There is No Such Thing as ‘The US Market’.

OK I say it, you say it, everyone says ‘The US Market’, and this is obvious, but it still needs to be said.  The United States is not a market.

It’s hundreds or even thousands of markets. There are 50 separate countries – and even within those countries, there are huge regional differences.  Florida and the Florida Panhandle may as well be Mars and Venus. California has at least 5 regional markets, and don’t ever confuse ‘Upstate’ with New York City.  

So the first mistake to avoid is thinking about the US as a ‘market’.  In fact thinking of the US geographically is often a mistake (unless the business you are starting is local by definition, like say a cafe).  But if you are exporting a service or product to the US, it’s likely that your customers will be geographically dispersed – even industries that used to to be geographically centred (for instance the pharmaceutical industry was once primarily based on corporate campuses in New Jersey, close to NYC) are now spread around the US.  

Thinking geographically causes all sorts of headaches – for example: ‘we’re a tech company so we should set up shop in San Fran’ is probably the last thing entrepreneur X said before going bankrupt under the highest rent and salary bills in the US.  In fact, this law firm says it’s cheaper to fly a private jet of lawyers from Texas to San Francisco to work, rather than employ lawyers who live in the valley.  When the lawyers say it’s too expensive….well let’s not go there.  

Another common mistake of the geographically challenged is to set up their office where their first big customer is (there is a later article on the pitfalls of opportunistic moves like that).  A good example is putting your HQ in Bentonville, Arkansas. Bentonville is Walmart – and if you are selling to Walmart, you might want to have a small office space in town. But if you build out your ‘US HQ’ in Bentonville, you are signalling that Walmart is, and always will be, your only customer in the US.  Other retailers are unlikely to trust you. So let’s agree to separate strategy from geographic location (and I will address geographic location in another post).

So if the ‘US Market’ doesn’t exist – how should we think about selling our product in the US.

Start with the research.  I see Kiwi companies making terrible assumptions based on limited information because they haven’t invested the time and effort in research.  Look for real industry reports and talk to real customers. Don’t rely only on the ‘data aggregators’ who push thinly researched reports based on public information (and charge thousands).  Another option is to talk with NZTE who may be able to help commission a survey company to get some real data about the competitors.  

Get on the ground and go visit real companies who are potential customers.  You will need to invest money to get the data you need. That means a minimum of $5,000 – $15,000 for solid research if you are a small to midsize company, and up to 5 times that much if you are making a large investment (in the millions let’s say).  In addition, you need to budget for travel.  

It is difficult to get meetings at the VP level, particularly if they think that you are selling something.  You will have to go through a number of gatekeepers, however, I have found that most director and associate director level people will take a call to talk about the market.  They are also closer to the coal face and are therefore more useful. My first step is usually to research a company on LinkedIn to find the specific people in the organization who might help and send them a personal note.  Tradeshows are also useful from an information-gathering point of view (but often not from a selling point of view).  

You need good information, particularly about the competitors you are going to come up against.  Kiwi businesses are often poor at understanding the competition – you need to understand how big they are, how many employees they have, how much they charge and how customers perceive their strengths and weaknesses.  You need to understand their market strategy as well as they do. This is the level of data that most Kiwi companies don’t seem to get to, and as a result, they are really just winging it with shareholders money. If you are the board, you should make sure that you have the best possible data before you start discussing strategy.  We will talk about using this data as the basis for strategic analysis in a later article, but you need great data to be the platform for your strategic planning.  

With the benefit of good information, you will see quickly that the US is not a ‘market’ per se, and you will understand where the true opportunities are.

Bad data = bad strategy.