You have decided to expand internationally and US is definitely a high priority. But what other markets should you look at and how should you prioritize different countries and regions?
Jeetu Mahtani, MD of International operations at Hubspot, spoke about how Hubspot does this and I thought the framework of looking at opportunity vs complexity for each country was an excellent way to determine market priorities in a data-driven manner. Below is an excerpt from the podcast on the framework Hubspot uses.
We take a fairly scientific approach as we go through this process whereby we look at that opportunity; there’s a short-term opportunity and there's a long-term opportunity. The CFO would like to see some short-term opportunities, but you also want to take a long-term view.
So we think about TAM – total addressable market in two ways. We think of the short-term opportunity and how much of that short-term opportunity do we get? And what is the long-term opportunity in the country?
There's also the complexity of addressing and winning in that opportunity. So for each country, we map out short-term opportunity, long-term addressable market. Under complexity, we look at things like ease of doing business, competition, local labor laws, and legal landscape. We also look at the availability of talent because you really need to transition these local operations to local leadership. We need to think about how quickly we can get a local leader in place.
So anytime we decide on a big investment, we had this annual planning process that we go through where we look at where the next big bet is. I trade on this model of opportunity, complexity each and every year. It's a fairly exhaustive spreadsheet that gets refreshed. It's got a traffic light system and ultimately becomes very scientific with things like the top three opportunities, this is where you want to play and this is where you could really maximize your chances to win.
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