Sunday, July 6, 2008

What's wrong (or right) about Singapore's entrepreneurial ecosystem ?

Silicon Valley has become the Mecca for would-be high tech entrepreneurs AND government policy makers around the world. A large proportion of entrepreneurs founding companies in Silicon Valley are immigrants coming from outside the US (see e.g. Annalee Saxenian's Silicon Valley's New Immigrant Entrepreneurs, and Angelika Blendstrup's They Made It), and hardly a day passed without some government somewhere in the world declaring that they intend to make their countries/regions to become the next Silicon Valley. There have been many articles and quite a few scholarly books on how the Silicon Valley entrepreneurial ecosystem works ( the three books I most recommend are : The Silicon Valley Edge, Understanding Silicon Valley: The Anatomy of an Entrepreneurial Region, and Regional Advantage: Culture and Competition in Silicon Valley and Route 128 ) , as well as an increasing number of works that seek to compare various Silicon-Valley-wannabe-regions in the world with the real McCoy (see e.g. Building High Tech Clusters: Silicon Valley and Beyond, Cloning Silicon Valley: The Next Generation High Tech Hotspots, Creating Silicon Valley in Europe, The Inside Story of China's High Tech Industry: Making Silicon Valley in Beijing ). I myself have contributed a chapter each on Singapore in two of the latest such books (Making IT: The Rise of Asia in High Tech, edited by Rowen, Hancock & Miller, Stanford U Press 2006, and Growing Industrial Clusters in Asia, edited by Yusuf, Nabeshima and Yamashita, World Bank 2008).

Many official government delegations from Singapore have visited the Silicon Valley in recent years to learn how it works, and to find elements that they can adopt back home. There has been significant changes in government policies towards improving Singapore's environment for high tech entrepreneurship in recent years, and some of these recent policy changes clearly bear the imprint of what have been learned about Silicon Valley through such visits. Nevertheless, a casual browsing through a number of popular blog sites on Singapore's entrepreneurship scene, like Sg.Entrepreneurs, seem to suggest that many entrepreneurs are not happy with the environment for entrepreneurship in Singapore. Since 2002, a stream of my own NUS students, who spent their one-year internship with high tech start-ups in Silicon Valley under the NUS Overseas College (NOC) program, had come back to Singapore, and many would invariably tell me soon after their return home that they greatly missed SiliconValley, and that they lamented various weaknesses in Singapore's entrepreneurial ecysystem when compared with that of the Silicon Valley.

In this and the next couple of blogs, I would like to focus on how Singapore's entrepreneurial ecosystem can become more vibrant and dynamic. While I do have some points of view (including some contrarian ones, as you will see...), I would like to start by encouraging my readers to contribute their own comments on what specific aspects of Singapore's entrepreneurial ecosystem they found lacking when compared with Silicon Valley (or other high tech hubs in the world), and what they think could be done to improve things, and by whom. I would like to encourage you to go beyond just observing differences between Singapore and Silicon Valley, by probing more into the underlying reasons for such observed weaknesses, as well as to ask more fundamental questions, e.g. what aspects of Silicon Valley (or other high tech regions) should we actually try to emulate ? Might some of the observed differences actually suggest strengths we have that we can build upon to differentiate ourselves from other high tech hubs, rather than just trying to ape what they are good at? I look forward to your contribution and the interesting exchange that can emerge !

10 comments:

zwee said...

I asked Mr. Ong Peng Tsin, the founder of Ecentuate, which was recently sold to IBM, whether it was wiser to start a high tech company in the valley or Singapore.

He said the latter is capital efficient while the valley has the network that will help grow the business. For him, he mentioned he has already established his network so Singapore will naturally be the place for his next venture.

On that thought, I wonder why the network in the Valley is comparatively better. Being in the valley for the past year, I realized it is so much easier to reach out and ask for help here.

From the executives working in Google, Yahoo to the movers and shakers of the valley, they were all willing to extend a helping hand to budding entrepreneurs. That quality of sharing and going the extra mile for someone you just met is deeply ingrained in the culture here. I believe that is what Mr Ong meant by the network.

My 2 cents.

DaViD said...

i think the network really matters. i've been in Beijing for the past few months. the network here is very active. it attracts many talents and companies to come and explore. I guess it's very key. if you look at the VCs in China, it's very much the SV crowd. They travel back and forth between Shanghai(Beijing) and Silicon Valley. They are very generous in talking to young entrepreneurs. It was said in the CHINICT that Beijing is twice the pace as Silicon Valley. Everything there happens really quickly. On the other hand, Beijing is still lack the SV culture especially among the native Chinese entrepreneurs. During the series BASE (Beijing Angels and Startup Entrepreneurs) networking events, the Chinese found it hard to mingle with the foreigners, primarily because of language and their receptiveness toward a "foreigner networking event".

