The Martian approach to launching a new venture

Lee Clancy, SVP Product & Mobile Strategy at Naspers. 

OK, so you’re CEO of an exciting new start-up with an innovative product and enough funding to take it to market – where do you start? For many companies the answer is simple: kick off in your home market.

You know the customers, you know the laws and you have a good network to get your business up and running.

But is this always the best approach?

I was reminded of the ‘Martian Approach’ at a recent Naspers strategy day. Alec Oxenford, co-founder of classifieds giants OLX and letgo, used his Martian Approach to launch OLX, which became part of Naspers in 2010.  

The point is simple: if you were a Martian looking down on the world, where would you launch your business? As an unbiased extraterrestrial, you would of course choose the best available market for your business, not necessarily the one you’re closest to. In OLX’s case, Alec and his team decided to focus first on markets like India, far from their home country, because they represented the most fertile opportunity for growth and disruption. Business in their home market Argentina came a few years later. Fast forward, and what is the result of this approach? OLX is now a classifieds leader in India, as well as many other lucrative markets worldwide.

Many markets have specific local characteristics that create opportunities for entrepreneurs taking a Martian view. For example, the Swedish founders of classifieds giant Avito in Russia were attracted to that country because it was a huge market that did not yet have an incumbent online marketplace for trading goods.

There are countless other examples. Turkey is a top-five textile exporter, so start-ups focused on fashion find fertile ground and willing suppliers for their new business in the surrounding region. Brazil is the go-to for pharmaceuticals in Latin America, Poland has the largest workforce in Eastern Europe, India remains a hub for jewellery and precious metals.

But for most entrepreneurs, tackling an overseas market is not without its challenges.

If you do not have an inherent understanding of cultures and behaviours, it is imperative that you have access to intimate knowledge of local markets that enables you to check your assumptions.
 

Infrastructure

If you are based in a Western market you might be forgiven for thinking that everyone is happy signing up to a credit card-based payment system. However, the reality for many markets is that cash is still very much king. In Japan, 38 percent of consumer transactions are still conducted in cash, compared to a British average of 11 percent. Even mobile-only companies like Uber, which has run a globally-oriented central product organisation from day one, have had to adapt their payments approach in key foreign markets. Initially, Uber Founder Travis Kalanick adamantly refused to allow cash payments for rides, but he eventually acquiesced to his local India team’s urgings to permit cash payments. Uber’s ride volume in India and in similar markets has skyrocketed since.
 

Innovation

Similarly, many Western businesses still devote resources to desktop whereas many high-growth markets including India and Nigeria have leap-frogged desktop entirely – internet access is predominantly via mobile. Ironically, ecommerce players in those mobile-heavy markets are now finding that desktop is still important for converting transactions with some affluent consumers.
 

Interests

Cultural interests are diverse and yet not always immediately evident. In India there is a long-held stigma against buying second-hand goods, which creates an interesting barrier to entry for consumer-to-consumer marketplaces. Knowing this, with careful targeting and positioning, OLX is gradually reversing the stigma, particularly among younger Indians, and business is growing fast.

Success in overseas markets often comes down to leveraging solid market knowledge, understanding local intricacies, and responding to local consumer needs.

We live in a globalised world, and yet the thinking of many entrepreneurs still automatically starts with their home market. Entrepreneurs who take the Martian Approach can seize opportunities where others fear to tread.