A lot of people in start-ups have different perspectives on what ‘global from day one’ means, and whether this is a good frame of mind to have. At Sprout we don’t think there is a hard and fast rule for this, however we absolutely believe in having a ‘global perspective’.
New Zealand is a tiny market, 4 Million people, no matter what your industry, it’s a small market place. Combined with this we are in the unfortunate position where a number of our key industries are dominated by either monopoly or duopoly environments. These environments result in lazy competitive environments where organisations aren’t pressured to deliver innovation in any area from product development to customer service. For a start-up trying to sell a new product this makes it incredibly difficult to get quick penetration.
Contrast our environment with Asia, North America and Europe, these are big markets, hundreds of millions of people, characterised by highly competitive business environments, which generate a much quicker uptake of innovation and need for change. Kiwi start-ups must be aware of this environment and if they want to operate in it, they need to start behaving globally...now.
The key things start-ups need to be aware of when they're kicking off are:
General market sizes in different regions
- Example: In New Zealand, the Almond growing industry is tiny, almost non- existent. In California it’s a $3Billion industry. If you're developing something for the Almond industry, it’s important you take that into account; don’t get disheartened that there aren’t enough customers in New Zealand.
The value of a customer’s business in different regions
- Example: Honey is an example of a product that has many different variations and therefore many different market prices for apiary managers/bee keepers. As an example, in New Zealand, Manuka honey is fetching up to $85.00 per kg for bee keepers (MPI Apairy Management Report, 2014). The USDA Honey report published on Oct 21, 2015 stated the average honey prices paid to bee keepers was between $5.00 - $7.40 NZD per kg. For bee keepers in New Zealand, their ability to pay for new technology to support their businesses is much higher, however to export the same value proposition and product to the US bee keepers require most probably a different product configuration. As a start-up is building it's first product it is important to understand this so it can make good decisions early.
Competitors in NZ are a drop in the bucket to what you'll compete with in the global marketplace
- New Zealand’s isolation from the world, and small population base means it is normally the last region on the radar of global companies to sell their products into. More so, global companies are not very inclined to configure their products specifically for the New Zealand market. Put into the context of dairy farming, New Zealand has around 11,000 dairy farms, the US has an estimated 51,000 farms and Europe has almost 500,000 farms. While these farms are very different to New Zealand’s style of farming, for those companies producing products for the dairy sector, New Zealand doesn’t represent a significant market opportunity so we are not a priority for market entry. For start-ups, there is a need to make sure awareness of competition overseas is something they build early, because once you cross the Pacific or even Tasman, you are playing a very different game.
By no means is this list exhaustive, but hopefully it gives people some insights into more specifics about being ‘global from day one’ and what it means in practice. A simple step to get started down the path of thinking like this is identifying some news sites, online community groups or LinkedIn groups that represent a global view. A couple of examples we follow at Sprout are: