Questions With Skilio’s Felix Tan: Tracking What The Education System Doesn’t With Tech.
Quest Ventures Podcast Season 1 hosted by Vanessa Ho.
Questions With Skilio’s Felix Tan: Tracking What The Education System Doesn’t With Tech.
Quest Ventures Podcast Season 1 hosted by Vanessa Ho.
Questions With ELXR’s Steffan Fung: From Special Forces to Scaling Fitness with Tech.
Quest Ventures Podcast Season 1 hosted by Vanessa Ho.
By Aaron Sarma & Jeffrey Seah
So much has been said and written about the vast potential of the Malaysian tech ecosystem – and for all the right reasons.
Within ASEAN, Malaysia was one of the first countries to invest in the Digital Economy with the establishment of multiple government agencies, seeding policies, industry blueprints and development acceleration programs. Coupled with its multicultural society, ease of adoption in digital economy services and a well-exposed middle class, the nation has always been a prime destination for Asian and MNC organisations to expand their business footprints. Microsoft, Intel, NTT, Dell and Sony for example have all established Line-Of-Business hubs in Malaysia
And yet, it seems that Malaysia has been lagging behind in technology investments in recent years. In 2019-2020 a mere US$362 million (RM1.51 billion) was invested in Malaysian startups – a number dwarfed by Indonesia’s US$5.63 billion and Singapore’s US$1.47 billion. Neighbouring countries – Thailand and Vietnam – with lesser ICT investments in the past – attracted significantly more venture and growth capital in the same period. More troubling is how many venture investors seem to view Malaysia as an opportunistic investment market rather than a key focus of their investment mandate. [RM1 = US$0.239]
It is also the case that until very recently, Malaysia has found laying claim to having its own “Unicorn” – a privately owned startup whose investment valuation is in excess of US$1 billion – to be elusive, in comparison to ASEAN neighbours Indonesia, Singapore and Vietnam. “Unicorn” badging brings all-round confidence (perhaps part hubris) to budding tech ecosystems, and the resultant halo-effect drives further distance in the funding disparities in these markets.
Malaysian tech startup founders also have a tendency to be Malaysia market self-sufficient – reflected as “timid” and “lacking boldness” in their expansion plans to non-Malaysian investors. Often, their initial focus on rooting in Malaysia’s 32.7 million population becomes a permanent preoccupation. The Malaysian market, whilst of decent size by traditional measures, cannot fully realise the potential of the digital economy era in drawing the hub-spoke power of various Cloud, SaaS and Platform services available – as compared to the captive build of US$1 billion businesses for Indonesia startups’ 266.6 million, 16,000-island playground, or the scaling mindset of Singaporean founders who aim to go regional, if not global from Day 1.
All that said, we have witnessed green shoots in the last few months. Bright spots have dotted the Malaysian startup landscape: Fave’s US$45 million acquisition by Pine Labs, impending entries of Carsome and Aerodyne into unicorn status, AirAsia’s superapp plans kicking into high gear and of course – Grab – a Malaysian born and incubated startup listing on a SPAC to a reported value of up to US$40 billion. Malaysia’s tech ecosystem is finally coming of age, and this is the moment to unlock Malaysia’s Underrated, Untapped and Unknown Unicorns-in-making.
For all the concerns about the ability of the Malaysian ecosystem to create winning companies, Malaysian startups have shown the highest investment to return ratio in the region – more than double that of Singapore, and nearly 10x more than its neighbours across the Straits of Malacca in Indonesia. Perhaps a byproduct of being handicapped in raising foreign funds and expanding regionally, Malaysian startups seem to have found ways to develop businesses with good business models with a focus on profitability.
Malaysian founders have demonstrated their resourcefulness in leveraging corporate partnerships beyond proof of concept projects, and as well lobbied for government support grants and other benefits to sustainably grow their businesses and ecosystem. It would seem that this approach has yielded benefits during liquidity events such as IPOs.
Furthermore, local startups have access to a diverse and skilled talent pool. A result of years of development in the ecosystem thanks to entities such as Malaysian Global Innovation and Creativity Centre, Cradle Fund and Malaysian Digital Economy Corporation.
With Covid-19 testing the best of founders, the years of development work by these entities will now bear fruit as the Malaysian founders demonstrate their mettle in more equitable environments compared to their regional counterparts.
In the eyes of many investors, Malaysia’s ecosystem is indeed a diamond in the rough – chock full of ideas and potential and awaiting the right and timely stimulus to be the birthplace of thousands of successful startups. Beyond financial investment, the key to unlocking this potential is matching timely guidance at the various stages of founding to ensure that their startups are investor-mindset ready. Targeted coaching with regional and global mindsets will provide these startups with a good footing when branching out beyond Malaysian shores.
Malaysian startups need a strong go to market ethos, with a focus on scaling their models beyond the founding market borders. Many follow-on investors look to Malaysian startups who have successfully proven that they can build a business in another market as a signal of viability and investability. The need to go regional from the moment of inception is non negotiable.
Finally, corporate Malaysia needs to play its part in supporting the startup ecosystem. It is one thing for the government to catalyze growth through grants, tax breaks and other benefits but in the long run corporations must play a role in creating an environment for startups to develop long term collaborations that could lead to investments or acquisitions. It is encouraging to see companies such as Sunway Group, Petronas, Axiata and AirAsia be active in the startup space but more corporates should follow suit.
There are thousands of Malaysian founders who are building profitable technology companies in Kuala Lumpur, Penang, Johor Bahru, Kuching and in other cities. Official startup estimates state that there are around 3,000 startups in Malaysia. However the number can be significantly higher. Many of these companies are structured as small medium enterprises that use technology to reach their audience. It is unfortunate that these companies don’t rise to prominence but this is the opportunity for Malaysia – to turn these companies into high growth venture backed startups that can grow regionally and beyond.
Malaysian founders, too, should do their part. They need to shake off their mild mannered personalities and communicate their beyond-horizon growth plans when speaking to regional partners and investors. In many cases when they do, they achieve breakout success such as the likes of Tony Fernandes, Patrick Grove, Anthony Tan, Joel Neoh, Eric Cheng and Kamarul Muhamed. Malaysian founders will be perceived as good as how they perceive themselves.
In fact, the most recent Global Entrepreneurship Index (GEI) produced by the Global Entrepreneurship and Development Institute (GEDI) in 2019, which aims to provide a holistic assessment of the entrepreneurial foundation of countries and allow for normalized comparisons, shows Malaysia in a promising light. Amongst its regional peers, Malaysia scores the second highest at 40.1, behind Singapore (52.4) and ahead of Thailand with a corresponding score of 33.5.
Unlocking Malaysia’s Potential
We believe that the recent round of promising news from the ecosystem is not just a random occurrence but rather the beginning of the emergence of Malaysia as a startup heavyweight in ASEAN. It is the culmination of years of investment by the government, returning entrepreneurs, industry veterans and investors. This is the moment to double down.
To ensure that the Malaysian ecosystem maintains this trajectory, intervention is required to ensure that ascendant startups have the right perspective and focus to achieve meaningful growth. With strategic capital, coaching and effective go to market strategies we believe we can uncover gems in this ascendant ecosystem.
And this provided the impetus for Quest Ventures and ScaleUp Malaysia to come together in 2020 – the first significant investment program by an international VC into Malaysia. We have made a concerted effort over the last year to focus on grooming and developing startups in Malaysia, leveraging the experience of both teams and their ecosystems. Quest Venture’s involvement in ScaleUp Malaysia’s program brought not only foreign direct investment into the companies in ScaleUp Malaysia’s Cohort 2 but also served as a catalyst for a shift in the mindset in participating founders. Companies were coached in the program on multiple and concurrent market access, pricing strategies and best practices when speaking to investors. Accessing a regional network of businesses, investors and partners in ASEAN, China, India and Central Asia has provided many opportunities for collaboration and has forced our entrepreneurs to benchmark themselves on a global stage instead of simply being local heroes.
