“Building Local Tech Champions” means Growing Fast and Going Global

Uber has exited the region, selling out to Grab. Was it a lack of appetite, being late to the game, or simply not understanding how to negotiate outside their home market in the US?

Before I come to that, here are a couple of intriguing stories that came to my mind when thinking about the intricacies of the local business landscape: First, the Malaysian used-car platform company, Carsome raised US$19 million in March 2018. The funding was led by Burda Principal Investments, through their Singapore office. StoreHub, a Malaysian company that built a Cloud-based Point of Sale (POS) application that is used by 3,000 retail stores across 15 countries, raised US$5.1 million from Vertex Ventures. Vertex, an investor in Grab, is owned by Singapore’s Temasek Capital.

Then you may remember that last year, Soft Space, the Malaysian Fintech company raised US$5 million from Japan’s Transcosmos. Carsome, StoreHub and Soft Space, join almost 3,000 other companies that have been accorded MSC (Multimedia Supercorridor) status by Malaysia Digital Economy Corporation (MDEC). Since its inception in 1996, MDEC has been actively pursuing Malaysia’s digital agenda. This was done by initially encouraging technology companies to set up in Cyberjaya, and then bringing in shared services companies, and now by working to build globally competitive Malaysian headquarters companies.

In my last article, I provided examples of the first generation of Malaysian companies, many of whom achieved billion-Ringgit valuations with very little capital. Starting with founder’s money, these companies at best raised two to three million US dollars, which had to take them straight to an IPO. With few exceptions, except Grab and iflix, which raised US$ $170 million, Malaysian companies have not appeared on the radar of major VC firms.

Money chasing Malaysian deals

Well, as they say, times have changed: Money is now chasing local deals because of the ability of Malaysian companies to navigate the fragmented and tightly regulated markets of Southeast Asia. This is very important to note, as this is changing the landscape in Malaysia.

N2N Connect, a company that provides securities trading platforms used its Malaysia-base to grow into the region. We are fortunate to have a forward-thinking central bank. In addition to allowing for crowd funding platforms, and a sandbox for testing of new products, Bank Negara Malaysia (BNM) recently finalised electronic Know-Your-Customer (e-KYC) guidelines.

This is a huge step, allowing for much faster and more seamless customer acquisition. These guidelines made it possible for Internet payment provider iPay88 to launch a virtual account for the “unbanked” market.

I am pleased that MDEC has continued to play an active role in building the ecosystem that has allowed these companies to flourish. We maintain a constant and consistent dialogue with several stakeholders, including BNM and the Ministry of Higher Education – where we led the push to introduce coding classes in schools. While we continue to work on the digitalization agenda, we recognise an urgent need to bring larger VCs into Malaysia.

Companies like Carsome, StoreHub and Soft Space are building businesses, which are like utilities. There are differences though if one was to compare them with Tenaga or Celcom, Maxis and Digi. What are the differences? Utility businesses have large capex needs but their business is protected by licenses. They didn’t start off with a small bunch of customers and build the infrastructure from customer revenues; that business model just doesn’t work that way. Build a small power plant in Petaling Jaya, supply a few hundred customers and from the revenue build a megawatt plant. Big money is raised up front.

Scale up at speed

Well, the startup guys don’t have the protection of a license, so they start with a small bunch of customers and what is typically called a “Minimum Viable Product.” They then get feedback, gain traction and often go through a few product iterations. Once that has been achieved they need money – lots of it – to build the infrastructure, delivery capability and capture market opportunity ahead of potential competition. As we say in MDEC, it’s a matter of “Grow Fast and Go Global”.

Just last week, Zilingo, a Singapore based start-up raised US54 million for an expansion into the region from their base in Bengalaru, capital of the Indian state of Karnataka. That’s big money! The company provides a platform for customers to browse and buy fashion products from retailers in Southeast Asia. Since inception in October 2015, Zilingo has raised US82 million, to launch in Thailand and expand into Malaysia, Indonesia, the Philippines and Vietnam. Like other platforms, the technology relies on artificial intelligence – AI – to learn buyer behaviour and then propose the “right” product.

The need to achieve scale and leverage on engineering capability probably led GHL Systems Berhad to acquire rival company Paysys (M) Sdn Bhd for RM80 million, with half paid in cash and the balance in shares. GHL is no stranger to corporate exercises. In 2013, GHL acquired e-Pay Asia Limited, a company founded by Simon Loh, now vice-Chairman of GHL. Local PE firm, Creador, sold its stake to Actis in 2017, and they are now are pushing for growth in the payments, or fintech space, which is seeing a lot of new entrants.

Malaysia on the VC Map

Digitization coupled with the porosity of borders has meant that competition lands at your doorstep almost from the word go! Scale and speed of growth are important and the fuel for that is cash – and plenty of it! This is one of the reasons why MDEC is pleased to have attracted Vickers Venture Partners, to open their Kuala Lumpur office.

