Global Start-up

CEO's plan for world-wide sale of his medical device that will make certain types of surgery obselete.

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Why Gérard Hascoët took his company international even beforehe had a product to sell

Before some of us have come to terms with the concept of global markets , along comes the global start-up . France-based Technomed went international even before it had a product and at age three does business in 28 countries. An anomaly? Maybe. But some argue that what is an exception today may soon be the rule. -- R. A. M.

Maybe it hadn't been done before, but founder-to-be Gérard Hascoët saw no reason why he shouldn't give it a shot: grab the world in one fell swoop with one fell chunk of seed capital. Set up however many subsidiaries he needed to capture the major markets, cover the rest of the map with a network of company-trained distributors and agents, and do it before the competition caught on. If he had a product he could sell in any country or culture without modification, wasn't it simply a matter of allocating resources?

Yes -- provided he could find enough.

The daring business plan that Hascoët unfolded in 1985 established wholly owned subsidiaries in the United States, Italy, Japan, and West Germany virtually at the same time he launched Technomed International, the parent company, in his native France. The four subsidiaries would deal in the lion's share of the high-tech medical market; the leftovers, from the Urals to La Paz, would be attended by four regional managers out of the parent office. Hascoët was so committed to his one-world, one-market concept that in his design of it, even the support staff at Paris headquarters was to be a multinational mix, from the receptionist on up.

"The advantage of starting international," Hascoët stressed to acquaintances with enough money and patience to hear his schemes out, "is you establish an international spirit from the very beginning. Ours will not simply be a French company made over; it will be a world company." To be everywhere at once, however, would require some $5.5 million. And he was determined to get it all from individuals, rather than institutions, "because I want to have someone capable of signing a check without referring to a committee."

Fifteen Reasons Why Investors Should Have Declined
1. There was no product.

2. No market studies had been performed for the proposed product.

3. One competitor was already in the field with an established product, and two others were about to enter.

4. No one had heard of Technomed International beyond Paris, yet its would-be founder projected sales of million-dollar machines to predictably skeptical doctors and hospitals around the world.

5. Before it could be sold in the United States -- the world's largest market for medical products, at 40% -- each device that Technomed might develop and manufacture would first have to earn approval from the Food and Drug Administration, a lengthy, costly, and possibly unsuccessful process.

6. For the next two largest markets, the product also would have to pass FDA-like scrutiny in Japan and meet rigorous manufacturing standards in West Germany.

7. Hascoët intended to subcontract most of the manufacturing; therefore, costs and schedules would be at the mercy of numerous suppliers in numerous countries with numerous inflation rates.

8. Currency fluctuations would play havoc with revenues.

9. Despite international patents, the machines could be reverse-engineered and duplicated in Taiwan, Singapore, Malaysia, Hong Kong, or even Japan.

10. Somebody else's technology might prove to be better in the end, somebody else's prices lower, somebody else's working capital more plentiful.

11. Attracting good people would be next to impossible; who would leave a good job to take a risk with an unproved chief executive officer?

12. There was no management besides Hascoët himself.

13. Hascoët was trained in electronic engineering, not business.

14. Hascoët saw no need for anyone in the company to be trained in business.

15. The French hadn't shown they were all that good at starting risky businesses, in any event.

One Reason Why They Didn't
In 1985 Hascoët was unmistakably on a mission. At the age of 36, he had just resigned from a 12-year stint in the medical division of Thomson-CGR, a manufacturer and marketer that, Hascoët grew tired of complaining to deaf management ears, "was too much oriented to the French market." The field of diagnostic-imaging systems was expanding rapidly, yet his employer was hardly bothering to pursue it across the border. Not to be denied, Hascoët decided to join the management of an imaginative, farseeing, energetic company that would -- his own.

"When you are not diversified with respect to product," he pleaded with the select group of investors he trusted would view it his way, "you have to be diversified with respect to geography. When one area is not generating sales, another will be. If you stick with one market and there is a recession, you're in big trouble. If you have world coverage, you avoid the fluctuation of markets."

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