What have we learned from working with US startups so far?

A dynamic operation, good price-value ratio, dedication and consistency - this is what you need beyond the reliable technical knowledge to break into the American startup scene as an outsider.

What have we learned from working with US startups so far?

We are in the closing stages of 2021, so two years have now gone by since we started building strong technological partnerships with several startups overseas. It’s been a wild trip for us, and we wanted to share our thoughts about it, hoping it could be useful for anyone in the tech sector, on either side of the pond.

When we launched Lexunit a few years back, we primarily focused on those industrial business leaders in the country who could possibly have the capabilities and resources to utilize machine learning solutions in their production chain. There are roughly 1000 of them. The other part of our clientele has been the local SaaS scene.

We’ve successfully managed to make a dent in the industry, launching exciting cooperations with the likes of Siemens, Rolls-Royce, or Negentropics. We hoped for a somewhat more dynamic development curve in terms of showcasing our AI expertise, but who doesn’t? For a bunch of tech bros fresh out of engineering school, it has definitely been a success story anyway.

Then Covid happened, exactly when we started the execution of the most in-depth sales strategy we ever did. We literally 10X-ed our sales efforts, and even that barely managed to keep us above the water. Almost all of our projects in preparation have been iced in the first half of 2020.

It seemed that we had to move faster away from trouble, instead of building cautiously. Without thinking too much, we made some calls, talked to some friends locatedin the States, and started creating strategies to build partnerships there. This has been something on our mind for a while, but we’ve been planning to branch out a bit later.

Towards the end of 2020, our sales efforts finally began to generate some results, companies eased up, while our first cooperations with startups based in or around Boston, MA started to take shape. Exciting times!

Working with US startup founders is somewhat different to what it’s like working with middle aged, Hungarian industrial business leaders. So let’s take a closer look at what happens when Central European talent mixes with the North American entrepreneurial spirit!

Break on through to the other side

Building trust has proven to be the hardest challenge.

This is where most European teams fail when they are trying to secure deals overseas. Getting through that initial filter is hard. The good news is that it all hinges on your skills, and nothing more. No one cares about your background, only your performance. All the project teams we participated in are completely global. Europeans, Middle Easterns, Indians, you name it.These startups evaluate your performance and your price, and look for the best opportunities, globally.

Which leads us to the next part of this equation: they don’t care about the price in itself, they care about the value. They are definitely willing to pay more for something that is valuable or important to them, and vice versa: they won’t choose someone who is cheap, but there is a tradeoff in quality.

After you secure the first deal, though, and get the ball rolling, shipping high quality solutions, you will be recognized and your name will be passed on.

In a way, the process beyond this point may even be easier, in a way, than what we are used to here in Central Europe.

High speed, quick results

One reason for this is that the American scene moves fast. There’s no sitting around. They simply identify something they think needs solving in the next 3 to 6 months, we talk it through, and just go for it. Everyone is committed to removing obstacles and cutting through the red tape. They aren’t thinking defensively, trying to eliminate theoretical problems, wasting time and resources with it. This is a little bit of a welcome novelty for us.

It’s interesting to experience the philosophy that a half solution is still better than no solution.

Automation is the name of the game

To give you some insight, the challenges our partners face are usually about automating a business process, because this enables them to scale up.

They identify key functions and iterate them with their users. When the function is sufficiently quantified and stable, we map out a route towards automation. You usually can’t automate a full process, there are always ‘moving parts’, elements which you need to ‘automate around’. Requirements change quickly, so you need to know exactly what the current problem is, what the business is trying to solve right this moment.

This, of course, takes time. This is why a cooperation should start with a very clearly defined automation task, something relatively simple, which delivers quick results. This is the industry standard way of approaching complex partnerships (whether or not AI is involved): don’t try to master the whole world of the company overnight. Get something done quick, and build towards complete redemption from that early success.

Become the Innovation Partner they didn’t even know they needed

Because eventually, that’s what you will bring to them: redemption. The smaller scale projects you successfully complete early on will serve as a foundation upon trust is built. From there onwards, you will become more and more involved in the business planning itself, and get to know the core mechanics at the heart of the startup. This is essential for being able to offer the best you can, as a professional partner, this is how you can generate maximum value. At least, this is how we perceive our role, where we think we can truly shine: being a loosely defined Innovation Partner, working out the best possible solutions for the trickiest problems our clients face. Operating on the highest level that is technically possible.

