The Pillars of International Growth

Thanks to Natalie Rothfels (currently a Reforge Operator in Residence) for her significant contributions to this blog series, and to Brian Balfour, Valerie Wagoner, Ravi Mehta, Crystal Widjaja, Barron Ernst, Ron Schneidermann, John Egan, Frost Li, Lorna Whelan, and Amar Krishna for sharing their time and insights.

Product/Culture Fit

The first and most important requirement for international growth is product/culture fit. Like product/market fit, this sounds simple but can be deceptively difficult. There are a few hidden pitfalls that many companies run into when they begin to expand abroad:

Don’t get fooled by early adopters:

It is a common mistake for companies to see early traction in a market and falsely conclude they have achieved product/culture fit, when in reality, they are being fooled by a small subset of users who do not represent the majority of the market. If a company isn’t careful, it can prematurely pour on the gas, expending precious time and resources only to see its initial user adoption taper off and its growth rates stagnate.

Quizlet experienced this early on in its pursuit of international growth. After localizing our website and mobile apps in a couple dozen other languages, we started to see a handful of students and teachers in almost every country begin to access our free flashcards product. However, we quickly realized that many of the early adopters in non-English markets were either native English speakers or affluent students proficient in English who were studying for entrance exams to get into prestigious universities in the US or the UK.

By identifying the pattern early, we recognized this growth for what it was — the adoption of our product by a small subset of the population that represented a good “foot in the door,” but not the signs of true product/culture fit by the broader student and teacher population.

Lookout for emergent use cases:

Companies are often unaware or dismissive when international users begin to engage with their products in unexpected ways. This can end up being a big mistake.

Valerie Wagoner, Head of Product for APAC at Stripe who has previous experience as a founder, executive, and Reforge EIR, describes a couple of examples of this pitfall that she observed in Japan while helping to lead international expansion efforts at Twitter: “Real-time search on Twitter was a very strong use case for Japanese users given the disproportionately high tweet volumes in Japan. We also noticed that many Japanese users created multiple accounts because they wanted different personas to communicate with their bosses vs. their in-laws vs. their friends. However, these Japan-specific user needs were not prioritized at a global level, which prevented Twitter from growing as fast as it could have early on in Japan.”

These emergent use cases can represent massive opportunities to gain traction in new markets, but many companies dismiss them as aberrant or unwanted behaviors and fail to capitalize. In Valerie’s case, she championed support of these use cases, carving out Japan-specific product and engineering resources that ultimately drove outsized impact on Twitter’s global growth.

Differentiate your company from local competitors

A third mistake that U.S. companies in particular often make when expanding internationally is underestimating local competitors and failing to identify a strategic advantage that sufficiently differentiates their product offering.

As Valerie puts it, “Just because you succeeded in one country, don’t assume you can replicate success in other markets without an understanding of your unique strategic advantage. Why should a customer choose you over any other local startup that understands the market better than you do?”

Given the home-field advantage enjoyed by incumbent competitors, foreign entrants must identify unique advantages to serve local customers’ needs better than local companies. For example, as Valerie was leading Credit Karma’s international expansion, the company realized early on that there were no user network effects they could take advantage of across markets. However, their relationships with global credit bureaus that had been developed over the course of a decade in the U.S. allowed them to provide a differentiated product experience that proved to be a powerful advantage over smaller local competitors who did not have these partnerships.

So how should a company pursue product/culture fit, and how can it measure progress? Ravi Mehta, cofounder at Scale and former Reforge EIR, CPO at Tinder, and VP of Product at TripAdvisor, has a 4-phase framework for internationalization that companies may find helpful:

1. Local Availability in English: Make the product available with no changes.
2. Language-Level Localization: Localize the language of the product.
3. Content-Level Localization: Invest in local content that is tailored to local users.
4. Feature-Level Localization: Invest in local features to meet market-specific needs.

While this framework applies to most B2C businesses, the sequencing may look different for B2B companies, particularly in regulated industries like Healthcare or FinTech.

This framework is effective because it starts simple, allowing companies to get initial traction for minimal effort before committing to more resource-intensive efforts. For example, TripAdvisor and Tinder used this framework to great effect by focusing first on "switching the lights on" in international markets. Both companies made their products available globally as early as possible, but didn't spend a lot of time on optimization. Over time, the most promising international markets gathered steam. This early signal helped to prioritize deeper localization and international market development.

