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FAQ on startups for young entrepreneurs in HK

March 29, 2015

1) If I’m fresh out of school, should I take a corporate job or start my own company.

Answer: This is going to be a surprising answer, but if you have a choice you should *ALWAYS* take the corporate job *if you have a choice* rather than start your own company.  If you want to start your own company, then having some experience in a big company is going to be extremely useful.  You will learn a lot of things.  Among the things that you may learn is how much you hate working in a big corporation, and how badly dysfunctional they can be.  But that’s useful.  Also, if you are working for a salaried job, you can save money and get experience and that will help when you start your own company.

However, this is assuming you have a choice.  You may not.  There aren’t enough corporate jobs in Hong Kong, and right now the reason people are talking about startups is that everyone knows this.  The banks in Hong Kong are shrinking, and there are just not good jobs for young people.

Also, you may get that nice job, and everything is going fine.  Then one day you get a new CEO, and your entire department gets closed down and all the work gets shipped over to Pakistan.  That happened to me.

So what we need to do is to have a few totally insane people start companies, and these will create jobs for other people.  The other thing is that if you want to start a company, you aren’t going to listen to my advice.

One thing that shows a major problem with the HK economy is that people think in terms of this sort of choice.  In fact, what we should be working for is a diversified economy in which you have more than two choices.  You might not be a founder of a company, but in many places, once a company becomes successful, the founders start hating the big corporation that they created, turn the keys over to other people and go off and start the next company with the money they raised.

One other thing that I’ve noticed is that among the success stories in HK startups, they often contain people that often have one to three years of experience in the corporate world.

One other odd thing is life in a startup or founding a company isn’t more stressful or requires harder work than working as a junior person in an investment bank.  If you work in the front lines in an IB in Hong Kong, you will likely get to work at 8:30 and work until 7:00 p.m. with some days lasting until 10:00 p.m.

2) How do I network with senior people?

You can get an associate member with TiE Hong Kong and sign up for office hours.  However, one of the mistakes that I made when I was younger was to assume that senior entrepreneurs had all of the answer and would be useful to network with.  In fact, the most important people that you need to network with are people that are just slightly older than you are, people in your peer group, and people that are younger.

If you were to talk to the head of Goldman-Sachs or JPMorgan, they could offer you life skills and general wisdom, but they would be totally useless as far as strategy.  The people that have this sort of information are people that are starting businesses right now.  The CEO’s and employees of local companies can provide you with far more useful information and advice than senior people in finance.  It would be more useful for you to network with a street hawker or a person running a restaurant or clothing store than it would be to talk to the head of Goldman-Sachs.

Also, help out people younger than you.  If you are a senior trying to start a business, do whatever you can to help freshmen trying to start their own businesses.  Bill Gates and Warren Buffett already have their quota of close friends filled, but you still have a good chance of being close friends with future Bill Gates and Warren Buffett’s.

One of things that I like about the startup world is that it’s more democratic and less hierarchical than corporations.  In a big corporate, you know your place.  With startups and SME’s, we are just people all trying to make money, so you get to interact with people as equals.  I have X and want Y.  You have Y and want X.  Let’s deal.

3) What holds back e-commerce in Hong Kong?

It turns out that Hong Kong is a terrible place for retail e-commerce, but one trick in e-commerce is not to have customers only in Hong Kong.  One thing that I learned from the e-commerce startups is that they a lot of their business comes from Taiwan.

4) Has there been a drop in the quality of startups in Hong Kong and is there a startup bubble?

In Hong Kong, the quality of startups is extraordinary high, and there is such an imbalance between angel investors and startups, that there is no issue with quality.  Hong Kong needs a lot more angels.  The analogy I use is food and health.  If you have too much food, this is bad, but too little then you starve.  My strong feeling is that Hong Kong has too little funding in angel funding.

I do think that there is a startup bubble in Silicon Valley and Beijing, and one thing that annoys me is that I’m seeing a lot of frankly stupid things getting funded in SV, whereas there are tons of good projects in SV that aren’t being funded.  I’m seeing tens of millions of dollars of funding being wasted on smart contract solutions in SV, whereas it appears that the first real smart contract was written in Hong Kong.

Part of the problem is that the funding model in SV is somewhat broken.  There is no mechanism by which a VC fund can do a USD $10K investment.  If the minimum investing is USD $1 million, then you are going to end up with a lot of fat and a lot of nonsense rather than organic growth.  I do agree that there will be a “startup crash” in about 12 to 18 months, and so we really need to prepare for that.  The good news is that I’m looking at the startups that are forming in Hong Kong.  They aren’t burning cash from investors but rather are real companies solving real problems.

5) Are entrepreneurs born or made?

Heros are cowards with no other options.  I do agree that you’ll find that successful entrepreneurs often have a major life trauma, but sometimes that trauma happens to be the fact that you can’t find a decent job.  If you apply this to societies rather than people, then things look very good for Hong Kong.  Hong Kong has had a very turbulent and traumatic history, but has been able to bounce back.  I think that Hong Kong is going to do fine, because we don’t have any other real choice.

6) What is the one word you’d use to talk about startups?


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