David Hodges, Founder and Managing Director of Loc8, knows what it takes to make the successful transition from start-up to flourishing, scalable business.One of the key challenges for David and his team was to expand their company internationally while maintaining the core cultural values reflected in their mission statement:
'We’ve shipped our Australian people and culture around the world to our international offices to make sure our Australian flexibility, service approach and sense of humour touches all of our customers. And our crew who are not Australian seem to be acting a little more Aussie all the time…for better or worse!'
Loc8 currently have offices in Melbourne, London, Miami and New York (we only have offices in Melbourne, Sydney and Miami however, we do have clients in the US and in the UK). David spoke to us about how his team made the most of their opportunities to expand, how technology can broaden your office space and how you can ensure that your business culture won’t get lost in translation.
What do you consider to be the ‘Loc8 culture’?
David: Loc8’s culture is family-focused. It is cooperative, it is creative and it is informed by a drive to create class-leading technology. We mightn’t always succeed, but we try. We also fundamentally don’t believe in tying customers into a contract; instead we survive by producing the best-valued product in a competitive marketplace.
Why is culture so important for a business?
David: We’ve always been a company who’s hired on ‘fit’ — based on whether the prospective employee will suit and add to our culture. That chemistry and cohesion drives stability and, as a company, you exude confidence, which in turn provides great customer services. In technology you constantly need to change and adapt to remain competitive and that’s very hard to do if you don’t have that core.
What are some of the initiatives that promote your culture?
David: We are big proponents of flexible working arrangements. From the beginning I was working from Sydney when our base was in Melbourne, so we’ve had the processes in place from the get-go. We’ve had working parents who can work 9-3. Our flat management structure also helps to drive those values I mentioned. When everyone feels like their say is valid, then you can promote a very open, creative and innovative culture.
How did your overseas expansion come about?
David: We had internal staff relocate and saw it as a real opportunity to learn more about those markets. We started to foster relationships and partnerships in those bases, and we worked with Australians overseas who had done it before; it went from there, really.
What advice do you have for businesses looking to establish a presence overseas?
David: There are quite a few things that we have learnt along the way (and we’re still learning!) But some of the most important things to do when establishing an international presence include:
Have a strategy
When setting up an overseas presence, you’re running so quickly that there’s a danger of not having the right checks and balances. These are so vital because they force the company to continually question: Are we going in the right direction?
Understand the culture that you’re going into
This is so important. And I don’t just mean the wider cultural context; you need to understand the competitive nature of the market. Even in the US, we’ve found business opportunities to be very different on the West Coast compared to the East Coast. In Miami, we discovered that the market was comprised of much smaller, trade-based organisations, whereas on the West Coast, they had much larger teams.
In the UK, while we knew how many competitors there were, we underestimated how mature the market was. These learnings have really informed how we approach integration, the features we onboard and what we need to do in terms of strategy.
Have mentors, partners and guidance
Learning from those who have gone before you can help you get a sense of the culture, the competition and idiosyncrasies about the market that aren’t immediately obvious. These partnerships can be invaluable in cultivating international relationships and building trust in that market.
Send internal people over ...
In the three instances of setting up international offices the staff members who have gone overseas have been with us from day dot. We tended not necessarily to do it with a newer recruit simply because they didn’t have that same understanding of our company. They offered a unique perspective that could represent the aims of the business as well as identify opportunities and quirks in the market that a local might take for granted.
For example, in the US we discovered that MYOB and Xero aren’t so well-known, they use a platform called Quickbooks. This meant we had to progress our work to make sure that we could integrate. Interestingly, this disparity hadn’t come up in our initial research, it was only when we were talking to prospects that it became apparent.
Another element we uncovered was that the US tend to prefer a chat feature throughout the website. Installing this feature opened us up to prospects that we hadn’t been able to previously access.
By being on the ground your staff can also uncover really subtle differences. Whereas we tend to use the word ‘enterprise’ to describe a larger organisation, it’s a piece of jargon they don’t understand (they would tend to use, well, ‘large organisation.’) This may seem really insignificant but it allowed us to make sure that we were shaping our offering in keeping with what the market expected.
...then hire local staff
Once you’ve got an understanding of that, then you need to hire local staff. Not only will they be invaluable in answering some of those larger questions, but they will be key in setting up local infrastructure and operations.
Has Loc8's culture changed since expanding internationally?
David: Our culture is changing all the time. I think the international side of the business forces us to get out of our comfortable world here in Australia and admit that we don’t necessarily know the best way to do things. As a result we’ve become a lot more open, communicative and ready to think internationally. At times it can be a balancing act – ensuring that we’re satisfying our local customers as well as creating features that will appeal internationally.
Is there anything you would do differently?
David: Yes and no. The experience we’ve gained through the mistakes we’ve made have been invaluable, but, if I were to do it again, I would ensure we had a bigger war-chest before going over. Sometimes we couldn’t react quickly enough and that cost us time and opportunity. When you enter a market you’ve got to be ready to go.
The flipside is that I’ve seen organisations with a lot of money going into regions. The money can make them complacent; they don’t put enough weight into understanding their business in that different context. They just approach it with the mindset, ‘We’ll just replicate what we’re doing here,’ rather than asking, ‘What problem are we trying to solve in this market’?
They might also fail to acknowledge that the way you solve those problems can vary. You can gain great insights by looking at your competitors and examining the way they do things. We see a huge difference in how those companies approach field management.
The other thing I wish I’d done sooner is get a Board of Directors (BoD). In the beginning, a start-up is focused on just keeping the doors open. We found that, when our core team became managers, and when I stopped being the accounts payable/marketing team/sales force, my role wasn’t just informed by the tasks I needed to complete anymore. I was making the transition from operational to strategic, and we needed measures to support that. I think a BoD would’ve helped.
As I’ve said before, when people talk about start-ups no one talks about the process of going from a small business to a large business – that is a real challenge. And the people that started mightn’t have the skillset to help you expand. More education around that process would be invaluable. I think it would be fantastic if government, business and industry could create hubs where start-ups could go to liaise with those that have done it and could learn more about how to safely and successfully scale their business.
Loc8 is an exhibitor at CeBIT Australia 2017. If you’d like to see some of the innovative things they’re doing, or would like to learn more about how you can get your start-up prepared for long-term growth, you should consider coming along. You can register here.