The advent of crowdfunding is going to change startup scene in Asia, and the funding ecosystem, will definitely evolve to a point where one will not need to worry about financing but can focus on developing a good idea and building a good team to pursue that idea, said Prakash Somosundram, vice-chairman of the Action Community for Entrepreneurship (ACE), in an interaction with DEALSTREETASIA
Somosundram, a key figure in ACE’s efforts at encouraging the growth of entrepreneurship, is of the view that Singapore needs a startup visa equivalent to attract, the best of talent in this space.
Edited Excerpts from the interaction:
What led you to become an entrepreneur?
It was right after I left the army, when I was legally able to start a business. It was also what I’d really aspired all my life. I started my degree in SIM at the same time but actually dropped out after my first year. I first started a web design company in 1999, at the tail-end of the dotcom fever. That business didn’t last and folded up after 1.5 years. After that, I took a break for four months and started Yolk in September 2001.
That was much more successful and was acquired by WPP a decade into the business. It’s one of the worlds largest communications holding companies. Most people don’t realise that the communications business is controlled by four or five holding companies. WPP itself owns Ogilvy & Mather, Hill & Nolton, Wonderment, XMKT and Young & Rubicam, among many others.
What experiences during your schooling and military conscription, do you feel, added value to your entrepreneurial approach?
Studying in Singapore tends to focus on academic outcomes, and I was not a great student. I repeated my first year in junior college twice. In my second year at St Andrew’s Junior College, I had an experience where my teacher told me that my grade was higher than my mark – this was chemistry. In essence, I’d scored a single digit on my test. But I studied really hard to pass that exam in the end. It showed me that when I put my mind to it, I could achieve what I wanted
Most of my experiences in school were from team sports. In my old secondary school, Fairfield Methodist, I was with the football team. We went around washing cars as a team to raise funds for buying stuff. That taught me about organisational skills and entrepreneurship. Ultimately, it’s about working together to find solutions to the problems we have – that’s truly entrepreneurship.
Most people forget that entrepreneurship is about coming together as a team with a common vision and complementary skills, rather than being a single founder. It’s about working together to overcome the challenges you have and developing a business model around it that works.
What’s more critical to a startup venture – innovation in business models or innovation in the product?
I try to simplify things to a point where we can identify a problem most people ignore, while we have a solution and the resources to get going, with a business model that works. A lot of startups look at innovation for the sake of innovation, then look at the business plan for the later stage – its not a sustainable approach.
I would say innovation is more in terms of fixing problems and prioritising the business model over the product. Many startups I talk to, are trying to differentiate simply from a pitching perspective – they want to appear different to investors for the sake of differentiation, rather than any value addition.
In an interview with tech blog e27, Dr Lim Tit Meng, chief executive of Science Centre Singapore, highlighted the difficulties involved in persuading local youth to undertake a STEM (Science, Technology, Engineering & Mathematics) education. What do you reckon needs to take place to arrest the fall in the numbers of STEM-educated manpower in the workforce?
It comes down to the educators. I don’t mean to push the buck to the teachers, but at times the teachers fail to share the implications of education. For instance, they fail to share that by learning maths you can become a programmer, or to sell the big picture and impress upon us, the education that can become applicable in the real world – that’s one of the key things.
Secondly, I think education needs to be practical and experiential. Rather than approaching it theoretically, why not let kids plays with programmable robots and circuits?. Unfortunately, many fail to get past the basic theory of things. Even back in my school days, I felt that educations was generally driven by the flavour of the month – being an engineering nation or entrepreneurial nation.
And we followed the trends, rather than building deep expertise in a single area. We should be a lot more holistic and hands-on. For instance, why not run a robotics program with an entrepreneurship element to it, where youths can build a cool robot they can sell as well? Hybridise the elements and incorporate a team-play dimension, where one builds and the other sells.
How does having a family impact your decisions nowadays in the professional domain, especially given all your professional responsibilities?
The key thing I look for is time, the most crucial commodity. With everything I get involved in, I have to figure out how much time is required. And half my time is focused on doing non-profit work, which I’m happy to do, as long as it benefits people. In terms of business, ideally, its those that require the least amount of effort to deliver the most amount of good, to the most amount of people. I’m starting to shy away from opportunities where I trade time for money, because it’s not sustainable, no matter how you plan it. That model just doesn’t work for me.
I also function on a four-day work week. I spend my off-time with my wife and family, run errands and sometimes just do things I don’t usually do on my weekdays. By working on a four-day basis, I’m more efficient about what I want to achieve in my workweek. In my opinion, a five day week is not the most productive. You spend Monday acclimating back to professional realities, while Friday’s sent having one foot in the weekend.
