What you need to know
We have all these startups that have some success internationally, but we don’t have the level of international success that we would like and used to have in the semiconductor industry or ICT industry.
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Corrections have been made on 9/25/2015: MOSA is an independent startup event in Taiwan. It is not held by Slush and corrections have been made in the Editor’s note.
With the prevalence of Taiwanese startups in recent years, many startup events have popped up as well. Starting in May, some groups and individuals have come together and plan to hold a new international large-scale startup event, MOSA, in October. Wayne Huang is in charge of the programs and inviting speakers, Changee is responsible for production, AlumVest is in charge of 1 on 1 VC matchmaking, Taiwan Startup Stadium (TSS) has organized two sessions, Power for point is holding workshops and students will also participate in the event.
Up to last year, Slush has been around for six years and Business Next reports the event attracted more than 1,000 startups, over 400 investors and more than 500 journalists last year. Compared to the year before, the number of participants doubled with a total of 14,000 people. Many people have been hoping for the event to be held in Taiwan.
Talvari comes from Estonia and started traveling all over the world a few years ago looking for places to hold the startup event. He has a Google spreadsheet of all the cities he has visited and has even come up with a ranking system of his own. Out of 43 cities, Taipei is top three in most categories and shows Talvari’s fondness of the city. (The top two are usually Australia and New Zealand.)
And based on Talvari’s own observations, the value of Slush will expire once the event is over if it merely holds a meet in Taiwan. They hope to help locals build their own community and create their own startup events so that the events can have long-term developments.
Talvari dove into the conversation as the main organizer of MOSA and observer of trends in the industry, while Lin spoke through his own experience of guiding and observing hundreds of startups in Taiwan.
The conversation was held in English and has been translated into Chinese. Readers may click on the tab above the article to read the interview in Chinese.
TNL: Both of you are experienced in holding seminars and supporting startups. Can Jamie talk about the advantages and disadvantages of startups in Taiwan?
Jamie (referred to as J below): In my view, anywhere you go you have got this normal distribution of startups and it’s really hard to say what the general advantages and disadvantages of startups are in a certain place. The reason is anywhere you go only the top one percent, or even 0.1 percent of the startups succeed. So the mean of the distribution of startups in any place, even though the mean might be slightly different, it’s not really important because you’re supposed to look at the top one percent or even 0.1 percent of the startups that are going to make it.
To compare the top one percent of Taiwanese startups against the top one percent of US startups and Chinese startups is an extremely difficult comparison. I would say though, with Taiwan having a smaller market, if startups here don’t find a way to go outside they might not grow as big as their US or Chinese counterparts. And that might be one disadvantage to growing your startup in Taiwan, but it would apply to one city or one state in the US or to one city or province in China.
Secondly, maybe on average, with traditional Chinese, because the global user base is so much smaller, it’s actually not as easy for you to get the most up-to-date and most comprehensive information if you only read traditional Chinese information sources. So if you don’t expand your information sources out to news or articles written in English, then the knowledge base you tap in is much smaller. I think these are maybe the two disadvantages of starting a startup in Taiwan.
And then the advantage I would say is you face much less competition in Taiwan. Anything you do, if you get a little attraction in the Silicon Valley or China, you will start to see a hundred or a thousand startups like you popping up. But in Taiwan, you can grow comfortably, without people trying to clone you. The market is a lot smaller, so on average you have much less startups working on the same idea and you end up having less competition. The competition is less in the initial stage; therefore the opportunity cost for the initial stage is probably less. But once you want to grow bigger, then the friction you face might be bigger if you do it in Taiwan. But this is a lot of over-generalization.
TNL: Can Martin talk about the advantages and disadvantages of startups in Europe?
Martin (referred to as M below): It’s impossible to just nail it. Like he (Jamie) said, there’s no way to say the advantages are here and the disadvantages are here, so that’s where you go. Otherwise all the entrepreneurs would be in one country. But at a very general level I’ll point out a few things. Market diversity, it’s good and bad. The good side of it is that you have access to the main languages in the world, within a few hours. Then you have seven hundred million people there; every one is connected and every one is used to buying things online. But that’s also the bad thing.
Think of me as a startup now and on top of me there will be a market. 28 countries, 24 languages, different legislations, different policies, it’s a headache. It’s good to be there, but what you see most of the time, startups in Finland and in the UK, they build something and then they capitalize on all these general moments they have and then they go to the U.S. or outside of the world to win their market globally.
Europe also has affordable cities with good lifestyle, that are attractive to many entrepreneurs, like Berlin, Lisbon and Barcelona. All these cities provide world class capital, mentorship and connections in the industry. There are tens of large VC funds each with more than hundred million eur funds, fueling the growth of local startups. London, for example, is probably the best place in the world for financial technology startups; Stockholm and Helsinki qualify as the best for gaming and entertainment. It’s a snowball, these cities have reinforced their position. More importantly, Europe is a good ground for hiring top talent with startup mindset. Just a month ago, Angry Birds studio Rovio cut 260 jobs in Helsinki, that means we will probably see 30 new gaming startups, and other existing similar companies will draw in many who left Rovio.