Similarly, Quizlet was able to achieve significant penetration in many Nordic countries without investing in content-level or feature-level localization. Due to similarities in the local education systems, language-level localization was sufficient to generate strong demand from teachers as an early adopter population. These teachers then created relevant local content and shared it with students, driving our core UGC-Driven SEO and Word of Mouth loops and helping Quizlet achieve significant market penetration with minimal investment. However, in other markets where local languages, cultures, and education systems diverged more significantly from the U.S., Quizlet has had to invest more time and resources in seeding relevant content and features to get local flywheels spinning.

The best ways to measure progress toward product/culture fit are to measure customer retention and look for accelerating organic growth. You will know you are making progress when customer retention curves flatten over time or rise up after a certain number of periods (also known as a “smile curve”). You can also measure leading indicators, including satisfaction metrics like net promoter score and engagement metrics like DAU/MAU ratio that capture the “stickiness” of your product and tend to be positively correlated with long-term retention.

Customer cohort retention curves provide an indication of product/culture fit in a given market. Flattening or “smiling” long-term customer retention is critical for supporting sustainable growth.

The ultimate sign that you’ve achieved strong product/culture fit is accelerating organic growth. This is the natural byproduct of robust long-term customer retention: if enough users love your product enough to keep coming back, or better yet share it with friends, then it is only a matter of time before you start to see compounding growth.

Companies that want to take this a step further can plot normalized customer growth per month across markets to get a sense for where they have already achieved strong product/culture fit, and where they still have more work to do. In his blog post “How to Build a Growth Team,” former Head of Rider Growth at Uber Andrew Chen illustrates how Uber used charts like this to recognize “nuclear growth” in Chinese cities relative to the more typical (though still exponential) growth curves seen in other international markets.

By plotting monthly trips per city and normalizing based on the number of months since launch, Uber visually demonstrated “nuclear growth” in Chinese cities that were growing unusually fast.

Customer Accessibility

In addition to product/culture fit, companies must ensure that their product is broadly available to local customers to sustain growth in an international market. Fortunately, this tends to be more straightforward because there are a few common steps — which I refer to as the “Three Ps” — companies can take to make their products more widely available:

1. Product performance: Internet speeds in many markets across Asia, Africa, and South America are much slower than in the U.S. and Europe. Optimizing website and mobile app performance is critical for ensuring that customers in these markets can consistently and reliably use your product as it was intended. For many products, speed is a feature, and often a very important one. If your customers are constantly needing to reload your site or app to use your product, then they are unlikely to continue using it for very long.
2. Pricing: Willingness to pay is another important factor that varies widely across markets. Making your product available in the local currency is a good start, but if you’re applying your U.S. price in markets where your target customer has less disposable income, then you’re unlikely to see much traction. Accessibility means affordability, and that means understanding how much local customers are willing and able to pay for your product. Tools like The Economist’s Big Mac Index are helpful for optimizing international prices.
3. Payment methods: Understanding local market payment needs is critical for achieving widespread customer adoption. For example, in European markets like Germany, accepting payments through SEPA (Single Euro Payments Area) is important for accessing significant percentages of the population. Meanwhile, in India, there are fewer than 30 million credit card holders out of a population of 1.4 billion people, but UPI-based payment methods have grown from 0% to ~70% of India’s online commerce in just a few years. Finally, coupon-based payment experiences where users make online purchases by paying in cash at convenience stores or ATMs are popular in Japan (Konbini), Brazil (Boleto), and Indonesia because younger users don’t have access to digital payments and older users don’t trust them. Companies that tailor payment methods to meet local needs will be able to reach a much broader customer population.

Often, seemingly inferior products win out over more advanced alternatives in certain markets because they are more accessible to customers.

Barron Ernst, VP of Product at Zenly (part of Snap), shared one perfect example of this from a previous role as CPO of Showmax at Naspers, where he was responsible for growing the company’s streaming video platform in Subsaharan Africa. At first, Barron and his team assumed their biggest competitor would be Netflix. Only after personally traveling to Kenya multiple times did Barron realize that the best available substitute for the product they were building was the local “movie guy” selling cheap DVDs on local street corners. Barron found that many potential customers in Kenya did not have a bank account, credit card, or access to a high-speed internet connection. For them, the “movie guy” provided a product that was much more accessible, affordable, and reliable than Netflix or Showmax could with their product at the time.

While product performance, pricing, and payment methods represent a few common barriers that companies must overcome to grow internationally, there are many others. Market-specific regulations, institutions, technologies, and distribution channels all play a critical role in determining whether or not a company’s customers can successfully access its products.

