We're sharing a guest blog post from our community EIR Danny Martinez that's part of a series of posts on marketplace expansion. This was previously shared as a deep dive post in the community here.
‍
This is Part 2 in a series of posts covering marketplace expansion into new markets or geographies. Part 1 focused on marketing considerations.

In my previous post, I covered how different marketplaces have approached marketing when expanding into different geographies (geos), as well as a couple of other key insights around marketing and expansion. A key insight from that post is that knowing how to get the balance right between which marketing roles are hired in HQ vs. in launch geos is key. So you might be asking what about sales with expansion? That’s what I will be diving into with this post.

Note that I recently asked community members to share their experiences from different marketplaces; the insights I gathered from DoorDash, Booking.com, Yelp, UberEats, as well as my own experience advising startups on expansion, will be used in this post.‍

When it comes to building a sales team for geographic expansion, there are two contrasting strategies you might consider:

• The centralised approach with sending a sales representative from headquarters to spearhead the launch in a new geography.
• The outsourced approach with engaging a sales agency or hiring external sales professionals to handle the entire process.

‍
Whilst those might be very different extremes with strategies and approaches, I’ve actually seen both approaches in my time working with marketplaces (these approaches are more common than you might think!). I’ll break down the specific issues with both approaches below:

1. Central: as great as the employee from your local office might be, they will most certainly lack the local geo context. Sales is fundamentally a trust game, and if your prospects feel a salesperson doesn’t understand them and their context, you have not really given the launch a fair chance of success.
2. Outsourced: At this point it almost seems like a truism to say that you can’t simply outsource sales. Knowing your prospects, their jobs to be done, as well as knowing precisely how your product solves their specific problem is not something you can easily teach an external party, especially if your product is one of the many they’re selling.

So what is the right balance? To help answer that, I’ll provide some insights into:

1. What you should consider before launching in a new market
2. The ideal sales profiles to target for hiring in a new geography
3. How to set up a sales function (in a remote geo) for success
4. Defining and measuring success for sales teams in new geos.

‍‍

What you should consider before launching in a new market

Before you take the leap into a new geography, it’s essential to understand the market's unique landscape and how well your product fits within it. A deep dive into local market dynamics can reveal how your product might be received differently across various geographies.

• Study the local market: Take UberEats' venture into Korea as an example. The company encountered a mismatch with local practices where couriers preferred batch deliveries over the one-at-a-time method favoured by UberEats. This misalignment led to lower courier earnings and higher restaurant fees, which ultimately contributed to their exit from the Korean market.
• Find Product-Market Fit (PMF) with speed vs. accuracy: If you have the luxury of being able to place more than one salesperson in a geo, it will definitely give you the benefit of learning whether you have PMF in that geo much faster. Whilst this isn’t an option for everyone, having a single individual in a city creates the risk of not knowing whether a market hasn’t worked due to the wrong individual/go-to-market approach, or whether you don’t have PMF in that geo.
• Understand that reparation is key: Many startups expand to new markets before they are ready. Assume new geos will work less well than existing ones: the local presence and brand you might have in your local market is not something you’ll have from day 1 in your new geo, so keep this in mind when planning for a launch (and it’s impact on your overall goals).

"I'd like to reiterate the importance of Product-Market Fit. When you're planning a geo expansion, it's worth the effort to thoroughly assess whether the product you've built at home fits the new market you are launching in. And if not, whether you're willing to invest in localising the product." -Joe Rhew (prev. Head of Marketplace Operations at UberEats Canada)

"Hire a small number of 3-5 salespeople (if budget permits). The reason being is that it's sometimes hard to know whether a new market's slow launch is due to market fit or simply just not having the right GTM team. So a couple sales reps gives you a larger data set." -Steve Kenning (prev. VP of Customer Experience at DoorDash)

"Many startups expand to new markets before they are ready. eg. they don't have the demand side built up but decide to go into the market and build supply. Oftentimes this is driven by wanting to hit growth metrics. You should also assume new markets will work less well than your existing markets, so don't go after them until you are ready to fully execute your proven playbook." -Pete Hancock (prev. VP of Sales at Yelp)‍
‍

The ideal sales profiles to target for hiring in a new geography‍

Once you’ve pinpointed the geographies for expansion, the next critical step is assembling your local team. These individuals or teams will not only represent your brand, but also communicate the nuances of their geo to your central headquarters. This information is crucial for things like product localisation and navigating regulatory landscapes.

