Discover the entrepreneur in you (Part 3a): How to make the pitch

I earlier wrote about the importance of making a good elevator pitch.

Today, I was at a Tech Start-up event. There was a good mix of some 30 booths with start-ups from Singapore and other countries. It has been a while since I went for such events. Most of the booths I visited would have someone enthusiastically present their ideas and products to me. One caught my attention, for the wrong reason. After 5 minutes, I was still not clear what their product was about, so I moved on to avoid wasting more of each other’s time.

Since I had shared the importance of an elevator pitch, I should also share some thoughts on how to make a good elevator pitch.

  1. A good first-liner. Today, someone said to me, “What can I do for you?” That’s a bad opener for such an occasion. I wouldn’t even say, “Can I help you?” I did not walk into a provision shop where there was a range of products to buy. As a start-up, you should be having a single main concept, and you should go straight to the point, such as “Good morning. Can I introduce you to our application which allows you to ….”
  2. Be enthusiastic. At several booths today, I had to prompt the presenter to tell me more. I was given short replies that were incomplete explanation of the concept. It’s easy to tell if someone is enthusiastic or just there to fill the time. An enthusiastic person would have a sparkle in the eyes and a belief in the product that would show through. An unenthusiastic person would be stating facts plainly and often insufficiently to allow the listener to fully appreciate the concept. Make sure you add something about what’s good or unique about the product / idea. Use suitable adjectives to spice up the explanation. Let your conviction come through.
  3. Where possible, use concrete examples or compare your concept against some established ideas so it is easier for someone to visualise. Examples:
    1. “You may have used a job portal like Jobstreet.com. A common challenge an employer using such a portal may face is … (describe a problem). Our solution is to build an alternative job portal that allows … (describe your solution to the problem).” In this example, one would immediately know yours is a job portal but with a solution to some challenges faced by job advertisers to make it possibly more attractive to use.
    2. “Our solution allows you to gather lots of special deals information that other users have tagged over Google maps.”
    3. “Our application will help you aggregate information from various search sites such as Google, Yahoo, … and classify them by ….”.
  4. If you have it, flaunt it. If you have some specific advantage over others, be sure you tell it. Do not wait for your listeners to ask you for it. For example, if you are running a portal selling unique asian art pieces and you have a renowned art connoisseur backing the project to classify the pieces, say it. Or if you are doing a medical products portal with a well-known doctor or organisation ensuring proper sourcing, state it.

One start-up that presented to me today was smart enough to state that it is incubated by a well-known portal that has a large existing subscriber base. That immediately gave me confidence that this is not a wannabe. Seasoned investors or partners often look at how you can operationalise your ideas. If you have experienced industry people running the business or a large network of users to tap on, it gives confidence that the idea has a better chance than its peers.

I recall when I started ASKnLearn in the face of other dotcoms, we threw up whatever advantages we had, such as having a higher learning institution as one of our shareholders and credible board members in the education circle. When we had some top schools as our clients, we flaunted these.

To different audiences, we played different cards. When schools were skeptical who would support the system if we closed down, I could state that the polytechnic had developed the system and was using it themselves, so the system would still be around if we are not. When I presented to investors, I would cite credible people that have already supported us. That would give confidence to the listener that some due diligence had been done on us already.

5. Look out for visual and verbal cues from your listener. By all means, do an impactful opener and crisp explanation. As you do, watch for body language and interrupting questions from your listener. Be flexible to adjust your presentation depending on the response. A mistake is to keep going on when your listener is obviously confused or may have a pressing point to clarify but you are ignoring it.

6. Be sensitive to who your audience is. He/she could be one of several likely roles – potential investor, partner, distributor, user or even competitor.  It is not easy to tell and may be rude to ask who the person is before you present. However, I would at a suitable point after a brief pitch enough to provide the overview of the concept, pause a while and see if there’s a question (but don’t ask if he/she has a question, just have a short pause) or sense the body language.  You could ask questions like (depending which is appropriate for your concept), “Have you used a similar product before?”, “How do you see this as being relevant in your work?”, “What do you think of the concept?”, etc. It is however best to let the listener ask the questions so you can gauge his/her level of understanding to determine who likely role the person may be.

7. Finally, have a takeaway. Ask for a namecard, ask if there can be a suitable date for you to make a more formal presentation, or referral, or if he/she would like to sign up as a user, etc. Or you could ask for a feedback to see what improvements can be made.

Making good pitches takes practice. Constantly practice and be sensitive to responses. Have fun!

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Discover the entrepreneur in you (Part 4): Tenacity – a highly useful quality

There is a popular game in arcades where moles will pop out of holes on the game machine.  You have to hit it hard to knock the mole down. No matter how fast you hit, there will be more moles popping their heads out smiling at you.

A die-hard entrepreneur is like the moles. The entrepreneur gets knocked around with problems and failures. Yet he/she keeps popping up, refusing to surrender to the hard knocks of life.

We often glorify the success of entrepreneurs. Some have an easier route while some have it real tough to achieve success. Even for those on the easier route, there will always  be challenges that will confront and even threaten while on the road to success.

We remember Sim Wong Hoo for his Sound Blaster success. How many of us know that was not his first venture? His first was the Cubic, a multilingual, multimedia computing machine that was too costly to build and did not sell well (http://www.avinashblog.com/2011_02_26_archive.html). I am old enough to remember seeing them briefly in the computer shops when I was buying my first PC.

From that costly failed venture, Sim and his partners decided that sound card was the way to go. They uprooted themselves to make-or-break in the USA. Even so, selling the sound cards in the early days was a tremendous challenge that required persistency in the face of rejections (http://www.daretofail.com/article.php?adi=88&pageno=2).

