How To Start A Web Business In Another Country

In: Advice|Business Ideas|How To By: Brian Armstrong

5 Aug 2008

Here’s a question from a Breaking Free reader:

I’m not sure if you have any experience with this, but i’m wondering since the world and borders are shrinking, what are your thoughts on opening web based businesses in other countries. Is there anything that someone should know before going at it? Most specifically the USA and Canada.
There may be some legal issues as well as logistical.
-Lucky from HelpYourSelfGetLucky.com

Yes, I think this is a great idea. What’s most exciting about it to me is the idea of taking a business idea which you KNOW already works in the U.S., and then being first to bring it to market in another country.

Being First Counts For A Lot

Ebay was first to market as an auction site in the United States. They reached critical mass first and therefore dominated (the value of the site is directly linked to the number of people using it so there was a high barrier to entry for competitors once Ebay got going).

However, Yahoo Auctions was first to market in some other countries (like Japan) where they now dominate. Yahoo IS the Ebay of Japan, nobody there uses Ebay.

Why not become the Netflix of Canada, or the MySpace of the Netherlands, or the Zappos of Honduras.

The reason I like this idea is that it reduces the uncertainty in starting a business. You already KNOW the business idea is good because it has been proven to work in one place already.

What To Watch Out For

You do have to move quickly and catch on to a trend early. Most of the big ones (Amazon, Ebay, Netflix, etc) I’m sure are already being knocked off. You need to get in early when you see a site that has some success. It doesn’t have to be a huge site either, it could just be doing well in come niche.

The other concern here I’d say is to take an idea where it pays to be a local. For example, doing Netflix in another country would require knowledge of the local postal system. Twitter, on the other hand, could be launched in 50 new countries tonight with few changes. Pick an idea where you will have an advantage as a local and it isn’t trivial for the big dog to swoop in before you really get going.

Finally, you do have to watch out for cultural differences here as well. Selling beef jerky in India where most people are vegetarian might not work so well.

Save The Legal Fees

Regarding the legal aspect, I’m not a lawyer, but I wouldn’t be concerned about that at all. After all, once MySpace and Facebook became popular there were literally hundreds of social networking sites that cropped up that were all basically copies, and they didn’t face legal repercussions. Add to this the barrier of operating out of a foreign country and I think it’s pretty safe.

Of course, you would never want to actually copy the code off their website (that would be illegal), or if you were an employee at MySpace and then left to start your own copy there may be an issue there.

But strictly “reverse engineering” the functionality of a site is perfectly legal and ethical I think. Thats how all great innovations are made. Take the best pieces from everything that is already out there, and then take it one step further.

Feel free to send me other questions you have about starting a business. Please keep them to one paragraph or less and include a link to your site with your question.

What other proven sites exist in the U.S. which haven’t been brought to other countries? Leave us a comment below.

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10 Responses

Lucky

August 6th, 2008 at 12:46 pm

Brian, Thanks for the this post.

Have you ever considered doing a semi regular podcast? If you did, I would be the first to subscribe.

Brian Armstrong

August 7th, 2008 at 1:17 am

Yep, I did some for a while called “Interviews with Self Made Millionaires”. You can see some of them here:
http://www.startbreakingfree.com/category/interviews/

For some reason though I could never get excited about doing it. It took a long time to schedule with people and edit the mp3′s. It didn’t really fit into my “semi-retired” lifestyle, haha. Who knows, maybe I can find a way to fix that though, like to just bring a tape recorder when I’m to have lunch with someone, and then give it an assistant. Not sure…

Lucky

August 7th, 2008 at 10:07 am

I’m not talking about interviews. That could be part of it but I was thinking more along the lines of a “how to break free” podcast. Give some of your insights, what has worked and what hasn’t.
No one is going to get excited about doing a podcast when they have no idea if anyone will ever hear it. Once you build an audience, you’ll feel the rush.
I’m not here to convince you though. Just a thought.

Brian Armstrong

August 7th, 2008 at 2:32 pm

It’s a good idea for sure. Thanks Lucky.

Lucky

August 7th, 2008 at 10:11 am

On another note… I just heard about this guy in Germany getting sued by Facebook for coming too close to their design. I guess you can “sue over borders”. But he could have easily gotten away with it if he had the same idea with a fresh design and a little different functionality.
In the e-bay vs yahoo example, you can’t patent an auction, even if online auction has never been done. but if yahoo in Japan looked exactly like e-bay, there might have been a few lawyers involved.

Brian Armstrong

August 7th, 2008 at 2:34 pm

Thats true. I suppose you don’t want to copy the design. Just the functionality.

I got into a little bit of hot water with my College Student Tutors site (http://www.collegestudenttutors.com/) because it’s design was similar to Basecamp (http://www.basecamphq.com/). I’ll need to be more careful about that in the future.

Creer un site

August 18th, 2008 at 5:43 am

An other point is that some business always followes the same road, for example, in Europ, the market starts in UK, then in DE and FR, and in ES, IT and PO. It particularly exact in the web, once you see a biz coming in FR, it’s high time to start the It and ES website :-)

College Town Menus (CTM)

June 5th, 2009 at 2:25 pm

I think one of the big things to look at, as Brian mentioned is the importance of Time to Market. Microsoft consistently (and unforuntately) is the King of this. They do NOT work their hardest to make the BEST product – instead, they make deadlines (about every 3 years) for a new operating system, with small little tweaks – mostly visual – and work on getting out a new version of their baseline operating system on a schedule, and then using their market share muscles to force a shift in industry to use their latest product. They know and have done trade studies that show if you make a product that works, even if it has bugs, people will still use it, so long as it does what they want it to do, and it can be fixed via updates later.

Same thing is for new small businesses. Find a niche you like, find an area that doesn’t currently solve this problem, and push as hard as you can to get your presense known in that area, and now YOU have some muscle since you were first to market there. Then, if/when a similar competitor comes around to try and steal some of your business, you can flex your muscles to increase the barriers to entry.

Good luck!

A.M.

January 23rd, 2010 at 5:30 am

Hi Brian,

I found this article to be quite fascinating. If you have any other references or advice please let me know. I love the U.S., but I would love to live and work in Canada as well.

Jojo

October 12th, 2010 at 3:26 pm

I am doing this exact thing! I do not wish to move to the country I´m establishing my site in though. I wonder if I have to register my business in my own or the target country. Or could I just register it somewhere else, or maybe even not register it at all?
Any suggestions?

Breaking Free

How To Start A Web Business In Another Country

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