When the five startup founders including Melvyn Lubega and Andrew Barnes made the decision to take their e-learning software, GO1.com, to the US market, they chose a rather unique way to crack that market – through one of the most competitive and intense seed accelerators, the US-based Y Combinator.
The startup which enables companies to train their staff or customers launched at the start of 2014 in Australia. Today the startup has a footprint in South Africa, United Kingdom, United States and Vietnam.
In 2015 GO1.com participated in the accelerator’s three month program. As Lubega explains, the accelerator helped them to build a foundation for what was always a goal for the startup – heading to the US.
“We have always had the ambition of being a global leader. The US is currently one of the largest markets for online training. Therefore, it was not a question of whether we should enter the US market, but rather when we should actively pursue it.”
“Rather have a small group that loves your product and can become ambassadors than a large group that likes it”
GO1.com co-founder Melvyn Lubega shares with SME South Africa why the decision to head to the US and the doors that an accelerator, like Y Combinator can open.
Melvyn Lubega, Scott Kincaid, co-chair of the Oxford Seed Fund for 2015 and Andrew Barnes, GO1.com co-founder. IMAGE SUPPLIED
Making the decision to chase the US market
The catalyst came when we started to receive an increasing number of US enquiries following being named a top new learning management system globally. However, [through] subsequent conversations it became apparent that not having a presence in the US was a handicap – I recall when a potential flagship client opportunity fell through at the end, despite them loving our product, because we did not have a US presence.
It was at this point that we realised that whilst the US is a competitive market, it was necessary to build an operation there. Moreover, we knew it would give us access to a large market and it would help us improve the product as we competed head to head with our global peers. The question then became how to enter the US market. Y Combinator with its strong reputation and deep network in Silicon Valley seemed like a natural choice.
We were poised for growth
Y Combinator (YC) is particularly beneficial for companies that are ready for growth. These are companies that understand the problem they are solving and have shown initial traction after producing a product that initial customers love (even if they are a small group – rather have a small group that loves your product and can become ambassadors than a large group that likes it).
Having this was not only crucial for Go1.com to be successful in its application but also during the programme.
Gaining exposure to global learnings and investors
Y Combinator is an incubator in the truest sense. At the beginning, you set targets depending on your business model and maturity. Then over the next three months (and beyond) you have access to the YC partners and networks (most of whom are seasoned entrepreneurs and investors) to offer targeted advice on the areas where you need it most.
If you achieve your three-month targets, it is likely that you have a strong foundation for continued growth and will attract some of the most successful early stage investors globally at demo day.
Demo day is an event where you had to pitch your company and what you have achieved over the YC program, in two and half minutes, to over 300 seasoned investors. In this sense, the seeming deadline of demo day and the YC environment allowed us to double down as a team. Moreover through YC, we were able to crystallize our entry point into the US market – focusing on corporate training.
“I believe that having customers who love your product and are willing to pay for it at the price point where the unit economics make sense is arguably more important than the need for capital”
We gained access to more than just capital
Capital is an important aspect of any business, even more so for startups which will likely burn through cash as they develop their product and find product-market fit. However, I believe that having customers who love your product and are willing to pay for it at the price point where the unit economics make sense is arguably more important than the need for capital.
Being part of Y Combinator did give us access to capital but more importantly for us, it allowed us to have the right partners to enter into a mature market where customers were familiar with business models such as ours. We also were fortunate enough to already have a working product – so we were further along the development pathway than many other companies.
The 3 biggest lessons from the experience
• Early-stage technology companies are not too dissimilar from one another in the challenges they face, therefore having access to mentors and advisors who have been where you are can be a step towards change in your business.
• Build a product people love – this is determined by how people use your product not necessarily what they say.
• That being said, release early and let your users’ interactions inform how you improve the product.
What has changed since the Y Combinator program
We originally applied to YC so we would have a better foundation to our entry into the US. Prior to Y Combinator we did not have a physical presence within the US. Now we have a growing team based out of San Francisco who service a steadily growing base of customers across the country.
The initial reception following Y Combinator has been overwhelmingly positive and this has enabled us to build our client base particularly in the US and partner with the complementary companies within the online training space.