Founders in India have started building high-quality products. These products have the ability to go global. But in order to go global, you need to be able to understand the difference between building for India and building for the US. Unfortunately, they’re not the same.
This is primarily because the industrial and cultural nuances are entirely different in the two countries, and they need entirely different approaches. We have been writing posts describing how founders should shape their thinking. Our friend Mohit wrote about hiring salespeople. And Shubham spoke to Sri from Rocketlane about how to acquire your first few customers. But we thought, how about a slightly more zoomed-out view of this problem?
So, we called Sudheer Koneru of Zenoti to ask him about his approach. His story is particularly interesting because Zenoti started with India and Southeast Asia, and successfully pivoted to the US market.
“In the beginning, we weren’t as conscious that we would need to figure out our product-market fit again. We talked to some large players, explored our software with them, and realised that they would not use our product unless we signed up to make a lot of big changes,” says Sudheer. His company makes cloud software for large salons and spas, including Gene Juarez, Toni & Guy, and Sono Bello. They moved to the US in 2016.
Indian SaaS has the potential to get to $1 trillion in value and create nearly half a million jobs by 2030. A significant portion of that growth is set to come from the US.
And the best way for Indian founders to achieve their potential is to listen carefully to those who have come before them. We asked Sudheer for a list of things founders should avoid when moving to the US.
Should you or should you not go to the US? The answer to that question is another question: Is there a problem for you to solve in the US?
You are thinking about entering one of the biggest marketplaces in the world, and, as it follows, one of the most crowded. Without a well-defined problem to solve, you won’t get far and it would be better not to move at all.
Founders sometimes overlook the degree of competition in new markets. A lot of local players are working on software products to address problems in various industries. You need to start by checking who they are catering to, whether there are gaps left unserviced, and whether it would be viable to build a product that fills these gaps. If you manage this, you can carve a niche for yourself in the ecosystem.
Sudheer claims he got lucky. Zenoti succeeded in identifying a problem, and it was in a segment where they were already good—spas and salons.
“We found that while the local players catered to the small-ticket businesses, the larger enterprises were not well served with good software,” says Sudheer. That is where Zenoti made a dent.
“Trying to go after the mass market of spas and salons would have perhaps jeopardised us. Because there are just so many players in the US and the needs of those mass markets are so simple, it would be very hard for us to get some meaningful traction and stand out in the ecosystem,” he adds in retrospect.
Even within industries that are being heavily serviced, it is likely that specific sizes or types of businesses have been relatively neglected. So look for the opportunity.
Once you have found a problem, it is best to start moving with a sense of urgency. A market entry plan could take anywhere from six to 18 months to put into action. So the sooner you make a start, the sooner you can learn the nuances of the new market.
Sudheer regrets that Zenoti was slow to get there. “We were two years behind since we thought India and Southeast Asia were big enough markets, and why should one bother with the US, which is in a very different time zone?”
While Zenoti kept investing in the product before they moved, Sudheer now finds that it was unnecessary.
“In hindsight, you don’t need to invest in the product. You anyway cannot take the same product and go and sell it.” The problems are very different, so the solutions will be different too. He gives the example of the apartment management industry in the US. “The social aspects of how you manage real estate, how people pay bills, what payment processing you use, etc. is very different in the US versus India.” That being the case, time is better spent on knowing what the peculiarities of your target market are, rather than on finessing the product from afar. “The person who wants to enter has to address all those issues and understand the social dynamics and the flow of business dynamics and various integrations which are required in the US.”
Next, do not forget that the move will also involve shifting yourself and perhaps your family. A quicker start can help you figure out living situations properly. “It would not be enough just to go to the US for a little bit and then come back. After a point, you have to be ready to make that commitment,” says Sudheer. He felt confident about moving after a year of exploring the market in the US, and after two deals had solidified.
While going into a new market, it can be tempting to repeat everything that worked in your original market. That would be an obvious mistake.
