Wisdom of the Past
From our experience, we've seen many SaaS startups launch with overconfidence in Asia. By assuming a SaaS product can scale in Asia after success in other regions can lead to mix results. Every well funded startup has an amazing product, a team of ex-consultants that developed the go to marketing strategy, and your best team of growth hackers relocating. This must be the formula for success! Unfortunately, it's never that simple.
Our Story
I was the APAC GM of a Silicon Valley startup that had raised over USD$165mm. I got the role because I fell in love with the company's product. I developed a go to market plan and presented it to the founding team. 3 months later, a headcount budget was approved and we launched in Asia. Two years later, I was forced to do the heart breaking act of laying off my entire team and shutting down 3 offices we've worked so hard to build. What happened?
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Expectations and resources
There can be a plethora of reasons why the initial launch of a SaaS product in Asia can see mix results. The alignment between the local team's belief of needing more resources vs. head quarter's view on cost will waver over time. When these alignments break down, finger pointing begins and the pressure to deliver results becomes more magnified. This path only leads to one result, and that's closure of the expansion regions. I went through this personally and I was completely caught off guard when my startup decided to exit Asia. I had reported directly to the CEO and the only conversation we had leading up to the decision was an analysis of how much resources I needed to achieve certain future revenue.
Question: What if there is a way to validate the resources required and the expected revenue before we launch a permanent presence?
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Should we be in Asia?
There are two ends of the spectrum. On one side, it's common to have a SaaS mentality that assumes successes achieved in other regions can be replicated in Asia. On the other, executives typically have concerns on expanding to Asia based on mostly hearsay and assumptions. Majority of the unknown regarding the Asia market cannot be answered unless efforts are made to connect with local buyers. Looking back, when I first launched the Asia market, we signed up 40 clients in the first 3 months. That initial success led our team to invest further and thus raising unrealistic expectations too quickly. At that time, we didn't foresee the lack of product adoption and our US centric marketing efforts would eventually lead to our stagnant growth.
Question: Can a startup remain nimble to prove out quickly its chance of success in Asia whilst operating at a low fix cost?
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I wish I had a Jarvis as my copilot
There are a plethora of reasons why startups fail in Asia. Those include cultural mismanagement, local competition (especially those with inferior product), market misjudgement, operational pitfalls, and regulatory challenges. For a frontiersman, he/she has had to rely on luck to build the right local connections to gather realistic feedback regarding risk. I did a lot of partnership discussions when we first landed our startup in Asia. The list of contacts included government officials, local startups, investors, LPs, influencers and everyone seemed to offer good opinions and was genuinely helpful. However, none of those feedbacks we received helped us foresee our challenges around our product adoption. It was not until 12 months in, we discovered our flaws. Eventually we went back to our contacts and our findings were validated. By then, it was too late.
Question: How valuable would it be to know which local contacts to prioritise and what key risks to validate?