The F* Word Asian Entrepreneurs Need & Why No One Likes Saying It
If someone quits the firm in Silicon Valley to start a company that ultimately crashes, it’s more than OK to go back to the old firm. Supervisors will celebrate the attempt as an educational rite of passage even if it failed. Why do Americans, especially in the Silicon Valley, tolerate failure in startups while Asians don’t and what makes some hardy people in Asia take the risk anyway?
Answers matter because Asian millennials have launched sharing economy apps, a solar energy firm and even venture capital firms. But Asian startups lag the West in terms of valuations. That’s partly because the startup trend formed here relatively late in 2007 and began notably spiraling just a couple years ago. But “fail” is a four-letter F-word in Asia, discouraging aggressive pursuit of original, high-stakes new companies. Once a startup fails, their founders usually disappear in shame rather than lionizing the experience and trying again, Asia business hands say. That trend will ultimately limit the net value of startups and nibble into national economies.
Most of Asia was poor just 30 to 50 years ago, and the middle-aged to older generations remember. Those elders may have started businesses because they couldn’t find day jobs that paid enough for survival. And a lot failed, meaning they equate startups with risk. Although some wealthy families give their children startup funds, most elders they discourage progeny now their 20s and 30s from taking risks.
“Southeast Asia doesn’t have a culture of accepting failure,” Inspire Ventures co-founder Tom Kim says of the region where his firm helps build new businesses. Most youth-run startups his region — Bangkok, Ho Chi Minh City and Manila – are failing, he adds. “Six months later they’re done. The businesses did not have a chance. They’re just kids. There’s no infrastructure to support them.”
Asian public school systems, often reflecting the values of elders in society, hardly offer that infrastructure. Teachers in greater China, Korea and other East Asian countries instill a fear of failure by ranking children according to accumulated exam scores. Low scorers may be hit by teachers and asked to sit in their own corners of the classroom. A teacher in the United States might instead herald poor scores as a chance to learn more. Some of the most celebrated Americans business people, Tumblr founder David Karp for example, dropped out of high school.
“Silicon Valley is obviously a place where people aren’t just saying it’s important to fail and you learn by failing – they get hired back,” says Tim Chae, partner in California-based venture capital firm 500 Startups. Chae looks for fundable firms largely in South Korea and it’s no Silicon Valley. “In Korea, starting from education day one, failure is not something you’re trained to love,” he says on the sidelines of theForbes Under 30 Summit in Singapore last week. “You’re scared of it. That’s why you see people so willing to be middle of the road, the best college and a job at Samsung.”
But fear of failure shows signs of thinning. Some company founders are naturally confident. Some such as Filipina dating app founder Valenice Balace keep getting venture capital despite thin margins, if any. And in China, younger people have seen over the past 10 years they can make more from a well-run tech startup than from a day job as the legal and financial costs of opening shop go down, Beijing-based technology angel investor Danny Levinson says.
Then there’s persistence, key especially for those who have sunk years of work into their companies.
“Scene was nascent then, funding was scarce, starting up wasn’t sexy,”Royston Tay recalls 2007. Tay is CEO of Zopim, a Singapore startup that provides websites live chat software. “The few of us in the scene tended to be really hardcore about entrepreneurship. Many of the founders from my batch simply haven’t succeeded yet. They’ve either started new businesses, or joined another startup. It’s rare to see someone take on a corporate job.”