6/6/00

Kathleen O'Toole, News Service (650) 725-1939; e-mail: kathleen.otoole@stanford.edu

Advice on spreading high-tech entrepreneurship to Asia

English speakers are now out-numbered by non-English speakers on the Internet, opening the doors of opportunity for would-be entrepreneurs in many countries, leaders in business, academia and government were told at a June 1 and 2 conference on innovation and entrepreneurship in Asia.

Asian and European consumers are also less fettered than Americans by communication wires, making those continents good test beds for new products and services based on wireless technologies. Yet Asian countries still have some obstacles to overcome if they are to become as famous as the United States for entrepreneurship, some conference panelists said.

Organized by the Asia/Pacific Research Center with support from the Chong-Moon Lee Foundation, the conference drew more than 190 people from Asia, the United States and Europe to the Bechtel Conference Center, where they heard from successful Asian entrepreneurs, venture capitalists, scholars and government officials familiar with technology business developments in Asian countries.

There was, for example, Kohei Nishiyama, founder and chief executive officer of elephant design, a Japanese product-design company that lets Japanese consumers talk to each other on the web about what kind of microwave oven or home fax machine they would like. The company then redesigns the devices, seeks bids from manufacturers and takes orders from consumers, sharply cutting the cost of custom-designed products.

Nishiyama began the business as a kind of club and initially used postcards to communicate design ideas back and forth with consumers. It took six months to complete a design turnaround that way, he said, and he had to hire staff to input data from the postcards at $1.20 each. On the web, the consumers input their own data and the turnaround is two weeks, said the former business analyst for McKinsey and Co. in Japan.

An entirely different type of high-tech business was described by Jhun Ha Jin, founder and chief executive officer of Haansoft, Korea's largest software company. The makers of Hangul, the most widely used word processing program in the Korean language, Haansoft had to fend off competition from Microsoft and Korean software pirates to survive. "We assumed our product was secure as long as we maintained a technological edge," Jhun said, but the company found out differently when it nearly went bankrupt in 1998. That's when Korean customers deserted Hangul en masse because they were switching from DOS to the Windows operating system faster than Hangul could make the transition. Now the company has revived itself by leasing, rather than selling, software over the web. It has helped, also, Jhun said, that the Korean government and public finally have realized the problems created from what once was widespread software piracy.

He and Othman Yeop Abdullah of the Malaysian government's Multimedia Development Corporation also stressed the importance of firms hunting for talented employees globally. In Malaysia's "multimedia supercorridor" zones, the government permits foreign and domestic firms to hire as many foreign high-tech employees as they want.

While innovation and entrepreneurship have taken hold in many Asian countries, Chong-Moon Lee, chairman and chief executive officer of AmBex Venture Group, an American-based venture capital group, warned the audience of remaining stumbling blocks.

The co-author of a book due out this fall called The Silicon Valley Edge, Lee has worked with Stanford scholars at the Asia/Pacific Research Center to detail the factors that make Silicon Valley a hotbed for high-tech entrepreneurship. He argues, along with co-authors William Miller, Henry Rowen and Marguerite Gong Hancock, that what distinguishes the valley is not its scientific advances and technological breakthroughs but its "habitat." The habitat includes supportive government regulations for new firm formation, leading research universities that interact with industry, an exceptionally talented and mobile work force, experienced support services in such areas as finance, law, accounting, headhunting and marketing, and a willingness to take risks.

"There is too much money hunting for too few exciting deals" in Asia, Lee said. Management talent is in short supply and government policies "add to the confusion," he said, by taking a "shotgun approach" rather than zeroing in on a target or two. Asian engineers with start-up plans, he added, need to be asked the question: "Would you rather own 51 percent of $100 or 20 percent of $10,000?" because they are too focused on controlling the companies they found, rather than the markets they enter.

Nishiyama agreed that few Japanese venture capital investors can provide the expertise that Silicon Valley venture capitalists are known for. "I would ask [Japanese investors], 'Why do you value our company at this much?' and they would say, '[Because] we have this much money.'"

Venture capital is of necessity a local business, but experienced firms are learning to franchise and expand their expertise to new places, said Steve Jurvetson, a managing director of Draper Fisher Jurvetson, a Silicon Valley venture capital firm that has invested in more than 150 high-tech startups. DFJ now has offices in several U.S. cities plus Hong Kong, Singapore and the United Kingdom. Silicon Valley's talent pool is extremely tight, he said, so investors will flock to any place with a talent pool, especially if local publications begin to tout "local tech heroes."

Asked in what areas Asian firms have the best chance to be global leaders, Jurvetson suggested wireless technology and multilingual Internet businesses as good places to start. Studies indicate people are three times as likely to buy products and services from offerings in their own language, he said, but most American entrepreneurs are still developing English-only business plans. Wireless ideas are also likely to take off faster in countries where consumers are already sophisticated users of wireless technology.

"And when you have a company that hits it big," Jurvetson said, "you'll find everyone in the community is more likely to take a chance."

-30-

By Kathleen O'Toole