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AuroraTec goes international

Building the start-ups within the start-up

When we talk about international business, we often think about global supply chains and logistics, the use of foreign workers, and the importing and exporting of goods and services across various national, regional and continental borders. While these are all indeed aspects of how many large international businesses operate, others centre on an international presence of a different sort. In particular, managerial decisions about where to sell a good or service are an important part of many growth strategies. Since the move towards a more globalized world in the mid to late twentieth century, many more companies look to sell their goods or services internationally, even when they are relatively small.

Within this episode, we see that dot-com technology companies, which were famously located in California, were heavily invested in expanding into multiple international markets.

About globalization

Globalization represents the shift in economic activities towards a more integrated and interdependent form of business. There are main types of globalization that have impacted businesses and societies in very different ways. First, the globalization of markets relates to the fact that previously separate geographical markets have merged into one global market. On the other hand, globalization of production is the use of goods and services from international locations that take advantage of differences in cost or quality compared to domestic alternatives.

Hill, Charles (2014), International Business: Competing in the Global Marketplace, McGraw-Hill Education.

Photo credit: istockphoto.

In the market for a new European partner

In the spring of 2000, having successfully secured funding for the US-based activities, AuroraTec (a pseudonym) began to pursue expansion into multiple new international markets. The product offered by AuroraTec was fundamentally connected to the Internet, translating websites designed for desktops into mobile readable versions. Like the Internet, the potential markets were not physically limited by distance or borders. Websites were all over the world, so they could be too. Thus, as they started to look overseas, first to Europe, where their plan was to acquire a company that would provide a ready-made presence.

M&A or JV?

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M&A stands for merger and acquisition, which is when the ownership of a company is transferred to another. For a business seeking to internationalize, buying a company in their target market can be a good option. Alternatively, a joint venture (JV) creates a new business that two companies have a shared interest in. This is also an option for businesses entering new markets, but they need to be able to work with their new partners.

Seeking visibility in new markets

Additionally, while the firm’s initial entry strategy was still just forming, the Chief Marketing Officer, Jennifer, was already trying to keep a handle of an already growing campaign, much of which was focused on building the profile for the business in Europe and courting particularly large and important leads. However, with so many different trade events and conferences, and with such a fledgling international presence, there was a question about whether resources should be directed towards developing business leads so soon, though some within the firm were clearly keen.

Conflicting priorities

However, not only were there questions over the costs, but the Vice President in charge of AuroraTec’s global business, Doug Roberts, and its European Managing Director, Michel Dupont, were not even aware it was in the calendar. Moreover, Michel questioned the sense in attending, highlighting that it was ‘just another’ event and that AuroraTec was not ready to capitalize on such profile-building opportunities.

Shifting to a joint venture approach

As the person responsible for the firm’s market entry strategy, Doug spent much of the summer trying to find other companies to take a share in the new venture. Rather than the acquisition they had been looking to initially make in Europe, the firm’s strategy had moved towards a joint venture instead. The potential JV partners Doug was seeking would provide much of the necessary capital needed to fund AuroraTec’s international expansion after the recent crash and had local knowledge of their particular market that the firm could exploit.

Developing a network of professional support

At the same time, AuroraTec was also building a network of professional services to help them with their international strategy.

The European office begins to take shape

By September, their European operations had started to take a clearer form, with the hiring of a new Head of European Operations and presence in both the UK and Germany. However, there were still no signs of a JV partner, and operations were still minimal within European markets.

Japan, Brazil and beyond

At the same time as AuroraTec Europe searched for their JV partner, Doug was also working with contacts in Japan and Brazil to find a partner for AuroraTec there too. At this point, AuroraTec, a company that was only itself still a relatively small start-up, was simultaneously trying to establish operations on three separate continents.

A man on the ground in Japan

As with Europe earlier in the year, any presence AuroraTec had in these regions was confined largely to that of brand or business development. Despite the lack of any operational presence, this did not stop Doug from following up on leads in China, yet another target for future market expansion. Thankfully, his contact, Jiro Ichiyanagi had been hired to join the team and look after Japan, taking on some of Doug’s expanding portfolio of responsibilities.

Testing the limits of international expansion

Nonetheless, even with active plans to expand into Europe, Japan, and Brazil, Doug was also prepared to consider the South Korean market as well, though even he admitted that they may have enough on their plate. Jiro agreed, advocating that they focused their attention on Japan.

Making good on his promise to ‘keep them warm’, Doug goes back to the potential South Korean partners, letting them know that AuroraTec was interested in pursuing South Korean expansion in the following year and suggesting that they meet in the US when they were next there.

AuroraTec, an international business

By the end of that year, the company was able to boast offices in two European locations and Japan, all of which consisted of small teams maintaining what was primarily a business development presence in those locations. Nonetheless, it was already proving useful as the firm tried to build partnerships for their main business lines.

The gap in the email collection

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As the emails we draw on are from a partial collection, we sometimes encounter periods with very few emails. In this case, there was very little information on the company’s international activities in 2001. We know from It’s all about the burn rate that the management team chose to limit the European team to 3 people through 2001, and that they focused much of their attention on the US market, where they had a stronger presence. Overall, it seems that along with the reduction in costs experienced in the Santa Monica headquarters, there was also a rationalization of the company’s international expansion.

Japan market lead the way for recovering AuroraTec

By August 2002, things were starting to look up for AuroraTec, not only in the US but also abroad. Paul Jacobs, the president and CEO of the company, was able to email employees with a couple of pieces of good news about the companies Asia operations.

“Things happening for us around the world”

With the outlook continuing to look good for Japan in the New Year, Jacobs created a new position, Vice President Asian Operations, promoting Jiro into the new role. The move acknowledges the success of AuroraTec Japanese expansion and management’s strategic interest in other Asian markets. By contrast, Europe and the other expansion possibilities have taken a back seat, with little sign of the appetite, there has once been for internationalization on multiple fronts.

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