5

Where to set up

Despite the shift towards fully-remote teams and multi-hub models, you are still likely to establish a primary US hub. This is where you choose to plant your flag, with your landing team and initial hires, even if your team build-out ends up being more dispersed.

Our analysis of European companies that have expanded to the US revealed three clear winners when it came to choice of US hub - New York, the Bay Area, and Boston.

Where do European startups establish their US hub?
Index Research. Sample size = 186

New York is increasingly the first choice, representing 44% of US hubs over the last five years. San Francisco has become less popular, but still accounts for 28%. Boston hosts another 11%. The remaining 17% is highly dispersed, with only Los Angeles appearing to be gaining some specific momentum.

When specifically looking at outlier success stories, 43% have US hubs in the Bay Area, with 34% in New York and 9% in Boston. Since outliers tend to be older, more mature companies, this mainly reflects the historical landscape, before New York’s rise to prominence.

Decision matrix

The following factors should drive the decision where to base your US hub, ranked in order of importance:

1

Customers & Partners

Where are your existing, and potential, customers?

2

Sector

Tech is focused in the Bay Area, whilst finance and media are in New York, for example

3

Timezone

East Coast (Boston, New York) gives you 3 more hours of working-day overlap versus the West Coast

4

Talent

What is the availability of GTM hires you need – inside sales, enterprise sales, partnerships, growth? Where will you find executives with proven scaling experience for your business model and sector?

5

Cost

Salary and rents are extremely high in New York, and even higher in the Bay Area. Using cost as a proxy for talent retention makes this even more critical

6

Personal & Investor network

If you know a trusted and credible US leader, this can potentially sway the decision of where to land

Often the decision of where to locate will be obvious - in fact, only 30% of the European founders we surveyed said that it was a difficult choice for them.

Following your customers is a good tenet, but qualify this with not only where your current customers are - but where your future audience is likely to be.

There are two types of customers. First, those that help you build your product. Second, the ones you are going to actually sell to.

Hannah Seal

Index Ventures

We began in Boston because we knew someone who we hired there. Then we realised most of our target customers were on the West Coast, so we moved our US centre of gravity to San Francisco.

Ingo Uytdehaage

CFO, Adyen

Some companies realise that their addressable market is spread across the entire US, even if their early adopters are in a specific region or sector. This is often the case with consumer propositions, or in horizontal SaaS. In this case, you may switch to availability of talent as your primary driver of where to locate.

The maxim, go where your customers are, and will likely be, still holds true. If they are everywhere, then go to where it is easy to create a sales base, or create distributed teams in locations where it is easy to hire from other companies with relevant experience.

Abakar Saidov

CEO & co-founder, Beamery

When it comes to experienced executive-level talent, critical mass only exists in the three hubs mentioned earlier. For SaaS roles - including VP Sales, CRO, CMO or CFO, approximately 60% are to be found in the San Francisco Bay Area, with 15% in each of New York and Greater Boston. The remaining 10% are spread elsewhere. For B2C executives, the split is different - approximately 60% in the San Francisco Bay Area, 25% in New York, and 15% elsewhere.

SF, NY, and Boston all have a high concentration of talent, especially executives. If you are choosing a different metro hub you better have a good reason why.

Erik Kriessmann

Index Ventures

If I were rating the concentration of B2B leadership talent, the Bay Area is a 10, New York is a 7, and Boston is a 5.

Mannie Gill

Renovata Partners

San Francisco

As the beating heart of the tech sector, Silicon Valley would appear to be the obvious destination for any tech company looking to succeed in the US. Early-adopting customers (consumers, startups and corporates), pivotal distribution and product partners, the most seasoned talent pool when it comes to successful scaling, and a roll-call of the most successful VC funds.

There is a gravity to the Bay area, an underground infrastructure - by being there, you are plugged into what’s happening, and what is on the horizon. You can’t get this anywhere else. There’s also a feeling of closeness and community in the people you are interacting with.

