8

Scaling up

After establishing your initial presence in the US, and gaining some early customer traction, the challenge shifts to your model for scaling. How should you design your increasingly complex global organisation, and your global leadership team?

Leadership talent

There is now a fairly deep pool of talent in Europe across all functions required by startups - technical, commercial and operational. It is growing all the time, and extends well beyond London - to Berlin, Paris, Amsterdam, and elsewhere. However, there are still only a handful of outlier tech successes that have been built in Europe. This means that the talent pool for leaders with proven experience of high-growth tech companies at-scale is still very shallow. This is true across all functional areas. The dominance of US companies, and more specifically, companies from the San Francisco Bay Area, is reflected in where this top leadership talent can be found.

On the journey from startup to listed company (or equivalent scale), we typically see two or three iterations of executive leadership, reflecting the evolution of capabilities that are required at different stages of growth. This is not a hard rule, and there may be one or two executives who stay and grow with the business through different stages. But on average, each function will see three successive leaders. We can characterise these stages as early, middle, and late.

The sequencing for these stages differs by business model, but we set out below a typical journey for a SaaS company, together with estimates for the number and location of experienced leadership candidates at each stage.

SaaS scaling journey - leadership requirements and talent pools

Stage of scaling
(ARR as a proxy)
Number of experienced executives per function Example leadership role and focus:
Sales Function

Early
(Series A-B)
$0 - 15m

1,500 proven US candidates
60% in the Bay Area
200 proven European candidates

VP Sales
- Experimenting with sales motion
- Finding market-fit (client size, sector, use-case)
- Player/coach, hiring and mentoring initial sales team

Middle
(Series C-D)
$15 - 75m

500 proven US candidates
70% in the Bay Area
50 proven European candidates

CRO 1.0
- Scaling and optimising repeatable sales motion
- Full customer lifecycle (upsell & resell)
- Pipeline management
- Strong methodology for sales metrics
- Ramp-up
- Regionalisation and verticalisation
- International (Europe)

Late
(Series E to Listing)
$75m+

150 proven US candidates
80% in the Bay Area
<10 proven European candidates

CRO 2.0
- Nurturing strong leaders below them
- Building channel sales
- International (APAC, Latam, MEA)

The most ambitious European companies will aspire to hire experienced and proven talent. By the time you reach the ‘middle’ stages, this will almost always involve candidates in the US, either to hire in the US, or to relocate to Europe from the US.

Companies also need to be open to step-up candidates.

Pat Haggerty

True Search

Relocating leaders

Within the US

It is a common misconception that relocation is much easier within the US than in Europe. Whilst this may be true for junior or mid-level talent, it is rare for executives.

Relocations of execs in the US, particularly from the West Coast, are super-hard, particularly with Covid-19. I’ve actually done more European relos from the US over the years. It’s actually getting harder now, with dual-career couples juggling priorities, and greater concern for protecting work / life balance.

Mannie Gill

Renovata & Company

If one thing is mis-understood, it’s the likelihood of candidate relocation at exec level. In the last four years, I haven’t done a single one.

David Ives

True Search

On the other hand, commuting is more common for executives in the US than in Europe, and offers another way of broadening the talent pool. This doesn’t work between the East and West Coast - the distances are just too long to be viable over any period of time. However, there are many examples of execs who commute weekly along the East Coast (particularly between New York and Boston), or West Coast (e.g. between Los Angeles or Seattle, and the Bay Area).

If a candidate hasn’t proven themselves to be capable of a commuting arrangement before, that’s a red flag to me.

Pat Haggerty

True Search

Relocations to Europe

For relocations from the US, we advise looking for US candidates with some ‘hook’ to Europe. There is a growing pool of expatriate Europeans in Silicon Valley, who now have young families and/or ageing parents, and who are therefore open, or even keen, to return to Europe. Inversely, they may be American executives, with a European partner who is keen to return. Alternatively, they may have spent some time studying or working previously in Europe, or simply have run international teams involving frequent European visits. Another receptive talent pool we have seen are South Asian expats on the West Coast, who want to move significantly closer to home. Whilst it can be tricky to pre-screen candidates for some of these characteristics, our experience is that you need at least one of these hooks. Beware of US candidates whose interest boils down to “I want an adventure, and Europe sounds fun.” Not only might you waste time on ‘tyre kickers’. The bigger risk is hiring someone who then doesn’t work out, because they didn’t appreciate the realities of moving to Europe, either personally or professionally.

