I don’t want unicorns in Asia but viable businesses that can grow: Joseph Ziegler, Telstra Muru-D

Joseph Ziegler, EIR of Muru-D.

As the entrepreneur-in-residence (EIR) at Telstra-backed accelerator Muru-D, one of a breed of emerging corporate incubators & accelerators (CIAs) in Singapore, Joseph Ziegler possesses rare insights into the functioning of entrepreneurial ventures dealing with technology.

Originally from Texas, Ziegler has a professional background spanning the corporate sector and startup venture space, having built and exited startups in the US, Australia and now in Singapore.

With the proliferation of accelerators and the growth in the venture capital space across Southeast Asia, Ziegler shares his views on the startup ecosystem, corporate innovation and cultural dimension of the startup business with DEALSTREETASIA, in addition to explaining the importance of possessing technical insights when developing technology products.

Edited Excerpts:

What are the contours of your role as an EIR with Muru-D? In your view, what’s the most critical aspect of your role?

My only job is to grow the startups. Right now we have nine businesses but I’m not sure of the total team size. My job is to make them grow and succeed, by giving them everything they need to build traction. There’s no conflict of interest with Telstra, since they allow me to prioritise the best interests of the startups. I never have to compromise, in terms of bringing in the best investors.

Sometimes, its not the best thing for a startup to align with a parent company of their main accelerator. Sometimes the startup’s interests are not the same of the parent company of the accelerator, I have the luxury of being the startups’ champion.

Given your background as an entrepreneur with international experience, how important is cultural literacy and language to entrepreneurship and growing a business?

I think that corporate culture is extremely important. It’s about having a vision and culture that people are willing to be part of, in addition to executing at a high level, especially at an early stage. You need to have a corporate culture and environment that motivates the technical and business talent and brings people together, being connected and motivated.

I’ve worked in Vietnam with teams that are internationally diverse. Muru-D is separate from Telstra because it needs to have that speciifc culture that’s different from the organisational norms of a large, successful enterprise. Many firms have done innovation programmes and their company culture prevents and inhibits meaningful change. It has a big impact on how companies perform.

Also Read: Opportunities abound in ASEAN’s ‘VIP’ markets:George Mathew

You were part of the Silicon Valley scene back in the days of the Dot.Com bust of 1997-2000. What’s your take on talk of a bubble existing now and the valuations of unicorns being so high? Is there a bubble?

Back in 2000, my startup had a Superbowl commercial – it’s not necessarily a good thing. In my view, a unicorn is something that just has a massive, unproven valuation. Is Apple a unicorn? Not at all.

I don’t want unicorns in Asia but viable businesses that can grow. So here’s whats happening – in Q4 2015, no one’s deploying funds. And they will not deploy funds now because the markets have crashed. No one is going to be able to pull or raise money in from sources. You’ll find things are pretty slow with lots of economic turmoil and commodities turmoil.

You’ve got lots of underplayed capital in Singapore, so it will take some time, with an impact to the startup space and market corrections emerging from that. There’s also a lag time. Indonesia gets attention because it’s a large future market and effectively accounts for 75% of ASEAN GDP.

With most of these investment, the companies you’re dealing with here in the region have more grounded valuations. I foresee the unicorns – the big ones out of the US – undergoing some contraction. I don’t know if that’s bad, but the path to exits here in the Asia Pacific is different than in the US. And being able to get a unicorn in this part of the world can be difficult.

For instance, Atlassian is not going to list on the ASX – which is a pretty accessible stock exchange. They’re going to list in the States. If we don’t have an exit vehicle in this part of the world and can only exit in the US, then we’re not going to have unicorns in this part of the world. With regard to the bubble, I don’t know if a bubble is going to burst but funds are going to be slower to deploy in this quarter and 1H 2016.

There may be deployments on the VC side but I would guess we won’t hear about the VCs being able to do as many raises until the earlier part of next year. A lot of VCs have already closed their funds. But I’m bullish in that we can achieve a lot of things. The cost of innovation is so low now and do a company that solves many things is easy. I’m hopeful that we can do some very great stuff.

In a Financial Times piece you were quoted as saying: “…the start-up scene in Singapore is, ‘…boring boring boring. To make money here there’s no pain. And without pain it’s hard to have good innovation.” Could you provide some context with reference to this?

I did not say the startup scene is ‘boring boring boring’ – that was taken out of context. I was trying to get across that fuelling innovation is difficult, unless there’s problems to solve that require innovation. Unless you got something that needs to be done then the impetus to innovate is not as strong. Within Singapore, there’s lot of opportunities to solve an array of large problems.

