Six Ways to Open an Office Overseas
Paul Simon has identified 50 ways to leave your lover. Wallace Stevens counts 13 ways of looking at a blackbird. Lou Hoffman estimates there are at least half a dozen ways to open an international office. And he has tried all of them, learning along the way that there is no single best way: Different markets demand that you approach them in different ways.
Hoffman is founder and CEO of the Hoffman Agency, a public relations firm based in San Jose, California, that grossed $9.6 million last year, mostly from high-tech clients. In 1994, as clients like Hewlett-Packard (NYSE:HPQ) stepped up their global marketing, Hoffman yearned to expand along with them. Planning to open his first international branch, he narrowed his sights first to Asia, because it was less competitive than Europe, and then to Singapore, a city-state that was more Western than the rest of the region. In fact, Singapore was so Western that Hoffman felt he could simply dispatch one of his executives to handle the office launch. He did. It worked.
So on to Japan. But during a reconnaissance trip, Hoffman was staggered. He was prepared for an unfamiliar language and culture, but the sticker shock on labor and office rent floored him. In search of a cheaper way to set up shop, Hoffman tried teaming with a company in Tokyo that specialized in translation services. "The idea was that we would give them the ability to do something more strategic," Hoffman says. "And since they already had office space and people, we'd get an inexpensive way into Japan." Almost immediately the relationship foundered: Hoffman says his partners had neither interest in nor facility for PR. "We wasted a year," he says, "and finally went back to the well." What came up in his bucket was a local woman with extensive experience in Japanese PR and American finance; she successfully launched the Tokyo office from scratch. "I learned from that that if something looks like a shortcut, it's probably not a good idea," says Hoffman.
If Japan was perplexing, China was baffling. Hoffman traveled there for the first time in 1998 and "after three days I came back dazed," he says. "The divide between East and West was too dramatic. I thought there's no way in a million years we're going to figure this out."
What Hoffman needed--a manager equally versed in the nuances of Chinese business and the creative culture of his agency--didn't exist. So he invented one. The company's HR director, always on high alert for international talent, had flagged the resumé of Zhong Li, who had previously worked in PR at a large Chinese petroleum corporation. The CEO hired Li and relocated her to Silicon Valley, where she spent the next 14 months learning all things Hoffman Agency. "We said, your No. 1 mission in life is to absorb who we are," recalls Hoffman. "We don't expect you to generate one penny of revenue. Just become part of the fabric."
Li absorbed--but she also contributed, working on several account teams. So clients wouldn't have to finance his employee's learning curve, Hoffman didn't bill her out. Li also marketed Hoffman's Asia-Pacific operations in Silicon Valley, holding free seminars about China for local technology companies. Her firsthand insights glossed the agency's reputation and helped win new business.
In 2000 Li returned to China and opened an office. Finding good marketing talent is a tricky fit for that country, where hard work and conformity are, even today, nurtured and rewarded more than maverick thinking. Having been steeped in the Hoffman Way, Li was able to find eight employees who were eager to learn Silicon Valley-style marketing. "People in China are smart and ambitious, but they still expect to be told what to do," says Hoffman. "After her time in Silicon Valley, Zhong Li was able to guide people and cherry-pick the mavericks."
Feeling Like a Second-Class Citizen?
Conventional wisdom says stick with a winning model, and so Hoffman tried replicating his China success in the United Kingdom in 2000. The CEO hired a Brit and gave her a stint at headquarters. "After a year of the good life in Silicon Valley, driving around in a convertible with the top down in January, she didn't want to go back," he says. Deciding to do it himself instead, Hoffman moved his wife and two children to London for 18 months.
"Part of the motivation for taking the overseas assignment was to experience our operation from outside headquarters," says Hoffman. "I wanted to feel what our country general managers and regional heads feel." One thing Hoffman discovered is that they felt the occasional pangs of neglect. For example, he knew that when corporate e-mail servers crashed, time zone differences meant global staff might have to wait hours for resumption of service. Sitting pretty in Silicon Valley, Hoffman had deemed those delays acceptable. But in London, deprived of e-mail for hours while he waited for the U.S. office to open, he changed his mind. "Experiencing a crash firsthand showed me how disruptive it was, not to mention making our European folks feel a little like second-class citizens," says Hoffman. As a result, the company invested in servers in Europe and Asia.
Not surprisingly, Hoffman's presence lent luster to the budding branch. As his company's top ambassador, he was uniquely positioned to make contacts that are still paying off for the agency. Among other coups, he persuaded several European competitors to refer clients expanding into Asia to Hoffman's Asia-Pacific operations. Upon viewing the high-tech and PR industries through a European lens, he also developed an intimate understanding of the market, which helped him recruit the managing director who successfully took charge of the office when Hoffman returned to the States.
In other countries the CEO has tried still more approaches. Hoffman worked with a German-born staffer at his U.S. headquarters to help him locate a qualified leader in Germany. By the time he launched a Taiwan office last year, his company was so big in Asia he felt comfortable entrusting all the start-up decisions to a managing director based in Hong Kong. The company didn't plan for an office in France. But while looking for freelancers there, "we found this terrifically talented woman," says Hoffman. "We knew we had to pounce or there wouldn't be another like her, so we opened an office after all."
Today the Hoffman Agency has 10 international offices, and about half of its total revenue comes from overseas. "Every new country has had its own vignette," says Hoffman. "It's all interesting. I'm always learning. And if it weren't for the global expansion, I would have absolutely sold the business by now. This is what gets me out of bed in the morning."