Ensure that your shortlist of candidates in any executive search is therefore weighted accordingly - eg 4 from Europe, and 1 or 2 from the US. Otherwise you run the risk of drawing a blank.

In my experience, someone from Silicon Valley is as likely to relocate to Europe as they are to NY or Boston.

David Ives

True Search

Another common challenge with relocations from the US relates to compensation. US compensation is significantly higher than in Europe, particularly for equity. This difference partly reflects the higher average experience levels of US candidates, and also the very high cost of living in the San Francisco Bay Area. However, even adjusting for these factors, you may need to re-think your executive pay-scales in order to compete for US talent. We recommend also thinking about this in terms of up-levelling compensation for your European-based executives. It creates resentment if a relocated US executive is offered a much better package than their European peers. Often, this is because companies have failed to increase compensation for their existing executives in line with growth.

US talent is far more focused on equity - you need to pay to play, and they’ll do a lot of due diligence.

Andrew Robb

Former COO, Farfetch

It is important to recognise the ‘pulling power’ of different European locations for US candidates. Individual candidates will have personal preferences, but our experience of ‘city appeal’ is as follows:

  1. London - by a significant margin

  2. Berlin, Amsterdam, Barcelona

  3. Paris, Dublin, Copenhagen, Stockholm

  4. Other locations

Recommended Headhunters

For GTM hires in the US:

True Search - Pat Haggerty & David Ives

Renovata Partners - Mannie Gill

Daversa Partners - Gary Constance

For US to Europe relocations:

True Search - Nick Fairclough

Renovata Partners - Thomas Jepsen

Daversa Partners - Wendy Colvano

Distributed leadership teams

Successful US expansion implies that, for at least some functions, or time period, company leadership will be distributed across the two continents. This presents challenges, even for companies with a fully-remote model. The critical factor to ensure success with a distributed leadership team is a willingness to travel and meet frequently. This is essential for any executive in an organisation split between the US and Europe, and the expectation needs to be explicit before making any hire.

Having remote leadership takes a certain kind of person - someone willing to take late-night calls and frequent travel. There are lots of late nights, and lots of jetlag. Not everyone has the stamina for it. Although we wanted our people and leadership co-located, for the right person, remote can make sense.

Andrew Robb

Former COO, Farfetch

At the earlier stages, it is important that leaders are co-located with their functional team, until there is sufficient bench-strength to cover day-to-day management. We see this most clearly with R&D leadership - engineering and product leadership will remain in Europe for several years, before it is possible to consider upleveling these roles in the US. But the recommendation applies to other functions too - marketing, finance, operations, etc. When a functional team is small, there is a significant advantage to co-location, making it easier to establish systems and processes, and to train up more junior members of staff.

An exception to the co-location model is for sales leaders in companies with a field sales model. Field sales teams are likely to be distributed by their nature, and also composed of experienced individuals, so it is fairly common for these roles to be remote. But it is still preferable if sales leaders are located with other leaders.

Engineering stays in Europe

In every outlier success story of Europe-to-US expansion, core engineering has remained in Europe, even if commercial success pivots to the US. Once you have built an engineering team that has in turn built your product, it is simply too risky to move or replace it. Keeping your engineering team in Europe also allows you to take advantage of a strong talent brand, lower costs, and higher retention. Later-stage European companies sometimes add additional engineering centres within Europe as they scale, in order to tap into new talent pools. For example, King and Skyscanner in Barcelona, or Collibra in Wroclaw. But there is still an advantage to keeping hubs relatively close in terms of timezone.

