What does it mean to reach a new level?
Vietnam’s ecosystem is currently overshadowed by VNG. The company is reportedly valued at as much as USD 1 billion. Following VNG are two giants, VC Corp and Vật Giá, each worth around USD 100 million. Behind these two are a number of startups valued at around USD 10 to 30 million, including Tiki.vn, Appota, mWork, Topica, Hotdeal, Vietnamworks and a few others. But behind them are numerous startups struggling to reach a company valuation of USD 1 million. Moving to a new level means reaching the level VNG is at. Can Vietnamese startups do that?
Talking with investors and startups, I noticed several issues among young startups. I believe Vietnamese startups today, though more mature and prominent than ever, remain naive. When I asked one startup why it entered e-commerce, it answered, “Because that is the current trend,” and something felt wrong. Or when I met a new startup that had spent 6 months developing its product, it still did not know how to make money from it. I am truly concerned. Lê Hồng Minh, VNG's CEO, often says:
Understanding exactly why you must become an entrepreneur and who you are, among a host of deep and difficult questions, is certainly hard to answer.
Clearly, young Vietnamese startups need greater depth.
To help readers understand better, I have gathered criticisms and insightful observations I have heard over the past few years—feedback Vietnamese startups should seriously consider. Some points will affect startups significantly, while others will have only a small impact. All 20, however, carry differing value for a startup's survival and growth.
1. Experience
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Of course, this new wave of Vietnamese startup founders is very young, and only a few have graduated from university. But this creates a good foundation for the entrepreneurial community’s future development. In terms of age, it has been found that the most successful startups are created by people averaging 28 and a half years old. That means spending a few years throwing yourself into work to acquire the experience, passion, and iron will needed to build a successful startup.
A lack of experience affects everything. Young people are often enthusiastic and energetic but lack the discernment to see hidden issues or the ability to view their startups broadly. The best way to gain experience is failure. Founders who have tasted failure know how to overcome it. Talented people know when giving up is not yet an option. The younger people are, the sooner they want to quit.
2. Relationships
Relationships are a secret rarely discussed publicly, but often whispered among colleagues during casual conversations. This is one of the essential factors startups need, and young startups particularly lack. Vietnam is a “minefield.” An opaque and incomplete legal system leaves you wondering whether what you are doing is right or wrong.
A relationship with the right person, whether a politician or an entrepreneur, can make a crucial difference. If your network includes professional entrepreneurs who have succeeded in Vietnam, they can certainly help you understand the market step by step. That is even better than knowing an MBA graduate. A relationship can build or ruin your career.
Some leading Vietnamese startups owe their success to relationships. Never underestimate this factor, and nurture your relationships carefully and thoughtfully. Relationships help you raise funds, navigate legal and political issues, negotiate, and find partners. Relationships protect you.
3. Know the exit and understand investors' needs
Most startups I meet want to raise capital. Outsourcing and made-to-order companies with passive income have less need for investors. But if you want your startup to be worth millions of dollars, you need investors. To persuade them to provide enough money to reach that level, you must understand the value of the outcome and what investors expect from you. Your product must establish its value in a larger market. You need to know which companies need you and which market needs your product. Otherwise, you will never raise capital, and one key to doing so is…
4. Make sure your market is large
I have noticed 2 types of startups in Vietnam recently. One has a market so small that investors do not even look at it. The other wants to enter the global market and become as widely known as Facebook or Google. In the first case, the market is too small to interest investors, and the user base is not large enough for the company to grow. In the second, there is no clear approach to promotion or finding a core user base. If you are targeting the global market, you must be truly ready to equip yourself with a five-star team, global thinking, design thinking, and a great product or business model. Such conditions are quite rare in Vietnam.
Essentially, a middle path between the two choices is to find a niche market that is nevertheless large—for example, mobile games and content like Appota's, or computer games like VNG's. As Paul Graham clarified, you need to find a small market that can easily become a large one. In short, you need a core business model that can expand and grow with the money you pour into the larger market.
5. A perfect business model
Ultimately, you have to make money to support your family and yourself. That is why we need an excellent business model to succeed in Vietnam. Some business models I have seen recently tend to raise very little capital. If you only hope to earn $1 million a year, enough to support your family and team, you can be content with what you have. But that is no different from running a business as a hobby. It is not really entrepreneurship.
Startups are built to grow rapidly and strongly, create enormous value, and enter new markets with innovative business models Wall Street has never seen. Google is a prime example. Who would have thought that inserting a small advertisement related to what people are searching for could generate huge profits? Can Vietnamese startups invent such innovative models?
6. Implementation
When it comes to copying, Vietnamese startups in particular and Asian startups in general fear becoming victims. Although external conditions in the ecosystem are changing, with startups apparently becoming more open, the concern remains. People still do not fully appreciate the value of implementation. The winners are those who execute an idea best, not those who merely have it.
