Global Like Goldman

Three core principles for startups expanding internationally

This was originally published on Substack


Since moving from the US to Europe about 18 months ago (and actually becoming French about a week ago!), internationalization has been top of mind.

When should companies think about expanding beyond their home markets? Is there a broadly applicable strategic and tactical playbook that these companies can run? And perhaps most interestingly, what are the underlying factors — economic, societal, technological — that are making it possible for companies to go global earlier in their life cycle?


Culture > Code

One of greatest enablers of global growth over the last 5 years — for companies large and small — has been the maturation of what Haystack’s Aashay Sanghvi termed the “Internationalization Stack”.

Elements like seamless translation and more efficient payment rails have lowered the level of investment required to push into new markets and have been a driving force behind increased, and earlier stage, cross-border investment.

But while there is an abundance of technical options available to help companies address individual users around the globe with precision, there remains scarcity in the ability to actually develop each “local” user experience in a way that both aligns with the culture of the new market and holds true to the company’s core product beliefs and north star vision for the business.

In markets like health and wellness — where local consumer preferences and regulatory requirements can diverge significantly — this “two-sided” cultural adherence may be even more critical on the path to building trusted brands in each new market.

At a dinner I was lucky to attend this week with an incredible group of international founders, researchers, and executives from the mental health market, global growth was a major topic of conversations and hearing these experienced operators recount the challenges they and those they have worked with have faced in exporting beloved brands and products drove home the importance of a multi-faceted and multi-stakeholder approach to determining the why, where, and how of global expansion.

Going Goldman

“Our challenge was to replicate Goldman Sachs in London and across Europe so the firm looked, felt, and tasted like Goldman Sachs as much as McDonald’s is McDonald’s in Frankfurt, Germany or Toowoomba, Australia. To do this global branding, we had only one choice: Our standard must always be excellence.”

My favorite book that I read in 2019 — also the longest and paradoxically, the dryest — was The Partnership: The Making of Goldman Sachs by Charles Ellis, which recounts the company’s rise from lowly beginnings to, if not the world’s preeminent financial services institution, the one with the strongest and most persistent firm culture.

My hope in reading the book was that it would help me in developing my own playbook as I worked to help expand our firm, TechNexus, from the US to Europe as well as develop a framework to assist portfolio companies preparing for global growth…and I was not disappointed.

Through reading The Partnership in addition to other writing on Goldman’s history and culture (notably this from The Family’s Nicolas Colin), I landed on three core principles that I believe should be represented in any company’s “International Culture Stack”, around which a strategy can be built and on the ground tactics can be deployed.

1. Make credible commitments

“People won’t believe what you say — only what you do, and exemplary behavior will be crucial. Mere words would not suffice; the only way to counter such worries was to use convincing symbols and take action. So Fife never even considered living in a rented flat or in the firm’s handsome apartment on Chester Square. He sold it and bought a substantial house in London where he frequently hosted dinners for clients and others, including Margaret Thatcher. The symbolism was powerful in England, where “home” has such great meaning. It told everyone, The people of Goldman Sachs are here to stay.

The value of optics early on in a company’s entry to a new market should not be underestimated. Talent, regulators, media, and customers are all actively looking for signals upon which they will build their lasting opinions (or bury the efforts of a foreign company who doesn’t tread deftly).

2. Grasp the contextual complexity

“Only by understanding the most subtle characteristics of each national system and the complex strengths and personal priorities of the key players — a richness of understanding that would take a lifetime to master— could Goldman Sachs compete with local banks.”

Optics-level considerations are a start but must also be paired with high level execution that — especially in markets like health or transportation — deeply bakes local expectations or laws into the evolved product and business model.

To accomplish this, Goldman cultivated relationships with — and properly incentivized — well-connected “Country Advisors” who served as highly valuable strategic partners for the firm.

“Serving as a country adviser for Spain — and later Latin America — de la Dehesa would be paired with a senior investment banker. Not a mere door opener, he would provide expert advice on Spain’s laws, national customers, and practices; coach the firm’s bankers on social, political, and commercial dos and don’ts; and identify people to be wary of and people to focus on because they were rising in stature within the nation’s inner circle. He would advise on how to develop trustworthy relationships for the long term.”

One way that earlier stage companies can work to solve for this is via their cap table. US firms investing in Europe have long touted their ability to help companies push into the American market, something that (along with being willing to pay higher valuations) has given them a competitive advantage in gaining access to top deals.

As more US companies look to make the early jump to go global, there may be an opportunity for funds based in Paris, Berlin, and London to make a similar infrastructure-level pitch to help companies address the fragmented but lucrative European market.

3. Align internal incentives

Instead of treating London as a stand-alone business, he decided to net its investment banking losses against the overall investment banking profits. He made a similar calculation for the other business lines in London. All the expenses in London should be netted off against the gains in the United States, he reasoned, since “[w]hen you’re starting a new activity in a new place you have to add people before you can expect revenues.” He had learned that very lesson when he started the New Business Group, “which had taken a long time to produce a substantial return on our investment.” Like magic, the attitudes toward the London office “swung around 180 degrees” since “every division head now felt some responsibility for what happened in London, and the results began to show it.”

As divergent as the product considerations, business model, or go to market strategy may need to be in order to find success in new geographies, a shared point of view on the value of expansion and a collaborative internal approach to accomplishing goals abroad needs to be established.

In the same way that tactical decisions should be shared across teams or individuals within a business — for example weighing the tax benefits of locating an international HQ in one city vs. access to certain talent in another requires input from multiple stakeholders — so too should the incentives to drive value creation.

Startups are an exercise in outpacing uncertainty and international expansion is a critical step many companies must take to win this race over the long term. Over time, the strategies a company employs to grow internationally will necessarily change, but the principles upon which it builds its reputation — with the long term aim of establishing a brand trusted in each new market as if it were homegrown — must remain constant.