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The Bootstrap Alley Tour in Hanoi

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Last Wednesday night, a panel of local and regional judges selected Echoes as the winner of the Bootstrap Alley Tour in Hanoi and set things in motion for the multi-national team to attend the upcoming Tech in Asia Singapore startup conference on May 6 and 7. The three judges were Ronnie Wee, founder and managing partner of Incuvest (based in Singapore); Quan Nguyen, venture partner at Inspire Ventures (based in Ho Chi Minh City); and Ben Liu, director of Kamia (based in Taipei).

Around 100 people squeezed into co-working space and incubator Hub.IT in Hanoi’s Hoan Kiem district for the event (as part of a ten city journey), which will lead up to the tri-annual Tech in Asia Singapore startup conference. Approximately sixty entries were trimmed down to the Top Five teams, each of which was given five minutes to make the case to win free tickets and accommodation, and a booth at the startup conference. After each pitch, the judges provided feedback and probed some of the teams’ assumptions. All entries had to be an internet, mobile, or hardware-software startup with, at minimum, a prototype ready to demo.

Advice, Experience, and Vision

Before the Top Five teams pitched, a fireside chat was held with the three visiting judges. During this segment, the judges shared their views on operating in Vietnam, the greater region, and why it’s important to think ahead. Between them, the judges have made investments in companies in Vietnam, greater Asia, and North America in spaces such as Internet of Things (IoT), education, logistics, internet services, and digital currencies.

For Ben Liu, one of the key considerations when evaluating a deal is the founder’s strategy and market, i.e., “have they convinced me that this team and this market are the best?” Teams should have a good understanding of what market comes next, and how to grow and accelerate; one of the best ways to do that is to reach out through your network and find local resources. It does not mean jumping into the market—first network, learn what you need to know and then make your move.

Ronnie Wee explained that investment decisions are based on the team and market execution—which means understanding a team’s thought process and execution plan. A team should be able to be a good regional player and understand the nuances of different markets. Look at potential partners, prove and show traction—a team’s thinking process should be clear for investors, meaning that a team has gone through and begun to identify gaps. Do research and validate your assumptions.

Quan Nguyen pointed out that a product by itself can’t stand alone: “Can you make your strategy happen? Do you have the connections?” Many startups don’t think about going abroad because a big opportunity can sometimes be scary. However, a team than can scale needs to have the ability to cross borders. Different scenarios require different plays (especially as an investor) so it’s important to have an idea where and how to exit.

Overall, the judges drove consistent points to the audience: thinking beyond your home market, building and having a network in place to form vital partnerships, and having a viable execution plan to scale the business.

The Top Five Teams

AZ Stack provides a way for developers to include peer-to-peer (P2P) calling and messaging over low bandwidth in their applications by simply adding a few lines of code. Founder Quang Mai Duy and the rest of his team are initially targeting local developers and software companies in order to gain traction.

#HotTab (meaning Hotel Tablet) was another strong contender for the top prize. Founder Sanjeev Sapkota had a vision to solve basic communication issues between hotel staff and guests via in-room tablets. The new in-room technology addresses guests needs and provides enhanced services by partnering with companies like Food Panda, GrabTaxi, TicketBox, and others.

OnOnPay is a way to top-up your mobile phone credit with the added bonus of receiving gifts, 20% more of the top-up value, lucky draws, or other rewards. Founder Sy Phong (who has experience in the telecommunications industry) is aiming to launch the service by May 2015.

GCall is a way for online retailers to provide customer service to shoppers in their own native languages. As shown on a mockup, the service itself appears on an online product’s page as a distinct icon so that a shopper can select the icon and be connected to a customer service representative (CSR). The CSR can then go ahead and help the customer with his/her purchase, which can range from answering questions to a more proactive approach.

The winning team, Echoes, presented a novel way to conduct audio tours but the tool itself can be customized to meet a variety of needs. The project, led by Josh Kopecek, originated from a Hanoi Soundwalk held in 2013. Echoes is essentially two parts: the creator web app and the consumer mobile app linking content with users. The team has several promising pilot projects in the works, including clients in Hanoi and Copenhagen, and at least one global brand has expressed interest in the technology behind Echoes.