TNL: Jamie, do you think Taiwanese startups aren’t thinking on an international scale enough?
J: Go talk to the Americans. Two-thirds of them don’t even have a passport. The only stories you hear from the U.S. are the ones who have made it, and then expanded to Asia. So it gives you a false perception of all the US startups are like the successful ones. But that’s not the case. Those are the top one percent or the top 0.1 percent of US startups. Looking at the average US startups, they aren’t anymore capable, international or hardworking than the average Taiwanese startups.
TNL: Martin, not being globalized enough is something the Taiwanese often talk about. Do you think this happens in European startups?
M: This is something I have been thinking for a long time. Dividing countries into three categories: the very small ones, the big ones, and whatever is in between. I think the luckiest ones are the small ones. I’m from Estonia with one million people and we don’t have this luxury of, “What do these Estonians like that we can build for them?” No way.
The other lucky countries are the very big ones. The top one percent goes out and succeeds, but the other ninety-nine is totally fine. They can be super successful there. The ones who struggle with this question are whoever in the middle. They might be tempted with this medium-size success. They spend one or two years and then that’s it, when they should be bold enough to say, “No. Let’s act like the very small ones and go there because we don’t have that five hundred million people in the hold.”
TNL: There have been a lot of incubators and startup meets in Taiwan in the past few years, but, Jamie, why do you think we aren’t able to hold a startup event with the same scale as Slush?
J: If you want to have an event on that scale, it has to be more of a regional event instead of a countrywide event and Taiwan has been trying to not be a regional hub for a long time.
For the past thirty years, we want to become a powerhouse in the greater China region, but we have neglected our northeast and southeast Asia neighbors. So if you go to all these startup events in southeast Asia, nobody is talking about Taiwan, even though Taiwan does have a vibrant Internet and startup community. They don’t even know the difference between Taiwan and Thailand.
That’s a big reason you don’t have a regional event here. People in southeast Asia wouldn’t come to attend a startup event in Taiwan because it’s not on their radar. There’s also a barrier of how many Chinese people you can invite to one event. There’s a huge gap in that. So inherently, it’s hard for you to hold a thousand-people event.
TNL: Slush started in Finland and is a startup event with over ten thousand participants. Martin, why do you think Slush is so successful?
M: The reason Slush is what it is today is it’s really owned by no one. It’s absolutely owned by the whole community. You have the core team running it, but that changes time after time. So the way I see Slush is a vehicle where many people can take turns in the driver’s seat and other events are the other people tagging along in the back seat, but you learn only when you steer. So the key of success is thousands of volunteers behind this. These volunteers gradually grow into the drivers.
Then come no bias and no ownership by governments. Over the last years, we have seen a few thousand events around the world. Every country has at least ten events and governments somehow own a lot of them. Now I’m not saying it’s bad. It’s good. But governments should be careful of how they deliver it and what their motives are. So the government cannot start an event once only to gain popularity. They should instead get behind this event that is organized by the community because only then can it last for five or ten years.
Slush is absolutely independent, owned by the community, has a lot of volunteers behind it and it creates this alumni thing. The drivers before become successful because of the event, now they come back to help the next driver in the seat and we have seen that many times. That’s the mechanism you want to put in place. That’s the key to success. Positive cycles.
TNL: A lot of people don’t understand the relationship between Slush and MOSA. Would you care to shed some light, Martin?
M: My intention was to open Slush here and the government officials here came over to Finland and they liked what they saw. We had lots of Skype calls and in May I arrived in Taipei and very soon realized the intentional plan of opening Slush here was not correct because Taiwan needs its own event and no chapters. Slush here would only bring one week of value. We would bring all the speakers here, they would leave and that’s it. A very short-time value.
Instead, Taiwan needs its own Slush or something else. The whole conversation will change and finding the amazing people in the industry here that are willing to take up the challenge and organize the event was just perfect. The community is also involved in this right now.
TNL: How will MOSA be different from other startup events?
M: If the sort of mechanism that we described before takes place, the main differentiator from most events around the world would be the same that it’s sort of a community contribution. Every one comes together to put it in place and it creates this thing that’s not really owned by any one of them. If this succeeds then it means when people come together great things happen. Also, it’s not a government event.
TNL: Both of you must have come across a lot of interesting startups? Are there any noticeable trends in the past few years?
J: In the US, northeast Asia and also China what we’re noticing is the whole movement of mobile is probably coming to the bottom-half of the game. A lot of the leading players have established a position that would be very hard to disrupt. For example, WhatsApp is reaching a billion active users and that scale is probably very difficult for a newcomer to replace.
What we’re seeing is, the iPhone came out in 2007, Android came along in 2008 and after seven or eight years the opportunity for startups to create a huge success around this mobile platform is sort of at the bottom-half. I’m not saying there won’t be startups finding their way, but you will start to see opportunities becoming less and less.
On the flip side, you’re starting to see possibilities in the IoT space, the non-computer and non-cell phone spaces because of all the enabling technologies the prevalence of mobile has brought to life. You’re starting to see reinvented cars, buses, buildings, trains maybe later on even airplanes, transportation and everything is all being reinvented.
