Navigating Global Expansion | Larry Harding | 549

Here's the challenge in thought leadership. It's not enough for you to spot an opportunity yourself. You often need to help people see the world in a different way. And that's a combination of thought leadership, entrepreneurship, and persuasive communication. Today I speak with Larry Harding. He's the founder and CEO of HSP Group. In today's episode, I want to explore the concept of category creation via thought leadership. How do you stand up a new category of solution and get others to notice and sign up? We'll explore helping prospects learn what they don't know and shaping how people think by making the invisible visible to them. I'm Bill Sherman, and you're listening to Leveraging Thought Leadership. Ready? Let's begin. Welcome to the show, Larry.

Thank you. Happy to be here.

So I want to dive in with a challenge and a question. Often when you're creating a new category, which is the world and the excitement of entrepreneurship, there's a piece of education that needs to happen. And in our previous conversation, you and I talked about the customer doesn't know what they don't know. So set the table for me in terms of what HSP does and then the challenge that you've had in terms of customer education.

Sure. Uh, HSP Group basically helps companies expand overseas and manage their global footprint. So specifically, we tend to provide solutions for the office of the CFO, finance, accounting, tax, human resources, payroll, and then chief legal officer, compliance officer. Typically back-office folks. None of the reasons companies go overseas are to process a great payroll every month. They're either opening up new markets or they're finding talent or they're, you know, realizing some cost-effectiveness. But once they do go overseas, there is an inevitable list of different things that they need to be on top of. One of the challenges is unless you've done this before, you know it's risky, you know it's hard, you know you're going to be pulling your hair out, But you don't actually know what you don't know. So there's an element really of, of having to, to learn and understand what the different challenges are, what the different solution approaches might be. So we work with clients who've done it before and it's much easier to sort of entice them because they know, oh yeah, we, we totally need what you're doing. And with other more challenging prospects, there's a little bit of an education. And typically there's—

So talk to me about that education process in terms of How do you take someone's interest in expansion to a really prepared state, right? Where they realize there's a gap that they don't even see.

Yeah, well, it, it's interesting. Oftentimes when the folks that we're talking to are talking to us, it's because the organization has already decided to go overseas. So, you know, they're along for the ride whether they like it or not. Their job is to make sure all the different pieces are in place for that to be successful from their different perspectives. And they talk to us really to understand, okay, what am I getting myself into? What do I need to be on top of? And fortunately or unfortunately, typically this education conversation is, you know, this is going to be a lot more challenging than you probably understand it's going to be. And we talk about, you know, different tax compliance and HR employment regulations, which for a US company are much more complicated outside of the US. Money and funds transfer challenges, different compliance requirements, differences from country to country and region to region. So a lot of times it's a bit of a culture shock, a rude awakening for the folks that we're talking to. But equally, they're incredibly appreciative and gratified and relieved to know that they're talking to people who've done this before. We do bring the expertise to the table to help them be successful and minimize their risks. It's a little bit of a bad news, good news scenario oftentimes when we're speaking with these folks, but they quickly realize whether it's HSP Group or some other alternative, they're gonna want and they're gonna need the help in order to expand overseas successfully.

And that makes sense. And you pointed out that in many cases the decision has already been made. This ship is sailing. So that's creating an urgency. If you will, of I've got to figure this out and I have a limited amount of time and I can't go educate myself.

Yeah, 100%. And that's a nice dynamic for the market that we're in, but it's also a nice feature set that we're able to bring to the table because we're, you know, I've been in these shoes before. I was our customer back in the day. So it's very gratifying for myself and others on my team to be able to know that we're providing such tangible help and peace of mind to the folks that we're working with. So, you know, we get as much energy out of having these conversations as, you know, I think some of our prospects and customers do.

So you made the comment that you were the customer. Talk to me in terms of the journey that you went through from being on the customer side of the table to be on the solution provider side of the table. What was that journey like? How did you realize that you could cross the table, if you would?

