As I was prepping for my presentation at Israel-Gateway 2010 this month, I took some time to consider the mistakes many B2B technology exporters make when trying to enter the US market. Enjoy and your comments are appreciated.

---

#1. misunderstanding scale

---

The sheer scale of the United States market is mind-boggling, overly distracting, and financially deadly to those interested in exporting their products to Americans — especially within the high-tech space. But let’s throw out some quick numbers:

• 7.5M people in Israel; in the US: 307M
• Urban Tel Aviv is home to 1.3M; there are 2.5M nurses in the US.
• 610K live in Haifa; the US has 689K science & engineering staff in the computer hardware industry alone.

These mind-boggling numbers do not mean that an Israeli med-tech company’s products for nurses have a potential market of 2.5 million. Their market potential is a small fraction of that audience — especially when their competitors have been selling to nurses for decades.

The US market can be overly distracting as well. Most successful US businesses succeed through specialization of their products. Overseas companies, especially from significantly smaller home markets, are at a disadvantage. Products developed within smaller countries often need to be designed to appeal to a wider local audience with more features to fit more of prospects. This generalization of products works against you within the US.

For example, let’s say an Israeli software developer creates a point-of-sale system for smaller retailers. Their POS has sold very well to clothing stores, gas stations, bakeries and many other small and medium-sized stores within Israel and other smaller countries. But when they tried to sell it into the US, they ultimately failed. There are 115K gas stations in the US and 53K retail bakeries, and each of them expects that their POS is specialized to their own types of stores.

And with a country as large and complex as the United States, many companies’ efforts are financially deadly: they overestimate the market potential while underestimating the cost and time to enter a market. They forget to factor in customization costs, sales channel development and a wide range of other necessities needed to export their products into the US market.

So does that mean exporting your products to the US is near impossible? Not at all — it takes time, some product specialization, and the support from people who understand the scale of the market for you to be successful.

Next Sin: Targeting too Many Niches