Selling to US Corporates – a Guide to the Perplexed

I’ve previously written that non-US emerging tech companies setting up their first office in the US need to consider carefully where they should go (read here). There are a number of factors that influence this decision, including the industries served/customers, availability and cost of talent, investor proximity and costs.

Once that decision is made, however, much of the early business development, particularly for B2B businesses, may be clustered around the area where the office is located. Whether or not your initial focus is local, understanding the business culture and perspectives of your potential customers is critical. 

Here are a few points that may seem obvious, but somehow aren’t:

There is no single US business culture. This point was brought home to me when I spoke to a British entrepreneur who said she liked doing business in the US because she didn’t need to make small talk before getting right to business. There was a key fact in her story, though – she was based in New York City and selling to a local market. The New York style is considered rude in many parts of the country, including in the South, Midwest and Southwest, where some initial discussion of family or sports might well precede a discussion of business.

That being said, there are broad points to keep in mind.

Don’t mistake friendly enthusiasm for serious interest. Americans, in the main (possibly excluding New Yorkers … :)), tend to be friendly. In the context of a business meeting, this may lead to a level of enthusiasm that can be misinterpreted as real interest in your service or product. This will become apparent when you follow-up, but don’t be initially misled.

There may be greater receptivity in the US to working with emerging companies, but corporate sales cycles are still long. A number of non-US emerging companies that I helped in the US have been pleasantly surprised by a greater willingness to work with them than they experienced in their home markets. Obviously, this is a two-way street, so one element of it is the focus on innovation in the home market. However, I think it is true that emerging companies presenting solutions to real problems may find it easier to get traction in the US.

Despite this, your absence of an established brand and track record makes it more difficult to sell successfully, and makes it much more risky for your corporate counterparty to do business with you. You should assume that large corporate sales will still take a long time.

Looking American is important, particularly in some US markets. In many parts of the US, Americans like dealing with Americans, and your looking foreign can add perceived risk to the proposed transaction. There may be offsetting factors in some cases (e.g., Irish or Italian Americans may like dealing with folks from Ireland or Italy), but in general it will be very helpful if your US operation looks local. This is not to suggest that you should refrain from involving senior home country team members in the sales – indeed, senior involvement may be critical in some cases – but you will find that having a credible local American-looking presence can be crucial.

Make sure your sales pitching is fit for market. First, you need to be sensitive to language difficulties. While the US is a nation of immigrants, you may find we are less experienced in dealing with difficult accents from non-native English speakers than, say, Europeans, who are accustomed to a variety of accents in English due to use of English as a common language. Your potential customers won’t want to ask you to repeat yourself – they may just turn off. Consequently, especially if there are language issues, your sales pitches should be delivered by the person best able to deliver them, who may not be the most senior person on your team in the room.

Present using short and clear sentences. If you are using a sales deck, pictures and graphics are likely to be more effective than words.

Be direct. English understatement, for example, does not work in the United States – we don’t understand it.

Hire the right US sales and business development people. As I’ve written separately, making the right hiring decisions in the US is a big challenge (read here). You can reduce the risk in a number of ways: (a) getting assistance from your US business angels, advisory board members or friends in identifying and vetting candidates; (b) doing appropriate due diligence with past employers; and (c) understanding that candidates whose only experience is with large corporates may not be capable of selling for an emerging company without an established brand or marketing department. The bottom line, though, is that you can’t sell successfully with the wrong people.

Try to stay clear of US corporate legal departments to the extent possible. If you get the happy point where you seem on the verge of a sale to a large corporate, you will be sent the corporation’s standard form contract and told to mark it up. You will find that it misdescribes the services that you are providing, includes performance standards that don’t make sense, and also contains a number of other provisions that you don’t like.

If you are forced to do a mark-up, you are likely to find yourself in a ping-pong match with the legal department that can take months (and will be costly for you if you are using external lawyers). Internal corporate lawyers are focused on protecting the company and the legal department, not getting your deal done.

A better approach (if you can make it work) is to go back to your commercial counterparty with an issues list (preferably no more than 10 items – you will need to live with some stuff you don’t like) and negotiate it with him or her. Once you have a business agreement, ask your counterparty to have his or her legal department make conforming changes. This won’t always work (and it will be a more complex procedure than I’ve described, with multiple steps), but where it does work it will save you time and money.

The US generally is a good market for emerging companies in which to do business, but you need to approach it in the right way.

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This discussion is not intended to provide legal advice, and no legal or business decision should be based on its contents. If you have any questions or comments, feel free to contact [email protected] or via LinkedIn here.

You will find Bob’s other weekly blogs for emerging and growth companies on US issues, international expansion and early stage financing here: http://bit.ly/2lP5uMP