As we emerge from the Covid-19 pandemic and the economic morass it has wrought on the global economy, Malaysian startups have an opportunity to lead from the front. ScaleUp Malaysia and Quest Ventures aim to continue to be the port of call for startups in Malaysia who want to become breakout success stories. As Cohort 3 begins, we aim to build on the strong foundation we started in Cohort 2 – with a laser focus on finding Malaysia’s next big success story. We welcome you to join us on this journey!
This is the moment for Malaysia’s startups to be unleashed.
An entrepreneur who successfully exited his startup in 2018, Aaron Sarma is an active investor and ecosystem leader in Malaysia and is General Partner, ScaleUp Malaysia.
Based in Singapore, Jeffrey Seah was a C-level leader in advertising & media in Southeast Asia before moving to the venture capital world. He is Partner, Asia Fund, Quest Ventures.
This post first appeared on Digital News Asia.
A Brave New World in the COVID-19 era, with value creation in the physical and digital economies as they grow and continuously integrate
We are close to 1.5 years into living with COVID-19, reacting to its multiple variants (alpha, beta, gamma, delta).
The shifts in and out of lockdown across the world have been, at the very least, frustrating to individuals, communities, and businesses. But the whole point is probably for the global population to be able to toggle smoothly and efficiently between the two states – lockdown and pre-COVID-19 normal.
This, perhaps, is our new normal with COVID-19 being a time marker for BCE (Before COVID era) and the CE (COVID era).
And as we live in these times, I could not help but think of Huxley’s imagined future of a totally planned society of alphas, betas, gammas, deltas, and epsilons, who are genetically engineered and live a pain-free life.
We are far from this society as the world population struggles with vaccination campaigns and even the wearing of masks to limit the spread of the virus. Not an advocate of Huxley’s Brave New World, but I believe we are moving into our very own Brave New World triggered by the pandemic.
This Brave New World is strongly characterised by high tech and high touch. And these are some trends from the pre-COVID-19 era, which will persist and mutate in the COVID-19 era.
Digital migration and expanding digital economy in the COVID-19 pandemic
Life goes on, digitally. From socialising to business to shopping, the world is compelled to go online, in order for their lives to bear any semblance to that BCE.
In Latin America, 13 million people made their first-ever e-commerce transactions. McKinsey also reports that “social commerce is on the rise as well, with 34 per cent of people saying they have shopped on Instagram based on an influencer recommendation.”
Powered by tech and personalisation, the convergence of social and commerce is an extremely exciting space for the expanding digital economy.
It is not a new realisation that social interactions convince consumers to buy things. From in-store shopping, consumers could discover products and experiences in groups. The discovery, interaction, and promotion were once thought to not be replicable online when we were at social commerce 1.0.
But now, social commerce has evolved to 2.0 enabling a high tech and high touch shopping experience without ever stepping out of the house.
Social commerce combines the stickiness of online shopping and the network effects of social media. Social commerce which now makes up 5 per cent of all e-commerce, is projected to take up 19 per cent of the 14.7 trillion e-commerce market in 2025, according to ARK Invest.
At social commerce 1.0, the model stops at social selling and referral. 10 years ago, while 12 per cent of the top 500 retailers have Facebook applications that enable shopping, none has registered significant sales activity as a result.
In fact, within the past year, Gap Inc., Nordstrom, J.C. Penney, and GameStop have all opened and closed Facebook stores. General social media posts (influencer marketing and sponsored posts) used to drive traffic to web stores proved ineffective and inefficient in driving conversions too, as consumers need to leave the platform.
Moving into 2.0, social and commerce is layered into the same stack, and the mobile (or any other screens) would be the access point for any consumers to shop and socialise at the same time.
Fintech developments to enable payment transactions in social media platforms and online marketplaces had also transformed eCommerce and supercharged social commerce.
Consumers can now discover, discuss, deliberate, and make a deal online with their friends and community with the different social commerce challenger models:
Purchase can be done directly from online marketplaces and social media platforms. Earlier, we do see more marketplaces layering social for an interactive shopping experience for consumers, but now we are also seeing social companies layering commerce as part of their social commerce play.
With the collaboration between major social media platforms (TikTok, Facebook, Instagram) and Shopify to enable in-app purchases, brands would be able to turn their social media accounts into a digital storefront besides creating, running, and optimizing their social media marketing campaigns.
The opportunity is huge with TikTok’s over 100 million highly engaged users and Shopify’s over one million merchants coming together for social commerce.
The Shop Pay function that Shopify, Facebook, and Instagram are working on also enables a 70 per cent faster speed for checkout and sees a 1.72 higher conversion rate.
Consumer-driven e-commerce and team-based purchase
Consumers are taking the wheel in the newest development of social commerce. Companies are increasingly developing a discovery- and feed-based format for consumers to shop in teams, in contrast with the search-based format of traditional e-commerce. This creates a fun and interactive shopping experience for the consumers to aggregate demand and bargain.
At the same time, it enables a Consumer-to-Manufacturer (C2M/C2B) model to bring about better forecasts for manufacturers’ production and cheaper prices for consumers. An example would be China’s Pinduoduo valued at US$24 billion at IPO and rakes in US$38 million every day in revenue.
Its C2B model is characterised by buyers putting details of products on sites like WeChat (China’s WhatsApp with 1.2 billion users) to get friends and family to buy as a group. The bigger the group, the bigger the discounts available. And the orders go directly to manufacturers and farmers, reducing the price tag and raising profits.
Also Read: 10 lessons from building a niche, profitable Shopify app in 12 months
According to TechCrunch, “Pinduoduo’s annual GMV (gross merchandise volume) surpassed RMB100 billion (US$14.7 billion) in 2017, that’s around two years since its inception.
To hit the same milestone, Taobao took five years, VIP.com took eight years, and JD ten years. Pinduoduo now claims more than 343.6 million active buyers with an annual GMV of RMB 262.1 billion, or USD 38.5 billion.”
Live-streaming brings social commerce to a new level, as influencers and normal people create content and sell products and services to consumers in real-time. Social media platforms with live video functions, such as Facebook Live, Instagram Live, and TikTok allow some influencers to entertain, take orders, sell and transact in real-time.
The fulfillment of the sale is done later at the cost of the sellers or buyers, according to the agreed arrangement. Content from live-streaming is perceived to be more authentic and the real-time interaction between seller and buyer allows for instantaneous responses to questions on the product and services.
According to ARK Invest, streaming revenue will reach US$390 billion by 2024, more than 3.5x in 5 years. In China, live shopping is already a US$137 billion a year industry.
The above are just some examples of the social commerce models. For more, you could take a deep dive into Poshmark, a listco on NASDAQ with a market cap of US$3.1 billion, Meesho from India that raised US$300 million round led by Softbank, Super from Indonesia that raised USD 28 million from Softbank and Alibaba, and Partipost from Singapore that raised USD 5 million led by Quest Ventures.
The key to social commerce 2.0 is to not sell the same products to the same people with the same advertising and acquisition techniques. As Bain & Company put it, social commerce is paving the way for a more distributed model that’s built on community, connection, and trust. And as social commerce advances, we will witness the greater waves of digital migration and expansion of the digital economy.
New command centre in the COVID-19 era: Home
The home is now the de facto command centre for life, livelihood, learning, and leisure.
The average household in the US has 25 connected devices, and each person in the Asia Pacific has an average of three devices and connections.
Constantly connected and engaging with the digital world, individuals live, work, learn, and play in largely the same environment, as a result of the pandemic. The convergence leads to new customer profiles, consumer behaviour, and one way to reach them all – home.
Businesses must now find various channels to “break into their customers’ homes” and seamlessly deliver a message to one of their screens and/ or their smart devices. Apart from social commerce, where the customers initiate the engagement, connected homes may in the near future enable a two-way discussion between businesses and people.
At home, you could make a purchase by conversing with your virtual assistant, hold meetings in AR/ VR spaces, while getting another professional certificate from across the globe in the same space the same day. The future is here.
The control on the physical and digital world that you get from your home is unprecedented and as Paul Chaney wrote in Digital Handshake, we are seeing a melding of electronic and face-to-face interactions, which is now accelerated by COVID-19.
And here we go! Into our own Brave New World, in great hope of value creation in the physical and digital economies as they grow and continuously integrate.
