A few thoughts on the startup ecosystem in Malaysia
As Malaysians we like to do things others do. We follow our politicians and their grandiose plans and think we can do it. After all, we always have the catch phrase, Malaysia Boleh!. (Malaysia Can!). As much as the politicians say we don’t like to ape the west, we do it, just call it something else. It started with the multimedia super corridor, Cyberjaya, k-economy, knowledge workers, digital entertainment village, and more. Some of these are naturally still around and some are forgotten.
What’s prompted me to write down my thoughts at length was this post by Vishen Lakhiani of MindValley on the WebCampKL group recently. He proposed:
I’ve been looking at the whole incubator, VC, funding model and I’m coming to the conclusion that money is not the prime factor of success. Yet its what that govt tries to throw at entrepreneurs first. Instead what is needed is mentorship, trainings, hackweekends, Webcamp meetups, hackathons, peer support and more.
If I agreed to put up $1 million RM to fund an entire ecosystem of “soft” support like this for our tech community, with a goal of beating Singapore in 24 months. What would you guys like to see?
This is your chance to stop complaining about how “Singapore Gets It” and Malaysia does not. We can reverse engineer, build and innovate on EVERY technopreneur support system Singapore has built. And we can do it in 24 months.
What would you like to see? What are you ideas? What do you need to maximize success?
First up, let me state what I disagree with. The notion that “Singapore Gets It” isn’t necessarily true. It may be that IDA in Singapore (their local counterpart in Malaysia is MSC Malaysia) just spend more money talking about their wins. It might also be that Singapore is a more welcoming environment for the foreign entrepreneur. I know many foreigners who come to KL dreaming of staying on but get put off by the visa application process. There are issues here that Malaysia has that Singapore just executes better, but this is not the point of this post. Also, setting a goal to “beat Singapore” is probably not the right goal – I like competition, but there must be a more holistic goal.
However, Vishen is right. Money alone does not make a successful entrepreneur. My only notable response to that thread was the following:
Mentorship works if you can find the right mentors. Mentorship by actual entrepreneurs not mentors looking to make a fast buck. Same with trainings (by actual practitioners). Meetups, etc are very important I agree. And to make great product, vision is required. A collaborative environment (I like to say the folk at Fluentspace have gotten this down quite well) with ideas of sharing, etc. (something not ingrained in M’sian/Asian society). Money is important too just so one can focus on building great product and not payroll. A good read is this: http://www.feld.com/wp/archives/2011/10/entrepreneurial-communities-must-be-led-by-entrepreneurs.html – Brad feld nails it… its the reason why most govt.-led/funded stuff seem to fail.
Malaysians are good-natured folk. They want to “just do it”. Startups are all the rage nowadays thanks to the online media covering it; Malaysians jump on the bandwagon thinking this must be done. After all, Malaysia Boleh!
So lets get back to what Vishen thinks is important.
I totally agree that mentorship is important. I said that if you can find the right mentors, mentorship is great. In fact, mentorship by actual entrepreneurs is what is required, not people acting as mentors to make a fast buck. There are so many programs in Malaysia today that basically reserve a fee to pay the mentor (maybe RM500 per month, or RM2,500 per quarter). Yes a mentor’s time is important, but if a mentor is building a career out of advising startups, alarm bells start going off in my head.
After all, what is the basis of mentorship? It is when a more experienced or more knowledgable person helps a less experienced or less knowledgable person.
Some programs assign a mentor to you. What is to say the mentor you get is more experienced/knowledgeable than you? I always view mentorship as a very personal connection, i.e. its relationship based. Mentors communicate regularly with their mentee’s.
If you’re a startup looking for a mentor, it might be better to get one by going to networking events rather than having a chap assigned to you, who has absolutely no interest in parting good advice to you, except collecting his stipend.
Which Siong brings up as a good point actually: the ecosystem needs ex-successful startup founders. Because those are your valuable mentors.
There are many incubators and accelerator programs started in Malaysia in where the mentors have never worked in a startup before. Heck, they’ve never run a startup. Maybe they haven’t stayed at it long enough till there was even an exit. Or maybe they didn’t build something that lasted (a legacy). What about taking a company IPO?
