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Going global: Launching your start-up in Japan

You think it's hard to do business when you speak the language? Try it with a translator.

I am in Tokyo this week as we launch MuleSource in Japan. Pics and posts to come as I recover from the 11-hour flight. Somehow I managed to forget my watch, so I am not convinced that the flight was only 11 hours. It felt like multiple lifetimes.

At our Wii-off last week several people asked me if they should start considering expansion into global markets and specifically Japan. The answer is if your company is doing less than $10 million in revenue, probably not. The reason we're going for it is because there is a big push of SOA and open source and we found ourselves a great partner to work with and act as our reseller.

The big question you must ask yourself if you choose to set up sales in another country is whether it's worth it (meaning, will you get dollars?) There is a significant advantage for both OSS and SaaS companies for international expansion vs. BigCos that have expensive sales staff and marketing efforts to undertake. The downside is that expansion takes your focus off of where the money is at the moment. To smooth the economics you need to use a partner or other channel to get your offerings out into the world.

Here are the questions we asked ourselves at MuleSource (reminder: we are open source):

Do we have users? And, if so, what is their stage of deployment?
Generally speaking for the U.S., we've found that users need the most help while moving from development to production. In the U.K. it seems more like users wait until something breaks before they get involved with support subscriptions. In Japan we have users that are self-sufficient, but large companies do the majority of their IT work through systems integrators who are also VARs.

Do companies pay for open source in this geography?
This is a tough one. In many markets asking if people pay for Red Hat Linux vs. do they pay for JBoss ends up with very different results (RH yes, JBoss, no.) Regardless, going into a market that has no history of paying for OSS means you will have to educate during the sales process, which introduces overhead that you don't want to carry.

Do we have salespeople or a method by which to sell in this region?
To the extent that you can go international with inside sales, you should. However, certain markets like the U.K. are often channel driven, which means you need feet on the street. In Japan, it seems like you have to have SI partners.

Can we support the customer timezone?
This depends on how you set up support and applies more to OSS than SaaS.

What is the difference in relationships versus the U.S.?
This is by far the hardest thing to figure out. Do cultural differences play a role? Do you have to take the buyer to play golf? If you are in Japan do you have to go out for cocktails?

If all of these items (and the other things you figure out to ask) pass muster, here are a few tactical quick hits that can really bum you out:

  • Tax implications--international tax laws and things like VAT
  • Currency rates
  • Material ownership
  • Legal items like contracts, etc.
  • Employment rules (Germany and Italy, for example)