David Helgason

Former CEO & co-founder, Unity Technologies

There is still magic in the SF bay area. Take Gitlab, for instance. A fantastic growth company, 100% distributed. Their CEO chose to move from the Netherlands to San Francisco.

Mårten Mickos

Former CEO, MySQL

The biggest draw of SV is intangible. Before each trip, I ask myself if it’s really necessary. But afterwards, I find it has been so valuable for customers prospects, and investors. As well as for expert insights around product, growth, and marketing. I sum it up in one word - serendipity.

Christophe Pasquier

CEO & co-founder, Slite

Of course, it’s not that straightforward. There are two major reasons why the San Francisco Bay Area is losing ground nowadays as a US hub for European startups.

The first is timezone. With a 9 hour time difference between Continental Europe and the West Coast, the overlap during working hours is minimal. This barrier to effective team communication and collaboration cannot be underestimated. The additional 3 hour window from the East Coast is very significant. Add to this the increased flight times and jet-lag for the West Coast, which will take their toll when you’re making the trip every month or two.

Only go to SF if you are selling to customers based in SF. The time difference is huge, making the East Coast a lot easier for a US beachhead.

Abakar Saidov

CEO & co-founder, Beamery

The second is talent attraction and retention - the Bay Area is hyper-competitive when it comes to talent. As a European company, you already start at a disadvantage in terms of brand awareness and credibility. What applies to talent attraction is even more brutal when it comes to talent retention - employee turnover is higher there than anywhere else in the US (average 30%, compared to 20% elsewhere in the US, and 10-15% in Europe), as are expectations in terms of compensation, benefits, and sustained hypergrowth. You need to be realistic about whether you will be able to hire and retain A-players, as an outsider in the world’s most competitive talent ecosystem.

In SF everyone feels underpaid, all the time. However, how do you quantify the benefits of being embedded in the local ecosystem where your competitors are?

Anonymous European founder

In practice, we therefore only recommend San Francisco as your US hub if you are selling primarily to (or through) tech companies, or to developers. For example, infrastructure, data/analytics, or open source software require a focus on DevRel (developer relations), have highly technical sales processes, and require partnerships or integrations with other software platforms. Alternatively, if you are a consumer app dependent upon distribution through the Apple, Android, or Facebook ecosystems, the need to be in Silicon Valley is also compelling.

If you don’t fall into either of these categories, we advise against choosing San Francisco as your hub. And even if you do, be prepared to establish a secondary hub as you scale, for building more operational rather than strategic teams.

Developer tech is best done in the Valley, everything else can be done as well or better elsewhere.

Ari Helgason

Index Ventures

New York

The New York tech ecosystem is expanding rapidly, driven by the natural strengths of the city: Its appeal as a place to live and work particularly for younger talent; excellent universities; and global leadership in financial services, media and fashion. Its earlier strengths in consumer tech (Tumblr, Etsy, Warby Parker, Glossier, ClassPass) are now being balanced out in B2B and SaaS (MongoDB, Datadog, Invision, Squarespace, Braze).

Reasons for choosing New York as US hub
Index survey of European founders who have expanded to the US. Sample size = 50

If you are in a sector reflective of New York’s strengths, it is the obvious choice for your US hub. And for many enterprise SaaS companies, financial services represents their single most important customer sector. On the consumer side too, New York (together with Los Angeles) is the largest, wealthiest, and most influential US city.

New York as a city would be the 2nd largest fashion country globally.

Andrew Robb

Former COO, Farfetch

It is now possible to build entire GTM teams in New York, with CMOs and marketing talent particularly strong, given the city’s heritage. You need to be open to step-up candidates on the sales side, given the relative immaturity of this talent pool, and high demand.

Boston currently has still got a deeper talent pool for SaaS execs, but this is shifting steadily to New York, where there are more early-stage SaaS companies, and emerging leaders for the future… but be warned that whilst this pool is emerging faster in NY, it is also in higher demand due to the growth of the local B2B ecosystem.

