
Going Global with Your Startup - lainon
http://blog.ycombinator.com/going-global-with-your-startup/
======
HugThem
One thing I would love to know more about is how European SAAS startups handle
invoicing and taxes. Afaik the tax situation in Europe is super complicated
and you have to charge the tax of the country the customer is from.

I am in Europe and want to start a SAAS service that caters to individuals and
small companies. I wonder if it is feasible to do so in Europe. Do I really
have to ask each customer where he is based, if he is an individual or a
company and then tax him accordingly? Do I have to create invoices?

US based startups seem to simply not care. Even big companies don't. They just
ask for your credit card number and thats it. For example I used Amazon
Mechanical Turk recently to outsource some work. And there simply is no way to
get an invoice from them.

Do European startups have a big disadvantage in this regard or am I missing
something?

Are there services that abstract that away? Deal with all the invoicing and
tax issues?

~~~
dkyc
Running a Germany-based SaaS startup at some scale, so I feel confident to
chime in.

To put it bluntly, you're right. We have to do more work just to get started
accepting money than our American counterparts. Yes, the insanely complex EU-
VAT rules actually need to be followed. Yes, a lot of your customers will want
to pay via bank transfer and not through credit card. Yes, the American folks
will still want to pay in USD and not in EUR.

We use ChargeBee ([https://www.chargebee.com/](https://www.chargebee.com/)) to
abstract away most of the pain. I would greatly suggest using such a service
(Recurly and Chargify are more enterprisey alternatives). We had a selfmade
implementation before switching to ChargeBee, and one EU rule change caused us
to have to re-issue all customer invoices for one quarter. Not fun. ChargeBee
prevents you from doing the biggest blunders in taxation, and also allows you
to keep track of invoices paid through credit card or through bank transfer
(and specify the Dunning rules accordingly). Overall, I'd greatly recommend
it.

~~~
HugThem
Thanks for the info!

I tried your site and I saw that it adds the VAT when the user selects their
country. Since the order page makes network requests to ChargBee, I guess they
provide all that functionalilty.

Would you say ChargeBee is also a good solution for small one-time-payments?

When you say it abstracts away 'most of the pain' \- what pain is left?

~~~
dkyc
I think my sibling comment's experiences are somewhat dated. Running one-time
payments has been absolutely no problem with ChargeBee for us. It's obviously
geared toward subscription businesses, but it has full support for one-time
charges as well. No need for any hacks or weird work-arounds.

Regarding what pain is left: I'm approaching this from an end-to-end
perspective, so answering the question "Even when using ChargeBee, what
additional work do we have to do compared to a similar business based in the
US?":

\- You still have to code in UI-level support for multiple currencies.
ChargeBee handles the backend.

\- ChargeBee gives you a nice UI for keeping track of paid and unpaid
invoices. Nonetheless, for payments via bank transfer [which your EU business
customers will want to use], you still have to manually confirm in ChargeBee
that you've received payment.

\- You still have to supply quarterly MOSS tax returns to your local tax
authorities (though ChargeBee does all it can to make that process quick).

~~~
theseanstewart
AFAIK there is no other work-around for one-time charges that have variable
pricing. The $.01 quantity add-on is what's recommended by their support.

------
baybal2
1\. Snail mail is your friend

Not only it is cheap, 1 week deliveries are some times possible on Finpost,
Singpost, Swedish Post and most well known, HK Post.

Establish small warehouses in those countries.

2\. Do not have legal presence in as many countries as possible. Countries do
not tax purchases of their citizens abroad (no VAT, hooray)

3\. Be secretive (or at least until you can afford to do things the way "big
co." do)

4\. If you 100% need to have physical presence in the country, you are doing
something wrong.

5\. If you 100% need to have a team meeting in person with an ability to rent
an office for work for some time, only consider no hassle visa countries.
Singapore was once super hospitable to internationals: hire whom ever you
want, from where ever you want, but now they did a U turn. They also largely
cancelled their legendary high income individual visa (a de facto residentship
permit given just for agreeing to live and spend money in Sing.)

