American brand entering Swedish market
I have been a fortune to see, follow and experience some great brands entering this market over the years. They all share a few things if not a lot but my view today will only cover what I believe matters from a American brand perspective.
The following logos/brands are all successful businesses and all driven by leaders, founders and management across all markers that I deeply respect. Having said that I believe they all failed in this local market and it took 24-36 months on average to realize and acknowledge that fact. If you feel you have failed and if you haven’t passed the mark of 24 months you’ve successfully achieved what Dan Springer and Josh James couldn’t manage within the same time frame.
The following logos are just examples but the main contributors to my analysis and statements in this part of my document.
- Exact Target
- DoubleClick (before Google acquisition)
In the first part, I will focus on Repsonsys and Omniture but they all followed the same pattern.
Starting with Repsonys who had significant global growth on the message of “New school marketing”.
What’s a bit funny about this is that Responsys at the end of the day did email marketing. It was advanced for sure but still early in marketing automation and in all honesties through a quite complex platform from a user experience perspective. So the market could easily have challenged the main message “new school” as a core message, but it wasn’t challenged, it actually worked. Deeper underneath that message they spoke about understanding individuals, the importance to adapt to local markets, languages and being close to the end consumer.
For years they never published anything in a local language, never adapted to local markets and it was all driven with a US tone of voice – I’m the greatest “Mohammed Ali”
I will revisit my analogy to Mohammed Ali later in this document.
Omniture went to market under many different slogans, but one that stands out and that was used most frequently was “you’ve got the data, why don’t you use it”
Underneath this headline, they educated the market in usage and cases to prove the value of understanding prospects and customers. They created great e-books about the importance of adaptation to local markets, to support local differences, languages and to offer and market in a personalized perspective all the time. This was quite often referred to as the hidden values of being relevant making sure to communicate the right message to the right audience all the time.
As a sales rep both employed and as a partner working with these brands you entered almost every conversation struggling uphill. Customers and prospects laughed about the message and the fact that none of them was drinking there on champagne, and it’s obviously friction any sales rep would like to avoid initiating a conversation. I would say all people in the market making comments about this obviously understand the challenge of producing content in all languages, they consume and understand the message so its not a language issue but it didn’t stop them from making a comment and in my opinion the market hasn’t change one bit when it comes to this.
I wrote a book in 2016 called Data driven marketing, yeas that’s right an English title, in fact the book is written in English. I received a lot of good feedback about this book but it was also left with bad comments and even if its uncounted I think that 75% of all the feedback was negative feedback about the fact that I wrote this book in English.
- Translate and launch Yext.se
- Cherry-pick the most relevant content and start communicating to the local market
- Retarget and nurture the pipe in social channels with local content
This will have an enormous impact in not just volume but also the quality of the pipe and support sales in the local market in a completely different way.
Customer and prospect meetings
I mentioned Mohammed Ali earlier and what I mean with this and the famous statement “I am the greatest” is that vendors sometimes enter this market with this tone of voice.
Don’t make this mistake it is devastating and will take years to reset.
Even if people living in this market can be fascinated by international markets, brands and in some cases admire standards or success that comes with it. The old American swagger or the tone of being the biggest, fastest and strongest is sometimes a bad thing.
We have our own word for this and I think that’s a unique word that I hope only exist in this market cause it’s so dumb, it’s so stupid and it doesn’t make any sense.
The unimaginable stupid word is “Jante”, and in short it means we hate to see other people/brands almost anything being successful. Don’t mix this with being competitive or a bad looser cause this is different. This is different and nothing worth spending more time perusing just be aware of this strange conceptual way of thinking.
I know I don’t need to educate you on how to sell, but it’s important to consider this in regards to how we communicate with prospects throughout the sales process.
This is why local tone of voice is so critical and why you need the local presence and why they need a certain amount of freedom in how they operate.
This might be completely irrelevant but in the past we’ve seen organizations with local resources operate as if they worked from the US or the UK.
I have said this before, businesses in the Nordics may still be behind when it comes to being mature buyers of software but they have enough experience to understand they need to invest in a partnership, not just software.
With local resources you have the power to message that story and with the right approach articulating all those benefits in combination with the power of your brand.
Consensus and decision units are also something that defines this local market.
Finland is slightly more a single voice while the other countries often allow a bigger team to agree in how or when to engage with vendors.
This is the main reason why international vendors sometimes feel a complete lack of urgency. The process and time to organize and agree on proper next step is why you sometimes experience weeks passing by without response or feedback from a meeting.
This is why local content and marketing is so critical as this will indicate the level of engagement from prospects behind the scenes.
Being present in this market require that you understand the differences and understand how to navigate around this.
You can hate it but never change it
- I ´am the greatest – Don’t work
- The unimaginable stupid word of “Jante” exist so be aware
- Consensus across the decision unit – rare and unlikely a single voice
- Culture and language needs to be addressed properly
- The message, marketing, education and content in local langue
- Hustle its not part of our vocabulary
- 10 weeks of vacation will impact sales cycle so plan accordingly
- 8.30am to 4.59pm sharp, it’s a fire drill on the dot five days a week
To put it simply I think all examples above can be summarized in a few bullets.
