7 years on and still no YouTube in SG?

Looks like i was quite right back then to say that the environment conspires to ensure that our startups do not scale into the You Tubes of the world. Things are improving with recent exits and higher valuation rounds. But we are still stuck at the 10-100M valuation and exit area. The geographical constraint and market size is really a major determining factor. And with some many other startups operating in their home country in bigger markets, it is hard for SG based one to win in say China or USA or Europe.

 And i still stand by the good university statement. In fact the recent bunch of funded startups in Singapore are all from good schools and are founded by academically smart people. ======================================================================== (Article First posted on sgentrepreneurs Oct 2006)

I have been reading with interest about the recent debate in Singapore about whether we will ever produce our own YouTube type of company. Here is my take of the issue. I will confine my discussion to just dotcom type of companies since that is the area I believe I am qualified to comment on. To be brief, I believe it is difficult but not impossible for a local startup to duplicate what YouTube has done. That is to say, gather tremendous momentum over a relatively short few years and sell out to a larger firm for a world class payout. That means companies like my own – JobsFactory, Hardwarezone, Shareinvestor are all out of our league. 7.1M give or take 5M is not a world class, attention grabbing payout.

Here are some factors I believe are most important. Many have been debated before.

1) Size of market and relevance of local content.
Sad to say, this is a very real problem. Singapore market is way too small and SE Asia is too non-homogenous for effective economies of scale, even online. The way I see it, this is the major obstacle for any wannabe YouTube based in Singapore. Even the big names that succeed in USA find it tough to penetrate a non-english market easily even with cash and brand. Ebay failed in Japan, Google is losing to Baidu in China etc. Even between USA and Europe, there is difficulty. So I believe for a firm to succeed in Singapore, the concept has to be deceptively simple. Ala google style such that is does not require too much localization across the regions and more importantly, it has to be built for the big markets like USA or China. And you will probably need to start with one or the other since language and styles are so different. Chinese sites are messy with loads of flashing banners which US visitors hate.

A good local example is wholivesnearyou.com. I think it is a wonderful local site with great traffic. I estimate they are doing 5-10M page views per month which is very decent for a local site. They are very web 2.0 and very community led. However, it looks too local to me and obviously is focusing on local market.

2) Lack of vision or rather a different vision for local startups
Most entrepreneurs in Singapore do not have a vision to be a YouTube. I think our vision is to grow a good business, impact people in a good way and make good money. It is not to change the entire world. Again, I think most people in the world are like that. Americans, China PRCs are different, by default of their market size and population, doing well in their market, means conquering half the world already. Frankly, I feel there is nothing wrong with being happy and contented with what we have. One other observation I have is that many who do have world beating dreams are usually very very young startups who seriously have not done anything significant with their company. Once their company has some success, I think the environment conspires to reduce the scope of their dreams. We have exceptions of course, Ron Sim, Sim Wong Hoo, Wong Peng Kin are good cases to learn from.

 3) Lack of access to good quality funds.
Even if a firm overcomes the above two and has a great product or service which is global in outlook focusing on one of the major markets that has scale. And the firm has a strong founding team with brains, strategic prowess and management depth, they will still need money to make it all work. Now, frankly if a company has such traction in a major overseas market, then I believe they will get funding from valley investors rather than local ones.

The above 3 factors to me are the most pertinant in the discussion. There are of course others I am sure.

So does that mean we have no hope? On the contrary I believe we do have hope, it is just that we are against a gradient. So if any company does succeed, I truly applaud them. Some examples which I think can have hope? The characteristics I venture to guess will be as follows : Built with a larger market in mind. Either China or USA. But business can be based in Singapore for development, taxation, IP etc purposes. Web 2.0 community led concept. Spread like wildfire across the targeted market. May not even be known in Singapore. Probably focused on young. Esp since young are slightly more homogenous across the world thanks to cross cultural influences. Simple software and at least American standard designs and branding. Many local sites (mine included) are not up to standard still. We have basic grammatical errors, branding not looked into etc.

