Thriving without Intervention: Entrepreneurship in Perspective

KTM’s recent post [1] on emigration have provoked many interesting responses. While Hui Chieh, Lzydata and The Void Deck have offered their perspectives on whether the Singapore government are “listening” to the common people, a few comments (see appendix) centered on the issue of entrepreneurship in Singapore.

The aim of this article is to examine some of the comments made by people about the government on the issues of entrepreneurship and put things in perspective. This article also hopes to debunk the myth that the development of entrepreneurship in Singapore is heavily dependent on the government. On the contrary, entrepreneurship can thrive in Singapore with or without government intervention and molly-coddling. We set out to show that the onus is on the Singaporeans rather than the government which is crucial to the development of the entrepreneurial ecosystem.

An entrepreneur is one who either creates a new invention/business idea/product/service that changes the way how market works, or one who redefines the market by carving a market niche where it is not replicable. In return for that success, he contributes back to society not necessarily with money but with other possible resources that could benefit people in kind.

There are two aspects that encompasses the Singapore entrepreneurial ecosystem. The first is the hardware. Relatively compare to the rest of the world, Singapore is the 2nd easiest place to do business [2]. For most businesses, Singapore offers a good infrastructure, low taxes, and wages control that is beneficial to the employer than the employee. Even with the dominance of the government-linked companies, Singapore follows a free market economy. The second is the software, i.e. we need to encourage people to take up entrepreneurship. The Singapore culture is one that is intolerant of failure and advocates risk adversity. What has happened is that most people enter into entrepreneurship with too much expectation and lack of passion and fervour. Meritocracy is a double edged sword in Singapore. While meritocracy creates an egalitarian system for anyone who works hard to succeed, most Singaporeans have compromised quality with speed and efficiency and this kind of attitude is also illustrated in the lack of innovation and service culture from Singaporeans. The Singaporean does not care whether quality is important, all he/she wants is to get the thing done without thinking and bring the dough back home.

Here is a common list of comments offered by Singaporean entrepreneurs to the government on small medium business enterprises.

• “The government should give more cash assistance to the small-medium enterprises”:What is the rationale of injecting capital into your company using taxpayers money? The most common reasons given are regional expansion and scaling up the company operations. Not all business enterprises have the capability to scale up because scalability and sustainability are very dependent on the industry. When the government does not give the money to the small-medium enterprise, it is not because they are not helping the SME.It could be that the SME is not suitable for revenue injection. As a matter of fact, some companies are asking for cash without thinking of growth for their company. While I agree that there are very few genuine companies that require capital injection, I don’t back the other ninety percent SME owners screaming for cash when they don’t need it and they don’t know how to use it. Most enterprises fail because of the team and failure to manage cashflow.The government can offer services and assistance such as legal and accounting aid to these companies to develop their capabilities. In this way, these companies can learn to develop their enterprise further and also inject new vigour to the industry. That comes to my next point.
• “The government should award contracts to the local companies and not the foreign companies” or “Our market is too small, so why bother?” :If we live in a free market economy, the contracts should be awarded to the best company. It does not help that Singaporeans are brand conscious and will rather place their bet on paying more for the same product from a foreign company than a local company. Is there a way to get around the problem? As a matter of fact, there is. However, not many entrepreneurs are willing to test it.I am currently advising a company which is selling a piece of technology that can help to increase the speed of biology computation. The technology are built and prototyped in Singapore, but they have no local customers at all. As a matter of fact, our local research institutions have the capability to purchase it from them. Instead, they rely on the big vendors. The entrepreneur I worked with, did not whine about the situation. Instead, he sought out other markets. He bootstrapped for two years because the demand from the market has only appeared recently. Now, the technology is sold to Malaysia, Thailand, Saudi Arabia and also US including MIT. These people pay them upfront compare to our local institutions that is taking a hell lot of time to decide whether to buy something. The reason why I talk about this story is that most successful companies don’t really rely on the local market. The government is also a customer, and hence like any other company, they also can choose which products they wanted to buy. Being local-company friendly might create a sense of protectionism and deter foreign direct investments from coming to Singapore, as there is no incentive to put money in Singapore because of its legal and pro-business infrastructure.

Some Singaporean biotech companies (Cygenics and Rockeby) have problems raising funds even from the government, but they took an interesting strategy to take the company to be listed in the Australia stock exchange, and surprisingly, it helped them to scale up very quickly. Fundraising is an issue with Singapore for entrepreneurs, but there are other avenues of circumventing the cashflow problem. One approach is to use the bootstrapping strategy that is responsible for the success of many big companies like Dell and Microsoft. Of course, we often hear of the personalities but we never look at their strategies in how to grow their organizations into big multi-national corporations.

The reality is that the Singapore market is small, but an entrepreneur is supposed to find his own way to create the market and not wait for the government to create the market.

• “Teaching entrepreneurship is a waste of time”: Actually, there are many schools of thought. I will leave this discussion to another time. Here is a simple way to tell most people. To teach entrepreneurship, it is important that the academic is also a practioner, rather than the observer. It is also important that you cannot make entrepreneurs, and most sensible educators do not want to generate entrepreneurs. Their aim is to instill certain aspects like financial, marketing and management knowledge to give the students a greater scope in developing their career. Ultimately, it is important not to be molly-coddled by the government into becoming an entrepreneur. For more discussion on some common misconceptions to entrepreneurship, I urge the reader to look at this reference.

Entrepreneurship can thrive with and without government intervention (see [3] for an interesting view that Silicon Valley is no big deal either). The problem lies with the software, i.e. the people. Think about it, if you look at China, US, Taiwan and India, there is no government intervention to develop an entrepreneurial ecosystem. The people there have the fire in the belly to succeed. That is why foreigners are taking our jobs because they want it more than we do. For these countries, the entrepreneurs are just praying hard that the government is off their backs. Singaporeans live in a comfort zone where there is no hunger to pursue your passion or create something that you can change the world. They settle for the social contract laid out by the government. Perhaps, that’s why we don’t have fortune 500 companies. It’s not because of the government but we should look into ourselves and ask whether we can do it without the government.

References:
[1] KwayTeowMan, Emigration in Perspective, Singapore Angle.
[2] World Bank, Doing Business 2006.
[3] Guy Kawasaki, How to Kick Silicon Valley’s ass.