Key Takeaways

Whether your model is a copycat or you are targeting a blue ocean, you still have to get the fundamentals down. The consensus was that the pitches were good, clear, and well rehearsed; one judge claimed that the Top Five in Hanoi were the best batch yet. Indeed, it was a great sight to see fresh faces, expats, locals, and visitors come together to witness the excitement, passion, and motivation that all the founders had for their respective products and services.

After the event, some of the teams received additional critical feedback directly from investors—advice which can be used to refine their pitches for the next time, thereby bringing them one step closer to realizing their dreams. More broadly, Wednesday’s event brought together and strengthened the open and inclusive startup community in Hanoi. Ultimately, Tech in Asia’s Bootstrap Alley Tour has helped raise the bar here in Hanoi.

The next stop on the Bootstrap Alley Tour will be in Hong Kong on March 10.

 

Taking a Closer Look at the IPP

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In our last post, we outlined the IPP, explained its goals, and touched upon some of the challenges ahead for the program’s stakeholders. This week we are going to take a deeper look at the IPP and the cultural, comparative, and collaborative challenges ahead for the program in Vietnam.

Last weekend we sat down with Chris Zobrist, the Senior Innovation Partnerships Expert at the IPP, and he shared his thoughts on operating in Vietnam, the potential for entrepreneurship and innovation on a local level, and how the IPP factors into the changing landscape in Vietnam.

  • Can you share a bit about yourself? What’s your background, your role in your organization, and where are you located?

CZ: I’m currently working as Senior Innovation Partnerships Expert for IPP, which is a joint program funded by the Foreign Ministry of Finland and the Ministry of Science and Technology of Vietnam.  My background is as both an entrepreneur, having started many businesses over the last 15 years, as well as an entrepreneurship educator, spending part of my time teaching entrepreneurship and developing curriculum in several universities in Vietnam.

  • What kind of opportunities do you see in Vietnam over the next five years?

CZ: Vietnam has a lot of talent, especially in engineering and software development, and there are already a few high-growth companies as well as local start-ups planting entrepreneurial seeds here.

  • What’s the best way to establish trust with Vietnamese business counterparts?

CZ: It depends a lot on the individual with whom you are trying to build a relationship, specifically in terms of their background.  Generally, the best way to get to know someone is through someone they already know and trust, as in many cultures, Vietnamese really value social capital, and this can be transferred from one person to another through a proper introduction.  Besides introductions, sharing meals, and drinking together are also good ways of building trusting relationships which is an essential element of working together.

  • What’s the biggest difference between American and Vietnamese mentalities?

CZ: Coming from a developed country that churns out high quality products as well as infrastructure (roads, public buildings, etc), Americans as well as people from other developed countries have a natural expectation to see and make things at a high standard of quality.  Vietnam is still a developing country, so many things are made with what little resources were available, and so the expectation for quality coming from domestically produced goods is not high.

  • What’s the hardest part about doing business in Vietnam?

CZ: Ensuring high quality standards.

  • Do you have a favorite quote?

CZ: “I’m all for progress, it’s change I object to.” – Mark Twain, I like this quote because it is the most apt description of the greatest challenge facing entrepreneurs and innovators in almost every context, and especially true in a country like Vietnam.

  • What are the biggest differences between Hanoi and Saigon in terms of doing business?

CZ: Saigonese are generally much more open to new people and ideas, as long as there’s a clear opportunity and logic in place.  Hanoians are much more conservative, so even if they are presented with an attractive opportunity, they will be reluctant to mobilize the needed resources to capitalize on it.

  • What are the necessary attributes to succeed in Vietnam?

CZ: Social networks and building trusting relationships are keys to success in Vietnam.

  • Do you have any advice for expats/locals who want to be entrepreneurs in Vietnam?

CZ: Entrepreneurship is a team effort, so if you want to be successful, you need to learn how to network and collaborate with others to get things done.

Entrepreneurship, Innovation, and the IPP

During our discussion, Mr. Zobrist made it clear that the IPP is looking for people who have the necessary motivation, connections, and capacity to scale a company globally. That means that local companies will eventually have to implement international accounting standards, utilize English as an official working language (especially if looking to raise funding from foreigner investors), and clearly communicate a company’s Unique Selling Proposition (USP) across markets and cultures (differentiation).

