Most
startups fail at getting a new country off the ground. This is why Unicorns are
such a rare breed. Fortunately, a happy few have succeeded at finding this
magic formula, like the team at Blablacar and turned it into a competitive
weapon. One of their secret: acqui- hiring.
This is my
second post on international expansion. If you wonder how to pick your next
launch country first, see my earlier post here.
**************
One of the
most important decisions any company of any size will make is how it will
successfully launch operations in a new country (the following applies to
launching in new cities or states within an existing country). For early stage
companies, the stakes are even higher, and finding a great country manager is
the single most important element of a successful launch.
The most
common solution is not necessarily the easiest, where companies hire a manager
with expertise or a network in the chosen country, and enable him or her to
hire a team of two or three people as support to get started. However, an
experienced leader is extremely difficult to find and the risk of failure is
high. Alternatively, companies will “spin-off” an existing core team member to
lead the launch. While this is a good option, it can be difficult to implement
because this person must meet important criteria like language fluency,
geographic familiarity and more.
Fortunately,
there is another, proven strategy, which I will expand on here – the
acqui-hire.
Lessons from
Acqui-Hire Success Stories
The best
example of launching and expanding in new countries via acqui-hire can be found
in Paris-based BlaBlaCar, Europe's top ride-sharing company with 16 offices
worldwide. As, I was about to lead Accel’s first investment in the company, I
began building a list of all the start-ups operating in a similar or adjacent
space. Among them was a small company of two people in Italy called PostoInAuto
(at the time, BlaBlaCar had only launched in France and Spain). PostoInAuto’s
founder, Olivier Bremer, was terribly talented, but his business was not at a
point where he could raise a significant investment.
As our
investment in Bablacar was ready to close, I again reached out to Olivier to
gauge his interest in joining the BlaBlaCar team – strong leadership,
significant funding and the opportunity to retain total freedom to build the
service in Italy. He was intrigued, so I connected him to BlaBlaCar’s founders
who convinced him to join the adventure shortly after. Within four months,
Olivier re-launched his service under the BlaBlaCar brand in Italy, and today
BlaBlaCar is the dominant service in the country. Olivier went on to lead the
company’s launch in Germany given his dual German/Italian background, and
currently leads the business in both countries.
"There
were many reasons why I decided to join forces with BlaBlaCar: we shared the
same long term goals; I could feel a very good fit with the founding team; my
company was early stage and by joining BlaBlaCar” said Olivier Bremer,
BlaBlaCar GM Germany and Italy. “I was empowered to continue doing what I had
been doing, but with a much larger budget and support from a team that shared
my same passion.“
Learning
from the success of this initiative, I introduced the BlaBlaCar team to
companies in Poland and Russia, which have also been very successful
acqui-hires.
Making an
acqui-hire successful
If
successfully executed, combining resources from an acqui-hire will save years
of work while broadening the technical and talent bench. But, this is a highly
emotional process for the acqui-hired team. Therefore, it is very important to
set the right rationale and motivation to ease the process.
“Like any
successful partnership, the acqui-hiring and -hired companies must fully align
in terms of strategic goals, operational processes and culture. Both sides must
trust the other and commit to a shared vision,” said Piotr Jas, BlaBlaCar GM
CEE. “Both companies need to actively learn from one another throughout the
diligence process, and maintain an open and honest line of communication in the
early days of the expansion.”
Like any
relationship, the responsibility for success is shared. The acquiring company
must find a team with the skills and passion to accelerate growth
exponentially.
“Being
acqui-hired can be seen as a ‘fundraising++’ because the local team receives
money to expand faster (like any fundraising) and a robust and proven product and
tech platform. It also receives access to ultra-relevant experience in their
field, fast-growth methods, tailored customer support – provided by HQ in our
case –, a strong international brand with related communication methods and
positioning,” said Frederic Mazzella, BlaBlaCar co-founder. “Thus it is not
only about the money.”
Since its
acqui-hire of PostoInAuto, BlaBlaCar developed a team that scouts potential
acqui-hire opportunities across the globe. While it’s not possible to find
strong acquisitions opportunities in every country (the launches in India and
Turkey have been organic), it remains a key element of its fast global rollout.
The
interesting element of the acqui-hire strategy is that it does not require a
lot of upfront cash to implement relative to the resulting growth (assuming
proper diligence ahead of time).
“We acquired
three companies in short amount of time and each time I re-used the same term
sheet template. Most of the consideration for these deals was equity and
options, so cash is not a requirement. To be successful, you need to have the
right skills and having someone in the core team with M&A or venture
background helps a lot,” said Nicolas Brusson, BlaBlaCar co-founder.
**************
Today, more
than 50% of BlaBlaCar new members are coming from acqui-hires – an impressive
ratio proving the effectiveness of the approach.
While this
is one example of many across our portfolio and beyond, the acqui-hire strategy
remains consistent and taps into a set of best practices, regardless of
country: find great talent, maintain great culture and clearly communicate
strong values across each local teams.
