CEO Cheryl Yeoh lays out MaGIC’s ingredients
By A. Asohan September 12, 2014
- Three core activities: Connectors, Gap-Fillers and Storytellers
- GREAT2014 event, MaGIC Startup Academy and Asean Accelerator to launch
After months of head-hunting and speculation, the Malaysian Government announced it had appointed as chief executive officer Cheryl Yeoh (pic), a Malaysian entrepreneur who had launched a startup in New York, made it in Silicon Valley and saw it sold off WalMart Labs, the investment arm of the US retail giant.
When she took the role, Yeoh told Digital News Asia (DNA) that her first task would be to map out the ecosystem and identify the gaps. She and the team she was building up spent four months doing that, and late last month she sat down to a chat with DNA to lay out her blueprint.
PREVIOUS INSTALMENT: The MaGIC CEO and the crucible of fire
MaGIC’s underlying mission is to “fill the gaps and connect the dots,” as she puts it. The overarching vision is to act as a catalyst to transform Malaysia into the regional startup capital.
“In a way, we want to put Malaysia on the map. A lot of the times, regional and international VCs (venture capitalists) bypass us, but the fact is that we have a lot of really successful tech companies and entrepreneurs – they’re just not known,” she says.
This, despite the fact that Malaysia has produced the most number of tech IPOs (initial public offerings) and has some of the largest Internet companies in South-East Asia, she laments.
Among them are MyEG, the e-government service provider; Catcha Group’s iCar, iBuy and iProperty; regional online recruitment player JobStreet.com; and even less well-known but no less phenomenally successful companies like Fusionex. Early in October, dotcom pioneer MOL Global will be listing on Nasdaq.
Indeed, in August, a blog post on the Malaysian edition of Business Insider listing the eight biggest Internet companies in South-East Asia noted that six of them are from Malaysia – and four of them are Catcha companies, including Rev Asia, which incidentally runs the Malaysian edition of Business Insider.
This lack of disclosure aside; and despite an inexplicable reference to MySpace as a Malaysian company that is preparing for an IPO – which could be a mistaken reference to MOL Global’s impending listing – the gist of the blog post is true enough.
Yet regional and international investors believe the regional startup hub is down south, a problem that Yeoh is keenly aware of, and a misperception she is intent on correcting.
Thus, MaGIC’s mission statement is to increase the number of Malaysian regional and global success stories, and under this mission statement, there are three core activities the MaGIC team has settled on: Connectors, Gap-Fillers and Storytellers.
The ‘Connectors’ thrust essentially works on the resources already available in Malaysia, as well as the community, and a co-working space at MaGIC, according to Yeoh.
“We found out, through our mapping exercise, that there are 74 government agencies supporting entrepreneurship in various sectors and throughout various lifecycles,” she says.
Then there are private bodies and programmes, which together with the agencies above, make up a total of more than 160 points of contact available to entrepreneurs.
MaGIC hopes to make it easier for entrepreneurs to navigate this maze, via two means: A physical and a virtual portal.
“The physical part is the one-stop shop mandate when MaGIC was created, which will be called MaGIC Central, where we will be partnering with 25 agencies to begin with,” says Yeoh. [MaGIC Central was earlier described as the MaGIC Interactive Centre]
These agencies would set up shop or have resources available at the MaGIC building in Cyberjaya. Agencies which have agreed to come on board include Malaysia Venture Capital Management (Mavcap); Malaysia Debt Ventures; Teraju (the Bumiputera Agenda Steering Unit); the Intellectual Property Corporation of Malaysia or MyIPO; and national ICT custodian Multimedia Development Corp (MDeC).
But this won’t just be a physical centre, says Yeoh. “We are going to have weekly, monthly and quarterly events which will be theme-driven. So one month, it could be about funding, another month it could be about training, or how to take your company to an IPO, and so on.”
That one-stop shop mandate won’t be purely physical either. “When you think about, today not a lot of people ‘walk-in’ anymore, they use virtual tools,” she says.