A remarkable story is that of Lim Tow Yong. He founded the Emporium Group Holdings in the 1960s and built it to a $300 million annual revenue business. Then, crippled by the recession of the mid-80s and by competition, he became a bankrupt at the age of 72. Refusing to give up even at such an old age, Lim started all over again. He went back into the retail business in Sabah, Labuan and Brunei. Ten years later, he sold his 17 stores and supermarkets for $4.2 million, making him a millionaire all over again! (http://www.askmelah.com/82-year-old-comeback-kid/)

In my earlier posts, I shared about being turned down three times by the polytechnic prior to starting ASKnLearn. We eventually succeeded because we had the inventor of the software on our side, who was unwilling to work with the other suitors. Our persistence also played a part in convincing the polytechnic that we had the determination to succeed.

Securing clients proved difficult in the face of free software offered by many dotcom companies that had also started around the same time as us. I recall going to my alma matar where I was then actively serving in. The decision maker was my former teacher and I thought it would be easy to seal the deal. He showed me the offers he had received from 2 other big start-ups to use their software, one which he cited was chaired by Mr Koh Boon Hwee and another by a public listed firm, both totally free. He said there were many dotcom companies looking for him. How would he know if ours was not another “me-too” (a reference to companies with non-unique business ideas in the internet era) that would not survive?

I went away empty-handed. After all the euphoria of the past 6 months getting the business organised, incubated and finally started, I suddenly felt the weight of being an entrepreneur that day. My wife and I had put our savings into this. We left our full-time jobs and signed an agreement to put additional investment money into the business should it run out of capital in the first 2 years.  We had three young children. Securing real business was not as easy as we had envisaged in our many revisions of the business plan. We had not anticipated the flood of competition that came up.

It was late in the afternoon that day, as I drove home empty-handed after the rejection. I drove by Victoria Junior College and felt I had to turn in to make a try to secure at least a deal for that day to make up for the earlier disappointment. After asking around, I got to see the Head of Department for IT.

He listened patiently to my presentation and then made me an offer. The college had already selected a partner for its Fast Track@School implementation, a programme whereby IDA co-funded selected pilot schools to develop broadband content and systems. By coincident, the college had just received a reply from IDA that day asking for revision to their original proposal for greater clarity. He challenged me to come up with a totally new proposal within 2 days. If it was better than what he had, he would resubmit with ours.

I loved the challenge. It presented a ray of hope. I worked the whole night and next day on it. The college submitted ours and it went through without questions. Much later, he told me he was impressed with our speed, understanding of their requirements and determination that he decided to go with us.

The project started us on the track of developing complex multimedia simulations for mathematics and science. We did not even know how to build it when we started off. We figured out along the way by trial and error, selecting various part-time developers until we found what worked.

The college referred us to Raffles Institution, also on the IDA Fast Track programme. We secured that deal as well. One referral led to another and we accumulated more projects on the way until we built up enough confidence to invest further in developing more content of our own.

What started out as disappointment in losing what I had considered as a sure-win deal became a good break into a new area of content development with top schools that helped established our branding. Failure can turn into success if we do not drown ourselves in disappointment but use the failure to spur ourselves to try harder to succeed.

Despite the occasional successes we had in the initial 3 years, we have had many more rejections. If we were rejected by a prospective client or investor, we just move on to try harder to find the next one. It was common to be rejected, not just by clients and investors. One of our first employees chose to pay out his contract and told me the company had no future. Once, I made a job offer to a top graduate of a polytechnic. He told me that he did not want to waste his time with a small company like ours.

We were running out of funds after 3 consecutive years of losses due to high development costs. I wanted to secure more capital from shareholders through a rights issue to avoid having to retrench. The exercise turned out to be a failure. None wanted to invest more. I had the paintful task of telling various managers and some junior staff that we could not keep them. We closed down the two segments of the business. The restructuring helped us tide over until we broke-even our operations on the fourth year and became profitable thereafter.

I consider myself fortunate compared to what other entrepreneurs had to go through.  I found this list of 50 famously successful people who had failed initially (http://www.onlinecollege.org/2010/02/16/50-famously-successful-people-who-failed-at-first/).  That included Bill Gates and Paul Allen whose first venture was not Microsoft but Traf-O-Data and Colonel Sanders who had a hard time selling his chickens.  His famous secret chicken recipe was rejected 1,009 times before a restaurant in Utah accepted it and partnered him to form “Kentucky Fried Chicken”.

If you are determined to succeed, never let failures get you down. Constantly learn from failures and preserve on. This tenacity will serve you well.

Watch this blog for more upcoming articles on entrepreneurship!

Discover the entrepreneur in you (Part 3): Making the right pitch

An important skill an entrepreneur should have is how to make an elevator pitch.

What’s an elevator pitch? Imagine yourself stepping into an elevator.  Inside the lift, is the greatest venture capitalist (VC) in town whom you have been wanting to meet to pitch for funding for a great idea. The door shuts. There’s just the two of you. You have 30 seconds before the elevator reaches the destination. You have a captive audience. This is your biggest chance to make that pitch.

If you can get the VC excited enough about your idea, he could ask you to call his secretary to schedule a presentation where you may get 30 minutes to make a stronger case. Otherwise, he might just say “interesting idea” and move off when the lift stops. You may never get a chance to meet the VC again.

Of course you can use the elevator pitch idea to sell anything, whether it’s funding from a VC, or getting a sales opening from a major prospective client, or simply trying to impress the girl (or guy) of your dream. Making a strong impression to someone new in the first 30 seconds (or perhaps a minute or two) is critical. It need not be in an elevator. It can be any moments where you have the undivided attention of someone important for a short period.