David Ives

True Search

Interestingly, our research uncovered that startups born in London are particularly likely to choose New York as their US hub (52%), compared to startups from elsewhere in Europe (34%). This partially reflects sectors, with more fintech and adtech in London, but it also appears to be a cultural choice.

London is New York’s twin.

Hannah Seal

Index Ventures

Boston

Boston is a viable third option for your US hub if you are B2B, with the long-standing success of the Highway 128 tech corridor, plus world-class research universities and a heritage in life sciences. Notable Boston B2B and SaaS success stories include Akimai, Mimecast, Hubspot, Brightcove, Datarobot, Fuze, BlueConic, Toast, and Salsify.

Highway 128 is the Silicon Valley of the East. Boston is a college town that feeds this. New York isn’t. It is focused on finance, media, fashion.

Mary Beth Vassallo

VP North America Sales, Nexthink

In lifestyle terms too, particularly for families, it compares favourably against New York, with shorter commute times, and access to nature.

Boston is a city where you can have a normalised family life, which is critical as a founder giving so much time to your business. You can commute in 30m, and have a good lifestyle. Your money won’t go far in NY or SF.

Peter Bauer

CEO & co-founder, Mimecast

You face a difficult choice between locating yourself downtown in the city - where you’ll find many of the younger startups - or in the Western suburbs, home to the more mature tech companies. This situation mirrors, but trails, the evolution of the Bay Area, with the rise of San Francisco as a startup city, in contrast to the campuses of the tech giants along highway 101 to the South.

I’d caution against setting up downtown. It’s appealing for junior hires, but most of
the experienced talent is to the West, and they don’t want to commute.

Peter Bauer

CEO & co-founder

Secondary hubs

As your US footprint grows, it often makes sense to establish a secondary hub in a lower-cost location for your support functions. Typically these might include SDRs, inside sales, customer support, and operations (billing, compliance checking, etc). This has become part of the playbook for domestic US startups in recent years too, and a large number of secondary cities have emerged as potential destinations.

European startups will be particularly focused on nationwide office-hours coverage for sales and support functions, so tend to cluster in cities on Central and Mountain Time. Another significant factor specific to European startups is the availability of direct (or at least straightforward) flights to their European base, as well as within the US itself.

We have had a lot of success hiring outside of SF in hubs like Austin, New Jersey, Chicago and Phoenix with advantages ranging from cost, to talent retention, to time difference with London.

Abakar Saidov

CEO & co-founder, Beamery

Our analysis of secondary US hubs chosen by European startups highlighted Denver, Austin, Atlanta, and Tampa.

Selection of Secondary Hubs in the US

City, State US-born secondary hub European-born secondary hub

Denver, CO

Robinhood, Slack, Datadog, Freshworks, StackOverflow

Trustpilot, MOO, Funding Circle

Austin, TX

MongoDB, Airtable, Miro, Restaurant365

UiPath, Unity, Blue Prism, Darktrace, Beamery

Atlanta, GA

Square, New Relic, PagerDuty

Collibra, Algolia, Alfresco

Tampa, FL

Drift, Asure

TransferWise, TeamViewer, Scytl

Phoenix, AZ

Prosper, Opendoor, Oscar Health

Lemonade

Raleigh-Durham, NC

Indigo, View

Celonis

Dallas/Fort Worth, TX

Splunk, Blue Apron, Peloton

HelloFresh

Columbus, OH

Quest Software

Klarna

Nashville, TN

Warby Parker, Lyft, Eventbrite, Houzz

Opening a secondary hub can carry more risk the earlier it is done, since it extends multi-office challenges around communication, culture, and management. However, this needs to be offset against the challenge and cost of hiring and, in particular, retaining large, often junior and lower-paid teams. This can be brutal in New York or San Francisco, although somewhat easier in Boston, where cost and talent-competition aren’t quite as intense.

In (secondary hubs), people think ‘this is a great place to work’ and are happy. In SF, people are more like ‘where is my barista?’ It’s much harder to retain people.

