Posts Tagged ‘startup’

English rules

I just read: Unseen gap in ecosystem, and techies in their cocoons. English is brought up as an issue. 

English is the medium of communication. You can code in whatever computer language exists, but if you can’t write your weekly reports, you can’t write commit messages, you can’t write proper comments in your code and you can’t communicate with the rest of your team via email, you have failed at communication. 

Malaysians can excel if they improve their English. Period. You learn English in school but its not enough. I’ve seen Malaysian Computer Science syllabi that teaches English at university level. Apparently it is not enough. 

This is a policy decision. The government is choosing to push their agenda forward by ensuring that the people cannot converse in English. English is like teaching the man to fish. As long as you are given fish, you are going to be dependent on the ruling regime.

English is key. If you can’t get your message across, you will destroy whatever pitchdeck you have. 

So are non-English speakers are severely undervalued? No. Not even in a team of non-English coders. Let’s say they all speak Bahasa Malaysia. When they hit a problem, can they solve it by Googling it? Can they read documentation in another language and comprehend it? (Note: this is different if your team of coders speaks Russian, Japanese, Korean, etc. where there’s plenty of local language content being created).

At a previous company where we hired people from over 30 countries, and 70% of the people worked at home, what we did was pay for English language lessons for employees that couldn’t communicate in English. You were hired on the basis that you were a good coder, but you also had to complete English to be able to communicate with everyone involved.

I’ve taken this lesson to heart. Anytime I’m consulting with a company where the level of English is subpar, I ensure that the key people get tutored in the language. Not only does it help them grow, it helps in my planned obsolescence – they are empowered to solve more by themselves as I teach them more technically, and as they can now find solutions themselves as they grok the English language.

On startup factories

I read with great zeal the article about Y Combinator in the NYT titled: Silicon Valley’s Start-Up Machine. I think there are a few important takeaways, especially with people trying to build this kind of thing elsewhere.

  1. People take the $100,000 at a 7% stake because of the whole experience. Advice from seasoned entrepreneurs (like pitch improvements, etc.). The importance of the network they bring (which is hugely underestimated by many clones). Dumb money remains dumb.
  2. “The general public doesn’t understand start-ups at all,” Buchheit said. “They’re mystified how a company with no revenue can be worth a billion dollars. It’s because of this power law: If a company has a 1 percent chance of being a hundred-billion-dollar company, then it’s worth about a billion dollars. That kind of thing doesn’t happen in your normal life experience. If I get a cup of tea, it’s a cup of tea — there isn’t a chance that it’s actually made out of solid gold. But that’s how this works.” – direct quote from Paul Buchheit
  3. “One of the reasons,” he said, “is because there’s nothing else to invest in. If you have money, there’s nothing to put it in. Bonds return nothing. And the stock market — what public company do you feel reasonably assured is going to go up at historical norms of 8 percent a year? It could all just fall apart. . . .” If, on the other hand, you discover the next Google, you can increase your investment by “a thousand X.”

Nothing else to invest in. Interest rates in the USA are low. In Malaysia (or Singapore), you have property as an investment that should return more than 8% per annum. Refer to my old post about the startup ecosystem in Malaysia.

Its nice to see lots of funds and accelerators pop up, but without the experience, the lack of vision, and other investment vehicles that return sufficiently, I’m not sure how even the angel incentives help.

Tax incentives for angel investors in Malaysia

Today there were some incentives for angel investors announced in Malaysia as part of Budget 2013.

Who qualifies as an angel investor? Your annual income must exceed RM180,000 per annum and you must be a tax resident to qualify for the deduction.

What do you get? Total investment as an angel will be allowed as a deduction against all income.

When is this valid? From Jan 1 2013 to Dec 31 2017, and you need to apply via the Ministry of Finance.

Some details: as an angel, you must hold at least 30% of the shares in the company you’re investing in for 2 years, and you must pay up for the shares in cash. The company needs to have at least 51% Malaysian ownership.

What do I think?

Quite simply, the qualification income is something I see some people complain about, but this is similar to what America calls an accredited investor. I have no issue with the RM180,000/annum income. Feel free to hit up all those people you know with Visa Infinite, World MasterCard, Premier banking, etc. ;-)

Application via the Ministry of Finance (MoF) seems a little dodgy. The potential of red tape here is high. This is definitely a turn-off.

Does this benefit startups? Angel investors shouldn’t be making a 30% investment in a company. It is ridiculous. Consider giving away 20% of the company in an angel round, sure, but with just one angel walking away with 30% of the shares for 2 years?!?

Angels in Malaysia typically make RM20-50k investments (for up to 20% on the high side from what I’ve gathered). Very rarely do they hit the RM100k mark. Most accelerators are taking up an average of 6-8% for about RM15-18k investment already for 3 founders.

Startup founders are also not going to want to give away 30% of the company for a small sum of money. Many believe they are worth more. I guess you have to thank the media hype cycle for this.

