After 15 years of working for someone else Mikaal Abdulla finally got smart and started his own company. He is the co-founder and CEO of 8 Securities and his journey has taken him through Silicon Valley, New York, London, Dubai, Mumbai, Singapore and now Hong Kong.
Having spent the past 2 years building a company in Hong Kong, I can testify that it is f**king hard. In the beginning, ignorance is bliss. You allow your sexy PowerPoint slides to seduce you into believing your big idea is flawless. Your projections are up and to the right and you feel invincible. You sleep great at night and have the energy and ego to believe you will change the world.
It’s not until you quit your job, realize you have no health insurance, absorb the fact that VCs don’t respond to your emails and that you only have $2,000 left in the bank when reality sets in. You have been totally unaware of how misguided and flawed your plan really is. You are not sleeping quite so well…but you are resilient. You put your head down and execute. There is nothing glamorous about losing track of day & night, writing code, structuring a company, lawyers, tax law or fundraising. But you persevere.
First, the startup ecosystem is young and trying to find its footing. There is minimal structure that keeps entrepreneurs, investors, professional services and higher education in sync. Silicon Valley is the output of the perfect storm that has brought these pillars together as the foundation of a nurturing home for anyone with true entrepreneurial spirit and drive. This structure also plays an important role in vetting the good ideas from the bad and that valuable screen is missing in Asia. Hotbeds of startup activity like Jakarta, Singapore, Hong Kong, and Beijing are getting better but we are still years away from dissipating the friction that gets in the way of great ideas turning into real products and companies.
The second challenge in Asia is the deep rooted cultural aversion to risk. The average Asian parents did not invest so much money and effort in their children’s education for them to turn down a prestigious and well paying job. Priority number one is saving enough money to buy a home because only then is marriage and having children viable. There are no zero percent down payments in this part of the world. Today, it’s a 50 percent deposit, so there goes your bootstrapping. The longer we wait the harder it becomes to start a company.
There is also shame in failure. I have said before that in the US, people wear failure on their sleeve like a badge of honor. It says “I had the guts to try and here I am…stronger and smarter from the experience”. In Asia, our family and society view failure as simply the converse of success. Japan’s startup scene has suffered tremendously just because individuals are not given room to fail. And to fail and try again…well, that is just plain stupid, people think. Asian VCs are not much better and absolutely gravitate to proven and scalable models. I think Sarah Lacy captured it beautifully in this TechCrunch post.
The third challenge in Asia is that nobody wants to work for a startup. Startups are not cool and very few people care about equity as a currency. Once you are able to look outside the enthusiasm of the founding team, you will see that the fourth employee wants security, market pay and medical benefits. Until you can look and act like a real company you will surely struggle to find talent. There is absolutely no shortage of young and talented engineers in Asia but they are protected behind the fortress of the big companies they work for. Instead of developing an amazingly ubiquitous HTML5 application, they are more likely fiddling around with Pascalin the basement that houses their company’s legacy technology. They are certainly not all starting companies or clamoring to join yours.
I have absolutely no doubt that Asia will rise to the occasion, though. It will be the very same entrepreneurs that are struggling with these challenges today that will solve the problem for tomorrow’s entrepreneurs. The lens through which entrepreneurship is viewed by skeptical outsiders will change only once we demonstrate success. Success takes time. Across Asia’s we are seeing ecosystems form through the delicate interconnection of willing entrepreneurs, accelerators, risk tolerant investors, education and public & private services geared to serve startups.
As these ecosystems take hold, more companies are receiving seed capital than ever before. Now we need to see these seed funded startups break out and command the attention of venture capital. The A & B round announcements are few and far between. When more Asian companies secure growth capital, it will be a leading indicator that success is near.