This post first appeared on e27.
Product experts share actionable insights from their years of product management. Find useful tips on different ways to structure a product team within an organization, communication amongst different stakeholders, and hiring PMs. Practical advice on beta testing and prioritization strategies will also be covered towards the end of this piece so do read to the end to absorb the learnings from top PMs in the region.
This contribution was authored by Gwen Sim, Senior Analyst; and Vanessa Ho, Analyst, at Quest Ventures, with editing by Yiping Goh, Partner at Quest Ventures.
Product Office Hours is a first-of-its-kind panel discussion and mentorship breakout sessions dedicated to product management. Moderated by Yiping Goh, Partner at Quest Ventures, the panel saw a distinguished panel of product gurus: Shiyan Koh (Hustle Fund), Christine Sou (Wise, Women in Product), Jingshen Ng (M17), and Nan (a fast-growing e-commerce company), discussing in-depth the key topics of Product Management. Forty-three Southeast Asian startups were also selected to have closed-door mentoring sessions with over 15 experienced mentors hailing from Facebook, Grab, Gojek, Lazada, Zendesk, SEA, and more.
This article highlights eight key insights we gleaned from the session.
1. Product teams as a department and part of a scrum team
One of the most common product questions among founders as their startups scale is how to structure a product team within the company. Should the product team be part of the engineering team? Or should they be a standalone department?
The common consensus among product experts is for companies to build a product team as a standalone department once the company has resources to hire for specific roles. While product and engineering teams are typically in separate departments, companies may find it useful to split them up by scrum teams on a project-by-project basis. One method is to group PMs, project managers, designers, and engineers into scrum teams. This helps to move things forward quickly, as they are hyper-focused on a single task, and there is better communication within each scrum team.
For more mature and larger organizations, departments could be split by their mission to discover and deliver. A standalone product team will be in charge of discovering the “what” and the “why” of the product, while the engineering and project management teams will be in charge of delivering the “how” and the “when.” This structure allows everyone in the product team to have a holistic overview of the product and concentrated resources in consumer research and analysis. However, this method needs to be complemented with a robust communication system to ensure that both teams are able to work with one another to achieve the target business outcomes.
Regional product teams face a different set of challenges. Giving autonomy and trust to the product teams in each region while having a unified goal across the globe provides local teams with a good balance of direction and flexibility to carry out their projects. The business metric to focus on across teams depends on the company’s core business, ranging from revenue and volume of transactions to retention rates. Some companies have local product teams down to each country, giving them the decision-making power to include or remove certain features to localize the product accordingly. The key to managing regional product teams is to have clear direction from the global HQ while giving local product teams the ability to make decisions as they deem fit.
Whichever method is deployed to structure product teams, communication is essential to ensure smooth operations and reduce conflicts between teams.
2. Communication is key
The phrase “communication is key” is used in many contexts, and it is especially important internally in the product team, as well as externally with other stakeholders. From imparting knowledge within the product team, to sharing updates to the wider organization, having good communication systems in place is a key lubricant to a well-oiled machine.
As a manager of a product team, sharing skills, expertise, and information should be part and parcel of the day-to-day activities. In terms of sharing “how-to” hard skills, one way is to implement a buddy system for new PMs in the team. Newcomers will then have a go-to person when in doubt of how to use certain tools and systems. This gets them up to speed quickly, compared to them having to follow an internal SOP without senior guidance.
The fine art of articulating the intangible
Softer skills that are based on intuition trained over time are universally agreed to be hard to impart. Having empathy for users and determining the “smoothness” of a user experience can be difficult to explain in words. Oftentimes PMs end up exclaiming “the experience is just not smooth.” One suggestion to tackle this issue is to conduct competitor and user studies. Jot down what feels good and bad about using their product and share it with the wider team. Use those insights to form hypotheses about what customers might feel about your own product and validate them by observing users, collecting data, and having customer interviews. Another exercise to pinpoint aspects of the product to improve on is to get the product team to put on an anti-fan hat and list down everything that is bad about the product. It is an exercise for everyone to explain and prioritize what to work on within the product team.
Documentation, documentation, documentation
To manage turnover, good documentation is a key component of any PM’s role. This exercise is often neglected and deemed as a lower priority in a PM’s to-do list. To ensure that the team does proper documentation, the management team can consider setting up surprise spot checks to keep PMs motivated to document regularly. Managers of product teams can also task documentation to specific people and allow them to allocate significant portions of their time to do documentation. The logic is straightforward; If the management prioritizes it, members will naturally treat documentation with significant weight.
Tighten cross-functional communication
Getting a well-oiled machine up and running cannot be complete without communication outside of the product team as well. Having regular meetings with upper management, the engineering team, as well as other cross-functional departments is a method that fosters team spirit, and unites the organization with a common goal. Tapping on human psychology, individuals feel good about themselves when efforts are made to involve them in changes in the product. Regular meetings are also a good time to gather feedback from different teams with other points of view, to ensure that the product changes are effective and useful. For product and engineering teams who naturally work closely with one another, friction may easily arise when there is a lack of communication. To reduce that, the product team should consider inviting the engineering folks to product meetings from time to time. Both teams will then have an opportunity to share their opinions and build empathy for one another.
3. Product managers do not have to come from technical backgrounds
Having gone through grueling interviews themselves, the PM mentors shared key traits that make someone a good PM, and what they look out for when hiring one.
Ability and willingness to learn new things
The hotly debated question on whether a PM needs to have a technical background or not was answered during Product Office Hours. The unanimous answer is: One does not need to have a computer science degree but he/she has to be willing to learn on the job. As non-technical PMs, mentors shared their journey of becoming a PM without a CS degree and the abundance of non-technical PMs in the industry too. While it is useful to know how systems work and talk to one another, the technical side of a PM’s job can be learned on the go. The focus when looking to hire a new PM is the willingness to pick up things on the job itself. Having immense curiosity and an appetite for constant learning are more crucial to excelling as a PM, not the computer science degree.
Ability to communicate
As shared in the previous section, communication as a PM is crucial to excelling at the role, and hence the ability to articulate thoughts clearly is a huge factor that senior PMs look out for when hiring. The ability to explain intangibles such as the smoothness of user experience would be a huge plus for hiring managers. During the panel discussion, it was agreed that PMs need to be comfortable talking with data and with people. Most people are good at one but PMs straddle in between both realms and being good at both is a key trait to look out for.
Ability to prioritize and execute
A highly-valued PM is one who has a clear and logical thought process and the ability to strategize. With many permutations to work with, PMs often face the challenge of deciding which problem to solve, or which feature to implement first. Having the ability to structure thoughts and reach a logical conclusion of which to prioritize is key to becoming an efficient PM. This comes hand in hand with the ability to execute the intended strategy and ties back to the last point on communication. PMs must be able to work with developers and relevant stakeholders to see through conceptualization stages all the way to product launches and features released.
It might be difficult to suss out whether a candidate has the above capabilities during an interview but here are some ways to assess a potential PM hire. Case studies are a great way to assess the way a candidate structures his/her thoughts. The case study context can change from time to time, from designing a payments system to designing a calendar booking system, so that candidates cannot anticipate the question and are unable to prepare fully beforehand. This will help reveal their natural thought process. Whether the candidate jumps straight into the architecture or asks to clarify metrics can be an indicator of whether he/she is able to structure their thoughts well.
Other common questions to evaluate the suitability of a candidate could be relating to their methods of conflict resolution. Case studies can be used in this context as well. For young startups looking to hire PMs, asking them to share past experiences of having flexibility and agility to adapt to constantly changing environments is also an important question to ask, to make sure they have that mindset to take on the challenges of a growing business. For later-stage companies, questions around being able to focus on achieving business objectives will be more relevant, and that requires a whole different set of attributes and attitudes altogether.
4. Useful metrics to use in product management
To make sure business goals are met in a quantifiable way, deciding on metrics is pertinent in product management. For most if not all businesses, the overarching goal is to deliver value to customers. From there, the company would have to decide on a metric that will measure the success of delivering value, which differs from company to company. It can range from retention rates for SaaS platforms, to engagement rates for social platforms. For established businesses, it is best to have one overarching metric that is tracked company-wide, and have sub metrics for each product line to focus on.
