When scaling, the firm chose Europe as its first growth vector because it allowed them to replicate their exact strategy in the same industries and check sizes. This approach minimizes strategic variables, viewing geography as the most "close in adjacent" move before tackling different deal sizes or verticals, ensuring operational consistency.
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Instead of random growth, businesses have five clear expansion paths: serve wealthier clients (upmarket), serve a mass market (downmarket), enter a new vertical (adjacent), generalize your solution (broader), or hyper-specialize (narrower). This provides a strategic map for growth.
Rather than choosing a headquarters based on financial hubs like London, Pacific Avenue based its main European office in Paris. This decision was driven entirely by the location of the specific, highly sought-after individual they hired to lead their European efforts after an 18-month search, prioritizing key talent over geography.
After scaling a single location to its revenue limit (e.g., $9M in a dental practice), the primary growth strategy shifts from optimizing internal processes to duplicating the successful model in a new location. The constraint moves from marketing to talent acquisition for the new site.
When moving beyond your initial niche, target adjacent verticals. For example, a company serving realtors should target mortgage brokers next, not an unrelated field like lawn maintenance. This strategy maximizes the transfer of product features, market knowledge, and potential word-of-mouth.
For global expansion, view countries as having unique attributes like players on a sports team. Outsized returns come from matching your business to a country's inherent 'raw material' strengths—such as leveraging the US for its market liquidity, or Australia for its abundant land and sun for solar projects.
Instead of concentrating its sales force in one region, Deel hired individual salespeople in various countries early in its journey. This counterintuitive move, often criticized as defocusing, allowed the company to quickly test and understand multiple markets in parallel. This strategy was key to rapidly ramping up a global go-to-market motion with localized insights.
Growth isn't random; it can be planned along five vectors. From your current market, you can target higher-paying clients (upmarket), a larger volume of smaller clients (downmarket), different industries (adjacent), a wider category (broader), or a more focused sub-niche (narrower).
To maintain quality and individual attention, Techstars scales its accelerator model by launching programs in new cities worldwide rather than increasing the size of existing cohorts. Keeping classes small (8-10 companies) allows for deep engagement from the local mentor community, a model that prioritizes depth over breadth in a single location.
When entering challenging markets, large Western companies often operate in proximity. This creates a de facto ecosystem where participants share similar operational norms and contractual expectations, reducing friction and risk for all involved.
Instead of diversifying randomly, a more effective strategy is to expand into adjacent verticals. Leverage your existing, happy clients for introductions into these parallel industries. This approach uses your established credibility and relationships as a bridge to new markets, lowering the barrier to entry.
