#185 – Expanding a startup internationally | Karin Nielsen & Cosima Travis

How do you scale a startup internationally? Levels approaches our UK expansion as a growth lever, headed by Karin Nielsen. Listen as Karin and Cosima Travis chat about the considerations and processes behind Levels’s expansion initiatives, including product-culture fit, the differences between US and UK markets, and how customer experience stays at the center of it all.

Karin Nielsen (00:06):

Product culture fit is ultimately the goal that every start-up embarking on a new market expansion should be aiming for. And what that means is that you’re effectively not just taking the product that you have in your domestic market and cloning it one-to-one for another country, but you’re really making changes. Both to make your product more accessible so that people can easily get through the signup flow, for example, pay in their local concurrency, but also that they experience the product in a way that’s relevant to them.

Ben Grynol (00:51):

I’m Ben Grynol, part of the early start-up team here at Levels. We’re building tech that helps people to understand their metabolic health. And this is your front row seat to everything we do. This is a whole new level.

(01:06):

When companies decide to expand internationally, it’s not a light or an easy decision. There’s a lot of strategy, a lot of thought process, a lot of moving parts that go into it. So Karin Nielsen, who leads expansion at Levels and Cosima Travis, part of our product team, the two of them sat down and discussed this idea of how and why any company, specifically Levels would want to think about international expansion. What are some of the steps? What are some of the challenges? Why do you do it? When do you do it? How to approach it. In our case, there are regulatory considerations. In the US it’s a very different market than it is in Australia or Canada or the UK. There’s also other considerations anytime a company wants to expand. Localization, how do you start to change the support that you have for the product, how you change the messaging, the content, the marketing.

(02:07):

These are all things that go into this decision around why and when a company might want to expand internationally. There’s also other considerations around technology. How does a tech stack need to adapt? How do things need to change around small inputs that you don’t think about? Things like currency, not just language, not just the word choices that are used, but all of these touch points that come down to having a great experience. There’s so many considerations across operations, fulfillment, the list goes on. Anyway, it was a great conversation where the two of them sat down and dug into this idea of how to approach international expansion, why you might want to do it, and what are some of the challenges that companies can face. No need to wait, here’s where they kick things off.

Cosima Travis (02:55):

I’m really excited that we get to have this chat because I see we sort of jumped into working together on this project and I actually haven’t even had a chance to learn a bit more about how you approach internationalization and sort of what the big things are that go into how you break apart such a large endeavor. So I’d really love to zoom out and hear a bit just how you think about when a company should even consider expanding and where we’re at with Levels.

Karin Nielsen (03:30):

Yeah, big question. So international expansion is a lever that a company can pull to 10 x their growth. So it’s something that you should ideally do once you’ve got product-market fit in your domestic market. And the reason for that is that, adding additional markets before you have product-market fit in your domestic or launch market, just adds a huge amount of noise and complexity. So most companies would embark on an expansion initiative as a growth lever, but there are exceptions. So there can be situations where you might have a strategic driver that is the driver for you to enter a market, and that could be things like the regulatory landscape. So it might be if you are a FinTech or a health tech company, that there are other regulatory regimes in markets that are friendlier and more receptive to the type of proposition you have.

(04:36):

And that potentially gives you a lot more scope throughout experimentation. So I would say the majority of the time you should use expansion as a growth lever once you have product-market fit, but also consider other advantages that are a little bit more strategic that could expand your company in other areas. I think, when you make the decision whether to go deep or wide, there are so many factors to consider. The first thing that I considered when I joined Levels is the sheer complexity of what we offer. So Levels is a very different product to something like a to-do app, right? We have an app component to our proposition, we have a website surface area, or actually several web surface areas, but we also have a physical component in the CGMs that we actually send to people through the post. And those are regulated differently in different countries.

(05:42):

And in order for us to be able to send kits to people to get those into people’s hands, we have to additionally set up this entire supply chain and ensure that we have access to those sensors. So for Levels to go wide on day one and say, launch in 5 or 10 markets simultaneously, it is actually not really feasible for those reasons. If however, you have something like a to-do app, which is something you can easily push in multiple app stores globally, then it might be that you immediately make that product available in more markets at the same time. Although you’d probably want to do some language localization depending on which markets you were shooting for, but let’s say it was the US, Canada and Australia and the UK, then you might actually not have to go through all of that localization on day one to start getting those initial learnings and traction in those markets.

Cosima Travis (06:47):

Got it. And then when it actually came down to choosing, I guess, why the UK over anywhere else? Or in general when you’re trying to make that choice to jump in to a new market, what are some of the things you’re considering?

