A Letter from America

Following his recent trip to the US, Managing Director Thomas Averre explains the differences between European and US markets, and outlines his key takeaways from the visit.

I spent the first half of this month in the United States, travelling across Texas and meeting with people in politics, health, energy and finance across the State.

This was by far the highlight of my year - it filled me with enthusiasm and energy for what the next 12 months could bring, and for the future more broadly given the exciting innovation taking place in renewable energy, medicine and more.

I can't recount every meeting and event, but there are a couple of key moments that gave me particularly valuable insights that I will be sharing with clients over the coming months.

The trip started by meeting with officials from US Senator John Cornyn's office to discuss opportunities and international trade, which was extremely timely given he was in the running for Senate Majority Leader a few days later! Politics is never boring.

I then ran an event at the Texas Medical Center for UK companies looking to enter the US market, looking at how public relations differs between markets and how they need to change the way they communicate. I spoke with US medtech founders and European teams about their growth journey and the next steps for their companies - the differences in challenges and objectives were so interesting when compared side by side and revealed much about the cultural differences in approaches to entrepreneurship.

Later in the week, I was invited to join the British Consul General at his Houston Residence for a Winston Churchill Birthday Party (which was as good as it sounds!). This was a great opportunity to get a sense of how the transatlantic relationship is viewed today amongst diplomats and business leaders. It was especially interesting for me as I had dinner with Sir Nicholas Soames last year, who told stories of his grandfather's life with great humour and eloquence. As a history buff I was hooked on these stories, but it was nice too to meet those based in Texas who had travelled to the UK to visit Chartwell.

The Houston Innovation Awards were another highlight, shining a spotlight on the amazing innovation going on in the city and gave me an opportunity to meet those in the VC and angel communities who I hadn't yet seen face-to-face (a good reminder that Teams is useful but has its limits!). This was also really interesting from a 'comparative' point of view, having been to several similar UK awards events. The American ability to commercialise technology is undoubtedly better, and there is much we can (and should) learn from them. The Independent Review of University Spinout Companies, commissioned by the UK government and published last November, grasps some of these lessons but there are many that are anecdotal that warrant a trip for any founder.

So what take aways do I have?

In some ways conversations I had were enlightening and surprising. In other ways, many of them confirmed things I already knew or suspected from my previous experience and that of clients working in the US.

I can’t easily condense all these insights into one pithy piece (after several attempts), but there are a couple of poignant reflections I want to draw attention to as they are relevant to those within my network working in life sciences, energy and tech.

The most obvious point is that the United States presents an enormous opportunity. This is something most Europeans instinctively understand. A large population, big budgets and an eagerness to adopt innovation fuse together to create the ideal conditions in which to succeed.

So why don’t most businesses that enter the US succeed? Why has it become known as the ‘graveyard of British startups’?

There are three things that jumped out from conversations I had that European companies need to pay heed to if they are to thrive in the US: strategy, cost and connectivity.

What works in Europe doesn’t necessarily work in the US

On strategy, European companies are up against well-funded, innovative domestic companies who instinctively ‘get’ how to do business in their home country (obviously!). This means breaking through requires careful planning and a robust strategic reason for why you’re entering that market (hint: wanting a slice of the lucrative pie isn’t a good strategic reason).

The biggest mistake many are making is to try and apply technologies developed for the UK or EU markets to the US, instead of designing technologies for US problems, tailored to existing routes to market. It’s business strategy 101 but it’s also extremely tempting to think ‘what works here must work there’ and it often just isn’t the case. Learning this is an expensive mistake that can be mitigated through proper research.

Different regulatory structures, reimbursement systems, investment incentives, sales patterns and differences between states mean your business strategy needs stress testing, and in all likelihood, modifying. The recent change in Administration should also be factored into your planning as the context of another Trump presidency is important, particularly if you're working in sustainable energy.

Cost of doing business is much higher

Secondly, while the rewards are undoubtedly much higher than in any single European state, so is the cost of doing business. Staff cost more, setting up a business costs more and marketing costs more. Typical costs for a PR firm are anywhere from 6 – 12 times more expensive than a UK equivalent, for example.

This doesn’t mean it’s impossible by any means, but you need to factor in US plans into your investment raise and push back on investors who encourage you to plan for the US but won’t back you with the money you need to do it properly. Your US competitors are raising huge amounts because they know what is required to scale effectively; you should take this approach too.

If it appears too expensive, find ways to limit the cost to get started. This comes with a health warning: you still need to spend…but it might not be as much as the initial ballparks suggest. We’re supporting clients to enter the US by acting as a bridging partner, doing some of the work directly and working with a Texas based partner to do some of the in-market activity. This provides a halfway house to enable clients to land in a way that is realistic and effective.

Connectivity is key

Finally, connectivity is important whichever country you’re working in, but it is much more important in the US than it is in Europe. Public relations in the US is more orientated towards networking and lobbying, which contrasts starkly with the European PR model which focuses on press coverage.

Ensuring you are connected to the right networks and people is critical to growing quickly. These networks will eventually be acquired anyway as part of doing business, but if you’re able to get a head start this will save significant time and money. Our relationships are opened up to clients working with us on US entry to provide this head start, whether they’re in life sciences, energy or tech.

What next for Tarleton

Our clients are serious about entering the US market, and so we're serious about supporting them to do that. Much planning and negotiating is already underway to put the relationships and partnerships in place that are necessary to do well.

In Q1 2025 we will be unveiling details on our US support programme, which will formalise the help we will start providing to clients seeking to build a brand and successfully 'land' in Texas.

Please drop me a message if you'd like to discuss this or learn more.