Nearly 12 months ago our company started the journey to move our company’s head office to the US. This post is to provide a quick outline on some of the key items we have tackled along the way. I hope it helps other Aussie companies find their way to a broader market if it makes as much sense for them as it has for Section.
We made the decision to move here to the US for a number of reasons;
- The US market for our product is so much bigger (number and size of customers)
- The availability and sophistication of funding and advisory is greater in the US
- The agile development and CDN thought leadership coming from the US is ahead of where our Aussie community was up to.
After working through a number of potential landing points we settled on Boulder / Denver Colorado. We spent time in NYC, the Valley, have been through Seattle and investigated Austin. Why did we choose Boulder? Well a number of reasons again;
- Geographically, Boulder is centrally located providing access East and West Coast USA inside a day trip (or maybe two)
- The cost of building a tech business in Boulder is lower than high-cost areas such as the Valley and NYC (consider Rent, People, Travel, Perks, Hiring etc)
- The tech community here is booming.
- We found investors and advisory in the Boulder / Denver area who know, understand and can see the Section vision.
- The culture of the Boulder business and tech community is much more closely aligned with our values regarding how we believe a business should be built in a scalable sustainable manner, and finally
- Boulder is an awesome place for our families to live. We believe we will be more successful personally and as a business where our families are happy and healthy.
This has been a massive move for our company with some exceptionally positive outcomes already. We are working with some extremely talented people here and some awesome customers.
We also ended up in Techstars here in Boulder – more on that to come in a future post. My accent has landed me in moderate trouble a few times and Steve Irwin has not done much for our reputation here, but I reckon all will work in the long run as I finally convince these folks that no Aussies drink Fosters.
What have we tackled in this process? Lots!
- Lawyers, accountants, tax, shareholders, government agencies and more lawyers. Get ready for a variety of stakeholders playing in all the spaces from IP agreements to options and warrants and employee agreements.
- We engaged an awesome legal team here in Colorado (Cooley) to augment our Aussie advisors. Our flip needed a little special love and attention as we had two classes of shares in Australia as well as a few options to deal with. A few pain points here included:
- We had an employee shareholder loan incentive plan in Australia thanks to the restrictive tax structures which used to be in place in Australia with respect to options. (Not the case anymore). Options would have been easier.
- We had a couple of options in the Aussie entity with investors which need to be converted to warrants – This is a bit painful
- To provide the Aussie shareholders with some help to understand what we were doing with the flip and why we were doing it, we put together a broad information pack covering the purpose and process of the flip.
- Our Aussie shareholders needed some advice and comfort on the tax position as they were about to become shareholders in a US entity rather than an Aussie entity. While ultimately this is the responsibility of the individual shareholder to take care of their own personal tax position, we wanted to do the right thing by all and provide some broad “advice”. So we engaged an Aussie accounting firm to provide this advice as part of the information pack.
- Cooley facilitated the incorporation of the US entity and the share issue within the US entity to the Aussie investors.
- Cooley also then facilitated the issuance of shares to our new investors.
- Don’t forget to lodge all the relevant forms with ASIC to reflect the new ownership structure.
- You may need to apply for corporate restructuring relief if you have a company registered in NSW and hence a potential stamp duty bill.
Working with investors in the US when not “there”.
- We have been fortunate to find a great set of investors who understand the CDN / reverse proxy space and believed us when we said we were moving here.
- There was an interesting reversal of investor mindset we found when we landed in the US. Whereas in Australia, our awesome angel investors know very little (if anything) about agile development, CDNs and reverse proxy technology or direction, they knew and trusted Daniel and myself; in the US, our investors knew and trusted the technology direction we are making a reality but needed to get to know and trust Daniel and me.
- We took on a number of trips through the US in 2015 before moving here permanently in Feb 2016. We found that while phone calls, emails and skype sessions with investors were useful, we got so much more done faster when we booked a trip. A couple we booked with just a few meetings lined up but because we had the trips booked, more meetings fell into place quickly. Investors made time to grab a coffee, a meeting or a lunch with us because we had made the effort to come to them.
