Kuala Lumpur (KL) is a city mixed with a diversity of culture birthed from a history of manufacturing and serving as a pinnacle of entrepreneurship and innovation for the rest of Malaysia. But as the world continually becomes more interconnected and outside influences seep into KL’s entrepreneurial dynamic, how does this affect innovation? What does that mean for startups and entrepreneurs who seek to make Southeast Asia their base of operation?
Building a Westernized Company in a Southeast Asian Ecosystem
Before exploring these concepts, it is key to recognize that there is growing interest from Western entrepreneurs to set up shop not only in Kuala Lumpur but Southeast Asia in general. This is for a few reasons. Cheaper cost of living, which for a startup means everything. Growing market, which for a startup means everything. Less but validated competition, which for a startup…I think you get the point. So you are a smart gal or guy, you have an exponential business idea, and you want to take advantage of the opportunities to extend your runway. If KL is of any interest, then there are a few nitty gritty details of which to be aware that you might not find in HackerNews or in your next MBA class.
Western Way vs. Malaysian Way
So how does the Western way fit within the Malaysian context? One of the most pertinent points to consider is knowing what investors want. No one wants to build a business that local and regional investors won’t back. However, some things do remain consistent. Investors look for signs of traction and promising returns. According to local VCs in KL, what constitutes traction in Malaysia is different from that of the Western world. While many of us view MoM user growth as a staggering and strong KPI representing the hockey stick graph we all know and love, this does not necessarily count as significant traction in the Malaysian context. Many western companies use this specific metric to bypass more touchy topics such as revenue growth or turn of profit.
While it is common for investors in the states to settle for a 3 or 5+ year wait for returns, many Malaysian investors are expecting returns within months. This is primarily because the type of companies and startups booming out of Malaysia are products that do not necessarily have value in their standalone form. Malaysia stems from a manufacturing background, focusing on smaller parts of a whole production and supply chain. The value and KPIs are realized in the distribution potential, not the amount of direct users that you can persuade to use the product. The process is relatively simple to understand as to why investors look for these type of companies.
You build a product that can easily integrate within and improve a current manufactured product or products (the more the merrier). You land a deal with one or a few major manufacturers that can open up distribution channels. The product’s reach grows exponentially with little marketing and little overhead, while investors see immediate returns and recurring revenue. Although there are plenty of user based apps surfacing in KL and all over Malaysia, the landscape definitely shows a biased towards this distribution based model. If we then apply this opportunity to emerging technologies, such as IoT and the connected experience, Kuala Lumpur becomes an interesting potential hub for present and future tech.
Politics & Culture
Besides the industries that are thriving in KL, other refined facets color the experience of building a company in Malaysia. This boils down to the political and cultural climate. Many entrepreneurs like to take business concepts that have worked well in one country and transfer it to the KL or Southeast Asian environment. Granted there has been success with companies that follow the model of the Ubers and Airbnbs of the world, this does not always translate well. To do this and expect success to knock at your door is to miss vital differences in culture and ways of living. How do you take a concept like Venmo, Paypal, or Square to a country where most business tractions are cash based? How can you expect users to adopt applications based on information sharing when people have less trust and security in banks if fraud or breaches were to occur? Yet entrepreneurs continually push to fit square pegs in triangular holes.
On a political note, Malaysia’s history of feudal lords and familial loyalty represents the unseen subtle fabric sewn between the seams of business connections and deals. Having a member on your team with a particular family name is essential. It goes a much longer way in rapidly growing your business than an experienced entrepreneur with a seasoned background of success or a whiz kid from Harvard that can code up a storm.
For Rokk3r Labs, these topics are important to address, not to draw strict guidelines but to instead explore the subtle differences in company building around the world. In light of the launch of our new global fund, we are especially sensitive to understanding which intangible factors can affect the success of entrepreneurs is different parts of the world. Representing R3L, I was able to sit down with a few KL based VCs and entrepreneurs, who witnessed or invested in entrepreneurs who ignore some of these aspects and ultimately failed. But speaking of startups, check out a few that R3L had a chance touch base with during our time in Malaysia.
Featured Startups
Ganesh Muren (CEO) — Saora Industries
R3L had the opportunity to interview Ganesh Muren of Saora Industries. Him and his team have built a water filtration system created for third world countries who struggle with accessing clean water. Hear what he has to say about the tech ecosystem in Malaysia.
Steve Chong (Business Developer) — Supahands
SupaHands is a global outsourcing platform that helps entrepreneurs and businesses to scale and increase productivity through the outsourcing of their business tasks and core operations. This is done through Supahands’ strong technology, team of project managers, and army of remote SupaAgents. Supahands leverages an the exponential characteristic known as Staff on Demand.
Vishen Lakhiani (CEO) — MindValley
Mindvalley is a learning experience company that publishes ideas and teachings by the best authors in personal growth, well-being, spirituality, productivity, mindfulness and more — and combines them with cutting-edge sophisticated learning technology within engaged and supportive communities. Products include education platforms, online academies, and mobile applications.
Kenneth Ho (CEO) — BEAM
BEAM is a Global Platform Connecting Entrepreneurs, Investors, Developers, Journalists, and more with a primary focus in Malaysia and SE Asia.
Suresh Tan (Business Developer) — ServisHero
ServisHero is a mobile app that connects customers with local service providers such as Wedding Planners, Plumbers, Electricians, Cleaners, Movers and more. We exist to empower local businesses — allowing them to provide the best service to consumers who use the platform.
As described by one of their Business Developers, how is it fair that a service person perfects their craft, yet has to work other jobs as well in order to make ends meet? With ServisHero, you can focus on the vocational skill at which you are good and let them help you make money doing it.
For the Global Entrepreneurship Series, Rokk3r Labs’ Jide Adebayo is on a journey across the world digging deeper into entrepreneurs’ stories, understanding the universal investor mindset, and connecting the global collective genius.
We are excited for you to follow the journey, engage with the stories and share your experiences from the region. You can also read Jide’s personal anecdotes and connect with him over at jideadebayo.com.
More from the Rokk3r Labs Global Entrepreneurship Series:
- Prague: Cultivating a Promising Market
- Lisbon: Punching Above Its Weight
- Serbia: From Outsourcing to Entrepreneurship
- Thailand: Carving out a Space on the Entrepreneurial Map
- Cambodia: Kingdom of Mystery
- Vietnam: Resisting and Reinventing
- Kuala Lumpur
Rokk3r Labs is a venture builder and the world’s first ‘cobuilding’ platform for entrepreneurs, corporations and investors to create exponential startups. In 2017, Rokk3r Labs launched Rokk3r Fuel EXO, its first global venture capital fund. As a partner, Rokk3r Labs increases value, mitigates risk and helps to remain at the edge of innovation. With a focus on leveraging exponential technologies (e.g., the blockchain, artificial intelligence, and Internet of Things) and implementing new-age methods of raising capital, Rokk3r Labs is harnessing the global collective genius to cobuild companies that change the world. Currently, the Rokk3r Labs portfolio includes over 40 ventures. Visit www.rokk3rlabs.com.