It is relatively easy to decide on metrics to track when the company (or the business model) has been around long enough to understand what customers want. For example, e-commerce businesses are all about transactions. It can be distilled clearly down to quantity, quality, and efficiency of transactions. Quantity of transactions is typically tracked using GMV, quality of transactions, measuring how delightful the user experience is for customers, can be tracked using bounce rates.
The efficiency of transactions, measuring resources needed to invest to obtain quantity while delivering quality, can be measured using click-through rates of ads. For smaller businesses, however, who are trying to steer through uncharted waters, such standard metrics and best practices have not been established. For young startups who are still finding a product-market fit, the useful metric would be the one that validates that the definition of the problem is accurate. When the startups find that customers keep coming to a certain page on the website or a product, the focus should be on finding out exactly why.
5. Beta testing 101
Now that the product has been released for user testing, what data should be collected? When should the team stop testing and work on the feedback gathered?
Both quantitative and qualitative are important during the user testing process. At the initial stage, having face-to-face interviews and understanding the target group is key to finding out how to improve. Clearly segment the target audience for interviews and during the feedback session, ask about their experience instead of brainstorming with them for ideas. Leading questions should be carefully avoided and keep an open mind while listening to their experience. Quantitative data should be collected as the user tests the product, as well as through a post-test survey.
There are a couple of indicators that signal when to stop beta testing and fully launch the product. First is when the company receives many customer calls trying to get access to the product after hearing from their peers. That shows the company has reached a level of product-market fit and could be ready to officially launch. Second is when metrics that were set and monitored have stabilized and reached the goal of beta testing. When users are comfortable with the product and are able to attain the value that the company set forth to deliver, it is time to stop beta testing and launch it officially. For very early-stage companies, many often don’t have the luxury to test. They go ahead to launch their Minimum Viable Products (MVPs) and the best feedback comes from traction, funnel tracking, and retention rates.
While beta testing is largely about gathering user feedback and iterating on it, keep in mind that there are times to listen to customers and there are also times to not listen to customers. Some companies may adopt a strategy where growth is product-led and would rather spend the resources educating the users about the product rather than modifying the product to suit mass users.
6. Planning for product launch
Product launch comes with many considerations including timing, market validation, prioritization, risk mitigation, and post-launch preparation.
For early-stage startups with limited bandwidth, companies need to start planning early (usually at least 1 quarter before actual launch). Anything later than that may expose companies to risk where questions are unanswered and issues are not fixed and the train has already left the station.
The best way for a pre-revenue startup to gain market validation for a product is to talk to people and engage with customers and non-target customers to gain insights. Since taking bets on what product to launch can be a shot in the dark (especially when user experience may be compromised) companies should reduce “bets” and validate what the customer actually wants as much as possible so as to mitigate risk and uncertainty. One of the best practices is rolling studies where companies are getting inputs as a continuous process whether it’s via coffee chats or surveys, even as they are working hard to churn out intended features already. It is also important to build a culture of gathering data and doing analytics in the organization. Eventually, this would set the foundation for data instrumentation unique to the company itself to better roll out future products.
When setting expectations for project launch such as when entering a new market, systematically break that down into all the work that has to be done (big streams to small streams to individual components). For each component, identify the level of priority, risk, and estimated effort required. Priority is crucial especially when there is a target date to chase, for example, when competing against other market penetrators. It is important to know the assumptions and potential risks to prevent getting thrown off. Track along the way if these have changed and adjusted accordingly.
Lastly, for a successful product launch, prepare for the post-product launch. Do not focus on the gear required to climb a mountain only, but also the food and supplies required to survive at the peak and climb back down. Do an equal amount of planning for post-launch. Product launch is just the beginning and it’s important to have the full gear for pre- to post- launch. These could be instruments for metrics, visualization of the milestones, and customer support.
7. Prioritization strategy
In a prioritization strategy, PMs should look at the frontiers and the laggards.
To kickstart, the frontiers are OKRs, where it should almost always start from the top. In some companies, these are topline metrics. Senior management should be clear on the current goal and that will set the tone of what they will be doing next. Understandably, even with clear goals, PMs often face the dilemma of pushing out new features to achieve those goals or improving the back-end infrastructure to better support the product in the longer term.
One method to resolve this is to do both simultaneously. If the back-end system has reached a point where an overhaul is more efficient, there is an option to hire a new team (or an outsourced team) to build an entirely new system while the existing development team can work on the new features that can bring growth. Once features are pushed out, the systems can be integrated together.
The second method is to get input from the engineering team. Questions such as, “With technical debt, how far can the team sustain?” as well as, “After sorting out technical debts, can you deliver features more efficiently and bring performance to the next level?” can be quantified. The team can then collectively weigh them against the value of pushing out new features and decide which is of greater priority.
The crux is to figure out at which point will the technical debt really slow everything down, and plan for resources to be poured in when that happens. The third method is to constantly allocate time to sort out technical debt (ballpark figure of 10-20 percent per week). When it accumulates too much, the team can switch gears to spend about 50 percent of the week to sort them out instead.
Laggards are the bottlenecks, which are technically impossible to remove. Going by its definition, when a bottleneck is removed, another bottleneck will be present. Prioritization strategy often involves fixing the bottleneck but sometimes looking at the bigger picture is a lot more helpful. At the end of the day, PMs need to develop product solutions that optimize processes for the entire company, not for a person or a particular product. Picking the right fire to fight that helps the company scale faster and optimizes resources should be a consideration in shaping the prioritization strategy.
8. Managing product roadmap in line with the business goals
Be stubborn about the vision but flexible about the path. In a startup, things are understandably constantly changing but a roadmap that changes as frequently as every month is too much for any team to handle, and could be seen as a red flag. This may reflect that a business goal is not concrete, or the management team has not thought things out thoroughly before sharing the company’s direction with the team.
OKRs should not change that much because many other business units have considerations to be thought about as well. There are secondary metrics or ways to measure that may change more frequently, but it is important for top-level goals to be firm and clear to minimize changes in the product roadmap especially when it is not necessary.
In one of the social media giants, one of the constant OKR is to increase usage time, and they have 200 divisions spun out to achieve this OKR. While the overall business objective remains the same, the product roadmap in each division iterates only when it allows the company to progress closer to the main goal of higher usage time.
What happens then when the business is still in its nascent stage and is in the midst of validating the business model? In this case, it is important to communicate to stakeholders and the team what the company is experimenting with. While the management team may not have a clear vision of the product roadmap, it is essential to be clear about principles and visions and break them down into smaller problems and solutions for each department.
A short two-hour event generated heaps of learnings and advice that would go a long way for PMs in the region. We hope that this helps aspiring and current PMs master their craft and bring the product management community, along with the wider startup ecosystem in Southeast Asia to greater heights. We have our partners at Women in Product, Supermomos, and a rockstar group of product mentors: Alfonso Fiore (HappyFresh), Malobi Banerjee (Grab), Shivani Mukherjee (The Product Tree), Zack Yap (Xfers), Justin Binh Nguyen, Deepika Rudra Murthy (Gojek), Steven Li (Atome), Elaine Truong, Ayush Upadhyay (Zendesk), Valerie Wagoner (Gojek), and Wei Quan Liow (Greenphyto), to thank for coming forward to contribute in growing our product ecosystem.
Stay tuned for similar Quest Community events coming your way.
This post first appeared on TechNode Global.
As we continue to step into the new decade in 2021, the startup and venture capital ecosystems rode out the disruptive chaos of 2020, mainly due to COVID-19, into a more predictable state of change in the coming days.
Venture Capitalists (VCs) believe in capitalizing on disruptive innovation and developing technologies to displace older technologies, create new markets, and prepare the world for unexpected situations (e.g., global pandemics)–even if not all the startups and industries that VCs invest in may do so. There are many risks involved when investing in innovation, mainly attributed to the rapid pace of change, exposure across sectors and market cap, regulatory hurdles, political or legal pressure, and competitive landscape.
