Harald Horgen Interview | Cloud Plumbing

Jan 5 2012

Harald Horgen, CEO of The York Group, talks business with me. Harald shares insight on taking your business international and growing your business in general. He challenges more than a couple of thoughts that I concidered conventional wisdom, showing that few things are as simple as they appear from the outside. Ultimately, I really like his advice of “Have a structured process and have a good reason”.

Links referenced in the show:

The music in the show, Have Mercy — Big Walter Horton, was provided by Mevio’s Music Alley.

Transcription

Harald 00:00:24

Hi. My name is Harald Horgen. I’m the CEO of The York Group. And The York Group is an international business development company focusing on enterprise software companies/business-to-business software. We’ve been helping companies build the right channels for their product for the last 20 years and we’ve seen a lot of economic cycles and technology cycles. In the early days, we worked with mainframe software and then AS/400. And then it was client-server, thin-client, we had the ASP blip, and now it’s the cloud. And what we’ve seen is that every transition in technology has brought with it some changes to the underlying business models and channel models, but none of the changes are as significant as the move to the cloud. The cloud not only changes the architecture of the business model and the delivery model for the technology, but it has a very big impact on the business opportunity, the business development opportunities, and the options that are available to a company. In the good old days, with on-premise software, there were some very traditional routes to market; things like going through the distributers if you had a fairly high-volume product, going through value-added resellers or systems integrators. Fairly limited, well-defined channel roles. And what we’re seeing as the technology moves to the cloud is that there’s a whole new range of business models that are emerging and, in some cases, representing a very big threat to the existing channels. But in every case being a new opportunity for an ISV for a software vendor with the technology. Examples of that are marketplaces. And we’re seeing marketplaces emerging as a very important part of the new ecosystem. And we’re also seeing pure play VARs (value-added resellers) that are specializing in selling SaaS solutions; where they don’t want to invest in a lot of professional services, but they want to build up a book of recurring revenues through subscription licenses. And we’re seeing hosters emerging as a virtual distributer. They’re providing the infrastructure, distribution platforms, and in many cases, reseller networks, sales and marketing enablement for virtual solutions. We’re also seeing that managed services providers (MSPs) are emerging as a very powerful channel for solutions that are targeting the lower and the SMA/SMB mid-market. And I think that that’s going to be a fascinating development as MSPs start to move their clients (the SMBs) from on-premise into the cloud. But, Ryan, what we do is help companies establish the right business model, the right channel options, the right strategy for their particular technology. And one of the fascinating things with the cloud is that it opens up a lot more avenues to revenues for solutions.
Ryan 00:02:59

Cool. Yeah. I mean, you definitely sound, you know, passionate about it. You just -- I can tell that you’re going a lot of different directions at the same time; in all the best of ways. And I think this is going to be really useful information for, you know, the listeners because we’ve talked about cloud in the technical side, right? We’ve talked about how it’s different; what kind of problems it solves in that way. But it’s really important; especially for anybody, you know, a little on the entrepreneurial side that has to get involved in the business side to see just other ways that you need to be thinking about these things, right? Because we don’t want this to be a hobby.
Harald 00:03:30

No, you’re right. And it’s -- you’ve actually highlighted the biggest issue for a lot of companies and that is how do they sell it. We look at the major vendors (Microsoft, HP, IBM); they’re all pushing their partners to go to the cloud. The big vendors have made huge investments in infrastructure. They want the cloud to be a reality. Microsoft, for example, has a big push to get all of their ISVs and their channel partners into the cloud. And one of the biggest questions that they get from their partners is, “Well, if we make this investment in the technology and we move to the cloud, how do we sell it? Who’s going to sell it? What are the business models going to be?” And that’s a big uncertainty for a lot of companies.
Ryan 00:04:08

It is weird that there’s nuances that have really big impacts on your business in ways that, I mean, it’s just really complicated trying to sell certain things.
Harald 00:04:18

