The first edition of APAC Real Estate magazine is out now, with features and interviews from across the region. The June-July issue includes an interview with
What does Singapore offer a startup that the Silicon Valley doesn’t? What are the pros/cons of basing an internet startup in Singapore vs. the Silicon Valley? Is Singapore really a valid competitor?
I was A2A but must go anonymous because I am fundraising.
Part I: facts
There are three major ways in which Singapore outright thrashed the US for me as a non-American founder:
1. Rule of law (and more generally, protection of individual rights)
2. Cost of living
Let’s start backwards.
3. An Employment Pass in Singapore is approved in a matter of days, with some caveats (it’s going to be harder, but still possible, if your employee comes from a third world country, and/or doesn’t have a degree from a recognized university). Entrepass is a bit harder, but, well, it exists. And I can definitely raise enough to get one for myself and a couple co-founders. Why is this important? Well, I put out a few job ads for my previous company and interviewed over 100 developers. By and large only 20% of applicants came from the US (although 0% from Singapore). There is a huge concentration of programming talent (both in numbers and in quality) in Northern Europe in particular, and many diamonds in the rough in places like Vietnam or China.
I’ll let you think about the US visa situation and what it would be like to start a company as a foreigner and hiring foreigners. Or alternatively, you can reduce your pool of available applicants by 80%. That also works.
2. My rent for a 60 sq m apartment 50m from Orchard Road (basically, the equivalent of Park Avenue in NYC) is less than 2k USD a month (I pay half, partner the other). I could go down to 500 USD if I was willing to commute for 45 minutes. Public transport every day would set me back less than 100 USD a month, and my food budget is perhaps 40 USD a week, including frequent dining out (hawker centres are actually cheaper than cooking in most cases). My health insurance costs me 400 USD a year and covers me up to half a million. I’ve used the hospitals here and they are pretty good. If I wanted a live in maid, provided I could feed her and house her, I could also pay her 500 USD a month – completely legally.
TL;DR: total living costs for a middle class lifestyle? 1500-2000 USD/month. You can go much lower and still live well (some of our employees have a single earner family income of <2k USD).
Oh yes, and tax? I think it was 2% in my first (half) year and around 5-7% now. As an expat.
Right, now compute that cost of living for the Bay Area. Remember, you have to live in SF or Palo Alto or Mountain view within 3 minutes walking distance of the office for it to count.
(OK, this would change a bit if I wanted to buy real estate or a car here, but why would I? rent is cheap and the market liquid, public transport is great, taxis are very available, clean and fast thanks to the lack of cars on streets…)
1. But but, I thought Singapore was an evil dictatorship that watched their citizen’s every step, hung gay people at the first opportunity and canes people for scratching a car?
Much is said in the West about the Fine City. Much of it is hearsay. The country DOES enforce the law which can be a strange experience if you are from a decaying European city with areas where the police doesn’t enter (I can’t speak from experience for the US, but I understand you have your own).
Your property is always secure, your life as well. You can walk through parks at 2am. Some crazy people leave their phone or wallet to book a table at a food court (crazy because some day, this kiasu behaviour… hmm anyway). If you have a dispute with your landlord, it will get resolved within 2-3 weeks by the small claims tribunal (a colleague did just that). Taxis don’t take you on wild rides or overcharge. People are honest, in part culturally, in part because it’s the best survival strategy. As an entrepreneur, you won’t get sued for 80m if somebody trips and breaks their spine at work – 80k is more like it. People are equal before the law. Income tax is extraordinarily easy and free of red tape – in fact, this year the government texted me to let me know I didn’t need to bother filing. The paperwork for hiring and firing, for building a company and so on is similarly simple and the government always makes you feel like a customer, not an enemy. Case in point: go through Changi Airport and JFK as a foreigner, and compare the two; I think this comparison extends well into other domains. My record so far is 1 minute 30 seconds from aircraft door to taxi at Changi.
The only issue I have with that legal system is that homosexuality is still illegal, in theory. Although in practice, this is very casually enforced (a foreign business acquaintance picked up another man at Taboo on his first night here), it is a. problematic that some laws are selectively enforced and others not, if the rule of law is to be maintained b. not the government’s business what someone does at home (this also applies to drug use, but since the situation is the same in the US and to a lesser extent in much of the first world, I don’t care). But seriously, I’m only putting this up because I can’t find anything else to complain about. Considering the much greater violations of individual rights common in the US since FDR and coming back in force with the last few administrations (insert your favorite Libertarian position here) I will happily accept this compromise and stick around here.
