Outliers and Lost Opportunities

Note: This article was published in ‘The Edge Malaysia’, Malaysia’s leading business weekly on 20th July 2009 in my column entitled “Money & Entrepreneurship”.

Malcolm Gladwell tells a great story. His book, “Outliers” must be one of the best business books of 2008. The basic premise of his book is that people are successful not because of some great talent that they have or because they have very high IQs but because of the opportunities that they had, of being in the right place at the right time.

Take Bill Gates for example. How did he create Microsoft and end up being the richest man in the world? He’s brilliant, yes but so are thousands maybe tens of thousands of people in the USA, but why him? According to Gladwell, Gates was lucky enough to be born in 1955 which meant he was in his teens just when the computer revolution was taking shape. His parents were wealthy and because he was a bright child who got bored in public school his parents put him in an elite private school, Lakeside. It just so happens that in 1968, just when he joined Lakeside, the school bought a sophisticated computer terminal, the ASR-33 Teletype with a direct link to a mainframe in downtown Seattle. As owning an ASR and buying time on a mainframe was very expensive in those days, Gates was fortunate indeed to be at Lakeside. Hence he began programming at the ripe old age of 13, when most other teenagers were more concerned with pimples and hairspray.

Then, because Lakeside had a computer club he was given the opportunity of testing software developed by Computer Center Corporation a spinout of the University of Washington. He went on to do more computer work at the University, which had one of the more sophisticated computers in the US at that time. All of these honed his computer and programming skills which came in pretty handy in starting Microsoft.

His other great opportunity was his introduction to IBM. As Chairperson of the United Way Charity his mother Mary Gates met John Akers the CEO of IBM who mentioned that IBM needed someone to write the software for an operating system. She introduced her son Bill to Akers and Gates was given the job of writing the operating system for IBM, which was the beginning of the Windows operating system.

The final great opportunity that Gates had was that IBM was not insightful enough to keep the rights to the software that Gates developed for them. The thinking at that time was that hardware was more important than software and software had little value. IBM gave up the software to Gates and that was the final piece of the puzzle for Bill Gates.

Had Gates been born at a different time or went to a different school or if his private school did not have the ASR or if his mother had not met Akers or if IBM had decided to keep the IP rights to the software, there would be no Bill Gates the richest man in the world. Gladwell does not say this is luck, but the creation of the right opportunities is whats important.

That brings me to Malaysia and the Outlier principle. Perhaps we are not as successful in technology not because we don’t have the right skills or policies but perhaps we did not have the right opportunities and our timing was less than perfect.

Had Dr. Mahathir created the Multimedia Super Corridor in say 1986 instead of 1996, then perhaps Malaysia would be a great success today. The year 1996 was far too late to enable the creation of a technology industry, as it was at least two decades behind the US. The best of times for the technology industry when the giants of the industry like Microsoft, Dell, Amazon, Yahoo and many others were created was in the 1980s and early 1990s. The timing for the MSC was also bad because immediately after its launch the Asian Financial Crisis hit the region in 1997. It took 2 years for the region to recover and then disaster struck again with the “Dotcom Bust” in 2000. Then in 2001 we had the 9-11 terrorist attacks and again the global economy was hit. By the time Malaysia recovered from all these problems the opportunity to make it big in technology was lost.

Companies were also affected by all these economic turmoil. Many MSC companies were started in 1996 to 2000 and there was a tremendous buzz about the community, despite the 1997 Financial Crisis. However, the Dotcom Bust dealt a severe blow to fund raising for technology companies and many of the foreign Venture Capital firms that were investing in this region returned home. This curtailed funding and stopped the formation of larger technology companies. Again missed opportunities. Had we started in the late 1980s instead of 1990s we would have been able to ride the technology boom years of the 1990s and I am sure there would be many successful technology companies today.