While it might sound challenging, what the IPP is seeking to achieve isn’t impossible because it’s already been done before in Japan. Mr. Zobrist pointed out that Japan went from a ravaged post-World War 2 economy to the world’s second largest economy in the 1990s. What enabled Japan to be successful in its economic transformation was a stark shift in the workforce mindset, which even facilitated new vocabulary to implement innovative solutions.

Before this paradigm shift in Japan, specific industry terms did not exist to describe small batch, high quality production to factory workers. The Japanese created their own processes with their own resources to drive economic growth in 20 years; Japanese engineers, managers, and leaders took innovative ideas, applied them to manufacturing and processes and the result was innovative products from brands such as Sony, Honda, and Toyota. Thus, the development of a new technical language was necessary, which involved a social level (individuals, units, company culture, etc.) of change in innovation, and ultimately led to a change in output of manufacturing (lean manufacturing).

Vietnam currently has a similar language challenge ahead of it; for example, the terms doanh nhân and doanh nghiệp can mean “entrepreneur” or “businessman” and are used interchangeably (and sometimes ambiguously) in Vietnamese. Along those same lines, sáng tạo means “creation” while đổi mới means “renovation” so combining the two (sáng tạo đổi mới) is the closest meaning to “innovation” (literally “creative renovation”) in Vietnamese. The language will have to evolve in order to reflect the high standards and creative thinking that are necessary to maintain a competitive advantage in the global marketplace.

An ecosystem like Vietnam’s needs both entrepreneurship and innovation in order to foster the creation of high growth and innovative companies with a global outlook. If a company chooses to keep the status quo then it will stagnate, or worse, die. Copying existing models can be valuable, yes, but not nearly as valuable as new ideas that lead to the creation of value for a large number of customers or stakeholders. High growth companies are innovative and innovation requires change–there is no getting around this fact.

New language can shape new segments of a culture and creating new and/or dedicated Vietnamese words for entrepreneurship and innovation will allow the exchange of new ideas more efficiently and also help to facilitate a change in mindset–goals that the IPP hopes to realize once its integrated system is fully operational (good inputs producing good outputs).

The IPP seeks to perfect the way of building innovation systems in order to turn them loose and harness the innovative and entrepreneurial resources here in Vietnam. Then, the IPP can develop iteratively by building and expanding on foundational knowledge (training individuals and teams who can then train other individuals and teams and so on). In short, the IPP is building a Minimum Viable Product (MVP), learning from the outcomes, and making the necessary changes (quickly and fully) in order to make the process of creating high growth and innovative companies more effective and efficient in the future.

When the first phase of IPP finished at the end of 2012 there were some major lessons that were learned, leading to a promotion of transparency, accountability, and momentum for IPP Phase 2 (which began in January). This public-private partnership, comprised of a core curriculum and fellowship program, will eventually fully integrate entrepreneurship and innovation–but this process will require time, talent, and commitment at the individual, community, and governmental levels if it is to succeed in its mission.

Toward the end of our conversation, Mr. Zobrist pointed out that the IPP will have its final evaluation in 2018 but for now, the short term focus is on capacity building and making grants available to suitable applicants in this “wilderness stage.” However, the first significant indicators of progress could be as early as the end of this year or in early 2016 as the Fast Track training draws to a close and the New Innovative Companies are eligible for external funding on Demo Day.

With approximately 200 Expressions of Interests submitted to the IPP for New Innovative Companies, we look forward to seeing what kinds of teams are selected for the IPP–and more importantly, what kinds of teams, trends, and lessons emerge from the other side of the Fast Track Training.

Thanks to Chris Zobrist for sharing his time with us.

The Innovation Partnership Program

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Can innovation and entrepreneurship be taught? Does Vietnam have the ability to produce innovative and high growth companies to take on global markets? Are there people here who have the time, talent, and commitment to make an impact in the Vietnamese ecosystem?

The governments, donors, and people behind the Innovation Partnership Program (IPP) certainly believe so and with good reason.

Well, what is the IPP?