Edit 3: forgot the part where in the US (and elsewhere), you can sometimes pressure the government into passing legislation favoring your industry and it takes some pretty hard PR to get rid of it. I’m thinking of the heroic efforts by AirBnB, Uber etc. here. In Paris, you had taxi drivers literally going on strike and attacking Uber cars to preserve their unfair monopoly! It’s MUCH harder to get anticompetitive legislation passed here, at least in my limited experience. The government is (gasp) honest.
Part II: observations
Culturally: I find Singaporeans much more conservative and likely to fall under family pressure to hold a good job (preferably in finance, since this pays best) after getting top grades at university. Generally, Asians are much more family oriented. This is why I think we don’t see as many world class companies emerging from the island – many of those with the potential to start one don’t, because they’re working for the gahmin or a bank, or moved abroad. Occasionally someone rebels and takes the path less trodden. This pressure is present in most societies, including mine, but the degree varies. It’s just that Americans are so much more likely to start up, because their country was built by crazed entrepreneurs who had nothing except their life and risked it to build themselves a future. Similarly, honest failure is less well regarded although this being a trading island, people understand the concept (unlike in say, many European countries, where people will resent your wasting your investors’ money).
As a founder though, I don’t care about what others are doing. Less entrepreneurs also means less competition. It does impact hiring, because if you hire people from the region, you’ll have to present a comparatively lower risk package for them to be interested (higher salary as part of total comp, etc.).
Thanks to the Fed, Asia is both awash in liquidity (read: loads of millionaires) and devoid of investment opportunities since returns have been pushed so low. This means funding your company via angels even up to amounts traditionally reserved for large VCs (double digit million). Networks are important and if you are connected in any way to private banking clients you can hit up on this alternative funding method, which AFAIK is less of an option in the US, where the funding environment has shifted towards hordes of MBAs with a banking/consulting background applying checklist methodology to the problem. To me, this kind of funding is closer to the entrepreneurial spirit of old on which the Valley was built (and, going back further in time, Venice!). Startups are not formulaic, they are about a mecene giving a hungry penniless upstart a chance because he sees potential. I’m generalizing and I know it, but I felt very uncomfortable after meeting many of the US style investors and reading about deals gone bad (for founders).
Finally, you have two completely different markets. The US is a very competitive market where you will be rapidly copied (and copied well), but at the same time, it’s 300 million relatively high spending consumers all speaking the same language and in the same time zone, and a brand established there will roll out to the rest of the world very easily.
APAC is completely different. Competitiveness is very localized (for example, China is competitive, but Indonesia isn’t) so you have more time to get things done and grow organically under the radar, so you can build a better product and take less funding. There are 600 million customers in SEA alone, but it’s a lot less homogeneous with many local languages and habits to think about (for example, if you’re doing e-commerce, good luck using the postal service in Jakarta if you want reliable service). At the same time, most of the customers are not served with things we Westerners take for granted. Take Amazon: I end up ordering a lot of electronics and books from the US because there is no reliable e-commerce venture here that could deliver me things like noise cancelling headphones cheaper. A lot of people here routinely shop abroad. Take online marketplaces: PropertyGuru kinda sucks, but it has 80% of the listings and no competition, so why bother investing in faster servers? Take Google Maps: get yourself a list of Vietnamese addresses and try and map them. You’ll find less than 10% register a hit. Where’s VietMap? All of these are easy, proven opportunities, you can even copy the UX, and the capital is there. And next year, the borders fall, at least for commerce (cf ).
My last thought is to social status. I think it’s more accepted and cooler to be a founder in the Valley and to an extent, in places like Boston or New York, than in Singapore (dare I mention the 5Cs…). Personally, I like it that way. I like working under the radar and building products. If social status is important though, you might prefer the US.
Edit: Another cultural point linked to above. A lot of people who come here have a very different mindset to the US startup. No football table, no free snacks, no beer tasting at work. Again, it might be the Asian culture, but people here are much more ready to sit down and do the work and see this as the fun part of the job. Chinese entrepreneurs are all over the world running anything from restaurants to multinational conglomerates. I absolutely love that no BS, direct spirit which my idealistic self watching too much John Wayne thinks existed in the West when the West was still a frontier. I hesitate to call it the pirate spirit since pirates are glorified thieves (except for the founders of the American Navy, of course, who did their part for the creation of the free world). But it’s a beautiful thing, the way people focus on the important things and don’t get hung up on trivial details. Edit 2: I know what I was looking for. People like the heroes of Heinlein’s works. You’ll know what I mean if you’ve read Heinlein. Singapore sometimes feels like being in one of his books with its benevolent, rights-respecting libertarian chaos.
All of the above subject to usual disclaimer, YMMV, etc. Forgive an ang moh stereotyping.