As a serial entrepreneur, do you have any insights and recommendations for HR policies in a startup ventures?
The best appeal about startups should be the culture – the freedom that that corporate culture is all about. A startup needs to make a conscious effort to communicate its corporate culture out. This is not for the sake of sales and business, but for mindshare and employer branding. You want to be at the forefront of people’s minds when they’re seeking a job.
It’s not just for the young kids who want to dress down and be hip working for a startup, but older people as well. Young parents who are executives needing more time with their children, or those who need more work-life balance (e.g. ageing parent) and they’re more open to working for startups because it gives more flexibility
And I think the focus of startups should also be the pursuit of a higher purpose, beyond economic returns. That’s what’ll appeal to more younger folks. Things like CSR projects or other purposeful projects that people can align themselves with increase the attractiveness of a company, rather than simply chasing after numbers.
What do you foresee as the general investment trends for the next few years?
The advent of crowdfunding is going to change things. Its only the beginning. As the crowd gets smarter, we’ll see things like fundraising syndicates (e.g. Angel List), which have not happened in Asia yet. The funding ecosystem will definitely evolve to a point where you don’t need to worry about funding but can focus on developing a good idea and building a good team to pursue that idea. Crowdfunding could be used as a fuel for driving growth and expansion in regional markets
Say I have a startup that wants to expand into Thailand. It’ll use crowdfunding to get initial adopter, using funds and a strategy specifically catering to their growth in the Thai market. Through that crowdfunding exercise, the startup ventures will have a method to achieve market testing and expansion concurrently.
With ACE being privatised, where do you see it going from now till 2017?
To be accurate, its not privatised but privately-led. We serve as guardians to the funding that’s been given, so that we can run the different programs. We are led by entrepreneurs who have achieved success in their own industries, so we can be quicker and more nimble to adjust to the needs of the ecosystem.
I see the next few years being interesting for us. As much as entrepreneurship is moving into the next gear in Singapore, it’s also a time where our neighbours have woken up to prospects of technology and entrepreneurship, and we’re going to see a greater talent crunch. A lot of the developers we used to get from oversees will prefer to stay in their own countries (e.g. Malaysia, Thailand, etc.).
We need to look at the things happening to these markets and adapt to it. Building a startup, I need to look at quickly maintaining a regional presence, even if my developments were to take place in a different regional market.
There’ll be more outsourcing work and virtual team management. Singapore will still be a hub for fundraising and we need to continue to bring that proposition to more regional startups. We want more Grabtaxis coming here to raise capital, and its a very important aspect of how our ecosystem will continue developing and evolving in the years ahead.
As it is, there are a few areas that we are looking at making a difference in. We want to improve the whole fundraising process, creating better access for local startups to go around the region and likewise, for regional startups to land and establish a presence in Singapore.
What does the local startup ecosystem here truly need to compete globally?
Its time that we stop looking at the world and wanting to become someone else. We need to start looking at ourselves and see what we want to become for ourselves. We always look at whats happening out there and we try to bring it here or become them. We fail to realise that as Singapore, we need to look at what we can do to become truly “Singapore” in this process, rather than work to become someone else.
Rather than aspire to be the “Silicon Valley of Southeast Asia”, we have to be comfortable with what we have and celebrate what’s unique about the Singapore brand. It’ll build a sense of pride and ownership among the startup community. What we have, is a lot better than what our neighbours have, and that’ll probably increase the number of people aspiring to work in startups.
The other problem is that we have a very immature startup ecosystem,by which I mean most entrepreneurs are fresh graduates coming out to start their own businesses. As much as I don’t think its a bad thing, I don’t think there’s enough corporate guys coming into the scene, with 10 years of industry experience and domain expertise, to leave their well-salaried jobs and join a startup or found their own.
Corporate guys bring with them a pragmatism, experience and knowledge. They have a better sense of the real world and what will survive out there. Fresh grads are good and great, but they lack the experience and pragmatism that the corporate guys have. If you name a top few startups in Singapore at this point, only a few are by fresh grads. Property Guru and Redmart were founded by adults with extensive life experience and postgraduate educations
What are the other things we can look at in that regard?
We need to provide greater support and induce a mindset change. Society needs to be more forgiving of failure, rather than stigmatise it. To be honest, the guy leaving his career has far more to lose than the guy fresh out of school – he’ll work harder to make things work
In the UK, there’s a lot of people losing jobs because of the economic crisis. What they do is founding their own business. Perhaps it’ll take longer, but if they provide employment to more people, it helps society.