Like many decisions, I realized it when I was halfway through. So I'd been sort of a classic finance accounting person, you know, outta college. I took my finance accounting degree. I worked for one of the, you know, at the time, Big Eight accounting firms, did audit, did M&A consulting, and then I became a finance person at different venture capital-backed high-tech companies up in Boston where I was from. All of the ones I was sitting at headquarters at, you know, trying to deal with global expansion. It was a very frustrating, you know, I had to reinvent the wheel every single time, spend a third of my time on 5% of my workforce. So it was just very inefficient. I didn't know what I didn't know, and it was really a mess. I was then CFO for a company that acquired by a company called Sienna, which was a large global telecommunications equipment manufacturer. I became their VP of International Finance. So for 4 years, my job was to support them in 30 different countries. So I basically had to learn all of this on the fly. I had to find local partners, learn what the different rules and regulations were in 30 different countries. And after doing that, you know, pulling my hair out individually for 4 years, I realized that there really should be a company that helps folks like me take care of these challenges. So in 2003, I started my first company in this market, High Street Partners. Really pure back of the envelope. Looking back, I didn't know what I was getting into. You know, one man and a dog basically, you know, starting off. But we realized that the market was much bigger than I at first thought it was. And the team I began to slowly add. So bit by bit, it was a great time to be in a global expansion industry. We built up a really successful company, you know, reached 40 million in revenues. Raise venture capital money ourselves, develop some helpful technologies, you know, built up an amazing team of really talented people all over the world, many of whom are now working at HSP Group here with me, and just figured it out. And in many ways kind of created an industry that didn't really exist in the way it exists now. It was just very stealth, very disparate, you know, people doing one thing, others doing another. We were one of the first to sort of provide the full A to Z. Of global expansion solutions. And now it's, you know, a very interesting, well-defined market that we've been able to be on the journey of really figuring out.

Well, and from the way you describe it, it sounds like when you entered into this point, especially if you were— maybe it was different for if you were a Fortune 500 and a multinational, right? But if you were a VC-backed firm or you were a high-growth startup looking to expand internationally, you were hoping for someone who could say, I've got a guy, or I've got a gal who can help you solve that problem in country X, Y, or Z, and you were trying to solve it piecemeal, right?

Yeah, that's how we started out. That's, that's how the industry was before, but that doesn't scale easily, especially at a high-growth company.

That's a nightmare for growth, especially Yeah, different people in all the different countries.

So we saw that dynamic and we said, listen, if we can be that sort of one company, one throat to choke, as a term we started using was, and we're going to own and take care of, you know, all the different issues you need in all the different countries and all the different regions, that's a better answer for you than just, you know, finding the one-offs, I know somebody. And that really is sort of the market dynamic that we tried to improve. And I think that's where we were successful. That, that was really how it was done before. And nowadays it's, it isn't really done much like that anymore.

So you've mentioned working with VCs on several different levels, right? You've also talked about working with the portfolio company's CFO. Who's your target audience for the message these days and has it evolved over the course of time?

Uh, you know, the market's evolved, the people we're speaking to and what we're talking about hasn't changed a ton. So, you know, we, we call it our ideal customer profile or ICP. Um, it really does tend to be that, you know, B, C, D round venture capital-backed technology company of which there are hundreds. And, you know, every quarter there's $5, $10, $20, $25 billion of funding landing in US domestic companies, a meaningful percentage is going to be deployed to global expansion. So it's a very self-regenerating market. It's a, it's a really good wave to sort of keep surfing. And we have a very strong message to that cohort. You know, typically they're growing quicker than they can handle. That's the dynamic of a VC-backed company. They don't have a lot of infrastructure. They oftentimes don't have a lot of experience. So they especially need the help to fill in the gaps that they have to sort of make sure all the different pieces are on top of. So it's a great, it's a great ICP for us to focus on. We have such a strong solution set and so much experience helping those types of companies that it's one that we enjoy as much as hopefully the customers we work with get the benefit of.

Well, and from a customer acquisition as well as thought leadership perspective, one of the things that strikes me is any firm that is closing a funding round, whether on the VC side or the operating company side, is going to want to announce that they've gotten funds. So you have a pool of people that are raising your hand that are saying, hey, I'm your ideal customer profile, every month, every quarter.

That's, that's another attractive go-to-market feature. You know, these companies are definitely relatively loud and proud that they've raised money. Quite often they, in their funding announcement, they, you know, say that one of the things that's gonna be deployed for is global expansion. So yeah, you know, 100% of those types of customers, prospects, are folks that we wanna reach out to and who could benefit from knowing about us.

Well, and whether it was explicitly a dedicated use of funds in the raising prospect. It's like, okay, you talk about global expansion, how are you going to get that done? How are you going to create return not only for your initial investors but these new investors as well? Right.

