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What to know about accelerating the growth of your Australian business in the U.S.

Stephen Minning with Stephen Robinson

Every year, KMPG and Advance take a handful of high-performing Australian start-ups on a tour of the United States, and this year Pam Wayfinding was lucky to be among the chosen few.

Six Australian start-ups were taken on a tour of Silicon Valley, Los Angeles and New York. For 10 days we pitched and re-pitched our ideas to some of America’s most successful (and intimidating) investors.

We took part in intense workshops, listened to seminars, networked ourselves silly, and met other Australians whose products have flourished in one of the world’s biggest markets.

Here’s what we learned about growing your market in America.

North America presents a huge opportunity – but it’s easy to stretch yourself too thin.

Pam Wayfinding is a cloud-based platform for managing signs to create smart environments that encourage exploration, beginning with university campuses.

While there are around 40 major universities in Australia, there are 130 in greater Los Angeles alone – and 4,000 across North America. Clearly, the US represents a huge opportunity for Australian companies like ours.

But size brings its own challenges, and we learned how easy it is to stretch your resources too thin. As tempting as it may be to target customers on all corners of the map, it’s better to focus on a smaller geographic area to begin with.

You’ll need boots on the ground.

As customers, Americans have high expectations – they want to know that you’re going to be there to support them. You’ve got to make it easy for them to do the deal: they’re simply not going to buy from someone on the other side of the world if they don’t believe they’re going to be supported. A face-to-face sales meeting is always going to be more effective than a Skype call. 

Investors in New York are nothing like those in San Francisco and different again to Los Angeles.

At Pam, we’ve spent lots of time understanding our product and audience, but less time understanding potential investors. During our tour of the US, it became apparent that if we hope to raise capital in Silicon Valley, our product should promise to change or improve the world, with less near-term focus on profit.

Investors in New York are a lot more pragmatic. They prioritise numbers and prefer to invest in post-seed funded businesses that are already turning a profit.

Whereas angel investors will invest in ideas they like the sound of and entrepreneurs they like the look of, as you climb up the VC ladder, investors are managing institutional money. These investors are going to run you through the wringer in terms of due diligence and the terms attached to their deals.

We realised how important it is to plan which investors to target at each stage of our journey. According to our mentors at elevate61, you’re unlikely to woo investors in different North American cities with the same pitch.

America is not Australia.

This may be stating the obvious but throughout the program the cultural, social, demographic and political differences between the two countries were highlighted.  The importance of being aware of the differences and the changes that are ongoing in the US was clear.

The health care system is a good example. Due to the cost of health care, most employees expect health cover in the US, which equates to around US$20,000 per family. Obamacare provides a degree of universal coverage, which has taken some pressure off start-up companies to fund their employee’s health insurance.  So, if the Trump administration overturns Obamacare, start-ups employing Americans will have to pay a lot more on health cover.

The whole legal system is different in America, and tax is a nightmare – sales tax can change from suburb to suburb in some states. You need good advice, but of course that’s true of anywhere you do business.

America is litigious, so make sure you’re covered.

You’re obviously going to need a higher level of cover in the United States, which is much more litigious than Australia.

Employment laws are also completely different – you can fire someone on the spot, but they’re more likely to sue.

American developers cost more.

The Australian government offers R&D grants that help subsidise the cost of hiring developers. For Pam, it means we’ll most likely employ sales and customer support teams in the US, but keep R&D in Australia, so we can make the most of export market development grants and R&D tax concessions.

One size doesn’t fit all.

We met lots of Australian start-ups operating in America and realised there’s not one model for expanding overseas. Some people we met have moved their entire operations to the States; others have just moved sales.

Don’t count on your Aussie charm.

Australians are the flavour of the month in Hollywood, but being Australian is irrelevant in the world of start-ups. Your product needs to be of international standard – full-stop. In the US (or Europe and Asia) the bar is much higher in terms of quality and the depth of competition.

Get better at bragging.

Australians don’t sell ourselves as well as Americans. We’re too laid-back, we don’t like telling people how good we are. But in America, it’s not seen as bragging. It’s seen as putting your credentials on the table. You’ve got to try and stand out and be more aggressive, or no one will notice you.

You need to see the wood for the trees.

It’s always good to step out of your environment so you can see the wood for the trees. Elevate61 is pitched as an opportunity to network with investors in North America and learn how to do business in the US. But a lot of what we learned applies equally in Australia. We came away with more questions than we went over with, but that’s always good thing.

We’ve only been home a few weeks but we’re already looking to open our first office in North America soon – it’s going to be a big year for Pam.

Stephen Minning is Founder and CEO of PAM WAYFINDING; Stephen Robinson is Pam’s Head of Corporate Development. An alliance between KPMG and Advance Australia, elevate61 is a unique program designed to enable high performing Australian businesses to fast track their growth into the United States and beyond. Based at WeWork in Martin Place, Sydney, Pam’s tour of the United States was generously sponsored by WeWork.


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