One key tactic that’s particularly helpful, is to hire from within the industry (who better to explain geo specific needs!) and hire at a mid-level where possible.

• Hire for local knowledge and needs: Whilst the former might sound obvious the latter is often an afterthought. DoorDash's expansion into Japan, for example, highlighted the necessity of hiring individuals with a profound understanding of local merchant services and logistics. This need for specialised knowledge and on-the-ground presence was key to their eventual strategy.

• Hire for experience and Leadership: If you’re going to hire an individual or a team that doesn’t sit in HQ and hence cannot be hand-held, you ideally want to hire them with some experience. Assuming it’s a new country, you’d likely need to hire at a mid-senior level, so that they can scale their leadership with a team as required. 
  ‍
  

"In the DoorDash context, they hired as many people as needed to meet the *unique* needs of a market. So for DoorDash Japan for instance it was sales, but then also merchant services (menu, tablet, etc.), logistics (Dasher onboarding), and a few others where we felt that there were important nuances needing local knowledge and in-person responsiveness" -Steve Kenning (prev. VP of Customer Experience at DoorDash)

"They should be able to deliver results in month 1, since they come from the industry; understand it really well, and have great contacts within. Aim for 5-7 years of experience, ideally someone who has managed people before so they can then set up their own team and grow the market." -Sarah Louragh (prev. Commercial Lead at Booking.com, UK & Ireland)

"You have to hire entrepreneurial salespeople, they are bringing a new product to the market and they need to be scrappy. Too often companies seek to hire "experienced" people in the market and end up with B players with experience vs. A players with less experience who will do whatever it takes to make the new market successful." -Pete Hancock (prev. VP of Sales at Yelp)

Tactical advice:

1. In interviews, delve into city-specific knowledge and assess if the candidate can offer insights beyond what's readily available online.
2. Ensure industry experience aligns with your marketplace's local needs: demand-side experience may not translate well if you require supply-side expertise.
3. Evaluate entrepreneurial spirit. A candidate's ability to innovate and sell a new product in a new geo is critical for this role, so creativity is a must.
   ‍

How to set up a sales function (in a remote geo) for success

As with all hires, the onboarding process and employee experience from the moment they start is crucial to setting them up for success. Onboarding is critical for any new hire, but it's especially vital for sales people who will be operating from a local office. Effective onboarding can bridge the distance, fostering a unified company culture that avoids an "us versus them" divide.

• Seed great talent from home: Sending accomplished salespeople from headquarters to new locations can benefit everyone involved. It offers the traveller valuable exposure to a new market and ensures that the expertise and learnings of your core team are passed on, preventing repeated errors and smoothing out the learning curve for new hires.

• Setup new hires for success: Empowering new hires from the outset is essential. Where feasible, have them spend time at HQ and bring members of the core sales team to the new office. This helps new hires understand the company culture and sales processes before they take on significant responsibilities.
• Consolidate for culture: It's all too easy for remote hires to feel like mere cogs in a machine, solely focused on sales targets. Structuring the onboarding process to be inclusive and immersive can combat this, making new team members feel integral to the team from day one.