Vietnam, Thailand, Malaysia, PRC, Pakistan have no problem at all giving out
long term business visit visas to all and everybody. For as long as you get
your body on their side of the border, you are free to do whatever you want
for the duration of the visa unless you do something really stupid.

6\. If you are really insistent on having a single physical workspace,
consider places out of beaten path: look for countries that are cheap to live
in, yet fancy, and without bureaucratic culture. For example, say Kazakhstan
(their capital ranked 1 in Economist's list of cheapest megacities to live in)
or Pakistan (they have an actually working FDI assistance and protection
program.) There, locals are ready to almost worship the few foreigners who
want to spend money in the country, plus they are the kind of countries where
you can buy anything for money including the disposition of authorities. Also
check for possibility to do split tax/salaries legally in the country (pay
base in the country, and a project premium/stand alone consulting payment to a
proprietorship in their home or third countries.)

7\. Consider the fact that the majority of world's middle class lives outside
of the West today and that you get more opportunity for the money in markets
that are not yet as mature as in the West.

8\. Middle class outside outside of the West is easier to cater to: in the
West, you gave a plethora of different classes all qualifying as paying middle
class, with their own subclasses, and vastly varying demographics. Compare
this to Central and South East Asian middle class: age 25-35, 90% technical
professional occupation, %60-%70 with families/couples, highly geographically
clustered, employed full-time, mid to high property ownership, mid to high
light vehicle ownership, almost all with higher education and second language
knowledge.

9\. P.S. Pakistan has fabulous 200GB 4G data plans for only ~$90 a month.

~~~
teddyh
Price and cost is not the single overriding factor one should consider. Other
factors might be more important:

[https://en.wikipedia.org/wiki/Corruption_Perceptions_Index](https://en.wikipedia.org/wiki/Corruption_Perceptions_Index)

------
jgrahamc
_5\. You’re going to need to get on an airplane sometimes_

Yes, this is very important. There's still nothing like human contact. I use
video calls constantly all day, but still fly a tremendous amount because so
much communication happens non-verbally or with higher fidelity than video
provides.

~~~
iagooar
Especially so with your high-profile customers. There's nothing, NOTHING
better than meeting your customer personally, shaking hands, visiting their
office or having lunch together.

Humans are, by nature, social beings. Even though, as a civilisation, we've
come a long way and have created ways of communicating across huge distances,
we still feel like the personal contact is so much more powerful.

Never underestimate personal contact, especially when running a business.

~~~
mrisoli
There is a very simple reason for this, you always get more information in
person.

If you're interacting with a text-based chat interface you get one thing,
pieces of text, not only that's all you have to make decisions, but you have
no idea how much effort and time went into designing those messages for you,
this translates into the simples human interactions.

If you are talking on the phone, you get words and maybe a tone of voice, you
get more timely information, but that is all.

If you are doing video chat, you get to see the persons expressions, which is
a plus, but not much more(and how many times have I seen audio/video data
issues).

But, if you are meeting in person, you get all of that and then some, plus it
signals commitment and effort to allocate time to physically attend a meeting
considering how much other options you have. These do not have precise
metrics, but it drives people gut decisions.

