When one of our portfolio companies is planning to expand to the US, one of the first things a founder asks is can we connect them with another founder or operator who has done it before. And rightfully so! The wisdom gleaned from a conversation with someone who has “been there, done that” can prove invaluable. It’s a chance to not only sense-check your strategic approach but also sidestep common and costly pitfalls.

We’re scaling access to those conversations with a summary of the who, what, when, where and how of expanding into the US. That sounds pretty straightforward, so before you go any further, it’s worth acknowledging that every time you expand into a new country, your job becomes exponentially harder. When you go from one country to two, you square the problem. Two countries to three, you cube the problem. You get the gist. 

Our second caveat is that this isn’t an exhaustive guide–there are way to many ways you could slice and dice it based on your specific business–it serves as a starting point to get you thinking about an approach that makes sense for your startup, with some tips and advice to guide you along the way. 

When 

For Aussie and Kiwi startups with global ambitions, the case for expanding into the US market is compelling, with a huge total addressable market (TAM) up for grabs. In fact, the majority of founders we spoke to say that, with hindsight, they wish they had built their presence in the US sooner. 

But it's also worth playing devil's advocate and asking yourself: Is international expansion critical for your company right now? Or will you spread resources too thin and lose your focus and leadership in the ANZ market?

Push (proactive) and pull (reactive) forces also come into play, influencing your decision and shaping your approach:

Ultimately, there is no right or wrong time, but you will want to have solid answers to the following questions before you make a move:

1. Is the US market ready for you? Have you validated it?
2. Is your home team established and can manage without key personnel while they’re abroad?
3. Is there repeatability and scale to your current go-to-market approach? 

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A typical journey might look like:

The sage advice from all founders is to test first. Before you reallocate all your time and resources to the US, do a pilot, spend a few weeks there, see whether you have product-market fit and speak to customers. The risk is it becomes a massive time suck and distraction instead of a big prize. 

What

What you sell and the way you sell it may need some adaptations or modifications before you're ready for the US market. Whether you require a little or a lot of changes will depend on your product or service. Here's what we commonly hear from SaaS founders.

Product

• Domain and hosting: Use a .com domain name and a hosting provider with servers near the US to optimise website speed and performance. 
• Localisation: Use American English, date formats and the imperial system. Localise user data fields. If most of your customers are US-based, you might commit to this across your customer-facing touchpoints or choose a content management system that allows for easy content localisation and configuration of different website versions for each target audience/country. 
• Currency: Configure currency settings and pricing to show in USD. US vendors typically require customers to enter their zip code during checkout as sales tax varies by State, county, and sometimes even city. 
• Data privacy and security: You may only have to make minimal changes to your front-end, but if you're handling a lot of data, changes to your back-end will be critical. It's worth dedicating time upfront to the applicable laws governing the privacy, security, and treatment of customer data you'll have to comply with. Varonis has put together a guide to US Privacy Laws. 

Go-to-market

• Segmentation and ICP: It's easy to underestimate the size of the US market. A niche group in the US can be the size of the entire Australian market. All the founders we spoke to emphasised revisiting your segmentation and ICP before you try to tackle the market.
• Case studies: Case studies open doors–but only if they’re the right ones. Australian reference customers don't mean much to a US audience (yep, even the big ones carry little to no weight). Where possible, showcase US marquee clients for cut-through. 
• Sales style and communication: While English is the native language in the US, Australia and New Zealand, there's still a lot of room for miscommunication. Americans value confidence and self-promotion, which can be incongruent with Aussies' and Kiwis' style, which is usually more laid-back and self-deprecating. While their approach to sales may seem more aggressive and arrogant, upping your assertiveness and boldness will go a long way in helping you close more deals in the US.
• Marketing and communications: Revisit your positioning relative to local competitors. Shoot local images and videos. Some of the words, slang and colloquialisms we use don't land with our friends across the Pacific. Sense-check your marketing and comms collateral with a local to avoid missing the mark.