VCs risk capital and take on these risks in exchange for technology breakthroughs, substantial productivity gains, and sustained economic growth. Investment in innovations also creates tremendous employment opportunities. According to a study by Stanford University, 38 percent of the working population of America is hired by VC-backed firms.
Southeast Asia (SEA) was also propelled into a blockbuster economy, through VC and startup activities in the last 5-10 years. This has led to the creation of new markets, uplifting of vulnerable communities, and significant economic advancement in the formal and informal economy. Even as SEA braced itself against the waves of COVID-19 impacts in 2020, ASEAN-5 economies are only looking to contract -2 percent, second-lowest in Asia-Pacific (after China). Venture capital investments also stood resilient in face of the pandemic, with a nearly -2 percent dip in total capital raised by SEA-based startups in 2020 ($8.6 billion), as compared to 2019 ($8.76 billion).
So what may lie ahead for the region this year?
From studies of global and regional trends, these top three sectors are positioned for success: Digital Wallets, Virtual Worlds, and New Retail.
1. Digital wallets
In just two years—between 2017 and 2019—the number of e-wallet users globally exploded from 500 million to 2.1 billion.
Digital wallets are a global phenomenon
The US digital wallet opportunity alone would be worth $4.6 trillion, according to ARK, fueled by the viral peer-to-peer payment ecosystems, savvy marketing strategies, and dramatically lower cost structures (Customer Acquisition Cost (CAC): $1,000 for traditional institutions, $20 for digital wallets). In addition, because payments offer access to an immensely valuable source of data on user preferences, interests, and purchasing behavior, digital wallets can expand to provide financial services (Payments, Insurance, Personal Credit and Mortgage, Saving and Spending Account, Brokerage), and serve as lead generation platforms for offline and online commerce.
In Asia, the tremendous success of digital wallets in China (Alipay and WeChat) has foreshadowed the same for Southeast Asia. BCG reports Southeast Asia possesses many of the key characteristics that fueled the takeoff and rapid evolution of digital payments in China: high digital penetration and digital engagement, extensive friction between consumers and commercial banks, investments by startups and digital platforms, a steady expansion of e-payment use cases, and a strong government push.
However, in Southeast Asia, the Digital Wallet industry is still in its infancy and is only reaching its tipping point, with at least 10 percent of the adult populations of Malaysia, Vietnam, Thailand, Indonesia, and Singapore already use e-wallets.
The COVID-19 outbreak and its sustained impacts look to encourage more Southeast Asian households to embrace digital payments, as contactless payments/ transactions are safer options.
BCG projects an increase in the adoption of digital wallets in the next five years for all the consumers (banked, underbanked, and unbanked). The unbanked is projected to experience a surge in adoption from 13 percent to 58 percent by 2025, the banked will reach 84 percent by 2025, and 78 percent for the underbanked.
The share of the value of transactions made via e-wallets will roughly double for the underbanked, reaching 25 percent by 2025 and take a fivefold leap to 20 percent for the unbanked.
Digital wallets present a huge opportunity in Southeast Asia in the coming years, mirroring the success in China, propelling it to mass adoption across all consumer profiles.
2. Virtual worlds
Virtual Worlds consist of video games, augmented reality (AR), and virtual reality (VR), and the opportunity in “The Metaverse” formed by these are huge. According to ARK’s research, revenue from virtual worlds will compound 17 percent annually from roughly $180 billion today to $390 billion by 2025.
Asia games revenue (inclusive of China, SEA, China Taiwan, India, Japan, and South Korea) to exceed $65 billion in 2020 with the number of gamers reaching 1.5 billion across the region.
In-game purchases as a percent of total gaming revenue increased from 20 percent to 75 percent from 2010 to 2020 and is projected to hit 95 percent by 2025. If the increasing trend of both monetization and time spent remains in place, in-game purchase revenue could compound 21 percnt annually during the next five years, from roughly $130 billion in 2020 to nearly $350 billion by 2025.
As the global game market saw almost 20 percent growth in 2020 from the previous year, the Southeast Asian market is expected to triple from what it was in 2017 by 2023. Research has shown that more than half of SEA’s online population spends money on games, with men more likely to spend on games than women (60 percent of men vs. 44 percent of women).
Singapore emerges as one of the top destinations for gaming companies, with 83 game developers, marketers, publishers, and manufacturers choosing to base their businesses in Singapore. Aside from the presence of industry powerhouses like Ubisoft and Riot Games, local giants like gaming hardware company Razer are expected to continue their dominance.
Sea Limited’s Garena is also dominating the games platform. In terms of market value, Sea Limited is nearly twice as big as Singapore’s largest listed company, DBS Group, and three times larger than Singtel, the leading telecommunications operator in Singapore.
Virtual worlds present another tremendous opportunity in the Southeast Asian region, riding on the tailwind of the COVID-19 pandemic and the rapid development of the mobile-first nations.
3. New retail
New Retail is a term coined by Alibaba’s charismatic founder Jack Ma, referring to the integration, or interlinking, of online and offline shopping using modern technologies, data, and customer engagement techniques. It is not new, and the revolution in retail started even before it is turbocharged by the COVID-19 pandemic.
Interest in improving fulfillment peaked, in terms of streamlining and automating the fulfillment process. Store automation also became a major focus to ensure a contactless store experience. We also saw big techs moved further into commerce, with Facebook, WhatsApp, Google, Amazon launching, investing in and acquiring retail tech companies and solutions.
Excluding services and food & grocery, companies that sell tangible goods online, as well as technologies that enable online sales experienced a slight dip in deal number, but an overall increase in deal value in 2020.
Around 40 million people in six countries across Southeast Asia (Singapore, Malaysia, Indonesia, the Philippines, Vietnam, and Thailand) came online for the first time in 2020, pushing the total number of internet users in Southeast Asia to 400 million.
Southeast Asia is poised to hit $100 billion in gross merchandise value (GMV) in 2020, with e-commerce registering a 63 percent growth. B2B marketplaces for small businesses are positioned for tremendous growth.
In Vietnam, the e-commerce B2B market is predicted to multiply by 3x to 4x in 2021 to reach $500 million to $600 million, even when it is still quite nascent, with less than $150 million in GMV in 2020. While Telio and VinShop currently command a majority of the market in this sector, Grab had started to digitalize wet markets in Vietnam, the third Southeast Asian country where it has done so.
Supply chain and logistics
Tech-enabled startups delivering services across the supply chain, from freight shipping and warehousing to inventory management and last-mile delivery, has experienced slight dips in both deal number and value in 2020, but Q4 2020 saw the number of deals soared more than 40 percent and the deal value is close to 4x that of the previous quarter.
The robotization of the supply chain will see further developments, which will continue to drive e-commerce efficiencies through autonomous delivery, robotic fulfillment, and on-demand warehousing.
This will be alongside the rise of autonomous logistics, with notable funding in the long-haul trucking, mid-mile logistics, and last-mile delivery space.
Bonus: Deep learning
Deep learning is creating the next generation of computing platforms, including consumer apps (e.g., TikTok used deep learning for content recommendations, has outgrown Snapchat and Pinterest combined). This will shape the consumers in their lifestyles and behaviors in a big way.
In 2020, deep learning powered almost all large scale internet services including search, social media, and video recommendations. ARK’s research stated that, during the next decade, they believe the most important software will be created by deep learning, enabling self-driving cars, accelerated drug discovery, and more.
It is predicted that deep learning will add $30 trillion to equity market capitalizations during the next 15-20 years.
As the startup and venture capital ecosystems gear up for the year ahead in 2021, it is expected that the digital economy in Southeast Asia will continue to develop. Firms that introduce disruptive technologies in the tailwind industries such as Digital Wallets, Virtual Worlds, and New Retail are poised to thrive, as their solutions will continue to unlock new growth opportunities in existing markets and/or create new markets. VCs that are able to capitalize on these growth opportunities by investing in startups well-positioned to deploy disruptive technologies in the pandemic-ridden and post-pandemic world will stand to capture the most valuable companies in the coming decades and reap exceptional returns.