It is. It is. And with the new options that are available it makes it even more complicated. You know, especially for companies that might have existing relationships with their business partners, with VARs and SIs and distributers, and now they start looking at virtual distribution platforms and how is that going to impact their existing business model. How do they accommodate their existing partners? Do they push them aside? Do they recruit a new type of channel partner? Do they go after marketplace? One of the concerns on the channel side is that the cloud is going to, you know, disintermediate channels; the channels won’t be necessary anymore. And I just don’t think that’s going to be the case. We went through a similar discussion in the late 1990’s in e-commerce. There was a lot of speculation that bricks-and-mortar would disappear; that everything was going to take place online. And what we’ve seen is that it takes a lot for people to change their behavior. In 2010, for example, only 7% of retail sales in the U.S. took place online. So 93% of…
Ryan 00:05:15

Wow.
Harald 00:05:16

Yeah. It’s really surprising. And when you look at it, technology changes can be revolutionary but changes in business models tend to be evolutionary. So the Internet was revolutionary, e-commerce was revolutionary, but the underlying business models didn’t change that much. The, you know, tablets and smartphones are revolutionary but the business models to sell those technologies haven’t changed much. When you see Apple setting up stores and you see Microsoft setting up their own stores, it’s kind of funny that in this age of e-commerce technology companies selling revolutionary technology are opting to do it through physical stores. And I think that, to a certain extent, we’ll see the same trend for SaaS that people still like the human touch. They might do a lot of their research online, but they still like to go into a store, they like to talk to people, they like to get questions answered by a real live person before they make a final decision.
Ryan 00:06:07

That brings up something that’s kind of interesting to me is the way that, you know, our intuition is, I think especially in the tech field, can really betray us in a lot of ways. Like, for instance, I know far more than 7% of my shopping is done online, right? So I just assume. And then I talk to plenty of people. You know, family members talking about doing Christmas shopping and none of them are shopping online. And I think, “Wow, you’re all weird,” right? “You’re all weird because you’re not doing this thing that is obviously the right thing.”
Harald 00:06:35

Yeah. But you look at the numbers at Amazon.com is the 800-pound gorilla in e-commerce, but they just broke through 30 billion dollars in revenues recently and Wal-Mart is 440 billion. So you get almost that exact same ratio where Amazon is about 7% the size of Wal-Mart.
Ryan 00:06:56

Yeah. I mean, and I’m sure that there’s many ways that that’s applicable; just how people are running business, right? Like, people thinking, like, “Well, this doesn’t necessarily make sense to me,” or, “This does totally make sense to me. I don’t understand why I would even have to explain this to someone.” You know, that kind of thing.
Harald 00:07:11

It’s also, to a certain extent, generational. I think that, you know, to your point, the younger people are more likely to be doing more of this stuff online. And so there will be a gradual change as that generation becomes a bigger part of the economy. And we’re seeing the same thing in business. If you look at SaaS, SaaS as a product area in the enterprise space (and just look at the enterprise space), it’s only 4% of the spend. And in 2010, worldwide, there was roughly 10 billion dollars spent on pure SaaS solutions and there was about 235 billion on on-premise. But within that though -- so you can say, well, SaaS is only 4% of the market. But within that, there are big variations. The adoption of cloud solutions is much higher with startup companies where startup companies look at it and say, “Well, we don’t need to buy a server and ten desktops for our little company. We’ll just do as much as we can online.” But companies that have already made the investment and have existing infrastructure are still more likely to want to own the software. They have an investment in infrastructure so the total cost of ownership for them, in many cases, is going to be lower maintaining an on-premise model. So what we see is younger companies that are coming into the economy but also smaller companies as they go through their refresh cycle. So when they get to that point where they have to look at completely replacing their physical infrastructure, that’s when they sit down and look at, “Well, should we move as much of this as we can into the cloud and just keep some of the basic stuff on-premise?” So it’s been a more gradual change than people had expected. And what will be interesting to see is if we reach, you know, the hockey stick (the inflection point) where all of a sudden the cloud becomes a much bigger part of the business or whether we’re going to go through a very gradual tenure process or do we end up like with e-commerce; 5-10 years from now where only 7-10 percent of the business is done online. Personally, I think that SaaS is going to be a much bigger component of the software economy than e-commerce is today as part of the consumer economy. The adoption that we’re seeing is really with the smaller companies. And I think this is where, for example, managed service providers are going to play a big role because, you know, companies are already outsourcing their IT support to manage their service providers. And MSPs are used to collecting a monthly fee so they’re already in the business model. The more difficult transition on the channel side are for VARs that are used to collecting up-front fees for hardware and software and they do the break fix. And for them to change a business model is going to be more of a challenge than MSPs. So the large companies are the ones that have a big investment in their own data center. I’ll give you an example. Now Salesforce.com is the poster child of SaaS, correct? And that’s you pay for your monthly subscription and it’s all in the cloud. Well, Salesforce (and I won’t mention the company names but Salesforce) sells perpetual on-premise licenses to the fortune 50. So there’s a big computer manufacturer (a PC manufacturer, for example) and number one: no way would they let their data sit on a Salesforce data center. And number two: they have a data center that’s larger and more cost-effective than Salesforce does. So they’ve purchased on on-premise perpetual license for Salesforce.com, but they like the idea of the distributed architecture because they’ve got a lot of business units; a lot of geographies. So they can actually benefit from the architecture of SaaS within their own organization, but they have a lower total cost of ownership by running it as a private cloud than they would subscribing through Salesforce.
Ryan 00:10:41

