Abstract
Why do startups from mid-sized markets struggle to scale? We theorize that their home market is big enough to gain early traction, which incentivizes them to delay targeting new markets necessary for growth. This delay, however, allows adaptation costs to grow too large. We test this by exploring international expansions using interview and large-scale website language data of up to 20,000 software startups from around the world. Consistent with our theory, we find that startups headquartered in mid-sized markets delay targeting their websites to English-speaking markets that are crucial for software growth, subsequently incurring higher localization costs. Those that do orient toward these markets near their founding ultimately attract higher valuations and funding. These results suggest that startups from mid-sized markets face a "satisficing" dilemma that can constrain their growth.