Alas, it is a good start for Malaysia to be looking out for such things. Possibility to help boost the startup ecosystem.

Update: I thought about this a little more and realised that I applied a very myopic view to this piece. Reason is simple: I focus on tech startups & the angels that go with them. In this day and age, software (be it mobile or web-based) doesn’t take much in terms of cash to prove yourself. In other industries like manufacturing, biotechnology, film making, etc. you might look at much higher investments for 30% or more, but it isn’t something I know much about.

Malaysian censorship doesn’t cross borders but what if you’re a Malaysian startup?

The White House did ask YouTube to check if there was a violation of terms of service for the recent video that’s causing the Muslim world to go up in storm. It seems like there isn’t, and the video continues to stay up. Good on Google, good on YouTube, and here’s a win to freedom of expression & speech.

Today I see Dr. Rais Yatim, Information Communication & Culture Minster of Malaysia ask for YouTube to remove the movie. Its just smart that he realizes that YouTube isn’t controlled & created in Malaysia so its not “without our technical capability” to remove it.

There are some problems with this line of thought.

  1. If you are a company in Malaysia, hosting user generated content, you may be subject to censorship. Will it make a difference if you’re an MSC status company as there is a bill of guarantees? Or does it not matter?
  2. Rais continues on that Malaysia is an Islamic nation. It is a secular nation with Islam as the religion of the federation. It is a great pity he chooses to skew facts on what is supposed to be Malaysia Day today.
  3. Censorship without due course. Malaysia has many obscure laws that are passed as acts of parliament while the current ruling regime has been in power since independence. They have been so used to just sending notices for removals that they’ve forgotten that they need to consult the law. And chances are there are many laws that affect freedoms of speech & expression, even though they may be constitutionally protected. Companies incorporating in Malaysia need to take this into consideration.

Its good that Google isn’t simply buckling under pressure (another):

Google Malaysia communications and public affairs head Zeffri Yusof said they received the official request from the Malaysian Communications and Multimedia Commission (MCMC) and that both parties were discussing the next course of action.

“Google adheres to the laws of the land in every country it has a domain in. So, (we) will act based on official complaints from the regulatory bodies,” he said.

Zeffri added, however, that the regulatory body had to cite the relevant laws or bylaws which were breached when making its complaint.

Now the onus is on the MCMC to show what laws the video contravenes so that YouTube can block it for all those coming from .my domainspace. 

What does this do to already poor investor sentiment? What does this mean for startups? What happens when some zealot finds a subversive message in Gangnam Style that may cause all the follow-ups to be deemed anti-religion?

YouTube has a message questioning if you should really be looking at the video. Adults should well, learn to behave like adults.

Muhammad Movie Trailer - YouTube

People to follow: Zeffri Yusof on Twitter is @zeffri. There’s also @GoogleMsia. Google+ account for +Google Malaysia.

On the term “go global”

KLCC Park and PoolIn my recent rant about my thoughts on the startup ecosystem in Malaysia, I mentioned:

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?

My intention for that was very clear. If you’re a tech startup, think global from day one. Don’t “Malaysianize” your product because we’re not Vietnam or China. Or we just don’t have population masses like India or Indonesia. Or language differences like Thailand.

It seems like a friend of mine whom I’ve known for a little over three years, Doc Siva took a little offence to the statement. Doc Siva is an amazing guy, fun to chat with and is a prolific writer (lots of articles in net@value in The Edge). He works tirelessly to help entrepreneurs, and is even running an accelerator now.

The problem stems from the fact that the term “go global” is just too generic a term. Everyone uses it. From the genuine to the dodgy.

There’s the Cradle Coach & Grow Programme which helps you to go as far as IPOing. Doc Siva also has the Go2Market/Go4Growth/GoGlobal/GoIPO programs via Proficeo, his company. TeAM (disclosure: I’m currently a council member) also runs marketing missions that help your business “go global” in the region.

I believe all the above help to some extent. Kudos Cradle, Proficeo, TeAM. I’m sure I’ve missed a bunch of others that are doing a wonderful job. Programs like this are awesome for an entrepreneur since there’s no cost to the company and you get to other markets faster.They’re addressing the entrepreneur who finds it difficult to get his product in the hands of others, so that deserves a big kudos. They’re helping the entrepreneur grow.

The original post was never meant to be flamebait. It was never meant to point a finger at any one party. If you/your organisation took offence to something I said, that was not my intention. Much apologies. I parted with sage advice for the entrepreneur:

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”.

It was just meant to list problems that seem to be endemic in Malaysia. If time permitted, I could come up with a well researched tome with ideas on how to fix things. But its not like I do this for a living, right? ;-)~

A quick thanks since this post was read by Doc Siva before I posted it up online.

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.

Mentorship

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.

Training

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

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.

Hackweekends/Hackathons

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?

Money?

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.

Think global

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.

Investors/VCs/angels

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?

Talent

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!


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