Who

Founders

The claim that "the founder has to move to the US" is a guide but not a rule. The majority of founders in Airtree's portfolio with a presence in the US haven't permanently relocated; instead, they've set up a cadence of regular travel or have lived there for a stint.  

A common arrangement if you have a co-founder is to have the commercial co-founder based in the US. Having a founder in-market is crucial for making your first key hires, setting the vision and securing necessary resources and attention from HQ needed to make the move a success. 

For ANZ-based founders trying to build their presence in the US, here are a few practical tips:

1. Start spending time in the US. It's obvious but start with visiting once a quarter to get your finger on the pulse and build relationships and your network. This will pay dividends in the long run. 
2. Tailor your social profiles to the US. This includes changing your location and posting content based on US time zones. 
3. Work US hours. If you're looking to schedule meetings with potential customers and investors, don't send them a Calendly where their only option is to book meetings outside their work hours. You'll need to adjust your working day to take meetings at a time that works for them. 

To your customers and investors, you're based in the US for all intents and purposes, which signals your commitment to the market. 

Hiring

Expanding into the US is like a "second launch" for your startup. One way to approach hiring is like you would if you're a startup just starting out. Your first few hires need to be strong individual contributors who know how to build autonomously from scratch. You won't have time to hand-hold them yourself unless you commit to not sleeping!

A recurring theme from our discussions with founders highlighted the painful lessons learned from hiring mistakes.

‍Mistake #1: Buying a logo

Paying top price for a new hire based on their previous experience, thinking they’ve done this before and could do it again, when the reality was they were only part of the solution, not the actual changemaker who drove the company/function from point A to B. 

‍Mistake #2: Hiring too many people

Don’t try to scale too quickly, or you’ll burn through your runway. Instead, treat it like an MVP, and don’t scale headcount until you get evidence of demand and traction.

‍Mistake #3: Being sold the dream

US candidates are hard-wired to sell themselves, while Australians tend towards the opposite. If it's your first time recruiting in the US, you may be blown away by candidate after candidate who seemingly ticks all of your boxes. But you'll need to dig a little deeper to ensure their "say" matches their "do".  

Compensation

Salaries are not comparable between Australia and the US or even city by city in the US. US talent is very aware of their market value and benchmark compensation. It's time to make peace with the fact that you'll be paying more than what you're used to for similar roles, plus healthcare and benefits. 

From there, it’s worth devising your remuneration principles, for example:

• Level of salaries you’re willing to pay (e.g. market rate, above market, 60th percentile etc.)
• How you’ll administer ESOP (i.e. grading scale)
• What elements you align across geographies, and what is unique to the local market (e.g. healthcare and benefits)

Market data is your friend. Ask your VC if they have a compensation database. Find benchmarking reports. Or use services like Carta Total Comp and Glassdoor. 

Teams

The typical approach to distributing headcount across geographies is by function. For startups with the majority of their TAM in the US, most founders opt to keep engineering and operations in ANZ and establish a go-to-market team in the US. This isn’t a one-size-fits-all recommendation, and it’s worth regularly assessing your organisational structure to secure the resources you need to be successful in each market.

‍Engineering

Keeping the engineering team in ANZ, especially for early-stage startups, is driven by salary considerations and access to talent. It’s more cost effective to retain your engineering team in ANZ, and you’re likely to have an established employer brand that can attract high-quality talent–two advantages you wouldn’t want to compromise. 

‍Product

In the early days, it’s common for the product team to be co-located with engineering for seamless collaboration. As you expand your customer base in the US, having a small satellite team there can enhance collaboration with clients, understand their needs better and then tailor your product accordingly. This team can also assist sales efforts by offering technical expertise during client meetings and sales demos.

If your product team remains in ANZ, it’s crucial to establish robust operating processes and communication channels between engineering, product and go-to-market teams. 

