Note from me: You must be thinking when will this statement appear... LoL... read along and you will find out...
Let’s talk about startups.
Being a part of NEXT Academy and being at the centre of the ecosystem, I get to meet a lot of people who'd share their point of view and stories with me. And I realised that there are many misplaced expectations within the ecosystem itself.
Here are some of the most absurd expectations I've heard so far...
#1: Startups are sexy, I want to work there… Look! They’ve bean bags!!
(Happy minions working in startups.)
Fun fact: Somehow a beanbag can determine career paths, I don't know why but it works sometimes. If you want minions working for you, you should stock up on beanbags.
The reality is this, beanbags shouldn't be a determinant on whether you should join that startup or not. And if you can let something as trivial as that to determine your future, I think no one in their right mind will get you onboard to do anything meaningful at all.
What's important is you know what the startup stands for and why you believe truly in their mission. Do your homework.
Here is my not-so-rare interview occurrence when interviewing interns and permanent job roles at NEXT Academy.
Audrey: "Tell me what you know about NEXT Academy?"
Interviewee: "Em... you guys eerr... I am not so sure what you guys do actually..."
Audrey: "Did you check out our website? Because it is clearly started there."
Interviewee: "Sorry... em, I didn't."
Don't you walk into any interview and not do your research. Don't tell me that "this startup looks cool that's why I applied." Startup folks has no time for all these bullshit.
Number 2: Wow bro, you fundraised? Rich already la bro!
Now everyone is calling you BROTHER (more accurately, BRAAA---DEERR). Even people you’ve not met will call you at your 21st birthday and reminiscent about your good old days 25 years ago. Maybe this is a bit extreme, but you get what I mean.
Drama aside, you know that paper rich means nothing. It just means more accountability for you to make magic happen.
People fundraised BECAUSE they are running low on money. While some fundraised as a form of bridging finance to weather through a temporary storm, a lot of them really just took the money and yet have no clue on how to make a dime.
Number 3: Starting up makes you famous! I see your face on the papers everyday.
Sometimes you can sense of hint of jealousy towards you. But you know better, starting up and getting on news doesn’t equate to success.
Fame however, is good to boost things up, bring investor and customer confidence up. Most founders plaster their faces on papers purely because of business needs to bring awareness and push sales.
Number 4: Got tech idea then just go start up la! It’s easy nowadays. Got a lot of funds around.
Suddenly everyone has an idea. That’s cool. Suddenly starting a company sounded so easy, which is partially true. You no longer need deep pockets to do so.
The problem is that everyone likes the idea of merging tech with just about anything and expect it to change them into millionaires overnight. And in most cases, if you have a website for it, you can call it a “tech idea”.
The last time that happened was during the dotcom boom. And you know that if you’re lucky, you can make it out a millionaire. If you’re not lucky, even a bankable idea will collapse and you may find yourself on the streets.
While starting companies are a good thing, people are coming in with wrong expectations. That’s akin to build a house of cards and it is bound to collapse. You know that it takes more than just a bright idea to make things work, it takes resilience and courage; and at times, racking up unwanted debts just to make ends meet.
Number 5:Of course I should have the most equity; I came out with the money.
Equity dispute is common. Understandable. Everyone wants the biggest pie when the startup has an exit.
Ops, let me rephrase that. ONLY IF the startup has an exit.
The fact is this: most startups are going to fail. But you can increase your probability of success from 1% to 5% with a team of very dedicated people.
What you need are people with enough meat in the game to hustle their way to the promise land. And, you really do not need dumb money. You don’t need money that talk and boss you around AND does nothing to help the business grow.
(Is money important to startups?)
To the ones with the money, if the key people running the startups has not enough meat in the game, they will lose interest. They are there to work for their dreams, but if they ever felt that their dream is gone and they’re only working for you; you can say goodbye to your potentially handsome payout.
Number 6: At seed round, my company is valued at USD$10mil because a similar company in USA is valued the same.
Ok la… when this happens, I think all of us could agree that this person is highly likely new to the game. I’ve heard of this multiple times, and I’m sure you did too. In fact, we all probably did something similar when we first started.Even without an MVP to show, they love pitching it this way (it feels like it's templated)
- SEA population is ~640mil people
- The middle class is growing
- The total value for this industry is 500 billion dollar across SEA, and in [Malaysia], it has 50 billion dollar potential (I'm just giving you an example la, kay?)
- We're the first mover in the region
- We will capture that market, dominate it and then expand across SEA
- A similar startup in USA with ~310 mil population is valued at USD$10mil now, can you imagine how far we can go?
So S.E.A. has 2x the population of USA. So he assumes he can make it doubly big in S.E.A.! right?
Just like how Mark Cuban depicts it... Wrong. Why?
The demographic in S.E.A. is very fragmented
- USA is 1 country with 300 mil people who speaks the same language and has similar culture. You can have one team to service across USA.
- SEA is made up of 11 countries, each with one national language, multiple dialects and secondary languages. PLUS, culture in every country differs. You will need to establish teams in different countries who will be sensitive to the culture of the locals.
It takes a lot more effort and time to expand across countries than states.
- Is your team solid? Just talking about expanding into different markets is also dependent on the capability of your team.
- Do you know the local culture well?