Karin Nielsen (07:01):

Yeah. So this is going to be different for every company. Speaking specifically to how we approach this at Levels. We kind of came up with our own framework of things that create conditions for Levels to be successful. What are the threshold conditions that have to be met in order for Levels to succeed in a market? So we kind of started with that framework, and in our case that is the size of the market or the size of the opportunity. And that is a combination of like absolute market size, but also the level of demand for what Levels offers in that market. So not all countries have the same level of maturity in the kind of adoption curve that we’re interested in for Levels. Not every country has a high level of awareness about metabolic health and people aren’t necessarily ready to explore our product yet. So for us, the number one driver is first of all, what’s the size of the market, then what level of demand do we think we can tap into in that market?

(08:15):

And then we have other factors like, are CGMs available and how can we get those into the hands of our customers? And that’s effectively the supply chain component. And then the other dimension is how big is the lift from where we are today with our core domestic product to get to something close to product culture fit in that market? And I think with the UK specifically, we obviously identified it’s a very big market. There are a lot of people interested in metabolic health and wellness that you can look at other proxies, like how many people are interested in low carb products for example, and in general telehealth solutions and health tech in general. And in that sense the UK is actually really developed as a market already. And you can also then start to talk to customers, obviously to really understand the level of appetite for the thing that you offer.

(09:24):

And in the case of Levels, we actually had a wait-list that was up for several months before we decided on a specific market to enter and we saw the most traction from the UK outside of our domestic market. So, that was a big reason. And then another factor for the UK specifically is that actually the changes we have to make to our product weren’t that substantial in order for us to delight customers here to the same extent that we do in the US. So another one, we have an English language product. So a UK customer can understand an app that’s available in US English. It’s not ideal long-term. Obviously at some point you have to take the leap and embark on more mature phases of the localization cycle.

(10:17):

But for the time being, our customers here are very satisfied that they have early-access to the product and they’re perfectly capable of navigating our proposition and our product experience in US English, right. So that’s obviously very different to having to set up an entire localization framework and the whole network and program that goes with that if we were say to enter Germany or Japan. So those are some of the high level considerations.

Cosima Travis (10:52):

You mentioned product culture fit, which I feel like we talk a lot about product-market fit, but I haven’t heard that term used as often and I’m curious, I’m sure it relates a lot to expansion and how you size up the complexity of a market.

Karin Nielsen (11:08):

Yeah. So I guess product culture fit is ultimately the goal that every start-up embarking on a new market expansion should be aiming for. And what that means is that you’re effectively not just taking the product that you have in your domestic market and cloning it one-to-one for another country, but you are really making changes both to make your product more accessible so that people can easily get through the signup flow, for example, or pay in their local currency, but also that they experience the product in a way that’s relevant to them. And actually in the case of Levels, that’s particularly important because we deal in two things that are extremely nuanced in different cultures. So the first thing is that we’re all about food and helping people figure out what their optimum diet should be, and nutrition approaches and diets are very different in different countries. And they’re actually nutrition is, and eating is deeply rooted in our culture and in the social fabric.

(12:25):

So I know that you come from various different backgrounds in your family and I’m sure that you guys have, like traditions and things that are based around meal times and the kind of foods you eat. So finding product culture fit for us means that we can’t, for example, have a food logging system that talks about oatmeal because in the UK oatmeal is called porridge and people wouldn’t recognize that if they see it and they wouldn’t be able to relate to it. And we provide recipes and all kinds of other things that are just going to be very different in a different market. So when you find product culture fit, you know because your market should be performing at least as well as your domestic market on an NPS and customer feedback level.

Cosima Travis (13:24):

Right. And a lot of what we’re trying to do is of meet members where they are in terms of making behavior change. So if we’re starting from a US-centric approach, then we’re probably looking for two drastic changes depending on culturally how people’s current patterns of eating, movement, sleep, etc.

Karin Nielsen (13:48):

Exactly that. And the other thing to consider is that healthcare systems are very different in different countries. So in the UK we have the National Health Service, which, preventative healthcare and attitudes towards that are quite different here because you don’t have to pay for healthcare at the point of need, which means that people don’t necessarily have the same acute pressure to take their health and wellness needs into their own hands. I think that’s changing a lot in post-Covid world actually because it’s definitely no secret that the National Health Service is struggling to keep up with demand at this point.