You know, one thing I think that we should probably touch on real quick. I mean, you’re talking about huge companies with big revenue and lots of terminology that maybe, you know, people just getting started or, you know, just doing the startup thing maybe haven’t researched might be thinking at this point, “He’s not talking to me,” right? But let’s underscore what you just said. This is a lot with startups. This is a lot with small businesses.
Harald 00:11:04

Oh, absolutely. And that’s the market. That’s really the market for SaaS technology today is the small and mid-size business segment. And then there’s a big opportunity there. You know, again, those companies are going to be much more sensitive to investments, they don’t necessarily have a big investment in infrastructure, much more likely to move as much functionality as they can into the cloud where they don’t have to worry about writing a check for 20/50/60 thousand dollars to get set up. They can write a check for a few thousand dollars a month and get all of the functionality that they need and maybe more. So we’re seeing that there are product categories that are doing really well with SaaS. And the other thing that we’re seeing with SaaS is that it is let’s say de-marketizing access to sophisticated applications. In the on-premise world, there’s a limited number of companies that can afford to make the investment in things like ERP, CRM, business intelligence; you know, the bigger applications that cost a lot of money to install. And when you get those applications in the cloud, it opens up a big, big tier of SMB companies. They say, “Well, gee. We can’t spend $20,000 on a business intelligence solution today, but we can spend $100-150 to get the same functionality.” And that’s where a lot of the growth is very explosive for SaaS solutions. It is the SMB market. Even if it’s companies that say, “Well, we’ve got out little server and we’ve got our 15-20 desktops and there’s certain things that we’ll keep online,” it gives them access to much more sophisticated solutions and because they can pay for it on a monthly basis and it’s hosted someplace else.
Ryan 00:12:43

Yeah. And, you know, you kind of bring up an interesting point there too; it’s not necessarily an all or nothing, right? You can take a piece of your business and kind of…
Harald 00:12:50

Oh, absolutely. And that’s what we’re seeing. That’s where, you know, companies are going refresh cycles and saying, “Well, what do we want to keep in house? Do we really need to have Exchange on-premise? Do we really need to have Office on-premise or can we get Office 365 Hosted Exchange? Move those things off of our server.” And maybe they want to keep, if they have a small ERP or accounting system or things that they think are very key to their business and they want to control that on-premise, and they’ll use their existing infrastructure (extend the useful life of that infrastructure) for certain applications. And then they’ll start moving stuff off instead of expanding their infrastructure.
Ryan 00:13:25

Right. Yeah, and that’s an interesting thing that’s come up a few times too but definitely worth, you know, bears repeating is the idea of maybe what you need to think about is what’s the core pieces of your business. And then if it isn’t realized, you know, which parts are far more important? And if you’re holding certain things sacred, maybe those aren’t as important.
Harald 00:13:43

