When To Open Your First Int’l Office? Maybe When You Have $1.5m in ARR There

Going global has always been a big part of SaaStr.  Pre-Covid at least, over 50% of the attendees to SaaStr Annual have been founders from outside the U.S. — coming to the U.S.  So much SaaS is now global, too.  25%-30% of the average public SaaS company’s revenues are outside of North America.

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But the world has changed.  Do you still need an international office?  Can’t we all sell over Zoom now?  And do offices themselves even make sense anymore?

My general rules for years in SaaS have been be thoughtful:

  • Opening an international office is distracting.  You have to talk about it.  A lot.  Hire someone.  Who do you hire?  Someone from here?  Or there?  A GM / jack-of-all trades?  Or a regional VP of Sales?  Or a customer success lead?  And it’s expensive.  You have to tour offices.  You have to go there.
  • You can service many international customers just fine without an office.  Inside sales works fine, if you adjust for time differences.  You can hire people here that speak French if you have to.  They can wake up early, or late, or whatever.  Yes, you can’t go there in person.  But a lot of times, that’s fine.  And support can work fine from any geo, too, if you do it well.
  • If you have a mini-brand, int’l customers will buy from you even without any local presence.  Buyers in the U.K., in Australia (key early local markets) are used to buying from U.S. vendors.  They’d rather buy the best solution for them rather than one that just happened to be built in Sydney.

So you can go quite far without ever opening an international office.

And yet.  And yet …

  • Bigger customers will buy a lot, lot, lot more if you visit them.  You know this.  It’s still true now.
  • It’s harder to really localize product marketing and even the product itself without local leaders.  Buyers are different in different geos.  Even if the core product is the same.
  • Customer success in bigger accounts really benefits from a local presence.  The bigger customers do want to connect with their local contacts.
  • A local team gets to know the local ecosystem much, much better.  The systems integrations.  The channel partners.  The integration partners.  It’s much easier to co-sell and co-market together when you and your partner are both local.
  • Referrals and second-order revenue works much better when you are present.  You can do better events.  You can do steak dinners.  You can do meet-ups.  If you don’t meet with people, they don’t refer you nearly so much.

I recently caught up with Anjali Sud, CEO of Vimeo, where 50% of their $350m+ in ARR is from international customers.  Her advice?  Even in an almost 100% distributed world, local offices are just as important as ever.  It’s just maybe, they can be a bit smaller.  Maybe support and more of inside sales can be done from the HQ.  But having a local GM in each core market, with at least a small team under team, remains critical to outperforming across the globe.

So when to go international?  My advice hasn’t changed much and it’s the same as Anjali’s.

Once you have even $1.5m ARR in a geographic area, if you can hire someone strong to be the GM of that geo, or a hands-on regional VP of Sales, make the hire.  The reason is, at $1.5m in ARR, let’s assume the next goal is $3m ARR from, say, “Europe”.  If you hire a local team, and you think they can get you to $4m in that time instead — then it’s totally worth it.  Spend that $1m delta, or at least part of it, to get there faster, bigger, and stronger.  It just compounds from there.  That small team will more than pay for itself over time.

It may be a bet.  You may not be sure.  Too early is tough.  If you do this at $250k in European revenues, it will be harder to see it as accretive.  Although it might be worth it even then, if you have higher-touch customers.  Just one great hire might get you another big deal or two.

Done right, if customer success, if upsells, if referrals matter to your business, and rough-and-tough, your deal sizes are big enough ($30k+) … I say at least go Euro, go Asia, go even Australia once you have $1.5m there.

Second-order magic will happen.

(note: an updated SaaStr Classic post)

Published on September 20, 2021

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