I had my elevator pitch moments. When I first approached Ngee Ann Polytechnic to secure their agreement to license their software to us, I was turned down for being too inexperienced. I looked at our situation. It was just my wife and I in the team, backed by some modest investments from friends. We needed stronger credentials.

I recalled meeting an elderly gentleman by the name of Chan Kai Yau a year before, who had then told me he was a retired Director of Education at MOE. He had enquired my age and confidently told me he had signed my O levels certificate. I checked and it was true. I dug for and found his name card. He was then the Secretary of the Board of the Methodist schools in Singapore.

I called, and he was in office. It was fortunate because he went to the Methodist church office only occasionally. I wanted Mr Chan to be chairman of our proposed business and to be a founding shareholder. I needed someone credible to back us, not just to get the agreement from the polytechnic but also when we do approach schools for business.  

It was an elevator pitch. If I pitched it well, I could get a meeting with him to explain my business plan. If not, he would hang up on me. I made a quick introduction of myself and surprisingly, he recalled our brief conversation a year ago.  In less than 2 minutes, I explained my business plan and we scheduled to meet me over lunch. Over lunch, I had an hour to make my presentation.  He kindly agreed to consider being our chairman and to put a token investment into the business.

Despite having Mr Chan backing us, we were rejected a second time by the polytechnic. They had two other suitors then. It was the peak of the dotcom fever. Stratech (soon to be public listed) and another education company were interested to work with the polytechnic. We were nobodies in the industry, with modest capital, no experience and no team in place.

Then I chanced upon a Straits Times report that the former Permanent Secretary of MCDS (now MCYS) and MOE, Mr Er Kwong Wah had retired early from the civil service and was now running a football school. He must surely be an entrepreneur! Perhaps if having one retired Director of Education was not good enough to make our case, I could appeal to Mr Er’s entrepreneurial spirit and add a retired Permanent Secretary to strengthen our case.

The brash young man in me bravely checked the telephone directory (there was no Google then), found his contact and made my second elevator pitch. The pitch had to be efficient. Within minutes, he agreed to a meeting at Siglap Coffee Club, where we met for over an hour and he agreed to be our advisor. Later, he became a founding director and shareholder.

I further roped in two of my former colleagues at NUS School of Computing, an Associate Professor and a lecturer to also become advisors. Still, we were rejected by the polytechnic; although this time they gave us the chance to make a full presentation to a high-level committee. But that will be for another story how we finally got our business going.

In the course of running our e-learning business, there were other elevator pitch moments to get customers. Sometimes I would chance upon a school principal or someone responsible for the purchasing decision in a casual event or at some exhibitions we were doing. Every chance meeting could be an opportunity for an elevator pitch. You either interest the person to secure an occasion to make a full presentation or you get the boot. An entrepreneur is constantly selling. It can be to investors, clients or even to interest a key person to join your operations team. You have to learn to be thick-skinned. Rejections are the norm. Get used to it.

I recall being given an opportunity to present our business to a Datuk with diverse investment portfolio. It was an organized meeting at the introduction of a friend. We made an hour-long presentation. Three hours later, his manager called. We haggled over the investment price a little and we secured $500,000 in new capital that day, a rare feat after the dotcom bust. That was after many rejected presentations to countless others.

Bill Gates, founder of Microsoft made a call to MITS, the maker of the Altair 8800 microcomputer in January 1975 to make a pitch to sell his software idea to them. Bill Gates was a student at Harvard then. That would be an elevator pitch moment for him. He secured their interest to present his software to them a month later. With the successful phone call, Gates and Paul Allen worked tirelessly to develop their software in time for the presentation, and subsequently formed Microsoft.

As a new politician, I learnt quickly what it meant to do the elevator pitch. I initially helped with the East Coast GRC team in a few of their walkabouts. I then started my own walkabouts, totally inexperienced. I had only one party member with me and a handful of well-meaning friends completely new to politics themselves. For a few days, I noted the body language and verbal responses of people that I met as I presented our party brochures and myself to them. I was taking too long to make my case. I was saying all sort of random things. I did not seem to connect.

Yaw Shin Leong came to my house one evening and went through my pitch. He gave me valuable pointers of how I came across. I had to adjust my message. It has to be authentic and precise.

I looked at what constituted my strengths, what our party stood for, and what it would take to convince someone to vote for me. We had lots of ground to cover too. I started my campaigning only in end March. Joo Chiat is almost entirely private residences. Campaigning was limited by the weather and it rained frequently in the evenings that period. Campaigning was effective only in the evenings between 5.30 pm to 8 pm when the house owners are home.

I needed a short and clear message to be effective and efficient. Over the next few days, I crafted a 20-second elevator pitch to Joo Chiat residents. It would cover my local boy branding (since I am campaigning in an area I have lived my entire life in), my essential professional experience to portray credibility (I chose my initial career as a teaching staff of NUS School of Computing and now an education entrepreneur) and my belief in having stronger alternative voices in parliament (I believed most private residents were more concerned about national issues).

The message worked better. We covered more ground in a shorter time. With a consistent elevator pitch, I could build a branding. My supporters walking with me had a consistent message to pitch. Residents who were impressed enough after the pitch will then engage me in further discussions where I could make a stronger case for their votes. Some seemed convinced enough with the 20-second pitch. Some would reject me after my pitch and that is something a politician has to learn to accept.

The elevator pitch was even more important during visits to condominiums where we were given limited time by the management committee to make our rounds. It was critical in coffeeshops as well, where you need to turnaround quite quickly to avoid interrupting someone’s meal.