- Are you guys newbies in the new market or well-connected in the market of expansion? Investors will take that into account.
- Strategic partnerships come in super handy here. Also because some government has very strict restrictions on foreign ownership.
So... please do not pluck numbers from the sky. Be diligent and do your homework to back you up.Maybe you are able to get some people to buy into your highly inflated valuation, but ultimately, the more money they put in, expect triple the pressure as they want to see their 10x returns fast.You can argue that investing in startups are risky. That’s true too. But to an investor, losing 10k vs 100k is very very different.
Number 7: Me and my investors are like buddies la... They will understand why I'm doing this...
After a few great laughs, drinks and handshakes.... you'd think you guys are officially buddies. Not really lar. It takes more than that.
Just think of it this way...
You and your investors are like friends with benefits. It's fun when everyone's high, sulky when things turn sour.
You love them especially when their money helps your business grow. And they feel the same when your business help your money grow.
Just like sex, when money (returns) is great, the happier everyone will be. The happier everyone is, the more trust they will have in you to build up their wealth; and the more trust you will have in them to stand by you for your next venture.
When everyone is in a relationship of trust, well done! You are off the "Friends with benefits" list and you're now officially... in a proper relationship.
Don't believe me?
Try losing your investor's 100k and say, "Bro, we're still friends right? The last business is unfortunate la... But I've another great idea. You wanna invest in my next business?"
Number 8: I’m the one who came up with the idea, he’s only the tech guy. Why should I give him any equity? He should be thankful he has the chance to build this.
Well, everyone thinks their ideas are great. Reality check guys! Ideas are cheap. In fact, no ideas are truly unique.
Here's a fun fact: Thomas Edison wasn’t the one who invented the light bulb. He was just the first who made a commercially viable one. There were quite a number of others who were on the race to create the 1st commercially viable light bulb back then. Annnddd, you know who won. :)
Ideas are cheap guys… execution is key. That's how Mr Edison got his name engraved onto our history books.
Next, the tech guy problem.
Well, I think it takes more than a techie to get the company running. The rain maker, the marketing rockstar, the office commander are all important parts of the puzzle. But let’s just focus on the techie for now.
These days, techies are seeing themselves as valuable assets. While my part of the world (Malaysia) still do not value techies as much, the good and capable developers who can actually build stuff are being snapped up right, left and center.
If you get a good one, he’s not the lucky one if he’s building it for you. You are the fucking lucky dude whom you should wonder why he ever chose you.
In the most recent case, due to a dispute between the founders and the tech guy, the startup subsequently saw the app got shut down by the techie… with just a switch.
It’s the same for any crucial role in the company. Ask yourself: if anyone were to leave the team, whose absence will cripple the company?
Number 9: Just go fundraise first then only look for customers later.
This is actually not as rare as I thought it would be. People are putting so much emphasis on getting love from investors, they totally totally forgotten about the one true love they should be getting from instead.
Loyal customers are they ones who will pay your bills and your salaries, stand by you even when things are tough. They're the ones who truly love you for who you are (your product la, not you) and ask for nothing but good service in return.
Sometimes you'll need some capital to get you started or even to pay salaries during a period where you are not yet profitable. But if you want to think long term, always remember the 1 dollar from your customer is worth more than 100 dollars from your investors.
...Yes, startup scene can be superficial, a bit like the modelling world...
At times, it is painfully entertaining but it is a necessity for survival, a belief that is needed to be imposed upon you. If not, the Malaysian way “where got business liddat?”
The hype is needed, truth is obscure, occasionally lies are exposed, the stories are juicy. Don’t worry, people never learn and will continue to rave about it. And precisely that, investors invest, customers buy, people are willing to take a step of faith to start up, new frontiers are explored, the economy continue to grow.
All everyone ask for is to be ethical about it. Or else, money get burned, employees lose jobs, confidence collapses, and it’ll be a lose-lose-lose-lose-lose situation.
Just recently, a startup came up with false figures to get funding and was ultimately exposed. Now, investors are wary to put their bets on rising stars and actual legit ideas to avoid a similar situation.
So please lar…. Don’t spoil the market.
...why still run or join startups?
I asked myself, "Why are you still at NEXT Academy?"
We've our very own ups and downs. But what make us journey on is when students come up to us and thank us for their journey and the second chance.
I think Khailee's post summed it all up.
The thrill of "adventure" -
Starting up while you are young, can't afford much and you cross your fingers hoping everything will turn out alright. Life's an adventure
Economic Growth -
The only reason why people are hoping despite the impending, expected economical catastrophe is because startups are paving the way for economical growth while the traditional businesses freeze hiring and cut man count.
Impacting lives -
Startups are giving many people second chances to come out from the poverty line, creating valuable jobs for people, giving people a chance to explore their true passion.Building an amazing team - Here you find like minded people who will go through thick and thin with you. Here you draw out the latent potential of others (mainly because everyone need to double and triple hat la).At times, these are little things you will only realise on hindsight.
We always look at how much we couldn't achieve, and forgot how far we've come.
It is time to celebrate the little milestones you have achieved and give you and your entire team a pat on the back. Say thanks to people who have supported you, because they made it possible for you to impact other people's lives. And thanks for bringing our country forward, we really really need it at this juncture of time.