We reviewed hiring developers and UX in New York, but the cost of doing so was astronomical compared to London.

Joshua Jian

Head of Corporate Development, Credit Benchmark

From our research into 275 European companies that have expanded to the US, only 50 had any developers in the US. Much later in the scaling journey, we do sometimes see the opening of a secondary engineering centre in the US. This is typically triggered by the hiring of a US-based CTO.

The problem with engineering talent in the US, particularly in the Bay Area, is that there is just no loyalty. In Europe, they are genuinely excited about what they are working on, and are more likely to stick it out through the highs and lows.

Danny Rimer

Index Ventures

What % of R&D Headcount do European companies have in the US?
What % of R&D Headcount do European companies have in the US? Index Research, sample size = 251
Keep technology in one location for as long as you can. If you need to expand, seed the new location with a mini cell and build a team around that cell. Avoid building a technology team in the US, because of retention issues.

Stephane Kurgan

Index Ventures & former COO, King

Organisation design

With the exception of engineering, the impact of US expansion on organisation design varies widely, depending upon your archetype. A summary of each potential journey is presented below, after which we will discuss some specific recommendations for each of the archetypes.

Organisation Design and Leadership - division between Europe and US

Early Stage Venture Stage Growth/Listing Stage
Archetype

Organisation Leadership Organisation Leadership

Compass

All in Europe

R&D in Europe
G&A in Europe
GTM increasingly in US

Europe:
CTO
VP Product
VP Finance

US:
CEO
VP Sales
VP Marketing
VP Customer Success

R&D in Europe
G&A
mostly US

GTM mostly US

All in US:
CEO
CRO
CMO
CFO
CPO/CTO
CHRO

Pendulum

All in Europe

R&D in Europe
GTM, G&A distributed

CPO/CTO in Europe. Others distributed between Europe and US

R&D in Europe
GTM, G&A distributed

Distributed between Europe and US

Anchor

All in Europe

Mini-org in US across all GTM functions

All in Europe, except US President

R&D in Europe

Mirror-org in US across all GTM and G&A functions

All in Europe, except US President

Telescope

All in Europe

All in Europe except BizDev team in US

All in Europe, except
VP Business Development

Mostly in Europe, except BizDev team, plus % of Customer Support, and maybe Finance

Mostly Europe, except VPBD, and maybe VP Support and CFO

Scaling Compasses

The Compass archetype is characterised by a pivot of the whole organisation to address the US market. After the founder has moved, and US commercial traction is established, this has a ripple-effect on all other functional teams, and on leadership. At the point of IPO or listing, the entire leadership team will be in the US, along with about 50% of the overall team.

Product

In the early stages, your product team needs to be close to engineering - close collaboration is critical. But following US expansion, the requirements of US customers will drive your product roadmap. It is essential that your product team is oriented to these needs, hearing them first-hand from customers, as well as from US-based sales and customer success.

This can be achieved whilst keeping your product team co-located with engineering, but you need to put in place rigorous processes to foster communication and collaboration with the US GTM teams.

High-quality engineering talent and strong product experience means that maintaining Israel as the center of gravity for R&D makes sense for most Israeli companies. But this can’t be done successfully without heavy ongoing investment in a culture of cross-border collaboration.

Gil Dibner

General Partner & founder, Angular Ventures

However, what we usually find is the creation of a dual product team. The majority (maybe 70%) of product managers will remain in Europe alongside the engineering team, with a technical orientation. But a smaller team of (usually more-experienced) product managers will be hired in the US, with an explicit customer-orientation.

Product leadership has to be close to customers and to sales. Our product team is now split, with most of the senior PMs in the US.

Peter Bauer

CEO & co-founder, Mimecast

At later stages, with the product organisation growing in complexity, the pressure builds to hire an experienced leader - someone with the gravitas to counterbalance demands from the sales team, whilst capable of maintaining a consistent and integrated product roadmap. The talent pool of proven Chief Product Officers is very heavily weighted to the US, which results in a further pivot towards the US. This individual will often also oversee engineering, through a VP Engineering direct report based back in Europe.