In whatever job capacity or life situation you are in, do not underestimate the power of a good elevator pitch. Be conscious of how you make your impact in the first 30 seconds. Acquire and polish up this skill. Learn to be precise in your points. Be clear how your message may be taken in by the recipient. Learn this skill well and you will find it useful someday.

Congratulations to Oliva Lum – World Entrepreneur of the year

 It is something that makes entrepreneurs in Singapore proud. One of our own being named as entrepreneur of the year, not in Singapore or Asia, but in the world.

Oliva’s story is one that should motivate many (http://en.wikipedia.org/wiki/Olivia_Lum and http://biz.thestar.com.my/news/story.asp?file=/2011/6/9/business/8862387&sec=business). She does not know who her real parents are. She was raised by an adopted person called ‘grandmother’ who gambled away her savings when Oliva was just three. She grew up humbly in a shack without running water and electricity in Perak. Her teacher was wise enough to recognise her potential and recommended her to go to Singapore to study at age 15. She studied her way to NUS, graduating with major in Chemistry, worked for a while and then founded Hyflux with just $20,000 initial capital and lots of passion (http://www.straitstimes.com/SME%2BSpotlight/SME%2BBlogs/Working%2Btowards%2BSuccess/STIStory_486283.html).

You don’t need rich parents and lots of connections to do well. Of course there are entrepreneurs like Richard Li whose father is the very rich Li Ka-Shing. But there are many more like Oliva Lum, George Quek and Sim Wong  Hoo who have humble background. They just have a lot of passion and drive to make things happen from a starting small.

Another thought I had of Oliva’s success is that it is also one of the positive examples of how our government can help a promising local start-up succeed. We needed clean water – Newater and desalination. We could have gone that usual safe route of awarding contracts only to big MNCs in this space. I am glad that Hyflux was one of the key providers of such services through public-private partnership when Hyflux was still a young and growing company. With success in Singapore, Hyflux is now providing such services to many countries overseas.

I feel it is important for our civil servants to think about developing local companies especially in key areas that we could start selling our services worldwide when we have succeeded in Singapore. I wish there are more examples like Hyflux’s. It is difficult to think of several more. More often than not, our civil servants awarding large and key c0ntracts are paralysed by fear that if anything goes wrong with the project after they have awarded to a local start-up, their careers would be jeopardised. A top civil servant told me once in private his reason for awarding a large contract to a foreign IT firm is that he is awarding to the known best in the field and if anything goes wrong in future, that will not be the fault of the awarding committee. How sad if that was the main reason driving that award, which I knew went to the foreign firm that charged much more than comparable local solutions.  Unfortunately, that is not the only case I know of which the awarding committee’s primary concern was about how to answer in case of future failures.

Many times, our government agencies promote start-up through grants. There’s nothing wrong with grants and they are useful to drive initiatives in certain areas. But grants do not make companies succeed. Companies need a thriving marketplace with real demand driving the growth of companies. We need to enlarge the marketplace by being more open to using the services of promising local start-ups by government departments and by not crowding our start-ups with Government-Linked Companies (GLCs) and the likes of NTUC going into every space they can lay their hands on.

I congratulate Oliva once again and wish that we can have more of such global successes with our local companies, hopefully with some useful push by our government through a friendlier business environment.

Discover the entrepreneur in you (Part 2): Starting with a blank slate

My definition of an entrepreneur is one who is able to start from scratch and take responsibility and risks to build a venture into something sustainable. In the process, value is created.

Indeed, a true bred entrepreneur thrives on such challenges. It is what differentiates an entrepreneur from a professional manager.

Ironically, I became an entrepreneur after I was sent to attend a 1-day SIM course in 1999 by my boss, an entrepreneur himself. I cannot recall the course title, but I recall the trainer challenging us to think about how we can create value in our business. He cited how the Internet has allowed new start-ups to make quantum leaps in value creation and surpass traditional players by redefining the playing field. He urged us to stay alert on how we can find opportunity to make quantum leap in value creation in our businesses to break out of the competition.

Shortly after the course, I had chicken pox. Whilst on medical leave, I was reflecting on how I could find a new paradigm in the education business when I remembered my 1996 online test business plan. With the dotcom revolution happening in America and starting to take place in Singapore, I felt it was time to relook at my original plan seriously.

I called some friends together and used blank papers to draw out my plans. Those were the dotcom days where if you can speak passionately and convincing about an interesting new idea, you could attract investors, even if it’s a business plan drawn on the back of an envelop. My friends were interested to invest but none would quit their jobs to join me. So I was left to run with the idea, together with my wife, a former head of department in a primary school.

After 3 unsuccessful attempts, we persuaded Ngee Ann Polytechnic to license to us exclusively an existing suite of online assessment software that one of its departments had built, in exchange for shares in our to-be-incorporated company. I met the founders of PAVE Language Centre, an enrichment service provider to schools who casually mentioned their interest in selling their business. We took majority investment in the company and on 2 January 2000, less than 6 months after my chicken pox, started ASKnLearn in the office of PAVE with myself, my wife, another co-founder and a hired marketing staff.

It was a humble office inside West Coast Recreation Centre, right next to the bowling centre. You can hear the pins being hit by the bowling ball or the ball bouncing on the gutter. In the weekends, we used our office space for the language enrichment operations. In the weekdays, it was our office. We progressively hired more staff. The second staff was a system engineer who chose to pay us to break his job contract after 3 weeks with us because he said our company had no future. The third staff was our office administrator cum accountant, then a programmer and a replacement system engineer. I was not sure how to identify the right staff as the business was new to me. It was a lot was trial and error and gut feel. Fortunately, most of the initial staff turned out well.

