In 2008, the global financial crisis reprimanded the growth break of millions of businesses and I was moving to London. Five years ago, I sent to Dublin from Mountain View headquarters to manage Google’s European expansion, and despite our incredible growth, the macroeconomic situation put us in an immediate defensive stance and managed to bring back our ambitious plans.
Almost a year ago, companies around the world were back in triage mode, facing the uncertainty of a global epidemic. Employees lay off, budgets cut, and growth opportunities lowered to the bottom of the priority list. However, as we enter the spring of 2021 the world is a dramatically different place. Tech stocks are stronger than ever in record-setting IPOs, vaccines are here, and revenue growth is again the first priority for B2B SAS startups. There are ultimately three ways to drive growth in technology startups: expand your product offerings, move to new segments or expand into new markets.
Developing new products or circulating new segments may seem like a more comfortable path but scaling high-performing businesses in new markets represents a huge financial side upside, especially when performing well. Look at some of the Sauce businesses with top performances over the past few years – 31% of Zoom’s revenue comes from outside the U.S., 38% of Slack’s international revenue, 39% of seats and 48% for Dropbox. If your organization survived last year, now is the time to shift from defense to crime and prioritize international expansion. At $27.5 trillion, EMEA represents 38% of the world’s GDP and is the largest addressable market outside the United States.
Europe is the world’s second-largest B2B software market, and it has the preferred location for more than two decades when U.S. companies look beyond their own borders. Through the democratization of software distribution, it is now common for companies to discover 10% -12% of their business from Europe. By IPO, however, these same firms average 30% of their earnings from Europe. What changes and how do you capitalize on this huge growth opportunity in an expensive way?
Despite last year’s long-term challenges, high-performing firms are investing today and prioritizing European expansion. For example, Figma, one of the most attractive companies of the past several years, announced its new EMEA headquarters in September. * Clearbanc has flown to Europe in Q4 and will invest £500 million in US startups over the next year. The CEO of almost all growth stages has decided to suspend international expansion plans for the past 12 months and many had an effective strategy of “testing from afar” – but this is only a temporary solution.
The best CEOs are globally ambitious, and they know that unlocking Europe’s growing potential remains an important step on the path to IPO. Even after focusing on surviving for a few months, finding the right time to invest in growth is not always easy. However, it is easy to identify key indicators accurately extend the time in Europe. First, your customer and revenue growth has been stabilizing and accelerating again.