If you’re fresh out of school, go and join a startup as an employee. Take a year or two to learn before launching your own business, as that’s where you develop pragmatism. I have met many smart, young kids with big dreams, but they may not have the pragmatism to get them there. When you’re not grounded, its just a recipe for failure.
You need a mentor if you’re fresh out and wanting to start your own business. Viswa Sadisavan was mine. With my first company, Angel Dynamics, our offices were really close to each other. One day, I gathered enough courage to speak to him and asked him whether he could meet me, since he was more experienced in the communications business and I sought him out for advice.
We used to meet three or four times a year and it allowed me to share what was good and what was bad. He preferred to hear about the bad things in my life, so that he could give advice about what needed to be done. And to be honest, when I was expanding into a new country or starting a new business unit, I shared my plans with him.
After each session I often felt discouraged about my plans. A mentor helps a young entrepreneur to review and find the blindspots in the ideas that they often fail to see, and that can be a painful process.
The startup visa – a necessity for growth in the startup ecosystem or is the current EntrePass scheme adequate?
Honestly, the fact of the matter is that the Entrepass is insufficient to meet the needs of the startup ecosystem. Malaysia has announced they’re going to do it [startup visa], and its easier to get it in places like South Korea and Japan. There’s a shortfall in human capital and we will lose opportunities, especially with the ASEAN business community integration coming up in the future.
Some startups will choose to land in regional markets, which are becoming open to more activity. Recently, Malaysia announced it, creating a lot of positive buzz, but its got certain restrictions. You need to be under the MaGIC program, so these things are restrictive, but there’s enough provisions to cater to the unique needs of startup ventures.
We lack that here, which is a big problem. I know a very seasoned entrepreneur from South America who’s seeking to start his third venture here and is having major immigration issues, as he does not fall into the traditional areas or usual domains where entrepreneurs originate from.
Previously, the Entrepass was SPRING Singapore, but it was abused. People made use of template business plans and just kept getting people to apply for it. My proposed solution is greater transparency, with entrepreneurs able to apply but required to create a public profile accessible to the public and disclosing their investors, sponsors and other backers, in the interest of due diligence and preventing abuse.
With transparency, there’s a much smaller chance of fraud and foul play. Regulators then don’t have to worry about abuses and the transparency reduces the effort involved. If you make the whole process open source, you’ll reduce the volume and scope for abuses. Psychologically, it also deters people from bullshitting – like LinkedIn, the data can be corroborated and verified.
Do you reckon public policy can keep pace with technological developments, given the possibilities of 3d printing, like people printing out guns and bullets, or the creation of synthetic drugs via chemputers?
I feel initiatives like ACE are a good way of staying in touch with the ground realities and forthcoming developments. We need to keep pace with where the trends are going. This model where ACE is privately-led and works with the public sector is a good example of how the public sector is looking at innovating and staying current, as well as crowdsourcing what needs to happen.
Ideally, from a long-term anticipatory view, rather than a reactionary stance, things like 3d printing and the abuse of it are something that we all need to evolve with. As they say, with great power comes great responsibility. Just because there are negative applications for it doesn’t mean you can stop the Second Industrial revolution or inhibit the application of these technologies.
The important aspect is for the policymakers to be in touch with the ground realities and know where things are going. They need to be engaged in a more consultative approach. The Singapore conversation should be an ongoing, perpetual phenomenon. And that should be the way that policymaking, takes place here. When I find that policies are passed in the absence of consultation, that is where the negativity comes from.
The private sector feels that they public sector does not know the challenges they go through and policies are passed in absence of feedback from people who benefit or suffer from it. We have seen this in recent times. The Personal Data Privacy Act was done well, with extensive engagement and consultation, lots of preparation and great effort on a transition.
But there have been other policies passed without consultation – like the NLB incident with the book about gay penguins. That incident could have been resolved via a consultative process, where a corner for these books was made and set aside, with parents able to guide their children on the matter.
Given the recent trend in the US of investing in digital media publications, is Singapore a good destination to found a digital media startup?
Only if they have a global or regional focus. If you’re building for Singapore then the market may not have enough support for it to succeed. For instance, Rakuten acquired ViKi for US$200 million. Now this was a media startup with a global focus, translating and localising videos.
You can build a media company like VICE or Mashable, based in Singapore, as long as your content speaks to the world. Just don’t become the TechCrunch or Buzzfeed for Singapore. Singapore’s a small market and the adopters of this technology and content are far smaller than the whole population.