(14:29):

So we’ve seen a huge increase in demand for private health services in the UK, but those kind of macroeconomic social conditions are also a really big factor in how we position ourselves and what kind of products we offer under what price points. I think another great example of finding product culture fit that relates directly to the levels proposition is that in the US, and I think this very well, you’ve been working on the blood panel and the metabolic panel product and how we’re kind of thinking about redesigning that right now. And in the US that service involves sending an at-home phlebotomist to somebody’s home.

(15:17):

But in the UK you couldn’t actually replicate that because we don’t have at-home phlebotomists, it’s just not really an industry that exists. So we’d have to think quite differently about how we design that feature in order for it to meet the needs of a population, here in the UK. And the same goes for things like, what payment methods we offer, for example. There are all these things that are just going to be very different for each market. And finding product culture fit just means that you are listening to your local members and you’re responding to that with solutions that meet their needs.

Cosima Travis (15:57):

So in a case like the decision to expand into the UK, how did you take a step back before kicking off the project and set what you thought were the right objectives, but also how are we going to launch and then decide if we were successful? Decide when was the right time to scale up volume? How do we move from these different stages of half-launch, pseudo-launch, beta-launch, to full blown availability? What do those phases look like that move us through that path?

Karin Nielsen (16:34):

Yeah. So like everything at Levels expansion, and UK specifically started with a memo. And I think one of the most critical success factors for expansion initiatives is actually that they get top down buy-in starting with the CEO and everybody on the senior leadership team. Because, expansion initiatives are really labor intensive. They demand a lot of attention and require a lot of resources from the business. And if you kind of semi commit, then I would say that’s a big failure mode. So when I was writing the memo for international initially, I was really just thinking about, “What are the sort of smallest steps we can take in each market?” So obviously the UK is our first non-domestic market, but what is a repeatable phasing strategy that we can implement to gauge appetite and then incrementally build out our product and our team and everything else that we need to do in that market?

(17:42):

And the first thing I guess you have to start with is your objectives. What are the goals that we want to achieve? And for Levels that’s very much a strategic objective and it’s also a growth objective. So we want to grow paying members in the UK and we want to have a strategic position here that allows us to have this bigger surface area to play with. There are different sensor models available in the UK and other factors that are of strategic interest to us. So I guess taking it from the top, the first thing we do is we launch with a wait-list in a market. So that’s our sort of number one proxy for gauging how interested people are. And obviously we’re reaching them with our existing channels right now. So you wouldn’t expect to see the same demand that you do from the US for our domestic market because we’re not actively doing anything growth-related to activate that market yet.

(18:49):

So we’re really just seeing, given that a lot of people speak English, particularly the sort of tech savvy crowd that would be customers for Levels. We’re really just seeing how many people are interested in what we have to offer and wait-lists are a great way to do that. And we can then use the people who signed up to those wait-list to have first conversations with people. We can ask them, “Why did you sign up? What are you interested in?” And then we can really start to build up a picture about a market at that ground zero level. Then we also have a 360 degree immersion phase, which is what we would do for the markets that from which we see the most interest and which we think are the most promising. And that really means exploring everything. So you can call it deskwork, I guess.

(19:43):

And it means we start to look at the regulatory regime or regimes that impact our ability to do what we do. We would start to look at the size of the market. So we’d do some market sizing exercises, we would look at competitors, we would look at talking to experts potentially and influencers to gauge their interest in Levels and to get any as many proxies as possible to give us a feeling about that market. And then only once we have that relative certainty from really doing our homework and digging deep into what makes a market tick, can we start to stack rank those opportunities and figure out which markets we should approach and in what order. And then once that decision is made, the next step, which is what you’ve been super involved in, is kind of figuring out what do we build? What does our skateboard for this market look like?

(20:47):

And I guess for Levels that isn’t a small skateboard because we have a product that we need to localize, we needed to localize our checkout and our eCommerce experience and we had to line up all of the fulfillment elements that we need in order to get the product into somebody’s hands. And there are also legal considerations. We had to spin up a new entity here. We had to think about how we structure our global business and what tax arrangements we have to have on place. So you can then bit by bit in tandem start to put all of these pieces of jigsaw together until you get to where we are now, which is having a product in close beater that’s acquiring members at our pace. So we can grow intentionally at a pace that works for us. So we can take on-board feedback, iterate and improve, and then whenever we feel we’re ready and we have a sufficiently delightful product to pour gas on that fire, then we can do that. And that’s what we refer to as the sort of general availability phase.

Cosima Travis (22:03):

And I think something that we love to do at Levels is experiment, learn, iterate quickly and sort of test new feature ideas. How do you see that through an expansion lens? In many cases, being expansion-friendly or localization-friendly implies a level of scalability to the things we build, which can sometimes be in contrast to trying to test something out, build it fast, build it in a way that allows us to not feel too invested in a new idea.