This post first appeared on TechNode Global.
The Demo Day of the Kazakhstan Digital Accelerator on 2020 Nov 3 marked the first time an economic corridor for startups and innovation is created between Southeast Asia and Central Asia.
We are privileged to have the Hon. Anuar Omarkhojayev, Singapore’s Honorary Consul in Kazakhstan and Deputy Chairman of the Board of Baiterek National Management Holding, share the opportunities he sees between the two fast-growing regions.
By Anuar Omarkhojayev
The air was crackling with excitement on Nov 3, even as Demo Day of the Kazakhstan Digital Accelerator (KDA) was held online due to the pandemic. The start-up presenters from Kazakhstan and 150 investors and partners – many of whom were from Southeast Asia – were separated by thousands of miles, but true innovation transcends boundaries.
Some of the ideas put on the table: Cerebra, an automated self-learning artificial intelligence (AI) service for diagnosing strokes; Retail Analytica, an AI retail system that evaluates customer interaction; and Egistic, a smart farm management system that monitors and manages crop areas.
They were among the first batch of 10 cutting-edge start-ups that received seed funding of USD 50,000 each and will have industry veterans mentor them under the KDA. The KDA is an international collaboration between QazTech Ventures – the venture capital arm of Kazakhstan’s sovereign wealth fund Baiterek Holdings – and Quest Ventures, a top-ranked Singapore-based VC firm.
It is the first time an economic corridor for start-ups and innovation has been created between the fast-growing regions of Southeast Asia and Central Asia. It is a good model of how the countries intend to support the Kazakh start-up scene going forward and to allow Southeast Asian investors to discover possibilities and great ideas in Kazakhstan.
It’s just the start
Most accelerators simply offer educational services and mentorship sessions. But together with our strategic partner Quest Ventures, Baiterek was able to let Kazakh companies have international investment and market access, as well as to learn from the best in Southeast Asia. Through KDA, the start-up founders could interact with dozens of industry veterans and founders. They also had more than 40 hours of masterclasses and fireside chats with experts and seasoned entrepreneurs; 13 weeks of individualised mentorship from the Quest Ventures team; as well as access to Quest Ventures’ vast ecosystem of networks and partner benefits.
On Baiterek’s side, we ensured the start-ups – which specialise in areas like edtech, agrotech, healthtech, and retail – had the best instruments for global success. For instance, this meant structuring all the deals within the framework of Common Law under the Astana International Financial Centre (AIFC), in which all the KDA firms are registered.
The results have been promising. In the months since these start-ups have been selected under the KDA, we have seen them blossom. The hope is that they will in turn contribute back to the start-up scene by sharing their experiences.
A tech scene brimming with promise
The KDA and its participants are but a microcosm of Kazakhstan’s burgeoning entrepreneurship scene. The country, driven by the AIFC, is becoming a fintech hub for start-ups. Some of these budding businesses have already won awards in international competitions.
Other more established Kazakh companies are making waves internationally. On Oct 15, fintech firm Kaspi.kz, which runs the country’s largest e-commerce platform, listed on the London Stock Exchange with an overall valuation of USD 6.5 billion, making it Kazakhstan’s most valuable company with listed shares.
There is much to build on. According to Startup Genome, a global innovation policy advisory and research firm, Nur-Sultan ranks high in terms of fast-growing start-up ecosystems in the developing world and is fifth overall for affordable talent.
Baiterek provides necessary support to the start-up industry. The holding’s subsidiary QazTech Ventures plays a leading role in providing institutional investments to the market. Recent examples are a USD 10 million commitment for a total USD 50 million Quest Ventures Fund II co-launched together with Pavilion Capital.
Building a bridge
It is not just about developing and harnessing Kazakh talent, but also providing a key entry point to the broader Eurasian and Central Asian markets for faraway countries like Singapore, which might otherwise not have a foothold here.
There is also much to learn from Singapore, the centre of leading expertise, innovations and investments in new technologies of Southeast Asia. Therefore, I am very much interested to facilitate the process of bringing Singaporean capital and businesses to Kazakhstan and introducing the country’s best practices – not just in the private sphere but also the public domain.
Here I wish to highlight another area in which Baiterek has advanced significantly with Singapore’s assistance. I am talking about introducing an affordable housing system in Kazakhstan, modelled after the Housing Development Board (HDB) flats in Singapore. Over the past eight years, we have seen a growing number of people in Kazakhstan waiting for public housing, but the availability of housing per capita is still less than international standards (22 square metres in Kazakhstan, as compared with 30 sqm by United Nations standards).
When I first met with HDB in April 2018, I was impressed by the statutory board’s integrated approach that created self-sufficient townships. We moved quickly together with Singapore Cooperation Enterprise to develop a road map outlining large-scale transformations, which led to the launch of a national housing operation like HDB under Baiterek. Our initiative has received extensive support from Kazakhstan’s top political leadership.
The creation of the national housing operation, which executes and controls a full cycle of affordable housing development – from design and construction to commissioning facilities – is the starting point of introducing best practices from Singapore in this area. The entity is tasked to introduce fundamentally different approaches in planning and construction methods, which will ensure quality homes delivered through an e-service platform like HDB’s.
It is heartening to see Kazakh-Singapore ties growing. I sincerely hope that affordable housing and start-ups are just the start of a bigger, brighter relationship between the two nations, that will serve as a bridge for wider bilateral economic cooperation.
The writer is Singapore’s Honorary Consul in Kazakhstan and Deputy Chairman of the Board of Baiterek National Management Holding.
Kazakhstan’s range of natural resources attract investments globally. While we focus on venture capital investments into Kazakhstan technologies, we observe many traditional industries increasingly infused with smart capital to tap into global demands. The macro trends are clear.
We are privileged to have the Hon. Andrew Fernyhough, Kazakhstan’s Honorary Consul to Australia, share his personal journey and the opportunities he sees in Kazakhstan.
By Andrew Fernyhough
The biting wind swirls through the vast swathes of mountain pasture, but the black specks of life dotted across the fields of snow are hardly perturbed. They keep grazing, with an occasional moo here and chomp on grass there. It’s no wonder they are wandering blithely, as the Angus stud cattle are insulated with fat all over, the kind that produces high-grade marbling for the world’s tastiest steaks. They are truly a cut above.
Mention Angus stud beef, and you think of cattle farms in Australia or North America. But here I am in Central Asia, standing before a massive, modern operation that can rival almost anything in Australia. I’m 3,000m above sea level at Ranch Aktasty in Kazakhstan, 300km east of the country’s largest city, Almaty, and only 65km from the world’s biggest consumer market over the west Chinese border. It is one of three cattle facilities set up by meat company Kazmyaso, and together they total 20,000ha of land, with a 3,000-strong breeding herd.
It all started in 2013 as a pilot. With all genetics originating from Australia, the most recent delivery of 1,500 premium breeding cattle was flown over in 2019, more than 10,000km from Australia to the Land of the Great Steppe, an oft-used moniker for the former Soviet Republic due to its boundless flat grassland.
Today, the US$15 million project is one of the largest of its type in Kazakhstan, and is only possible through the marriage of Australian expertise and Kazakh resources and talent. The business, which has incorporated advanced techniques in growing, fattening and slaughtering cattle, is now almost totally run by local management. With a fully integrated supply chain from breeding through to processing, it is well-equipped to supply top-quality meat to the best restaurants and hotels in the country.
Eyeing greener global pastures
The goal is for Kazakh-bred angus beef to be seared in the finest kitchens worldwide as the country aims to be among the top 5 beef exporters in the world by volume. It currently resides outside the top 10 rankings, while Australia is second behind Brazil in terms of tonnage but is No.1 when it comes to value. With 222 million ha of agricultural land in Kazakhstan, and much of it untapped, such a goal is certainly attainable. There’s a whole frontier to be explored.
Kazakhstan has much to offer the world, but to do so it must first overcome geography as it is landlocked and shipping routes are limited. Yet its ideal location in the heart of the world, adjacent to China, Russia and the Middle East, means the nation simply cannot be missed, especially with the abundance of opportunities it provides.