The presence of Vickers on our shores is yet another indication of investor interest in Malaysian-originated deals. Have we done enough to put Malaysia on the map? Only time will tell, but the good news is that investors are now getting off the plane at KLIA. At MDEC, we are busy making sure they continue to keep Malaysia firmly on their radar.

One major initiative we recently worked on this year was the “Sea Dragon Venture Platform” event (10-11 May2018), which was organised by PIKOM. MDEC was pleased to support this major initiative, which saw 30 global VCs and corporate investors visiting Kuala Lumpur. About 35 technology companies from Malaysia and the region were shortlisted to pitch at this event. SEAD are targeting companies that have the potential to be leading players in the Asian and North Asian markets that are looking for growth capital of US$5-25 million. This event was yet another opportunity to showcase to the region why having a startup to scale is best done from Malaysia.

It’s time to “Grow Fast and Go Global,” which is in line with MDEC’s globalization strategy; “Building Local Tech Champions!”

Gopi Ganesalingam is MDEC’s Vice President of Enterprise Development.

This article first appeared on 5 May at 2018 at Business Today, titled “Building Local Tech Champions” means Growing Fast and Going Global

Malaysian Leaders Must Build World-Class High Impact teams

When I joined Malaysia Economic Development Corporation (MDEC) in February 2015, I took on the role of Vice President of Enterprise Development. It was a new division created to identify and catalyse Malaysia-based companies into the global arena as eventual world icons. This was and still is one of MDEC’s four strategic pillars – to build world class tech champions.

It’s usual for MDEC to move people around internally to lead teams to drive various corporate objectives, so my MDEC story moved through different chapters. Currently, I am leading a laser-focused team using MDEC’s GAIN (Global Accelerator and Innovation Acceleration) initiative to elevate Malaysian companies onto the international stage, starting with the ASEAN region.

World-class ambitions demand a high-performance culture, which is a fast-emerging trend in many key organisations. Personally, I point to football teams (mysteriously called soccer by Americans) as examples of some “secrets” of what it takes to successfully develop and drive high performing teams.
Malaysia has already seen several inspiring success stories, moving in the right direction and gathering momentum. Just to run through a few:

  • Vitrox Berhad is a global player in automated vision inspection solutions. Founded by Chu Jenn Weng and Steven Siaw Kok Tong, both graduates from University Sains Malaya. Vitrox was first admitted to the ACE market in 2005 and moved to the Main Market in 2009. On 19th March 2018, their market capitalization stood at RM2,755 million.
  • Aemulus Holdings Berhad is another listed MSC status company. Founded by Ng Sang Beng and Yeoh Chee Keong, it listed on the ACE Market of Bursa Malaysia in 2015. Co-founders, Ng Sang Beng and Yeoh Chee Keong were colleagues at Altera Corporation in Penang. Their market capitalization stands at RM107 million.
  • Other MSC-status champions include Inmagine Group, now 16 years in operations, best known for their stock image business (123rf.com) and Piktochart, which produces visual stories from charts.
  • Green Packet Berhad is a Malaysian company that started out in Silicon Valley in 2000 and achieved listing in 2005. In true Silicon Valley style, the company evolved, selling its wireless broadband business to Telekom Malaysia to focus on the Internet of Things (IoT) and fintech.
  • iflix, a video on-demand service, was founded by Patrick Grove, who also built the hugely successful Catcha Group, a leading internet player in the region. In 2016, iflix secured a US$45 million investment from pay-tv giant Sky Plc.
  • MDT Innovations is the leading innovator in the region for IoT. Driven by Liew Choon Lian, CEO and Sim Hon Wai, COO, its revenue is 95% export driven. It was listed in Gartner’s Cool Vendor and featured as top 25 IoT companies by APAC CIO Outlook Magazine in 2018.

Passion, Diversity and Innovation

There are several other Malaysia-born companies that are now serving customers around the globe. All of them started with a core team of founders, who recruited their team and infused it with a mission, and – as they say – a dose of passion to achieve performance. As well as performance, they developed and continue to maintain high performing teams: It’s easier when you start from scratch, but if you don’t – you do need to continually add to your talent pool.

That means having to be in a location, which is attractive for talent, like Malaysia. MDEC has played a major role in making this possible, as one of the benefits of MSC (Multimedia Supercorridor) status is the ability to bring in talented staff from around the world.

In the corporate world, managers don’t have the luxury of building their teams from scratch. They join an organization, work their way up the ranks and if all goes well they get to run a department, division, etc. It’s fully staffed but nonetheless it is incumbent upon the leadership team to ensure diversity and inclusiveness. That’s how you get innovation – new ideas are needed from the outside: New blood to enable a fresh perspective, so to speak!