Completely. And, you know, the natural thought process is, okay, this is a huge market going into the European Union. We can save this much cost putting folks over in the Philippines or India. And that's the driver of the decision. But nobody ever that I know of sort of incorporates their decision and we're gonna run the payroll with these guys and it's gonna be fantastic. We are an afterthought, but we're an inevitable piece of that plan, that strategy. So we just sort of make sure that as early on as possible, and early on is better for everybody involved, you know, we become a part of that project plan so that we can, you know, advise them before they make different decisions. Well, you might wanna think of this region versus this region. Have you, you know, do you have the budget required to sort of pay these different taxes that you're going to have to deal with. So, you know, the employee fringe benefits, you know, the burden rate is something that even in low-cost places can become really meaningful so that, you know, the delta may not be everything you think it's going to be between a US salary and an overseas salary because of that differential.

If you're enjoying this episode of Leveraging Thought Leadership, please make sure to subscribe. If you'd like to help spread the word about our podcast, please leave a 5-star review at ratethispodcast.com/LTL and share it with your friends. We're available on Apple Podcasts and on all major listening apps, as well as thoughtleadershipleverage.com/podcast. So I want to go into thought leadership side a little bit with you. And I'll give you two customer profiles. Pick whichever one you want to start with and we'll go from there. One being the CFO of the high-growth company, and maybe they're about to start a funding round. The other being the VC partner who's responsible for the investment thesis and saying, hey, if we invest X, we're going to see return Y. Education here is a key component, and the further left of the deal point you can reach them, the better, I would think, so that they know you before they need you. What are you doing to create those education opportunities to get them to think along the ways that you want them to think?

Great question. So I'll, I'll focus on the operating folks. First or exclusively. We want to do everything we can to make sure that we become sort of a known resource in their decision tree. So, you know, we try and get to know the different lawyers and bankers and accounting, the folks who sort of support companies like this in that ecosystem. You know, we want to make sure they all know who we are because quite often we'll get a call from a law firm that says, hey, this client's raising their Series B round. I know you guys have helped a whole bunch of our other clients. They're going to need you. But do you mind if I make an introduction? It's like, no, we don't mind if you make that introduction. So getting, getting what we do in front of the different others and advisors in that ecosystem is a big part of sort of making our awareness out there. We do a lot of webinars and content marketing so that we're talking about different issues. Data privacy over the last 3 or 4 years has been a big one. So making sure that we're announcing to the market all of the different challenges of expanding into Europe and dealing with data privacy and how you go about doing that. That's one of the big areas that we try and from a thought leadership, make sure that we're sort of known to bring these solutions and this guidance to the market. And then, you know, again, when, when, you know, there is a connection between a prospect and one of our subject matter experts, making sure that we're walking through them, you know, For us, it's a conversation that we have multiple times every week, but it never gets old. But to the prospect who's hearing it for the first time, you know, the solutions and the risks and the education that we're able to bring to them is kind of gold because that's, that's what they need to know in order to properly support the rest of their organization. So, you know, it's a pretty sophisticated methodology, you know, focused on all of those things and others. Just to make sure that our expertise is really known as early in that sort of needed point as possible.

And so if I was to recap, I hear referrals, I hear organizations such as ACG would be deeply relevant to build that referral network in chapters and associations. Also then some of the one-on-one calls, doing some speaking, doing the content marketing, getting your ideas out and saying you don't have to do this alone. And in fact, it's more expensive to try and painful to try and do this alone. You don't want to go to talk to the board or your VC owners to say, hey, here's the problem we dug ourselves into.

Yeah. Or even, even your CEO or your, you know, your head of tech. Oh yeah, yeah, exactly.

Do you even say to head of sales, yeah, I know you're trying to close this, we can't keep up, right?

You know, here are the risks in order to optimize the sales, you know, how are we gonna get product into the country? You know, how are we gonna account for the VAT taxes? So if we do our job well, then we've equipped the folks who are our direct customers to really do an incredibly effective job supporting their organization working with their colleagues so that sales can be successful, so that the, you know, head of R&D can hire these offshore developers and be successful. So that's really our mission, you know, because we are our ICP ourselves. I mean, we manage a global footprint, we have a head of sales, we have a head of development, and so we know what we need to properly equip our colleagues so that they can carry out their mission successfully from a, you know, global compliance and efficiency perspective. So If we do, you know, our head of HR. So if we do a good job, you know, with what we do internally, we know that we're providing the right solutions for our ICP and really any other customers.

And what I'm hearing there too is you're creating an internally embedded champion for that, someone who can be the advocate to talk to the other business functions and say, hey, let's look at this from the sales point of view. Let's look at this from HR's point of view and make sure that everybody who needs to be a stakeholder is at the table and that this solution's integrated rather than just siloed.