This is where Australia, an established meat exporter, comes in as a natural partner, especially as the two countries share comparable land sizes, population and a rich agricultural heritage. The Aussie export machinery is a well-oiled one, bringing produce from farm and forest far out to the seas. For example, logistics companies specialising in export supply chains will find plenty of fertile ground in Kazakhstan.
Such collaboration to unlock Kazakhstan as a viable and attractive food provider to the world is especially vital in the midst of the Covid-19 pandemic. Global supply chains are being paralysed. Many countries used to take their imports for granted, but such complacency has been wiped out as the vulnerability of international trade has been exposed. Economies are now on the lookout for alternative food sources to diversify their supply, and with its resources, Kazakhstan should be top of mind for such nations. It can be a farm for the world’s highest-demand markets.
The country is already Australia’s leading trading partner in Central Asia, with many joint activities in the oil, gas and mining sectors. These sectors contribute to more than a third of Kazakhstan’s export earnings. While the relationship between corporate Australia and Kazakhstan is still relatively immature, the opportunity has been realised by some of Australia’s best-known names, with established links in Kazakhstan, among them engineering giants WorleyParsons and SMEC, and mining titans Rio Tinto, Fortescue Metals and Iluka Resources.
Other ripening fields include other food-related industries like large-scale meat processing and irrigation. For example, Melbourne-based Rubicon Water is in Kazakhstan trialling its word-class irrigation systems, the likes of which have been adopted in places like the USA, China and India.
Kazakhstan’s most valuable resource
Yet for all of its natural endowments, international audiences often overlook the most precious commodity in the Kazakh playbook: A young, vibrant and well-educated population.
Many Australians already know this well. Since 2007, the Kazakh government’s Bolashak International Scholarship Programme has seen thousands of scholarship recipients study abroad, including in Australia, with exchanges in course development and teaching placements also taking place between colleges. For instance, the University of Melbourne and Nazarbayev University in Nur-Sultan, Kazakhstan’s capital.
The Kazakh projects I have been involved in have all had a healthy ratio of young locals involved, and I’ve been impressed by their world-class talent, adaptability and hunger for opportunity.
Most of all, having trustworthy local partners is the most important ingredient for companies to succeed in the Kazakh market. I first set foot on Kazakh soil in 2003 after meeting my wife Ainura, and fell in love with the country and its people. Since then, we have shuttled back and forth between Kazakhstan and Australia, first finding opportunities in the media sector, before growing roots in agriculture. When my mother-in-law came to Australia to live with us, we became more involved with the expatriate Kazakh community in Australia and I founded the Kazakhstan Society of Australia. This deep involvement in Kazakh culture and development of relationships certainly has been key to doing well. We are happy to share our experience with other companies looking to enter the market, in the interests of developing the country. Regardless of industry, the same principles apply.
It’s an exciting time to be involved in the development of Kazakhstan at this pivotal point of shaping the new Silk Road bridging Europe and Asia. I look forward to seeing the bright future for the country come to realisation, and hopefully a newly defined mutually beneficial Kazakh-Australian partnership is a big part of that horizon.
The author is Kazakhstan’s Honorary Consul to Australia.
There are two key measures central to transforming the maritime industry to increase its sustainability and profitability. In this article, we introduce both of them, E’ (E prime) and C’ (C prime), and we discuss their relevance to operational efficiency, predictability, and strategic competitiveness.
Managing E’ and C’ for shipping success
The world consists of two major ecosystems. The natural ecosystem produces the food we eat. Humans have created a capital creation system that produces the goods and services we consume. Success in the natural system depends upon capturing and storing energy, and we measure success in terms of energy efficiency, which we call E’ (E prime). Those that are efficient at capturing and converting energy survive. Every organization and industry need to raise its E’ in order to create a sustainable society. Energy expenditure is a component of nearly every cost of business. E’ is the invisible fuel, and the resulting savings go directly to the bottom line and enhance sustainability.
Every organization is a capital creation system and has a recipe for converting one of six types of capital (economic, human, natural, organizational, social, and symbolic) to another form or enhancing one form of capital. The transport industry, composed of multiple value-producing organizations, creates economic capital by moving goods from producer to consumer. In so doing, it relies on, for example, human capital (a ship’s crew), economic capital (a ship), and social capital (connections to shippers and shipping agents/port operators). Successful capital creation is measured by capital productivity or C’ (C prime), and in the shipping industry this is influenced by E’ because ships requires large amounts of energy.
Managing a ship requires balancing these two primes. To maximize C’ you want to spend the least amount of time traveling between ports and in ports and carry the largest possible cargo on each leg. In other words, you want to maximize port visits so you can carry more cargo with fewer ships. However, as you are aware, this not a trivial management task, as exemplified by the following challenging questions:
In order to get more cargo, should a ship spend another day in port, or should it sail with a partial load?
Should a captain sail between ports at full speed in order to maximize port visits per year?
Answering these questions requires a shipping company to have insights into the needs of its customers, and the capabilities and plans of its service providers. It also means understanding how the relationship between E’ and C’ varies for major decisions. Raising E’ by green steaming between ports might lower C’ as a ship will be able to make fewer port turnarounds. On the other hand, a higher speed over water could raise C’ and lower E’. Furthermore, when a ship cannot immediately enter a port for cargo handling, then there is no loss in C’ if ship green steams to arrive just-in-time.
You can raise E’ by green routing between ports so that a ship takes the path of least resistance in terms of wind, currents, and depth under keel to minimize energy consumption. Combining green routing and steaming will generate a higher E’.
Overall, the critical metric is C’ and its value is determined by initial capital costs for building, buying, or leasing a ship and operational costs, which are mainly determined by E’. We are evangelists for developing Maritime Informatics to give ship owners or ship charters the wherewithal for the dynamic short-term management of C’ and E’, say between three or four ports, to maximize the lifetime C’ of a ship.
Astute captains and shipping owners intuit what you have just read, but they likely use different terms. Our goal is to work with the shipping industry to generate the data needed to compute C’ and E’ and develop the data analytics to maximize C’ for a shipping fleet or each voyage. We first need to start with a common understanding of the fundamentals, which we argue are C’ and E’, and then we can build the digital infrastructure to manage them.
Enabling maximization of C’ by data sharing
Importantly, the values of C’ and E’ are dependent on the actors participating in the co-production of transport between manufacturer and consumer. They must continually inform each other of their progress and plans to minimize delay and raise capital utilization. As the maritime industry is a self-organizing ecosystem, this means the various parties must share standardized digital data as needed to enable tight integration of operations when required. Collaboration greases C’. This is particularly true in the current economic and maritime situation, where many shipowners are extending their operations to, cover the entire multimodal logistic chain. In this respect, digital data sharing is essential for the effectiveness of this entire chain. By improving E’ for the different modes (e.g., optimizing loading / unloading trains or optimizing truck pay load). Such improvements will be reflected in a higher C’ of the different actors in the chain.
Optimizing E’ and C’ through digital enablers
The optimization E’ and C’ is enabled by data sharing and data analytics. Without standards for digital data sharing about all aspects of transport, such as the status of every container, optimization is infeasible. Once a foundation of data sharing standards is established, then data analysts can combine real-time digital data streams and historical databases to apply techniques such as artificial intelligence, machine learning, and digital twins to raise the quality of decision making in the pursuit of higher values for E’ and C’. Maritime and logistics companies are already working on problems such as the optimizations of vessel operation and predictive and prescriptive solutions to various critical aspects of the logistic chain.
EEOI as a measure of E’
The Energy Efficiency Operational Index (EEOI) is a current measure of E’ appropriate for the shipping industry. It refers to GHG emissions per unit of transport work, such as grams of CO2 per ton-mile (gCO2e/tnm). In practical terms, this KPI recommends that ship operators maximize the number of fully laden holds for the fewest number of legs on each voyage. As well, one could measure Megajoules per ton-mile, which would measure energy usage directly.
From an operational standpoint, managing to reduce EEOI begins with collecting relevant and accurate data. These data include vessel type, size, its route, reports from the ship, engine/equipment performance, weather conditions along that route, port congestion, availability of berths at each port and of course, speed and bunker consumption. Each of these data sets helps to paint a picture of a vessel’s performance while steaming and while conducting activities in a port, which also requires using fuel of some type.