Right. Yeah. No, absolutely. And it would definitely be a mixed model. And there would be, you know, some companies, especially startups, that don’t make an investment in hardware up front that just want to do everything online and we’re seeing that. But for most companies -- and it’s kind of interesting. We see the adoption of SaaS by geography. So out of that 10 billion dollars in SaaS, the U.S. is roughly 2/3 of the world’s spend on SaaS applications and enterprise space; roughly twice what the on-premise market share is. So the U.S. is roughly 35% of the software spend worldwide for on-premise, but 2/3 of SaaS spending is in the U.S., which means that a relatively small part of the SaaS spend is in international markets. And there are a lot of different reasons for that. But where we are seeing very rapid adoption of SaaS is in emerging markets. Emerging markets, again, where small companies haven’t made an investment in physical infrastructure and say, “Wow. We can now just do everything online.” For the same reason that mobile phone penetration is much higher than fixed line penetration in places like India, China, Southeast Asia, and Africa. People/individuals/companies have found it much more cost-effective to jump straight to mobile phone subscriptions rather than fixed line installations. And we’re seeing the same thing with SaaS that in the emerging markets there’s very rapid (in the SMB space in the emerging markets, very rapid) adoption and one of the fastest growth rates of SaaS adoption is in those markets. So when a company that is developing a SaaS solution, they have to look at a number of different things. They need to look at -- there’s the geography and where the best markets are going to be, where the adoption is highest, and it’s going to be the U.S. is a great domestic market. The SMB market is a fantastic opportunity for SaaS. They have to look at the different types of applications. And what are the types of applications; e-mail, collaboration, security. A lot of those applications are moving to the cloud faster than ERP and core operating applications. So there’s a lot of different ways of looking at the market and finding where the pockets of growth are and then targeting those for your solution.
Ryan 00:15:54

Yeah. That makes me think of something that I’d read on The York Group’s Website where it said, you know, the common thread between a lot of the services that you offer I think is that all of them was -- it’s about growing revenue in international markets. And I think that that’s an interesting thing to talk about because what’s that mean with the Internet? I mean, I’ve got a Website that sells my goods. Google’s going to translate for me. I’m international, right?
Harald 00:16:18

So how are you going to get paid? That’s one of the barriers to international Internet transactions is how do you get paid? You need some type of a service provider because in a lot of markets people don’t use credit cards or the credit cards that they use are a different technology than what’s compatible with U.S. banking systems. So if you’re sitting as a consumer in France or Germany, very often your local bank card doesn’t work for international transactions. I lived in France for 14 years and when we moved back to the States 7 years ago, we had known friends that would call us up and say, “Hey, can you buy this for us on eBay or on Amazon because we can’t process the payment. And that would just take care of us in France.” So there are some practical issues. One of the other very practical and very legal issues is if you’re going to be doing business with consumers or anybody in Europe, for example, European law prohibits non-European companies from storing and hosting European personal information. So if you’re getting credit card information or personal information (e-mail addresses, for example) from a European consumer, technically, from a legal perspective, you’re not allowed to store that data on your server unless you are in compliance with European Union regulations. So between the U.S. and Europe there’s something called Safe Harbor, which is a treaty arrangement that allows U.S. companies to go through an audit and make sure that they are in compliance; that they are treating European data the same way that a European company would, then they’re allowed to do that. And I think there are about 2,000 companies in the U.S that have actually gone through that process. But for a startup company to just start selling in Europe and host that data; technically they are in violation of European law. So there are a lot of issues that are coming up. The dream is that the Internet and SaaS will make this a world economy that removes all of the barriers to international commerce, but in reality there’s a lot of legal and business issues that will make the adoption of SaaS across borders a little bit more difficult.
Ryan 00:18:26

That’s so crazy. I mean, it just feels so almost archaic to think, like, the idea, like, I have a good and I can’t sell it to someone just because of geography, right?
Harald 00:18:36