Good nature yes, but these people are already guilty of violating the Peter Principle.
I’ve seen courses by people that have never actually done anything in the field before. They’re just expert trainers. I’ve seen ads for people saying you can make thousands in the app store, and show you examples of their students apps, but these people have never had an app in the app store before.
Training has to be done by practitioners. Period.
When I used to give OpenOffice.org training, I was a practitioner — I used the software, I hacked on the software, and I was an active member of the community around OpenOffice.org. If I had to give OpenOffice.org training today, it wouldn’t be so wise. Why? I use Keynote for my presentations. I don’t hack on OpenOffice.org any longer. I don’t even consider myself a part of the community any longer.
If today I decided to give training about a database, I’m pretty sure I know what I’m talking about. However if I decided to give training about making money in the app store, I’d fail. Why? I’ve never launched anything successful in the app store that has made thousands of dollars within the first month.
Meetups are very important. A Unix hacker friend of mine popped into Malaysia and wondered why there were no regular FOSS/LUG style meetups in Malaysia. There used to be a very successful MyOSS meetup where Linux/Unix types would show up, talk, and then go to the mamak to eat later. In Melbourne, Red Hat sponsor(ed) the local LUG with a venue (at a college), and sometimes people would sponsor food later.
In Malaysia, by far the most successful meetup group so far has been the WebCampKL group. It has people from all walks of life and its clear there is a big amount of people into web-related stuff.
But I have to ask, where’s the Hadoop meetup? Where’s the OpenStack meetup? Interested people just do not gather to talk about stuff. Or maybe they’re just not interested in self-development and networking because they’ve been told to work too much all day and the traffic situation in KL is horrendous in the evenings.
Siong brings up tech support at meetups. And this is what I remember when I was a regular attendee of LUV in Melbourne. Beautiful mailing list. Malaysia lacks this. I’m not saying that the author of said opensource project must show up at a meetup, but we need a culture where we’ve faced such a problem and are willing to share the solution with others. MyOSS/OSSIG used to do this for Malaysia, but this just doesn’t exist any longer.
I’m a big fan of getting people together and creating a workable product within 48-hours. I’m also a big champion of continuity. How many projects do you know have started by hackathons in Malaysia? How many fizzle out after the weekend is over?
Its great to gather for 48-hours, but if there is no continuity, or no follow-thru, that is what you consider a wasted 48-hours. Something must be built/gained by having such a hackathon. If its not a product, its a relationship between teammates or others to continue to gather and build something great(er).
Companies like Facebook or Yahoo! find hackathons useful. Why? They’re focused on building better APIs, mashups based on their existing APIs, and so on. Its not just “bring a cool idea and bake it”. There’s actual need/want out of the hackathon.
Peer Support/Collaborative Environments
No one has addressed what happens after a hackathon. Do the people ever meetup again? Do they continue working on the project? Where do they do so?
I specifically singled out FluentSpace as a successful collaborative environment (even though I myself have never found the time to step in there). Why? They’re a co-working space where their folk all do stuff with one another. Be it from the tweet here or their recent projects that have launched, its quite amazing.
The culture of sharing is something Malaysians need to learn more of. Nobody will steal your idea, remember its the execution that matters.
Vision to build a great product
This is something a mentor can encourage you and egg you on about, but its not something they can come up with. You as an entrepreneur have to champion your product and your vision behind it. And when I say vision, you’re worrying about things on a month-to-month basis, but where do you see the product in 3 years? 5 years? 8 years?
If you say you hope to have exited by then, you’re dead wrong. If you say look for the next grant, you’re dead wrong. You have to have vision and an idea to be profitable from day one. Malaysian VCs and angels don’t like to play the numbers game (i.e. free product, but the users are the product to be sold). Its not their fault — its just that they have no idea whom to sell to come time to exit.
Don’t be ashamed if you are still running your company after ten years. Who says all startups must exit? You can be profitable and growing without any issue. Sure you won’t get covered in the media. And its a lot harder to buy that Porsche. But you can focus on growth, can’t you?
