Archive for the 'Money' Category
Wednesday, July 30th, 2008
Review of panel discussion: What are the next investing opportunities in new media?
Something very funny happened before Damon, my trusted sidekick, and myself headed to Swissotel for the iJam networking session (announcing launch of iMatch) yesterday. We happily walked towards Raffles City and go up to the ballroom in Swissotel. What followed was a series of confused hotel staffs not having a clue of any IDA event when we couldnt spot nor sniff a single clue of any IT geeks. It turned out we were at the wrong Swissotel (as Damon put it,”Oh there are more than 1 Swissotel!” and to which I replied,”*gasp*”). We were supposed to be at Swissotel, Merchant Court. Nice.
Ok so lets move on to discuss more serious “Series” - Series A, B, etc funding. These are terms use for different stage of fundings for startups by Venture Capitalists (sometimes jokingly nicked Vulture Capitalist - credit to my portfolio management professor, whose identity i shall not divulge :). First of all, I must say that it was a fruitful talk which was worth all the hassle Damon and I experienced prior to it. The panel boasts of a excellent concotion of local and international VCs and Technology experts - notable attendees: Ms Lauren Liang, Mr Pierre Hennes, Ms Ong Siu Leng. While they offer some pointers which many of us would have already known, they reinforce some beliefs in myself and offer new perspectives to what VCs want to see in young startups.
Some important takeaways buried deep in my head:
1) Early stage VCs look not just for a great idea. The assessment team plays an important part.
- How creative is the team?
- How is the synergy and energy of the team?
- The character of the team: Are they determined enough to walk the talk throughout? (without falling for the temptation of bigger money and job elsewhere?)
- Keith: An academia pointed out in a research that a trait of successful startups is that it has more than 1 founder, between 2 to 5, while 3 is the optimal number.
2) Localisation or Globalisation? The panel is quite divided on this. However, they all agree that it is important to focus on a segment of consumers on whatever choice you make. More importantly, get your first dollar in quickly, at least to assure your backers.
- Keith: Bear in mind Singaporeans being Singaporeans, we are a very unique breed of citizens compared to many others in the world (just hear our accent, our English, our love for durian, our loyalty to the ruling party :P). E.g. We can largely generalise consumer habits of Malaysians and Indonesians, or Taiwanese and Japanese, but what works in an already small Singapore market more often than not will not work for many other countries. Be prepared to customize radically when scaling abroad.
3) Be prepared to sacrifice, even if it means you being the CEO. When big brother wants to bring in someone more qualified and experienced to be the CEO, you should let go.
- Keith: Which is why, please hedge yourself with an MBA education (:
4) VCs require that the team has enough stakes nonetheless, so to ensure they remain motivated and responsible for their gains and losses.
5) Cold Calling the VCs may work, but networking would speed things up to establish a relationship between the VC and the Startup team. No one said it better than Mr Pierres when he said it is “like a life long marriage”. Relationships, or guan xi always work like a charm.
- Keith: I have to admit that I’ve never enjoyed networking, so I always go in with a mindset of making friends for learning, rather than other tangible benefit. It helps.
6) LIVE: One of the panelist said a rule of thumb of a successful product encompass the following attributes: Lively, Interactive, Visual, Experiential.
7) Me-Too Products - VCs generally do not require startups to be a from-scratch-innovation based company. Me-Too products can equally be, if not, more successful and astute investments for them.
8.) Are Singaporeans really that un-creative and un-innovative? Mr Douglas Abrams from Expara disagreed, and had seen his fair share of innovative local start-ups. Singapore, while not comparable to Silicon Valley at the moment in terms of the eco-system of funding, has good potential with our good infrastructure, supporting government schemes and growing amount of wealth (especially private) in Asia.
- Keith: I suppose the link to how growing wealth in Asia equates investing in Singapore startup is this: 1. Singapore being a financial hub for Asia 2. It is easier to manage startups in Singapore if the money comes to Singapore 3. Thus, with 1 and 2, go for local startups.
9) The question of IPO came up when a gentlemen asked what are the other exit points other than IPO and M&A? I didnt really get the answer other than a brief remark on convertible debt aka convertible bond (which I don’t think have to be these 2 exit points anyway), a panelist cautioned startups not to be overly confident and declare “I will be IPO-ing in 2 years”. No one can guarantee an IPO.
10) This has to be the best advice all day: You will always need more money and time than you think. So plan carefully and do not overspend. The worst mistake that can occur to a startup is to hold multiple series for extra funding when they realised they do not have enough. A business should be focused on the product, and not funding at all times.
Please feel free to comment on any points (:
Sunday, September 30th, 2007
Down to Basics - Part I: Free, Open Source or Commercial?
Ever been in a situation where your business decision comes to a crossroad in the topic, in which the answer is not always straightforward? Before I go into a deep discussion, I’ll explain what each terminology, at least, means for the sake of this discussion.
Freeware: This category of software in fact encompasses Open Source software - more distinctively, free software are otherwise considered which its source code is proprietary to the owner. E.g. MSN Messenger and Windows Media Player are both free but their source codes are not revealed to the public to work upon and developed further. The companies who developed these softwares or open source softwares operate on a different business model compared to commercial software companies - through provision of paid technical services, training of usage, using free software as a mean of branding and advertisement, etc.
