There’s hardly a growth-oriented U.S. company today that isn’t excited by the opportunity to sell in Asia Pacific and Japan (APJ). It is a vast and economically enticing region. APJ includes about half of the world’s population and three of the largest economies in the world – China, Japan, and India.
However, breaking into these markets offers no shortage of challenges, including the multitude of languages, a highly differentiated economic and business landscape, and varying levels of market maturity and technology adoption. There’s no one-size-fits-all playbook, and U.S. companies often struggle deciding where to invest and what kind of ROI to expect. Despite the inherent challenges of the region, APJ continues to tempt companies because it offers a staggering opportunity for growth and financial success if you get it right.
So, how do you get it right?
You invest in the right teams in the right countries at the right time. You treat APJ as an ongoing and evolving project that takes years to build. You reassess constantly where the best opportunities are, and adjust your priorities. And you drive success while educating and collaborating with your U.S. headquarters on how to do business in this region.
For Snowflake, APJ represents a massive opportunity due to the exponential growth of data – managing, sharing, democratizing, and monetizing data is a huge challenge for all organizations. With Snowflake’s Data Cloud, organizations across APJ can easily transform, integrate, and analyze all of their data. The key for us is our localized approach and why we’re achieving strong results, early.
Success for U.S. companies is tied to localization
Most U.S. companies begin with Europe when they decide it’s time to expand into international markets. When attention turns to APJ, common entry points are Australia and New Zealand, English-speaking markets with Western business practices, quick adoption of disruptive tech, and countries that typically don’t have a lot of domestic competition.
Often, the next logical APJ markets are Singapore and India again because they are English-speaking countries, and Singapore is frequently used as a hub for tech companies. At this point, companies tend to focus on market expansion, hiring people, landing lighthouse accounts and reference customers, and closing business to justify more growth and opening more offices.
In my experience, everyone’s hustling in the same direction for about four to five years. However, once you reach 300-500 people, you often find that this strategy has resulted in a centralized APJ office located in Singapore, employees that are purely English speakers, and the addition of a management layer to increase support across functions. While this plan adds (in theory) more internal reporting and discussions that justify a bigger team in Singapore, there’s an obvious issue: you’re not investing in greater APJ.
How can you possibly provide strong coverage across the vast APJ region, develop local relationships, and have a direct impact on countries when you aren’t actually in the countries or speaking their languages?
Simply put, it’s impossible. In my opinion, the best APJ strategy is to go local. The three key elements for success are:
- Build teams that work locally, speak the local language, and understand the local business practices.
- Drive behaviors from the field in response to what local customers want and need.
- Create an expansion plan that takes into account each market’s maturity and evolves to match conditions by understanding market forces within each country.
In practice, that equates to building local organizations quickly as you enter each country. The first hire in an APJ country is your general manager (GM), which is the most crucial role. That person must hire local people and figure out how to sell your technology, set up order forms, and get partners and resellers signed up. It’s a total startup environment where your GM is running the show and determining how best to localize. Everybody who works in that local organization is hands-on and rolling up their sleeves to meet and support customers.
For HQ, it’s important to treat each region or country as a distinct geography—not as a sales outpost but as an actual company with a GM leader who hires a head of sales, a head of marketing, a head of services, and a head of business strategy (BS). These organizations must be self-sufficient and engage directly with customers, and partners.
I strongly believe that a lean APJ model is the best approach. Investing in localization helps you get the most impact, and reduces reporting that springs from a large corporate APJ office. Investment is pushed out into the field, and APJ leaders are empowered to drive action. After all, they are the experts and know how to do business in their country.
Of course, you don’t want to recreate the wheel from a technology or sales perspective, so you should leverage all the great things that have happened in the company. The strongest APJ organizations will leverage best practices from HQ and other global offices and combine with the local team’s knowledge to sell and support effectively in their country.
What it takes to succeed in APJ
Opening your business in APJ is going to be a deep learning experience. If you follow the traditional path and start in Australia or New Zealand, it will give you a chance to get your footing, drive some early revenue and strategize for the rest of the region. The key is to learn from each new market experience and build an expansion strategy that’s based upon those learnings.
Snowflake applied our learnings from building in Australia to speed up our Japan organization, which in turn sped up Korea based on new insights from Japan. This build-and-learn process produces a standard model that’s smooth and effective in how we justify opening in a new country, how we build that initial team, how many people we need, what functions must be covered, and what kind of localization and marketing budgets we start with in order to gain traction quickly.
When it’s time to start or expand in the APJ market, you want to keep the following six factors in mind.
General Manager (GM) must be a builder
Ideally, this person has a strong background and a record of success in the country, and has established relationships with C-suite leaders at big companies.
You want somebody who has the presence of a local executive. He or she should be capable of scheduling conversations with high-level executives at APJ companies, without requiring the presence of your CEO in order to get the meeting. I look for builders who have the presence and personality to access people significantly above them in terms of responsibility and numbers. This capability will drive bigger and better opportunities in the market, and your strategic engagement with customers will become much stronger.