Go-to-market

Establishing a solid presence in the US market necessitates having sales, marketing and customer support teams on the ground. Many startups retain a portion of these teams in ANZ to maintain relationships with existing clients and leverage tacit knowledge of the brand and product. Over time, the bulk of the go-to-market headcount shifts to the US to drive brand awareness, generate leads, close sales and provide timely customer support.

Where

While Delaware is the go-to State to register your company, where you choose to base yourself or your team may differ. San Francisco and the broader Bay Area are popular choices, providing access to a large talent pool, investors, and business networks. But it's worthwhile examining what other cities in the US may be a better fit for your business. Here are some questions worth asking to get you started:

• Where are our existing and potential customers?
• Will we be remote-first or have an office? 
• If we have an office, what's the cost of office space like? 
• Where's the best talent pool (availability and quality) for my business model and sector?
• If we're remote-first, how many different States will we hire in? How will we balance getting the right talent through the door with adhering to all the different rules and regulations in each State?
• Where is the best location for overlap of hours for all teams?
• What locations are the most easily accessible by flights? Do we want to be one flight away from Australia, or to key customers/partners?
• Where is the city hub for my industry?

Let’s take a look at some of the usual suspects of where to set up shop, plus some other US metro areas worth exploring. 

While the maxim is to go where your customers are, if you're looking to raise capital, consider the deal activity in the city and the investors based there. 

How 

Payroll, HR & benefits

Payroll and benefits are more complex and cumbersome in the US than ANZ. You'll want to get things right from the get-go, as non-compliance can result in heavy penalties. Most founders and operators recommend paying a PEO to do it for your peace of mind. 

A PEO handles employee payroll, compliance with all filings, health and safety regulations, and the provision of health and pension benefits (401k). They will also register offices and/or employees with state-level departments. Using a PEO doesn't affect stock option grants. We've compiled a guide to the pros and cons of PEOs and a list of providers.   

Visa

Figuring out which visa is right for you and navigating the application process can be a battlefield.

In the early days when you’re doing market visits, you can use the ESTA visa waiver program (VWP) for stays of 90 days or less. Business activities permitted while in the US on the VVP include:

• Consulting with business associates.
• Attending a scientific, educational, professional or business convention or conference.
• Attending a short-term training, but you must not be paid by any source in the US except for expenses incidental to your stay.
• To negotiate a contract. 

Once you or someone from your team is ready to relocate, you’ll need to assess the best visa route. Nationality determines visa eligibility, so to get Aussie’s started, check out our overview of US work visas for Australians. An immigration specialist may also be a worthwhile investment to guide you through this process. 

The Delaware Flip

You can do business in the US without reincorporating (flipping) your company. Companies that don’t reincorporate use a US-based subsidiary to operate and hire employees in the US. However, you may choose to reincorporate–most commonly a Delaware Flip–to facilitate business and gain easy access to US investors. 

Before flipping, there's a lot to consider, from tax implications to revenue recognition and transfer pricing, so start planning early. We've covered all the key details about the Delaware Flip here.

Banking 

To open a company bank account in the US, banks need to execute their Know Your Customer (KYC) formalities, requiring you to gather a bunch of documentation such as:

1. General background information of your business and source of funds
2. An EIN number
3. A copy of the Certificate of Incorporation
4. Two forms of photo identification
5. Proof of address

You can set up a US bank account online with International banks like Silicon Valley Bank, First Republic and HSBC. However, it’s usually recommended that you have someone physically present in the US to set up your account as some banks prefer to handle additional follow-up questions and admin in person. 

Legal

The US has a highly litigious business environment. US companies spend 166% more on legal services than their global counterparts, with technology being one of the industries facing high levels of litigation. As such, it’s wise to have a good lawyer on hand for all the initial setup (e.g. subsidiary setup, employment contracts, stock options plans, Americanise commercial contracts, trademark and patent filing, data privacy etc.) as well as ongoing counsel. 

‍Cooley, Fenwick, Akerman, Goodwin, and Morrison & Foster are all firms well-versed in startups and technology.