Daniel Glazer, head of Wilson Sonsini Goodrich & Rosati’s London office, reveals his thoughts on the challenges of scaling in America
In the London office of US tech law firm Wilson Sonsini Goodrich & Rosati (WSGR), among the baseball memorabilia and star-spangled banners, you’ll find a copy of an old American government pamphlet. One paragraph of it reads:
“The British don’t know how to make a good cup of coffee. Americans don’t know how to make a good cup of tea. It’s an even swap.”
The 32-page booklet, published in 1942 to prepare US soldiers for their time in Britain during the Allied war effort, is a beautifully apt memento. That’s because the office where it now sits has a similar aim. It, too, acts as a cultural guide to a foreign country: WSGR London helps entrepreneurial Brits heading to the US.
WSGR partner Daniel Glazer, a New Yorker whom American Lawyer Magazine named its inaugural Transatlantic Innovator of the Year, opened his firm’s Old Street office in August 2018. His aim is simple: to guide UK companies through their American journeys.
Daniel explains how the office came about: “Eight years ago, I met with the UK Department for International Trade (DIT) in New York to discuss the then-nascent East London ‘Tech City’ initiative. DIT indicated that they expected to see a new generation of UK tech companies launch, scale and focus on the US market.
“I’ve loved London ever since I came here as a student with a backpack and a BritRail pass in the mid-1990s. I’ve viewed it as a tremendous privilege to support the development of the UK innovation ecosystem.”
An American law firm in London
Over the next seven years, Daniel and his team created and scaled a practice assisting UK tech companies intent on tackling the American market or raising US capital. These plans were informed by WSGR’s experiences of working for stellar US clients such as Google, Pixar, Tesla, Apple, Netflix, Twitter, LinkedIn and Netscape.
WSGR built a network of around 200 UK clients and in 2018 opened its Old Street office. Today, Daniel’s London-based team – working in concert with WSGR’s 850 American lawyers across 11 US offices – acts for more than 550 British tech and life sciences companies and investors.
Navigating the US market
“We help ambitious, high-growth UK tech and life sciences companies navigate the US business landscape and compete to win on the global stage,” explains Daniel. “The services we offer in support of that mission are many and varied. It could be launching an American subsidiary. It could be raising money from US venture capital investors, or it could be listing on the New York Stock Exchange or NASDAQ. It could even be buying US companies. The most common point at which we first engage with UK companies is when they’ve raised a bit of external capital and say ‘Right, we’re going to the US. We’re being pulled there by customer traction and user growth. What do we do next?’”
How the UK and US really differ
We all know the clichés about doing business in the US, mostly derived from hearsay, Hollywood movies and TV shows. But what are the realities? Few people have as much experience of the differences between the UK and US markets as Daniel Glazer, so we asked him to share his thoughts. What he says may surprise you…
1. The UK is more ‘DIY’ than the US
Daniel says: “The US is not as ‘DIY’ as Britain. The States has a more robust culture of leveraging outside advisors – due in part to greater compliance complexities and an aggressive litigation environment – whereas British start-ups tend to be more self-reliant. In America, founders and executive teams typically focus on the core business and build a trusted advisory team around them so that they can maintain that focus. There’s a give-and-take relationship between emerging companies and professionals in the US, and a key consideration for companies is how to best leverage their advisors’ expertise and network to more quickly scale the business. The UK has more of a bootstrap culture, and US investors are often surprised at the foundation UK companies build with relatively few resources.”
2. The UK is more supportive than the US
“The UK’s startup ecosystem is tight and supportive, particularly in terms of the collaborative environment that has developed among companies and the resources provided to the private tech sector by the government. In America it’s a bit more competitive from the get-go, and government support doesn’t feature to nearly the extent it does in the UK.”
3. It’s harder to get funding in the US
“In Britain you can build a business with relatively little money, taking advantage of a robust seed and series-A funding ecosystem fueled in part by UK Government tax programs such as SEIS and EIS. Yes, there is more funding available in the US, but there’s much more competition for it.”
4. The US is pricier
“The cost of doing business in the US generally is higher than in the UK. One of the biggest differences is employee salaries, which in large US cities can be two- or three times higher than in London. Additionally, you typically need much more outside support from law firms, tax advisors, insurance, banking and HR in the United States. That’s partly because the US has a federal system on top of a 50-state system, and partly because the compliance and litigation culture places a premium on taking advice on a proactive, problem-avoidance basis. A recent study found that tech companies in the US annually spend, on average, twice as much on outside counsel as companies in the UK, and four times more than counterparts in France and Germany.”
5. The UK is more short-term-profit focused
“Lastly, the US start-up tech model is less about short-term profitability and more about long-term profitability at scale. Take Amazon, for example. It took years for Amazon to become profitable but eventually, at scale, it became one of the most valuable businesses in the world. That Amazon model is a very American approach to building a large tech business. In the UK, there’s more focus on hitting profitability sooner rather than later.”
How to ‘break’ America
With those differences in mind, how do British companies go about making it big in the US? Over the years, many have tried but relatively few have succeeded. Here are Dan’s thoughts on why so many entrepreneurs and commentators call the US ‘the graveyard of UK start-ups’.
1. Move too fast and die
He says: “Two types of British companies tend to struggle in the US: ones that move too quickly, and ones that don’t move fast enough.”
“The ones that move too fast tend to feel they have to launch in the US simply because they’re a tech company. They try to scale in America before properly working out if there’s a real appetite for what they’re offering. We’ve seen many companies throw money at the US and not succeed because ultimately it was never the right place for them – there’s no product-market fit.
“Start-ups with limited cash – particularly those who are remaining UK-headquartered companies rather than moving one or more senior executives to the US – should look to de-risk US market entry, such as by initially selling into the US remotely, doing more comprehensive market research, and where appropriate leveraging part-time contractors rather than building a full-blown US team.”
2. Move too slowly and die
“On the other hand, if you’ve proven there’s real US demand for what you’re offering, and you determine that winning the US market is a high priority, you need to really go for it. American competitors tend be aggressive and are willing to spend money to win the market.
“You need to formulate a business plan that allows you to compete in a landscape dominated by players who have home-field advantage and often have raised significant capital.”
3. Don’t underestimate UK-US differences
“Business practices that are hugely successful in the UK may fail miserably in the US. The seeming lack of language barrier makes the UK and the US seem more similar than they are, but the business cultures are really quite different. You have to be prepared to adapt your business to win in the US market.”
The final word
Daniel Glazer offers some valuable insights for UK start-ups dreaming of American success. His law firm, Wilson Sonsini Goodrich & Rosati, is a legendary organisation with long-term working relationships with many household names. That makes the firm’s decision to open a London office all the more positive for UK tech start-ups and the broader entrepreneurial community.
Daniel’s message for UK start-ups is clear: you must not rush into your American adventure, but once you commit, you have to go for it. The US market will punish equally harshly both half-hearted strategies and rushed, botched entries.
That said, the prize America offers is enormous; whether you shoot for that prize – and tackle all the risks that come with it – is a huge question for any start-up. Just bear in mind that there are many more differences between the UK and the US than tea and coffee, despite the advice contained in that old Second World War pamphlet.