The global garage operation rev 4
Transcript of The global garage operation rev 4
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The Global Garage Operation
Arie Brish
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Edits for 2011
• Add 1-2 slides about advertisement, PR, journalism
• Social networking
• Cut down to 20-25 slides
• First steps overseas: Commute, part-time rep,….
• Globalization and eng/science/medical work
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AGENDA
• Why go global?• History• Why global small business?• Case study: Tehuti• Global Challenges• Additional challenges for a global small business
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Why Global?• Increase market potential
• Competitive strategy
• Leverage off-shore manufacturing know how
• Tap into foreign technology experts
• Access to resources
• Arbitrage opportunities
• Access to work force
• Global Customers
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History
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Europe’s Expansion to America
• 1003: First known European settlement by Leif Ericson.
• 1485: Portuguese king declined Columbus’ initiative.• 1486-1491: Columbus campaign with Spanish monarch.• 1492: First expedition. 3 ships. Returned with “samples”.• 1493: Second expedition. 17 ships.• 1493: Columbus granted governor of the new territories• 1500: Columbus stripped of governorship.• 1510: First permanent settlement.
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The Birth Place of Silicon Valley
1939 :Bill Hewlett and Dave Packard officially founded HP. First location a 12X18 ft garage at 369 Addison Ave, Palo Alto, CAInitial funding $538 in cash
Revenue at the end of 1939: $5369 .
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The Birth Place of Silicon Valley
2005 :369 Addison Ave became an official state landmark.
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1959 :HP Going Global
Marketing organization in Geneva Switzerland
Manufacturing facility in Boeblingen Germany
The trigger: European Common Market
Sales: $48M Employees: 2,378
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Made In JapanAkio Morita and Sony
Although our company was still small … it was a consensus … that a JapaneseCompany must export goods in order to survive.
In 1958, only 1% of Japanese homes had a TV, only 5% had a washing machine... ,
Our first transistor radio of 1955 was small and practical…. We were very proud of it.
I saw the United States as a natural market; business was booming, employmentWas high, …. , and international travel was becoming easier.
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Small Business Examples
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Technology Start Up
• Global customers
• Leverage off-shore manufacturing know how
• Tap into foreign technology experts
• Foreign employees
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Freescale’s 1’st 3G chip was designed by a global team in all these locations
ChicagoPhoenix Austin Ft Lauderdale
Toulouse
Tel Aviv
Bangalore
Sidney
Geneva
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Communication• Report on global events to local media.
• Report home events to foreign media.
• Different countries/cultures often require different communication strategy.
• Different countries have different channels and processes to approach media and get coverage.
• Different cultures respond to ads differently.
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Local Doctor Clinic
• Many foreign nationals patients
• Medical Tourism
• Foreign drug suppliers
• Outsource diagnostic tasks to off shore clinics
• Learn from off shore drug trials
• Foreign medical equipment suppliers
• Off shore insurance processing services
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Small Farmer in West Texas• Foreign farm equipment
• Energy cost depends on global events
• Oil revenue depends on global events
• Many wind energy companies are foreign based
• Global commodities markets
• Learn from like farmers in other countries
• Global events opportunities
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A Global Startup in the 21’s Century
2003 Investors: 1 U.S., 1 Italian, 2 Israeli Total 3 employees, all in Israel
A U.S. phone number that rang in Israel
2005 10 employees in Israel (50% Russian) 3 employees in the U.S. (33% Indians)
2 employees in Taiwan
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Customers Deployment by Geography
CISCODELLF5FOUNDRYFORCE10HPIBMINTELLAWRENCESUNNextIO
FUJITSU-SIEMENSNOKIA
FUJITSUNEC
SILICOMVOLTAIRE
ABITACCTONADVANTECHACERALPHA NETWORKSAOPENARIMAASUSDLINKGIGABYTEIWILL LANTECHMITACPORTWELLQUANTATATUNGTYANUSI
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Tehuti’s Global Network
Silicon Valley Chicago Raleigh Austin Houston
Paris
Tel Aviv
BangaloreTaipei
GenevaMilan
OsloAmsterdam
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Global Challenges
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Global Challenges• Cultural differences• Distance• Time zones• Language barriers• Different financial systems• Exchange rate risks• Operational infrastructure• Different labor environment• Different legal systems• Government regulations
A common way for a large corporation to deal with all of the above challenges is to open a local operation/office with local professional staff
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Additional Challenges to Small Businesses
• Cash flow-A multi $K international trip could be a significant expense for a small business
• Critical massA small business can not afford to hire people in each country it operates in
• BandwidthA small business owner does not have the time to deal with all the international issues by him/herself.
