Going Global

Every man lives by exchanging.
— Adam Smith

A reality for most companies is the need to grow. We start offering a product or service in our home market and then eventually look to expand. We broaden our offering to tap new customer segments. Then we look to expand into new markets. The most prolific companies of the 20th century successfully expanded by building and maintaining operations abroad. They leveraged sophisticated delivery networks to move goods from one corner of the world to the other. However, much of what we know about our current economy going forward is that it will be digital. This presents new challenges for companies looking to deliver digital services abroad and the path to growth may look different

Cross-border bandwidth since 2005 grew 45 times. This chart predicts an additional 9x growth in the next five years.

This is not a surprise. We are communicating, transacting, and sharing data across borders more than ever. Since 80% of the purchasing power is outside of the U.S., it is highly unlikely this will slow down. The dynamics of the web and mobile ecosystem makes it very easy for customers to access. It's instantaneous and very cheap. It is exactly for this reason it's often difficult to stop a product's momentum. However, some countries have taken to policy to address the issue.

Netflix recently came under fire in Europe for not carrying enough local content. Each market is rightfully entitled to regulate industries, but this is such risk that digital companies need to overcome. It is likely this trend will only gain steam. Our challenge moving forward is in acquiring and retaining access to customers abroad. Big companies may take it upon themselves to address the issue, but it may be more advantageous for companies with limited resources to seek partnerships and work with the local markets.

Digital companies should leverage the knowledge they've built and provide this as a service to partners in new regions. It removes a lot of the dangers involved in marketing to a new crowd and avoids any legal issues. As with any new challenge, it's a great opportunity for new startups to tackle.

The theme we're likely to see in the next five years:

  • more attention focused towards global growth
  • increase access of new markets
  • on-boarding new markets to services provided by teams abroad
  • increase in non-typical multinationals

Massive potential for teams who can deliver:

  • easier access to local markets around the world
  • streamlined partnerships and M&As
  • increase share of resources and IP
  • easier and faster diligence in joint ventures
  • ease of access to resources protected by policy

As with new opportunities, the actual outcome may take a different form. Digital services will look to expand beyond their potential.