Well, money is important. Its important so you can continue to build your product and execute on your vision without having to worry about how the servers are kept running, how your car loan is being paid, etc. Many say take up to 18 months of money to be worry-free so you can hire easily, and execute. However the situation in Malaysia may not be so kind, unless you were paying yourself a pittance.
Many grant-related programs paid the pittance of RM1,500/employee/month. This is ridiculous. For that kind of peanuts, the only people you’ll be able to hire are monkeys. Pay yourself fairly and if the VCs and angels don’t think you deserve it, walk away and learn to bootstrap.
Malaysia is a small country of 28 million very different kinds of people. Singapore is even smaller. It has been very famously said to build for & test your market in Singapore, and huge populations are within an 8-hour flight away from the hub that is Changi.
Its amusing when I see programs titled “go global”. When you start your business, especially if its a web shop, you’re already world-wide. Why are you building locally? (unless you’re offering local e-government services or something).
If anyone tells you that ASEAN and South East Asia is similar, they’re lying to you. Look no further than Malaysia to see how populations differ and are divided by language, ethnicity, and even urbanity.
Most of the ASEAN nations are also given the opportunity to use all software that is available worldwide/globally. The Internet isn’t controlled (thankfully) like in China or Vietnam. Building clones is a lot harder when people can just use their international counterparts.
This is not to say that clones can’t exist based on language. Or other niches. Rocket Internet has made a killing focusing on clones in the European market. They’re now also looking towards Asia. Again, its the execution that comes into play.
Angels are meant to be kind, but many angels in Malaysia can be devils. Siong hits the nail on the wall – in the Valley, you can get an easy $100k as seed money for maybe 1-5% of your company. In Malaysia, expect to get RM100k for 20% of your company. This is not limited to angels either. Many venture capitalists act like vultures, some demanding up to 40% of the company for very small investment sums.
Again, if you had built profitability into your model, you wouldn’t have to worry. Of course you wouldn’t be building a Twitter, but you might be building a Facebook (I’m sure ads were at the back of the minds from the start).
Ask yourself this. Would anyone invest in a Geocities in Malaysia? Probably not. Why? Because Malaysia lacks a Yahoo! to sell to.
This has lots to do with reach of the individual as well. It plays a role with regards to partnership.
And investing is a bet. A bet on you. A bet on your team. There are no surefire returns and many Malaysians work hard for their money. Safer havens exist (property, structured deposits, etc.). You’re competing amongst all this in the minds of an angel.
VCs also want to see hunger. Commitment. Are you just asking for money for the sake of asking for it? Or do you believe in an idea so much you plan to remortgage your parents home to make it succeed if the VC falls through?
In simplicity, if you can’t find amazing talent, will you train amazing talent? Also, if you pay peanuts, expect to get monkeys. Be fair as an employer and you shouldn’t have too much of an issue. Don’t expect however Malaysians to work as hard as say folk in Beijing — I’ve seen engineers come into work at 8am to do study, perform their working tasks from 9-5pm, then continue on personal study from 6-10pm. This is because they have higher positions and a greater paycheque to achieve. Folk need incentives.
A few parting thoughts
Don’t blame the government. Don’t blame the VCs/angels/investors. There’s an old English proverb which states, “If there is a will, there is a way”. Its very true. Don’t whine. Don’t be a grantpreneur. Focus on doing great stuff. Plan. Execute. At the end of the day, it is the execution that counts.
Remember also that there is no such thing as overnight success. The media like to portray that such things exist. Its all headline grabbing for more pageviews. And there are always edge cases like how AOL acquired about.me about four days after their launch. Things take time. Zynga just acquired omgpop as Draw Something has become terribly famous; no overnight success there, been at it for over five years, reiterated, had three rounds of funding, then found their success. Remember Rovio, the makers of Angry Birds? They had many failures before their one success (and now plan to make the Angry Birds franchise even larger than Disney).
Write your idea down on paper. Figure out a method of execution. Throw money-making ideas there. Don’t be afraid to try things quickly, then throw it away. Reiterate. Then just do it.
Go forth and build!