Most interestingly, strong executors are often strong imitators. They know how to match their competitors, learn from them, and turn competitors' finished products into their own. Behind every successful act of copying or borrowing an idea is an excellent implementer. In most cases, a startup fails because it cannot execute its idea well, not because someone copied it. As Appota CEO Đỗ Tuấn Anh once said, “Ten ideas are worth only a glass of beer.”
7. The hidden side of passive income sources
Behind most successful startups, particularly those targeting the domestic market, lie hidden aspects. Many successful Vietnamese startups had covert income sources in their early days. Revenue could come from game cheating, spam technology, gambling software, viruses, third-party app stores or anything else.
The initial stage, with the pressure to find every possible way to make money, sometimes blurring uncertain legal boundaries, is necessary to train a growth-oriented mindset and create agile Vietnamese entrepreneurs. To survive Vietnam's minefield, you must be seasoned. The reality is that young startup entrepreneurs earn their first money this way so they can focus fully on larger plans.
8. Understand customers deeply
When discussing customers, the story of 5giay.vn deserves mention. Its founder initially opened 5giay simply to sell his computer monitor. After he succeeded, friends began asking him to sell their other products. That was how 5giay was born. Phương had never intended to start his own business. He simply knew what he needed and accidentally created a product that many others needed too: a place to sell used items.
Today, startups are not truly close to customers and focus only on technology. Young startups need to leave their offices and talk more with customers and potential partners to hear what they really need. That is where genuine business ideas are born.
9. Design thinking
When discussing design, people often talk about a product's appearance. Steve Jobs once said, “Design is not simply how it looks, but how it works.” Looking at Vietnam's “terrible” payments market, you will immediately understand what I mean. Every payment platform is absurdly complicated and difficult to use, even for a technology blogger who encounters many new technologies every day. There are far too many steps.
Dieter Rams once said, “Good design is as little design as possible.” Indeed, we are witnessing a new design wave in Vietnam: Triip.me, Not A Basement Studio, Tappy, and even Flappy bird. But the entire ecosystem needs even more simple design to make design a refined highlight of every product.
10. Culture
At a Startup Arena event we recently organized, Kuo-Yi Lim of Monk’s Hill Ventures observed that Asian startups struggle to build open cultures because hierarchical East Asian thinking holds them back. He believes startups must do this to encourage new ideas, accelerate work, and scale quickly.
Peter Theil, PayPal’s cofounder, once offered a memorable maxim: “Don’t fuck up the culture” (loosely translated as “don’t blame the culture”). Startups need a new company culture in which every member can develop and demonstrate their abilities better than in any other environment. This is not simple. Culture is hard to shape. It requires leadership skills, processes, recruitment, environment and many other factors. Have you ever wondered why Apple, Facebook and Google put so much effort into their offices? They want an environment where everyone enjoys working together comfortably. This is a serious investment in company culture. Some Vietnamese companies have begun doing the same, recognizing that creativity cannot survive in a poor cultural environment.
At its core, culture is a collection of core values, attitudes, and consistent behaviors within a team that can spread. Culture can be considered one of the most important elements connecting every factor needed to produce breakthrough innovations.
11. Clear direction
In Vietnam, there are three main directions: targeting the domestic, regional or global market. Vietnam has achieved some success domestically and globally. The domestic market has witnessed VNG’s brilliant success, while the global market knows Flappy bird. Misfit Wearables, Not A Basement Studio, VC Corp, Vat Gia and many others have also made a name for themselves. However, we have yet to see a standout contender in the regional market, even though many domestic companies, such as Appota, are moving toward competition across Southeast Asia.
These three directions require very different resources, teams, relationships, and strategies. To enter the global market, founders need to attend international conferences, study abroad, build international relationships, assemble a team with a global mindset, and create products capable of competing internationally. In the domestic market, you need close relationships with partners and local authorities, a deep understanding of Vietnamese culture, and the ability to steer your company toward earning real money in Vietnam's unstable and still highly uncertain business environment.
For each direction, startups need to define their path clearly, month by month and year by year.
12. Market research
You need to understand the market thoroughly to establish a clear and correct direction. You also need sound calculations to estimate the size, development limits, growth, and scope of your target market. Startups I meet today often give very vague market figures. They almost always overestimate its size.
For example, if I target tourism, I may estimate the market is worth trillions of dollars, but that is only a number on paper. In reality, my market is much smaller because I target only a small niche in Vietnam. My estimate must therefore shrink many times over. Vietnamese startups need more realistic figures.
13. Vision
When setting goals, startups must be realistic but also visionary. Frankly, small Vietnamese startups are still far from a valuation of 10 million dollars, and they all share a tendency to set modest goals. We need startups that dare to dream of a 100 million dollar valuation. We need startups that dare to dream and plan seriously to become billion-dollar companies. This is the only way to draw investors' attention to Vietnam and the only way for startups to make a large-scale impact on the country's economy and society.
