Aaron Katz, Co-Founder and CEO of ClickHouse, and Dave McJannet, CEO of HashiCorp, dispense actionable insights for businesses to navigate Asia and tap into growth opportunities
Aaron Katz, Co-Founder and CEO of ClickHouse, and Dave McJannet, CEO of HashiCorp, dispense actionable insights for businesses to navigate Asia and tap into growth opportunities
How can enterprise Software as a Service (SaaS) providers shape gameplans to access Asia’s fast-growing markets, from Singapore?
Aaron Katz, Co-founder and CEO of ClickHouse, a database management system provider, and Dave McJannet, CEO of HashiCorp, an infrastructure provisioning and management company, shared their views at the GIC Bridge Forum Summit in San Francisco in May.
Here are takeaways from the discussion moderated by EDB’s Managing Director, Jacqueline Poh.
Katz believes that for enterprise SaaS companies, international expansion is never a question of if, but when.
And which regions should companies target? Asia is a clear winner, as the region’s digital economy has continued its positive trajectory, with projected gross merchandise value expected to reach US$300 billion1 (S$405.33 billion) by 2025.
While many companies have a “60-30-10 mantra, where 60 per cent of your revenue should come from the US, 30 per cent from Europe and 10 per cent from Asia”, Katz suggested they may want to redefine the model to achieve an equal split between international and US revenue – and a greater focus on Asia.
To achieve this, knowledge of international markets is key – otherwise businesses would spend large amounts of time and money trying to build quality networks around the region, only for this endeavour to come to nought.
One way to speed up the process of market entry is to adopt a product-led growth (PLG) strategy, in which the product itself acts as the primary driver for buyer acquisition, retention, and expansion.
PLG can be facilitated with open-source software where the program source code is made freely available to the public for download, use and modifications. This helps to reveal which markets within Asia have the greatest demand for the company’s services. That should give businesses insights into how to make the best use of resources, Katz said.
He added: “There's been two big themes that I've experienced personally, which is around cloud computing and open-source, which enable your software to get into these markets before you hire somebody to go and try to distribute it directly.”
"If you narrow down the focus to internationalisation, the only question is when do you go, not if you go."
Aaron Katz
Co-founder and CEO
ClickHous
Asia is home to distinct economies that are in various stages of development, with rich and diverse languages and cultures. Building a playbook for each of these key markets within Asia is necessary.
Referencing his experiences in Japan, South Korea, and China, McJannet advised that it’s important for companies to consider the local context for each of these markets as this can mean the difference between working with partners such as agents, resellers or going directly to businesses.
Business leaders need to be in tune with what approach or which “levers” to push to get the best results, shared McJannet. “[For instance,] you’ll realise later that putting more sales and company representatives on the ground in Japan is not going to move the dial the same way as in Korea. And I think building that playbook [should capture] the essence of how you think about your investment path,” he said.
Echoing McJannet’s observations, Katz advised that while the prevailing regional dynamics have shifted radically over the course of the last 15 years, countries like Japan and South Korea have remained somewhat stable.
Comparatively, business operations and processes in larger economies such as China can be more complex. McJannet pointed out that companies should be aware that it can take a long time to form relationships and cultivate local distribution channels. “[But if done well, companies] can capture and monetise that market in a way that you (business owners) couldn't a decade ago.”
For US enterprise SaaS companies expanding to Asia, US multinational companies with operations in the region can be a good first customer to land.
McJannet explained that having these credible global brands as lighthouse accounts—or early customers—can create a steady stream of customers in your target markets and anchor them to the company.
Besides their familiarity with your product relative to the market, they can eventually become an advocate or a good local reference use case to supercharge your customer acquisition efforts, which is invaluable to your long-term business strategy.
Katz referenced his experiences working with Uber, the ride-hailing company, noting that this proved to be crucial in helping the company land the opportunity to work with Asia’s Super App, Grab.
“Uber’s logging infrastructure runs on ClickHouse. So, for us, we can take that use case as a reference. Also, it's very transferable to Grab. Without that, it's going to be a big [shift] to try to convince Grab to migrate off elastic search and onto ClickHouse, if we don't have a reference in their sector.”
McJannet shared that in every market, there are two categories of customers – established Forbes Global 2000 or equivalent companies, who have the budgets and appetite to adopt enterprise tech at scale; and digital natives and tech-savvy companies that require equally advanced tech solutions.
In Asia, “digital native companies such as Grab are running infrastructure that are as incredibly sophisticated as Uber ... Gojek in Indonesia is the equivalent, the scale of infrastructure they run is akin to Netflix,” said McJannet. He added that while many digital natives are tech unicorns themselves, companies should not overlook telcos and other “legacy” companies in Southeast Asia as many of them have been able to leapfrog from their old tech infrastructure to one that is at the leading edge.
In particular, both Katz and McJannet agreed that Singapore is a great location for US tech companies looking for customers in Asia. No other country in the Asia Pacific accounted for more regional headquarters in the past 10 years3. And with more than 43 per cent of Southeast Asia’s fast-growing unicorns2 like Grab, and Indonesia’s GoJek, operating in Singapore, the city state continues to be a strong contender for business opportunities here and further afield.
With remote work increasingly becoming the norm, McJannet said companies should use the opportunity to tap into a larger pool of international talent. Rather than having one main location, companies can foster a global network of business hubs to access talent in various local markets.
Incidentally, a 2022 study by Mulesoft revealed that 92 per cent of IT leaders4 in the region believe that businesses stand to lose over US$ 7 million in revenue if they fail to implement digital transformation strategies. These further cements the importance of digital transformation in linking global hubs together for better collaboration.
Footnotes:
1 Hill, Degen. “SaaS Expansion Strategies for Southeast Asia.” KrASIA, 3 May 2023, https://kr-asia.com/saas-expansion-strategies-for-southeast-asia. Accessed 4 July 2023.
2 Lath, Vivek, et al. “Singapore Emerges as a New-Business-Building Hub.” McKinsey & Company, 1 Apr. 2022, www.mckinsey.com/business-functions/mckinsey-digital/our-insights/singapore-emerges-as-a-new-business-building-hub. Accessed 4 July 2023.
3 Orbis Crossborder Investment Database, “Search parameters – (i) Business Function: Regional Headquarters and (ii) Status: Completed – confirmed.” 2013-2023.
4 “2023 Connectivity Benchmark Report.” MuleSoft, 2022, www.mulesoft.com/lp/reports/connectivity-benchmark. Accessed 4 July 2023.