GTM

Sales and marketing organisation and leadership will rapidly pivot to the US, reflecting the growth opportunity and focus, as well as availability of talent. This naturally creates tensions during the transition, particularly if early GTM leadership is already in place in Europe.

It has been tough matrix-managing a lot of people with hard dotted-lines to our Lausanne functional leaders. It’s the biggest challenge.

Mary Beth Vasallo

VP America, Nexthink

Over time, you will probably appoint a VP Sales (Europe), responsible for sales activity across the whole region, and reporting into a US-based CRO. If European R&D is in a secondary hub, the European GTM hub may well be in a different location - London or Amsterdam being the most likely. For example, Collibra and UiPath have both chosen London, despite R&D being centred in Brussels and in Bucharest, respectively. For further insight into building out European GTM operations, read the Index Ventures handbook ‘Destination Europe’.

G&A

As the commercial focus shifts to the US, functions such as finance and legal will tend to follow, albeit at a slower pace. The ‘2.0’ leadership hires are likely to include a US-based CFO, General Counsel, and Chief People Officer.

Scaling Anchors

In the Anchor archetype, US expansion involves the creation of a condensed mirror-org across GTM and G&A functions, and hiring a US President. Expansion tends to be later in the journey, by which point ‘2.0’ European functional leaders are likely to already be in place. The US is not expected to become the dominant market in terms of revenue share, although it may become the highest-revenue single country (20-30% of total). At the point of IPO or listing, the leadership team will remain entirely or mostly in Europe, along with 70%+ of the overall team.

Matrix management in the Anchor model can be tricky. With most functional leadership sitting in Europe, it is usually best to give significant autonomy to the US, so that they can optimise for US market needs. In practice, this means dual-reporting lines for US functional heads, but with the stronger line into the US President for sales, marketing, and customer success functions. Ideally, the US President will be responsible for the full US P&L, although this depends upon your business model.

Unlike in the Compass, the product function usually stays in Europe alongside engineering, although you may scale to having one or two US-based product managers, focused on ongoing localisation.

For our product teams, being close to customers is important, but being far from engineering is a risk.

Ingo Uytdehaage

CFO, Adyen

Scaling Pendulums

The Pendulum archetype poses the toughest leadership and management challenges with US expansion. Distributed leadership works best when functional teams are built on a distributed-basis from early on. In fully remote teams, this approach is part of the DNA of the company. But if your initial engineering team is centralised, a deliberate ‘remote-first’ decision needs to be taken when hiring later for functions such as marketing and finance.

My advice is that if you truly believe your company is going to be big, don’t accrue organisational debt; adapt to distributed leadership early, definitely once you’re post-Series B. Especially today, with remote working being more viable and desirable.

Daniel Ek

CEO & founder, Spotify

We never had the whole exec team in one location, and this took a big toll on my personal life. Running a distributed team needs you to have a very clear vision on what you are trying to accomplish, and clear associated KPIs.

JB Rudelle

Chairman & Founder (former CEO), Criteo

I was focused on getting the best talent, so I accepted the trade-offs in having a distributed leadership team: management tension, lots of travel, and video conferencing. I can recommend this when you are in pure scaling mode, and when the proposition is totally clear. But not at the stage when you are changing things, and adding product lines, all the time.

JB Rudelle

Chairman & Founder (former CEO), Criteo

Having a distributed leadership team works fine for an early stage startup where everyone is used to the rough and tumble, and are just working to get things done. Collaboration is harder on the individual-contributor level, but at leadership level, people make it work.

David Helgason

Founder & ex-CEO, Unity Technologies

Criteo provides a good example of successfully navigating these challenges. In 2013, in the midst of hyper-growth, the CEO and founder, Jean-Baptiste, was in Palo Alto. The CRO was in New York, the CPO was in London, whilst the CTO and CFO were in Paris.

Sometimes there is no ideal org structure. A good strategy is to change the design every couple of years, like multinational corporations tend to do, keeping ideas and relationships fluid.