We peddled the software to schools. We had three schools already using the software from the polytechnic and they were transferred to us to service at a subscription cost we negotiated directly with the schools on. Selling to schools in a dotcom era with an abundance of free software was a big challenge. IDA’s Fast Track@School was a break for us, as the pilot schools with IDA support had to develop new content and systems and we were the hungriest player in town, grabbing projects even  before we knew how to deliver them. I just had faith that if you try hard enough, problems could be solved.

I persuaded my brother-in-law, Dr Ngoi to quit DSO where he was head of a research unit to join us as Chief Technology Officer. We were taking on a number of fairly technical projects for Fast Track and I was running out of ideas how to get the rather complex Mathematics and Science simulation projects delivered.

Over the next two years, we experimented with different content, systems and business models and eventually evolved the business into something with a definite value proposition to our clients, the schools. We had initially wanted a B2C (Business to Consumer) model but felt our resources were too little to take on the consumer market. It was fortunate we took on the B2B (Business to Business) model, offering paid subscription services to schools. It proved to be a sustainable model while our competitors that went for B2C went bust rather early.

I feel the hardest part in being an entrepreneur is the start. For us, there were no operating system, no office, no staff, little resources, no established reputation in the market and a relatively simple product suite acquired from the polytechnic.  I had a business plan, revised many times over as I spoke to prospective investors and customers. Execution was tough. Each day presented interesting new challenges to be solved. Decisions had to be made fast. There was no time to look back and regret any decision. You make a decision and you move on to solve the next challenge.

When I finally exited ASKnLearn in 2009, a system was in place. There were products, clients and an organisation structure to see to the continued running of the business. I did not expect to start another business so soon, but my wife and I did again, within months of leaving ASKnLearn.

I met a MOE official who was roped in to look after a new curriculum in primary schools called Programme for Active Learning, or PAL for short. He wanted a creative visual arts component able to develop students’ imagination in a fun way, as well as to build their social emotional skills.

I introduced TV artist Oistein Kristiansen to MOE and helped secured the implementation of Oistein’s programme in a piloting school. Oistein’s company asked me instead to fulfill the project by forming a new joint venture company with them. Interestingly, on the exact date 10 years after the incorporation of ASKnLearn, we incorporated 360 Education to deliver creative visual arts programmes for students and adults.

It was a whole new experience for me. I am trained in computer science and business, not in visual arts. Everything was new, and had to be started from a blank new sheet. We learnt how to doodle and draw cartoons, manage artists, develop visual art content for new curricula, handle wall mural painting, publish books and handle art workshops and assembly shows. We were going to the schools once more, but with a brand new product in a brand new field. We needed an office space and to hire staff. The adrenaline rush had started all over again.

Every entrepreneur, successful or not, tells an interesting story.

Bill Gates, founder of Microsoft recounted how in January 1975 he made a call from his Harvard University dormitory to offer to sell software to the first company that made the PC. He was told to come back in a month’s time as they were not ready for him. Bill Gate himself was not ready yet but he and Paul Allen wrote the software day and night to get it ready (http://www.youtube.com/watch?v=AP5VIhbJwFs&feature=related) .

The once-richest man in the world started Microsoft with a phone call and the challenge to write a software. He had simply read the January 1975 issue of the Popular Electronics magazine featuring a microcomputer and decided to make the phone call to the computer company. He started with a blank slate, not even the software they claimed to have. Richard Branson of Virgin fame also shared how he started as a student making calls from payphones in college selling his magazine. Branson started from a blank slate too. From magazines, he ventured into selling music records and then creating record labels and now a whole range of products and services, including airlines and telecommunication. The “can-do” spirit is evident in true entrepreneurs. They are never afraid of starting from nothing more than an idea.

I like the Singapore story as well. I see it as a form of entrepreneurial success. We were plunged into independence without a proper army, a small domestic economy, low education level of the population and high unemployment rate. We did not exactly start from blank as we inherited a good legal and administrative system from the British and a working education system. Nevertheless, the challenge to build up the national defence, currency system, entire new industries and administrative systems as well as reform the education system required an entrepreneurial ‘can-do’ spirit which our first generation of leaders and civil servants had. There weren’t always models which they could copy from. It took a lot of active thinking on how to problem solve that had helped Singapore build up its infrastructure and resources. Now that the low hanging fruits have been plucked, maturity has set in. Getting to the next stage for Singapore will take a lot of guts to push for a new paradigm for growth.

The entrepreneurial mindset can also be something you can practice in your workplace or in organising a social outreach. Entrepreneurship is not necessary only for entrepreneurs. While running ASKnLearn, I had constantly challenged managerial staff to find their own blank spaces to build something now. Those who did found faster career progression for themselves as they had to first create value and from the value they had created, we could share the fruits with them. We chose to run the company in an entrepreneurial fashion, as we were operating in a small and challenging market. We needed staff to find new markets and ways to expand the business creatively. Richard Branson of the Virgin group fame, is an entrepreneur who has built his business through making entrepreneurs out of his staff. With global competition, Singapore’s businesses need managers who are more entrepreneurial in their mindset to grow in the 21st century.

I hope that Singapore will be able to cultivate a new generation of leaders, entrepreneurs and managers who are willing to take on uncertainties ahead of them and rise above the challenges to build exciting new ventures from blank slates.

Watch this blog for more upcoming articles on entrepreneurship!

Discover the entrepreneur in you (Part 1): Stages of a business

This blog series is on entrepreneurship. Being entrepreneurial is not just for people who aspire to start a business. Entrepreneurship is about daring to be different, daring to be innovative in your approach and setting about to build something new out of just ideas. It can be practiced in your workplace, in setting up a social network or even in politics.