Yeah, but because every country has its own laws. The one thing is storing personal identifiable information (personal data); that’s one issue. The other issue in Europe: if you are selling to a consumer (not a business, but you’re selling to an individual consumer) in Europe, technically, you are required to withhold or charge value-added tax so you have to have a mechanism in place in order to do that. Then there are legal jurisdictions like Germany where if you’re selling to a consumer, if the product isn’t in German and if the user documentation isn’t in German, in theory, a German consumer can return that product to you at any time for whatever reason and require a full refund. Because the assumption is that a consumer having to read a software license, read documentation in English, is going to be at a disadvantage; doesn’t necessarily know what they’re getting. Another thing, and this is in Europe in general but I’ll just use Germany as an example again. Germany and most European jurisdictions do not allow a competitive matrix (a comparison). So if you have on your Website a comparison of the features that your product has compared to your competition, from a legal perspective, you’re not allowed to market that in Germany. So if you have this on your Website in the U.S. but you are driving traffic, so you have some type of banner advertising or click-throughs or Google AdWords in Germany that’s driving traffic to your Website in the U.S. and your Website has a competitive matrix, you are in violation of German law and you can be fined by Germany. So there are a lot of those types of things. Another issue that people in the United States don’t think about it, but as I travel -- and I travel quite a lot. Just in the last couple of months I’ve been in Russia, Israel, Brazil, New Zealand, Australia. And one of the issues that comes up time and time again is the impact of the Patriot Act.
Ryan 00:20:27

Yeah.
Harald 00:20:27

So the Patriot Act is the U.S. anti-terrorism legislation that gives the U.S. government the right to request personal data that resides on a server belonging to a U.S. company or the international subsidiary of a U.S. company. So let’s say you have a company. Even if you have a subsidiary in Australia and you’ve got your own data center in Australia -- and this is something that Amazon has run into (Amazon Web Services). They’re having trouble getting Australian ISVs and customers to host on their data center in Australia because of the Patriot Act because, in theory, the U.S. government can go to Amazon and compel them to provide information on Australian customers because Amazon is a U.S. company. Even if the data center’s segregated and ring fenced in Australia and they’ve got a subsidiary there. And what we’re seeing is that a lot of international competitors (local companies) are using that as part of their marketing to make it less attractive for a German or French or an Australian company to go with a U.S. company. So again, you get one of these legislation; the Patriot Act is really an emotional issue more than a practical issue, but it’s a big factor in the market today. And so you get all of these things that tend to create siloes within legal jurisdictions rather than opening up and breaking down the barriers.
Ryan 00:21:52

Well, and honestly the international companies sticking, you know, with local businesses instead of going with American companies because of the Patriot Act. I mean, of all the things that you listed that one makes the most sense to me, right? Like, that makes more sense than anything about, like, product comparison charts or things like that. Like, I mean, that’s a really serious decision and I would think in that situation I’d be hard-pressed to think of a reason not to do the same thing.
Harald 00:22:17

Yeah. But the point is if a U.S. company has a SaaS solution and they want to go international, yes, having a Website and having an e-commerce engine makes transactions easier, but they really do need to look country by country, look at what the local rules and legislations are so that they don’t potentially put their business at risk by making a commitment that ultimately they’re going to find that they have to back out of.
Ryan 00:22:42

Wow. Yeah. It’s just kind of mind-blowing to think about things like that. Like you saying that having an advertisement that drives links to a Website, you know, hosted in America that has a thing that’s against the law in Germany. Like, it’s amazing to me that that’s a problem, right? Like, because I guess thinking about enforcing taboos is where you really get in trouble. It’s one thing to say, “Hey, look. You know, this person has this certain right and we’re going to go ahead and kind of enforce this in different scenarios.” But to have, like, these taboos and cross-referencing them. You know, I mean, it just seems -- like, it would be maddening to try and keep on top of all of that.
Harald 00:23:17