Yeah, I mean, you know, as one example, we've developed our HR technology solutions that we provide to our customers. We have first made sure that Lisa, our own head of HR, who manages people in 17 different countries, has a piece of software that helps her do her job effectively. So we know if we satisfied Lisa and her team and given her a great product, helping her be successful, inevitably, invariably, we have a great solution for all of the other heads of HR with the customers that we're gonna be working with.

So you also talked about sort of building an opportunity through the employer of record graduates. Can you talk to me a little bit about that process and sort of cultivating an audience and developing and educating?

Sure. So employer of record, or EOR, has been in the global expansion space over the last 4 years, 5 years, one of the more explosive parts. And it is a fantastic step one. It's, it's a basically outsourced third-party employee leasing approach so that you can expand into Germany or Australia or just about anywhere, you know, turning on a light switch. So right from the get-go, you can have a third-party entity be the legal employer of your person in Australia, but they carry out your orders and it's really just like an employee. You pay a premium for that. And with, you know, the first employee or the first handful of employees, especially when you're not sure how permanent the global expansion step is going to be, it's a spectacular solution, but it doesn't necessarily scale. The more successful you are, which is really the goal, is to try and be as successful as possible. And then, you know, the higher number of employees you get into Australia or any other country, in certain locations, it's a temporary solution. It's not ever going to be a permanent solution. In certain countries, it becomes a little clunky. You know, you can't quite— you don't have the benefits flexibility, for example, as you might. So in a meaningful percentage of those EOR customers, as great as they are, at some point they're going to want to and need to graduate. And so when they have to move on from an EOR approach, that moves into the whole solution set that HSP Group provides. So we're doing, you know, that's probably the biggest part of our pipeline these days is companies who are transitioning or graduating from that EOR approach. We also work with a bunch of different EOR providers so that, you know, they recognize they want their retention, they don't want their churn. So they've recognized that working with us can sort of help keep, you know, at least pieces of the customer relationship. So they're advocates versus adversaries in this whole thing, which is nice. At the end of the day, I mean, you know, you want to keep as many customers happy with as many different things as possible. But that EOR graduate dynamic, and because of the huge growth in the, you know, heads under EOR management over the last 4 years, you know, the COVID pandemic, the work from anywhere explosion that sort of happened, there's this huge, you know, bulge of EOR customers and clients now. And so those graduate percentages are really, you know, increasing exponentially. So it's a good dynamic for us as a business. It's a great, you know, great dynamic for the global expansion market. And, you know, we're big fans of EOR, you know, even if we sort of, you know, pick up a lot of business when they move on from EOR.

Well, and I think it would be also useful for you to be able to paint a picture in a thought leadership perspective early on and say, here's your likely journey, here's what makes sense, and here are sort of the evolution gateways where the solution from today isn't going to meet your needs tomorrow, right?

Yes, absolutely. So we work really hard to be one of the thought leaders again, basically supporting EOR. We love EOR. Right, right. Inevitably, some of you are gonna need to do something different and, you know, here's plan for it now. Could be a year, 2, 3 years out, but know that these are the next steps and we're some folks who can help take care of that for you. You know, we work with our EOR partners to sort of combine those elements. So yeah, it's education and just, you know, awareness of the different transition steps is a really important part of the dynamic.

So I want to ask you a couple specific questions. You said, hey, we're involved in thought leadership here. How much of your time now is spent in a thought leadership role rather than sort of the founder and leader of the organization these days? So when you look at the many things that you have to do, how much of your time is allocated? And then we'll look at the rest of the team.

Yeah, I mean, you know, it's a very meaningful percentage and I think it should be, you know, I think the main benefit or value I bring to the organization is sort of, you know, not making sure that my amazing team is doing what they're doing because they're gonna do what they do.

Yeah.

So my main benefit is sort of forging partner and competitor relationships in the market, understanding where the industry's going and for sure, you know, different thought leadership. So, making sure I have my fingers on the pulse of directionally what's changing, what's hot, where are the problems arising? Because in our world, it constantly shifts. There's the whole geopolitical challenges arising these days. Currencies have been up and down, interest rates. So yeah, there are a lot of different things from a thought leadership and a direction of travel that my time is best spent really understanding what's happening and how it could mean for what we want to do and how we can be of best help to the market. Although, you know, in the actual provision of the thought leadership, the news that I'm happy to report is I think we have the best team in the world of sort of subject matter experts and people who've been doing this at a very high level for a really long time. We have experts who can talk about global HR or global payroll or global compliance who are vastly stronger on the subject than I am. We try and plug the, you know, the people who have the most significant horsepower into providing the thought leadership depending on their area of expertise.