“The best way to transport the best of your company's DNA and culture is to simply send a small part of it to your new market in person. Documents and management structures and zooms only go so far; sending a high-performing, rising sales leader from home helps ensure that there's someone on the ground to ensure new team members stay true to the culture that's got you this far.” -Steve Kenning  (prev. VP of Customer Experience at DoorDash)

“Rely on your HQ-local hierarchical order and expect your team to over-communicate. Have an outstanding relationship and ask them to go shadow them in their market. Be humble if you’re learning and share insights where you can add value.” -Sarah Louragh (prev. Commercial Lead at Booking.com, UK & Ireland)

Tactical advice: Encourage new hires to observe live sales calls. While playbooks are invaluable, they can't replace the experience of witnessing sales tactics and team dynamics in real time.
‍

Defining and measuring success for sales teams in new geos

With your local sales team in place, it’s time to define what "success" means in your new market. Resist the urge to apply benchmarks from other geographies directly, each new launch has its own dynamics and seasonal influences. Tailored goals that reflect the specificities of your market and launch timing are not just recommended; they are essential for a focused and effective launch.

• Agree on goals: A key step during onboarding is to establish realistic yet ambitious goals for the new city. This involves a delicate balance: goals should motivate the team without feeling unattainable. Collaborate with the launch team to set a "north star metric" for 1, 3, and 6 months, ensuring their commitment and setting clear expectations for performance assessment.
• Constrain your launch geo: It might seem counterintuitive to limit your initial launch area, but this is closely linked to achieving marketplace liquidity. Uber’s focused launch strategy serves as an example in this community post. Instead of targeting an entire city, they would zero in on neighbourhoods with high nightlife activity, scarcity of transport options, and customers with a readiness to spend. By distributing flyers with promo codes and offering driver incentives for specific areas and times, they were able to increase the likelihood of successful matches.

“Constrain your marketplace when you’re initially launching to maximise the chances of matching. The dimensions on which you constrain your marketplace will depend on the context, but usually the more constrained, the better. Uber had a hard geographic constraint, but also a soft time/rider/driver constraint. Over time, we loosened the constraint on these dimensions as liquidity on both sides of the marketplace increased.” -Joe Rhew  (prev. Head of Marketplace Operations at UberEats Canada)
‍

Tactical advice:

1. Seasonality is a critical factor in setting goals. Align your targets with the natural activity peaks of your marketplace, whether it’s summer, holiday seasons, etc.
2. Work back from your north star metric to input metrics (calls, emails, meetings, etc). This gives you real time feedback as to how the early days are going.
3. Make sure you’ve accounted for marketplace liquidity in your first months. You’ll need to factor time/resources for both sides, whilst you get the flywheel spinning.
   ‍

Conclusion & takeaways

When it comes to geo-expansion with a focus on sales, there are a number of key considerations that can dictate the success or failure of your efforts:

• Do your research: Before going full-scale, assess if your product fits the local market and understand what your competition is doing. Is your business model and product setup the right one, and will you have product market fit for this geo?
• Build local teams: Look for candidates with local knowledge and industry experience. Ideally, aim for mid-level hires who can grow into leadership roles. Hire for entrepreneurial abilities, as this isn’t a standard sales role.
• Prioritize onboarding and culture: Sending someone from your HQ to seed the culture and knowledge can set your new hires up for success. Invest in onboarding programs that make remote employees feel part of the larger organisation.

• Define clear success metrics: Setting up specific, ambitious (yet realistic) sales goals that are tailored for your new geo will offer a clear success roadmap. Don't forget to account for seasonality and other local factors in your targets (work through  these with your launch team) and make sure to reverse out to input metrics.
• Constrain launch areas: Consider starting small to test the waters and solve for liquidity in the marketplace. Uber's strategy of targeting specific high-demand neighbourhoods provides a great blueprint for this.

Remember, sales in new geos isn't just a numbers game; it's a strategic play that requires thoughtful planning, choosing great new hires, and goal-setting, tailored to the nuances of each geo. Please let me know specific questions you might have on this in the comments below, your own experience, or if you’d like to chat through this more. I’ll also be sharing the next post for Part 3/3 soon!

You can connect with Danny to discuss this post in the Everything Marketplaces community here. A big thanks to Danny for also being an active EIR in the community, where he is often sharing his marketplace experience, insights, and helping early stage founders.