Building a Global Alliance

Tacit Networks wanted to expand overseas but had few resources and no leads. So it found another way to go global.

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Note: This article has been modified from an earlier version. See clarification below.

Tacit Networks, a technology company in South Plainfield, N.J., makes software that allows instant file sharing between networks, no matter how far apart. So it made perfect sense for the company to expand internationally. The problem was mustering the resources. At the start of 2005, Tacit had 60 employees and revenue of less than $5 million, and there wasn't a lot of manpower or money to spare. What's more, no one on staff had strong business connections overseas. Tacit needed savvy locals onboard to help negotiate the language, culture, and legal barriers--but president Chuck Foley could hardly afford to put them on his payroll.

It's a dilemma faced by nearly all first-time global traders--how to get a foot in the door. Many entrepreneurs stalk industry trade shows for contacts, while others cold-call or travel overseas to pound the pavement in search of customers--none of which is terribly efficient, says Niraj Patel, CEO of Vipana, an international technology consultancy based in Jersey City, N.J. "It takes a great deal of time to make inroads in new markets through grass-roots efforts like these," Patel says.

A more efficient approach is to put off searching for clients and instead forge relationships with companies that sell to your potential clients--essentially turning those outfits into your offshore sales force. It's a global twist on the classic relationship between, say, tech companies and their resellers. As in most reseller arrangements, the overseas partners get deep discounts on what they sell. But they also provide instant access to a network of trusted customers, helping defray the expense of establishing a local presence and marketing in new languages. "It's kind of an inside-out sales process," Foley says.

Tacit took that approach last spring when it made its first moves into Europe. First, two sales VPs, Bob Minschall and Nick Smyth, searched for companies that had a need for Tacit's technology by sending general information e-mails to anyone they thought might have logistics and distribution issues. Among those that responded was Elan, a technology-industry recruiter with offices in London, Paris, and Nice. Two months later, in London, Minschall and Smyth demonstrated Tacit's iShared Networks system to Elan executives. They were impressed but didn't exactly rush to write a check. That was fine with Minschall and Smyth: The idea was less to sell to Elan than to find out where the recruiting firm would turn for similar services. Elan referred the pair to its tech consultant, London-based Solution Centre--which, as luck would have it, was looking to provide file-sharing technology. Two weeks later, Tacit had a partner.

Under their agreement, Tacit will sell its applications to Solution Centre at a discount of 30% to 40% of what it charges most end users; it also will provide technical support. Solution Centre will do the marketing and installation. Forty percent is a big discount, Foley admits, but worth it because Solution Centre already has contacts and licenses across the continent.

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