Thus MaGIC will also make use of hotlines and Google Hangouts where entrepreneurs can schedule appointments with the agencies above.
“There are all these great resources … but it’s very hard for people to connect. If I cannot navigate the ecosystem, how can you expect someone from more remote areas to do so?” Yeoh says.
“Not only do we direct you to the right agency, we also track. We not only get you to the right person in the right department, we will set up a survey to see if you’re successful. If not, you come back to us and we’ll make sure that you’re redirected to the right person,” she says.
“That’s the ‘physical’ part. The virtual part is where the 180 or so agencies that we’re mapping out come in. We’re publishing it as a MaGIC resource tool that would be available on our website – you can find out about all the various programmes from your home,” she adds.
The GREAT event
Both resources will be launched at the four-day GREAT (Gathering of Rising Entrepreneurs Acting Together) 2014 event that will be launched by Malaysian Prime Minister Najib Razak on Sept 17.
MaGIC is billing it as “the ultimate gathering of Malaysian entrepreneurs, startups and funders” that will allow aspiring entrepreneurs to tap into and interact with the ecosystem.
To be hosted at MaGIC, it will revolve around six industry clusters (food, agriculture, technology, lifestyle, creative arts and women), and include about 95 workshops and speeches by a host of Malaysian and international personalities and entrepreneurs.
“It’s basically an outreach programme where we’re expecting 5,000 aspiring entrepreneurs and entrepreneurs. We have so many programmes, there’s something for everyone – the food entrepreneurs, the retail entrepreneurs, the social entrepreneurs, and so on,” says Yeoh.
“It’s meant really to get people excited around entrepreneurship,” she adds.
Cohorts and communities
The other aspect of building a community is the proximity aspect. MaGIC has co-working space for up to 150 entrepreneurs, with 50 spots already taken up. The idea is to get like-minded people together so that they can share information and experience.
“We believe in building startup communities. When I started my company in New York, and again in the Valley, it was very much community-driven,” says Yeoh.
“It’s the serendipity aspect of it,” she says, adding that when people work in close physical spaces, they tend to talk to each other more, and may discover they are working on similar problems and thus put their heads together.
“In Malaysia, what I’ve noticed is people working in pockets. They don’t have a space.
“All the co-working spaces are about RM450 to RM600 (US$188) per month, so they prefer to go to Starbucks or work from their homes – but when that happens, there’s no exchange of information.
“So what we’re trying to create is not merely a co-working space, but a community around that co-working space. They come out, and share and work together,” she says.
The other part of this is something Yeoh strongly believes in – ‘cohorts.’
“Think about it: Usually, your best friends are from high school or college. You went through the same selection process, the same batch, the same orientation, and you graduated together.
“That’s the kind of community we’re trying to create, because such people tend to help each other out more. And to build startup communities, the cohort is very important,” she adds.
The co-working space at MaGIC offers rates as low as RM150 a month, RM30 a day, and even RM200 for a minimum of three months. Facilities there include the usual Internet connectivity, meeting and training rooms, and even 3D printers.
Next Page: Gap-fillers and storytellers – the Academy and the Accelerator
The MaGIC Academy
MaGIC’s second core activity revolves around filling in the gaps, which would involve two programmes: The MaGIC Startup Academy and the Asean Accelerator.
“One thing I’ve noticed is that people here think that you need to raise funds to start,” says Yeoh.
“They have an idea, and they think they need to get grants or raise funds but in actual fact, with today’s technology, you can bootstrap your startup and test apps with very little money,” she says.
The MaGIC Startup Academy will be a year-long, workshop-driven initiative. The agency is aiming to run about three workshops a week, involving successful local, regional and US entrepreneurs. This would arm entrepreneurs with the skills and the training so that they can test products and prototypes.
Among those slated to deliver workshops is US entrepreneur Neil Patel, the ‘growth hacking’ and digital marketing expert who will be at MaGIC in October to talk about digital marketing.
