Tuesday, September 30, 2008

Lessons from the Starting Up of StartUp@Singapore

I'm pleased that the annual StartUp@Singapore (S@S) business plan competition will enter its 10th year of operation when its official launch event is held this 22nd Oct. You can visit the S@S website for more details.

As the original founder of S@S way back in 1999, I must say that I do feel a sense of pride that the competition has not only survived, but has indeed grown to meet my original goals. Firstly, while I and my centre (NUS Entrepreneurship Centre) had played a lead role in the organizing of the events in the earlier years, the event has been fully run by NUS students since 2 years ago. Secondly, the number of participating teams in recent years had consistently exceeded 200, and indeed last year recorded the largest number of participating teams ever. Thirdly, the event had also been able to raise sufficient corporate sponsorship to become fully self-funded last year, and I am cautiously confident that the new student organizing team will be able to achieve the same this year, despite the distinctly harshier funding environment this year. Last, but not least, I believe the venture had now evolved to become more than just a business plan competition, but a highly effective program to get people to learn experientially about entrepreneurship by engaging in the early stages of the start-up process itself -- writing a plan, building a team, learning networking skills, and pitching to potential investors and getting mentoring feedback.

Looking back, I think the start-up of StartUp@Singapore itself may serve as an interesting case study about the entrepreneuring process -- opportunity recognition, brand positioning, fund raising, team building and execution. It all started in Q2 1998 when I was asked by the then deputy vice-chancellor of NUS, Prof C.C. Hang, to lead a task force to develop a plan on how to promote technopreneurship education in NUS. The vice-chancellor subsequently approved our plan in Q4 1998, and I found myself being asked to start up a new centre at the end of 1998 to implement the plan. (Incidentally, I decided to call the centre by the name of Centre for Management of Innovation & Technopreneurship (CMIT), since I'm from MIT...).

Although the main mission for the new centre was to introduce the teaching of technopreneurship to NUS undergraduates (this was how I got the mandate to start the Technopreneurship Minor Program...), I knew that I had to go beyond the classroom to raise awareness and interest in entrepreneurship in NUS. Being an MIT alumnus, I had vaguely heard of the MIT $50K business plan competition, and realized that there was an opportunity to start a similar business plan competition in NUS. (I actually knew I was going to do this when I was chairing the task force, but I did not mention it as a "to-do" thing in the task force's plan, as I didn't want to be stuck with it as a KPI in case I could not pull it off...). So as soon as I managed to get the Technopreneurship Minor Program successfully rolled out in July 1999, I went to visit MIT to talk with the MIT student organizers of the $50K Competition. After the meeting, I was quite confident that I knew enough to organize such a competition in NUS. But on the flight home, I became convinced that I had the opportunity to do more than that -- I saw the opportunity of having a competition that catered to not just NUS, but the whole of Singapore, because no one was doing any such competition in Singapore then.

So the first thing I did was to recruit an NUS student leader to join me to form the core management team. The student leader -- Ong Kee Sing -- was at that time the president of the NUS Entrepreneurship Society. He had earlier been trying to develop a business idea competition primarily among business school students, but I convinced him to take on something much bigger. We effectively divided our roles, with me playing the salesman & fund raiser role, while Kee Sing took on the COO role to actually build the NUS student team to run the competition. Between Kee Sing and me, we also came up with the name and logo-- I came up with the StartUp@Singapore name, while Kee Sing got the logo designed (which still largely stands today). I deliberately wanted a name that had Singapore in it to give it the right brand positioning, and even tried to get it trademarked (which I couldn't as there was some rules at that time about us not being a legal entity to own a trademark...).

The next thing I had to tackle was fund-raising, which involved selling the whole idea to some corporate sponsors. Those of you who know me personally would know that I'm a terrible salesman, but what saved the day was the lucky timing -- if you remember, Q4 1999 was close to the peak of the dotcom boom, so despite the bad salesman that I was, when I made the round to call on all the venture capitalists and government agencies that I knew (or had someone I knew to introduce), I actually managed to convince sufficient numbers to pony up enough sponsorship money -- I got NSTB to match the S$50K prize money, and several VCs to fund the operational costs. I must credit a venture capitalist friend, Mrs. Chin Tahn Joo, for helping to open the doors to some of her VC contacts for me. It is only after I had gotten some confirmed sponsorship funding that I went to my boss Prof Hang for his blessing.