- As part of the DD process, our investors needed to get their heads around an Australian corporate entity and the nuances of shareholding for an Aussie subsidiary. The lead investor also engaged Australian legal advice (on top of their US advisors) to close the loop on the Aussie side of things. It was right and proper to get this done from their side but of course, it added cost, time and work involved from our side as well as theirs.
Aussie and US team integration
- We have a team of brilliant folks in Australia continuing to build out our product and platform in addition to winning and helping our customers. One of the key things we are keen to do is make sure we operate as a global team.
- Several of our Aussie crew have visited Boulder already and more are on the way.
- The folks who have joined our team here in Boulder will be working closely with the Aussie team so it’s important they have the tools and techniques in place to maintain comms in an appropriate format – Slack, Hangouts, and our Wiki are all key parts of that comms process.
- We have a once a week company-wide stand up on hangouts which is not particularly formal (yet).
- On the upside, our Aussie team are all remote workers most of the time so as a company, we are already well set up and structured to manage the wider “remoteness” of Australia versus Boulder.
- Consolidated accounts – we have ledgers for our Aussie and US entities – you will need a good accountant to get the process in place to manage the multicurrency budgeting and reporting. Trust me, it’s worth getting this stuff right early. yOu will have better business insights and an easier time talking to investors etc.
- Gotta get em. We considered L1 and E3 visas and settled on the E3 as this fits what we needed. The process was actually pretty straightforward in the end but does require lots of paperwork so be prepared to get this stuff done. You can pay lawyers to do it for you but we found that with the helpful and comprehensive advice found on Geoff McQueen’s blog https://geoffmcqueen.com/2011/09/28/e-3-visa-for-australians-how-to/ that it was cost effective to get this done ourselves. Seriously, if you know or meet Geoff, buy him a beer for me. The interview was simple at the consulate. No stress.
- Family visas? More paperwork and form filling in but the process again was less hard than time-consuming. The interview process for my wife and kids was also really simple.
- More forms and standing in line – I have one now but my wife and kids cannot get them as they are on E3D visas
- Get one – you will only have a certain number of days driving on the Aussie licence before it is illegal. I believe each state is different. I sat my Learners permit here then booked my driving test the very next day. The test was much easier than an Aussie test – no three point turns or reverse parking! You will need a valid proof of address like a bank statement and you I94.
- You can open one at a bank like Chase with a rental agreement to show your address. Wells Fargo was a little more lenient on what constitutes a valid address. Interestingly you could open a Wells Fargo account then walk over the road to Chase and open an account with a Wells Fargo letter as your proof of address.
- You will need a reference or additional deposit to get this up and running. We managed to get by with references from our investors and a new local director appointed to our board.
- We packed up the gear from our Aussie home and expect two months before it arrives. Furniture rentals are the go in the interim.
- The Bloody dog – yes it’s easy to get the dog into the US. Just a rabies shot and a vet report and you are away. United can ship the dog as excess baggage if you are not doing an extra hop. As we had to make an extra hop to Denver, our dog overnighted at LAX so it got pricey and complicated!
- Lots of appliances won’t work on US power due to frequency of the power and the 110 vs 240V – Kitchen appliances like blenders etc will have problems. Many modern TVs are ok on both 110 or 240V. An easy tip to avoid plug problems; pliers can bend / straighten any Aussie two-prong power plugs gently into a US shape. Not that I would advise this of course as it may not comply with some form of electrical regulation??
- No credit rating here means a $400 deposit on Verizon per handset. We checked with several carriers and found that none would provide a sim only plan for the handsets we brought from Australia – apparently not compatible with the US cellular network.
As more comes to mind I will update this post. Otherwise, I hope the above helps you on your journey and if I can help you further, do let me know in your comments on this post.