When we take all these innovations and spread it out to other areas, I think we will start to see more and more startups working on innovations in areas other than the traditional PC, web and mobile Internet. We’re kind of in the in-between stage where you see a lot less mobile innovation but not enough Internet of smart things.
M: As an event organizer, we’re always chasing the latest trends and perhaps the far frontiers, but yes, virtual Internet is something. As an organizer or media, that’s interesting, but startups should not just jump on the ship and be chasing all these IoTs because there’s so much money still in the e-commerce and market places. Keep calm and carry on with what you are best at, however don’t lose track on how the trends may affect what you are building. Investors follow trends more, I reckon. They measure the timing element and know when to bet where.
So the call for startups is, yes, there are these trends, but it doesn’t mean you have to go there otherwise there’s nothing to do. There are these traditional things where there’s still a lot of money. IoT has been around for a long time and it still hasn’t hit its potential yet. Taiwan is in a very good position for whenever the IoT hits mainstream with its manufacturing side and all.
On the other hand, virtual reality (VR) is happening. It has also been there for a decade or more. You’re seeing gadgets, like headsets, with very low price points. We would buy a set for US$ 100, so it will hit the mainstream. I was just in New Zealand a couple weeks ago, and you have people like Peter Jackson who is behind all these avatars and they are absolutely killing it with VR. You are nailing the price point and the content side, so I think virtual reality is a trend now.
TNL: Taiwan seems to lack international-level startups. What do you have to say on this?
J: I would actually argue against this. Given our size, we have a fair share of internationally successful startups. I would probably say we are on par with countries around our size, but I’m saying that’s not what we want for Taiwan.
Taiwan is a country with not a lot of people and not a lot of natural resources, so on a worldwide level it’s at a disadvantage. The only reason we have a much higher GDP per capital than most of our neighbors is we betted on the right industries before everyone else did. But this time around when the biggest value is Internet and associated verticals, we didn’t bet enough on them. We have all these startups that have some success internationally, but we don’t have the level of international success that we would like and used to have in the semiconductor industry or ICT industry.
TNL: There are sayings that the Taiwanese government provides fewer resources for startups. Do you think this is true, Jamie? Martin, can you share from your own experience, how governments of other countries, including Finland, northern Europe or other Asian countries, lend these businesses a hand?
J: The government is trying to change, but they’re trying to find an easy way out. Taiwan is in a very dire situation right now, so our GDP might not end up growing this year and the problem with that is we’re not doing the big things that are right. We betted too heavily on the old traditional stuff, like ICT manufacturing and semiconductors, and all these industries are becoming mature ones. We didn’t bet enough on the Internet and that’s why we are suffering.
But the government is only trying to take care of the little things around the problem. It’s like we’re heading into intense care but the government thinks we’re just having a headache so all you need to do is take some Ibuprofen and we will be fine. They’re giving out petty cash, hosting little random events for startup founders and they’re thinking that’s enough to change our fate. But that’s not enough.
I think the solution right now is to really look deep into the problem and realize it’s the core economic engine that’s having problems. We should, like the Chinese government, say out loud that the Internet is our major national strategy. If we don’t do it, whatever you do is not going to help. You work hard tactically, but it doesn’t change the fact that you lack a main strategy.
M: The good thing I think the government recently done here regards visa. So welcoming foreigners here has become easy here. Another thing the government can do is to think of a better commercialization system for research, getting the things developed in labs out into the real world.
J: Another problem Taiwan has is that our government prevents the professors who invent the technologies to play a big part in the private companies that license their technologies. So you can be a minority shareholder, but you cannot be a significant one. You can’t even be a director. They feel that you might be stealing from the public because the public pays for your salary and research. If you’re channeling that into that into a company you hold a majority share or you’re director of, then you’re benefiting yourself or certain people instead of the whole public.
TNL: From past experiences, how do these events benefit startup companies most? What do participants gain from these events? Are there really startups that receive funds directly from these events?
M: No event can really claim the amount of money it raised, but for sure you can say connections remain.
TNL: There is a saying that entrepreneurs should work more and take less part in these events. What do you two think?
M: Noise is very high. Five years ago you had very few events and now you have a few thousand events. Startups should not attend more than one or two big events around the year. They should have a very clear idea why they go to the events. They should have pre-booked meetings when they go to the events.
TNL: Martin, other than MOSA, is there any other startup-related thing you would like to do in Taiwan?
M: If I build a startup today, I would build business in the Nordics, develop it in Taiwan, and sales and marketing in Australia and New Zealand. Nordic business is great because I admire how straightforward they are and the development here is highly skilled.
J: At least through developing in a more international country you can experience how international businesses work. After that you might want to take it a step a further and establish your own international business. I think it’s a good way for Taiwan to create value in this Internet game while our talents can learn from their experience. So I’m always supportive of international Internet companies to come and set up a development center. It’s better than not having it. Yahoo and Google have development centers in Taiwan, while Facebook and Twitter only have sales offices, which is not as good as a R&D (research and development) center that can train local talents.