Can the same be said for the Biotechnology and Green technology industries? Are we late in the game or are the best opportunities happening currently thus giving us a chance to make it big in these industries? If one explores the Biotech industry timeline (http://www.bio.org/speeches/pubs/er/timeline.asp) the Human Genome Project (HGP) was officially launched in 1990 while the Plant Genome project was started in 1989. The HGP was probably the start of the greatest race in Biotech history and the next 20 years brought forth so many discoveries in human healthcare, cloning technology, DNA sequencing and agro-technology. The Human Genome was completely mapped in 2002, 12 years after its launch and ahead of time. If you go to the link given above, you will see that there were probably 10 times more discoveries in the 1990s and 2000s than in all the decades prior to the launch of the HGP.

Malaysia, however, is just starting out on the road towards building a Biotech industry. While, opportunities still abound the lack of qualified and properly trained personnel and lack of quality Biotech education in our universities means by the time we are ready, it will be too late again for us. Yes, there will be some successes and I believe we should still build up this industry but the best years of the Biotech industry may be behind us by the time we are ready. For this industry finding the right niches would be the best thing for our country and that might be in Neutraceuticals or agro-technology.

Green technology is still in its infancy and probably holds out some hope for us, but the new Ministry of Energy, Green Technology and Water has to come up with policies and incentives soon because in the last 100 days since its formation we have still heard nothing in terms of Green technology. We are generally not known for our speed in policy formulation or implementation so unless something is done very soon, it will be too late again for us.

I don’t mean to disillusion everybody, but I believe Gladwell has some very important points in his book. Success does not come merely from talent or brains it comes because the talent and brains are in the right place at the right time or because we create the opportunities to be in the right place at the right time. Hence, our policy makers need to be more prescient, we need to look ahead into the future and look for the opportunities that will present itself over the next 10 to 20 years and then create openings for our Entrepreneurs to take advantage of these opportunities.

We cannot merely be followers of technology; we need to be creators of opportunities. Only then can Malaysia make the great leap forward to become a developed nation.

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Bust2Boom: Are you ready for the recovery

On 7th May 2009, Multimedia Development Corporation (MDeC) and Technopreneurs Association of Malaysia (TeAM) organised a very interesting Forum with 5 leading panelists on the topic “Bust2Boom: Are you ready for the recovery”. The premise of the Forum was that the recession is coming to an end and that companies now have to prepare for the recovery that always follows a recession. In economic terms, there is always a cycle of boom-bust-boom and its only a matter of timing when a boom will follow a bust.

We had an eminent set of panelists for the session comprising leading Technopreneurs, the CEO of the largest technology project financing company in Malaysia (Debt Ventures) and the VP of industry development at MDeC and I had the pleasure of moderating the session:

Panelists:

Mr.Chris Chan, CEO, The Media Shoppe Bhd (TMS)

Mr. Michael Lai, CEO, Packet One Networks (M) Sdn Bhd

Mr. Low Huoi Seong, CEO, Vision New Media Sdn Bhd

Mr. Zubir Ansori Yahaya, CEO, Malaysia Debt Ventures Bhd

Mr. Saifol Bahri Shamlan, VP, MDeC

Moderator:

Dr. V.Sivapalan

See below for the slides that I presented at the session to explain the premise of the Forum.

The Panelists concluded that we will definitely see a recovery in 2010 if not by end 2009, so companies should start preparing for the recovery. The Panel also gave several concrete recommendations for companies:

• 1) Get yourself benchmarked. A slowdown is a good time to get yourself benchmarked and to prove to customers that you have high standards in place. For example software companies can get themselves benchmarked to CMMI standards.

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• 2) Do more R&D. When business is good, you will be busy serving clients but a slowdown is a good time to analyze your business and improve what you have to offer by spending the time on R&D.

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• 3) Take advantage of the many grants on offer, not just R&D grants but also marketing grants. They can help you build up the business for the coming recovery

•4) Build more partnerships, locally, regionally and globally. When times are slow everyone will be more willing to look at new partnerships so this is a good time to do this.

• 5) Build credibility and a good track record, both for the business and personally.

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• 6) Spend time exploring the needs of your customers and fulfilling those needs.

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• 7) Broadband and convergence is a powerful medium that will disrupt the way business is done globally. It is no longer only about the Internet but convergence will happen with other devices and the most powerful of these will be mobile. Study how this will affect your business and your customers and use it to build new disruptive businesses.

