The Interview: Larry Harding, president of High Street Partners

About 20 of High Street Partners' employees are based at its Annapolis headquarters. The rest of its 160 workers are spread around the world, from California to London to Shanghai — which makes sense, considering its niche.

The company helps firms set up international operations and keep them humming, whether it's a U.S. corporation trying to break into Brazil or a European company expanding here. High Street is finding plenty of call for those services: Revenue increased by more than 50 percent in 2011, and the company expects to repeat the performance in 2012.

A year and a half ago, it had 200 clients. Now it has 400 — corporations, universities and nonprofits.

Larry Harding, who founded High Street after working at telecommunications-equipment supplier Ciena Corp., chatted with The Baltimore Sun recently about how equity funding fueled his company's rapid growth, why his clients are going overseas and whether the U.S. is a simple place to do business.

Harding, 48, lives in Annapolis with wife Lynne, who also works at High Street. They have three children.

Why did you start the company?

From '99 through 2003, I was vice president of international finance for Ciena … [helping support] all [the] different countries, all different sizes of offices that Ciena had. After doing that for four years, I learned so many different things and put up a network of resources across the globe, and decided that providing similar services … for other, slightly smaller companies would be an interesting business.

So I started High Street Partners then in 2004 and was really fortunate in terms of the timing. That was when all the sort of world-is-flat globalization boom was just beginning to take off.

The first year, it was three of us over here in Eastport in Annapolis. We were a true back-of-the-envelope startup. I remember the dinner party where I sketched out for a friend, "OK, here's what I'm thinking of doing." I wish I saved the envelope.

What do you do for clients?

There are four different types of needs that they have when they expand overseas. The first is sort of a set-up project. They need to establish a subsidiary or set up a payroll or establish a branch. Second, there are recurring needs. … They need to close the books and pay suppliers, the typical just-operating-type stuff. The third type of service they need is an understanding of what the compliance [requirements] are in that country.

In a place like China, there's probably 15 or 20 things a year they need to be doing — business licenses and just weird stuff that's different than what they'd be used to in the U.S. When they're operating in these complicated territories, there's just a never-ending need for ad-hoc [help] — problems, issues, questions that come up. "I just got this notice, it's written in German, what am I supposed to do with this thing?" … That fourth thing has really been a big market differentiator for us.

No one else is doing that?

No. I think I've started the only business I could actually start, because I've been our customer, desperately needing these types of services. And no, I could never find anybody for that fourth category, and the people I could find for the first three were all really expensive.

How have trends changed over the last 10 years?

The growth rates of some of the developing countries have been so high that companies are incredibly incentivized to go there, so they're going to more places much earlier in their development than [firms] ever did before. It used to be a Fortune 500 company. … These days, it's pre-revenue companies that have that profile.

How has your business changed?

We took on some growth equity funding … the spring of 2010. … Really the biggest reason to do that was to develop an automated application that would perform as a software the things we had previously been doing manually.

It's a little like putting your company on steroids when you get the growth equity infusion. You really have to make sure to keep everything balanced so you're not growing too much one way and not enough in another.

Are companies mainly setting up shop outside the U.S. for lower costs, or is access to growing markets a driver these days?

It's definitely — at least in the client base we have — the access to markets. And I think that's because if they're going overseas for lower costs, that's the type of company who's hiring 500 people in a manufacturing plant in China or an offshore software facility in India, and they just don't fit our profile for needing our services. … They have enough of a critical mass to do everything in-house.

What's your view on the effect offshoring has on American job prospects?

I'm a little bit of a counterview. I think generally for most of the jobs lost to offshoring, there are companies that are able to hire more salespeople and provide more services. So I really feel on a net basis, probably as many jobs are created in the U.S. as jobs that are lost. But that … is a meaningless issue if you're the person whose job is offshored. Then it's 100 percent a problem.

Do you help foreign companies set up here?

Everyone wants to figure out how to access the U.S. market. … This is definitely one of the very top regions [in the U.S.] that overseas companies tend to want to look to expand into, certainly one of the top three.

Why is that? Proximity to Washington?

That's one element — certainly the opportunity to sell into the government sector is one. But it's the third- or fourth-largest metro area. It's easy for European counties, especially, to land in.

What are the hot new countries to go to?

The old reliables in the last few years have stayed consistent. China is just red-hot in terms of a market access place. We're seeing more people go to India for market access vs. just strictly offshoring.

Dubai was a real high flier, a lot of debt-fueled construction — they were creating out of nothing the Hong Kong of the Middle East. With the debt slowdown, a lot of the hyper building growth that was going on there has abated, but it's still a really interesting place. Commercially, that is a great spot to access the Middle East and even Africa.

What are some of the most complicated countries to do business in?

China, India and Brazil are incredibly challenging. They historically haven't been set up to be commercially friendly; they've been very closed societies, protective of companies within. And so the rules and regulations haven't caught up to the volume of businesses that are expanding into there. On the other end of the spectrum, places like the UK, Singapore, Hong Kong are extremely simple and business friendly.

What about the U.S.?

More challenging than you might imagine. [One client that expanded into Texas is a] Swiss company. … I met with their CFO a few years ago and was shocked when she explained to me that of all the countries that company had gone into, the U.S. was the most complicated and challenging.

We tend to think of this [country as] very simple, very commercially friendly and easy, and we stack up only OK.

If the federal government came calling to ask how it could improve the situation, what would you suggest?

Just making it easy. Clear tax laws, tort reform — one of the things that's worrisome, even if it's not necessarily impacting companies, is the reputation for litigiousness that the U.S. has vs. other countries.

Our tax rates, they really are high compared with the rest of the world. We're one of the only countries in the world that taxes worldwide income. When a U.S. company is competing against a German company, the German company only has to pay German taxes on what it sells in Germany, while the U.S. company has to pay taxes on what it sells in both countries.

There's just a lot of red-tape type complications compared with a lot of other countries in the world. We're still much better than China, India and Brazil, so it's not of that magnitude.

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