When you get there, this is where you can encounter unique situations, like when the client describes a development strategy and you suggest a completely different route, which will be only slightly less effective, but can be done in half the time. This is a very typical characteristic of this whole scene - they are very time sensitive. Time is more important than money. It’s gold.

Time-sensitive Operation

This is so key, that it actually defines the whole strategy.

Here is an example to the kind of decision points you encounter after your cooperation with the client fully developed into an Innovation Partnership:

Let’s say that the base timeframe they use is biweekly. You always have something on the to-do list, of course. There, you need to prioritize: what generates the maximum amount of value at this moment? Maybe there is a bug on the production side which is causing a 10% error rate, yet you ignore it for the moment, because you can finalize a new feature which will triple the user acquisition rate. You go back to the 10% problem when there is no higher priority task in the pipeline, or when it becomes critical - which means largely the same thing, as it’s becoming top priority anyway.

Like an outsourced CTO

In these US projects we function like outsourced tech departments. We don’t simply manufacture things - we are taking part in running the operation. We code it, upload it, monitor it, develop it further, instead of just ‘zip it and ship it’.

We are not selling products, we automate elements of the operation. So basically working with us means that the automation of the solutions to a certain set of problems is secure.

Pursuing the priority

Identifying the key priorities, based on where the startup is in its lifecycle, is the most difficult aspect of our work.

There is a pattern: we need to sacrifice a lot on the altar of speed. We cut corners. When the model is proven and it is time for scaling, the need for a more robust and more streamlined system arises. Some parts of the tech deck need replacement, but how can you seamlessly integrate these infrastructure maintenance tasks with the ongoing continuous development and operation? You can always see from the data which part runs well and which one is underdeveloped, but how do you decide what to sacrifice from daily operation to achieve a medium term goal?

Another interesting challenge we often face is the optimization of the operation itself: what do we need to do to make sure that bugs and development needs are uncovered as fast as possible?

It’s hard to get to the bottom of things from the operation side. This is why you need to work towards a good, open, honest relationship with the business side.

Their management has only one goal in the end: to get the maximum value from the cooperation with you, in a set timeframe and under a set budget. You need to see the big picture to be able to do this, and you will make a lot of key decisions together with the client. To get to this level of trust, well, it requires an awful lot of work in the early phases.

Overdelivery is the minimum requirement

The first 6-8 weeks are critical. This is where you need to shine. Their business problem is in the absolute center of your attention.

In the early days, they don’t know that you can do it - and most everyone says they can. That’s why you need those convincing, quick results, fast reactions, flexibility and dedication. This obviously requires some extra energy early on, but this will pay dividends later.

These intense periods return in waves - you need to realize when it’s necessary to go deeper into your energy reserves, and when you should stay on the baseline performance.

So what did we learn?

It’s a great experience that builds confidence. We have been able to become valuable technology partners in the most competitive segment of the software world, the last 18 months stand as proof for that. Our stack is in a good shape, our skills are up-to-date. We at least hoped this much this is true, and we got confirmation. However, we never guessed that the thing we learn the most about thanks to our overseas adventures is project management.

The ritualistic approach of AGILE is pretty hype, but the amount of time you lose with rigorous documentation often goes unmentioned. You obviously need to generate more value than what you lose, using a PM system. That’s why we prefer a flexible, step-by-step approach to managing projects.

What we are working on right now is to create a system that helps Adam, the one who usually sees the big picture, to share just the right amount of information at just the right time with the appropriate people. If the context is too wide, our team members can’t identify the objectives clearly enough or it slows the process down far too much. If you don’t give enough information, though, you obviously can’t deliver. This is a delicate process in which we see room for further improvement.

So this is what we experienced so far in the Boston startup scene, with a Central European perspective.

If you want to talk shop and share your own findings, just let us know! Have a business challenge you’d like to confront the Lexunit way? We are happy to be your innovation partner.

Thanks for reading and see you again soon!