Well, and from a maturity cycle, you know, there's only so much a founder or CEO can do on their own to get thought leadership out there. Now, they may be able to open more doors than a sales team on their own by getting invited to speak places or place an article or have a conversation with a leader. But you've got to make sure that whether it's coming from the top of the house or from a country expert or a policy expert, that gets to the sales team, to the account lead, so that you're speaking with one voice and there's a consistency of message on that. How do you close that gap, especially given the fact that, as you said, you've got a global footprint both on the team side as well as then your clients wanting to go many places?

You know, that's a really interesting question. And I have to say, I don't have a great answer for it. You know, I can tell you, I can report that my sense is our team is incredibly cohesive and unified. I mean, we sing from the same hymnal, probably because we've been working together for so many years. I mean, you know, this is a team of colleagues who have years, if not decades, working together, you know, not necessarily at HSP Group because we're only 3.5 years old, but at other different places in the global expansion market over the years. So it's a very well-versed team at its core. And then it seems like the people that we add who maybe we haven't worked with before pretty instantly sort of get what our messaging is and where we— what we emphasize and where our expertise is, where it isn't. So we haven't run into challenges not being aligned. I think one of the strengths we've been fortunate to have, and I wish I had a better answer for you, is if you talk to A or B or C in our company, you're gonna hear the same message. It's just, you know, it works that way.

Well, and that's the desirable piece, obviously, right? But like you said, when you're onboarding someone, how do you close that gap so that they know and they see?

We're very collaborative. Yeah. We, we, our approach is very collaborative. We really tend to focus on, you know, inviting people to join different calls, so forth.

So as we begin to wrap up, I have a question for you. You've been going through this journey on the outsourcing side for tax and for legal and HR. My question to you is from a thought leadership perspective. Knowing what you know now, what would you advise your younger self? And that may be your younger self from 3 years ago, or you might want to go back to 2004 or so when you started all of this. But there are many people who are on this journey who are looking ahead and saying, how do I teach the world what my new category is? So my question to you is, what do you wish you knew then?

Boy, I think like anybody else, there are a million things I'd love to do over again and hopefully, you know, not make the same mistakes or do things I did well even better. You know, I think you can never have enough talented people in your orbit, you know, whether they're colleagues, whether they're partners. Surround yourself with, you know, the best talent and the best subject matter expertise in the world. You know, work collaboratively, empower. People to sort of run with opportunities themselves. You know, I think there's a natural tendency a lot of entrepreneurs might sort of be control freaks, you know, to make control more than you need to, where the natural impulse should be sort of actually step back, you know, let some amazing talents carry you forward and then you're not pushing things constantly yourself. That's just something that experience, you know, has gotten me more attuned to and effective with. But You know, I'd love to sort of 20 years ago have that knowledge that I have now and be able to apply it even, even more effectively.

That's a great answer. I think listening to the in-house expertise and sometimes shining the spotlight on them or helping them amplify their voices in the market is an amazing way to grow and also then build a level of employee engagement that's through the roof because all of a sudden it's like you're shining the spotlight on me. You want the world to know what I think.

It's, yeah, it's empowering. It allows you to grow, you know, it allows you to scale so much more effectively than one person or two people. Yeah. And people way more often than not, when you give people an opportunity to step up, they're going to step up even further than you would have imagined they would.

Well, and you talk about a team that's been together a decade or more, right? That's, that's a compounding effect right there. The longer that you shine the spotlight on them, the more they grow and surpass your expectations, surpass client expectations. It's such a virtuous cycle. So yeah, I really love that advice.

Yeah, no, it's been nice to learn it and live it myself.

Fantastic. So Larry, I want to thank you for joining us to talk about thought leadership as well as HSP Group today.

Thank you, Bill.

If you're interested in organizational thought leadership, then I invite you to subscribe to the OrgTL newsletter. Each month we talk about the people who create, curate, and deploy thought leadership on behalf of their organizations. Go to the website orgtl.com. Tl.com and choose join our newsletter. I'll leave a link to the website as well as my LinkedIn profile in the show notes. Thanks for listening, and I look forward to hearing what you thought of the show.