The MaGIC Startup Academy will launch on Oct 15 with a five-day programme, and on the third day (Oct 17), MaGIC will bring in 15 to 20 regional and international venture capitalists to hear pitches.
“It’s not really a conference. Malaysia has a lot of events where you pay a lot of money to get speakers to come in and talk, and you get inspired – and then you go home, and it’s ‘So what? What’s next?’ ” says Yeoh.
“We want to avoid that. The five-day MaGIC Startup Academy launch is all about workshops, ranging from two and four hours, to three days, or even four days, where you will get to learn an actual skill – whether it’s building a prototype or design thinking and digital marketing.
“There will be a theme every day, and on the fifth day, we’re ending with a startup career fair where we’re inviting all startups to set up booths,” she says, adding that the other big problem for startups is hiring talents.
“The MaGIC Startup Academy is meant to prep talents to be hireable by startups,” she declares.
This sounds very much like what MDeC was doing with its Knowledge Development Centre (KDC). Wouldn’t this be a duplication of effort here?
Yeoh doesn’t think so. She says that she has spoken with Muhammad Imran Kunalan Abdullah, head of the Talent Division at MDeC, and determined that his programmes are more geared towards filling the skills and talent gaps in large ICT corporations and multinationals.
“KDC focuses more on skills in .Net [the Microsoft software framework], Oracle, SAP, Java, C++ and so on – more suited towards large company IT jobs, not startups,” she argues.
“What is missing, we’ve found, is talents for startups, which requires slightly different skills. In Malaysia, for example, UX (user experience) is not being taught in schools. Project management, digital marketing and Ruby on Rails (an open source web application framework) are not being taught in schools.
“These are the skills we’re teaching entrepreneurs,” she says. “That’s a No 1 gap, and we’re trying to provide that education.”
Another gap that MaGIC hopes to fill is that of accelerators, which Yeoh believes there is a lack of, while acknowledging programmes like 1337 Accelerator.
“The rest are all incubators. There’s a huge misunderstanding between what an accelerator is and what an incubator is,” she says.
“An accelerator comes with funding, and is a cohort-driven programme. It’s very selective,” she says, adding that incubators work on a landlord model – renting space and utilities, with ad hoc mentorship.
Thus MaGIC will kick off the Asean Accelerator in the first half of 2015.
“We’re looking to open doors because what we really need to create in Malaysia is this critical mass. Again, coming back to the point that there’s one startup here, one startup there; an office here and an office there – we need everyone to come and gather around MaGIC as a hub or a ‘capital’,” Yeoh says.
“We also want to open doors for Asean to come into Malaysia – especially since Malaysia is hosting the Asean Leadership Summit next year,” she adds.
“We’re looking to fund about 150 startups here, about 50 of them social enterprises,” says Yeoh, reiterating that of the RM70 million (US$22 million) that the Malaysian Government has allocated to MaGIC, RM20 million has been set aside for social enterprises.
The Asean Accelerator is modelled after StartUp Chile, which in three years – and spending only US$35 million, according to Yeoh – has put the country on the map and acknowledged as one of the top 20 startup ecosystems in the world.
StartUp Chile was conceptualised as a seed accelerator in 2010 and launched the next year. Startups are invited into the country for four-month programme, and are given US$40,000 in seed money which they spend in Chile as they build their products.
“We’re going to visit them in November, and have been talking to them for the past six months,” says Yeoh.
“They’re been very helpful – they’ve shared all their metrics, and the lessons they learned. For example, they didn’t prepare the local talent, and after the first six months, startups couldn’t hire, so they left.
“The other was follow-on funding – after the seed fund of US$40,000, many startups couldn’t raise money, so they left.
“That’s why we’re creating the MaGIC Startup Academy – to support the talent. And that’s why we’re talking to private VCs and funds to come to our Demo Day to make sure that that linkage happens,” she adds.
Regional and international exposure
One of the key thrusts of the Asean Accelerator is to position Malaysia as a strategic launchpad for startups in South-East Asia and its 600 million population.