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Globalization Becomes Affordable
1980-1982 2004-2008U.S. Liason of an Israeli
Subsidiery CEO of a Global Startup
Cost of International Phone Call $7/min $0.03/min
Free if using VOIPCost of one hour International Phone Call $420 $1.80
Sending an immediate mail
Go through a centralized mail service. Expensive. Requires
management approval. Free email
Video Conference Call DID NOT EXIST Practically Free
overseas flight $2,000 $2,000
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Practical Tips
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How to Overcome Distance & Time Zone IssuesHow to “localize” Yourself in Each Region
• Visit the other region frequently (At least once/quarter)
• Participate in local networking groups and local events
• Network heavily in all regions
• Invest in local PRs
• Acquire a local phone number that will ring you anywhere in the world
• Keep a local office
• Respond to overseas messages promptly (within few business hours)
• Be virtually accessible during both time zones
• Respond to emails in weird hours
• Hire a local answering service
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a Day in the ofc for a U.S. Based CEO of a Global Start Up( and Have a Life)
04000500060007000800090010001100NOON130014001500160017001800190020002100
Israel & Europe
U.S. East Coast
Personal time
All U.S. Regions
Personal time
U.S West Coast
Personal time
Asia
Alternative:
Eur days: Start early - finish early
Asian Days: Start late - finish late
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How to Overcome Major Customers Resistance
Major customers are often hesitant to integrate a product coming from a start-up, let alone a foreign start up
• Customer does not want to depend its product on an un-proven technology.Answers: 1. Offer it first as an add-on option. 2. Apply it first to a lower priority product.
• Customer is afraid that the start-up will go under and leave them stuck with no supply.Answers: 1. Escrow the design with a reliable third party (IP lawyer) 2. Contract a second source for critical components.
3. Inventory.
• Major customers often insist to have local technical supportAnswers: 1. Initially have one of your technical experts commute to customer’s location. 2. Very quickly train a local technical support. 3. Translate documentation to customer’s language. 4. Have a home based engineer on call during most of biz hrs abroad
• Customer plain refuse to deal with a foreign start-up.Answers: 1. Sign up a home customer first that will serve as a value added channel 2. Hire a reputable 3’rd party generic manufacturer that will offer your product
3. Partner with customer’s subsidiary in your country first.
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Manufacturing and Logistics
• Prototypes are better off to be manufactured close to R&D.• Prefer use of short turn around manufacturing technologies for
quick fixes of design errors.• Limit the quantity produced in early batches.• Contingency plans for surprise upsides:
- Build some back up inventory of long lead components.- Build a backup batch half way.
• Perform due diligence before signing up a foreign production site.• Visit the manufacturing supplier in person before signing a
contract.• Do not pay the whole amount in advance.• Visit off shore production site frequently.• Have an off shore production agent for day to day supervision. • Consult with an off-shore attorney or respected business person.
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How to Start a Sales Channel
The Problem: Tier1 Channels are reluctant to serve start ups. Even if they do, they are often too expensive.
• “Compromise” on tier2 channel partners.• Value Added Channel partners.• Hire a local senior advisor.• Offer stock options.• Offer launch milestone bonuses on top of sales commission.• Offer higher commission in early years.• Offer a “tail” commission formula in case of disengagement
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Considerations in Setting Up Headquarters
• Target markets.
• Government incentive programs.
• Investors geographical preference.
• Tax considerations
• Workforce skill sets.
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Strategic Steps for Start-Up Globalization
• Acquire an investor from your strategic target region.
• Hire a strong part time senior executive to serve as the local senior face.
• Hire a global advisory board with senior people from your major strategic regions.
• Incorporate in the major countries you plan to operate in.
• Issue patents in all your regions.
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Questions?
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Thank You
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