“Only those who dare to fail greatly can ever achieve greatly.” – Robert F Kennedy
Deepak Natarajan, Intel Capital’s director for investments in South East Asia, Australia, and New Zealand, chats with Katherine Steiner-Dicks on government spoon-feeding, cultural barriers, debt-laden MBAs, risk takers, and the value of building stronger entrepreneurial ecosystems in the region.
Just as I exit my neighbourhood each morning I anticipate two things: the sweltering glow of the sun over Kuala Lumpur and the arrival of the Roti Man (“bread man”). He speeds up to our neighbourhood gate on his modified motor bike fitted with a container holding an Aladdin’s cave of bread, snacks, and even cooked rice. The commonplace Roti Man has been the primary source of bread for many households in South East Asia and the hundreds of thousands of foreign workers that live in make-shift tin hut ‘communities’ as a direct result of the sprawling Malaysia, Singapore, Thailand and Indonesia construction booms.
Each Roti Man has his patch, and if he is lucky, can make up to RM1500 ($450) a month to provide for his family, less petrol costs. As I sit in my car and wait for the morning traffic to pass, I ponder how he can survive on $450 and would his business, and that of every Roti Man, be transformed if a savvy technology entrepreneur took over the reins; investing in a web-enabled smartphone or mobile text platform that aims to revolutionise the Roti Man’s patch, based on “live” interested customers?
Along my car journey I hit one of the many monorail construction hot spots across KL. The cogs turn. Could an affordable weatherproof solar mobile charging device be attached to their hard helmets to make best use of the sun during working hours and could it be hands-free to avoid accidents? I dream up of a similar device for the helmets of Roti Men and the millions of motorcyclists that weave and dodge the KL traffic.
With mobile phones now a part of daily lives, what is impeding startups from really taking off and getting risk-taking traders, like the Roti Man, off the poverty line?
I contacted Deepak Natarajan of Intel Capital, a Silicon Valley veteran who has been working out of Singapore for the past six and a half years, to size up the situation.
“When I visit places, such as Thailand and Vietnam, mercantile trading can be spotted on almost every street corner,” says Natarajan. He says that these traders have a natural propensity for handling risk; the lost opportunity, however, is that they do not have the technological skill set [or education] to take their business to the next level of growth.
Natarajan believes that every budding entrepreneur from this region with the financial means should work in an entrepreneurial setting outside of South East Asia. After that, they will have a fresh perspective on what innovations and technologies would make life-changing differences back home. He says the entrepreneurs that have worked for a year or more, for example in Silicon Valley, have had a taste of the “soft infrastructure” – the ecosystems – where people run at twice the speed to make things happen. “Silicon Valley is not a two legged stool. Besides the obvious “VCs and world-class universities”, it is a place where meritocracy, experience in managing high-growth, and risk-taking combine to create the mind-set for creativity and world-changing innovation,” he says.
One of those soft elements is the positive attitude towards success, risk and failure. “We never thought twice about going to work even though we were sitting on top of the San Andreas Fault line. We even joked about The Big One, the rest of the United States will fall off into the Atlantic while Silicon Valley will stay afloat,” recalls Natarajan of his 27 year stint in Silicon Valley.
He divulges that only a handful of entrepreneurs in his region are willing to relocate to less developed markets, such as Myanmar, Vietnam or Indonesia to build a new business and give up their salaries. One example is Ardent Capital, an incubator with offices in Bangkok, Singapore, and Jakarta. The founders set up Ardent to re-invest the proceeds of their exits back into businesses that will develop the South-East Asian technology ecosystem.
“In Silicon Valley, it is not uncommon for engineers and marketers to give up $250,000 salaries to follow their passions and start new businesses because they always feel that they had a chance to make it big,” says Natarajan.
“And when I refer to making it big, that means being comfortable with your chances of success and failure in equal measures. In many parts of Asia failure is not an option. This is a cultural issue,” he says.
Natarajan confirms that weak startups in South East Asia do not get weeded out as fast as they should. “Some government-funded startups in South East Asia stay around a lot longer than they should because they are drip-fed, because those involved do not want to lose face. But this model does not work because markets are moving so quickly that they have probably missed the market window for a successful launch of the product or service anyway,” he says.
Natarajan also points out that many MBA programs have jumped on the bandwagon to “teach entrepreneurship” but fail to consider that their own business model of charging $100,000 or more in tuition creates a debt-burden that inhibits risk-taking by their graduates. “The universities should adopt an entrepreneurial model themselves by charging a small amount of tuition in exchange for a percentage of future earnings,” he says.
Whether this proposal is put into action is yet to be seen. But perhaps fear of public failure would not be so ripe for entrepreneurs in this region if their personal debt liabilities were not keeping them down in ‘safe mode’ at such an early stage in their careers.
So far, he says, the companies he has invested in are progressing very well. “Every year makes a difference with the calibre of management.”
However, in Deepak’s eyes, if a company never shoots for the sky for fear of failing, it will never be innovative enough, and in the end, will fail anyway.
“I have been in the region for six and a half years and the needle has not moved at all [when it comes to a greater appetite for shooting high without the stigma of failing]. I suspect a handful of success stories in the region and an entrepreneur comeback from a [perceived] failure could help alter the mind set of entrepreneurs.”
Arguably, the fear of failure still haunts South East Asia like a ghost story passed down from generation to generation. Kids, is it not about time for some new bedtime stories? How about the one about the superhero that successfully executes, despite all obstacles, that must-have product to Indonesia’s 240 million population, ultimately transforming lives out of poverty (and helping a mighty few Roti Men in the process)? Yeah, I love that one. Tell it to me again.