Open Source: Open Source is a topic close to my heart; Mozilla, Filezilla(FTP Client and Server), Gimpshop (Image Editor), MySQL (Database Server), Tomcat (Web Server Test Environment), Asterisk (Phone System Program) and of course Wordpress 
all reside in my servers or laptop. By making source codes public, OS softwares leverage on the community spirit to produce improvements and plugins. One of the best known OS software is of course Linux, which is by default an operating system - but it has since evolved into a necessity for server technologies. Many times, these can be software which were originally commercial - such as Eclipse, a Java IDE.
Commercial: The name is self-explanatory; some examples are Photoshop and Microsoft Office, which can cost between USD$100 to USD$1k depending on usage.
Most often, many essential types of applications come in all 3 forms, or at least 2 forms. For e.g. Pixia (Free), Gimpshop (OS) and Photoshop (Commercial) is one combination, while another one would be OpenOffice (OS) and Microsoft Office (Commercial), That said, the following factors should assist in determining your choice.
1) Needs & Requirements: Is the free or open-source version fulfilling your needs? In many cases, free softwares includes important features of commercial softwares without the bells and whistle, and suffice the needs. E.g. OpenOffice has been adopted by many major corporations and organisations, like Singapore Armed Forces. OpenOffice was deemed sufficient for them; Microsoft Outlook, on the other hand supports Exchange Server, something which not many clients such as the popular Thunderbird has.
2) Costs: Assuming the software does not cost a single cent but brought you slightly less benefits, you have to make the call for the balance; is the premium you are paying worth the extra incentives? Are there other solutions out which are free as well that can complement the free solution? Is the extra effort and time worth it, or would you rather pay
3) Support: Closely linked to Needs & Requirements, there was a report released from Microsoft some time ago on how companies using Linux distributions had ended up spending much more than they would if they had continued with Windows OS. Of course, it may/may not be true, but the ultimate point is, if support was an important component as part of your business. Would you rather “self support” / pay for a technical personnel full time to resolve any issues? How often do you anticipate problems using their software.
However, always remember that paying heavily for a product does not always guarantee world class support. I have experienced some of the worst support paying USD$10,000 a year, while the best support paying for nothing (e.g. Open Source software). How did this happen? The logic is simple - Free softwares have more users, and thus, a larger community of fellow users who may have experienced the same problems and solved via “diy”. For open source software, plus the large community of users and developers altogether, there you go - you have thousands of developers working on plugins and answering your doubts on forums - for free
4) Usability and Adaptability: By now, we all know some of the best applications in the world are free; Mozilla, MySQL, Joomla (Award Winning CMS). Similarly, for some software, there are simply no alternatives - Gimp is notoriously known to be difficult for beginners who were used to Photoshop; Likewise, when I tried my hands on KompoZer (formally nVu), a web authoring WYSIWYG tool, a competitor to Dreamweaver, I had the hardest time relearning the basics and all the intuitively simple and useful functions in Dreamweaver. Dreamweaver has been far too developed and deservingly gets my pennies. *ps* KompoZer just released a latest update in September 07 while I was evaluating an 05 version.
5) Compatibility: What I meant by this is, in its most basic form for e.g. , assuming you run PHP applications - why then, would you use M$ SQL when MySQL often goes hand in hand with PHP - just see popular applications such as phpMyAdmin and WAMP(Windows)/LAMP(Linux) - which combines PHP and MySQL. Most of all, if you decided to save cost on server OS and opted for Linux, do not expect to use ASP later on. Likewise, are you in sync with your major business partners and your system compatible with theirs, so in order to smoothly integrate with theirs?
In a nutshell, the answer is, as always, “it depends“. Run through Pt 1 to Pt 5, before you make a judgment, as your business needs may demand different answers at different times. Personally, I am a strong advocate for Free or Open-Source applications - I have volumes of pleasantly surprising experiences with many of them - more importantly, my own company is a SME where savings go a long way, and where customizing Open Source applications is a huge revenue generator; Before Internet, it probably is not wise to use unsupported software in your enterprise; However, the advent of Internet meant previously isolated users are now able to get together and help each other out, and to “sanctions” or volunteer (Open Source Movements) for improvements of the applications.
Of course, there will always be the argument that without funds, there will be no R&D and eventually commercial companies cannot improve their products. This however has not surfaced; Oracle and MS SQL have instead been ruffled with competitions and economist will tell you competition leads to better standards.Wikipedia has shown how potent a single community can be - in fact, that they are intending to compete with Google with a similar concept -
http://www.techcrunch.com/2006/12/23/wikipedia-to-launch-searchengine-exclusive-screenshot/
It often fascinates me how many SMEs have conveniently overlooked free and open source solutions without considering all of the 5 factors I have listed. Most of my clients are often ready-to-pay for anything but consulting and technical support. Firm believers of commercial software should instead look to the power of communities in the open source world as the future of IT.
