Nobody Wants to Work for Your Asia Startup? Here are 5 Ideas to Change That.


 

A lot of factors will determine your startup’s success. Product innovation, consumer adoption, and competition are of course critical factors but get too much ink in the startup press. What is often only given lip service, but is in my opinion the most fundamental determinant of success, is the people you hire today. I have been very vocal in conveying the challenges that startups in Asia face, particularly in building teams beyond the founding members. I outlined some of the key structural, cultural, and societal challenges we face as entrepreneurs in a post I titled ‘There is No Glamour in an Asia Startup’. I want to focus this post on solutions.

My co-founder and I are old men in this startup game. We both came from a 4,000 person company called E*TRADE which was once a startup darling born in Silicon Valley. We both agree that the most valuable lesson we learned before leaving to start our own company was how to lead an organization through both good and bad times and how maintain an execution-focused culture . At the peak of the business at ETRADE we managed a team of 500 people across 15 geographies. Some of those local businesses ultimately succeeded and some failed. In almost every case it came down to people on the ground and the quality of their conviction and execution. People, not your product, will be your greatest long-term asset. As you build your team my plea is that you build your startup for what you want it to be and not for what it is today.

When you are a small team of founding members you are full of enthusiasm for your product and the opportunity ahead of you (as you should be). Hopefully your idea will gain traction and you will be in a position to raise money or reinvest positive cash flow to drive growth. One of your first investments will likely be in hiring your first non-founding member. As you move to hire employee four, five, and six you will likely see that they are unable to match your level of enthusiasm. At first you won’t understand why they can’t be as emotionally invested as you but take a step back and think about it rationally. People work for any number of reasons and have their own ambitions and motivation. It is arrogant to think that every individual that joins should share yours. Don’t dismiss an individual because they don’t want to drink Red Bull with you and write code until 4am. This lack of motivational alignment absolutely does not mean they can’t be a great fit for your startup. The best people I have ever worked with have two clear qualities. They were self-directed and execution oriented. If you want to be a growing company you are simply going to need to anticipate and accommodate the diverse motivations of your team. Furthermore, enthusiasm can manifest itself in different ways.

So how do you turn HR into a competitive advantage for your startup? In Asia, we are typically not fighting a talent war with other startups, as is the case in Silicon Valley. Instead we are competing with large companies that have the perceived benefit of security and a long-term career. When you launch a startup these naturally won’t be the easiest selling points for you. On the basis that you hire people on a foundation of trust and respect, you can really push the envelope. Here are some ideas.

Consider killing the idea of a vacation policy

When we launched 8 Securities we decided to use our size to our advantage. We started with vacation days. Statutory vacation in Hong Kong is 14 days so we decided to offer 25. Quality is not measured in days or hours but in execution. Hire execution-oriented people who will deliver what you ask of them and you don’t need to worry if they take an extra day off here or there. I am tempted to kill the vacation day policy all together and not track it. Really, I don’t care. The day we cease to be more focused and productive than our competitors is the day I will rethink this approach. I don’t see that happening anytime soon.

Don’t be frugal when it comes to your team’s well-being

The next thing we did was implement a very generous medical benefits program including maternity coverage. Your health benefits are likely going to be between 5 percent to 10 percent of your compensation costs and I don’t think this is the area to be frugal. Your employees well-being and security should be on the top of your agenda. You may be 24 and a model of good health but the rest of your team probably does not feel invincible. This is one of the most important investments you can make that shows your team you are serious about building a company for the long-term.

Don’t be a big brother (leave that to your competitors)

Give your team the freedom to balance their life and work. If someone has to go to the dentist for an hour, don’t keep tabs. Let people have some downtime during the day to engage their social networks, go out for a coffee, or surf the internet. You do it so why can’t they? Nobody can be productive from morning to night. Without small mental breaks productivity is killed anyway and we find ourselves staring blankly at a screen. This is probably the environment at your bloated competitor who is too busy wasting their time running ridiculous reports on their employees habits.

Build a diverse environment

Diversity of experience, nationality, and gender is a powerful weapon. Diversity across these lines breeds diversity of thought and opinion. Without this diversity of thought your innovation and edge will suffer. We were fortunate that we managed a very diverse global team in our previous career and that instilled in us the importance of bringing that culture into our startup. We have six nationalities represented in our team. The majority of our staff are females which is unheard of for a financial services company. Finally, we have made a real effort to recruit outside of our industry to bring in new ideas. You need diversity to shake up very traditional industries that look within themselves for ideas. This is precisely why they don’t innovate and you have a real chance.