There needs to have a bridge to link the two very different cultures between Chinese and foreigners (be it Americans, Europeans or Singaporeans). I guess we need to be the ambassadors or the bridges. I guess some of the things i've seen in China also apply to Singapore. I guess the most important step is to attract those TOP entrepreneurs to establish closer connections with Singapore. All NOC colleges should do that to help set up the entire value chain. Hopefully, together we can make it a better place for entrepreneurs from all over the world.

JC said...

I am not an entrepreneur nor have I been to Silicon Valley - therefore may not be the best person to comment on this. However, my 2 cents on this:

Three critical factors contribute towards the success of an entrepreneurial ecosystem: (a) the Environment itself and (b) the risk taking ability of the entrepreneur and (c) the innovative mindset of the entrepreneur and his team.

Speaking about the environment, this requires a physical environment that is conducive and makes it easy for quick start-ups and one where a critical mass of shared resources are available to tap into for budding entrepreneurs to fall back on. Is this available in Singapore? Perhaps not, as of today. Is this something that can be built over time? Certainly, I would think this is very much a possibility given the willingness and need for Singapore to project itself as a R&D hub. I think there is a clear realization by those who govern the nation that R&D investments are essential to drive any new industry. The recent investments in Solar PV research centre SERIS is a good example of proactively investing R&D in an industry that shows promise. This is of course with an expectation that this R&D would drive future industry development and growth. I would think this is a valid argument.

Other than the physical environment, there is a clear need for what I would term as a “Mentoring Infrastructure”. This is the “software” that acts as a booster to the budding entrepreneurs and is provided by those who have “been there” and “done that”. Again, there needs to be a critical mass of experienced entrepreneurs who can provide this support. I suspect that there may not be a big enough pool of entrepreneurs / SV returnees who can provide this support as of today. The solution may be to look at starting up something similar to the extremely popular group: The Indus Entrepreneur (TIE), an association of SV entrepreneurs who provide the mentoring and hand holding support to budding entrepreneurs in India. Regular visits by the experienced mentors are made from SV and TIE facilitates the interactions locally.

From what I have seen thus far, I think there is a fairly optimal risk taking ability amongst the Singaporeans and those starting up from Singapore. Assuming a normal distribution curve, there should perhaps be enough of risk takers to fit into the environment.

The one area where I have my reservations about the typical Singaporean is the “innovative mindset”. I have had a fair degree of experience working closely with individuals from different nationalities. While generalization may not be fair here, if I were to single out nationalities of individuals who tend to be creative, India and Vietnam would rank high in my list amongst Asian countries and Italy would rank high amongst European countries. Is there a pattern here? I believe there is – the traffic condition on the road and the multi-winding path one needs to take on a road (or in some cases on the footpath!) even if one is driving straight. As someone who has driven in Indian roads, I can vouch for the need to have a radial thinking process when driving and being prepared, every minute, to do what would be unthinkable to a typical Singaporean. A typical Singaporean, in my experience, tends to play by the rules of the game – and this means – thinking straight. I have a theory – “creativity thrives in a chaotic environment”. This is because it is the chaos and the resultant constraints which make you look at different options. And this is a mentality that has to be built over time and most Indians do have that in their bloodstream. Any surprise, a vast majority of the SV entrepreneurs are of Indian origin?

Vibhas said...

I feel Singapore has too many influential firms and little competition. This does not present an environment conducive to innovation. Any new technology in the market is imported irrespective of cost in order to maintain the image of a modern and high quality destination for expat talent. Whilst it helps Singapore sustain its economic growth, its youth may be deprived of chances to compete and innovate processes. It also appears that the focus seems to be an avoidance of failure, as opposed to Americans focusing on finding the winner.

Bangalore and Hyderabad are nowhere near Silicon Valley, probably poor clones existing because of abundant availability of high quality English speaking graduates, but the reason for their success is fierce competition. Singapore looks like having the potential with all its infrastructure and capital, but why does it lag in innovative entrepreneurship? Is it because we are so complacent with a secure and comfortable life style that we have developed an aversion to risk?

DaViD said...

let us look at "what's right" and how we should leverage those!
The government is offering lots of incentives for people to start their own company. many education institutions are offering the students opportunities to take the entrepreneurial path. Many funding schemes are offered by the government to help startup grow and SMEs to become bigger.
I guess we should definitely leverage on the incentives to nurture the entrepreneurial culture. it takes time to build the culture. However, as more and more people start to join the startup community, the picture will change.

Zhou Wenhan said...

Hi Prof Wong,
I have posted this post on NearDeals.com. It’s a thesis
project for my Final Year at NUS. I am trying to surface locally relevant content by using social voting and location based information. Do let me know what you think. Looking forward to the next blog update.

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