For example, as a provider of online study tools, Quizlet has needed to adapt its products to local education systems in order to achieve widespread adoption among students and teachers. At the beginning of the COVID-19 pandemic, when teachers across the globe were scrambling to find online tools to support the rapid transition to remote learning, Quizlet saw explosive growth in a couple of countries after local education ministries publicly promoted our product to teachers on their websites. This growth was fueled by Quizlet’s longstanding efforts to uphold high standards of academic integrity and support its teacher community by making its products easily accessible to them when they needed Quizlet the most.

Universal Currencies

The final pillar a company needs to support efficient and sustainable international growth is to find one or more universal currencies to fuel its core growth loops across borders. These include “Three Cs” that any reader familiar with Reforge’s Growth Loops will recognize:

1. Cash: For many companies, the most reliable universal currency is still cold, hard cash. Businesses that rely primarily on customer acquisition through online ads and other paid channels can buy their way into international markets, up to a point. While a lot of work may be required to localize ads to fit the target market’s language and culture, this does not require wholesale changes to a company’s product or team. Provided the company has a sufficiently high customer lifetime value (LTV) to support its customer acquisition cost (CAC), it can reinvest cash generated from mature markets into ad campaigns to jumpstart nascent international markets that are critical for the next phase of its growth. For example, Credit Karma is a company that relies heavily on paid loops for customer acquisition. Valerie Wagoner and the Credit Karma team decided not to expand into the otherwise attractive India market largely because the expected customer acquisition economics required to support their paid acquisition loops were untenable. Other companies that have primarily used cash to grow internationally include massive tech giants like Apple and Amazon, as well as marketplaces like Uber and Airbnb.
2. Content: Another common form of universal currency is content. While not as universal as cash, a lot of content is relevant across international borders and cultures, particularly after localization into native languages. One example of a company that relied heavily on content to scale internationally is Pinterest, which took advantage of its visual medium to expand rapidly into countries even before it needed to expend significant effort on language-level or content-level localization (although according to Pinterest’s Head of Growth Engineering, John Egan, that came later with innovations like Copytune). Another example is TripAdvisor, where Lorna Whelan, Ravi Mehta, and the TripAdvisor team realized early on that travelers from different countries were interested in the same popular destinations that already had many English-language reviews. TripAdvisor made these reviews available to international travelers by manually translating the most popular reviews and integrating on-demand Google Translate translations for the rest. Other examples of companies that have primarily used content to grow internationally include search engines like Google, as well as content publishers like Netflix and Spotify.
3. Connectors: The third common universal currency is connectors. For B2C businesses that rely on network effects and viral word of mouth, these are often early adopters who play an outsized role in generating content and inviting friends. For B2B businesses, these may be local partners who boost credibility and provide access to local acquisition channels. At Facebook, Chamath Palihapitiya and Javier Olivan famously built one of the first modern growth teams and leveraged Facebook’s greatest asset - its users - to accelerate product localization in international markets. Other companies that have used connectors to grow internationally include Snap, Twitter, and TikTok, although it should be noted that these companies also relied heavily on user-generated content.

Applying the Pillars of International Growth

The purpose of this post has been to establish a foundation of universal pillars that every company must achieve to successfully and sustainably grow in international markets. Regardless of where your company is headquartered, what products it sells, or which growth loops it relies on to acquire customers and generate revenue, there are a few prerequisites it must achieve to create the conditions necessary for expanding abroad:

1. Product/Culture Fit
2. Customer Accessibility
3. Universal Currencies

So now that you know the Pillars of International Growth, how can you apply them to help your company achieve its global ambitions? The next two posts in this series address this question by proposing solutions to two practical problems that many companies face:

1. How to Understand and Unlock International Growth Loops: Many products grow differently across markets because language, culture, consumer preferences, willingness to pay, and competition alter the behavior and performance of a company's core growth loops. Before a company can satisfy the Pillars of International Growth, it first needs to deeply understand its core growth model and how this model varies across markets.
   In this post, we will discuss how to build a dynamic international growth model that allows a company to measure the key variables responsible for driving its growth, compare the performance of these variables across regions and countries, and use the insights from this analysis to establish market-specific strategies and playbooks.
2. Building an International Growth Team: Once a company has an understanding of its fundamental growth model and how its core growth loops vary across markets, it needs an organizational structure that puts the right people in the right roles to execute on its international growth strategy. This requires a top down commitment from the company to ensure that international efforts are set up for success. In this post, we will discuss how to secure buy-in from the CEO for international growth investments, align executives around a clear international strategy, and structure teams to execute against this strategy to achieve the company’s international growth goals.