Anonymous European founder

The precise trade-off in timing will vary, driven in particular by your team’s functional make-up. If your model is support- and ops- intensive from the start, a secondary hub is likely to make sense sooner. Over time, the secondary hub may well become your largest single US location. Whilst these cities can be strong on junior and mid-level talent in certain functions, they will be weaker when it comes to marketing or business development, and it is very unlikely that they can provide you with executive-level leadership. So you will have a continued need for a primary hub in one of the three core cities.

Buyers don’t care where in the US you are, so long as you have presence and a story.

Joel Passen

Former Head of Global Sales, Beamery

Fully Remote Teams

Fully remote organisational models have been growing steadily more popular with founders, even before the Covid-19 pandemic. At Index, we are fully supportive of remote-first teams, having seen them successfully scale first-hand at Elastic and MySQL, and more recently at Slite, Remote, Peanut, and others. The topic is worthy of its own dedicated guidebook, but for the purposes of US expansion, there are a couple of specific points to highlight:

Certain functions lend themselves more easily to remote than others. Enterprise sales are by nature remote. In fact, you want to pursue a distributed coverage model with reps across the US. Customer support and success also often follows this approach. Inside sales and SDR functions can be trickier, since these are often more junior hires who need intensive mentoring, and where ‘buzz on the sales floor’ can be highly motivating.

Sales leadership is hard to find in secondary hubs. But unless you’re building high-velocity sales, you don’t need a heavyweight sales leader in an office - enterprise reps are in the field most of the time.

Joel Passen

Former Head of Global Sales, Beamery

Community-building and partnering is about networking and ‘being there’. If you want to partner with Google or engage with cutting-edge developers, your DevRel team needs to be in the Bay Area. If you need to immerse yourself in the media ecosystem, you need to be in NY. This may dictate the location of certain roles, even if you operate a fully-remote model with no offices.

Archetype CompassCompass

US expansion through San Francisco

About: Algolia allow teams to easily develop tailored, fast search and discovery experiences.

Founded: Paris, 2012 YC cohort Winter 2014

Fundraising: 2013 $1.5M Seed
2014 $1.3M Seed
2014 YC W14 cohort
2015 $18.3M Series A
2017 $53M Series B
2019 $110M Series C

Fundraising to date: $184m, Series C

US as % of TAM: >50%

US % revenue: c.50%

Headcount split: 350. 63% Paris, 35% US, 2% RoW

GTM: Self-serve, inside sales, field sales

Leadership location: All in SF except CTO

Founder location: San Francisco

Founder/CEO: Nicolas Dessaigne (until July 2020)

US exposure via Y Combinator

Algolia participated in Y Combinator in the Winter of 2014, after they had raised a seed round, which included participation from Index.

We hesitated since we were already seed-funded, so dilution was significant. But going through YC was critical to our success.

Nicolas Dessaigne

Former CEO & co-founder

The team already had six people in Paris, and post YC they debated moving everyone to SF. However, since one of the co-founders was expecting a child, and splitting the team was ruled out, they decided to all return to Paris.

If I were graduating from YC now, it would be a close call whether to stay or return. It’s trading off easier access to customers in SF versus easier access to talent in Paris.

Nicolas Dessaigne

Former CEO & co-founder

Flipping to a US topco was a requirement of joining YC. There was a tax hit, and it meant we couldn’t use BSPCE’s [French stock options], but overall probably was a good thing to do.

Nicolas Dessaigne

Former CEO & co-founder

Rationale for expansion

Algolia expanded to the US with the priorities of getting more customers, attracting the right strategic partners, and securing investors. However, the quality of talent they were able to access through this move has proven more important than they expected.

We have come to appreciate that for executives, the top calibre candidates are almost all in Silicon Valley.

Nicolas Dessaigne

Former CEO & co-founder

Founder move

Despite returning to Paris after YC, Nicolas had already committed to moving back to SF in 2015, during the Summer school holidays (he already had three children).