Dom Vidal

Index Ventures

Scaling Telescopes

Telescopes are able to build a customer base in the US with little US headcount. The core customer acquisition channel is usually self-serve growth, which is run by teams back in Europe. Instead, US hiring tends to centre around two functions:

  • Business Development and Partnerships - key distribution and technology partners are in the US
  • Customer Support - proportional to the size of your US customer base

As you scale, you will probably hire a VP Business Development based in the US, to run this function, although it will never become a large team. In terms of headcount, the US support team is likely to become larger, depending on the relative % of your US customer base. If the majority of your support team ends up being in the US, it might make sense to have your global team leader there too - ie VP Customer Support. Most other functional leaders are likely to remain in Europe, even if they are individuals relocated from the US.

The level of expertise you can find for certain roles in the US is beyond anything that exists in Europe. We found this when we hired Danny [Head of Platform Partnerships] and Brian [Head of Ad Sales].

Riccardo Zacconi

Former CEO & founder, King

An important caveat is that in B2B, Telescopes have a tendency to evolve into Compasses. This happens when a software product based on a freemium or bottom-up growth model, starts to get traction with larger enterprises. In this case, the GTM model shifts towards sales, which requires people on the ground. Zendesk, Dropbox, and Slack all evolved in this way. In Europe, Pipedrive, the Estonian CRM software company, is also now shifting from a self-serve to a more sales-driven model, and building a sales team in the US. When this happens, the gravitational forces described in the Compass model kick in - drawing the founder/CEO and the leadership team towards the US.

Archetype CompassCompass

Achieving hypergrowth and category leadership from Romania to the US

About: UiPath designs and develops robotic process automation (RPA) and AI software.

Founded: 2005, Bucharest, as DeskOver, pivoted and rebranded in 2015 to UiPath

Fundraising: 2015 $1.6M Seed
2017 $30M Series A
2018 $153M Series B
2018 $265M Series C
2019 $568M Series D
2020 $225M Series E

Fundraising to date: $1,243M

US as % of TAM: >50%

US % revenue: >50%

Headcount split: 2,700. 30% US, 43% Europe, 27% RoW

GTM: Field sales, channel sales

Leadership location: All in New York, except co-founding CTO in Bucharest, and CPO in Seattle

Engineering location: Bucharest and India

Founder location: Splits time mainly between Bucharest and NY

Founder/CEO: Daniel Dines

History

Daniel Dines and Marius Turca (CTO) founded DeskOver in Romania in 2005. It was a lifestyle business, making $300k a year providing automation libraries and an SDK. Developers discovered the software through SEO and Adwords, and their users included teams at IBM and Microsoft.

In the beginning my motivation was to achieve the minimum wealth I needed to have a decent life. But to be an entrepreneur you need the hunger to achieve something from deep within.

Daniel Dines

CEO & founder

Daniel’s eyes were opened to the RPA opportunity when a customer told him that they were using DeskOver for task automation.

We were building an engine, and selling that engine to other garages...we didn’t yet know what we could do with it. Until somebody told us ‘you can use it to build an airplane’.

Adrian Dorache

Early developer

The shift to RPA

In 2012, with a team of ten, they built a basic RPA product aimed at SMBs. At the time, they were bootstrapping the company through consulting revenues, which was a distraction.

You’re much better off raising money through an accelerator programme. But in our time that just didn’t seem possible from Romania.

Daniel Dines

CEO & founder

With hindsight, the team felt that they went in the wrong direction for a few years.

We launched our product too slowly. We polished it too much, and we killed it too late.

Daniel Dines

CEO & founder

The turning point came in 2014 when they were contacted by a major Indian BPO who was pioneering RPA, and who wanted to work with DeskOver. Daniel sent a team of 3 to India for three months, to get immersed in the problem and implementation.

This was an astral moment, and I felt it could be our break. We didn’t think in terms of ‘product/market fit’ back then, but looking back, this was what got us there.