Yeah, but you really don’t have a choice if you can do business internationally. I think that’s one of the reasons why U.S. companies very often find that the U.S. is such a huge market. There’s so much growth potential. If you look at how difficult and potentially complex it is to build a business in multiple markets compared to using the same resources just to grow the business in the U.S., for a lot of companies they’ll get a better return. So it’s really intriguing and interesting and tempting to go into a lot of markets. And as companies launch their product, they will get a lot of inquires. They’re going to get inquires because they’re on a Website. They’re going to be on a Microsoft Website or on an IBM partner Website or people are going to find them and they’re going to get inquires from the craziest places. They’ll get inquires from Korea and Albania and Bulgaria. Just someone that just happened to find their product and either wants to be their partner or wants to be a customer. And you’re sitting in the U.S. saying, “Wow, this is great. I could have a partner in Bulgaria.” Well, do you really want a partner in Bulgaria? What’s the long-term potential for you? It’s so seductive when somebody contacts you and says, “I like your technology and I think I can sell it and I want to be your partner.” But at the end of the day, is that going to be the best use of resources?
Ryan 00:24:25

Yeah. I mean, there’s the element of, “Well, it sure sounds cool,” right?
Harald 00:24:31

Yeah. Yeah. It’s one of the reasons that we see a lot of small companies with partners (reseller partners or distribution partners or alliance partners) in lots of different places. We were brought in to work with a Dutch company. A relatively small company; about four or five million dollars in revenues, but they had partners in 70 countries. And 68 of those partners had sold a product once; not because they were ripping them off, but they just needed it for a specific project. It was a niche technology that a lot of people needed just for a single project and in the process they signed a contract. So they had this little company (relatively small company) with just a few million dollars in revenues supporting 70 partners; 68 of which had never sold more than that initial license. When the reason why they contacted them was because they’re sitting in Indonesia and they needed this slice of technology to complete a transaction and they became a partner. So the Internet does make it a lot easier for companies to end up with relationships (commercial relationships and partnerships) in markets where they really don’t belong. And it’s so seductive for a company when they’re being contacted. Somebody likes their product and says, “Yeah, we’ve got a customer and we can sell lots of these,” and they sign a contract and they never hear from them again. But it ends up being a real drain on resources.
Ryan 00:25:46

So is that part of, like, something that The York Group does? Like, just, “Wave off. Wave off. Don’t do that. This isn’t going to…”
Harald 00:25:53

Yes. Yes. So one of the things that we recommend is that whether you are strategically identifying and targeting specific markets or you’re getting requests or inquires from markets have a structured process. When you’re going international, select the markets that you want to go after and have a good reason because it does take time, effort, money, resources to be successful in a new market. In the same way that when you’re starting up in the U.S., it takes you a while to grow from a few hundred thousand to a few million dollars to maybe five or ten million dollars in revenues. You go through different phases of growth and it requires a real focused commitment and investment from management to do that. And new markets are going to be the same; just a little bit more complicated because of laws, cultures, languages, and so on. So what we suggest to companies is that pick the right market for you. It doesn’t necessarily have to be a large market, but pick a market where you think you’re going to do well, understand why, and then focus your resources, and have a very structured process for identifying the best potential partners, taking them through a discussion and a qualification process that results in a real commitment to an ongoing relationship that will drive sustainable revenues. When you get that call from Bulgaria or Albania, put the prospective reseller partner through the same process. Put them through the same qualification but do it very quickly because, in most cases, you’re being contacted because they have a single opportunity or they just want to add something to their portfolio. And what you want to do is if there’s someone that’s really serious and wants to make a commitment that’s great, but find out whether they’re willing to do that. So put them through a very strict qualification process up front when you get those calls and then find out, you know, this is just a one-sale opportunity or is it something that can develop into a more meaningful, sustainable, profitable relationship. For most companies, they’re much better off having strong partnerships in three or four markets than having weak partners in 20 or 25 markets. It’s not sustainable when you have that. The other risk that a company runs is that -- so they get a call from Italy and they sign up a partner in Italy. And it never goes anywhere, but your product is actually represented by somebody in Italy. And if you get to the point where Italy becomes more of an important market, you’re stuck with someone that’s had your product for several years, never sold it, and because these markets tend to be fairly small, everybody knows who everybody is, the competition ends up using that against you. So it’s very difficult to recover from a non-productive relationship in a market and then go out and find a partner that’s willing to make an investment because they’re going to look at it and say, “Well, Georgio over here has had this product for three years and he’s never sold it. So why is that? Is it Georgio? Is it the product? Is it the market? Is it the vendor? Why should we put our money into a product that hasn’t worked in Italy for the last three years?”
Ryan 00:28:34