I didn’t hesitate. And in the mean time, I travelled to the US a lot - I acted as if I was already here, and developed muscle for working at a distance.

Nicolas Dessaigne

Former CEO & co-founder

Momentum won’t come as fast if you’re not here. You’ve got to show that you’re committed, to talent and to partners.

Nicolas Dessaigne

Former CEO & co-founder

Where to set up

At the time of expansion, the US was roughly 50% of Algolia’s revenues, and the team was 20 strong in Paris. Nicolas moved to San Francisco. This was the clear choice over NY, given that Algolia is an API business that needs strong advocacy in the developer ecosystem, as well as technology integrations.

If you don’t need to be in SV, go to NY. We picked SF for the ecosystem, because we’re an API business. But the timezone is VERY tough. On the other hand, SF is better for kids, and the outdoors.

Nicolas Dessaigne

Former CEO & co-founder

Hiring in US

Algolia’s first hire was in sales, and they quickly realised that it was very challenging for Europeans to assess American candidates.

Why would an A player take a job with a European startup?

Nicolas Dessaigne

Former CEO & co-founder

You’ve either got to be super-lucky, or you’re going to mis-hire. We [Europeans] don’t know how to hire Americans, and you’ve got to develop pattern recognition. That happens much faster when you [the founder] are embedded here.

Nicolas Dessaigne

Former CEO & co-founder

With the exception of the CTO (in Paris), the leadership team is now all in SF - CEO, CRO, CMO, CFO, and Chief People Officer.

Product

Algolia found that France didn’t have the same quality of product talent as SF, so they hired product managers (both junior and senior) in SF. However, it proved to be too challenging to have the product function in a different continent from engineering. Instead, they found a good PM in France, who travelled a lot to the US; and they relocated a senior product leader from SF to Paris, who was a French expat.

Secondary US hub

In 2017, they opened an Atlanta office. This was serendipitous, as one of their early sales hires (an American living in Paris) wanted to return home there. Now the office is growing strongly for inside sales, alongside SF and Paris. Enterprise sales teams are in SF, NY, London, and Paris.

Culture & Communications

Communication across time zones has become more and more challenging over time. In the very early days the team used Aircall to do sales calls from Paris 24/7, pretending they were in the US. However, this quickly became untenable.

Once the team expanded to the US, they had to hire managers quickly, to support teams split with a 9 hour time difference.

Managers can handle 8 direct reports if they’re in a single office, but we’ve learnt the maximum is 5 when the team is split between the West Coast and Europe.

Nicolas Dessaigne

Former CEO & co-founder

The team in SF gets in early, and the team in Paris stays late, so they can communicate with each other. But they just do it - you can’t demand it from people.

Nicolas Dessaigne

Former CEO & co-founder

In order to keep decision making streamlined, there is a daily 10 minute stand-up for executives, and quarterly strategy offsites (before board meetings), which alternate between SF and Paris. The exec team stays together in an AirBnB, which helps with bonding.

All-hands are still held every week, 0830 PT / 1730 CET, and until recently (when the expense got too much), everyone was encouraged to travel between SF and Paris once a year, for an average of 2 weeks.

Before Covid hit and they adjusted their approach, Algolia had two corporate apartments in SF, and one in Paris, to accommodate people flying back and forth.

While this began for practical and cost reasons, it had the benefit of forging close bonds between the colleagues who shared apartments. It mixed up functions and offices, including execs, which had a huge impact.

We only speak English, including in Paris. It’s always a fight, even now. But it’s super-important.

Nicolas Dessaigne

Former CEO & co-founder

Algolia’s advice for European founders

  1. Try it first, by travelling to the US often

  2. Expect to mis-hire initially

  3. Comms across time zones has been harder than expected

  4. But becoming part of the SV ecosystem has been easier

Archetype AnchorAnchor

Setting up from day one with hubs in both NY and Florida

About: TransferWise is building the best way for people and businesses to move money around the world.