Entering the US requires not just slight tweaking of your PMF, but a full-blown rehaul. You basically start from scratch.
“You have to go and find the whole product market fit all over again. Because by no means is it even remotely similar, it is radically different.”
Sudheer and his co-founders learnt this from experience. They began by talking to some large enterprises about their original software and realised that they would not use it unless a lot of local needs were accounted for. “We just happened to have done a lot of enterprise software before. They liked our software’s big-picture messaging, so then they were willing to let us address the smaller gaps as part of working with them. We listened and got our product through to that.”
Be ready to break and rebuild.
First things first. Learn about the industry before you begin to actually understand the gaps.
What you should do when you get to the US is see how the businesses you want to service actually run. Visit them as a customer, says Sudheer, and go through the process of what happens inside the store, office, or workshop. If it is the garage industry you want to build software for, for example, you should actually go through the workflows in the garage—check in, check out, and note the different ways to pay.
You also want to interview people in the store about whether they have pain points and where.
Now comes the part where you start selling. Sudheer’s advice is to go to a particular region, pick up the phone, and set up demos with a few people. That could involve doing 100 demos or so. Be prepared to lose most of them. This is a part of your discovery process. Over the course of repeatedly showing your product, you will realise what features it does not have and what is required in the industry.
In Zenoti’s case, they saw that the US mostly has recurring memberships, which means you charge, say $50 a month, automatically every month and make sure that the front desk is notified if a card fails. That way, the business can call their customer and ask if their card had changed, etc. Plus, they needed to build ways for tipping and scheduling employee breaks into the product.
Also, in India, businesses would generate bills on Zenoti software, but when it came to charging the card, customers used their bank or charge card machine and did it outside of the software. In the US, Sudheer realised that clients wanted integrated payments—it is more a case of closing the bill, swiping the card on the same system, and you’re done.
“These were big enough chunks of work that we could kick off in parallel while we were still discovering smaller nuances along the way.”
Think about what your strengths are and where you need local help. It is generally a good bet to rope in a consultant who is from the industry to help you with the demo and discovery exercises. This is someone who has connections in the industry, can visit the stores with you, and understand what is required.
Zenoti’s founders made an initial error, hiring a former spa director in the US to lead sales who turned out to be less than ideal at sales. Being good at sales himself, in hindsight, Sudheer thinks he should have been the one driving early sales for the US markets. If this applies to you too, your company’s money would be better used to pay US-based experts a consulting fee instead.
At a later stage, after winning deals, Sudheer hired a local sales team. He also says to pay attention to accents and communication skills while hiring for teams in India. Candidates should have a minimum level of proficiency so that they can speak comfortably and clearly with US clients.
As founders, it is easy to be swayed by wins.
To begin with, what is a win? Some of the small businesses you meet early on in the discovery process may have very simple needs—maybe just an appointment book process—so if you do end up succeeding in a couple of those pitches, it may not mean much. You can’t count on them because these are customers who could just as easily move on to another service tomorrow.
For Sudheer, the serious wins came in the form of a few large chains which had over 100 stores. “That was not just a fluke. These are players who are aware of the entire industry and have done the whole analysis and realised that we are the better player to work with.”
At the same time, making the sale is not enough. In fact, that is the easy part. Now that people have bought your product, you have to implement the site, set it up for them, and make sure everybody using it is happy with it.
“My learning is to more closely address those go-live and support processes as founders. Define them very well, otherwise, it can be a problem.”
That brings us to the go-live and support processes.
Zenoti has found that the larger the customer is, the better it is to do support from India because these firms tend to have their own IT departments, which route calls to your support team. They are usually very cooperative about working with India, says Sudheer.
But when it comes to store-level customers, for example, you may have someone calling from Wisconsin who would likely be easily annoyed by a thick Indian accent.
After trial and error, Sudheer has hit the right note. He finds it useful to have 20% of their support staff in the US to deal with more challenging situations of support, and 80% based in India for handling regular requests.