From day one, this person must have a startup mindset and behave like a GM. You don’t want a salesperson who simply closes deals. The GM must have the right DNA to get things done, escalate quickly to get things fixed, and can explain to HQ that, in order to do business, we must customize and localize. Execution and delivery are key. Good GMs don’t simply paint a picture for the next three to five years of the kind of organization they want to build. They deliver startup-level growth on a quarterly basis to justify the investment they’re looking for long term.
My primary hiring criteria is to find someone who has built businesses before and wants to roll up their sleeves and do it again. A person who has taken something from scratch, made it big, and loves the building phase. The GM must be willing to do everything from hiring, to sales, to briefing media and analysts, and establishing a culture within their own teams.
Local hires should be a group of people who hustle, have grit, and fit your culture. The base hiring criteria in non-native English countries is that everyone must be at least bilingual. They need to speak English for your global network and company, but they must also speak the domestic language. Over time this becomes less relevant, but it is crucial at the start.
With a strong localization strategy, it’s important for your GM to have the ability to hit the ground running and hire the right people immediately. The smart move is to provide headcount for coverage in every important role—from pre-sales to post-sales—starting on day one and to put trust in the local experts.
The startup opportunity in APJ is very similar to adoption trends in the U.S. You’ll generally find that whatever happened in the U.S. with adoption trends will likely happen in APJ. The same customer challenges will be solved, and the same value will be derived from your product.
Snowflake saw early U.S. adoption by cloud-native companies such as online marketing, AdTech, gaming companies, online media, and startup companies. Enterprises, large organizations, and financial services firms took longer because they have on-premises legacy data warehouses and require lengthy migrations and clearing of regulatory hurdles. The same evolution is happening in APJ where a lot of our initial customers are cloud-native startups that shift over to Snowflake easily. As we gain traction in each market and our reputation solidifies, we engage in deeper business conversations with C-suite customers.
With that said, early customer deals are a lot of work. Set expectations during this initial land grab that you’re doing a proof of concept for customers who don’t know you and probably won’t make a huge investment. However, these first customers pay for localization and enable you to hire more people. Once you have successfully onboarded customers, acquired some reference logos, and developed a reputation in the country, the deal sizes start to get bigger. The conversation changes from technical benefits to a business discussion.
The U.S. is generally a direct customer model. You build a solution, customers try it, like it, and start using it. All of your internal systems and the way you sell and price are based on a direct sales model.
North Asia is more partner-oriented than the US, with 80% of enterprise companies in Japan and Korea relying on a systems integrator (SI). Major companies in every industry—manufacturing, pharmaceutical, public sector, telecommunications, you name it—outsource data decisions, infrastructure management decisions, and application development to an SI or other third party.
Many American companies try to go directly to the APJ end user and say, “We don’t use partners.” This doesn’t work. In a lot of ways, partner organizations are akin to the end user in APJ. To get traction with enterprises, you need to both sell the vision to the end user while selling the tech to partner companies, which means getting them on board and excited about your technology so they encourage sales to enterprises. Your sales model will need to be tweaked and partner programs improved to reflect this reality.
Let your local leaders figure out the best way to sell your products. There is no one size fits all. Engage your corporate HQ on what is working, what isn’t and how customers and partners are using your technology. This allows for sharing of best practices to other parts of the world, and influences the roadmap on a global scale.
The same goes for your teams of local people. Encourage them to interact with each other across APJ. You want to create a cross-pollination effect of best practices across the region that speeds growth.
Your APJ plan should be an evolving roadmap that takes into account market factors such as population density, potential customer density, GDP, economic power, and geopolitical issues. When you’re opening a new office, you need to know what sales pipeline growth looks like and how to staff a market.
The best strategy is to build your APJ plan using data and analytics. As much as possible, you want to remove the emotion and personalities from making decisions about what to do next and let the data speak for itself. When the company can see the data-driven decision-making involved and understand the size of the opportunity, you are more likely to get financial support and be able to launch a more aggressive plan successfully.
For many companies, this strategy will be challenging. A recent global survey of senior business, technology, and data managers across North America, EMEA, and APJ discovered that only 50% of businesses can access data where it resides, and no more than 38% indicated the majority of their decisions are informed by data. I find these numbers optimistic for APJ.
Initial customers are buying Snowflake for technical reasons and because they need technology that simply works and is easy to use. Conversations center around performance, cost-effectiveness, scalability, and fast data ingestion. We are in the early stage of growth across APJ, and there are a lot of opportunities for hypergrowth.
Advance your solution faster with APJ
The APJ region will continue to grow faster than other parts of the world, both in terms of population growth and business growth. Without question, the APJ region represents an exciting opportunity for tech companies, but you must take a localized approach.
The region is rife with opportunity to enhance your offering because countries will test your solution in new ways. For example, security protocols are an important concern in Japan. The scalability of your solution is important in India due to the sheer number of people and the volume, and size of the businesses. These markets will show you how to make your platform more robust and will reveal where you have hiccups. You may also find that you’ll kick the tires on new functionality faster because of the distinct nature of the markets, and the scale at which you’ll be receiving feedback.
The demands of the APJ customers will make your solution better over time and expose new business practices, new ideas, and new partnerships you haven’t seen before—but only if you take a localized approach and truly learn from these markets.