I have the privilege of starting several businesses. My most significant start-up was ASKnLearn. It was started with a 4-man team in 2000 with a modest start-up capital. It survived the dotcom crash, fierce competition from better funded and established competitors, and a weak market condition to become one of the top 2 e-learning companies for schools in Singapore before being sold to a public listed company in 2007. I shall be sharing from these experiences as well as from my observations of other entrepreneurs. It is my hope that by sharing stories on entrepreneurship, we can build a nation that is more enterprising and innovative, something necessary for Singapore to continue to prosper in the 21st century.

I hope this series can be dynamic. Readers that have interesting entrepreneurial stories to share can email me and I can see how I can fit the examples in to better illustrate the points made in this blog. I am happy to also give talks to budding entrepreneurs or students on this topic.

 Stages in a start-up

There are 5 typical broad stages a start-up company may go through, as illustrated in the following diagram:

  1. Idea / business plan stage
  2. Incubation stage
  3. Starting stage
  4. Growth stage
  5. Mature stage

Stages in a business

On the vertical scale, it measures the revenue you receive from the business. On the horizontal scale, it measures the time taken since the start of the venture.

Idea / business  plan stage

Ideas can come when you are hit with an inspiration reading something or just thinking, or they may come when you are brainstorming with others, or when you observe something.

In real life, no one would normally pay you for your idea unless you can have it patented and it has great potential. Unfortunately, patents are very expensive to file and a great idea to you may not be convincing for others. Hence, revenue is typically zero in the idea stage.

In 1992, my wife-to-be was teaching and MOE had recommended teachers to do regular item analysis on how students answered each MCQ question in a test, i.e. how many in a class picked which option for each question. There was no IT system to support it. It was by show of hands for each option of every question. This is to facilitate diagnosis of students’ understanding. Obviously it was difficult for any teacher to administer such a diagnosis. This presents a problem for teachers. My belief is that if you want to find a new business idea, look at problems. If you can find an elegant solution to a problem, it could be the start of a good business.

I was then a teaching assistant at the NUS School of Computing. A college classmate was regularly meeting up with me to talk business ideas. We came up with a quick business plan to develop a software to do testing and diagnosis using a database of test questions. We wanted to sell the software to the public. We then hit upon the problem of how to deploy the software. Internet existed then only for use by research and academic institutions in Singapore. After a quick feasibility study, we shelved the idea. So our attempt did not go past the idea stage.

We should not be afraid to come up with ideas, but we should also be practical to explore all possible scenarios to test the practicality of the ideas. It is necessary to do research and even talk to someone you can trust as a mentor and then evaluate with an open mind.

Incubation stage

Around January 1996, I met a friend who shared about the Internet ideas the education company he was working with was having. Internet was available to the public in Singapore since 1995. I listened and then shared my 1992 business plan passionately with my friend. I felt the Internet was the piece missing from our earlier plan. He told me to speak to his boss, an entrepreneur.  I did, and the entrepreneur offered to fund the business.

So I left my job in the Trade Development Board and started Questcom Technology Pte Ltd with the Kinderworld group. We started an Internet education programme for children while planning the development of the online testing software. Five months into the business, I realised that with just 20,000 Internet users in Singapore, slow access speed and expensive development cost, the project was not going to be feasible. We did secure some revenue for the company engaging students in learning how to use the Internet and marketing programmes around the use of the Internet. The group was facing some financial constraints then and there was a vacancy in business development for its children edutainment business. So we abandoned the plan in its incubation stage and I became the group’s business development director and later the Group General Manager for its core businesses instead. I did not think anymore of my abandoned  business plan.

In June 1999, I was still with the Kinderworld group. I had chicken pox and was on 2-week medical leave.  While resting at home, I had time to reflect on the dotcom revolution that was just about to take off in Singapore. I suddenly recalled my old plan which I had tried unsuccessfully twice to implement. I felt inspired to restart the idea and called a few friends to share my thoughts.

This time round, we went further. A few friends and relatives decided to invest in the business. We planned to develop the software but we came across a news report that the Ngee Ann Polytechnic had developed a series of web-based quiz and homework systems. We approached the Polytechnic to license their software to us on a joint venture basis but were twice rejected by it. We persisted and secured some high profile advisors and more investment commitment. Finally, the polytechnic made me commit to raising extra monies should the company run out of funds within 2 years of operations. I agreed and the venture was finalised. ASKnLearn officially began operations on 2 January 2000.

With the software from the Polytechnic, we could commence business immediately by deploying the existing solution to a few schools already on pilot use of the software with the Polytechnic.

So in a typical incubation stage, you could test out your ideas with some prototype products or a parallel product on the target market. I did this twice, first in 1996 by running Internet education services for children to understand the market, and then again in 1999 with the software we secured from the polytechnic. Both times in the incubation stage, we sold services to the clients at a discounted rate to secure their adoption and more importantly to better understand the market. In the first case, we abandoned the project after concluding the market was not ready and our resources were insufficient. In the second case, we pressed on after the incubation.

Michael Dell started his business form the dorminatory of the University of Texas at Austin upgrading computers. He discovered there was a potential in bypassing the middleman and from his computer projects, started Dell Computer Corporation. His years in Austin were the incubation period for Dell.

Starting stage

The starting up stage is when the company officially commences business with its intended product. Being relatively new, most companies at this stage may find business to be slow in coming. In a competitive environment, many would struggle to gain customers. During the dotcom days, many start-ups flushed with huge investments made reckless expansion, gaining customers but often by giving free products.

