Why good companies fail abroad

HostMost companies that fail in a new country don't fail because the market was wrong. They fail because they arrived with the wrong plan, and they only found out eighteen months later. My guest today runs an advisory and investment group that works in fifteen countries, and he has watched this happen from the inside more times than he'd like. Welcome to The Long View. FC, you're the chief executive of FC Holding. Let's start with the uncomfortable question: when a company comes to you already convinced about a market, how often are they right?

FCAbout half the time, and that's not a bad number, honestly. The problem is almost never the country; it's the order of the decisions. Somebody falls in love with a market, books a flight, meets three people who are all very encouraging, and comes home with a plan built on three conversations.

HostThree conversations sound thin.

FCIt's worse than thin; it's biased. The three people who agreed to meet you are the three people who benefit from your arrival. Nobody schedules a meeting to tell you not to come.

HostSo what does real research look like? Because everyone says they do market research.

FCReal research answers four questions with numbers. How big is the demand that actually pays, not the demand that exists. What are the prices being charged today, not the prices published. Who is already there and what are they bad at. And what does it cost to get through the door legally. If a report can't answer those four, it's a brochure. And you'd be surprised how many expensive reports are brochures.

HostLet's talk about the part nobody enjoys: risk.

FCRisk is the part people skip because it's the only part that can tell them no. But it's cheap insurance. We write down four exposures before anything starts: country risk, currency risk, regulatory risk, counterparty risk. And then the thing almost nobody does: we write the exit thresholds.

HostExit thresholds, meaning?

FCMeaning we decide, in advance and in writing, what number would make us stop. If we haven't reached this by month nine, we withdraw. It takes ten minutes to write and it saves fortunes, because once you're in, you'll always find a reason to stay one more quarter.

HostSunk cost.

FCSunk cost with a passport. It's much more expensive.

HostYou also raise capital. What do investors actually read?

FCFar less than founders think. In the first ten pages they're looking for three things. Do you understand your own numbers. Is the market claim defensible. And is there a plan someone could actually execute on Monday morning. Everything else is decoration. Founders spend three weeks on the vision slide and twenty minutes on the cash plan; investors do the opposite.

HostSecurity. Every company thinks it's too small to be a target.

FCEvery company is exactly the right size to be a target, because most attacks aren't aimed at anyone. Three habits stop nearly all of them. Know who has access to what and remove it the day someone leaves. Test your backups instead of owning them. And put a procedure on payments, because the expensive attack is almost never technical. It's an email that looks like it came from you.

HostThat last one is uncomfortably common.

FCIt's the most common. Someone gets an invoice with a new bank account and a plausible reason. No malware, no genius, just a convincing sentence and nobody authorised to say wait.

HostLast question: what's changed in the last two years that people haven't caught up with yet?

FCThe distance between companies that use technology well and companies that endure it has stopped being a gap and started being a category. It's not a prediction; it's in our clients' numbers. And the strange part is that the winners aren't the ones who bought the most software; they're the ones who fixed how they work first, and then bought.