The Global Entrepreneur

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Best Practice

The Global Entrepreneur
A new breed of entrepreneur is thinking across borders – from day one.

FOR A CENTURY AND MORE, companies have ventured abroad only after establishing themselves at home. Moreover, when they have looked overseas, they haven’t ventured too far afield, initially. Consumer healthcare company Johnson & Johnson set up its first foreign subsidiary in Montreal in 1919 – 33 years after its founding in 1886. Sony, established in 1946, took 11 years to export its first product to the United States, the TR-63 transistor radio. The Gap, founded in 1969 – the year Neil Armstrong walked on the moon – opened its first overseas store in London in 1987, a year after the Challenger space shuttle disaster. Companies are being born global today, by contrast. Entrepreneurs don’t automatically buy raw materials from nearby suppliers or set up factories close to their headquarters. They hunt for the planet’s best manufacturing locations because political and economic barriers have fallen and vast quantities of information are at their fingertips. They also scout for talent across the globe, tap investors wherever they may be located, and learn to manage operations from a distance – the moment they go into business.

Take Bento Koike, who set up Tecsis to manufacture wind turbine blades in 1995. The company imports raw materials from North America and Europe, and its customers are located on those two continents. Yet Koike created his globe-girding start-up near São Paulo in his native Brazil because a sophisticated aerospace industry had emerged there, which enabled him to develop innovative blade designs and manufacturing know-how. Tecsis has become one of the world’s market leaders, having installed 12,000 blades in 10 countries in the past decade and racked up revenues of $350 million in 2007. Standing conventional theory on its head, start-ups now do business in many countries before dominating their home markets. In late 2001, Ron Zwanziger, David Scott, and Jerry McAleer teamed up to launch their third medical diagnostics business, even though Zwanziger lives in the United States and Scott and McAleer live in England. They started Inverness Medical Innovations by retaining the pieces of their company that Johnson & Johnson didn’t acquire and immediately gained a presence in Belgium, Germany, Ireland, Israel, the United Kingdom, and the United States. The troika didn’t skip

Tim Ellis


December 2008


Harvard Business Review 107

Best Practice The Global Entrepreneur

a beat. In seven years, they wanted to grow the new venture into an enterprise valued at $7 billion and believed that being born global was the way to do it. They’re getting there: Inverness Medical’s assets were valued at $5 billion as of August 2008. Today’s entrepreneurs cross borders for two reasons. One is defensive: To be competitive, many ventures, like Tecsis and Inverness Medical, have to globalize some aspects of their business – manufacturing, service delivery, capital sourcing, or talent acquisition, for instance – the moment they start up. That may sound obvious today, but until a few years ago, it was standard practice for U.S. venture capitalists, in particular, to require that the companies they invested in focus on domestic markets. The other reason is to take the offense. Many new ventures are discovering that a new business opportunity spans more than one country or that they can use distance to create new products or services. Take RacingThePlanet, which Mary Gadams founded in 2002 to stage marathons, each 250 kilometers long and lasting seven days, in the world’s most hostile environments. Her team works out of a small Hong Kong office, but the company operates in the Gobi Desert in Mongolia, the Atacama Desert in Chile, the Sahara Desert in Egypt, and Antarctica. Distance has generated the opportunity: If the deserts were accessible, participants and audiences...
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