Happy New Year, y’all. We’ve had a gorgeous rainy afternoon here in KL, which hasn’t been good for fending off post-lunch naps (the humidity here makes me sleepy! Mm!).
The week after Francois and I touched down here, we had the fantastic opportunity to attend a couple of Global Entrepreneurship Week events here in KL. Fresh from New Zealand, attending Startup Camp (set in unconference format) gave us a great opportunity to meet some of the movers and shakers here, as well as a great number of up-and-coming entrepreneurs. The organisers really made it a point to rev it up, putting Malaysia as the host with the third most events behind Great Britain and the United States.
We were provided great guidance by our good friend Johnathan Lee (one of Dunedin’s favourite sons), who recently moved to KL to work at the Cradle Investment Fund, a seed and early-stage funding organisation backed by Malaysia’s Ministry of Finance.
The camp, which spanned a couple of days, gave us a brief insight into what’s happening here. In many ways, the scene is similar to that in New Zealand. Young entrepreneurs building and leveraging their huge networks through social events and social media (Facebook is the preferred network here) to build enthusiasm, share ideas and support each other through their individual challenges. Many who attended were interested in starting up, and the ones who spoke in sessions were entrepreneurs who ranged from the new to the seasoned.
This event really helped us connect with some great people here from the get-go, and has opened the door to a number of subsequent adventures that we have (and will hopefully soon) embark on! More on this later.
I’ll provide a number of insights from my time at camp as well as time from subsequent meetings, conversations and get-togethers.
1995
The start of the dot-com boom, and strangely enough reminiscent of some of the sentiments heard at startup camp. One of the more interesting events at camp was the VC Pitch to Entrepreneurs. There were representatives from a number of VC firms based here in Malaysia – of note were MAVCAP and Modal Perdana – as well as a number of newer ones, some of which were loosely politically and religiously affiliated. The quality of speakers ranged from very good (one VC challenged the audience to give him a hard time with questions – bring it on! But nobody – including me and Francois (who has a delightful penchant for cheeky questions) – had any, as he’d honestly covered all the bases 
), to very poor (the power cut out on one VC – we all wondered if it was rigged – but he stayed and the remaining 30 minutes were simply painful).
I was curious to note that many of the exit scenarios touted in their slides featured IPOs. I would think that in this day and age, where technology and infrastructure is more affordable than it’s ever been, that an IPO for a tech firm – especially a startup – would be rare. Having managed a listed web development firm, I know too many reasons why a tech startup should not be listed on the sharemarket. I’m all for managed growth under controlled capital expenditure, which theoretically should aid and simplify any acquisition process ultimately to the benefit of the company’s founders. This is one of the core principles that The Distiller embodies – invest as little as you can, retain as much equity as you can, and create as much value as you can. A sharemarket listing for a tech startup in this day and age simply seems counterintuitive, dangerous, and smells of a quick exit.
I’d give the abovementioned the benefit of the doubt if not for subsequent conversations with some of the locals comprising both entrepreneurs and observers. Over a long coffee with Yow Chuan, one of Malaysia’s more prominent personal finance bloggers at Meshio.com (check out his review of PocketSmith!) – we talked about the state of venture capital and entrepreneurship here in Malaysia. The general opinion is similar to the one outlined in the Idealog article that featured us in a full-page ’sidebar’ (did we write about this?) – a lot of money is being invested, but there aren’t any sufficient returns yet to plow back into reinvestment.
Furthermore, I understand that due to the relative ease of obtaining seed capital (and perhaps poor governance?), some young entrepreneurs are taking the opportunity to have a funded ride to explore their ideas without enough focus on the key requirement: how will the idea make money? Do these founders still dream of building market share, then listing with a view to liquidating their shares? Consequently, many fail – but I wonder if the ones who do make it to IPO do so for the right reasons.
“Less likely to run away”
Trust seems to be an issue here too, and the points above may lend some context. At camp, a conversation with a VC about PocketSmith led to this question: “Are you and your co-founders married?”
I pondered for a moment as to whether or not he was questioning Francois’ availability. Surely for a million dollars, we could…
I snapped back to reality. “No,” I said, “The company’s actually taken a bit of a toll on our personal relationships, for the sheer reason that we believe that we have to put everything we’ve got into our startup. Why do you ask?”
“Ah,” he said, “We believe that founders who are married tend to be more stable, and hence are less likely to run away.”
“Run away?” I said, amazed. “Do you have this problem often?”
“Oh, you wouldn’t believe some of the stories.”