Karin Nielsen (22:41):

Yeah, that’s a really good question. I mean, I think to be honest, the principles are the same regardless of whether it’s for an expansion initiative or anything else that we build. We have to start with a customer problem and we need to get under the skin of that problem and understand it as much as possible. And the only way you can get that understanding is by being super close to the people you’re serving. So I have lots of calls every week with people who are using our product and we get obviously a ton of insight from that. We also do a lot of surveys and once we figure out where the friction is, we can then identify the priorities in terms of where do we think we’ll get the most mileage by improving that thing one step at a time. And I think you just have to be disciplined and start with hypotheses.

(23:41):

We have a lot of hypotheses about what people might like or what they’ll find annoying in the product as it is today, but actually people prove you wrong every day. Right [inaudible 00:23:53]. A good example of that would be that I think we had a strong assumption initially that people would find food logging difficult because we have a sort of search functionality in there that looks up products, but based on US naming the things, so US language variants for things. But it turns out that people don’t really care about that so much. They’re logging their own things and they’re not really noticing that the things that they’re searching for aren’t coming up from our food log records. So I think it’s important to start out with hypotheses, but approach it with a very open mind and expect to be proven wrong regularly.

Cosima Travis (24:41):

Exactly. And I’m kind of thinking about just to, as you look across the Levels organization, I mean you really work with every team in order to make expansion happen successfully, and how you think about making sure that all teams are building and advancing the product with expansion in mind. And keeping that as part of the ethos of the way they build and how they approach things. We’re moving fast and testing and iterating and making sure that we’re thinking of UK markets, but also future markets.

Karin Nielsen (25:24):

Yeah, it’s really difficult and it’s difficult I think, especially in a remote a-sync environment when you have to have such a broad reach across the company, but you don’t necessarily see people face-to-face. So you really have to get in people’s space and reach out to them to figure out how they’re thinking about their area and have they considered how expansion is going to impact what they do and even the kind of systems and the tools they use. So one thing that was clear is that some of the things we have, some of the SaaS products even that we have, are just not localization-friendly. And you don’t find that out until you really try to do it. And it’s never something you think about upfront. When you’re just focused on finding product-market fit in your domestic market. The last thing you think about is what happens if you go to another 50 markets?

(26:26):

It’s just not a core requirement at that point. And you generally don’t sign up for enterprise plans on things either because you don’t need them and they’re very expansive at the time. And that’s generally where you get the kind of more global feature sets. So a big part of what I have to do is to really just keep on top of what everybody’s building and working on, so I can in the moment just remind people that there are considerations for expansion.

(26:57):

And I’ve noticed that that sort of cadence of having to remind people has really slowed in time because it’s now becoming much more front of mind. And I think at Levels, obviously we do have a memo culture, so I try to start every conversation with, “These are our values from an expansion perspective, these are our principles.” And then we can anchor our approach to execution and our tactics to those principles to make sure that we’re consistent with the ideas and the vision that we set out with for how we want to approach new markets. And I think the more you just rinse and repeat, the more people start to think about this, it becomes second nature.

Cosima Travis (27:47):

Yeah. Sort of planting the seed in everyone’s mind so that even if we do in particular cases make choices that are shorter term, we do it, not with blindfolds on, we do it knowing that and knowing that we’re going to have to go back and internationalize it at some point, but not doing it and forgetting that. But having it sort of planted in our minds.

Karin Nielsen (28:11):

A hundred percent. And I think it’s really important for people to realize that you don’t have to do everything at once. In a start-up, everything’s scrapping. You have to be able to move quickly. So it’s a very delicate balance to strike to not over-engineer something before you have enough, a need and use for it, but also before you actually know if it’s going to work. So as a rule, I think when it comes to product at Levels, we’d want to know that we have a reasonable degree of certainty around the future, particularly around the sort of core product experience before we push that into internationalization. Because otherwise we’re expending all of that effort to internationalize or localize something for the UK or any other market.

(29:09):

But then if we learn that actually we built the wrong thing, then that’s a huge amount of waste in both resources and cash. So you have to be disciplined, and I think it’s fine to have a need market. I’m pretty sure most start-ups I know operate that way. And you have to then have a high degree of certainty around something that you decide to fully internationalize before you go ahead with that.