Incentives and a common goal are key to building a high-performance team

What does it take to build a high-performance team? A common goal is clearly important. Incentives also work, as you can see with football players and sales people, in general.

However, one should be wary of incentives driving the wrong behaviour. When too ‘significant’, incentives can sometimes cause problems. Most recently the big four Australian banks were hauled up by regulators and told to stop their product-based incentive payments, as customers were sold products they did not understand or need. The independent commissioner, Stephen Sedgwick said, “some current practices carried an unacceptable risk – of promoting behaviour, which is inconsistent with the interests of customers”.

In my earlier article, I talked about the need to have a strong story. If the story is clear and meaningful, and shows purpose, then you can actually recruit and motivate a team without relying on large monetary incentives! A high purpose generates powerful energies that will drive high performance: That is indeed the practice at MDEC, because working in MDEC is more than a job or a career, it’s about ‘serving the nation with your hand over your heart’.

Coming back to the issues faced by most managers, who after climbing up the corporate ladder have a team to lead: It is often assumed that they have the skills to manage a team, but in practice that might not be the case. A great salesman might not be a great sales team lead, where his job is to motivate, assist and plan for his salespeople to perform. This is where mentoring and coaching is required.

The other point to understand is that in a team, there will some who perform and others who don’t. If you have team members who are not contributors and in fact turn out to be disruptors, they need to be removed quickly and in an open and visible manner. Unfortunately, a lot of line managers prefer to keep these staff on the payroll and avoid uncomfortable conversations. When there is confusion about responsibilities, and no one is really held accountable for performance, managers will struggle to have an open and fair conversation about an individual’s performance. Without accountability, you cannot build a high-performing team.

“Well Done!”

Managers who want to build high-performance teams need to really understand this. If I could borrow again from football: All top Premier League teams are packed with talented, committed athletes, but the reality is that at this level, you can’t build a winning team without a superstar. Liverpool might have discovered one such star in, Mohamed Salah, who just turned 25 years of age and joined the club in June 2017 from A.S. Roma.

In his book, “Leading” Alex Ferguson (with Michael Moritz) said, “the two most powerful words in the English language are ‘Well Done!’ Much of leadership is about extracting that extra 5 percent of performance that individuals did not know they possessed.”

In building a high-performance team, you need a powerful story, committed team members, a couple of superstars and an evaluation system that is fair and open. What’s good for the goose is not always good for the gander, so rewards and expectations must be specific to each member. Add to this a courageous leader and you will have a winner!

Gopi Ganesalingam, Vice President, Enterprise Development, MDEC.

This article first appeared on 27 April 2018 at Leaderonomics, titled “Malaysian Leaders Must Build World-Class High Impact Teams

Why Malaysian Companies Need To Be Better Storytellers

When national agency Malaysia Digital Economy Corporation (MDEC, previously known as Multimedia Development Corporation) was formed in 1996, the aim was to support the development of Malaysian-based technology companies — MSC (Multimedia Super Corridor) Malaysia status companies.

Over the years, the number of these MSC-status companies has grown to more than 2,500.

Many of these companies are already market leaders here, and some are ready to take the next step, which is to succeed in the ASEAN market.

To help crystallise their expansion efforts, MDEC recently launched the GAIN (Global Accelerator and Innovation Acceleration) programme.

We saw their potential to global players, and even to become global icons: ASEAN was envisioned as the next major stride forward.

Why Malaysia?

Why is Malaysia a fertile ground for emerging global icons? Firstly, Malaysia is centrally located, and for companies based here, many markets are easy to reach. We have gained a deep understanding of buyer behaviour and market dynamics.

Also, Malaysia – with a population of some 30 million limits the growth potential of any business, especially a technology one.

This fosters a creative tension, a drive to answer the strategic challenge: How does a company stand out from the rest of the field? During the infancy stage, most companies start by selling to customers that they can connect by a sharp focus on competencies, pricing, and delivery.

However, the next chapter of the story demands answering the overpowering need to stand out from the crowd. This will always remain a challenge, of course, for most companies throughout the entire life-cycle of the company: it’s the pressure to adapt.

But just to stop the story here: Consider that most companies will only look into this issue when they achieve a certain scale, a certain milestone along their growth journey.

Can you be differentiated by your product, service or is there something else? Looking at a sampling of the successful local technology companies such as iPay88, Fusionex International, N2N Connect, iflix, Sedania Innovators, Les Copaque, Mindvalley, I would say that only a couple have engaged the power of story.

Having worked at several MNC’s – such as Lucent, American Express, Telstra, and others – I have had first hand opportunity to delve into the sales process from the inside.

The truth, they say, always lies within. It has become crystal clear to me that the truly successful companies have been able to craft powerful strategic stories to explain their relevance.