It’s a matter of regional problems versus internal problems. There are many opportunities to build a good life in Singapore by going the traditional, conventional path. However, in other markets, these paths may not exist. Like in Vietnam, during Tet (i.e.the traditional Vietnamese new year), its hard to buy things or get home. Those are big pains that can drive a lot of the innovation.

For instance, there was a startup that dealt with women working in business process outsourcing (BPO) services in the Philippines and provided a solution to their need to get home safely. But that problem doesn’t exist in Singapore. I would have liked to accelerate them, but it would have been a disservice to bring them here, as we would have removed them from their core market.

Some problems can be too local and it requires the entrepreneurs solving that problem to be sitting there. Removing them from their context would have made it difficult for them to resolve it.

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Do you have any comments on startups you’ve invested in and advice, such as Malaysian venture Mobile 360? What are the areas you’re looking to invest in as an angel investors and do you have a theme or thesis?

I’m most interested in B2B markets. All the ventures I’ve invested in are B2B ventures. Consumer markets have a higher level of variability. If you can solve some really good business pain points and get the right channel, then you can control the levers. The ones that are consumer facing have to deal with traction and customer adoption in a different manner to enterprise-oriented ventures.

Consumer-facing businesses have to grapple with marketing, SEO, design and promotion, in a manner that is different to B2B ventures. B2B is more interesting, especially when it an advanced technology. My passion is for business systems that can solve problems involving large, scalable systems. I’m probably the only person I know whose investments are all in enterprise startups. Even Netscape’s main business model back in the 1990s was to sell server software to enterprises.

With your technical background, what would you say are the core programming languages that technical co-founders must know, across both the hardware and software space?

At the end of the day, for a lot of success we see, it’s not the technical aspects of the programming language. Rather, it’s finding talent that can implement that technology. That has driven the success of a lot of startups and their velocity. You can find the perfect language; SWIFT, for example, is an Apple language for the iOS and Mac. It’s really great but a lot of technical resources and personnel are using Objective C.

Now, if you’re in the market and you can access 5 guys who Swift or a 100 guys who know C..then the technical aspects of that language are not going to determine your success. Languages are just tools. You can build a lot with a hammer, but the right tool may be something other than a hammer. In this part of the world, the skill sets are different to the Silicon Valley and the amount of people with the skills are going to be different.

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With reference to a topic you broached at Echelon Asia Summit 2015, what technical skills should business co-founders aim to develop to complement their team?

Regardless of your role, if you’re the business co-founder seeking a technical co-founder, then you should have some background into the technology, as it can grant you insight. With that knowledge, you can communicate at some level with the technologists building your product. Everybody should be able to do a little bit of coding and understand the technical aspects.

In a business context, the most successful people are those that can inspire and build teams that execute towards their vision and add to that vision. It’s about being agile in how you approach problem solving. If you get a micro-manager as a founder, they can become myopic and they can’t scale out. They’re not able to take in anyone else’s idea and rapidly become a single point of failure. Such a team is not going to be able to succeed.

With Australia so close to a major emerging markets like Indonesia, yet the knowledge capital required to negotiate its dynamic market decreasing in Australia, what do you think needs to happen to push startups Down Under further north? 

It’s tough to accomplish this, because the FTA with the US has created an environment where many innovative startups and their entrepreneurs go to California to build their ventures. The FTA is not balanced as you lose a lot of talent to the US. Even though many firms have done business, I don’t know if they’ve been innovative.

The government is doing quite a bit, in terms of how to bridge innovation between the two ecosystem and bringing entrepreneurs up to Singapore. Singapore and Australia are complementary ecosystems. Singapore has a progressive business environment, funding and foresight, while Australia has the innovative startups and great technical skills.

Also Read: Marketing tech & finance are future growth verticals for ASEAN: Gianotten

What’s your views on corporate innovation, given the proliferation of corporate VC firms and Corporate incubators & accelerators (CIAs) in the past year?

In terms of approaching corporate innovation, take a look at some of the successes in terms of the acquisitions by the traditional businesses. Telstra acquired Ooyala, and I suspect that was good for both companies. Companies want innovation because they need to control their markets.They can’t keep on doing the same thing due to disruption.

But they might not have the culture and structure to achieve new ideas. So we have an environment where entrepreneurs can create new ideas and their ventures can be acquired and merged into a company that can learn from them. It’s good that they can innovate, as large corporations want all these services. Yet very often, they cannot do it due to organisational structure and other reasons.