I totally agree with these panelists. So start preparing for the coming recovery and then the boom that will certainly follow in 2010 – 2012.

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Teaching an Entrepreneur or a Genius – Its the Same

Following up on my article on how to teach Entrepreneurship, this New York Times op-ed article by David Brooks “Genius: The Modern View” is relevant. An Entrepreneur is like a genius. They both have talent and great potential but talent alone does not make a Genius great, nor does talent or Entrepreneurial traits make for a successful Entrepreneur. Like all great people even talented individuals have to practice, practice, practice and learn and improve on their skills before all that talent can flourish into something special. As Brooks says in his article, “The key factor separating geniuses from the merely accomplished is not a divine spark. It’s not I.Q., a generally bad predictor of success, even in realms like chess. Instead, it’s deliberate practice. Top performers spend more hours (many more hours) rigorously practicing their craft. Mozart played a lot of piano at a young age, Einstein read every book on physics he could get his hands on and Tiger Woods spent many hours every day at the driving range and golf course even after he had won all the majors, still fine tuning his game. Practice never ends and learning is a lifelong profession. So its the same for Entrepreneurs. You may have the talent and the traits of an Entrepreneur, but you still need to learn the skills of Entrepreneurship and management and then execute, execute, execute. And the learning never stops. Even today after 25 years as an Entrepreneur I am still learning new things.

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Can you teach Entrepreneurship?

My friend Dinesh asked me this question today: ” I’m curious, how does someone teach Entrepreneurship? Its those traits I am talking about, the ones which can’t be taught and have to be cultivated. The culture to take a risk, plug at it even if the going’s rough, to be able to think on your feet and out of the box to compete when you’re the smaller fish.”

Many Entrepreneurs generally believe that you cannot teach someone to be an Entrepreneur. That is true to a certain extent, but Entrepreneurial education is not about making an Entrepreneur out of someone who either does not have the interest to be an Entrepreneur or does not have the traits of an Entrepreneur.

To be a successful Entrepreneur, what do you really need? For sure you need to have traits like passion, desire, drive, risk taking culture, thinking out of the box etc. But is this enough? Will having these traits alone make you a successful Entrepreneur? Sadly I think not because I have see so many Entrepreneurs who have most if not all of these traits, yet 80% fail to create a successful entrepreneurial venture.

My own personal experience as an Entrepreneur of 25 years is proof. I had many failures, not because I lacked the necessary traits but because I lacked the skills.  If I had known then what I know now, especially the skills necessary to create a successful venture I would have been a more successful Entrepreneur at a much earlier age and would not have failed so often.

Can you even “teach” someone these traits? I have my doubts. One cannot teach someone to be passionate or driven or to take abnormal risks. It may also be difficult to teach someone the ability to “think on your feet” or “out of the box” but this is possible, as there are courses on creative thinking and innovation that can help with this.

So, traits are a necessary but not sufficient condition to create successful Entrepreneurs.

Today, there are literally hundreds of thousands of Entrepreneurs around the world who have these traits and have taken the plunge into starting an entrepreneurial venture. Yet the vast majority will fail. Why? Its definitely not because of a lack of passion or drive or the risk taking culture. No, they fail because even a startup, an entrepreneurial venture, is ultimately a business and like any business there are management skills that are necessary to make it a success.

But the skills necessary for an entrepreneurial venture are different from a mature company. Its those skills that we teach in Entrepreneurship education. For example, strategy – how do you create a competitive advantage, how do you ‘position’ your business within the competitive space (this is a different form of competitive strategy compared to what you would do in a mature company).

What is a good Value Proposition for Customers (you’ll be surprised at how few Entrepreneurs even understand what a Value Proposition is and how to effectively get that message across to customers). How do you market your business, what marketing strategies do you use & when.

Entrepreneurial education or training cannot make you an Entrepreneur, but if you have Entrepreneurial traits & want to create a successful business you don’t have to learn by trial & error, there are skills that can be taught to make you a better Entrepreneur and help you minimize the risks of your venture.

