I consider myself somewhat of an expert on the subject of moving a startup into Silicon Valley from a faraway land. I led three companies -- Waze, Intercast and Deltathree -- from Israel into the US. I can also say that I have made every mistake possible.
Splitting up a small company across thousands of miles and different time zone differences -- not to mention long flights -- might seem to be worst thing you can do. And it's true that it does add tremendous execution risks. But the only thing worse is not doing it. Between the execution risk (that is within your control) and the risk of not being there (which becomes out of your control), I choose the former. I want to choose the risk I take.
Since it is so challenging and dangerous, one should be very careful on how and when to execute the change and be very clear on the ‘why’ element. Here are a few poitns to consider.
1. If your core market is the US, it is critical to be there for product feedback. In general, except in a very few cases, the US market should be your first. If you are successful there you can be successful anywhere else. But success in another market is not a predictor of US success.
2. You will raise more money, at a better valuation, from better investors. Silicon Valley is a unique place. The odds of raising money from a Valley firm if you are based in a foreign country are very low. If you do raise while located abroad, you will be pushed to the ‘local’ partner and you lose the value of the US firm. In addition, the US valuations are higher and you will raise more money for less of the company.
3. Your media coverage will be greater in number and in influence. The tech press is mostly San Francisco-based and easy to approach more casually when you’re there. When you are at an early stage, an in-person meeting with the founder or chief executive -- and being infected with their excitement -- is the best way to get noticed. And that’s what your Bay area competitors are doing.
4. Your network, partnerships and contacts will accelerate dramatically. It’s hard to explain, but Silicon Valley is similar to Israel or Ireland in size, informality and interconnectedness. By living there you will meet many more experienced industry people who are happy to help introduce, connect and mentor. (Some of my best connections were parents of kids in my daughter’s class.)
5. The odds of being acquired and size of transaction grow in your favour. You must know the people who are your potential acquirers or partners. Everything in the world is personal so knowing the right people ahead of time is key.
(i) You must be the CEO or founder. This is critical; a founder or CEO should be able to take any meeting and go in-depth into any subject matter on their own. This includes demo, product, technical, business, investment, industry and strategy. They should also be able to make a decision on the spot. (If you need several people in the room to answer 90pc of the questions, then you are the wrong person anyway and shouldn’t be a founder.) This really is critical. This person will need to be able to handle:
- VC meetings, from ‘associate’ level upwards
- Partner meetings, including technical, demos, product, business development, corporate development, integration and feasibility
- Media Interviews, including demos, product, industry, competition and trends
- Presentations at conferences, meetups and events
- Sales and partnership meetings, discussing product value, features and pricing
(ii) You must have excellent and deep relationship with the other founders. This person cannot be a new hire. At Waze, I moved to the US after 18 months of working together with the team in Israel so we already had a pretty good relationship and trust between us. This is key: do not underestimate it. The founders and I still had our share of misunderstandings but, overall, they were contained and we could openly discuss our issues based on the relationship we had developed.
(iii) You cannot hire “an American business development pro” to run your US office. They will be sitting out there alone and have no idea what’s going on with the company. There will be constant misunderstanding, miscommunications and frustrations. Only a founder or CEO, native to the company’s start, will have the trust of their team back home.
(iv) You must be fluent in English, preferably having lived in the US before, plus some experience working with Americans.
(v) Your job description will include flying back and forth every four to five weeks. Nothing beats the face-to-face time and you absolutely must preserve your relationship, bring your feedback to the team, hear their feedback, eat dinner together, go out and maintain personal bonds. It sucks, but that’s life.
This is a complex question. In general, the earlier the better. But there are several rules of thumb.
1. Do not move until your team has built trust and the company DNA is clear. You should have, at minimum, a working prototype you are happy to begin showing around.
2. You should not move if you are in ‘stealth mode’: it’s cheaper to be stealth mode in smaller countries.
3. Do not launch from Ireland, Israel or your own corner of the globe. Plan to be in the Valley already before launch to leverage press, relationships and interest. You can only make a first impression once.
4. Raising an A round of funding. You can probably raise an angel round without physically being there, but the odds of raising an A round from a top tier investor is very low unless you are local. Make sure you are well established and connected before you start your A round search. It is much easier for investors to swallow a pitch that includes “I live in Palo Alto and the tech team is in Israel” than, say, “I will move after I raise my round and can only meet on the 29th”.
So, you finally moved. You are walking about San Francisco or Palo Alto. So now what? Here are a few tips.
(i) Try to hire a diverse team of Americans and folks with a different background than the founding team. In our case, this was non-Israelis. As a startup, it’s always very hard to recruit people, but this challenge multiplies when you are a bunch of foreign talent without a reputation among peers in the Valley. Make sure your first few hires are very well connected in the tech scene. You want to be out as much as possible, whether at meetups, events, conferences or whatever. You are looking for experienced people to learn from and they won’t come to you. My first hire was Di-ann Eisnor, a super-connected entrepreneur who quickly became a pseudo-founder of the company. It’s a miracle that I managed to hire her (I had to lie and cheat to get her on board but that’s for another article) and she was key in making Waze what it is today. It is very easy to sit alone in an office in Palo Alto every day and not meet anyone. But you might as well have stayed at home.
(ii) Socialise! Silicon Valley is an informal network of people. There are lots of events to go to and people to meet. Thats why you are here! Try meeting other entrepreneurs, meet investors, meet bloggers, just meet and talk about what you are doing. Such a random meeting with Brett Bullington led to an intro to Di-ann which changed the company and put us on the map.
(iii) When you rent an office, make it super cool. It is very hard to recruit people to work for a little-known foreign company, especially in the beginning when there is nothing there. So have, at least, a cool office that seems to be part of the scene. At Waze, we rented a storefront in Palo Alto on Hamilton – super cool and inviting. We paid more than we should have but it was worth every penny to fit in with the “cool kids” via a cool address.
(iv) Don’t hire corporate people with big resumes. Hire people who have been around start-ups and know what it’s like. Fancy executives will only cost a lot and add more confusion to the team. Make sure they are worldly and curious. I’ve found that if they’ve travelled a lot, lived abroad or are second generation immigrants, they will fit in better.
(v) Constantly use your product. When I moved to the US, I decided to live in Los Altos (our office was in Palo Alto) so I would have a 20-minute commute to dogfood the latest build. This was critical; our product sucked in the US and only my constant testing and feedback as someone who understands the tech, strategy, competition and goals – plus being someone the Israelis would listen to - made it mature.
(vi) Public Relations: one of your primary goals once in the US is to get media coverage for your company. This is a facilitator for everything you need (fundraising, partnerships, recruitment and more). In general, the press want to talk to a CEO or founder when you’re at an early stage. You cannot outsource this to an agency. I recommend having one of your first hires be a PR or social media person. They will get you coverage but are usually well connected in tech-related activities and can help plug you into the Silicon Valley or Bay area scene.
(vii) You are here to make relationships, meet people and preach the gospel. You must know the App Store editors of your category, your potential partners, the partners at the VCs you like, the reporters that cover your space and so on. Silicon Valley is one big Kibbutz – make it happen (and lean heavily on your first hires for this)!
(viii) If you have a family, do not move into your nationality’s ‘corner’ of the Valley (for example, Israelis who flock to Sunnyvale.) Spend the money and move into Palo Alto or Los Altos or Menlo Park. The people you will meet at school will be key contacts – it’s an unbelievable and unavoidable network. Break out of the circles that are familiar and try and meet as many locals as possible.