Cosima Travis (29:39):

And then I guess from your approach, how you approach in the day-to-day, I mean you work with so many distinct teams, so sort of zooming in and zooming out to marketing, to growth, to ops, to product, to design, to community, how do you maintain a level of bird’s eye view? If you dove into any single one of those areas too deeply, it would be a full-time job. So I’m kind of curious how you balance that on a more personal work level.

Karin Nielsen (30:13):

That’s a really good question, and I think honestly the first answer is just that we have an amazing team here. So I think one of the things that Levels does extremely well, is the way that we allow people to lead an initiative and run with it, right. We give people a lot of autonomy to lead things, even if it’s outside of their day-to-day responsibilities. So as we have a Directly Responsible Individual kind of structure, which means that somebody is deliberately assigned to take the lead on a part of a project, and without that, I think it would’ve been extremely difficult and it would be extremely difficult. So we are fortunate that because we have that kind of flexibility in the way we’ve designed our organization, that I can take an initiative that requires bandwidth from finance and assign Riley as the DRI for that thing, whether that’s opening a bank account or figuring out our tax requirements and so on.

(31:29):

And I can trust that he’s going to run with that and he’ll touch base with me regularly to make sure we’re on the right track. But ultimately, I obviously can’t execute on everything myself given the sheer breadth of stuff that needs to be thought about and done. But that structure lends itself very well to delegating bigger initiatives within our existing kind of org and team structure. So I’ve never seen this done in a company without a team focused on it. Like a dedicated expansion team. And I think that we’ve been able to do it precisely because we’re so nimble in how we assign responsibilities for key initiatives to people who are already experts in those things on the team. So I think that’s one thing. I think separately, you just also have to be realistic, right? There’s an awful lot of context to absorb and everything moves so quickly that the context is, it’s like a quicksand, it’s a constantly shifting landscape.

(32:38):

So you have to, I think to preserve your insanity, you have to accept that there’s stuff that’s going to change and you’re going to miss, and you just have to accept that and be prepared to go back and figure it out later. So I do a lot of reading. I actually book that time in my diary every week just to make sure I have the time allocated to catching up on the latest memos in areas that I’m working on and catching up on threats to make sure I haven’t missed things that are pertinent to decisions we’re making for expansion and stuff like that. So yeah, I think context is king and you just have to find a way to keep on top of the things that matter while also blocking out the things that maybe, I don’t want to say don’t matter, but there’s so much noise you have to deliberately say, “I’m just not going to think about this until I get to it.”

Cosima Travis (33:40):

Yeah, I definitely get the sense that this isn’t your first time around the merry-go-round of working on something like this. And I’m curious if there is some sort of pearls of wisdom or on the reverse side, some common pitfalls that you have your eyes and ears open for, as things to avoid or things to make sure to plant in the team.

Karin Nielsen (34:08):

There are so many failure modes, and I think the particular failure mode to think about for your company is going to be different depending on what you do. I think the number one thing that companies do wrong when they try to expand internationally for the first time is that they don’t fully commit, right? So I think a lot of companies would be tempted to take the, “Let’s experiment and iterate” mantra too literally, and they end up running an experiment that is so badly executed or so lightweight that it’s no longer a valid experiment. And that goes for anything, right? There’s a limit to how scrappy a feature to be before you can’t rely on the data anymore, whether people want that thing or not, or whether they just don’t like the way you’ve built it because it doesn’t work. And it’s exactly the same for going into a new market.

(35:08):

And that’s obviously not to say that you should never pull back or pull out if it’s not working for you. And it’s important to kind of understand up front what those kind of benchmarks would be so that you know if something really isn’t working, but companies really shouldn’t try to do expansion if they’re not A, prepared to commit the resource to it. But also if they don’t have the capital to execute on it properly. Because it costs a lot of money, you know, have to pay lawyers, you have to pay for translators and new software. You have to hire more people to deal with the additional support demands and product demands. And it’s a lot of commitment. And I think a lot of companies just don’t do it well because they don’t try hard enough to get it right. And that’s why, especially in our situation where so much has to go into running that initial experiment, we can’t run an experiment unless we can ship a sensor to someone.

(36:13):

And that in its own right is a huge lift. So it’s really important to do your homework and to not just jump into it, understand the market that you’re entering, really understand the customers and whether they want the thing that you have or not. And only when you’ve got that confidence should you proceed to the next stage. And that requires a lot of discipline because it can look like a quick win. It can look like a quick way to increase sales, but the reality is there’s probably going to be more of a drain on your resources than anything you get back in revenue from the additional sales. New markets take a long time to develop and it takes a long time to learn about them. So people have to be prepared for that commitment, I think.