You still need to have the passion, desire, hunger and risk taking nature of an Entrepreneur, we cannot teach you that. But if you have these traits and want to embark on an Entrepreneurial venture we can help you better manage that journey and this has been proven numerous times even through my own teaching of Entrepreneurial programs and my coaching of Entrepreneurs.

Yes we can teach Entrepreneurship and we can help create better Entrepreneurs.

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Week in Tech Video on Creative Destruction Crossroads

The Week-in-Tech (WIT) is a weekly Video show helmed by Karamjit Singh the Editor of Netvalue, The Edge and ably supported by Netvalue writer Aishah Mustapha. This week they review my article “Creative Destruction Crossroads” in their show. Watch it here.

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Creative Destruction Crossroads

Here is my latest article in the 20th April issue of Netvalue, The Edge (Malaysia) on what Malaysia needs to do to move up to developed nation status.

In his book ‘Capitalism, socialism and democracy’, Joseph Schumpeter set out the idea that innovation leads to gales of ‘creative destruction’ as it causes old ideas, technologies and equipment to become obsolete. He states that the question is not “how capitalism administers existing structures, … [but] how it creates and destroys them.” He believed that this creative destruction is the essence of continuous progress and improves the standards of living of the society at large.

I believe Malaysia is now at a crossroads, where the old economic order is becoming obsolete and a new economic order is necessary to continue the progress of the last 30 years and to improve the living standards of its citizens. The fact that we are at this crossroads today coupled with a global crisis of confidence and ebbing confidence in the leadership of this country is critical to the future of our new Prime Minister Dato Sri Najib Tun Razak as it is to the future of Malaysia itself.

However, knowledge that we are at such a crossroads affords us the luxury to change direction and that is what Najib has to do. He can be the architect of a new economy, based on innovation and creatively destroying the old economic order, so that the nation can set itself on a new direction of prosperity.

This change is similar to what former Prime Minister Tun Dr. Mahathir did when he came to power. Until the 1970s Malaysia was an agrarian economy dependent for its growth on rubber, cocoa and palm oil as well as tin mining. What he did was turn a small agrarian economy into a high growth industrial economy by adopting friendly export oriented policies and by encouraging the formation of export based manufacturing industries. He fostered this growth through a stable government and inviting foreign direct investments (FDI) in these industries.

However, the world has moved on and export manufacturing that is dependent on abundant low cost labour has moved to countries that are still relatively economically under-developed with large population bases like China, India and Vietnam. Malaysia with its smaller population and higher relative labour costs is slowly losing out with FDI moving to these countries in search of cheap labour.

The world has moved on, but we are still stuck in the 1980s mentality of labour intensive industries. Hence despite all the progress we have made in the last 30 years, we still have factory workers earning less than RM1,000 a month and University graduates still only earning between RM1,500 and RM2,000 a month upon graduation. Amazingly that was what it was in the 1980s and 1990s and it’s the same today. This simply means our citizens have made little economic progress in 30 years. So despite the many gleaming buildings and wonderful highways, to the majority there has been no economic progress, only economic stagnation, despite 30 years of economic growth.

The main cause of this is the policies we continue to adopt especially our dependence on labour intensive, low cost manufacturing and resource based industries. Let us be very clear about this: traditional manufacturing jobs have moved to other countries; our oil and gas and timber resources will be depleted in 10 to 15 years; there will be a glut of crude palm oil in 15 years time when Indonesia will probably produce 3 times our production of palm oil; tourism will be highly competitive especially with the integrated casino resorts in Singapore and tax free pioneer status and similar policies will be offered by just about every country in the region to attract FDI.

In 15 years we will be in no man’s land, competing with all our neighbours for the same FDI and highly choosy investors who will go where the offer is the best. That will mean the lowest cost offer. If we don’t do anything today, then the future for our children is very bleak indeed. I cannot imagine factory workers still earning below RM1,000 a month and graduates less than RM2,000 even after 2020, but that is the most likely outlook. Unless we do some creative destruction of our own economy, before it is destroyed by competition in the future.

So what should we do? Firstly we must not just pay lip service to the change agenda, we must instead make a constructive and conscious decision to turn our economy and our policies around completely. The focus of our future must be on a “brain economy”, where innovation and brain power is the cornerstone of economic policies.