According to the IPP website:

“Innovation Partnership Program (IPP) is an Official Development Assistance (ODA) program financed jointly by the Governments of Vietnam and Finland. IPP is in its second phase running through 2014-2018.

Working closely with key national and international partners the program aims to scale up innovation training in Vietnam and improve support mechanisms for new innovative companies targeting international markets. Besides providing seed funding and connections for the best teams in Vietnam, IPP builds the capacity of public and private stakeholders through entrepreneurship and innovation training programs.”

The IPP focuses on three different but related areas: developing people, developing companies, and developing the ecosystem.

The Fellowship Program will develop future business leaders and entrepreneurs in Vietnam who will then lead the Fast Track training for the New Innovative Companies.

The New Innovative Companies component will help high growth Vietnamese companies bring a product or service to the global marketplace via Fast Track training and expense reimbursement.

And finally, the IPP will work with Innovation System Development Teams by providing funding for organizations that will raise standards, develop new resources, and positively impact the entrepreneur ecosystem in Vietnam.

In short:

“IPP supports Vietnam’s overall goal of becoming an industrialized middle-income knowledge economy by the year 2020. The program objective is to boost sustainable economic growth in Vietnam through the increased production and export of innovative products and services.”

One can think of the IPP as a pilot program, leading the way for other actors in the local ecosystem to continue on and influence the course of Vietnam’s entrepreneur development from a global perspective. The IPP is currently in its second phase; the conceptual portion started in September and the implementation phase has been ongoing since December. The Fellowship program is scheduled to begin around April, 2015.

The Innovation Fellowship Program

The Fellowship Program will consist of 20 fellows who will be trained by top international and local talent. The fellows will focus on innovation entrepreneurship, and once trained (over the course of two months), they will lead the Fast Track Training (six months) for selected new innovative companies. Trainers from Silicon Valley and other startup communities will come to Vietnam and work with the 20 motivated young people.

In addition to the fellowship requirements, the fellows will be selected on the basis of two primary criteria:

  1. Can they learn how to be entrepreneurs and innovators?
  2. Can they take best practices from the fellowship program and teach others?

In other words, do they have the capacity and attitude to make an impact after graduating from the fellowship program?

The fellowship requires a 40 hour per week commitment and will consist of some classroom and about 80% field work. Fellows will spend most of their time figuring out what customers need and how to find/create value in fulfilling those needs. Each week, the fellows will cover a new framework and ultimately practice and reinforce the learned concepts by the end of the week. The fellows will each receive a $1,000 allowance per month for duration of the fellowship program; the goal is to focus and train a core group of people to have all the tools necessary to create successful companies in Vietnam.

The IPP is currently seeking two local trainers who, if selected, will receive two weeks of training at Stanford University in the US, in addition to a highly competitive salary for the two months of training.

New Innovative Companies

Innovation, high growth, global; these are the words used to describe the kind of companies that the IPP is looking to fund, and eventually, is looking to see created here on a consistent basis.

The New Innovative Companies to be selected will be held to milestones and operational requirements for the duration of the program. The IPP will restrict what funding is used for (which is intended to be used on salaries and training related to development) and will cover only up to 70% of total expenses incurred by the new innovative companies. If people within the new innovative company are being paid, or external consultants are used, then the fees and services must be directly related to business activities. Thus, the new innovative companies will need to show accounting records, show payroll stubs, and show that a bank transfer took place or that the fees were paid out accordingly.

Once new innovative companies are selected, they will be injected into the six-month Fast Track Program (led by the Innovation Fellows) which will culminate in a demo day with the hope that 20 or so investors will be present and ready to look at each new innovative company for potential investment. The IPP does not to take any equity share in exchange for funding (because ODA requires it). Also, there will be no corporate governance oversight by the IPP for the new innovative companies. However, the IPP will have the power to remove teams, whether it’s because of a violation or if it’s clear that a new innovative company won’t be ready to present a compelling final pitch when the fast track training is completed in December 2015 or January 2016.

Innovative System Development Team

Local or international companies that want to be involved in Vietnam’s entrepreneurship ecosystem transformation can opt to form a consortium and submit their plans for developing specific new parts or for enhancing existing parts.