Founded: London and Tallinn, 2011

Fundraising: 2011 $50k Seed
2012 $1.3M Seed (Index & IA ventures)
2013 $6M Series A
2014 $25M Series B
2015 $58M Series C
2016 $26M Series D
2017 $280M Series E

Fundraising to date: $396m, Series E

US as % of TAM: 20-50%

US % revenue: 25%

Headcount split: 2,200. 15% US, 65% Europe, 20% RoW

GTM: Primarily mobile app platforms

Leadership location: Europe (London & Tallinn)

Engineering location: Mostly Europe – Tallinn, London, Budapest. Also New York & Singapore

Founder location: London

Founder/CEO: Kristo Käärmann & Taavet Hinrikus

Context for US expansion

Kristo and Taavet knew from the outset that the US was the single biggest market for cross-currency payments. Roger Ehrenberg from IA ventures, one of their earliest investors, was also based in NY.

The company had already built coverage across the EU (both Eurozone and non-Eurozone) as well as Norway and Switzerland. However, they knew the US would be different – to meet the scale of the opportunity, they’d need to build a dedicated, full-stack, local team.

Regulation

Allowing customers to send money to a country is the less complex side of the equation in money transfer and TransferWise had this live for the US in early 2014, as an MVP. Enabling customers to move money out is much harder, and involves navigating a far tougher regulatory environment.

In December 2014, following their $25m Series B led by Valar Ventures (NY based fund), TransferWise launched this service, leveraging US licensing [JC5] partners to enable speed to market. It worked but there were challenges, such as when a certain US state’s regulator wasn’t happy with the process used by TransferWise’s banking partner. They had to move quickly to set up a replacement.

Operating from Europe and using partners in the US was challenging. But it gave us the speed we needed to help serve our customers far earlier than we otherwise would have been able to.

Joe Cross

Initial GM USA

Securing their own licenses took nearly 2 more years. Although users would hardly notice the change at first, it was a major back-end logistical challenge. US regulators required locally-based TransferWise employees, and each state had its own regime.

Our compliance team had to do a roadshow to loads of states, pitching them for regulatory approval. It made me realise that the US really isn’t a simple, single market. In the EU, fintech businesses like ours only require a single license to operate across the whole bloc.

Joe Cross

Initial GM USA

I had to get my fingerprints taken 50 times in a police office in downtown NY, so that all states could verify my identity.

Joe Cross

Initial GM USA

Launch team

Setting up the US involved a trade-off between local knowledge (US hire) and culture fit (transplant from Europe). The leadership thought hard about it, and decided to send a landing team for culture fit, who could then hire for local knowledge.

Joe Cross, head of marketing, and employee #12 at TransferWise,led the landing team as GM, and moved to New York in January 2015 together with Henrik, who led the product element of the team. In parallel, the head of customer support moved from Tallinn (Estonia) to Tampa (Florida), to build a local CS team.

I felt like I was stretching the org to America, hiring the specialist people who needed to be there.

Joe Cross

Initial GM USA

US Locations - New York and Tampa

NY was the obvious choice as the hub, given the fintech angle, plus timezone. It has a rich and deep immigrant history and is full of international communities, who are TransferWise’s core demographics. Initially they focused on expat networks of Brits, Europeans, and Australians. Whilst the Latam opportunity in the US was bigger, the company wasn’t live there yet.

Tampa proved to be a great choice for support and payment operations, with many universities, and several corporates running ops centres. This provided a large talent pool. The larger portion of the US team is now there. It was also a great location to service Latam, given the large community of Spanish speakers. The mayor of Tampa was extremely helpful. The TransferWise office is in an old cigar factory, and they held a launch event just as Donald trump was coming into office. The Democratic Mayor opened the site, exclaiming how happy Cuban factory workers would have been about this immigrant-supporting company.

US Tech

Originally there was a product and engineering team in Tallinn focused on US and Americas localisation. But over time, it became clear that the US needed its own local tech team. Some engineers relocated to NY, and there have now been many local hires too.

