How To Identify The Next Big Market

Next month, I will be speaking at the Global Expansion Summit, held from June 18-20 in London! I've been asked to discuss my thoughts on international expansion for technology companies, which I have focused on throughout my career. I will be drawing on my experiences scaling Vungle in Asia and Square in Europe (we just launched in the UK). The first question I've been asked to reflect on is a good one: how do you identify the next big market to launch your product in?

Every company needs to think through this analysis differently depending on the product or feature they are trying to launch. At a high level, I tend to structure my approach by collecting and interpreting data on market opportunity vs. market entry difficulty. For the market opportunity considerations - I look at metrics such as total addressable market, customer lifetime value, unit economics, and profitability potential. I try to accurately forecast these metrics going forward into future years, and take note of the growth trends. I also tend to bake qualitative trends into my models (e.g. geopolitical considerations and cultural nuances). On the market entry difficulty side of the equation, I try to weigh the amount of effort needed to win in a particular market. Top of mind for me are competitive forces, customer acquisition costs, and regulatory barriers. I attempt to make an educated guess as to how all of these factors will evolve over time. 

Through all of this, I try to keep in mind the reality of the company and products I'm working with. I try to think through whether the company has assets in place that would make certain countries easier to launch in than others (e.g. employees with specific language skills, regulatory licenses that cover multiple countries). I try to determine whether I have an existing product that directly addresses or solves the needs of the customer in a particular market - and I try to be brutally honest with myself and my colleagues on whether or not we actually have an advantage over incumbents in the space. If not, I try to determine whether or not we have the appetite for the investment and risk required to become successful, or at least reach parity with market leaders.

The markets ranked high on market opportunity and low on entry difficulty are no brainers — these are the low hanging fruit I act on right away since, in most cases, speed is crucial. I attempt to make a more data-driven judgement call on markets ranked high on opportunities and high on entry difficulty. I generally ignore the low opportunity markets, but revisit my analysis frequently to see if my assumptions on trends have changed. Last point of insight is this — the right markets sometimes require a greater amount of capital, people, and time than you have. This is okay to acknowledge! Sequencing and timing of country launches is just as important as picking a market. There’s a lot that goes into those decisions as well. Will share more on this subject at the conference!

In summary, a few key points to keep in mind for selecting the right market to launch your product in:

• Compare and contrast market opportunity and market entry difficulty of a new market in the context of your product. 
• Quantify the market opportunity (e.g total addressable market, customer lifetime value, unit economics, profitability potential, etc.)
• Quantify the market entry difficulty (e.g. competitive forces, customer acquisition costs, and regulatory barriers)
• Understand the short, medium, and long term trends. Model out how both market opportunity and market entry difficulty will evolve over time (e.g. 5 years)
• Understand the qualitative factors that will impact your analysis (e.g. geopolitical forces)
• Understand whether current assets within the company help you scale certain markets (or bloc of markets) first (e.g. regulatory license, employees with language competencies)
• Determine whether your product has solves the problem of the local customer, and whether you have feature parity with local competitors. If understand the investment and risk needed to meet feature parity.
• High opportunity, low entry difficulty markets are low hanging fruit. High opportunity, high entry difficulty markets require deeper analysis. Low opportunity markets can be tabled, but should be revisited periodically to determine whether trends are within what you predicted