We must gradually stop the hiring of cheap, low cost, under-educated labour that powers the labour intensive industries. Manufacturers must be told that over the next 5 years import of cheap labour will be phased out completely and only manufacturing that uses high technology and information technology will be encouraged. Existing manufacturing plants also have to upgrade their operations to high tech operations or lose their tax incentives. In future only high tech manufacturing FDI will be allowed.

Next we must look seriously at advanced manufacturing and follow the direction of Japan and Germany in using technology intensive plant and equipment for manufacturing and move up the value chain into design and development and phase out original equipment manufacturing (where someone else designs the product and owns the brand but we provide the low cost manufacturing base).

We must also increase the support and effort towards the information and communications technology (ICT) and Biotechnology industries. While the support seems adequate, it is not sufficient if we are to move to the next level of growth. After 12 years the Multimedia Super Corridor is maturing and we have created many ICT companies who are now exporting their products and services globally, we must increase the support given to these companies to grow even further. We have done well but we can and must do more.

The Biotechnology industry is now showing signs of success with more than 100 Bionexus companies (many of which are already profitable) and plenty of biotech and agritech R&D being done in our universities. These need to be commercialised but for it to happen technology and education industry policies need to be liberalised and this can only be led by the Ministry of Higher Education and Ministry of Science, Technology and Innovation. We need to be more progressive if we are to move our universities to the next level of commercialisation success. The R&D is being done, but commercialisation is being held back by poor policies and guidelines.

We also need to create more competition and we need to reward the progressive Universities by giving them more incentives to create new R&D&C (Research, Development and Commercialisation). For a brain economy to succeed we need to have the brains in the first place and here we need to improve the quality of education at all levels from schools to Universities. Just because more students have 20 A’s does not make them smarter, because it is not the number of A’s but the quality of the A’s that matter. Our standards must be improved and we must follow international standards not create our own lower standards just to show more A’s. By doing that we are doing a huge disservice to our children because their future will be impacted by the quality of their education.

The country must change and we must create an economy that is based on science and technology and on creativity and innovation. It is a very difficult proposition and it is precisely because of that that we must do it. If it is simple other nations will also imitate what we do and that creates competition like what we are facing today. But by taking the difficult road we can create high-level competencies and capabilities for our citizens and that will secure our future and create the “brain economy” we need to survive and prosper. Maybe then our factory workers will earn RM5,000 a month and not need to survive by selling goreng pisang and tosai to supplement their income. We owe that much to our children and that’s what the new PM should do.

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A Future Fortune In Video Ads

Hi All,

For my Chinese friends, Happy Chinese New Year. May the year of the Ox bring prosperity and good fortune to you & your business.

Speaking of fortune, I came across some interesting articles in the NYT on video ads. Seriously folks, there are more and more articles these days on monetising videos & this can only mean one thing, there is going to be a boom in video ads in the near future. Its almost a prophesy & I strongly believe it will come true.

Discovery channel is discovering (pun intended) that there is money in its 23 year archive of video productions and has started to monetise them on the Web. This is strictly for the Internet as they expect Web video to grow and along with it video ads. Check out the NYT article here.

Then there’s the opportunity of making ads for the SMEs.  See the article here. The company Turnhere makes video ads for the SME industry on the cheap, just US$1,000 per video ad and according to Kelsey Group an advertising research group, the SME video  ad business will be worth US$ 1.5 billon in 2012. Thats just for small businesses.

Kelsey believes that Interactive advertising (which includes search, display, classifieds & other interactive ads) will increase from US$45 billion in 2007 to US$147 billion globally in 2012. Thats huge business.

Yet making money from video ads is tough at the moment. Pre-roll ads (just before the video starts) or ads either in between the video (a clear no-no in video advertising) or at the end of the video (who will watch it?) have all been tried with varying degrees of success (pre-roll is acceptable, the others not so). Companies like Turnhere make the entire video the ad and has had some success with this type of ad.

