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Sunday, 1 February 2009

4 issues with Singapore Startups

I have been investing and advising startups in Singapore for the past 2 years now. It has been a fun ride and it gives me great pleasure to be able to contribute to the startup community. However, there are certain broad issues which I am seeing across Singapore's startups, especially those in the digital media sector.

Lack of depth in their thinking: Many of the Singapore startups are well aware of the latest companies and trends in the digital media space through blogs such as Tech Crunch, Mashableet al. If you know these blogs, they are good in providing coverage on the latest news. Unfortunately, they don't touch on strategies and structural opportunities, which are covered by less well know blogs such as John Hagel, Umair Haque, Taylor Davidson et al. Hence, most of our startups are learning the forms from the US counterparts without understand their true economics. Without that understanding, you can't built real competitive advantages.

Lack of global ambition: There are very few examples of Singapore startups that we funded who want to change the world. Most of them talk about building cash flow positive businesses in a local context. While there is nothing inherently wrong with that, this means you are solving problems in a different scale. This has implications. When you are solving global problems, you might fall short but in the process of tacking these hard problems, you might have built a stronger and more durable competitive advantage that otherwise will never be built if you focus on a small scale business.

Lack of collaboration: This is a bit ironic. Most of the Singapore startups are building 2.0 services and yet I have never seen much collaboration between themselves. This is perhaps an example of my earlier argument that they lack true understanding of what is important. Capability leverage for example, is a powerful lever that very few of our startups are using. Even the incubators are not helping these companies to build that kind of new advantage in our hyperconnect economy.

Related is also the issue of lack of social capital building. It is so surprising that so many of our startups and even incubators do not have blogs or twitters. How then do they connect to the rest of the world? It reflects a great deal when a government officer like myself blogs more than these startups when I have the least incentives to do so.

Lack of belief in building dynamic capability in the team: Some of the startups I have seen have no technical capability at all. They rely on outsourcing instead. This method might be ok if the environment is stable. Unfortunately, that era has past. In our sector, that means you need the ability to constantly evolved your technology and that cannot be achieved with a outsourcing model, unless you have created a new form on coordination like what Li Fung has achieved. Outsourcing, in the traditional sense, cannot help the company to create any sort of capabilities.

This is not a criticism. All these are issues that as government, I need to think about resolving.