Transparency rules

I think it is critically important that when building a team you are transparent about the risks and not just the rewards. Don’t take for granted that every employee may not be as well versed as you when it comes to market and financing risks you will surely face. It works to your advantage to be transparent because anyone that does not have a certain level of risk tolerance does not belong in the startup world. Try to mitigate the perceived risks with facts and always be honest. You are after all dealing with someone’s livelihood and everyone should enter the relationship with eyes wide open. I also am a big advocate of being transparent with business progress, both good and bad. We display our key real-time metrics across four ceiling-mounted plasma screens in our office. Withholding information breeds uncertainty and I would rather everyone feel unified and secure that we are all in this together.

Equity, equity, equity

One of the biggest disparities between Silicon Valley and Asia is the lack of equity culture in Asia. Beyond the founders you will find people are much more concerned about their salary, heath benefits and security than with long-term equity. Just because employees may not ask for equity it does not mean you should not grant it. My suggestion is to tie it to a concrete goal that everyone on the team can get behind. For us, the goal is the first full quarter of profitability. Once that is achieved we will issue stock to all of the employees and have stipulated that in our shareholders agreement with investors. I don’t think its especially helpful to grant equity up front as it has unclear value (so employees will not value it all) and it should be used as a tool to reward real achievement and loyalty.

I leave you with this thought. Building and motivating a team will be the hardest work you do. Again, build a foundation for what you want your company to look like in the future and not what it is today. Your product will take you only so far and it is your people that will be the ultimate factor in success or failure of your startup. As always, good luck! I am pulling for you.    


Simple.

 

Simplicity is the product of great design. It removes friction and gives us what we want, when we want it.  Complexity is the product of bureaucracy, complacency or a lack of creativity (or all of the above).

Starting a new company has been a liberating experience. The goal of simplicity for our customers and operations drives everything I do. The product design for our customers, our technology architecture, our internal processes and our office….all designed to be simple and usable. 

How many examples of companies can you point to that make your life easier? By and large, these companies are infected with complexity. The customer does not come first, process and procedures comes first. The bureaucracy feeds bad design and that leaves us all unhappy. 

The answer is simple. Simplify.

From One Entrepreneur to Another

 
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“We are going to change the world”. If ever there was a cliche at a technology start-up pitch, this has to be it.  Having gone through the roller coaster ride of raising investment, I learned an important lesson. Anyone that asks you how you are going to build a $1 billion dollar business and how you are going to "change the world" needs a wake up call. It is astonishing how many VCs continue to view investments through this lens. Furthermore, it is amazing how entrepreneurs are forced to pander to it. Sure, I understand the traditional VC investing model and that they will make five to ten investments a year and hope that one delivers big. The rest are simply collateral damage that could not scale fast enough to satisfy the VC with a huge exit.  Those that deliver big are few and far between and you probably won’t be one of them. But don’t let that stop you from building a great product and business because you can. Don’t waste your precious time and energy trying to back fill a story that shows 100 million customers with your totally creative way to drive revenue (that deep down you know is nonsense). Instead, focus on these four clear objectives and frame your business plan around this. First, build a great founding and operating team. Second, build an amazing product that delivers what it says on the box with early customer feedback to prove it.  Simply, make your customers happy. Third, set your sights to break-even and not a day beyond. Finally, ensure you are building a scalable business model and product from day one. If you achieve these objectives you will be in a great position to build a profitable growth business.  Remember, it will take one customer at a time to determine your success.

Investment funds like Dave McClure’s 500startups get it. The reality is that a successful exits for most ambitious and innovative companies will come in seven or eight digits and not the ten we find in $1,000,000,000. I assure you, if your product is so big and so groundbreaking, then you are not knocking on doors for investment. It will be other way around. Since no VCs are knocking on your door, don’t waste another minute of your time reaching for the moon. Instead, build your product and prove your customers want it. Do everything in your power to delight them with brilliant design and engineering. Change your customer’s world and the rest will follow. If you do that, you will find the right investors with a realistic world view. You probably won’t change the world, but like the great Steve Jobs said, try to make a dent in it.  Good luck, I am pulling for you.