Home: The Best Place for Your Startup

Summary: Before packing you bags for San Francisco or starting Customer Development on the American market you may want to consider whether focusing elsewhere is worth giving up one of the most critical assets your startup has – the relationships and reputation you’ve created at home.

“Ventures perform better—survive longer, generate greater annual profits and cash flows—when their founders locate them in their home regions where they have deep roots of family and friends.”
Professor Olav Sorenson, Yale School of Management. 1

Startups Always Think “The Grass is Greener” in America

Since I began freely helping startups around the world I’ve had dozens of conversations with startups from India, Israel, America, China, Spain, Brazil, Singapore – pretty much every corner of the earth.

Many of these entrepreneurs have watched Steve Blank’s Udacity Course or read Running Lean and know that face-to-face conversations with prospective early customers is critical to gaining problem insight during the early stages. Some are American startups trying to launch a product in China or India. More still are Indian or Israeli companies trying to launch a product in America. They quickly run into a challenge meeting people and ask me for advice: “How can I quickly have face-to-face conversations with people if I don’t have a lot of relationships in that market?”

My answers are:

  1. You probably can’t
  2. Why aren’t you starting at home?

They often describe the challenges of starting in their home country: lack of capital, small market, poor legal system, lack of talent, etc. I explain that while America may have a bigger market and more opportunities, it is also insanely competitive and not growing as fast as the emerging markets. I also explain that plenty of American startups are struggling with how to do Customer Development on India or China because they see new emerging opportunities.

My advice: when starting, start at home. You’ll have a much easier time.

Why Customer Development in an Unfamiliar Market is So Hard

As I’ve discussed in great detail previously, getting face-to-face interviews and doing customer development is hard, tedious, tough work. Getting a few dozen face-to-face meetings and calls means sending hundreds of people email and lots of coffee conversations that go nowhere.

At these early stages, people don’t really care much about our ideas – mostly because our ideas aren’t very good or original anyway. Instead, they’ll take a meeting because they know us or were recommended to us by a friend.

I ask family members, friends, former co-workers – hundreds of people – for help getting intros. Often I use these opportunities to catch up or help them with their business challenges. I ask them for help with introductions to other people. I can only do this because I already know hundreds and hundreds of people.

Were I to try and repeat the same process in Mumbai or Buenos Aires I would have only one realistic option – get on a plane and go there. It is the only way I could meet enough people.

Starting Where You’re From is More Important Than Starting Where You Are

For the past year I’ve lived in Beijing, China – arguably one of the best startup markets in the world. But most of my professional career was spent in Washington, DC – a so-so startup market.

6 months ago I started working on soHelpful.me and started – you guessed it – doing Customer Development on the American market, mostly talking to people in Washington DC. Skype isn’t always reliable and the 12-hour time zone difference means that I talk to people at 4AM and 11PM regularly.

These challenges notwithstanding, 80% of my startup progress is attributable to insight I’ve had through conversations with people from home: Washington, DC. It is also the source of my most active users and most of my web traffic. My guess is that many of them can’t even remember the name “soHelpful.me” – they just think of it as “Kevin Dewalt’s startup”.

Do I talk to new friends in Beijing, Shanghai, Singapore and dozens of others I met during my startup help calls? Of course. But most of my progress is coming from home.

Earlyvangelists Come from Home

Only very rare, unique people will buy a product from a startup. Steve Blank calls these people Earlyvangelists – early customers who believe in you and your vision (often more than you yourself do). Just like you, they see a problem with the world and want to change it, so they buy a startup’s product. They’re the people who send you random emails with new ideas and insights.

They won’t buy because the product is great – because it isn’t. They’ll buy because they believe in the vision and they believe you. They’re probably friends or friends-of-friends. And you’ll find most of them at home.

Never Forget – Home has Unique Opportunities for YOU

Every startup city has its pros and cons. Every market has its pros and cons. But only home has unique opportunities for you.

I meet extremely talented entrepreneurs around the world who have figured that home has unique opportunities. Haiti is arguably one of the worst startup markets in the world. It is a very poor country with limited infrastructure. I don’t know what startup opportunities will emerge there in the next 10 years, but I do know that Luc Castera is in the best position to take advantage of them.  Just imagine for a moment who will have an easier time doing Customer Development in Haiti – me or Luc. Luc could have 30 conversations and launch an MVP before I book a plane ticket to Port-au-Prince.

Perhaps America is the best market for your startup, but it may not be the best market for you – even if you find an opportunity you’ll have to beat dozens of other American startups who will want your future and current customers and will do whatever it takes to get them.

But that’s ok, because these same Americans will get killed in your home market. Most likely they won’t even try to compete with you – I know I wouldn’t.

Give home a chance, you might be surprised at what you find.

About the Photo

I picked this photo of the streets of Buenos Aires by Stuck in Customs because I felt like it symbolized something unique we can find in every home town.

  1. Home Sweet Home: Entrepreneurs’ Location Choices and the Performance of Their Ventures.” Sorenson and Dah. Management Science (June 2012)
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