Why going global is the safest bet for a Vietnamese startup
I’ve been worried about Vietnam’s startup ecosystem. New regulations, not enough quality startups, and a lack of funding have lead to a rather risky environment. Although there are multiple incubation and acceleration programs churning out promising startups, it’s not clear if this will balance out in the market. When I talk to people in the region, they’ve turned cold to Vietnam. Foreign investors aren’t as keen as they were a few years ago.
But the regional and foreign climate is not necessarily a good measure for how well the country is doing internally. Local investors and serial entrepreneurs are more vibrant than ever. There’s startups like Momo, a payment startup that resembles Kenya’s mPesa, which is funded by a cofounder of FPT (Vietnam’s largest tech-related company with investments across tech infrastructure to education to outsourcing).
There’s an ecommerce logistics startup named GHN, which I’ve written about extensively. It has investors and mentors from Vietnam’s Best Buy, Mobile World. GHN is one of a handful of startups being funded under Seedcom, a secretive fund by the aforementioned investor-mentors. There’s also a handful of alumni who used to work for VNG that are also involved in venture capital firms like Inspire and their own ventures like Boomerang and others.
If these three cases weren’t enough, there’s one overarching feature of Vietnam’s ecosystem that I take as a sign of good health: tons of employees that are jumping from one tech company to the next. Talent incest is the surest sign of a healthy vibrant ecosystem.
This sounds great but all of this does not shake that apprehensive feeling I have for Vietnam’s startup environment. The above are a handful of very promising instances that indeed indicate strength. The best metaphor I can think of for Vietnam’s startup scene is a tree with a strong trunk but sick branches. VNG, FPT, Mobile World, the telcos, and the other more successful tech-related companies are like the trunk. The withering branches are the rest of the ecosystem. The policy, economics, quality of startups, lack of good investors, business ethics, fast growing but uneducated userbase, and more, represent the branches. And a big problem is that outsiders will have a hard time examining the trunk. Most of the time, all they can see are the branches. I don’t blame them. An ecosystem should be evaluated based on its totality.
But I think this only applies to startups tackling the domestic market. It’s my sense that startups in Vietnam that go global, instead of going local, will be able to avoid many of the pitfalls above. Leave the local markets for companies that have the connections and business prowess to weather the Vietnamese monsoon. The majority of Vietnamese startups should just look abroad.
Global winners in Vietnam
Before we dive into why going global is fundamentally better, let’s look at the global winners. There are a handful of mobile app winners like Flappy Bird, INKredible, Fuzel, and Greengar, which I’ve written about at length. There’re also companies like JoomlArt who have done well in the web space. These are all companies with most or all of their teams in Vietnam.
Then there’s the cohort of companies that have major branch offices in Vietnam. This includes the wearable tech company Misfit Wearables, big data startup Adatao, brain-computer interface company Emotiv, major gaming studio Gameloft, and enterprise software firm Atlassian.
And last but not least, there’s the growing outsourcing industry. Although they’re not product companies like the companies above, they do represent a large group of technology companies that work with international clients and build products for global or international customers. Because of their steady success, and obvious business model, there’s a growing number of small studios that do outsourcing and client work in Vietnam.
Vietnamese companies are already familiar with going global in a variety of forms. These are the potential mentors. If you are a Vietnamese startup that wants to go global, and you want me to put you in touch with them, let me know. They’re just one email away.
Failing local or failing global?
I’ve covered how to go global before. Many readers will likely argue that it takes more to go global than it takes to go local, since going global requires a way of thinking that is beyond one’s local scope. I’d argue that, at a basic level, it takes just as much testing of product, market research, and methodology to succeed in both oceans. But when you step back, it’s much more complex. Locally, do you want to battle with local threats from areas you don’t expect with defensive capability you likely don’t have? Or in the wide world, do you want to battle with customers you don’t quite understand with defensive capabilities you may not have but can gain?
Your call. But I think going global is less risky.
If you’re not convinced yet, here’s one thing that will totally convince you: failing is totally different in these two markets. In the local market, failure brings two major concerns. On one hand, in Vietnam, and Asia as a whole, failure is frowned upon. The local startup ecosystem is increasingly supportive about failure but family, society, and friends are not. And that’s just the cultural side. In the case of HaiVL, the founder sold his company only to have it shut down by the government. He’s facing a possible jail sentence. Failure is debilitating, you may not have a fresh start. And the things that you learn when you fail will not always be things that you can put right back into building your product or making your customers happy. The things you learn will be a mix of that, plus a laundry list of regulations you have to watch out for.
When you fail on the world stage, on the other hand, you will certainly be competing against startups above your weight category, but at least you’ll learn many things that you can apply directly to your business. The rules of the game are more transparent and you’ll likely lose because you suck, not because you were blindsided. And at least if you suck, you can change yourself. You can’t control the things that blindside you.
In either case, you will certainly fail. As we all know, a majority of startups fail. But the question is, what kind of recovery do you want after failure? What kind of person, and what kind of company, do you want to become after failure?
Look at the long path. Five or ten years from now, what kind of company will you be running? What kinds of lessons will you learn along the way? To me, if you want to battle in the local market, you’re going to need a broad set of skills and weapons at your disposal to really make it work. Your skin needs to be tough, and your execution and backing need to be resilient. If you want to battle abroad, it appears daunting at first, but it’s actually much simpler.