- Crossing the chasm mentality
- Reflection of the current situation
- Reset the GTM & and increase noise in local marketing with local language
- Add the missing components of the story
- Adapt to local challenges in culture
This is how I would summarize the changes made by other vendors in the past and what truly made a shift for them in becoming more successful in this local market.
If you can agree on a few actions around this and create a plan for everybody to execute on it will start to impact your performance.
Local competition analysis
The following session is my high-level DD on your local competitor to support your thoughts in how to approach this. I think the fact that they do exist is good as you have support in educating the market, at the same time you compete in market share but you have all the tools to take them out of business.
I have been through all the numbers of Pinmeto and a few things are obvious.
The growth is somewhat faked, venture capital injected is a joke and 2019 will be the year when they need to make it or I believe existing investors will pull the plug.
Lets start with growth:
This is public information and all numbers in SEK.
So at a glance, it looks like they do approximately 8,5M SEK in revenue but that’s not true. They activate R&D costs and split investment made in R&D over 4 years.
This is legal and nothing strange from a reporting perspective but they do activate 4M SEK and when doing that this amount ends up in this report as revenue, meaning in fact 50% of the revenue isn’t revenue it’s a cost and its increasing.
According to press releases they raised 5M SEK in September 2018, and a new press release made public in December 2018 stated that they closed a new round of 20M SEK in December 2018.
I can’t say for sure or guarantee any of this but a few things strikes me as strange in this. After reading through the annual report I would like to make a few qualified statements.
The first round 2018 in late September are obviously not planed properly.
The Nordics comes to a complete stop during the summer, nothings happen from first week in July until the last few days in august.
This means that they didn’t close anything during this period and not just 2018 this goes for all years. They also practice what every company in the Nordics practice and it’s a long summer break for employees from June to late August. People leave for 4 weeks during the summer forcing business to pay the annual holiday compensation at the same time for the full business and this is done in late august.
The sum of low sales YoY and increased salary cost drain the cash flow for any business but the small ones takes a significant hit this time of the year… every year.
Smart people know this, you plan for it and you make sure you can manage this, but in this case it looks like they panicked. This wasn’t planed because if that was the case why raise 20M SEK 3 months later…
This sounds harsh but it certainly looks like the team is extremely inexperienced and even worse, the same goes for investors or they should have acted upon this already in q1-q2 to avoid being forced away from summer houses in the middle of the summer to re-negotiate terms and SHA.
The second round of 20M SEK is also nothing but marketing, I investigated this and ALMI (State controlled independent bank) participated in the 20M SEK round.
This is interesting cause the way they invest is through a loan with securities attached to all shareholders as a personal/individual guarantee.
They require a minimum 50/50 split from other investors, so in this case existing investors bailed the company out of trouble in august by investing 5M SEK and by adding additional 5M SEK in December they where able to get a loan of 10M SEK from ALMI.
What it means is that the company received 20M SEK but will most likely be extremely careful to spend above 50% of that since that’s a personal risk for the entrepreneurs.
With the current burn rate and what seems to be a life style business rather then a professional engine I guess this year will be the year when they need to prove they can make it.
All above is based on 2017 and what 2018 looks like is still unclear but they do make a few statements in the press.
The growth of revenue in 2018 is supposed to be strong; they claim revenue to be in the range of 20M SEK. I don’t believe that to be true for several reasons explained below but for the sake of arguments lets assume it’s true.
If so I would guess they continue on the same path with 50% R&D activation and if so the revenue will be approximately 10M SEK. They also claim they can be profitable but choose to focus on growth.
I think that last statement is something we can use, its probably one of the biggest challenges they face meeting with prospects.
This is again a culture aspect, is it safe to join Pinmeto in a partnership, what if they run out of money, what’s my risk here.
I believe this can be used when going head to head, lets think about the consequences if this solution falls apart over night. What will be the immediate impact and how can we educate prospects about this risk without turning into Mohammed Ali.
Something about the last fundraise also tells me existing investors participated at a bare minimum and nothing above that.
H&M and Axel Johnson who invested at an early stage should have picked this up if this company was growing through the roof. They can certainly afford it and they both like to keep control in investment they make, why step away from that. I also believe the two of them would have liked to see a more seasoned local VC coming onboard such as Northzone or Creandum and if anyone can open up the doors to the two of them it would be H&M and Axel Johnson. I think it’s fair to assume they did but the team failed closing them and perhaps that created some level of uncertainty within the existing investor group.
Pinmeto is a competitor and we should be polite and give them some credit but lets agree it’s a tiny business and nothing to be to concerned about. You have the power to act on this in any way you want to and it all comes down to how we like to prioritize the time.
Strategy based on knowledge above on target accounts associated
- Step on the throat and watch the life go out of their eyes
- Leave it as is, burn rate will kill them anyway or force them to change direction
- Pros and cons on cases above
- Most importantly – what’s our focus
My opinion on this is to rethink how to approach the brands associated with H&M and Axel Johnson. Identify the weak ones and focus on wining one or maybe two. Let the market know they left the family and the rest of the market will do the math over time.
I don’t think its worth going in aggressive on all of them and dump the margin as it potentially could drain the local market across all accounts, pick a few.
I’m happy to participate in a session at some point in how to qualify this and how to approach it.