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Four Faces Of International Business
Netpreneurs Get Perspectives On Going Global

(Tysons Corner, VA -- December 13, 2000) The decision to move into global markets comes with many questions, but there’s no question that companies based in the Greater Washington region have at least one advantage. “The nation’s capital is a center of international business and policy and a center for solutions to international Internet challenges,” said James LeBlanc at this morning’s Morino Institute Coffee & DoughNets event entitled “Global Business: Challenges and Opportunities.”

LeBlanc once served as Chief of Staff to two Canadian Cabinet Ministers before founding J. LeBlanc International, a consulting firm offering international business development and public affairs services. He acted as moderator for the event, which featured speakers who brought four perspectives to entrepreneurs considering global expansion.

  • From the government perspective, Ambassador Alan Larson, Under Secretary of State for Business Economic and Agricultural Affairs, discussed many of the efforts and support services underway by the U.S. and other governments to create a more predictable global business and eCommerce climate.

  • From the entrepreneur’s perspective, Maurice Tosé, founder, Chairman, CEO and President of Telecommunication Systems, Inc. (TCS), brought the personal story of a technology company that has grown in just a few short years from a small consulting operation to a products company doing business on six continents.

  • From the investor’s perspective, T. J. Jubeir, Managing Partner of New Horizons Venture Capital, discussed how international opportunity affects a funder’s decision to invest.

  • And from the corporate perspective, veteran businessman Mario Morino, Chairman of the Morino Institute, technology investor and founder of Legent Corporation, presented many of the management lessons he learned in building a global company.

The Government Lends A Hand

International business has always been an important part of government policy, but never more so than in this networked world where distance is so easily overcome digitally. Traditional cross-border business and regulatory issues like language, culture, currency risk and intellectual property protection have been joined today by new questions of network infrastructure, consumer protection and privacy. Larson discussed such recent advancements as eCommerce policy discussions with Japan and the European Union, a moratorium on the imposition of customs duties for electronic transactions and an Intellectual Property protection treaty. In addition, the federal government has created the Global Information Economy Working Group to solicit input from the private sector, and the Digital Opportunities Task Force with the World Trade Organization, which provides a framework for involvement by business and non-governmental organizations. The World Bank and the United Nations also have initiatives in process, and there’s a good reason for it. According to Larson, global B2C eCommerce is expected to double from its current $61 billion by 2003; and global B2B eCommerce is predicted to increase six-fold in the same period from its current level of $184 billion. For entrepreneurs seeking practical help in specific global markets, the Feds also have local government offices to offer assistance. “We want to be of service to businesses big and small,” Larson said.

One Company Spreads Its Wings

As Maurice Tosé tells it, both the government and international expansion have played a big part in the success of his company, TCS. The firm started as a small Section 8(a) consulting company working mainly on Defense Department (DoD) contracts. “The federal government is a great incubator for technology,” Tosé said, citing not just TCS, but also the origins of the Internet at DARPA, the start of Network Solutions as another 8(a) company eventually sold to SAIC, and wireless industry darling Qualcomm which was based on government spread spectrum technology. For TCS, a DoD networks contract in the Middle East was leveraged into a major AT&T/Citibank satellite contract in the Asia-Pacific region. Along the way, the company developed an integrated intelligent messaging product. With its recent IPO, the company now has a run-rate of more than $40 million in annual revenue, in an industry where the European market has an edge over of North America. Tosé said that some of the keys to global success come from locating near your customers, leveraging partnerships, understanding the culture and, most of all, patience. In other countries, he cautioned, “It takes twice as long and three times as much money to do something.” There are pitfalls to be avoided, like ineffective and even corrupt agents, and processes you must put in place, such as guaranteeing deals and insisting upon a track record of responsible and prompt payment, but he still calls it a brave new world. “Many countries want to do business with the U.S.,” he said, “but it’s not always a level playing field.”

Investing In Geographic Scalability

New Horizons Venture Capital specializes in early stage investments in Internet companies. Managing Partner T. J. Jubeir says the fund looks for companies that have “a long-term commitment to grow the business,” and the firm puts a premium on companies that have a vision of scalability both within vertical markets and across geographic locations. They ask for main questions when considering an investment, and international factors play a role in all of them:

  • What is the opportunity? Global opportunities are often underestimated by startups, said Jubeir, and a good VC can help companies realize them. Despite challenges, he likes to see entrepreneurs who have considered the international markets thoughtfully.

  • What is the context? As the craze slows down, we hear much talk about enhanced due diligence and greater focus on real market opportunities. This plays into the global decision as well. According to Jubeir, entrepreneurs considering a global reach need a realistic assessment of market factors such as regulation, policy, customs and customer profile.

  • Who are the people? It’s another classic investment criteria, and Jubeir added, “The people involved become even more important in the more complex environment of international markets.”

  • What is the deal structure? Your global market plans may affect the way an early-stage fund looks for later round investors, especially ones that can smooth your path into certain markets.

There are challenges and complexities in tackling foreign markets, but good VCs can help entrepreneurs tremendously with advice and analysis of key questions, such as which markets to enter first¾the easiest? the most similar to ours? the cheapest?

War Stories From A Veteran

Mario Morino has a well-earned reputation as a successful businessman, savvy investor and insightful student of the technology industry. He started his first company, Morino Associates, in 1973 and grew it into the world’s seventh largest software company, with a presence around the globe, before its acquisition. In his wrap-up to the session, Morino peppered the audience with rapid-fire bits of hard-won practical wisdom, not the least of which was that “global business” is a much misused term. “Very few firms are truly global,” he said; instead they aggregate strategies in several country markets. There’s nothing wrong with that, but don’t fool yourself and don’t try to fool others, either. Being truly global means that you think internationally in every element of your business from finance to HR to R&D. Only a handful of companies on the world stage actually do that. Morino went on to give specific advice that ranged from hiring practices to cultural respect. He summed it up in a handful of key points:

  • Assume nothing.

  • Orient your team from the start.

  • Do your homework to understand what markets you’re going into and why.

  • Stay very close to your markets and international executives.

  • Execute well, and remain involved in the execution.

Four Perspectives, One Conclusion

So what’s the verdict on going global? Listening to all of the speakers, it comes down to one thing¾the global market is too big to ignore, even if it’s tough and not always fair. Of course, much depends on your industry or, rather, how well you really understand your industry. When Morino says that you have to do your homework or Tosé says that it’s all about “blocking and tackling,” it’s the same message entrepreneurs have heard about doing business in any market¾you have to know the space and respond with solid execution. When you’re ready to go global, it will take the right people to help; not just on your staff, but also with assistance from advisors, investors and government trade experts. Luckily, the people and resources are out there to help, especially in the Greater Washington region.

As Tosé said, “There’s a big oyster out there to harvest.” Opportunities and challenges notwithstanding, there’s another reason to keep your eye on the international ball. As LeBlanc said, “Today, your competitors are in Haifa, in Paris, in Stuttgart, in Halifax.”

  Copyright © 2000 Morino Institute. All rights reserved.




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