Friday, August 1, 2008

"The problem with the tech sector here is ..."

The rag had an article of the same title above today.

It was basically an interview with Tan Chade Meng, "the first Singaporean to work with Google", and his views on the tech sector, the lack of venture capitalist funding in Singapore, innovation and other miscellanea.

Frankly, the interview was quite useless. And banal. Hackneyed too, with the repetition of "cloud computing is the next big thing", and "social networks and Wikipedia will stay popular".

But this post isn't about Tan Chade Meng. I'm sure he's a brilliant engineer and a really nice guy. It also isn't about the deplorable quality of journalism in Singapore.

No, it's about innovation and career development in Singapore.

First, some comments on the article:

Does anyone other than me think it ironic that an engineer working for one of the largest and most successful companies today would say that young people in Singapore do not have the daring to start their own company but instead hope to join a big firm?

Granted, Tan Chade Meng started at Google in June 2000 when it was still early days with about ~60 employees, but crucially, by 1999, Google had already secured USD25 million from Sequoia Capital and Kleiner Perkins, as reported in Google's milestones. Hardly a super-risky startup career move.

Related to this is of course is the fact that starting a company or working in an unproven start-up generally carries substantial risks. Anyone who is charmed by the idea of working in a start-up should probably wise up to this fact, especially if they get all their news from the mainstream media. Stories of successful start-ups are a primo example of publication bias operating in conjunction with the availability heuristic. Perhaps survivorship bias as well. Who talks about today?

Oh, and by the way, the propensity to join a big company is hardly uniquely Singaporean. After graduation, many of my peers at Hopkins gravitated towards investment banks on Wall Street, management consultancies, and ... Google. This of course excludes the massive numbers who headed for medical school, law school and business school, hardly bastions of risk-taking.

As for opening up corporate culture to innovation, again, a problem that is hardly uniquely Singaporean.

Now let's talk about The Problem With The Tech Sector being the lack of venture capital funding.

I have a highly relevant previous post and a transcript of a New York Times article on this.

The lack of a strong tech sector, and more broadly, an entrepreneurial culture, here is not merely from the dearth of venture capital. Indeed, I would state that money isn't the major problem here at all.

It is so, so much more than that. I can think of many reasons:

GLCs with overwhelming dominance in many sectors of the local economy. The disadvantages that SMEs face in Singapore are well-known.

The lousy employment terms that many SMEs offer because of their lack of resources, which prevent them from hiring the talent they need, which in turn affects their profitability and ability to offer good employment conditions. SMEs complain loudly about their inability to attract talent, but frankly, the pay they offer sucks, the owners are stingy with handing out equity in place of cash, and there's little career development. 

The small domestic Singapore market, which makes starting a viable company harder.

The small stock market, which makes an IPO exit strategy harder.

The smallish corporate scene, which makes an exit-by-acquisition strategy harder.

Disengaged and disillusioned workers. Career dissatisfaction seems to be topical now in the media and blogosphere. See here and here.

Risk averse VCs who only want to invest in cash-flow positive companies.

Opportunity costs for entrepreneurs. Starting your own company looks slightly less attractive when you could be taking up a government scholarship and a 'high-flying' (for some, not for all) job in the public sector. Or raking in the big bucks in banking and finance. Or working in sure-fire 'successful' careers like law and medicine (I call these Singapore's respectable default career choices).

Conflicting government objectives. Oooh, this one's a biggie. I could write a whole post on this. But suffice it to say, many things that the government wants are inconsistent with each other. Singapore relies on heavy foreign direct investment, exports and 'hubbing'. These factors tend to favor large companies rather than small ones. They also make working in a bank that much more attractive.

Shoehorning young people into careers that turn out to be much less than they were made out to be in glitzy media broadcasts, all for the sake of stuffing warm bodies into the "next big industries", which in turn results in a disillusioned and disengaged workforce.

Scholarships tend to siphon off talent into the public sector.

High property prices, encouraging marriage and kids...these things tend to reduce the entrepreneurial drive. The last I checked, risk-taking entrepreneurship tends not to be associated with work-life balance, heavy mortgage payments, the lack of affordable childcare, and doing right by one's family and kids. As an aside, if single people are more likely to be entrepreneurs, well, it's hard to stay single and entrepreneurial when you're staying at home (because you can't afford private property and you can't buy a HDB flat, and rents are astronomical) and the parental units are nagging for you to 'settle down'. Parents also in general want their kids to opt for 'stable careers'.

1 comment:

testtube said...

You nailed it. Seems to me that the societal aspect (your last paragraph) tends to be ignored in discussions of [the lack of] entrepreneurship in Singapore. There's a general tendency amongst our autocrats to think that you can solve any problem if you throw enough money at it.