We had our share of aggressive competitors who had equity investments ranging from S$5 million to S$14 million competing with us with free e-learning systems for the schools. We had raised just a few hundred thousand dollars from friends and relatives when the NASDAQ dotcom crash came in April 2000. Half of the amount we raised was used to acquire an enrichment company which we thought would give us immediate reach to schools. It turned out that an enrichment business was too different from an IT service, even though the client organisation may be the same. The decision makers were different people even if they were from the same organisation.

Our difficulty in this stage was getting clients in the face of free software readily available to the schools. MOE was mid-way through its first ICT Masterplan (1997-2002). The major purchases had already been made before we entered the market. MOE had no interest in what a start-up like ours could offer and contracts were already tendered out. Our first three clients came from the schools who were partners of Ngee Ann Polytechnic in using the software. Getting the fourth customer proved difficult. We made a conscious decision not to go the dotcom way to offer free software as we felt we would not know if our customers were genuine. We wanted them to use the software and give us feedback so we can improve the system. Interestingly, a school principal told us that he did not want to use our competitors’ free software because he felt there was more commitment on both sides once they paid for the services. That strengthened our conviction to take the path of not offering our services free just to boost up usage numbers to play the dotcom game.

IDA had then just initiated the Fast Track@School broadband programme where they co-funded selected schools up to $75,000 each to develop innovative broadband content and systems. We were hungry for projects. After some hard persuasion, a couple of the Fast Track schools decided to let us develop some of their content. Content development was not in our original business plan. Eager for contracts, we took these up even though our development cost was going to be higher than our contracted sum as we wanted to co-brand with these schools and to reuse the content. We had no clue how to do design course materials and build multimedia content. We decided to just take on the projects and figure it out along the way.

Fast Track@School turned out to be the break we needed. We learnt quickly and did reasonably good science and mathematics multimedia simulations even though it was difficult as it required good mathematics foundation for our programmers. Customers referred us to a few more schools, all top schools in Singapore. It happened that IDA picked only our client schools to be showcased at the first Fast Track@School conference. That cemented our reputation as a builder of sophisticated education content.

Even so, our expenses were high as we were in development mode, far higher than our revenues. Our modest paid-up capital was fast being depleted. With the dotcom crash, investment looked impossible to secure despite trying hard. Eight months into our operations, we had just enough cash for the next month of operations. My wife and I had signed a commitment to the shareholders to raise more investment if the company ran out of funds within the first 2 years. It looked like we had to sell our only house to raise the capital.

Miraculously, someone came to our office upon the recommendation of another. After listening to our business plan, he immediately committed to invest $120,000 in 4 equal installments over the next 4 months. Our operating deficit then happened to be $30,000 a month! Four months later, we received another $500,000 investment from a public listed firm, followed by a further $520,000 a couple of months after that from another investor, despite the tough investment climate in late 2000/early 2001. Our cashflow situation was solved, for the time being.

We maintained our spending discipline. Operating environment was still tough. MOE had no specific budgets for schools to buy e-learning services.  Many schools were unconvinced they should use e-learning. Dotcom companies were still offering free software to schools, although these companies were beginning to die off one by one. We increased our customer base but expenses were consistently higher than revenues as we were still building new products while we sold what we had. Growth was slow due to competition and unfavourable market conditions.

For some new businesses, the starting phase could be short if their products caught on with the market. Breadtalk started out the same time as ASKnLearn, but their product caught on almost immediately with the market and they expanded rapidly to be public listed 3 years later. However many new businesses never got out of this phase. Around two thirds of new businesses fail within their first 2 years of operations. Indeed, most of our competitors including the well-funded ones ceased operations within two years.

Our starting phase lasted over 3 years, from 2000-mid 2003. During this phase, we gained reputation slowly along the way. Revenue growth was slow. The industry was not ready. We could not retain talents as we had budget constraints and could not pay market rates for staff. We tried to find out what else schools would pay us for to make up for the slow take-up for e-learning systems and content. We stumbled upon providing IT manpower services as we found schools were outsourcing IT training for students to external companies. It was logistically intensive but we had to go into it to supplement the meager revenue from the software side.

By end 2002, our cash reserves from the 2001 equity injection were nearly depleted. We tried unsuccessfully to raise more capital from existing shareholders. So we had to start a painful series of cost cutting where we trimmed 30% of manpower cost, mostly at managerial level. We closed down the enrichment business that we had initially acquired. These are the sometimes painful realities that an entrepreneur must face up to in order to keep a business afloat.

 Growth stage

Ironically, it took a national health disaster to let our business soar. SARS hit Singapore in April 2003, forcing schools to close for 2 weeks. It was a sad period for Singapore, China, Hong Kong and Canada, the countries most affected by SARS.

Opportunity sometimes presents itself in the most unlikely form and in the most unlikely of time. An entrepreneur has to quickly recognise opportunity when it comes. With what schools experienced during SARS, I could now articulate to them why they needed e-learning. In technologically-savvy Singapore, more than half of our schools did not have any solution to provide continued learning when SARS hit. I believe only around 40% of schools were on some form of e-learning in 2003. This was an unacceptable situation to MOE and to the public.

We marketed our solutions more aggressively when schools were reopened. Schools which were previously not keen were now more open to subscribing to e-learning services. E-learning has moved from being a good-to-have item to a necessary item for schools. It took a while longer for MOE to push for all schools to adopt e-learning as a compulsory tool. By 2005, all secondary schools and junior colleges were required to provide online learning, and all primary schools were to achieve this by 2006. With this, MOE also made available more funding sources for schools to acquire IT solutions.

