Expanding into a new market is a great opportunity for a startup, but it doesn’t always go according to plan.
Expanding into a new market is a great opportunity for a startup, but it doesn’t always go according to plan. In fact, my own company’s expansion into New York City came about as a result of an accident.
At the time, we weren’t looking to expand from our San Francisco base. Our engineering team leader was working in Manhattan but planned to move across the country to join up with the rest of our team. Then, a few changes happened in his personal life, and he needed to stay in New York.
Not wanting to lose him, we looked into expanding. We centered our engineering department around him in a co-working space and hired a sales manager to lead our growth efforts.
His need to stay in New York turned out to be a blessing for the company. It helped us lay the foundation necessary to expand into a new market.
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Finding the Right People
Boots on the ground are a great help when expanding, but remote expansions aren’t impossible. Our Washington, D.C., launch was completely remote from planning to execution, and we’ve had as much success with that approach as we have had with people already entrenched. The important thing is to find the right people to lead the expansion.
Most startups look for the frenetic and energetic “go-getters,” but silence can be just as powerful. We have both personality types in our office, and both can execute. But when we’re recruiting for expansion, the first people we look for are leaders who love projects and will treat our new launch like a project.
Those people can sometimes be in short supply. Only a handful of candidates made it through our panel interviews for the D.C. expansion, and our in-house recruiter was working on overdrive to get everybody in place. Local knowledge is a must. When Uber expands into a new location, it hires a new city-based local team.
Stack With Experience
Our expansion teams are always led by market-specific general managers who possess heavy project management experience. Those past projects might not be expansions, but the best candidates are able to pull from their experiences and are eager to get started. They’re also the ones who do their homework and come prepared with a thorough 90-day plan.
Once we have our senior-level leaders in place, we add the eager sales and supply members according to our specific hiring philosophy. Whenever we interview somebody, we ask ourselves, “Is this candidate better than 90 percent of our current employees?” If the answer is “no,” we pass and move onto the next person.
We’re not just looking to fill a vacancy; we’re looking to hire somebody who brings a new dimension to our expansion team and who can hit the ground running. Unfortunately, that means we can’t afford to bring in trainees, interns, or junior-level associates because our departments don’t have the resources to mentor and oversee their work. Although we love helping interns, and will be hiring plenty of them this summer, we don’t have the luxury to train and expand at the same time.
Most successful startups follow the same philosophy. We have killer employees who were “too junior” at the time for the roles we had in mind, but these people were already crushing it in their last positions, and we recognized they could be molded into something bigger.
A startup isn’t an elementary school, and an expansion is no time to be taking risks. The right candidates are those who can walk in with a 90-day plan backed up with data and anecdotes.
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While data doesn’t guarantee success, it does help to predict future behavior. Everything is data-driven today, and expansion decisions should be no different. We knew from our Los Angeles and New York expansions that the ROI for our first few leases would be incredibly disappointing, but we didn’t let that affect our ambition.
Instead, we used that experience, and the experience of our hires, to build our strategy for going forward. It takes an incredible investment for us to get our first lease, but our costs drop dramatically as we continue to close.
So when we moved into the D.C. market, we used the same methodology from our previous launches. We amped up our AdWords spending and ran targeted campaigns across Facebook and other social media platforms.
A marketing strategy for expansion needs to be different from one for an established market. We set monthly aggressive targets across our existing markets, but we tend to set more conservative and rational targets in new ones.
Our sales team might have only one or two members, and it can take time to get off the ground. Our objective is to cast as wide a net as possible and to remember that the first few batches of leads might not be the most qualified.
Startup Dream Teams vs. Expansion Dream Teams
Sales should be the key recruitment focal point when building an expansion dream team. It’s a different approach from recruiting people to help get a startup off the ground. Recruiting for that stage in a business’s life cycle means filling gaps in experience, but an expansion team needs to scale the most important areas.
A new engineering team, for instance, might not be necessary because engineering can be done remotely and doesn’t require regionally specialized knowledge. The chief technology officer and his team can work as effectively from the original offices as they can from the new ones, and the same might be true of marketing, too.
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Their budgets may require expanding to meet new demand, but new team members aren’t always necessary. Hiring efforts should instead be directed toward finding the personnel most needed in the new market and replicating existing members of the foundation.
This replication extends beyond matching roles; new recruits should mesh well with the character of existing employees to ensure the company has a consistent identity across locations.
Expanding into a new location can be a daunting prospect at first, and initial ROI figures might look worrying, but don’t be put off. Assemble an experienced, reliable, and engaged team on the ground, and success will soon follow.