When you’re a company from a small market like Scandinavia, there will come the point where you have to expand internationally to keep growing. But how do you best take on the world? And which market outside of your home should be the first?
The Danish unicorn Pleo has gone through an impressive international expansion where the answers to these questions have been found. Jeppe Rindom, CEO and Co-Founder of Pleo, has shared the key learnings from Pleo’s journey, which we’ll cover in this article.
How to Enable Your Company to Succeed Internationally
Pleo was founded in Denmark, a relatively small market, so they knew they had to expand internationally to scale. Denmark was their test market, and market number two was the UK. After just a few months of releasing in Denmark, they switched most of the focus to the UK.
Pleo had to show the investors that they had a greater vision than just operating in Denmark, so launching in a bigger market quickly established a lot of credibility. To enter a new market, it’s very helpful to have an international organization from day one, which Pleo had. Starting with the UK as the second market is also a good idea for many Nordic companies, since the language barrier is much smaller than if you’d go for a similarly sized market like Germany.
Even though it was Pleo’s first market outside of Denmark, the UK has been the fastest growing out of all the sixteen markets they’ve launched in. One of the reasons for that success was that the entire company started focusing on the UK, so everyone was very aligned and engaged. When you expand to the third, fourth, and fifth market, the company becomes more divided, making it more challenging to achieve the same level of success.
This is primarily the case for a fintech company, but Pleo had one part of the company working on and selling the software, and one part that focused on the financials with issuing payment cards and so on, which comes with much compliance. So in order to scale, not only the software departments need to be ready, but also the financial ones.
Onboarding from a financial compliance point of view was one of the biggest challenges. To solve this, Pleo needed to automate the process and be very professional in the onboarding. In short, you must ensure that your entire organization is ready to scale and expand internationally.
Combining Ambitious Expansions with Focus
You can have vast international ambitions and deep focus at the same time. Pleo has historically launched its solution at a pace of around one market per year, which is relatively slow. But this wasn’t enough for them, and now the plan is to launch in fifteen new markets in only fifteen months, with the help of outside funding.
When setting challenging targets, you must adapt and develop new strategies. Pleo launched a marketing expansion business unit that’s very cross-functional and can launch new products in new markets easily. This unit, consisting of about seventy people, is responsible for achieving the goal. Then these markets are split up into different tiers, with two of them, France and the Netherlands, being tier-one markets that deserve a lot of focus. The marketing expansion business unit owns the process of going into new markets.
If it’s a must-win market, like France for Pleo, you should hire a regional leader to scale around. Reasonably quickly, that person is joined by around ten people, with the majority in sales. Then you scale further once you find product-market fit and viable unit economics.
Expanding in Europe vs the US
When Pleo wanted to scale, they had to decide between focusing on Europe or the US. They needed to make this decision for many reasons, one of them being the two vastly different regulatory environments, which is very important for a fintech firm.
Pleo chose Europe, which was easier since the founders wanted to live there, and it allowed them to have nearness to the customers. But now that Pleo has gone through the journey of scaling in Europe, they can say that it would’ve been easier in the US.
This is because the US acts more like a single entity despite being very large, while Europe is very different when it comes to each market. In other words, Europe needs to be unlocked pocket by pocket, while the US can be attacked at once.
However, now that Pleo is a series D company and has to think globally, they believe that being a European company is an advantage. This is the case since they’ve trained their market launch and know which mistakes to avoid. So in a few years, Pleo’s more challenging beginning will pay off.
2 Valuable Tips for Expanding Internationally
When the Pleo founder Jeppe Rindom was asked what his top tips are for a SaaS company looking to expand globally, this was his answer:
1. Hire an International Team
When you’re a software company that plans to scale internationally, you need to think globally from day one, which needs to be translated into whom you hire. If you start with an all nordic founding team, it will be much harder to hire the first international person. The first ten or fifteen people need to have different nationalities to create an international culture where English is spoken.
2. Create Software that Scales Internationally
From a tech perspective, you should build software that scales internationally. Some really large companies have so much tech debt from not building their software correctly, that they simply can’t expand into new markets, which isn’t a position you want to be in. Your software needs to adapt to new languages, new geographical locations, and tailored needs that might be needed in a specific country.
- Software companies founded in small markets, like Denmark, will eventually have to expand globally to continue scaling. To succeed with this, you must ensure that your organization is ready.
- You can expand ambitiously while remaining focused, but you probably need a specific department that works solely on that. However, initially, it’s wise to put all your efforts into a single market.
- Whether you should expand in Europe or the US depends on many factors. In Pleo’s case, it was more challenging to expand throughout Europe, since every market is very different. But as a bonus, they now know how to enter new markets successfully.
- When expanding globally, you should hire an international team from day one and create software that can scale internationally.