~~~
kwindla
In a startup sales/bizdev context, the point you make about signaling
commitment and effort is particularly important. "The founder (or CEO) showed
up in person" can make a lot of things happen more quickly than they otherwise
would.

~~~
iagooar
That's a very fair point. Might be that to a certain degree people feel in
debt with the person who offered them their time, thus making a positive
business decision easier.

------
mcmoose75
I run the US office of a German startup. I'd add the below:

1) Issuing employee equity across countries is difficult: There are good US
solutions to prevent employee equity/ option holders from needing to pay taxes
before liquidity, and similarly for good German solutions to the same problem.
Getting these two systems to "play nice" with each other is challenging.

2) Time zones: If possible, I'd think about time zones when expanding
internationally. SF->Europe is brutal (8-9 hours), which is a major reason we
put our US office in NYC. I wake up at 6, check email, and have half a day to
work with the Germans during their work day. If I were to be on the West
Coast, even by starting at 6am it's already 3pm in Germany.

3) Visas: A good option for international companies expanding to the US is an
E-2 "investor" visa- these make it easy for employees of the foreign HQ to
come over to the US for a few years as long as the foreign company is
investing substantial money in the US organization (I think over a couple
hundred $K is enough)

------
j45
There is some nice advice in comments and articel

I had a few more things that helped with a platform that I built that went
global:

\- Internationalization - bake it into the bread from the beginning, the cost
is marginal, relatively speaking. Internationalize the UI for sure, and make
design decisions relative to having reasonable multi language support for any
user type content. It won't be perfect out of the box, but you will have a
huge head start when you have to optimize rendering of languages.

\- Localization: The forgotten sibling of internationalization can be critical
when going for an experience to show a native experience that is local and
inviting to the user.

\- Equality for the international user: Consider your browser configuration
globally and not just North America, which is typically better equipment,
higher screen resolution, faster internet connections, the latest browsers,
etc. This doesn't mean avoiding using the latest and greatest, but consider
it. As much as I like React, lighter libraries like Vue can be a little less
heavy. Lean, mean, and fast go a long way when you have a user on an off-shore
platform needing to access something required to do his job.

\- Mobile first - the world is mobile first, North America is a mix. For many
people, depending on the country, the mobile is the only device they have,
through which they have to accomplish tasks that others may complete on
tablets or laptops. Consider this in your design and also try using only a
phone for a week to do what you do normally on a laptop - it can be eye
opening.

Thanks to folks who have reccomended services like Chargebee - sharing current
resources that solve neccesary problems like this help a lot. It's great to be
able to take money in any form rather than force a user down a particular
path.

------
mceoin
As a side comment on the ideology of going "global first", startups from
smaller countries (with smaller markets) are almost forced to adopt this
mindset from day one.

Many advantages from going US only first: same currency & language, homogenous
culture, huge market, etc. The main disadvantage though is that you don't
learn how to operate in an international environment until later in the
business life cycle, at which point the institutional DNA is harder to change.

Your competitors will be taking a global-first mindset, so it's something to
think about.

------
kwindla
Original author here. Happy to answer any questions or talk about other things
related to working across national borders.

------
edouard-harris
Practically every pain point listed here is a startup waiting to happen.

~~~
exolymph
Or possibly a startup that's already happened but hasn't scaled yet :P

------
mindcrime
Good stuff. You can easily get surprised. We had not even thought about "going
international" to any meaningful degree, and then out of the blue a prospect
from Canada calls us. At that very moment, I had NO idea what would have been
involved in doing a deal with them... taxes, payments, etc., etc... all
totally beyond my ken.

------
jqueryin
Just a heads up that the YC blog spits out far more data than it should when
it errors out. I received a 503 and encountered this:

    
    
        Service Temporarily Unavailable
    
        The server is temporarily unable to service your request due to maintenance downtime or capacity problems. Please try again later.
    
        Additionally, a 503 Service Temporarily Unavailable error was encountered while trying to use an ErrorDocument to handle the request.
    
        Apache/2.2.24 (Unix) mod_hive/5.5 mod_ssl/2.2.24 OpenSSL/1.0.0-fips mod_auth_passthrough/2.1 mod_bwlimited/1.4 FrontPage/5.0.2.2635 mod_fastcgi/2.4.6 mod_fcgid/2.3.6 Server at blog.ycombinator.com Port 80

~~~
btown
Is this really problematic from a security perspective? Presumably anyone
malicious is already running a script-kiddie package that is actively probing
for vulnerabilities, so would it even help such an actor to know what library
versions you're using?

------
rgrieselhuber
I've been running my company as a globally distributed business for awhile now
and I'd also emphasize #2 and #5.

Also, managing a 40 person team across many time zones created interesting
communication issues. Be prepared to dial in processes far earlier than you
would expect to need them and learn how to manage / archive conversations that
happen in chat effectively. I've found that voice / video chat is still very
challenging due to time zones, varying internet connections, and spoken
accents vs text.

I definitely expect to see much more of this going forward though. Asian
markets are on fire right now and many US companies, large and small, are
focused on growth there.

