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Spotlight on Ray Skoglund - McNamee Lawrence
Going Global? ...
Just a moment ago, I was on the "HORN" with Ray Skoglund at International Investment Banking Firm McNamee Lawrence. We talked about Going Global ... or Not!
HERE’S THE SCOOP:
Elizabeth Perry (White Bull):
So, tell me a little bit about Going Global. Now, you’re an expert. But how did it all begin?
Ray Skoglund (McNamee Lawrence):
Well, I remember my parents taking us all over the world growing up. My father’s family is originally from Sweden. The familial connections have remained and I have spent quite a bit of time in there. ... Early on, I developed an appreciation for cultural difference.
Years later, I became an M&A lawyer, facilitating international deals and cross-border financing and then crossed over to investment banking at Hambrecht & Quist – doing the same types of deals. Now at McNamee Lawrence, I continue to help companies do business around the world.
I still spend quite a lot of time in Sweden and Scandinavia, by the way … finding that many Scandinavian entrepreneurs tend to have a knack for building companies with an eye on global growth.
That said, I think you don’t necessarily have to be an expert in world culture to be “Global” but you do have to know that differences exist.
So, you mean, just because we’re all “online” doesn’t mean we’re all playing a Global ballgame?
The world may be opening up … becoming more and more “Global” in nature, but cultural differences are still very much alive. You have to acknowledge them and be open to working with or around them.
You might put together a “multi-national” team … or partner with people who already have a global presence, or with people who can help you “transcend” those borders.
What sticks out as a major obstacle for companies looking to go Global?
I think one of the most glaring and universal problems, particularly for tech companies, is that they don’t always know what it is they do! ... Who are you selling to? What “problem” does the company solve? What is the “message” you are trying to get across? … Most outside people won’t want to focus on the technology. Rather, they will want to hear how a company will leverage whatever technology it is to do something useful or exciting, and above all something that sells!
And, now that you have your message, you must be able to communicate it effectively to your target audience. (And, like it or not, it’s most often going to be best to put it in English.)
What’s one thing you suggest your clients do as they prepare to enter a broader market?
One thing we stress with our clients is building strategic commercial relationships, such as channel or reseller partnerships. If you’re an ERP company, for example, selling to a European market, and you are ready to enter into the US, forging a relationship with a large company like Netsuite, Intuit, or Oracle will bring a whole new set of contacts and source of revenue.
We spend a good deal of our time facilitating those connections.
What are some of the mistakes that companies make while attempting to emerge as so-called Global players?
Ironically, one thing people often don’t think about enough is money. The VC industry in the US, for example, is such that investment firms need to invest more at an early stage to become lucrative. Fund sizes are bigger. So, if you’re thinking about playing in the global marketplace, you most likely have to think in larger sums.
Also, Europeans, for example, tend to be very “capital-efficient” when compared to other markets. A typical start-up in Europe may raise the equivalent of $1-2M in an A round and $2-4M in a B round, maybe $5M in a C, while in the US it’s likely to be twice that across the board. American firms are more apt to spend more money in the beginning stages just to see if it works. Certainly, they will spend more money on sales and marketing (which they tend to be good at) at an early stage.
Could you give me an example of a success story … a company who made that “Global Leap” the right way?
A company called LogMeIn. They were a small firm in Budapest in 2003 and they hired us to help them find investors. They kept their R&D in Budapest while expanding to the US … eventually going public on Nasdaq (LOGM). They now have offices worldwide.
Aside from having a cohesive management team, they recognized that Europe was a great location for developing cutting edge technology. They were able to leverage that technology while expanding other aspects of the company, building relationships locally everywhere they went.
So, I notice McNamee Lawrence has made some headway in the Green/CleanTech arena. How Global is that sector?
One thing we see is that Europe has been ”going green” for far longer than the US. US investors are realizing that and that we have a lot to learn from Europe in that sector. There are some great ideas coming out of Europe. US VC investment in Europe has, with a few exceptions, been nearly non-existent for the past two or three years, but it seems that Europe may have caught an edge, and that CleanTech is a bright spot. More and more VCs are looking to invest in that sector.
Aside from this area, what are some of the trends? ... What’s Hot?
So, the mobile sector is clearly vibrant worldwide. People are still looking for ways to leverage the mobile device. The Global market is still hungry for solutions … and, more specifically, things that actually drive revenue. The biggest trend in the US, for example, is that the large acquisitive tech players are really keen on driving revenue. While last year, it was about cutting costs (which by the way enabled some of the larger acquisitive tech players to really pad their cash positions), this year it’s about growing revenue through acquisitions. Smart buyers will put this cash to work by acquiring targets who have proven they can execute. ... It is no longer about the greatest technology that wins
We’re seeing now some great European companies that have weathered the storm called the “Great Recession” and come through with some interesting financial metrics ... some of whom have hit the ball out of the park. So, there are some very interesting targets for US buyers.
How has the Internet played a role in Global Success?
Well, aside from the obvious breaking down of borders, almost all of the survivors/winners I know in the enterprise software space in the last few years, for example, have embraced the SaaS business model … you know, taken the hosted platform and subscription pricing model and run with it.
So, the business of McNamee Lawrence is to help companies get investment or get acquired, expand, etc. Can you help those who are simply not ready yet “move on to the next level?”
As a firm who has gotten through the “downturn” quite well, we’ve remained active in talking with the large players and have developed and strengthened some great relationships during the past two years. The good thing, in particular, is that all of these Big Players have shopping lists. We understand what they’re looking for. But, it’s also an art, really. … One of the focuses of our business is to help the younger, expanding companies put together a plan for growth. We can help them to understand what it means to go global, and how best to grow, and when to expand into new territories… We are good at seeing that “window of opportunity” but we’re not afraid to tell a firm that they’re not ready. Quite frankly, given the economic mess of the past few years, many of our clients have benefitted from putting off an M&A or fundraising process and focusing on building their businesses and we have been happy to help them along the way.
The bottom line: We’re not going to blow smoke up their skirts. We’re not a Transaction Processing Machine. We like to think of ourselves as a company’s “Trusted Advisor”. We rely on our good track record and we want to understand the company as thoroughly as possible and help them make good decisions.
What other Pearls of Wisdom can you give those firms who may be ready to take the “next step?”
I firmly believe that the next two or three years will be a critical but extremely opportunistic time for European companies. I think there are some really cool, interesting firms that have gotten through the “economic disaster” of the past couple of years and who just need to keep a positive outlook and move forward.
Part of that is, again, connection. You have to put yourself out there … find dynamic settings and communities … interact face to face with people who have “international” perspectives. People, whether they’re investors or large firms, aren’t really afraid of borders any more. They don’t care so much about the fact that you’re a European company. They’re more interested in what you DO!
Pardon the pun here, but you have to be Bullish! ...