Daniel Dines

CEO & founder

From DeskOver to UiPath

Between 2014 and 2015 the team grew from 10 to 100. They grew their enterprise customers from 100 to 700, and in 2015 changed their name to UiPath.

Customer leads were still almost all inbound, through a free-trial offer. But deepening relationships with systems integrators (Cap Gemini, Cognizant, and others) were creating a strong channel to enterprises. EY Romania was a key strategic partner, and they got UiPath in front of global corporations.

In 2015, UiPath raised a $1.6m seed round, and flipped to a US topco.

The path to scale

In 2016 they reached $5m ARR through an inside sales team in Romania, who sold remotely into the US.

You can build good relationships remotely nowadays - we were introduced to GE via a partner, and our Romanian inside sales team closed it at $300k.

Daniel Dines

CEO & founder

Enterprise products were rolled out, and offices opened in London and Bangalore.

Web traffic grew from 10k per month in 2014, to 1.5m in 2016. This indicated a much broader base of interest beyond individual developers.

Daniel Dines

CEO & founder

Shift to the US

2017 proved to be a huge year for UiPath on multiple fronts. In January, they hired a US Sales leader following a search process. He was solid, experienced, and ran the US until recently, building inside and field sales teams. A top Romanian sales rep moved over to support him. Pre-sales was covered through a lot of travel by the Romanian team.

Daniel started spending four or five months per year in New York, often with his wife and baby.

My being in NY wasn’t significant for closing US sales. But it helped for hiring US execs.

Daniel Dines

CEO & founder

In February, Forrester ranked UiPath as a leader in RPA, which made a material difference.

The ranking counted a lot. It matters what analysts say. Besides just making sales, your product needs to be very good, and by the time this report came out, we were a company that delivered. This is important, because big companies want to deal with big companies.

Adrian Dorache

Early developer

In April, a large Series A provided fuel for expansion. By this point they were servicing 200 enterprises (40% Europe, 30% US, 30% Asia).

By the end of 2017, they had also built a field sales team of 40 across Europe, the US, and Japan. They achieved $45m in ARR, and doubled their direct sales contribution. Overall, headcount grew from 250 to 500, across 10 offices.

Over the next two years, hypergrowth continued, to $150m ARR in 2018, and $300m in 2019. In parallel, Daniel raised three huge rounds, taking the company to a latest Series E valuation of $10.2 billion.

Our culture is built on humbleness. What can make us successful is really the desire to do something better, to become better. Only people who think from a position of humbleness, can improve.

Daniel Dines

CEO & founder

Engineering and Product

Securing engineering talent in Romania was initially tough, because employees were not willing to take the risk of joining an unproven startup. But there was some success, including a 2016 developer hire who now runs the Romanian engineering team.

Romania was not a good place to build a business. Although there is good engineering talent they are scared of startups. Our success should change the ecosystem. It shows that we’re now in a global era, when it doesn’t matter where you start, if you have ambition and a good product.

Daniel Dines

CEO & founder

We had product owners in Romania, but really they were technical program managers. Effectively, I was running product for a long time.

Daniel Dines

CEO & founder

In 2018,they opened an additional engineering centre in Bangalore.They saw AI/ML integration as key to product innovation, so hired a CPO in Seattle from Microsoft. This has led to building a 100-strong engineering and product team there, focused on innovation.

However, the core engineering is still mostly carried out in Bucharest.

Marketing & branding

Compasses pivot their entire GTM focus to the US. Companies following the other archetypes, however, need to make deliberate choices. These are often trickiest when it comes to the marketing function, particularly in B2C, where marketing rather than sales drives customer acquisition.

Analysing the location of marketing teams in nine later-stage companies reveals differences in approach. However, what is clear is that marketing rarely pivots over to the US. The function usually stays unified, and close to the CEO in Europe.

It’s a Google and Facebook world, which means you can run or at least test all propositions centrally.

Andrew Robb

Former COO, Farfetch

Consumer brands have to feel as though they came from the region and have to rethink positioning of their brand and cultural messaging for the US.