They had a US flag above their desk in Tallinn, and one team member played weekly renditions of the Star Spangled Banner on the guitar!

Joe Cross

Initial GM USA

There was a lot of stuff we needed the central team to do, and it wasn’t always clear to them why we needed it.

Joe Cross

Initial GM USA

Culture

The US team found it easy to get behind TransferWise US, but harder to feel allegiance to the global brand.

We wanted TransferWise to be a distributed global team, one team with a unifying mission. This is so much more powerful than individual country units.

Joe Cross

Initial GM USA

When Joe returned to the UK in 2016 after 2 years in NY, a local GM replacement wasn’t hired. Instead, they re-integrated the US teams into the global functions. TransferWise had over this period hired and developed a strong slate of functional leaders based in London and Tallinn, including seasoned executives who relocated from the US.

The company holds an annual week-long summer offsite in Estonia, for which some US team members got passports to leave the US for the first time. This worked well for bonding, although some people were jet-lagged and experienced culture-shock. What worked even better was when people from European offices did stints in the US for a week or so, to help with onboarding new US hires.

Florida and Estonia in particular, are very far apart from a cultural perspective, but there were things that worked very well. For example, they made sure that CS agents in Tallinn learnt American banking lingo and terminology. On the Florida side, many of the CS agents joined from more traditional corporates). They now found themselves being quizzed by the Estonian engineering team for customer insights to improve the product, and they loved being involved.

Marketing

Ahead of expansion, TransferWise analysed census data, to prioritise how to tackle the US. They looked at the percentage of foreign-born residents, as a strong indicator that someone would use their service. New York, California, and Florida came out top.

You can get scared of how large it is, and not sure where to start. But it isn’t one big monolithic market.

Joe Cross

Initial GM USA

The US had good word-of-mouth (WoM) growth, but the viral coefficient was not the same as in the UK. The team needed to do paid marketing, as well as a PR drive.

WoM has nothing to do with how big a country is - it doesn’t mean that people know more people (except in Brazil!), so the viral loop is not enhanced.

Joe Cross

Initial GM USA

TransferWise didn’t realise how challenging it would be to stand out in New York, given the numerous homegrown fintech companies competing for consumer attention. They had to cleverly use paid social to find pockets of customers. They also ran subway ads in NY for a number of years, which was good for brand awareness, as well as for hiring and team morale, and was ROI-neutral in terms of trackable customer acquisition. Podcast sponsorship also became a major marketing channel.

As the US footprint expanded, they analysed census data in terms of nationalities-by-area, to prioritise which Latam corridors to open up, and where to focus local US marketing efforts for specific Latam communities.

For PR, sharing what was happening in European banking was interesting for tech and business reporters at major media brands - Wall Street Journal, New York Times, The Economist, and Reuters. These were important outlets for credibility and brand. TransferWise business announcements are now usually covered in the US. However, leveraging the reach of consumer media has proved much harder.

There’s such a cultural difference! US consumers are surprised by instant transfers, whilst Estonians ask ‘what’s a check?’.

Joe Cross

Initial GM USA

Archetype CompassCompass

An enterprise SaaS company that pivoted to the US through Boston

About: Mimecast cyber resilience provides email cloud services for security, archiving, and continuity.

Founded: London, 2003

Fundraising: 2008 $2m Seed
2008 $3M Series A
2010 $21M Series B (Index)
2012 $62M Series C

Fundraising to listing: $90M, Series C

Listing: 2015, Nasdaq

US as % of TAM: >50%

US % revenue: 50%

Headcount split: 1,750. 41% US, 41% Europe, 18% RoW

GTM: Spread between field sales, inside sales, and channel

Leadership location: All leadership team now in Boston, except SVP Customer Success in London

Engineering location: Mostly still in London, but secondary EC in Boston, with small teams elsewhere through acquisitions

Founder location: Boston

Founder/CEO: Peter Bauer

The South African co-founders of Mimecast, Peter Bauer and Neil Murray (CTO), were in London when they set up the company. However, some of the early team and customers were back in South Africa, which remained a major market for many years. They built the engineering and product teams in London.

