Brunch with IDEATE
With his deep knowledge of startups in the States and Southeast-Asia, the world’s fifth largest economy by 2020, Yinglan Tan is a venture capitalist whose views are much sought after. He tells IDEATE how he sees regional startups can work together.
Name: Yinglan Tan
Designation: Founding managing partner of Insignia Ventures Partners and ex-Sequoia venture capitalist
After Ying Lan graduated with bachelors in ECE and Economics at Carnegie-Mellon University and a master’s at Stanford, enrolled briefly in a PhD programme at Harvard University before going on to teach at the National University of Singapore, Nanyang Technological University and INSEAD. He was Head of Projects at the National Research Foundation in Prime Minister’s Office of Singapore. He joined Sequioa Capital as a Venture Partner from 2012 to 2017 and left to start Insignia Ventures Partners. He has also served as a Young Global Leader, Global Agenda Council Member, Technology Pioneer Selection Committee at the World Economic Forum since 2011. He is also an Eisenhower Fellow that identifies, empowers and connects innovative leaders around the world. The father of three children is the author of three books andcontributing columnist for Forbes magazine.
“Investing in technology is also like buying fine wine. The question is not so much ‘How much is this today?’ but rather ‘How good will it be tomorrow?’” he said. (Asian Scientist Magazine at: https://www.asianscientist.com/2018/02/features/insignia-venture-capital-tan-yinglan/)
- Before your illustrious career as a VC, you started your own startup called LoveMatch.com in 2003 when you were studying at Stanford. So, having been a startup founder yourself, what would you say are the most important qualities for growing a company? In your opinion what is a founder’s DNA?
This reminds me of a question I encountered, “What are three characteristics of a great founder?”
I said, “Great founders only have one: they are unstoppable.” Unstoppable founders know clearly what they want, but also the limitations getting there. They constantly ask themselves, “What is stopping my company from getting to the next level of growth?” They overcome the market hurdles that others would find impossible to work with. As an example, to overcome limitations of existing logistics infrastructure, Stoqo improved its service to restaurants by developing its cold chain capabilities and running its own warehouse. The Indonesian startup is a one-stop B2B online solution that connects food and beverage supplier with culinary businesses for purchasing and managing supplies. (SOURCE: https://play.google.com/store/apps/details?id=com.stoqo&hl=en_SG)
- Among the challenges startup founders face, they range from finding the right co-founders, funding, making a minimum viable product, marketing, administration and so on, what are the ones that you pay most attention to?
Working with founders 24/7, I’ve seen them encounter different kinds of problems. These problems boil down to three Fs:
The first is false product-market fit. Startups need to know what is driving their growth, and this corresponds to why customers are using their product. Tying use cases to the right metrics is necessary to finding the right business model.
The second F is funding depletion. Startups are constantly in a race to raise more money. One of two things usually happens. This can be startups burning through discounts quickly fueled by the wrong assumptions about the product and the market. Alternatively, startups burn slowly, unable to find the right direction.
The third F is the founding team itself. Many people discuss product-market fit without considering founder-market fit. Different industries require founders of different moulds and founding teams with specific sets of complementary backgrounds.
- What were the seminal lessons of Sequoia Capital for your successful investments in Carro, Gojek, Tokopedia and others?
Companies do not become unicorns just through the funding they receive. An investor is like the soccer coach who mentors the player and helps him or her to improve his game to become the best player s/he can possibly be.
As a coach, you are the entrepreneur’s first call. Founders should have you as the number one on their list of go-to contacts whenever they need help. This means always being ready to support the founder 24/7 on any issues – be it about a competitor, regulation changes, or internal HR problems.
- You have traversed Singapore and international education and technological innovation landscapes. What is the special flavour of Southeast Asian startup scene?
Many people talk about learning from business models and innovation in more advanced ecosystems like the US. However, we see that the infrastructure gap and inefficient services are giving rise to unique Southeast Asia-first business models. For example, Carro started out first with a basic service, offering an online marketplace for transparent buying and selling of used cars without dealers, before expanding services into the full customer lifecycle to cover pain points experienced by its customers, such as when Carro discovered that customers may be willing to buy used cars but whose loan applications are rejected by banks, thus impacting Carro’s sales figures. This is when Carro’s founder, Aaron Tan, found that the credit underwriting methodology and algorithm by the banks are inclided towards a certain set of the customers . This led Carro to expand from an online marketplace, offering auto-financing, roadside assistance and new subscription models for short term car ownership.
- You have had extensive experience in the education, incubation and investment of human capital for the startup ecosystem here. How do you see Singapore startup scene growing?
There is a gestation time required for the startup ecosystem and we are starting to see the ecosystem in Singapore reach critical mass. Singapore is now at the forefront of the wave where industry-specific products and services are transforming traditional business practices.
Take the cross-border logistics industry, where previously you’d have to talk to one large freight forwarder or multiple service providers to ship overseas. Platforms like Janio reshape logistics by routing deliveries to the most cost-efficient and fastest service providers and standardizing industry documents and terms.
- How would you describe the differences of the startup ecosystems in Vietnam, Indonesia and Singapore, given how competitive the ASEAN startup landscape is?
Instead of focusing on differences, I like to look at how the strengths of each country can be tapped to build the pan-Southeast Asian company. You can headquarter in one market, base your designers and engineers in another, and launch the product in a third market. My advice is to build your tech team in Vietnam, launch your product in Indonesia, and seal business deals in Singapore.
- Singapore government has been trying to inculcate entrepreneurship among students. How can this be done through the school system, in your opinion?
Singapore students are educated with a global mindset, but how well do they know Southeast Asia, the go-to market which our startups should target? Instead of embarking on global exchange programs to developed markets like the United States and Europe, they should be exploring neighboring countries like Indonesia and Vietnam, understanding cultural nuances and connecting with entrepreneurs in the region.
- It is rare for investors to write in the public domain so readily. What makes you want to share on Forbes?
Every article published is a vehicle for promoting open collaboration and rapid innovation, ingredients essential to technological development in Southeast Asia.
Open collaboration through cloud platforms like Github sped up technological development in the West. This pushed the limits of productivity far beyond what developers would have been able to do on their own. In China, the intense competition among internet companies has spurred rapid innovation and brought the ecosystem to where it is today.
- You have said “Investing in technology is also like buying fine wine.” Which of your investment has been the most rewarding and why?
The most rewarding part of being an investor is not found in a wine bottle but the joy and satisfaction from being a wine enthusiast. This joy stems from seeing founders grow, their companies thrive, and the lives of people improve because of their good work. Successful companies inspire the next generation of founders to create even greater impact.