According to the IPP website:

“IPP’s grants are for covering 70% of internal and external human resource costs related to the innovation project. The first phase grant is approx. €50,000 [approximately 1.2 billion VND]. The most successful teams can receive an additional grant of maximum €200,000 [approximately 4.8 billion VND].

The potential content of the projects may include, but are not limited to, development of a new incubator, creation of new services for existing incubators, planning of a new funding program in the province, adding startup services to existing technology park or initiating a regional cluster growth program.”

To that end, expansion and funding activities, and, most importantly, imagination will be critical to finding new ways to leverage the funding to provide new resources to aspiring and dedicated Vietnamese entrepreneurs.

What’s Ahead for the IPP

February 23 is the deadline to apply for the Fellowship Program, but there is no set deadline to submit an Expression of Interest for the New Innovative Company and Innovation System Developers portions. In the longterm, IPP seeks to train individual people—not just companies. The real value of IPP is in developing people–the human talent–and getting them to share their newfound knowledge with others. Building teams takes time, and even longer to reach the point of creating high-growth companies so things won’t change here overnight, but the program is a great opportunity to head in the right direction.

One huge part of the challenge ahead for all those involved with the IPP is creating a proper technical vocabulary in Vietnamese, and in the long term, a cultural shift for attitudes toward entrepreneurship and innovation within the training programs. While the IPP has a fund amount of approximately $10 million—and it will certainly go further in Vietnam than elsewhere in the west—it will be the people on the ground, in the training sessions, and taking risks to create something great who will show the world just what’s possible in Vietnam.

First Impressions of Vietnam

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Trying to explain Hanoi, and Vietnam in general to someone who has never been here can be quite challenging. For many expats in Southeast Asia, the region and its cultures can be difficult to understand and navigate let alone effectively explain to family and friends at home. And research, while helpful to understand settings, is not a substitute for direct experience.

This week we have a guest contributor who is with us here in Hanoi. Zdravko Tumbovski is an international businessman who has done business in Turkey, Bulgaria, his native Macedonia, and other countries. He arrived in Hanoi for the first time on Tuesday, November 18 in order to take a firsthand look at the Vietnamese market and to gauge its potential for his interest in trading with Vietnam and in Southeast Asia.

His professional experience includes an internship at an insurance company in Macedonia; a Business Analyst position at a family owned company, Info Group Ltd, which made investments in the Macedonian Stock Exchange and the Macedonian Real Estate market. Currently, Mr. Tumbovski is the founder and director of Z&Z Capital Ltd based in Bulgaria, which specializes in transport and logistics services in the European Union (EU).

Additionally, in conjunction with partners in Turkey, he is involved in import-export transactions, mainly in cooking oil, but they are also expanding to other commodities for the Turkish bazaar. His primary role is to find a suitable supplier and to negotiate the payment methods and transportation of the goods.

Zdravko shares his first impressions of Vietnam below:

After constantly moving around between the US, Europe, and the Middle East in the last seven years, I spent a considerable amount of time in Los Angeles this year. About a month ago, I reconnected with director of GKTA Group, whom I have known for several years.

GKTA Group introduced me to some of the many challenges, opportunities, and conditions faced in Vietnam. I felt attracted to learning more about this dynamic market and it didn’t take long for me to decide to come here and check out Vietnam for myself.

Even though I am still in the first week of my arrival, I must admit that I am having a very smooth transition to this country so far. I was already familiar with Asian cultures due to my friendship with Asians in my network that I have known for a long period of time, and also because GKTA Group put a lot of effort to set up at least one meeting per day with a local person where I can get his/her answers to some of my questions about his/her country’s future, his/her point of view toward foreigners, and the changes that s/he has seen the past five years in Hanoi, especially.

Hanoians and Hanoi

Vietnamese people in the capital of Hanoi are generally polite and quiet. It usually requires some time until they start to feel comfortable sharing their views, and begin to realize the goal of my questions because I see that they are not very used to foreigners who are interested in their culture, and who try to understand their values.

Vietnamese people seem to be the loudest on their motorbikes. They are honking at every cross street, and from my findings they rarely show anger with words, but only with menacing stares at the perceived wrong-doer. The amount of motorbikes and the traffic frequency for me was something unseen before; in short, outrageous.