~~~
justherefortart
#7? The list only goes to 5.

~~~
Isamu
Linear extrapolation?

~~~
rgrieselhuber
Haha I meant #5. Edited.

------
rsp1984
I run an international Startup as well and we ship stuff around the globe too.
It sounds like the author has good experiences with DHL. Unfortunately that
has not been the case for us. Too many delayed packages, customs trouble and
general incompetence made us switch to FedEx a long time ago. Haven't had a
single problem since then.

Although I'm German I can't recommend DHL to anyone in good conscience.

~~~
jacquesm
Seconded, I used to ship a lot of stuff using DHL and have transferred all our
business to FedEx or the US bound stuff and other carriers locally and within
Europe. DHL caused us no end of trouble with breakage (more so with packages
marked fragile), lost packages, late packages and so on.

------
simonbarker87
On the shipping front there is a nice expression that you only air freight the
2 Fs “fresh flowers and f __* ups”. I would say though that shipping large
goods internationally is easier in my expiernece than small individual orders,
for that amount of shipping cost it is far easier to get a good service that
can keep things moving than for an individual order.

------
zerostar07
So , tax accounting and immigration paperwork are areas ripe for innovation.
There is an unjustified amount of effort and time going into accounting, which
should be automated in western countries.

------
raverbashing
"Anywhere you have employees, you need an accountant and a lawyer. This one
surprised me."

Really?

That's pretty much business 101. Doesn't need to be one person exclusively,
there are offices that combine both services, but yeah.

Unless you're subcontracting them.

Oh and "work visas are complicated", they are, but H1Bs are much more
complicated than the average (and abused by big players as well).

So overall, it's a nice writeup, but pretty, pretty basic.

~~~
munchor
I understand the surprise given that many companies these days hire full time
"employees" as "contractors" in other countries. These employees are sometimes
not really "contractors" (they have a fixed salary, they get benefits like
paternity leave or paid time off, they have performance reviews, they can be
promoted, etc.) but on paper they are "contractors".

Personally I know various companies that have employees all over the world but
DON'T have accountants and lawyers anywhere. These "employees" are both
"contractors" and "employees", depending on which angle you look from.

~~~
slgeorge
That's true, but the reality is that lots of small start-ups are "doing it
wrong" and will be caught eventually [0]. Most jurisdictions have firm
differences between a temporary worker (contractor) and an employee.
Generally, companies have responsibilities to pay things like payroll taxes
for employees and not for contractors.

While management and team members might consider them selves BOTH employee and
contractor. The legal and tax situation is that those are different employment
states and you can't be both. For a recent example see Uber in the UK.

It's somewhat a tech industry thing the idea that employees can wander around
the world and work from wherever they want - the tax and legal system isn't
quite as fluid.

[0] statistically the chance of being noticed by the tax authority is pretty
small at the start which is why it doesn't happen that much. But, if you start
'employing' tens of people in a jurisdiction and don't have company tax
affairs in order then it gets increasingly risky.

------
vgf
Over the course of several companies, I have noticed something special
regarding China (in the context of expanding there, from a western country):

1\. You inevitably hire a local person to handle this market.

2\. Because of the combination of language issues and timezone differences,
communication suffers. All of your communication is via your one local person.

3\. Your Chinese country manager decides that the Chinese market is
significantly different from every other country in the world, so your product
needs to be rebuilt to address the local market. Fortunately they can hire
lots of people very quickly and relatively cheaply. You don't really have any
insight to say whether they are right or wrong.

Comment: I feel this tends to be a combination of a) empire-building
strategies and b) ignorance of the rest of the world, and a specific
assumption that China is special in some specific way, which often turns out
to be false.