I would certainly love to hear of them, especially if they’re so bad as to turn a VC into thinking that at a startup’s seed or early stage, an entrepreneur who’s a good bet is one works a 9-to-5, and then goes home to service their significant other.
Gray areas
A session I was particularly pleased to have attended was one by Stephen Chia, President of TeAM (the Technopreneurs Association of Malaysia). He kept the room intrigued and entertained by the stories of his journey as an entrepreneur – dabbling in businesses of different sorts before taking a stake in a little WiMAX company that eventually got acquired by a conglomerate. This particular story is one that struck close to home, and bears many similarities with an acquisition that I’m familiar with, bearing a number of hallmarks that resulted in the subsequent decrease in value and human capital of the acquired firm.
One of his stories that provided me with a slight case of culture shock was that of him taking over as General Manager (or a similar position) of a new property development: an then-untenanted shopping mall. I love turnaround stories. There’s so much creativity that is applied in the face of adversity, that you have to wonder whether or not chaos needs to be a necessary attribute in the operations of any business.
The gist of his story was that he had to populate this mall with suitable tenants; he regaled us with some of the little tricks he applied to get customers to visit, a few were centered around the carpark, which he made free, bringing in visitors from the nearby freeway – and the lighting within (they couldn’t afford better lighting, so he paid some staff to repaint the interiors white. A funny prologue to the former is that he had to make the carpark free initially because they couldn’t afford to pay for the parking entry barrier gates!
The bit that interested me was the gray area nature of doing business here, in this case necessitated by the creative levels of crime. Carrefour had moved in (for those unfamiliar, it’s a French hypermarket) and was being plagued by syndicates of people working together as cashiers and customers to rob the premises. Their gig was to effectively put a person or two in as a cashier(s), after which their accomplices would check out – for example – cases of beer (more expensive here due to high tariffs), at which point the goods would not be entirely accounted and paid for. Alternatively, the more daring would just pick up goods at the loading dock. Other incidents of crime included pickpockets on premises.
I asked about police intervention, but got laughed at by the room. Correlate this with the fact that drivers pretty much break the sound barrier on the freeways here.
So what did Stephen do? He employed the local gang as additional security. Better to have them in the tent piddling out than outside piddling in, I guess. Moreover, he was surprised to see that they had better gear than his guards (wireless earpiece walkie-talkies), were a bit less forgiving (maybe not so surprising here), and above all they issued receipts for services rendered. And according to him, this was an effective strategy – as an example, after a couple of incidents, pickpocketers were rapidly nowhere to be seen.
Now I’m not advocating or condemning any of the above – but a big part of what I’m understanding about doing business in Malaysia is that one needs to understand how the system works. The example above is a crude one, I have also learned of subtleties to approaching business and obtaining contacts. I don’t want to draw this into a discussion around the political or economical climate in the country (we may do on this blog if we end up doing business here and/or the ISA is repealed) – but this is a fact that sometimes concerns me, and compels me to pay more attention to how business is sometimes conducted here.
Success bred by unbridled enthusiasm
Through all of this, I got to witness the fruits of labour of an entrepreneurial venture on the 20th of December. One of the sessions at Startup Camp was held by Jolene Lo, one of three organisers of Massive Worldwide, a large-scale rave event featuring a number of trance DJs both local and from around the world.
Jolene’s talk was on the transition from working at an events management company doing events for corporates on an ever-reducing budget, to running one of her own, where she would seek venture capital to arrange and promote events of her own. Massive was the first of such events, and she teamed up with a couple of other entrepreneurs who were into the music.
Because we met the organisers at Startup Camp, I was fortunate enough to have been privy to a bit of the ‘behind the scenes’ as well as their challenges – the biggest one necessitating a last-minute change of venue. But it all worked out in the end, and despite a smidgen of skepticism (so these young ones know how to organise a party?), I rocked on up on the night and was blown away by the production values, the size of the crowd (over 3000 people), and the sheer execution of this idea.
For a large outdoor party, security was tight, the atmosphere was good and safe, the music was accessible trance, and the venue – amazing. Held at CapSquare, which is a new business development located close to KL Tower, the dancing crowd was surrounded by buildings both brand-new and under construction, with the tower looming above, multi-coloured lights illuminating the buildings around, all to the continuous rhythm that echoed into the night.
What have I learned from the entrepreneurs who pulled this off? Nothing is impossible, and while there’s hard work ahead, if you put your brains to task, a cheeky smile and a can-do attitude will see you through.
