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NET EFFECT: Lessons in loyalty

NET EFFECT: Lessons in loyalty

If there's one thing we Aussies love, it's teaching them Yanks a trick or two. The success of our Olympic swimmers is a good case in point. In fact, we're not shy about talking up any of our sportspeople.

But when it comes to business, particularly ICT business, we often sit back and simply assume our role is to soak up whatever pearls of wisdom float our way across the Pacific Ocean.

In my case, I was on the receiving end of some US insight this month, courtesy of three US venture capitalists who spoke at an event held by the ANZA Technology Network.

To be fair, the VCs were right on the money, if you'll excuse the pun. They took time to solicit feedback from the audience, repeatedly asking if their comments on the state of venture capital rang true with the local audience of ICT business and VC executives.

Amal Johnson, venture partner at ComVentures; Mark Cameron White, founding partner at White & Lee; and ex-pat Aussie, Andrew Nash, CEO at Novaroo, offered valuable tips on the challenges that face Australian IT companies wanting to break into the giant whale that is the US technology market.

They covered all the obvious suggestions, such as the importance of relocating to the US and setting up your own network of contacts. But what really caught people by surprise was the potential cost of sales. A really good salesperson could cost you anywhere north of $US1 million.

It was a bitter pill to swallow given that the alternative course of action - working the US channel - was quickly dismissed by one of the VCs.

"There is no one else more passionate about your product than you," Nash said. "Channels are time-consuming, expensive, can work sometimes, but not always."

So the upshot was that establishing either a direct or indirect sales force in America will cost aspiring Australian multinationals big bucks, with no guaranteed results.

That scenario got me thinking about the go-to-market conditions in Australia.

It's no secret that US vendors typically establish a serious foothold here by signing up a distributor, who in turn carefully selects a set of instantly loyal resellers.

On one hand, this model is attractive because the channel can be more cost effective than employing a direct sales force. But what's more often a motivator is that US vendors can tap into local expertise and a network of established relationships.

If you take a close look at the network of resellers, integrators, service providers and distributors in Australia, many of them at one time or another bet large slices of their companies on one or two vendors. We are either stark-raving mad, or we really believe in the value of alliances.

Looking back at our American counterparts, it seems they believe loyal US channel relationships are hard to find, or at least difficult for outsiders to leverage.

And if that's the case, I would say it is about time we sent our own delegation of experts across the Pacific to offer the US a few lessons in building strong channels.

There is a reason why a trusted reseller's recommendation goes a lot further than an expensive direct sales rep. We've got this great cultural yardstick that's used to measure our sporting and business stars: respect is earned, not bought.


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