’ company whereas all profits/losses of the UK branch are incorporated with the overseas parent.

Use an international law firm to do the work. You should be up and running in less than 2 weeks.

Chris GrewPartner, Emerging Companies

Orrick London

cgrew@orrick.com www.orrick.com

Employing in the UKThere is no employment at will, but UK labor law environment remains flexible, protecting both the employer and employee.

Either party can terminate with 1 week’s notice during initial 3 month probationary period.

Thereafter 1 month’s notice is required and 3 month’s notice may be asked of key hires.

UK employees accrue additional rights after 12 months of employment, after which a simple procedure should be followed in order to terminate employees.

Compared to the European Union average of 40.4 hours, full-time employees in the UK work an average of 42.2 hours per week. Source: Eurostat, 2010

The UK has a far less restricted system than our EU neighbours thanks to a unique opt out from the EU Working Time Directive which enforces a maximum 35 hour working week in the rest of the EU. In the UK employees are allowed to work longer hours, with no restrictions on working hours, overtime and less public holidays. This means more productivity for your company. Source: Invest in the UK, 2010

International hiring 101

Hiring in the UK is broadly the same as hiring anywhere else.

Don’t hire people you might hate, make sure they can do the job, use your network, avoid recruiters wherever

possible etc.

(but if you do need a recruiter)

Dan Hyde of Erevena (based in London) has

helped us find several key people (CTO, VP Sales,

Marketing Director) over the last few years. www.erevena.com

Working in the UK (i)

FACT

It’s very naughty to come to the UK and work without a visa

Visiting the UK for business

US nationals can seek entry as a business visitor from an immigration officer at a UK port of arrival.

A business visitor can: Go to meetings and trade fairs, buy goods and negotiate contracts with UK businesses Go to conferences and seminars as a delegate Find out about, check the details of, or examine goods Undertake training, as long as it is classroom-based instruction or limited to observation only

Business visitors cannot: Take paid or unpaid work Produce goods or provide services in the UK Sell goods and services to members of the public

To qualify as a business visitor, an applicant needs to satisfy that he/she: Intends to transact business directly linked to his or her employment abroad Normally lives and works abroad and has no intention of transferring the base to the UK, even

temporarily Receives a salary from abroad (but may get reasonable expenses to cover travel and

subsistence during the visit)

Working in the UK (ii)

If you intend to spend long periods of time working in the UK you’ll need a visa.

I have literally no idea how the UK visa system works but if it’s even half as painful as the US system then use a specialist immigration attorney in the UK to assist you with your application.

UK banking for your business

Great things about SVB

Set up the account from the US

They’re well connected to the Tech City people

Shai Goldman is on the ground in NY

Bad things about SVB

Their banking interface was created by Satan himself

Also consider HSBC (for both business and personal banking) as hundreds of branches in UK.

START UPS

FINANCE

MEDIA

The Geography

Office Options

Co-working spaces such as Techhub, The Trampery, White Bear Yard

Flexible office spaces with The Workspace Group, Regus

Ask people you know if they have spare desks – even big companies start this way.

Other things to be aware of

Budget 1/3 of salary for additional taxes and national insurance.

You don’t need to worry about healthcare – this is wrapped up in the national insurance cost. This is generally the case in most of Europe.

By law, a pension scheme (i.e. 401k) must be offered but the company doesn’t need to pay into it.

Generally, people are less motivated by stock and more motivated by salary. Why? London is an expensive city to live in and there isn’t the same heritage of big technology successes are there is in the US.

London Meetups

There are hundredsof meetups every week in London for people working in tech and media, or interested in entrepreneurship.

The best are DrinkTank, Minibar, YC Hacker Meetup, Silicon Drinkabout

Useful conversation topics when talking with Londoners

“What about this weather we’re having?”

“How was your commute in today?”

“What about this weather we’re having?”

“Fancy a pint?”

“Looking forward to the Olympics? No, me neither.”

“Yeah, I totally preferred Shoreditch before the suits moved in.”

Part IVStuff you need to know and do as you grow

What / who to move abroad?

What’s the purpose of the new office? Sales? Engineering? Customer service? A mish-mash of all of them probably won’t work well.

Do you have a senior member of the team (a founder, ideally) who can form the nucleus of the new office?

Dealing with the divideDistance breeds mistrust; if you can’t see what someone is doing you’re probably going to assume they’re doing nothing!

Everyone hates process (documenting stuff, filling in forms, regular meetings) but without some process everything will begin to fall apart. Define a simple process for stuff and try to stick to it.

Reply to email from the other office as priority

Over-communicate, over-communicate, over-communicate!Internal email newsletter

Always available by IM – try to cut down on email traffic

Policy for cascading information down

Make the distance as small as possibleRegular company all-hands video conference

New joiners introduced weekly by video

Internal Facebook group for gossip, sharing fun stuff

US team flown over to UK for induction and Christmas party

Finding a team structure that works

As you grow, reporting lines become important (especially so as you grow internationally)

Don’t hire and just hope for the best - ‘water finds its own level and staff will work out seniority’ doesn’t work.

It’s likely staff will report into someone in another office

Appoint a GM in each remote office for day-to-day management

Look at implementing OKR (objectives and key results) for a lightweight way to keep people focussed

Changing your working day

I start in the office at 8am, although I first read email in bed at 7am

The London team work later, and often take calls from home at 9pm (after the kids have gone to bed)

8am – 11am is reserved for communicating with London

Put regular catch-ups with your team on calendar and stick to them. Non-attendance punishable!

Skype is your friend – make sure everyone has it open and a web cam installed

Maintaining company culture

Useful Online Tools

Rypple – staff management and reward

Yammer – micro blogging and communications platform

Shoeboxed – expense reporting

Tripit – travel management

Notable – product / design review

GoToMeeting – the most reliable tool for conferencing we’ve found

Teamly – action and performance management

Pipedrive – lightweight CRM that doesn’t suck

Spotify – create a shared playlist all offices can collaborate on and listen to

Knowing what you now know

Ask yourself: do you actually need an international presence? Could it all be

done from the US?

Doing it properly (i.e. incorporating a company, associated legal fees, renting an office, hiring staff, visas for key US

people, relocation costs) is likely to cost at least $100,000.

Doing it cheaply (regular travel, sofa surfing, desk squatting) could cost as little as $5,000 per year.

However, the distance doesn’t necessarily have to be a bad

thing….

My co-founder

Thank you!(Part V – Questions)

Thanks to Mike Butcher (TechCrunch), Chris Grew (Orrick) and Helen Moore (UKTI) for their input.