That’s interesting because it isn’t very intuitive to me because to me it seems like, “Oh, you want to, you know, you want to partner up and try and sell this thing. What the worst that could happen? You don’t sell anything?” Like, especially depending on how your commission structure is set up. Like, it seems like there could be, you know, no harm no foul.
Harald 00:28:49

Yes. And that’s the trap that companies fall into because it does seem like, well, if they don’t sell, they don’t sell, we don’t lose anything. If they do sell, it’s found money. But the reality is that there will be management cycles, bandwidth issues if you end up with 40 or 50 of them. But the real cost to company, long-term, is the fact that their product is a loser in that marketplace because no one sold it. And, like I said, it’s very difficult to recover from that if your product has a reputation for no one has bought it, no one wants it, and why is that?
Ryan 00:29:20

That’s good things to think about. I mean, definitely, like I said, at least for me, far from intuitive. And, like, what you were talking about before, it seems, like, just the importance of really thinking about the markets that you enter into. Gosh, that just seems like almost like topics we’ve treaded for other reasons. Like, just really it’s important to think about why you’re doing things. Like a really honest assessment about what is the benefit of this and whether or not it’s worth the effort because, you know, just to say, like, you know, well, it’s probably not going to cost us much more than time. I mean, that can be really, really expensive.
Harald 00:29:53

Yeah. It can. And, again, a company needs to look at it and say, “Well, if we’ve got limited resources where do we get the best bang for the buck? Have we peaked in the U.S.? Should we continue in the U.S. or should we look at expansion markets? And if we do, let’s select the right market for the right reason.” And that’s one of the things that we do with a lot of our clients. In some cases we come back and say, “You know, you shouldn’t be going after this market and here are the reasons why. Here are the barriers to entry. Here are the legal issues. Here’s the local competition.” And a lot of times and especially in the more developed markets like the U.K., France, Germany, Brazil is another example that has a fairly robust local developer community. And you may look at your solution as being unique in the U.S., but when you go into France and Germany or Brazil you’ll find that there are local competitors that are already selling a solution that’s similar to what yours is in the local language. We see this in France. France at one point was the second largest developer community in the world outside the United States. I think they’ve been bypassed by a couple of countries since then, but there are thousands and thousands of solutions that get developed in France in French for the French market. And it’s very natural, I think, for local consumers to want to buy something that’s local if it has more or less the same feature set.
Ryan 00:31:07

Yeah. I mean, it makes sense. Even just little, you know, the documentation things that you talked about before. Like, little things like that that seem silly, especially if it’s a technology solution, but little user experience things can make all the difference in the world depending on your product. So, Harald, if people are interested in this and they want to follow up, where’s a great place for them to get more resources?
Harald 00:31:27

Well, the place that I would recommend is a partner facing Website that Microsoft has put together. Microsoft has actually licensed a lot of our processes (a lot of our content) and they put it up on a Website. It’s SMBChannelDev.com. So SMB (like the SMB market), channeldev.com. It’s free to registered partners. There’s a whole series of Webinars as well I think anybody can access. But anybody can become a registered partner for Microsoft. It doesn’t cost anything. There are a lot of benefits for companies. They get access to a tremendous amount of information, they get much lower prices for a lot of the core software products. So I would recommend that people do it in any case, but if they go onto that Website they’ll get a whole tutorial (a very structured, very detailed tutorial) on how to build a business through indirect channels, whether that is domestic or international.
Ryan 00:32:13

Excellent. Excellent. And I’ll, yeah, definitely have some links in the show notes so people can follow up.
Harald 00:32:17

Yeah. And if you have any other questions later, if your listeners have any questions, then feel free to contact me. We are very passionate about business development international, we’ve got a very good understanding of what it takes to be successful, and we’re always happy just to field questions and be a resource for companies to give them a little bit of guidance without charging them for it. And if they’re serious about going international we can provide more extended services and we’re very happy to do that as well.
Ryan 00:32:40

Well, Harald, thanks a lot for your time. This has been great.
Harald 00:32:43

Okay. Thanks a lot, Ryan. All the best for the holidays. Bye bye.