Marketing the competition to students and the general budding entrepreneurial community turned out to be relatively easy once I had the prize money (and several prominent VCs to agree to serve as judges) -- the dotcom euphoria certainly helped to draw in a lot of interests. We ended up receiving over 200 business plan executive summary submissions, twice the target that I promised my boss. I was also lucky in my choice of COO -- Kee Sing did a great job marshalling a team of dedicated NUS students, and despite some minor hiccups, their execution was great. (One of the things I have learned as an educator working with young talents over the years is to hold my tongue -- it is often better to let them try and do something that you knew would likely fail, instead of stopping them from doing so (so long as it does not have serious consequences) -- people learn from their mistakes much better than if they didn't try in the first place. )

Despite the good start, the following year the competition nearly died -- just as the dotcom boom made the start-up at the end of 1999 easy, the dotcom crash in 2000 made everything difficult -- sponsorship from VCs dried up, NSTB was transitioning out of its stewardship of the T21 initiative, and entrepreneurial interests among Singaporeans nosedived. We had enough of foresight towards the end of the first competition to know that the second year would be tough, and I prudently stashed away some surplus funds from the first year to roll over to the second year. I was also able to rope in a long-term strategic partner -- the NUS Business School Alumni Society -- to help in the organizing effort. Their help in securing sponsorship from their alumni networks was crucial to make up partially for the loss of VC sponsorship. The number of participating teams dropped by half, but to cut the story short, we managed to persevere and survive.

In the intervening years, we had the good fortune of finding a succession of capable and passionate NUS student leaders to take the helm of S@S, and over time the student leads themselves had developed a very effective peer-to-peer process of grooming their own successor. My mantra to each student lead team is to try something new each year, and over the years, we have indeed seen a continuous streams of experimentation and innovations to the competition (e.g. introducing a youth category, reaching out to the heartlanders, bootcamps, advertising on buses, etc) . Some of these worked, some didn't, but I believe we all learned a lot in the process, and the fact that there's always something new kept the excitement up and made it fun. While my actual role in S@S had reduced over the years (even though I had continued to serve as co-chair of the steering committee), I must say that it has always been a privilege for me to have the opportunity to work with such entrepreneurial young talents -- it is they, collectively, who have taken ownership of S@S and built it into what it is today.

If I may draw any lesson from my own involvement in the early founding of S@S, it is the following: Borrow ideas from others, but define your own unique opportunity; use your first mover advantage to stake-out a clear brand positioning; recruit a self-motivated team; under-promise so you can over-deliver; emphasize execution & experimentation over endless debates on ideas; and last, but not least, recognize that lady luck gives, but also takes away, so be prepared for both.

In closing, I would like to link back to my last blog entry about double social entrepreneurship: I believe that StartUp@Singapore has the potential to become a double social entrepreneurship model. Indeed, my wish is that S@S will be copied by others around the world, for our ultimate goal is to get more people, especially those from the developing world, to learn experientially about entrepreneurship. So here's my suggestion to our future student leads of S@S: make it easier, not harder, for others in the developing world to copy us!

Tuesday, September 23, 2008

"Double-Social" Entrepreneurship

You all know the saying -- give a man a fish, he lives a day; teach him how to fish, and he lives a lifetime. There is certainly profound truth in this -- that imparting knowledge does more to improve lives than charity -- and I am not knocking it. The world needs more of both.

But reality is a bit more complicated. First, teaching someone fishing can be time-intensive and difficult to scale, unless one invents a better teaching methodology. Second, if fishing requires the use of a fishing equipment, then knowing how to fish is not enough -- you have to get the fishing equipment as well, which may be costly, especially if someone owns the intellectual property behind it and can charge a monopoly price.

What I am getting at is that doing good is not just a matter of good intention, it requires a good understanding of the role of innovation and scalable business model. This brings me to the concept of social entrepreneurship. Or, shall I say, the common misconception of what social entrepreneurship is about.

