International Expansion is like Creating a Wonderful Meal — Methodical, Genuine and Local
Master Minds Podcast by Sway Ventures — Greg White interviews Albert Vazquez-Agusti
What Has International Expansion Got to do with Cooking a Wonderful Meal?
I’m from Barcelona, where we love our food! We eat well on the restaurant terraces and also cook well at home. Our special ingredients are time, creativity and the best local ingredients . . . listen the interview or read the transcript to find out why these are also important in international expansion especially for a US-base company, as I recommend here, which targets Europe first.
Transcript
Greg White (00:04)
Hi everyone, this is Greg White. I’m a Partner at Sway Ventures. We’re a US-based venture capital firm investing in early to mid-stage technology companies. Our charter is to invest in high-performing teams that are building revolutionary technology and creating the next enterprise, or consumer categories. We work with founders on something we call value-add. There are four distinct areas in value-add for us. We think of it in terms of capital syndication, revenue generation, talent acquisition, and product strategy. I’m joined today by our very own Albert Vazquez. Albert is a Sway Ventures Partner, he’s based in Southern California, and he’s really involved in much of what we do around this practice. Hey, Albert, it’s just great to have you today. Thanks again for the time. Tell us a little about your background.
Albert Vazquez-Agusti (1:02)
Thank you, Greg. Born and raised in Barcelona, I had a professional career that brought me all around the world in projects like one in Beijing in the middle of SARS of 2003, working at subsidiaries in countries, working at headquarters in the US, managing a business in the UK with a multilingual back-office supporting teams spread around Europe. While I have been all my professional life working in different environments on technology, enterprise software, and hardware, I have been for the last few years associated with Sway Ventures focused on venture backed software companies.
Greg White (01:50)
I think you’re kind of right out of Hollywood casting for us as it relates to talking about and thinking about international expansion. The timing around global market expansion, and in particular Europe, is always highly debated — especially when companies get to a certain size or when end markets, customers or channels require such expansion. So with that said, why do you see Europe as a logical first international expansion strategy for US-based companies? And what are the challenges these companies can expect when entering European markets?
Albert Vazquez-Agusti (02:27)
Europe is an attractive option. You find mature economies, similarity in consumers and businesses to the US, and you find a stable legal system that respects intellectual property rights. So all that combined, that should make it the top option for American startups when they are thinking about their global expansion. However, Europe is not a unified market, it lacks the market efficiencies of scale that the US has, and there are certain particularities. It’s a big market, has a population almost twice the one of the US, but it’s a region where you have a lot of diversity, for example speaking 25 languages for 30 countries. So I can understand that the prospect for a US company in approaching the European market can daunt at first, but I would definitely consider Europe the first step to a global expansion.
Greg White (03:47)
There are other things when you and I were talking about this. Thinking that you can kind of go dabble in Europe and expect good results is silly. And Europeans are quite aware of that, when US-based companies don’t fully lean in, they always look at that. So it’s important that if you’re going to do it, you do it.
Albert Vazquez-Agusti (04:19)
There are three reasons for that. On one side, there is already a certain expectation from investors, to see no less than 30% of your revenue coming from Europe as proof that the startup can grow outside the US. Second, especially if you’re a B2B enterprise startup, you will find early that some of the flagship companies that you want to get in, even if they are US-based, will require you to support them internationally. So, Europe will be a geography of interest by your larger customers. Third, if you’re being a successful company in the US, you will start finding companies created in Europe replicating your successful business models. That’s something that you have to bear in mind in for long-term strategy. So, my recommendation is to think about the European opportunity rather sooner than later.
Greg White (05:31)
Well, it actually begs the next question. What stage do you see startups launching these expansion strategies these days? I mean, actually committing resources. Just the languages and the cultural alignment, can be quite daunting. Please, give us a sense of what you’re seeing with startups today in that regard.
Albert Vazquez-Agusti (06:10)
Even if you’re starting early, you might get a few customers from Europe, but this doesn’t mean that you’re committed to the European market. Normally, the decision to expand internationally happens around series B financing. By this time a company has built sales traction in the US, has a proven go to market strategy, and a strong core management team in the US. After that B round, the company will have the financial firepower needed to launch outside of the US. At this point, you should see some user adoption and then get information about where your customers are pulling you in, and where you are going to be most likely getting more traction in Europe.
Albert Vazquez-Agusti (07:14)
I don’t have a fixed approach where it says… start in this country. It would be case by case, depending on what are the dynamics of the business you are in. However, getting into Europe or any other geography, it requires a commitment. Decide where the company will direct investments by function and by geography. And when I say geography, I would talk in Europe country by country. The second one is about alignment. Ensure that all company functions are focused on delivering the global plan. There needs to be a commitment from the core team in the US to support that global expansion. And then, the execution of that is going to be driven mainly by local talent. You need to help them gain — grow through operational rigor and discipline. Each time that this team learns. It’s a milestone that you need to capture as a way that you are learning as an organization. Those successful plays (learned tactics) can be useful when you get into other geographies. So, capture these plays in a sort of playbook as you are going country after country.
Greg White (09:07)
I will double underline what you said from the beginning, do it earlier. At the formation of your company, you should be thinking about this. Hey, Albert, it’s been great today. Really terrific feedback, and there’s a lot to unpack here. If our founders and exec teams want to get in touch with you about any of these topics to dive deeper or to discuss in any particular way, what’s the best way to do that?
Albert Vazquez-Agusti (09:40)
You can reach me at albert@swayvc.com and glad to discuss your thoughts and plans. As a closing, I come from Barcelona. So, we have a strong food culture. I like to cook, and I can translate that into the global expansion practice. My experience tells me that creating a truly good meal takes time, certain creativity, and the best local ingredients. So the same will apply to your international expansion. You cannot dabble, you need to show commitment, and you need to find the right partners in that journey. Thank you very much, Greg.
Greg White (10:30)
Yeah, you bet. We’ll talk soon. Thanks again.
About Albert Vazquez-Agusti: Since I was a teenager working with my father at his engineering office, I’ve seen firsthand how technology and innovation impact our work. We have reached a crucial acceleration point where technological change, education, and inequality are involved in a kind of race. I’ve come to realize that the real bottleneck to taking advantage of innovation is the lack of relevant managerial skills to impact business models through new technologies. That’s why I promote the development of people and organizations to support technology adoption to solve small to big problems based on my experience in Fortune 500, SMBs, Private Equity, Start-ups and Venture Capital organizations.