US planning

In 2007, with a team of just 35, Peter aligned the management team behind a US launch within the next 18 months. Although they had explored expanding to other European countries, the US was their largest market, and also more closely aligned in terms of language and regulation.

Mimecast’s Head of Sales (Will) was Canadian, and volunteered to be part of a seven-person landing team, which also included Mark Bilbe (employee #5, and now Chief of Staff to Peter). At the time, Mimecast had only received angel funding, so costs were tight. They rented a small Regus office in early 2008, and gave each team member roughly a $5k relocation allowance. This team set up US data centres, and provided initial tech support (core to their proposition was not using public cloud).

Early days in Boston

Peter had spent a summer in his youth working at a camp in Boston, so he knew the area, and liked it. The timezone, and ease of travel to London, were also a big plus.

Their initial local GM hire wasn’t a good cultural fit, so Will took on the role, hiring a local junior inside sales team. But the lack of any US brand, or nameworthy VC’s, made this tough. There were some great hires - some still with the company today - but after 6 months, they realised they were spending more on recruiting than the revenues being generated! However, they did win some notable US customers, as well as expanding through UK customers (especially law firms) that had US offices.

During this time, Peter was already spending 30-40% of his time in the US.

The financial crisis hit just after they raised a Series A. Mimecast considered closing the US office, but kept the faith and, fortunately, didn’t. Instead, they kept costs tight, and weathered the downturn.

The team kept a central R&D function in the UK, but otherwise encouraged a lot of autonomy in each local geography (UK, US, SA), with no central marketing, etc. This was very important, as it encouraged local entrepreneurialism, and avoided tensions. These days, things are more highly leveraged from the centre, but Peter believes a looser federation was the right model for that period.

Founder move and leadership

Index led a Series B in 2009, and soon encouraged Peter to move to the US. But he was not ready yet.

I said it wasn’t necessary. Our centre of gravity was still in the UK, and it was hard to see how to extricate myself. But I said I’d think about it.

Peter Bauer

CEO & co-founder

Instead, they hired a local, more experienced, GM, who helped with scaling. Two years later, they switched to someone from the original landing team. By this point, the US market opportunity and momentum was clear. Peter encouraged his wife to visit Boston, and in mid-2011 they moved with their 3 kids (youngest 5 years old). Neil, as CTO, remained in London, together with Alan Kenny to lead UK sales. Peter’s move proved transformational for the business.

The biggest challenge became dealing with the ambiguity of where our centre of gravity was.

Peter Bauer

CEO & co-founder

Within one year, Peter convinced his CFO, and early joiner, Peter Campbell, to join him in Boston from London. But the rest of the leadership was in the wrong place. It was time for a new set of execs to take the company into the next phase. As a young founder, however, it took Peter 18 months to fully appreciate this.

In retrospect, it was obvious. I was in the US. Our largest market was the US. And the deepest talent pool was in the US.

Peter Bauer

CEO & co-founder

Scale and IPO

Between 2014 and 2015, Mimecast made a series of executive hires in the US. Critically, this included Ed Jennings as COO, which enabled Peter to focus on the upcoming IPO, whilst sustaining growth.

Ed was a transformational hire. But I’m not sure we could have hired him earlier than we did. We lacked the brand. Even if you throw money at stars, the risk is that you just end up hiring mercenaries.

Peter Bauer

CEO & co-founder

The IPO was in November 2015. The engineering team is still mostly in London, although there are now smaller teams elsewhere, including in Boston. And in 2017, Mimecast hired global product and engineering leaders in Boston.

I wanted the leadership team to all be together in Boston. Our SVP eng spends half his time in London, and we’re lucky he can do that.

Peter Bauer

CEO & co-founder

First boots on the ground
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