World class credentials from management team. Sorry guys, but I do not think a couple of fresh graduates will make it unless they are from Stanford, MIT or harvard, or maybe IIT, Bei Da, Oxbridge. Pedigree attracts pedigree. It’s a fact. There are exceptions of course, but I am taking an educated projection here. Funding from similarly well known firms. Perkin, Sequoia etc.

Those good old memories... read this if you want to understand the old 2000 dot com thinking.

This is cute. So i am looking back at an article i wrote. And in that article i was looking back another 5 years. The major difference between now and then is that today, the startups are having to make a lot more sense before we can raise money. In addition, the business models are a lot more developed and targeted and definitely there is a lot more talent available in the market compared to 2000. Interestingly, the idea of doing side software or service projects to make ends meet still applies esp for more bootstrapped outfits.

And even better, some names still exist! Catcha is now back in the game as the originator of iProperty, dealmates, icarasia... Kudos to Patrick and team from Malaysia. Job portals still strong as ever and i believe we are still the most profitable of internet plays. Hardwarezone and Shareinvestor both sold to SPH already. I will analyze those sales in another posting. ================================================================================================ (Article first published in sgentrepreneurs back in 2006)

Sharing my own experience on the topic written before as it got me thinking a fair bit more. JobsFactory was started as a job portal back in 1999. During that time, there were lots of start ups in Singapore which were in dot com. It was our own dot com boom. Companies like Interauct, Commontown, Wizoffice, eJazz, Nececity, Myscissors, asiastockwatch, catcha, zingasia, earth9, surfgold etc etc all raised lots of money and were advertising like crazy in mass media just to get “eyeballs”. The idea was that we got lots of traffic first and IPO. We can figure out the revenue side later. It was really a fun period as there was a strong buzz and young fellas under 30 were sitting in board rooms making contra deals that inflated each others revenues while adding no actual cash flow. Its damn funny now looking back.

We attended quite a few parties and opening ceremonies and they spent so much money on the marketing and image and yet spent so little resource thinking about sales and business model. A typical consequence of cheap money. My list above is for pure dot coms, i am not including players who closed like MPHonline, asiaone.com etc. These have parentage and roots in profitable businesses. Fast forward to 2001 in the aftermath of the dot com crash. Funding all dried up and very quickly those without a revenue stream crashed and closed down. The survivors tended to be those who :

1) Moved into corporate market by tweaking their C2C or B2C software into a purely software vendor for large firms in specialized fields. Example :

a) Surfgold – from online currency type consumer model to loyalty and CRM software vendor for large MNCs. Doing very well now if I may add.
b) Earth9 – from some community C2C site to a CRM software provider for Starhub and others. Doing quite okay too. This company cute, their CEO used to be called DNA.
c) Commontown – Still around. They were some C2C community too and now are software providers for web sites which revolve around community. But i think this one not doing that well.
 d) Of course, you got the suppliers of software like Adroit Innovations, managed to list but also died as nobody wanted to build expensive web sites after 2000. Can’t think of others. That is how few survivors there were.

The other category that survived and doing quite well are those that were in B2C or C2C and went deep into media area within their area of expertise. This group all making $2M – $10M range.
1) Hardwarezone – From just a site, to magazines and events and regional.

2) Catcha – From a yahoo wannabe, gave up online, moved to Malaysia too and now a decent sized publisher of magazines. Juice, Stuff, etc.
3) Shareinvestor – from community of investors to community + investor relations software provider + magazine publisher (new one).
 4) Jobsdb, Jobstreet, JobsFactory – Job portal is a proven business model. So still job portal but branched into running events, magazines etc. So if I do some projection.

Fast forward to 2008, I believe the 2 models will still be there. One as specialist software vendors, the other as media companies who are rooted in online mediums but who also cross synergize with events and print and maybe even TV production (I know catcha is doing this). In a sense group 2 are doing web 2.0, cuz they will be forced to be ever more interactive in their chosen channels.

For my side, job portals which increasing allow users to feedback and interact among themselves about companies and jobs? Or to allow them to search for referrals (ala social networking sites) ? These are all possibilities. One thing for sure, all the surviving companies listed above are profitable already. Sharing my experience. Make your own conclusions