Founder’s Perspective: ForgeRock co-founder Lasse Andresen on His Company’s Journey to the U.S.
When Lasse Andresen left his position as Sun Microsystems’ CTO of northern Europe in February of 2010 to found open source identity software company ForgeRock, the native of Norway, did so with an eye toward a big opportunity in the U.S. market.
Around that time, enterprise cloud and mobile adoption were exploding, and many companies were increasingly dealing with identity management and security issues.
“We were a very traditional European company, building the business block by block with early customers in our home market, but we knew from day one that the product we were building had significant applicability to U.S. enterprises,” Lasse recalled during a recent conversation. “There wasn’t really a U.S. market leader in the space we were operating in, so our founding team understood that we’d be crazy not to ultimately move in that direction.”
So, just two years after founding the company in Norway, Lasse and his fellow co-founders decided to pull the trigger — relocating the business from Oslo to San Francisco.
Recently, I had the opportunity to talk to Lasse about that move, the challenges/opportunities it presented, and what fellow European entrepreneurs could learn from ForgeRock’s experience. Below is a transcript of that call.
Firas: You mentioned that migrating to the U.S. was on your team’s mind from the beginning, but how did you know it was the right time to make the move?
Lasse: It really stemmed from our knowledge of the U.S. market. We saw an opportunity in the U.S. market and we knew that in order to capture it we needed to act fast. Of course, in order to do that, we needed money.
We’d bootstrapped the business initially and the organic growth was great, but that growth often happens too slowly to capitalize on the type of opportunity we were pursuing. To execute the transition we wanted to execute, we needed a sponsor in the U.S. that had specific skills or knowledge about the market we were entering and the capital resources that could help us make the jump. We found that sponsor in Accel Partners, and that partnership ultimately facilitated our migration to the U.S.
The bottom line is that there was a ceiling on how big we could grow in Norway. But by agreeing to the deal with Accel and relocating to the U.S., that ceiling grew exponentially.
FIRAS: When you first began seeking outside investment, what was your experience?
LASSE: Thankfully, the interest in our company was huge. We were talking to investors in Norway, the United Kingdom, and the United States, and the attitude in each market was very different.
In Norway, for instance, investors very much believe in a slower paced, stone-by-stone approach to building companies. The concept of stepping on the gas to quickly scale a company is totally foreign to them. The attitude in the U.S. was totally different. U.S. investors recognized trends in cloud computing, security, and mobile, and saw a company with a proven product and an amazing team with a great track record.
In the end, we came away with six term sheets, and we signed with Accel because they really aligned with and bought into our vision. They understood that there was risk in investing in a European startup, but they didn’t try to drown us in spreadsheet risk management and diligence like many of the European investors were. For me, that showed that they really understood and shared our vision.
FIRAS: What did the Accel investment ultimately help you do?
LASSE: It enabled us to execute our vision with better efficiency and effectiveness.
The reality was that the talent and customer pools in the U.S. were significantly larger than our home country, and there were fewer roadblocks to closing deals being an American company vs. being a Norwegian company.
Frankly, we weren’t having trouble pitching our product to American buyers, but we were running into trouble in the procurement department. There’s just a lot of uncertainty that surrounds U.S. businesses buying technology from a small Norwegian company. It raises all sorts of red flags in the purchasing process. So, when we were headquartered in Oslo, we might be able to convince U.S. customers that we had the best product for them, but the process often stalled when it came time to convince purchasers to actually close the agreement.
As soon as we became an American company, 200 questions were immediately answered for those purchasers and it made the process of closing deals much faster and efficient.
Firas: I know you built a U.S. development team early on, but when did you officially start U.S. distribution? Was that pre- or post-funding, and what was your experience there?
Lasse: We began selling into the U.S. market pre-funding, but we were selling remotely and it just didn’t work. If you want to have any success selling to U.S. customers, you need to be here.
The first two years, we didn’t have any funding to build a sales team in the U.S., so we did the best we could — booking cheap flights back and forth, working at night in Europe to address the difference in time zones, etc. It took a toll on our team and it wasn’t effective. We knew that we needed to be on the ground. People still buy from people, and the continuity in your sales process breaks down if you’re only in the U.S. every few weeks.
So, that’s what we used some of our funding to do. We built a team in our San Francisco office that mirrored the one we had on the other side of the Atlantic. That way, we could execute autonomously without needing to share resources, yet there was still continuity and consistency between offices.
FIRAS: As the CEO, how did you manage wearing two hats during the move to the U.S., and when did you ultimately decide that it was the right time to pass the baton off to (current ForgeRock CEO) Mike Ellis?
LASSE: To answer your first question, the only way to survive bouncing back and forth across the Atlantic is to marry the best woman in the world. Seriously though, if you’re family or personal life isn’t stable or your family isn’t supportive of the move, I’d strongly advise against starting a journey like this.
Your family has to be on board, or you won’t be able to commit yourself fully. You have to be willing to go all-in, or nothing will go as fast as you need it to and growth will only occur incrementally. So, from day one, you need to accept that a move to the U.S. will require five years of your life. If you’re not willing to invest that, then you shouldn’t do it.
As for your second question, I don’t think European founders always need to step down as the CEO, but I do think it’s important to understand the lifecycle of the company and whether your skillset translates to the stage you’re entering.
Typically, the characteristics of founding CEOs are very different than those possessed by CEOs of companies with 200+ employees. Those two jobs just require a very different skillset. So I’d advise every startup founder to figure out what they’re best at and determine whether that skillset will scale. If it won’t, you have to do what’s best for the company.
FIRAS: Looking back over the two years since you moved, are there some lessons you’ve learned or mistakes you wouldn’t make again?
LASSE: I think the biggest thing for other European entrepreneurs to know is that if you want to start a global company, consider starting in the U.S. from day one.
We spent a lot of time and money on the transition from Oslo to San Francisco, and it created a lot of insecurity in our Series A round. Being an international company raised a few red flags for some investors, and then there was the issue of talent. There’s nothing wrong with Norway. It’s my home and I think there’s a lot of talent there. But if your goal is to be a big, international company, the U.S. just provides so much more of the resources you need.
So, my advice would be to just jump right in. From a pure registration perspective, it’s easier to set up a company in the U.S., and creating the right structure from day one is really important. If you know what the end goal is, it’s best to architect your plan with that goal in mind.
FIRAS: Anything else that presented a particularly significant barrier to U.S. migration?
LASSE: We haven’t talked about culture yet, but I think that’s extremely important.
When you’re an international company hiring your first U.S. team, it’s critical to find people who are culture-aware or have experience working internationally. The reality is that you’re always going to have international roots or ties. As such, your employees — particularly your senior leaders — on both sides of the Atlantic must be able to manage those cultural differences, or your business will suffer.