Sofia Dolfe

Index Ventures

Location of Marketing Teams in late-stage companies (non-Compasses)

Company Archetype US Headcount Marketing Team Location Marketing Leader

Farfetch

Anchor

200 of 4,000

Almost all in London 5 in US - brand

London

TransferWise

Anchor

173 of 1,600

Almost all in London 4 in US - content

London

Adyen

Anchor

300 of 1,500

Mostly in Amsterdam 13 in US - local social, events, and comms activity

San Francisco

Spotify

Pendulum

3,200 of 6,850

Split between London and NY, across all sub-functions

New York

King

Telescope

315 of 2,650

Almost all in London

London

Supercell

Telescope

100 of 774

Almost all in San Francisco Community in Helsinki

San Francisco

Lemonade

Telescope

176 of 326

Almost all in Israel

New York
(recent CMO hire)

Pipedrive

Telescope

55 of 600

Almost all in London 2 in US - channel marketing

London

Typeform

Telescope

29 of 259

Mostly in Barcelona

6 in San Francisco - product marketing and comms

Barcelona

The factors which influence the location of marketing teams include:

  • Co-location - the benefits of co-locating marketing teams across sub-functions - paid digital, social, CRM, content, brand, comms, etc
  • Talent - availability of marketing talent in HQ location - eg world-class in London, much rarer in Helsinki
  • Proximity to product team - strong collaboration required, eg for acquisition funnel-optimisation, growth mechanics and viral loops
  • Evolution of comms - the comms aspect of marketing is more strategic with scale, encompassing internal comms, investor comms, and public policy. Staying close to the CEO is important
  • Localisation - certain marketing sub-functions tend to localise more obviously, such as offline campaigns (TV/radio, outdoors, sponsorship), events, and content
Being such a visible part of the London tech scene was something we took for granted. In NY, despite our guerilla marketing, and stunts including taking our clothes off, we just didn’t get the same reaction! We weren’t local, so we needed to earn the right to be anti-establishment.

Joe Cross

Joe Cross, Global Marketing & PR, Transferwise

The comms function operates at its best when it is close to the senior executives who engage with external and internal stakeholders most frequently. When the CEO and C-level moves, the comms team usually follows.

Vojtech Horna

Index Ventures

Archetype TelescopeTelescope

Building a successful product and brand for the US, out of Israel

About: Lemonade is a full stack home insurer powered by AI and behavioral economics, and driven by social good.

Founded: Tel Aviv and New York, 2015

Fundraising: 2015 $13M Seed
2016 $13M Series A
2016 $34M Series B
2017 Corporate round
2017 $120M Series C
2019 $300M Series D

Fundraising up to listing: $480M

Listing: July 2020, NYSE

US as % of TAM: >50%

US % revenue: >50%

Headcount split: 380. 37% US, 55% Israel, 8% RoW

GTM: Mobile app and web platforms

Leadership location: Leadership split between Israel and US

Engineering location: Israel

Founder location: Israel

Founder/CEO: Daniel Schreiber, CEO & co-founder Shai Wininger, COO & co-founder

Founding story

Lemonade was founded by Daniel Schreiber (former president of Powermat) and Shai Wininger (co-Founder of Fiverr), in 2015 in Israel. Both of them were experienced tech entrepreneurs, match-made by investor Michael Eisenber of Aleph VC, as they were searching for their next ventures.

In February 2015, they began broadly brainstorming huge businesses and industries - something that could be explosive, and make a dent in history. They stopped when they got to insurance, and realized the untapped opportunity. They knew nothing about the industry, but used their outsider status, and first-principles thinking, to develop a disruptive concept to be an end-to-end fully-licenced insurer, controlling the entire user experience. Their vision was to build an insurance brand that consumers loved, aligning their incentives with their customers’.

Launching in the US via New York

Daniel and Shai knew that disrupting the industry meant cracking the US market, so they focused on it from day one, even while operating out of Israel.

They chose to launch in NY, because it is one of the strictest places to get a license; if they could prove themselves there, they figured further roll-out would be much easier.