Social entrepreneurship has become a big buzzword these days, but like all buzzwords, its meaning has become vague and (as I will argue) potentially misleading. Generally, the term has been used to mean entrepreneurial activities directed at addressing some social problem (doing good), instead of making money for the entrepreneurs (doing well). In this sense, some have equated social enterprise with non-profit organization. There are some who believe that one can do good while doing well at the same time, and distinguish social entrepreneurship as having this characteristic, vs. the traditional non-profits that can do good but cannot do well, and thus need to rely on charity to fund its do-good activities. There are of course further distinctions -- some use the term to mean only a venture that can do good and do well at the same time, while others would include a venture that makes money in some conventional profit making activities and use the profit to subsidize its social (non-money making) activities. Regardless, most people seem to agree that the label "social" in social entrepreneurship refers to the intention of the venture -- trying to do good.

While this definition of social entrepreneurship (let's call it SE1) is certainly useful in highlighting its difference from conventional, purely profit-seeking venture in terms of its goal, it is in another sense not very helpful at all, because it doesn't tell us how social entrepreneurship actually differs from conventional entrepreneurship in terms of its entrepreneurial process.

I would like to argue that there is actually another meaning of social entrepreneurship that focuses on the process, not the goal. In this interpretation (let's call it SE2), social entrepreneurship is about a process of entrepreneuring that essentially socialize the core innovation or knowledge asset, versus conventional entrepreneuring, which emphasizes keeping one's core innovation or knowledge asset proprietary or private. In other words, in social entrepreneurship, the entrepreneur creates a new innovation or knowledge-asset, then allows (indeed, encourages or empowers) others to replicate it, whereas the conventional entrepreneurial model would have the entrepreneur trying to protect its innovation (e.g. seeking intellectual property rights protection with the aim to prevent others from imitating it).

The open-source model is essentially an example of social entrepreneurial model in the SE2 sense. Another example is the Wikipedia model. What makes the open-source and Wiki models powerful is that it encourages not only others to use its innovation, but also to contribute their own innovation or content which in turn is freely distributed. In other words, an SE2 entrepreneurial model unleashes and multiplies many more entrepreneurial contributions. Now, the open-source or Wiki model does not actually do away with the concept of intellectual property rights -- it just defines it differently from the conventional proprietary right, and involves a different form of licensing. It also involves a different entrepreneurial process or model for managing future innovations on top of the prior innovation, one that is social in nature (community of volunteer coders, user contents aggregation).

In my view , the really powerful social entrepreneurial ventures are therefore those that not only seek to achieve social goals (SE1), but also do it with a socialistic innovation process (SE2). If I may come back to the fishing analogy -- a social program to get volunteers to teach people how to fish and a chairty program to dole out fish both have social goals (SE1), and the former is certainly better than the latter. But even better would be an entrepreneur that invents a better way to fish that dramatically reduces the cost of the fishing equipment compared to existing technologies , then gives his or her invention away to the people to not only encourage them to use it (at the much lower cost compared to existing technology), but also to make their own improvement, and to have such improvements freely diffused as well. An alternative example would be an entrepreneur that invents a more scalable model to teach fishing, such that people who learn how to fish can easily (and are motivated/obligated to) become teachers of others.

There are actually a growing number of examples of such "double-social" entrepreneurship emerging in the developing world. One of the best examples I know is that of the Aravind Eye-Hospital in India, well documented in C.K. Prahalad's book, The fortune at the Bottom of the Pyramid. In essence, Aravind not only pioneered an innovative product technology (low-cost lens) and an innovative process technology (low-cost eye-surgery process), but literally make them available to a vast number of poor patients who could not otherwise afford it, using a business model that charges a small margin on more well-off patients to cover patients who cannot pay at all, or very little. The Aravind hospital system includes innovating a highly scalable model for training village girls to become effective nurses that handle most of the work conventionally done by doctors and surgeons, leaving the latter to concentrate only on work that truly require their critical skills.

The world needs more entrepreneurs with social goals. But what is truly in short supply are the double-soical entrepreneurs who have the vision and innovative know-how to create a venture that combines social entrepreneurial processes and social goals.