But how do you monetise other forms of video, news stories or documentaries or other short videos? I wrote about the Stanford startup that blends videos into videos and there is another startup in Israel called Innovid which also blends videos into videos, sort of like a “skin” over the original which is even clickable to take you to the advertiser’s site. Veeple is another startup that enables content owners and publishers to monetize their video content, by embedding interactive, clickable elements to their video. Thus you can embed clickable logos and links within your video to send viewers to your website, social network profile, etc. All these are innovations that will only help create the video ad industry of the future.

In terms of behaviour, are users taking to video ads? Apparently yes, based on a survey done by Kelsey (see below). Almost 43% of those who saw a video ad visited the website and 15% made a purchase. Thats pretty impressive & can be indicative of the future potential of video ads.

One company Blendtec even increased its brand recognition and sales by 500% thanks to its funny ads on YouTube. That is proof enough that you can monetise video.

Moral of the story? “There’s gold in them there video ads” (vads?)

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GEW 2009 Launched in Kuala Lumpur, Malaysia

Malaysia is honoured to be the country to launch Global Entrepreneurship Week 2009. Having done extremely well as the 3rd most active country for GEW 2008, Malaysia and Warisan Global, the hosts for GEW in Malaysia, were given the honour of launching GEW 2009 on 21st January 2009 in our fair city of Kuala Lumpur.

The guests of honour at the launch were Dato’ Saifuddin Abdullah, the Deputy Minister of Entrepreneur Development, Malaysia and His Excellency Mr. Boyd McCleary, the British High Commissioner to Malaysia (on behalf of Mr.Gareth Thomas, MP, the British Minister of Trade who was supposed to launch it jointly with Dato Saifuddin but had to return urgently to Britain).

It was a fantastic and colorful occasion with more than 150 invited guests and GEW partners and even Bag Pipers and a lion dance to commerate the Chinese New Year on 26th January 2009. I must say, having been in Scotland for a few years, the Bag Pipers were top notch for a local group.

As HE Mr. McCleary said, this year Malaysia has to do better than 2008 and thats to be No. 1 in the world. Dash, my friend (CEO of Warisan Global) you have a great challenge ahead, but with everyone’s support I am sure we will achieve this target.

So everyone, lets help Dash, lets make Malaysia No. 1. Onward we go……

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NetValue on What’s Hot 2009

Karamjit Singh of Netvalue, The Edge wrote an article on the What’s Hot 2009 Forum. Click here for the article.

Here are some photos of the event

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Whats Hot 2009 Part 2

In a previous article I shared with you the thoughts of a panel & participants on Whats Hot in 2009. Even better than what panelists say is what investors have actually been investing in especially in late 2008 as they are investing for 2009 and beyond. The best global gauge of technology investing is the USA, so what have US VCs been investing in?

The following graphic on industries that they invest in is interesting.

In the US the top 3 sectors are biotechnology, software & energy. Media and entertainment (which is what Creative Content covers in Malaysia) is a distant 5th.  Outsourcing is not even on their radar (thats obvious), broadband & mobile is in 8th place. Web2.0 is probably covered under software while clean tech is 3rd under energy.

So we are doing ok with our Hot 2009 except for biotech which is BIG in the USA but we didn’t have even a single Biotech Entrepreneur at our event. Perhaps much of our Biotech is still being done at Universities and has not got into the mainstream yet. This is food for thought for Malaysian Biotech Corporation.

So what should Entrepreneurs do in 2009? Besides Biotech, in the ICT sector software, creative content & IT services is definitely Hot. Because of the financial crisis computers and consumer products rank quite low, so very cold. In conclusion we are still on the right track with the hot sectors in ICT, now if only we can persuade the Biotech Entrepreneurs to join the party!

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Innovation: Video in a Video

This is a awesome example of a great innovation. By enabling you to insert your video or picture into another video, it allows you to sell ads within your videos and also to do so much more with videos. If this works seemlessly then it is going to be a great business idea. Thanks to Colin Wong for posting this video on his Facebook.

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Would Be Entrepreneurs Handbook

Check out the Would be Entrepreneurs Handbook from CNNMoney.com

Its not very comprehensive but a simplified 10 step guide on what “would be Entrepreneurs” should think about.

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