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