It was a challenging time while they worked on obtaining their NY operating license. During this time they were approached by both the UK and Israel for their initial launch. But they refused and stayed true to their original focus. In September 2016, with licenses in place, Lemonade launched in New York.

It’s part of our values to do hard things! We didn’t start the company to take the easy route, so we persevered in making NY work!

Gil Sadis

VP Product

After this they rolled out across the US quickly, adding 7 new states in 2017, 13 in 2018 and 6 in 2019.

Pivotal hires, building the US team

Ty Sagalow, a seasoned insurance executive, was hired in NY as Chief Insurance Officer. Dan Ariely, the world-leading behavioural economist, joined in 2016 as Chief Behavioral Officer. Hiring great people from the start helped to set them up for success, raising the bar for further hiring.

Building a consumer brand

Gil joined Lemonade in 2015 as the first product manager. He was inspired by Shai’s passion, and also excited to work with Dan Ariely. The chance to build a world-leading consumer brand proved too enticing to pass up.

Shai masterminded the brand concept, alongside the VP Comms and Gil. They would watch insurance ads for hours, and then brainstorm. They wanted to change people’s experience of insurance; in a highly-conservative industry that people love-to-hate, they would develop a brand that people love. They wanted to be selected on the basis of brand, and not on price. They wanted their user experience to mirror that of tech companies like Spotify, Uber, or AirBnB.

Transparency is a core tenet for Lemonade. They shared their bank account statements, and wrote easy to understand terms and conditions for their insurance policies. They gained a cult following - for example, by refusing to insure assault rifles, or guns above a certain value, and by not investing in coal or environmentally-damaging companies.

Our leadership was brave enough to risk that half of the US population might turn away from us, but that the other half would love us.

Gil Sadis

VP Product

Building product from Israel

Shai, Gil and others in the product team travelled to NY constantly. They parked themselves in a Starbucks and asked people to try out the app, doing hundreds of sessions of user-testing, focusing on the UX and micro-copy. Shai was the product visionary - and remains so today.

They had the benefit of time while waiting for licenses, and being very well-funded.

We were lucky. Sector sluggishness gave us a first-mover advantage. We benefited from the numbness of the industry - we shook it up with innovative branding and marketing!

Gil Sadis

VP Product

The Lemonade app launched with strong conversion rates. The first product was renters insurance - a simple use-case with a reasonable, underserved audience, which had been largely ignored by traditional insurers, so it had a lower CAC (customer acquisition cost).

As the offering got more complex, it became harder to be so far from the customer base. So the product team travels a lot, on rotation. They also rely heavily on user data - from the app itself, from user surveys, from support tickets, and through strong communication with their NY and Phoenix customer support teams.

They have since also launched in Europe - starting with the Netherlands and Germany.

Global team set-up

The founders remain in Tel Aviv, alongside R&D, growth and comms. In this respect, Lemonade is organised along the lines of the Telescope archetype. They feel that keeping comms and brand close to the founders and product has ensured coherent messaging and alignment.

Several members of the executive team are now in New York, including the Chief Insurance Officer, CFO, VP Business Development, and more recently, the CMO. Daniel travels to the US every 3 weeks.

In this sense, Lemonade also has some characteristics of the Pendulum archetype, and the company presents itself in the US very much as a domestic player.

Consumer marketing expertise is rare in Israel, which has been so much stronger in B2B tech. Lemonade hired for potential, developing people over time. They also managed to relocate a lot of talent, for example in copywriting.

Communication and Travel

Lemonade is a very data-driven company, which allows them to be location-agnostic.

Now we have such scale, the data really yields insights.

Gil Sadis

VP Product

They emphasise the importance of internal communication, via Slack, travel between offices, and beyond.

Lemonade’s Top Tips

  1. Invest in your brand, taking care with micro-copy, design, and UX. Consumer expectations now are way higher than they were in the ‘lean startup’ days of 2009

  2. It is possible to start a company without being on the ground, if you are laser-focused on your target market. Start with the smallest niche possible in the beginning, and build out from there

Fundraising in the US
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