If you attend a startup event anywhere in Asia, you’ll most likely hear mentors, advisors, and other judges using the ecosystem’s universal jargon. They’ll speak of the need to build a lean startup, create a minimum viable product, and pivot when needed. Such terminology comes of course from the Lean Startup by Eric Ries.
While the lean startup framework undoubtedly provides enormous value to entrepreneurs in Asia still learning about tech entrepreneurship, few people have volunteered additional ideas or models that might further guide founders in Asia. The perspective that Ries was writing from was Silicon Valley, after all, which is vastly different from emerging Asian markets like Manila, Philippines or Jakarta, Indonesia, or even the region’s financial hubs like Singapore or Hong Kong. The markets in Asia Pacific are just different, and perhaps they require additional or more region-specific ideas to guide founders in building products, services, and companies here.
Asia is just not a microcosm of Silicon Valley. We are not Silicon Valley Lite.
Proof of this fact is evident in the numerous startup business models that have been copy-pasted from Silicon Valley into emerging Asia only to fail, sometimes spectacularly, including everything from carpooling to crowdfunding. Many of these companies also tried to employ lean startup principles, but they nonetheless floundered. Some faced regulatory issues. Others did not find product-market fit. Many could not achieve escape velocity to scale.
The vast majority of these startups would not have been saved by newer, more localized models and ideas. But some would have benefitted. That’s why it’s important to rethink how we think about innovation in Asia.
While there are several thought leaders doing exactly that, one of the most promising models comes from serial entrepreneur Winston Damarillo. Damarillo is one of the very few founders in the world who have scaled and exited technology companies in both Silicon Valley (acquisitions to IBM, Iona Technologies, and Intalio) and Asia (IPO of Morph Labs). This fact is less interesting as a biographical tidbit were it not for the fact that it shows that Damarillo can see across the divide: He knows what works in Silicon Valley vis-a-vis what works in Asia.
In a talk at Echelon Asia Summit 2019, e27’s flagship tech series, Damarillo put forth a new model for tech innovation and corporate investing, which he dubbed Corporate VC 3.0.
In Silicon Valley, startups can be dragon-slayers. So long as they have a brilliant idea and great execution, they can take down even the largest and most entrenched incumbents.
Asia stands in sharp contrast to this model. Damarillo argued that startups and corporates need to work hand-in-hand to innovate in their core business, with each providing key resources that the other lacks. Corporates provide high-distribution capabilities for startups, who would otherwise lack access to scalable markets, and startups provide corporates with technologies that internal dynamics would otherwise preclude them from creating. In corporate-speak, it’s a win-win.
In Damarillo’s view, Corporate VC 3.0 is a natural and necessary evolution from how corporates previously thought of corporate investing. In 1.0, corporates invested in startups in adjacent industries, and in 2.0, they invested in startups in their direct ecosystem. In 3.0, corporates work in close collaboration with startups to innovate their core business, in active rebellion of the dreaded innovator’s dilemma.
In explaining this framework, Damarillo drew on his own experience building Saphron, an insurance-tech startup already working with some of the biggest insurance companies in Asia, such as Pioneer. Saphron’s mission is to make insurance radically accessible, using mobile and internet technologies including AI and data analytics to package and deliver the most relevant insurance products, to the masses who need it most.
Other startups in Asia would be well-served to follow Damarillo’s example, if not his model. By laser focusing on what corporates may need and articulating how their solution fills that exact gap, startups can move away from the ethos of growth-hacking.
Rather than having to experiment with a suite of digital marketing tactics to find the one that yields hockey-stick growth, startups can tap into the corporate distribution networks that already have a proven pathway to millions of users.