Yes, we needed to have the right product-value mix, but the deal is definitely lost if our story lacks meat, lacks structure, and misses telling the unique selling point.

Photo taken from http://www.stevejobsmovie.co.uk/

Why stories work?

Stories are powerful differentiators, and for this reason have always appealed to the human psyche. The first clear stories that remain visible for human-kind are probably the Palaeolithic cave paintings in Lascaux, France, which are estimated to be 20,000 years old.

For centuries our ancestors were captivated by stories, and long before the written word, history was passed down verbally through the generations in the form of stories.

Photo taken from http://www.stevejobsmovie.co.uk/

It was paintings, visual work and the spoken word that captivated our imaginations.

Interestingly, fast forward to the modern era and noted linguist, Noam Chomsky, who in the 1960’s said that we are all born with an innate language.

He went on to say that the primary purpose of language was for thought – not communication!

Yet leaders and sales people continue to throw facts and figures at us. I am not saying that these are not important, but they need to be placed within the engaging, compelling structure – that we call an overarching story.

This is something that NGOs do very well. Talk to any successful NGO and they are able to explain the reason for their existence without using facts and figures.

Companies, possibly influenced by the finance and product specialists, seem to just jump straight into why the product is better or cheaper, and the better ones are able to sell the value proposition.

It seems we have deliberately ignored the wisdom of generations in order to get into a “you can never win” race to prove our product is better than competitive offerings.

Companies that are not able to climb out of this abyss will find it difficult to survive in an increasingly competitive and connected world.

It is tough to win the features and benefits war when you are sitting in front of a prospect, and impossible when you are not.

And in a competitive world, this is the challenge faced by ASEAN companies. There are of course notable exceptions; AirAsia always had a great story, represented by its famous tag-line, “Now Anyone Can Fly”.

Nadiem Makarim, Founder & CEO of GoJEK ,is a powerful storyteller and is propelling the company into an Indonesian logistics and payment superstar.

Strategic storytelling

Grab is following suit. The ASEAN market will be an open one, which means local SMEs need to start thinking about how they are going to compete, not just within the region but against global players.

For SMEs and technology companies the writing is not the wall. Learn to compete, or face extension. This is why the storytelling skill is critical, and, for me, an area where local companies have not mastered the battle of the mind that needs to be fought.

Let’s take a look at a couple of extraordinary storytellers from the technology world.

Steve Jobs attention to detail in presenting Apple product is legendary.

In the movie Jobs, you can see the time and effort that goes into his presentation – it’s not a matter of running through the few slides with a narrative. What he says, how he says it, where he stands, sits, how he unveils the product functionality is all carefully crafted within an overarching story so that he captivates, entertains and most importantly speaks to each and everyone in a personal way that touches our emotional core.

Why does he do this? Is it his passion, obsession with detail? Perhaps. But I think he truly understands how important stories are to the human psyche. And by casting the story correctly, he is opening the door for his sales and marketing people to follow up with the features and benefits pitch. That’s the art of strategic story-telling.

Simon Sinek, in his most watched video on the “The Golden Circle” says that by answering the why question you can reach into the limbic system, or the “emotional brain,” which we know from biology is buried within the cerebrum and is possibly the oldest part of our brain.

This part of the brain doesn’t control language, reasoning, coordination, etc., which are controlled by the cerebrum, but because it is the repository of emotions and memories it can drive actions more effectively than rational thought. Jobs and others have perhaps intuitively understood this and used stories to set their companies apart from the pack.

Elon Musk, a man I truly admire and respect, entrepreneur and leader extraordinaire is another example of a great strategic story-teller. He announced the Tesla Roadster in 2004, using the chassis and engineering strength of Lotus Engineering and delivered the first unit four years later.

The cars that were on the market were sold on their features and performance. Potential buyers were told about; zero-emissions, luggage space, range per charge, etc.

When presenting his electric car, Musk talked about it being “cool, great design and acceleration. It was a simple but powerful message targeted at the limbic system. Tesla’s Model-S became the bestselling electric vehicle in the US in 2016 and 2017.

To end on an important point: Why is storytelling so important to local technology companies? I’ve already talked about the competitive environment these companies face. Instead of pushing more and more information out, we need to learn the art of storytelling. The emotional engagement that I mentioned earlier is vital to business performance.

Technology today has democratised and has deepened our connectivity and our reach to our customers, competitors, and just about every single person on planet earth: So let us share the stories of our business propositions, and tell the stories of our entrepreneurship journey globally.

Malaysian companies can stand tall with other global players: we need to tell our compelling stories!

by Gopi Ganesalingam, MDEC’s Vice President of Enterprise Development.

This article also appeared on New Straits Times on 14 March at “Why Malaysian companies need to be better storytellers?

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