It is easy to see that building companies with enormous valuations requires creating substantial value that can generate profits. This is therefore not simply about becoming social enterprises. VNG changes millions of Vietnamese lives while generating profits to support a team of over 2000 people.
14. Luck
Everyone wants to be lucky. It is also worth adding that many inventions and companies we see today have their own element of luck. Mac users are surely familiar with the Dock app. Few know its creator was once rejected by Apple's recruitment team but later chosen by Steve Jobs because he liked it. Most startups have a lucky story like that. Examples include Bill Gates selling DOS to IBM or Xerox letting Apple see the graphical user interface. If you meet and speak with successful startups, you will always hear them talk about the luck they received.
This does not mean you must seek good luck (I am not superstitious like most Vietnamese people), but you must know how to seize luck when opportunity arrives.
15. Lean startup (or a few reliable startup methods and theories)
If you have not read about Eric Ries’s Lean Startup method, I recommend doing so as soon as possible. Although not everyone agrees with it, it is a compelling and successful innovative model for entrepreneurship. Every startup needs a method to operate its business model and test it in the real market. Otherwise, it is like walking through a dense forest at night without a guiding light.
There is no specific, clear formula for building a startup; you must find your own path. A foundation of theory and methods makes a difference. Learn from predecessors, continually test your idea and keep moving forward.
16. The real problem
Vietnam's education system has certain effects. If the entire population is drawn into rote learning and endlessly following prejudices, where is the space for critical thinking? Critical thinking is central to identifying problems and implementing solutions. Fortunately, Vietnamese people learn problem-solving through practical experience. But that foundation remains weak. For young startups, this poses a major risk. As Paul Graham once noted, “By far the most common mistake startups make is to solve problems no one has.”
Vietnamese startups need to look carefully and analyze whether the problems they are pursuing truly exist. Do not seek a solution to a nonexistent problem.
17. Unceasing passion
How deeply committed are you to the problem you are pursuing? How much do you love your field? Are you willing to work without pay for weeks or months on an idea whose success even you are unsure of? Are you comfortable and happy encouraging teammates you rarely meet? How much do you love creating? And how accustomed can you become to living with risk?
These are questions only time can answer as you share the startup's ups and downs. Entrepreneurship is certainly not easy and will be among the hardest things you ever do. Learning an instrument takes a few months, a little talent and a good teacher. Entrepreneurship is different: it demands years and tests you to exhaustion. It takes a toll on your health and drains you mentally. You will become vulnerable and easily shaken. At times you will want to give up. You may reach the heights of fame or fall into the depths of despair. Are you truly ready for everything I have described?
18. Partners and the question of making use of other brands
Although still a young startup that needs to work hard to prove itself on the long road ahead, Ticketbox.vn (a website specializing in event ticketing services) achieved early success thanks to its founder's partnerships. Never underestimate the power of branding, especially when you are still a small, unknown startup.
Vietnamese people pay particular attention to brands and tend to prefer foreign over local brands. If you can maintain partnerships while pursuing other brands, you will benefit from a domino effect. When customers visit your website, they judge you by who your partners are. Working with large companies also helps you better understand their needs and wishes. This is certainly true for B2B and applies equally to B2C. Why do you think Rocket Internet companies are so active in building partnerships with industry players?
19. Innovation, Research and Development
Recently, an investor told me that one of Vietnamese startups' biggest problems is copying ideas from Silicon Valley. If one startup can copy an idea, other startups can easily steal it again. Consequently, our ecosystem becomes full of cheap ideas. Cheap ideas are easily stolen and rarely endure without a strong execution team.
We must acknowledge that startups have not been truly serious about investing time in product research and development. We have yet to create unique technologies and ideas that are difficult to imitate and deliver truly breakthrough value to the market. Consider Yahoo and Google: these two giants rose above numerous projects by many computer science researchers at Standford University. They must surely have had secret weapons of their own.
20. Investment
This article would be incomplete without mentioning Money. Clearly, all startups need money to grow, maintain their finances, pay employees, and invest in resources. Yet money is precisely what makes all young ecosystems struggle. The truth is that if you have a team with great ideas, money will find its way to you.
Peter Thiel, PayPal’s founder and the magnate behind its empire, once said, “The lower a CEO’s salary, the higher the company’s chances of success.” Thiel believes a team willing to sacrifice for a shared mission has a better chance of succeeding. So stop focusing on money and put the company first. That is a company aimed at a big goal. Vietnamese startups today focus too much on finding investors and persuading them to put money in. But money is not the main concern. Focus on building an outstanding team, identifying the real problem and creating wonderful products.
Reference: Paul Bischoff, Techinasia
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