Hanoi is a city with a long history, and it is shown on every corner. Hanoi has the street-selling spirit and it is still done traditionally and mostly inexpensively for locals. However, there is luxury consumption visibility in the younger generations and newly rich populations. For me, this is probably more visible because I was raised in a former communist country, Macedonia (Former Yugoslavia).

The Wi-Fi coverage and the use of internet are quite impressive compared to the expectation of technology in a developing country. The “drinking-coffee” habit is at large range, and the number of cafes is seemingly endless but a favorite of Vietnamese people. One new thing for me is using condensed milk (“sua dac”) in almost every cup of coffee—and I find it tasty—even if it is uncommon for me as a European.

Luckily, I am fan of Asian cuisine, and have been eating it frequently. Compared to other cuisines and the tastes of some westerners, you may remain hungry here if you are very picky with the food. The traditional street foods, or the local dishes in the very basic and not-so-modern restaurants can be tasty for people who are food enthusiasts and open to new flavors; on the other hand, it can be off-putting (even though I aim to be cautious with my language here), because I certainly know many people who would not be able to eat the local food here, and who would not be willing to be seated and served in the Hanoian or Vietnamese way of small tables and children chairs. So far, I enjoy it.

Work Ethic and Exposure

My personal view is that most of people here work hard and long hours. The basic example for that is the staff at the hotel where I stay. They are here every single day of the week, for over twelve hours per day. They are very friendly and very helpful even if there is occasional miscommunication.

When talking to waiters or other people in cafes and on the streets, I have come to realize that many of them have not had a chance to travel a lot. Actually, many have never been outside of Vietnam. The reason for that is first, money and second, time since, as mentioned before, they have to work almost every day, year-round.

There is a sense of trust that permeates through the people here. I had a very unique experience that occurred to me at the border upon arriving at the airport: I had arranged for visa upon arrival and at the bureau the visa was issued and stamped more quickly than what I had estimated, but I had no cash on me to pay. The customs officer asked me if I had any currency equal to the amount of $95 (the price of the visa), but I had none. The ATM was outside the immediate area, after the passport control, so I thought that I couldn’t consider the option to withdraw some money. As a matter of fact, the officer walked me through the immigration border without any checking and without any concern, just to withdraw the necessary money for the visa, and then led me back to her desk in order to pay. That was surprising. Actually, the border control experience in general was more liberal than in many other countries.

If I am allowed a chance or could offer some suggestions to Vietnamese who want to be successful with westerners, it would be:

  • Learn more English, the number of tourists is increasing  and you need it
  • Strive to be more comfortable with foreigners
  • Be more creative for international businesses; this land is rich
  • Act more responsible to the duties and respond to requirements efficiently and faster

Business and Understanding Vietnam Now and in The Future

I haven’t experienced any business deals in Vietnam yet, but I am most worried about the changing industry regulations, the unpredictable law amendments, unfair competition, and the guarantee of quality standards.

My advice to the expats that want to do business in Vietnam is to spend as much time as possible here, but with local people. It is essential to understand the habits of the Vietnamese before starting any sort of business, in order to prevent an organizational mismatch and communication misunderstandings. It is complex and different here indeed.

I can already see that the necessary attributes required to succeed in Vietnam are patience and simple guidelines.

What I would like to learn about Vietnam or the Vietnamese is: until what extent have the ancestors shaped today’s population, and how much is the young generation willing to keep and practice the old traditions? I hope that finding this balance will help me to predict and understand their place in the world for the next decade.

This next decade will be crucial for Vietnam as the country transitions to increased trade with more global partners, the middle class continues to grow, and more foreign investment pours into the economy. Vietnam has many natural resources, a lot of talented people, and a willingness to exceed economic indicators but it will not be without some development friction, conflict between traditional and modern Vietnam, and addressing some major investor concerns. However, the long-term benefits will be far greater than what the shortcut rewards of today will provide. After all, as Jim Rohn says, “You cannot change your destination overnight, but you can change your direction overnight.”

Thanks to Zdravko Tumbovski who contributed to this week’s post.