If founders have a big exit via an acquisition, then companies can scale up these solutions that a large pool of consumers can benefit from. It’s a good story. There’s no need to disrupt the giant incumbent, but you can make friends from working with it. Microsoft is an example, with their acquisition of Outlook granting them an excellent email client.

These acquisitions, when done well, are beneficial and create an exit environment for smart entrepreneurs. It benefits the consumers with better products. It also forces companies to change and innovate. Corporate innovation is something that many firms are doing. Some will do it well, while others will have to go through several iterations before they get what they want.

With a landscape having more corporate incubators & accelerators (CIAs), what sets Muru-D apart? 

Before I joined Muru-D, I worked with a lot of different programmes. The way Telstra has set up Muru-D, I perceive it as very successful configuration. But they had to coordinate with Annie Parker to have certain things in place that allowed us to be successful. It required buy-in from the top and autonomy in how we operate, as well as a strong leadership team to be successful. It’s a very successful programme for this industry and for Telstra.

Once you change the parameters and you’re only looking at companies that are aligned with your business or are possible acquisition targets – when you have these are objectives then the accelerator programmes will struggle. For instance, Telstra owns a stake in a surfboard company, Disrupt Surfing, which makes use of 3d printing to enhance its user experience.

In a traditional programme run by a telecoms firm, they would never have succeeded. Disrupt Surfing has been hugely successful and they’ve gained significant traction. I’m pretty happy with those guys.

Also Read: Singapore fintech firm Enepath bags investement from Telstra

Any advice to corporate executives and other corpocrats looking to make the leap into becoming startup founders or middle market entrepreneurs?

I think that’s a huge untapped market. There’s lot of focus on universities and young professionals. But when it comes to people with really deep domain knowledge, or they’re here as expats working in a large company, the only way they interact is as investors and mentors.

They learn about it through these interactions. My question here is: “Can we create an environment that has as large corporate team to second in a team for the whole programme?”

Say there’s an MNC that wants to motivate them or retain talent. If we can get a team of such people in and let them have the freedom to just create a startup, it results in an untapped market as well as a source for entrepreneurs which could really grow the ecosystem. These are people that have extensive corporate links and can bring them back to large firms, by acting as channel partners. And it would be beneficial to the MNCs to have teams like that.

That’s why I don’t focus so heavily on universities. JTC Launchpad already has programmes that target that segment. We’re here in the CBD, so we’re positioned to start to reaching out to these people with deep knowledge and we can build this other element of the ecosystem.

What’s the difference between a single proprietor, startup founder and entrepreneur, given how much entrepreneurship and startup scene is being glamorised?

We don’t recognise that there are a lot of entrepreneurs. Hawkers are entrepreneurs. The big difference is that the subset of startup founder are looking to really scale up and have some exit and you’re talking equity stakes. You’re not building a lifestyle business, but there has to be a scale when you’re talking about startup founders.

In order for it to work, that equity investment needs to work and investors need to see their return overall, out of all the bets they’re making. They need to see that its worth the money and the costs involved. If not, then we’ll end up going back to traditional investment – debt investment by banks and secured investments.

Also Read: Telstra acquires Pacnet for $697m

How do you think the visa system can be improved to boost entrepreneurship?

I personally have looked at an Entrepass, and I don’t know many who come through that route, given that the requirements seem to increase every year. There are two type of entrepreneurs in Singapore; permanent residents (PRs) based here or those that pay themselves enough to get an EP. There’s lots of benefits to being a PR due to a lot of support and access to great programmes and you know you can stay. Additionally, there’s lots of government support.

If you only have a visa, then the only option is to pay themselves enough to get an employment pass. I don’t know many people who can come on an Entrepass and take big risks. It’s an additional cost for startups to do an EP route.

What do you make of the startup visa and schemes in countries like Canada and Denmark, where they grant permanent residency as part of attracting and retaining entrepreneurial talent?

I just returned from Taiwan, which has a startup visa. Many countries are adopting this model. Right now in Singapore, it’s a pain point that we don’t have a strong path for startup entrepreneurs to stay and work easily.  I understand there are many concerns regarding the issue of visas, but I think the hurdles that startups have to navigate to have visas, as well as to take big risks with their companies, are holding us back.

The next big step in Singapore is to have a proper position of Minister of Innovation who can drive both business and immigration policy.Singapore wants to grow with some of that growth coming from immigration.  Why not extend that to the best and brightest entrepreneurs in the world?  Sounds like a great place to live to me.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.