Jan Ulč spent most of his life abroad and he came to the Czech Republic only because GE Energy appointed him as a Business Development Director for Eastern Europe in 2008. Since then, he’s been getting accustomed to the Czech environment and trying to incorporate the knowledge of international business he has gained around the world. As the CEO of CROSS Network Intelligence, he wants to conquer foreign markets from Prague. In the interview he explains why this is just a short-term strategy and why every globally-minded company ultimately has to move abroad.
When is the right time to think about expanding to foreign markets?
The right time is when the product and company have proven themselves in the local market, they are scalable, and the company has a strategy for expansion around the world – initially through partners who know the local market and are able to sell and deliver the product. And also when there is enough money for the expansion and a team that speaks excellent English. At least that is the case when selling a software B2B product for a specific market, such as the management and operation of telecommunication networks. The version of the product for the mass market requires a different strategy.
You mentioned a scalable product. How would you define it?
It’s a product that a local partner can easily customize for, sell independently in and implement within the local market. This means, in practice, that it must be expanded to include a standard interface for integration with the surrounding systems, have complete English documentation for users, administrators and developers, and a training curriculum – that is, a ready-made environment for partners to take over the product and work with it. The original vendor is expected to take care of marketing and product awareness. They must therefore have a perfect website and marketing materials, be a member of global professional organizations, exhibit their products, lecture at events and publish papers.
Should the product be tweaked according to the market to which it is delivered?
It depends how big the changes are. Product tuning is possible, but when you have to change the product significantly for each market, it is not scalable. Company partners should have tools available to create a local language version and a well-defined interface (API) to extend the product to local extensions and connect local data sources to it.
How do you find a good business partner, whether it is in China, Namibia or Russia?
Your partner is actually the first customer – you have to convince them that selling and implementing your product is good business. The problem is that every really good partner already has a lot of work and usually isn’t looking for another product because it costs money and time. They have to learn your product, create local marketing and train people. You must therefore have a good partner strategy, case studies, flexible business conditions, and provide sales and technical training. In most cases, however, you often have to create and run the first project yourself and the partner will verify that your product works.
But where can you find a good partner?
The ideal method is to start with target customers and find out which potential partners they like, and then connect with them. Most of us, however, take the path of the least resistance and contact the people we already know. Partners need to be pampered, including large international system integrators who are independent and do not commit themselves to contractually support one particular product. But if you make their life easier with a good deal of support before and after sales, they will tend to choose you in their projects if they have the opportunity.
Based on what criteria should a company choose which market to enter?
Each company must first verify that its product is suitable for the market and addresses a real problem, in addition to evaluating the market potential. It does not make sense to deliver the first system to the first customer-innovator somewhere far away unless you are ready to find a partner or establish a branch, make sure that the first implementation is successful and start building the market. For example, it’s not such a good idea to enter the US market unless you start a local branch there.
Okay, but what country should I choose? Many Czech startups automatically choose Slovakia and Poland and then try Austria, but they never get any further.
It is logical because it is the easiest way. On the one hand, we can behave rationally and focus on the markets we understand, but then again there are markets like China and India that have great potential even if little is known about them. You need to consider whether to go to an unknown market or not. In our case, we consider it crucial to have a reliable local partner. We recently declined one Middle Eastern order due to unusual business conditions and because we do not understand the market nor have a partner there. But even the German market right across the border has its own specifics, and it pays off to have a local trader or partner.
So a good market is one that I know and in which I have a business partner I can rely on?
I would try any market if I could meet the conditions I promised. People mostly learn about CROSS Network Intelligence through our marketing channels, because we have a highly innovative product. Then we follow up with online tutorials and demonstrations of our product. We also ask our team whether we are able to sell and deliver the product well. If the first product delivery does not go well, we will destroy our reputation in the market for the future, so the first delivery must be successful. If you have unlimited capacity to deliver, you can go to any market, but our capacity is limited and we keep having new orders in Central Europe where we are well-known, so we are a bit of a competitor to ourselves. But these are not universal truths. In short, we have a product whose implementation plays a big role. A product that puts itself into practice almost on its own is less risky.
Is it good that Czech startups try to expand in the Central European market?
Do you want to know the answer to this question? Keep reading the interview on the UP21 blog.
Jan Ulč was born in Prague and emigrated to the Netherlands, where he studied Computer Science at Delft University of Technology, at a young age. He earned an MBA at California State University and then dealt professionally with geographic information systems, digital cartography, remote land surveying, and engineering and telecommunication networks. He worked at Computervision in Massachusetts and California, at Intergraph in Alabama, and at Smallworld in the United Kingdom, which was acquired by General Electric. In 2008, he came to Prague as the Director of GE Energy Sales for Eastern Europe, and since 2016, has served as the CEO of CROSS Network Intelligence.