For each of the needed data sets —and there are more—there is some inherent level of inaccuracy, and they are generated or updated at different times and frequency, from real-time, to quarterly. Some data feeds are subject to the availability of the Internet and can, in fact, go missing for days. AI and machine learning can enrich, validate, correct and present data in an actionable way to maritime decision makers. When there are missing entries, machine learning can interpolate based on historical data.
The Maritime Informatics Agenda
As an energy and capital-intensive industry, shipping needs to build a digital foundation spanning from data standards to new analytics tools to digital twins that makes feasible effective measurement and management of E’ and C’ to improve decision quality. To have some influence over the future, you need to participate in making it. You want to prejudice your future by shaping today’s key decisions. Maritime Informatics is an emerging discourse joining practitioners and researchers to explore the opportunities enabled by enhanced digital data sharing, digital collaboration, and data analytics to optimize E’ and C’. Thus, we argue that a body of industry innovators and scholars need to coalesce around the theme of Maritime Informatics to create an overarching set of forums for addressing the full range of issues relevant to E’ and C’. The captain steers the ships between ports, and Maritime Informatics can chart the industry’s voyage between the present and its digital future.
This article was originally published by Windward’s Captain’s Insights.
About the authors
Mikael Lind is Associate Professor and Senior Strategic Research Advisor at RISE and has a part-time employment at Chalmers University of Technology, Sweden. He serves as an expert for World Economic Forum, Europe’s Digital Transport Logistic Forum (DTLF), and UN/CEFACT.
Richard T. Watson is a Regents Professor and the J. Rex Fuqua Distinguished Chair for Internet Strategy at the University of Georgia. He has written books on Data Management; Electronic Commerce, Internet Strategy, Energy Informatics, and Capital, Systems, and Objects and has published nearly 200 journal articles.
Chye Poh Chua is founder of the ShipsFocus group and a venture partner at Quest Ventures. His interest is in maritime digitalization and inclusivity, helping MSMEs narrow the digital divide.
David Levy is Chief Marketing Officer of OrbitMI, a maritime software company headquartered in New York City with offices in Sweden, Norway, and Serbia, whose purpose is to unlock the value in data to help maritime become more efficient, profitable, and sustainable. Its product Orbit, offered as a Software-aa-a-Service, is a suite of integrated business solutions that transforms raw data into actionable insights and predictive intelligence.
Socrates Theodossiou is the owner and co-CEO of Tototheo Maritime, a maritime technology company specialized in optimizing vessel and fleet performance. His experience includes designing and rolling out integrated software solutions for data analytics as well as communications’ and secure network solutions.
Omer Primor is a specialist in maritime predictive intelligence and has collaborated with and advised organizations worldwide on optimizing operations and mitigating risk. He is a former Intelligence Officer and currently Head of Marketing at Windward. Windward’s Predictive Intelligence SaaS solution fuses AI, big data, and maritime expertise to enable clients and partners to understand the maritime ecosystem and its broader impact on security, finance, and business.
Alexio Picco is Managing Director at Circle Group, providing IT solutions for ports and logistic actors. He was involved in digital transport projects since 1996. Currently he is the coordinator of the project on the port of the future (DocksTheFuture) and the leading consultant to support the EU Coordinator for Motorways of the Sea. He works also as IT transport specialist for the European Commission (e.g., EMSWe, TAF TSI).
There are three reasons why Vietnam is outshining its neighbouring countries when it comes to handling the aftermath of COVID-19
Vietnam is one of the first countries to ease social distancing measures and reopen its society as early as April 2020, where most countries are only starting to grapple with the severity and spread of COVID-19.
Also known as the land of the ‘Ascending Dragon’ (due to the geographical shape on the world map), it the first in Southeast Asia to emerge from the global pandemic, allowing for businesses and domestic travels to reopen. Vietnam is also identified as one of the first countries in Southeast Asia when Singapore reopened its borders for travellers.
The total number of COVID-19 cases in Vietnam stands at 349 (as of 22 June), with zero deaths. This stands in stark comparison with more than 42,000 cases in Singapore, 30,682 in the Philippines, and 8,587 in Malaysia.
The international community is stunned by Vietnam’s breakthrough during this COVID-19 pandemic. An Asahi Shimbun reporter assigned to cover Vietnam was intrigued by the following statement by a Japanese national who works in the country: “Even though I talked about the very few patients infected with the new coronavirus and the Vietnamese government’s tough measures to combat COVID-19, no one in Tokyo believed me.”
Following the outbreak of the coronavirus, the IMF’s 2020 GDP growth forecast for ASEAN-5 countries – Indonesia, Malaysia, the Philippines, Singapore, and Thailand – is cut to -1.3 per cent (and Singapore -4-7 per cent), but Vietnam is expected to still experience positive 2.7 per cent GDP growth, with a strong rebound of seven per cent projected in 2021. Prime Minister Nguyen Xuan Phuc sent a positive 2020 economic growth target of over five per cent, in spite of IMF’s projection.
From this, we can see Vietnam is poised to emerge one of the strongest economies in Southeast Asia and these are the three reasons why:
Swift action and digital services
Vietnam’s ability to achieve such outstanding results due to the swift and decisive actions from the national government, followed by coordinated and dedicated efforts of the general population. Vietnam took action very early when there was minimal information about the virus.
Nationwide school shutdowns were implemented in January, travel restrictions and border closure followed quickly. Vietnam also implemented aggressive contact tracing and quarantine people who are exposed to suspected cases for two weeks.
The Ministry of Health developed an app, NCOVI, health authorities disseminated warnings and orders through Zalo, a homegrown messaging app with more than 50 million users, and the internet spread a coronavirus public awareness pop song that went viral.
The swift action and digital services enabled transparency and collective and informed decisions in Vietnam’s battle against COVID-19, enabling them to emerge fast from the pandemic.
Resilient economy and startup ecosystem
The Business Times reports “Mobility metrics show the fastest recovery of activity in Vietnam, with movements to retail and recreation venues having rebounded to just 15 per cent below the baseline, compared to more than 60 per cent below baseline before measures began to lift.”
People may remember Vietnam for their amicable people, natural wonders, and sometimes their fight for independence for over 30 years. Through this COVID-19 episode, the world now views them in a new light, as a resilient and stable country, and one of the hubs for innovation and entrepreneurship in Asia.
The innovation ecosystem in Vietnam is attractive to e-commerce, software outsourcing, AI, fintech, healthtech startups. With more than 3,000 startups in the ecosystem, total investment in Vietnam startups increased six-fold in the period of two years between 2017 and 2019.
Some of the tech startups have also contributed to the fight against COVID-19 in providing online medical consultations, medical deliveries, and on-demand access to healthcare services.
Strong cross-border collaboration
“Being ahead of the curve, the ASEAN chair is in good stead to lead and shape regional responses on the pandemic”, says Dr Huong Le Thu, senior analyst at the Australian Strategic Policy Institute told The Straits Times.
Vietnam works closely with the regional neighbours in COVID-19 response and also in terms of driving regional growth and innovation.
To drive regional startup ecosystem development and integration, Vietnam’s public and sector stakeholders have been actively partnering with international entities for two-way market access for startups expanding in the region.
Quest Ventures, in partnership with statutory boards under the Ministry of Trade and Industry of Singapore and Saigon Innovation Hub (SIHUB), supports Singapore startups entering Vietnam through Vietnam Global Innovation (VGI) acceleration.
Leading venture capital in Southeast Asia, Quest Ventures supports startups through Quest Ventures’ wide network of mentors and domain experts. Startups will also have access to high quality and comprehensive online training module topics, and (if global health situation allows) an in-market immersion in Vietnam to maximize exposure and establish long-term partnerships between startups and ecosystem players.
It is no surprise that Vietnam emerged fastest during this health crisis and this winning strategy of swift action, resilience and cross-border collaboration is also the same one that will allow the economy and startup ecosystem to rise strongly in the region.
This post first appeared on e27.