Atomico’s Zennstrom, Hailo’s Bregman and Klarna’s Adalberth On Scaling Up

At Web Summit founding partner of tech investment firm Atomico and co-founder of Skype Niklas Zennström, Hailo CEO Jay Bregman and Klarna Deputy CEO Niklas Adalberth will talk on stage about the challenges of scaling up companies. To date, Hailo, a service that allows consumers in cities around the world to connect to the closest available licensed taxi via their smartphones, has carried nearly 8.5 million passengers. Some 12 million consumers have used Klarna, an online payment service. The service is now offered by 15,000 merchants in seven countries. Atomico, the growth investment firm Zennström founded, invested in both. Informilo’s Jennifer L. Schenker posed questions to the three prior to the event to give readers a preview of the planned discussion.

 

What is the secret to conquering not just your home market but an entire region, and the globe?

Zennström: “Great, global companies truly can come from anywhere. I’ve seen that not only as an entrepreneur with Skype and others, but as an investor with Atomico, working with amazing founders from Europe to Brazil to Russia and Japan. Companies with the right technology, brand and ambition can succeed anywhere.That doesn’t make it easy, and there are many challenges to overcome. Even with a very strong product, the cultural and business challenges can be significant, especially when trying to succeed in a market far from home, where there can be big differences in the way decisions are made, the way partnerships are formed, the way the market operates and so on.So that means getting key decisions right. Can you enter a market alone, or do you need to find a strong local partner, and if so, who? Hiring decisions are critical, too. Most companies we work with don’t need a big team in each country — sometimes even with big markets they don’t need more than one or two people — but they need to be the right people, with the right network and expertise.”

 

Bregman: “Hailo has the potential and the people to get as big as the taxi market itself. We provide a service that improves the experience for drivers and passengers, so it is our belief that anywhere there are cabs, there will also be Hailo. Scalability is of course vital in any type of significant growth, but we learned very early on that all taxi markets are not identical in their operation and set up. We found it hugely critical to recruit local drivers very early on who help educate our team regarding the particulars of a city and the taxi market there. Simultaneously, we meet with the local government and taxi authorities. We want, and quite frankly need, them to be part of the process of Hailo launching. Local law makers can help tremendously, but if you don’t work with them in concert, the results can be unproductive to say the least.”

Adalberth: “Think big. We set out to create the world’s best payment solutions for merchants and end customers. You also need to understand the parameters for each market. The culture within payments differs a lot from market to market. For example, what percentage of the population uses credit cards? Is invoice an established and preferred payment method? We have intensified our focus on being local, hiring country managers, opening sales offices in the different market and establishing relations with local companies through our own thought leadership activities.”

 

How do your international ambitions affect the way you design your products? Or how you organize your company? What does it mean for your hiring decisions?

Zennström: “It’s important to think globally from the outset. That means solving problems which are experienced in many countries from across the world, and finding solutions which will apply in all those countries too. It also means taking advantage of global platforms where possible, and the iOS App Store and Android have made a big difference here.When it comes to hiring, it means you’re in a global battle for the best talent. When you’re looking for your country manager in Japan, you’re competing with all the Japanese start-ups as well as the other international companies there. So it’s more important than ever to focus on building the right culture, so you attract the right people and they want to stay with you for the long term.”

Bregman: “Local talent is always important. You want to locate people who know the lay of the land. Each city in the States operates a little bit differently from the next and then when you look at cities in Asia, again there are unique elements that need to be honored and understood. Who better to lead in a city or region than someone who knows the local market? Take Japan for instance. We were lucky enough to hire Kiyotaka Fujii as President, Japan and Asia Pacific. Fujii’s experience in Asia with McKinsey and Louis Vuitton make him the ideal person to roll out Hailo there. We can augment the individual market knowledge, with expertise from the entire company starting with our board but also with our engineering teams and units like marketing and operations. There is a ton of internal experience that gets called upon in every new city we enter.”

Adalberth: “We know that people want safe and simple ways to pay for goods all over the world; this does not change. However, the market, customer and merchant behaviors vary from country to country, meaning we have to adapt to local regulations, situations and customer demands. That is what makes this market so exciting, you have to adapt and adjust, while still remain true to our core and what made us great in the first place. When you grow as much as we do, we must remain diligent in the hiring process and invest time and money to recruit the best talent. We have over 40 nationalities in our engineering department, which I believe is a testament to not only our diversity and global approach, but that we are able to attract the best people from a global talent pool.”

 

Is it harder to scale internationally from Europe than from the U.S.? If so, how have you escaped the pitfalls?

 

Zennström: “It’s certainly true that there are more global companies that started in the U.S. than in Europe. But I don’t think that means today, an entrepreneur from the U.S. has a big advantage over a similarly ambitious entrepreneur from Finland. Just look at Supercell!If anything, being in a big domestic market like the U.S. can mean that companies there think about international expansion later, since they can focus on growing at home first. When we’ve built companies, especially starting out in a relatively small market like Sweden, you know from the outset that to have a real impact you need to focus on a global problem.”

Bregman: “Scaling is always a challenge regardless of where you are based, but we try to be methodical and take the required steps. Find great people and let them be great. That is part of the magic.”

Adalberth: “With a very strong domestic market like the U.S., you can build a strong local platform before going international, which can be useful. On the other hand, your product risks being too rigid and inadaptable to many heterogeneous markets if you have become very big before going international. As long as you stay agile and keep putting the customer in focus, as we do at Klarna, I believe it does not matter where you come from.”

 

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