After a dozen years in New York City, Co-founding two startups and being a mentor at the Founder Institute and Peter Thiel’s 20 Under 20 Fellowship, Cheryl Yeoh returned to her native country of Malaysia.
She was brought on as CEO of government agency Malaysian Global Innovation and Creative Centre (MaGIC) in KL’s tech hub Cyberjaya.
As the head of MaGIC, Yeoh has worked with both successful and first-time founders and she gave e27 a macro-view of the country’s ecosystem in a recent interview.
Here are the edited excerpts:
What do you see are the popular startups in Malaysia?
I think the trending startups here are the same as all over Southeast Asia. A lot of e-commerce, a lot of fintech. Startups here are trying to copy business models that already work in the US. Which is fine, I always tell them it is OK (to copy business models) as long as they localise and customise because every culture is different.
For example, e-commerce in the US; everyone is using credit cards. Here, companies still need to do cash on delivery. They need solve logistical issues.
In Malaysia specifically, we do see a lot of social enterprises, because as a developing country in Southeast Asia, I think a lot of people want to solve social and environmental issues within their communities.
What are some challenges for the startup scene here?
So in general, people always complain that they cannot hire enough developers. [These days] technology is the next wave disrupting every single industry; it has disrupted the transportation industry with Uber and GrabTaxi, it has disrupted the hospitality industry with Airbnb. So [with that being the case] you need more engineers, you need more developers.
When I started my company in the US I was always told by my mentors, ‘If you want to start a tech company, you need a technical co-founder’ because outsourcing just doesn’t work. It is too slow, it is too expensive and the product is going to change a lot. When you push it out to the market you are going to see how people react to it, how people use it and based on the customer feedback you are going to change and tweak your model.
So because of that agile, quick, iteration it is always better to have a developer in-house.
For example, there are a lot of graphic designers in Malaysia, but they aren’t trained to do web design. So at MaGIC academy we teach people how to code, we offer these courses so [entrepreneurs] can tweak what skill set they already have and keep up on the latest tools and trends.
You mentioned localising, but what about scaling?
Today with Amazon Cloud Service it is easier to scale your company. In the past, you needed to buy big, expensive servers. By virtue of the cloud service, it is very easy to start a company. So that is on the infrastructure part.
But in terms of marketing in Southeast Asia, it is really hard to scale a company because the countries are so fragmented. Even if you started a company in Singapore, it has only five million people so it is a very tiny market. So Singapore is used as a base, as a hub, and very quickly the entrepreneurs know they have to build a presence in Thailand, Indonesia or the Philippines.
What is the major difference between the US and Malaysia?
I think the biggest difference is [Malaysian] entrepreneurs are too unfocussed. They do too many things. A product has to have one feature.
It is fine to [want to] take over the world, but they put too many features into a product which makes the product confusing for customers to use. I see it all over the region. I think entrepreneurs have to be more disciplined and diligent about focusing on one thing at a time. Some have multiple companies, they just do too many things.
Do you see investments coming from the West? From China? From within Malaysia?
Not so much the West. I don’t think Silicon Valley VCs are super interested in investing in Southeast Asia yet. They are more interested in India and China. But we get a lot of VCs based in Singapore, and we also see a lot of the bigger checks coming from Japan, China and Australia.
So you know in the US, you have Facebook, Google, buying up smaller companies and allowing for liquidity and exits. Here the equivalent would be Rakuten or Softbank (from Japan). From China — Alibaba, Tencent, Baidu these [would be the] big giants. And in Australia there are bigger companies who are willing to buy smaller companies in Malaysia. So the exits come from these three locations.
Where do you see Malaysia in comparison to the rest of Asia?
We want to position ourselves as a hub. It is not about the Malaysian market, 30 million people is still too small, but we could be an alternative to Singapore. Singapore is seen as the hub right now because it is very international, very cosmopolitan, but also very expensive.
We are not trying to compete, but [companies should] consider us too because we have a lot of good incentives. MSC status allows companies to be tax free for up to ten years. Also, if you set up via MSC status you get to hire up to 20 foreign workers so you can bring in outside talent as well (See the list of incentives here).
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