U.S. Market Is Overrated

[ramikalai]

Why do so many founders build for the US or with the ambition to go sell in the US? I get the consumerist culture, higher willingness to pay, etc, but there are so many other markets where you can build and sell much simpler products and dominate.

Why compete in the biggest pool when you can dominate a smaller one?

[softwaredoug]

People underrate the homogenous culture that makes it easier to build something and have a large market that will consume it.

In Europe, for example, you have a much less homogenous market. A French retailer/business may be popular in France, but has a lot of friction going to another market. Not so much in the US.

So large, homogenous, wealthy culture that, if you can address a problem for, creates a financial foundation, and makes your app exist in at least a cultural context somewhat portable to other markets outside the US.

[ramikalai]

Yeah but Brazil is homogenous and has 200M+ people - not as wealthy but far less competition there. Why would you try to capture the US market if there's lower hanging fruit? I don't get it.

[endisneigh]

“get the consumerist culture, higher willingness to pay, etc”

Who cares if you’re the king of some country in Africa. Manhattan has more money to slush around on apps than the entire continent combined and that’s literally just one area of one city in one state in the USA.

[ramikalai]

Sure, but how many apps does the average Manhattanite already pay for? You think they care about your app? In Brazil for example, the fruits are lower hanging it's 200M+ people, the probability of making more money is higher.

[caeril]

The primary reason is the rule of law.

You keep mentioning Brazil in your comments, but as a founder I'd rather not have to keep track of the various government officials I have to bribe in order to be compliant, and even then, not be completely sure.

I hate lawyers and I hate governmental red tape, but at least in the US it's consistent, and the rules are laid out for you ahead of time. Finding out three months after launch that you have to buy Chico's cousin a hooker in order to get your business license renewed is suboptimal.

[ramikalai]

You're right, the US government has zero corruption. haha jokes aside, that's a fair point.

But if you're selling there, you can still manage to avoid a lot of the red tape, bureaucracy, etc. You can be a c-corp and sell there. I'm sure a lot of the US companies that sell there don't have to engage in all that, so why not focus on that market?

[codegeek]

"but there are so many other markets where you can build and sell much simpler products and dominate. "

You need to clarify this with real examples. Which Markets ? The reason everyone wants to be in US Market is because of the size, adoption, maturity of consumers (willingness to spend) and many other reasons. Yes there may be markets where it may be easier to replicate but they have limits and ultimately you want a piece of the US Market.

[ramikalai]

Brazil is a great example. 218M+ people. 1 Language. Sure there's less willingness to pay/wealth, but the fruits are lower hanging. You can sell less complex products at a wider scale with less competition.

Sure they have limits but why start in the US? What makes it great is what makes it super competitive.

[keiferski]

The infrastructure for setting up and running a business in the US is significantly easier than most places. Not all places, but the combination of a huge English-speaking market and the ease of doing business makes it more attractive than many of the other places mentioned.

[ramikalai]

Talent in Brazil is far cheaper and as good - I would argue that that is part of the setup ease. US has overinflated salaries making it inaccessible without private funding. That works when the VC funds are flowing but not in this interest rate environment.

[PaulHoule]

There are certain businesses (social media) for which people believe scale is everything. If you believe that then the U.S., India and China are the markets that matter. (e.g. you don’t see a social media site from the Netherlands so Israel make it big globally)

[ramikalai]

Yeah but we don't need another social media site... Such a waste of time building more of those. I'm talking valuable businesses that add to society.

I think you can achieve "scale" in markets like Brazil which aren't as attractive but still have +200M people if you build the right thing.

And the right thing can be simple and something that has worked in markets like the US before.

[PaulHoule]

Hard to say.

The natural lifecycle of online communication services is that they burn out and get replaced rather rapidly. It seems as soon as one gets enough users to reach critical mass it is very hard to peel people away but inevitably when that happens the service stops investing in reliability, never mind new features, so maybe 5-10 years or so later people are saying: “I know you’re skeptical about trying new apps but this one really works, it is like Skype was 10 years ago…”

To look at Twitter in particular there are a lot of people who can’t seem to quit using it even when they know better.

[ramikalai]

I agree - I just think that there are far more enriching businesses to build than social media. Especially with the current business model. Not much good in that IMO

[PaulHoule]

What about https://mercadolibre.com/ ?

[ramikalai]

What about it? Solid business

[solumunus]

$$$.

[ramikalai]

The equation is $$$ X ability to capture $$$.

US is oversaturated with products, solutions, competitors, etc...

[solumunus]

Where’s your evidence for that? It doesn’t seem to be the case based on the amount of US-focused start ups experiencing success that we often see on HN.

I’m currently building a product for the UK market, because like you say there is less competition. I won’t argue against that, but the fact remains that if my product were a success in the US market it would make more profit.

[ramikalai]

"if my product were a success in the US market it would make more profit."

The "If" in your statement is exactly my point.