Wednesday, November 16, 2011

My Last Bite at Government Grant

Hi, I am Desmond, and I am jinxed with Government Grant applications. For the past 6 years, I applied for 4 government grants (from 3 different agencies) and entered a reality TV pitching show, and all of them sunk. You can read about my journey.

In the early years, I thought I am half-hearted with no track records, thus I fail. Then I manage to develop a service with great traction (self-funded), yet they still doubt my capability to venture into new markets and criticized my inability to monetize on the traction. When I mentioned Twitter secured millions of dollars in funding, with hundred millions of users, considered wildly successful and still hardly profitable: everyone keep their silence because they can’t come up with a reasonable answer, but I know none of them agree with the statement. I was asked why I have 300,000 visitors and still can’t make great profit, and waiting a year before profit comes in is labeled as “pathetic”. I try to explain to them that this is not a software product which you can profit immediately per sale, this is consumer web (product > traction > trial & error / pivot > maybe profit): and I know none of them understand what that phrase means.

At the end of the day, government grants are KPI-based to improve the country’s GDP (towards the ETP): so you need to prove that you can make tons of money, or already making tons of money (Ironic, isn’t it?). They are not going to invest in Twitter or YouTube which can’t generate great profitability in the early years, in regardless of how many users you have. Government grant is about short term profitability (will be better if it’s proven profitability); but there are some exception. Why TryMasak is portrayed as a success story for ICON fund? Traction? Profit? Perhaps is the collaboration with MOSTI, ability to watch cooking video on Hypp TV and featured on Malaysia Book of Records.

Forget about what Silicon Valley taught us about 1) Team 2) Product 3) Traction, it doesn’t work for government grant in this country (it’s like some weird idea from a different world. I dunno what are these crappy stuffs? Show me the money!). Though I suspect the forth element, social proof, might still work very well. If you are like me, who have no connections with the “right” people; don’t try to focus on the product or tractions, and don’t even try to promote your team because we are all crappy little minions begging for money. I am not encouraging this, but I guest boasting about your current profit or instant profitability within the next 6 months is something they would like to hear; and perhaps some partnership with big names like AirAsia, Maxis, and TM would ring the bell as well.

Government grant evaluation panel nowadays include “industry expert” besides a bunch of bureaucrats, which sounds more promising, but not quite so. These experts might not be entrepreneurs themselves, perhaps managers or CEOs (which have a very different mindset from entrepreneurs, but confident of their personal achievement due to the 5 figure monthly salary). I am guessing none of them have experience with business like Google, Facebook, Twitter, YouTube, TripAdvisor, Yelp!, etc.; and I am not sure if they even read about them, or at least use them. There is a high probability they might still be traditional-minded: build some product with 3-6 months, spent tons on marketing and branding, sell like hotcakes and become profitable. Spending millions and years before profitability is just crazy, something they genetically couldn’t comprehend.

My conclusion is:

  1. The expectation and benchmark of Silicon Valley VCs are different from local government grants. So it's Product + Traction + Team vs Profit.
  2. At the end of day, it’s all about proven profit and fast profit (within 6 months – 1 year, not beyond). They are not interested with traction, though they might criticize you if you don’t have it.
  3. Although they say there are looking for the next Google, but we know they won’t invest in Google during their early days (for God’s sake, they don’t even have a business model then, forget about profitability). So do something proven, especially proven locally; so that they could smell the money.
  4. Know the “right” people. Social Proof works globally. 
  5. Sometimes it's like selling a bat to a golfer; or Tech and Business person speak a different lingo (it's like why Man couldn't understand Woman). Choose you investor wisely, if there is a choice.

I hope I learned the final lesson from the grant applications spree, which cause a lot of distractions. I conclude that they are not interested in my kind of startup: focus on content and user tractions, not proven business model locally and no proven or instant profitability. I do admit I didn’t focus on monetization, because I felt that someone could do a better job than me, so I focus on what I do best (my theory is, the inability to monetize doesn’t means the platform has no value). More work required here.

Am I being delusional or arrogant here, sometimes I asked myself? My brother said, “If you still know how to ask yourself that question, you are pretty much safe.”

What’s next? Do more, complaint less. If I don't believe them, the next thing to do is to prove them wrong :) Malaysia Most Wanted Rocks!

 Be so good they can't ignore you - Steve Martin


meiru said...

It's an uphill battle to pitch to the wrong group of people, firstly they have different taste (a super duper great salesman might do the job), secondly some of them might not even be professional enough or experienced enough to judge about the business. After all, some are just hired managers or some sort, who never startup any business before.

In terms of internet business, Malaysia is still left far far behind... because there are gatekeepers who do not have the foresight to evaluate what to invest and what not.

kc said...

Do you consider getting an individual investor? If yes, then I'm interested with your project. I have the desire to create something valuable on the web and been following many stories on TechCrunch and Mashable. So let me know about your venture, perhaps I would be interested. Cheers!

Kenny said...

And that is why Malaysia does not have a single true global tech brand. Maybe investors here aren't rich enough, but they are risk averse. Nobody dares gamble with tech because they know so little about it. They'd rather put their money in other high risk ventures instead of IT (which they understand little).