Of the e-learning companies, ASKnLearn expanded most rapidly during that period, recording an average of 50% annual revenue growth between 2003-2007. We won Deloitte’s Asia Pacific Fastest Growing 500 Technology Companies Award twice during that period. The growth was due to a shift in market conditions. Our products were sufficiently mature by then. Many of our competitors had already ceased operations. We were the fastest to seize the shift in market conditions and ramp up our marketing and operations. To cope with the increased demand, we figured that the best people to market our products and handle operations could come from the junior ranks, which were the many IT trainers we had seconded to schools to run our IT training programmes. Our industry and our product mix were unique. We made it into an annual exercise to recruit the most dynamic trainers to the corporate office to become support and marketing executives or to handle IT operations. It turned out to be a winning formula as we provided career advancement and more importantly identified people with the right temperament for the job. We created a simple brand message – “Innovating Education” to capture the diverse things we were doing and often pioneering in the industry. We rallied staff to give them a shared vision. With these measures, we won over new clients.

ASKnLearn’s operation broke-even in 2003 and was profitable thereafter. We took the opportunity to also acquire WizLearn through share swap from the National University of Singapore in 2005 to expand into the junior college, tertiary institution and corporate learning market.

Business is never static. One must be flexible to adjust your plans according to the market situation. More importantly, one must recognise opportunities when they present themselves and to seize these opportunities to make exponential growth. There’s a time to expand and a time to consolidate. By capturing a unique opportunity well, we propelled ourselves into an industry leader position.

Mature stage

Growth cannot go on forever based on the same product and same business model. In a large economy like China, when one hits upon a successful business model, it can take a long time to hit maturity. Even so, maturity will come when the market is saturated and competitors play catch-up.

Singapore is a small market. With 50% annual growth from 2003-2007, ASKnLearn was already servicing a third of all schools in Singapore by 2007. We had competitors, the most significant of which was Learning Edvantage (Lead.com), now renamed as Marshall Cavendish Online. It was owned by the largest textbook publisher in Singapore. It was not possible to grow as fast after 2007 without getting into a significant price war with major competitors. We ventured overseas since 2005, making sales to Kuwait, China, Brunei, Vietnam and Indonesia. However, education content and services in the primary-junior college space were subjected to a lot of cultural and political sensitivity. Making significant breakthrough in overseas markets was difficult.

When a company hits the maturity stage with its products, revenue growth will slow and even decline if there’s aggressive competition. Creative Technologies had many years of growth with its sound cards. Once you have many computers already using the sound cards and with competitors building alternatives, Creative’s growth tapered off. Unless the company can find new markets or create new products, it will eventually decline. Creative was right to develop MP3 devices to counter the saturation it was facing in the sound card market, but Apple was just much better in marketing. Even Apple had to constantly come up with new products to continue its success. After the Macintosh, it faced maturity and declined. It was revived by the iPod, then the iPhone and now the iPad. When the iPad market matures, it will need another product. The iCloud perhaps?

History is laden with examples of great companies that have gone into oblivion. Sometimes it is because of competition with cheaper cost producers. Sometimes it is because of changes in technology that leveled the playing field and allowed smaller competitive players to beat the incumbents. For example, Michael Dell took advantage of the then-new web technology to do away the middleman to overtake many incumbents in the computing industry. It grew rapidly but now faced maturity as its model was copied by others. Nokia, the former number one in handphone market is on a decline now. It had overtaken Motorola in the 1990s but is now being overwhelmed by Apple and a host of Korean and Taiwanse brands. The phone is no longer just a calling device. Nokia took too long to recognise that.

In 2007, ASKnLearn received an acquisition offer from India-listed Educomp Solutions Inc. Shareholders were excited to be able to cash out after 7 long years of investment so they could get a decent return on their investments. The Singapore market was getting saturated. Either a new killer product line should be found for the Singapore market or some serious expansion overseas was required. It was facing maturity in the Singapore market. The high growth experienced earlier could not be sustained. It was however in no danger of collapse as it was already well entrenched in its market and customers in this industry were averse to change unless absolutely necessary.

Concluding advices

You will notice in the diagram that at the end of each stage, there is a solid line trending upwards as well as a dotted line dropping to zero, with a question mark at the junction. This is because at each stage of the business, either a breakthrough is made or the company may cease, either gradually or suddenly. For different companies and different markets, the duration a company spends in each stage may differ. Life cycles are getting shorter these days with global competition and rapid technology changes. My advice is for entrepreneurs to stay alert all the time. Watch keenly for opportunities constantly. It can come in the form of a major external event, a technology change, demise of a major competitor or even a lucky break with a major customer. Watch for dangers to your own business as well. That can come from a major external event, new technologies obsoleting what you have, entry of some new and aggressive players or loss of a major customer.

A second advice is for budding entrepreneurs not to fall overly in love with your business ideas. I have seen countless people telling me they have a secret winning business idea. I tell them that ideas are cheap. Execution is tough. Some of the best new businesses did not start as original ideas. The founders just executed them much better than everyone else. It is also not true that there will always be a first mover’s advantage. First movers sometimes have a disadvantage to educate and cultivate the market with leser returns. Google was not the first to come up with search engines. Yahoo was one of the earliest and the most successful then. Google bettered the algorithm and made it simple and effective to use. Google is now many times more valuable than Yahoo. Amazon was not the first online book store. They just executed it so well they became the dominant player. There’s nothing wrong in looking at old ideas and exploring how you can make it simpler, better, faster and cheaper. When you do get to execute your business plan, stay flexible. If you love your plan so much that you refuse to change even when the market cannot accept your business model, chances are, you will fail.

 Watch this blog for more upcoming articles on entrepreneurship!