“I can talk the whole day about why Malaysia,” says Yeoh, noting that the country’s 30 million population makes it a fair-sized testbed market.
“Malaysia is a very good launchpad for any company wanting to expand regionally because we’re English-speaking, and we have a highly social customer base very willing to try out new products.
“We also speak Bahasa Malaysia, which is not too far from Bahasa Indonesia, and we’re next door to Indonesia which has a population of about 300 million and a market which a lot of VCs are interested in.
“And we’re a lot cheaper. If you look at South-East Asia, only the governments of Malaysia and Singapore are so supportive of entrepreneurs and are dedicating so many resources towards entrepreneurship.
“Singapore may be very attractive, but it’s very expensive, with its currency at almost the same rate as the US dollar. Its five million people makes it a very small market. It’s also a very affluent market, which is good if you’re targeting the luxury market, but beyond that, is not a true reflection of South-East Asia.
“As I was thinking of doing this Asean Accelerator, I really could not think of a better place to do it than in Malaysia,” she adds.
The third part of MaGIC’s ‘Gap-Fillers’ thrust is providing regional and global exposure – that is, to increase the number of successful regional and global Malaysian startups.
“But if our entrepreneurs don’t go out of the country, how are they going to learn of the world’s problems?” says Yeoh.
“So in November, we’re taking 50 entrepreneurs to Stanford University for a two-week programme where they will be trained by Stanford professors and seasoned entrepreneurs from Silicon Valley.
“At the end of the programme, they will pitch to a panel of actual VCs to give them feedback on their startups,” she says.
MaGIC is also talking to technology blogs like e27 and Tech in Asia, which hold startup and pitching events across the region, to help Malaysian-based entrepreneurs who want to expand to these other markets.
Finally, the Story-Tellers portion is just about success stories to inspire people, says Yeoh, noting DNA has documented a lot of them.
“We want to create success stories that are searchable, so it’s like a directory of the successful entrepreneurs in Malaysia.
“We want to tell the emotional part of the journey, not just stories of them raising funds and who they raised it from, but why they created this product, and how this product impacted and changed the lives of people.
“We want to tell those stories too,” she says.
One initiative under the MaGIC’s ‘Connectors’ core activity also overlaps with storytelling. The agency has launched WeAreMY.com (pic above) which profiles community leaders, engineers, designers, and others from the ecosystem.
“We want to profile entrepreneurs so that everyone knows who’s who in the community,” says Yeoh.
Next Page: Funding and other missing pieces
Funding and exposure
In just about any startup event DNA has covered in the past two years and more in Malaysia, complaints usually centre on the funding ecosystem here. What is MaGIC doing to address that?
“This is one reason why the critical mass is so important. I think the regional VCs always bypass us because they think there are no startups here. There are! They’re just invisible. They’re in their homes,” says Yeoh.
“So we’re building a database to ‘surface’ them. The Asean Accelerator can also create that visibility, here at MaGIC in Cyberjaya, because this is a programme with a start date and an end date, and after the four to five months of the programme, we will end with a demo day.
“This is the platform where we will invite regional VCs to come and see the pitches. We are already creating linkups with these private investors because we recognise that the Government’s role can be to come in and seed, and create that critical mass, that visibility. Hence we provide that little bit of funding.
“But beyond that, we create the linkages to local private VCs, and we’re also getting a lot of interest from Japanese VCs – there’s never been a better time for Malaysian entrepreneurs,” she declares.
But she reiterates her point that startups do not necessarily need funding to build prototypes, and believes that MaGIC can close a loop here.
“When we accept entries for the Asean Accelerator, they have to have a prototype, a proof point. If not, they can go back to the MaGIC Startup Academy to learn how to do it.
“The Academy was established to support the eventual Accelerator. It prepares you, preps the talent, so that you can build these prototypes,” she adds.
Follow-on action … or lack thereof
Malaysia has played a host to a number of startup and entrepreneurship events in the last few years, from accelerator bootcamps to international conferences and hackathons.
But there has been a lack of follow-up action, and a lack of success stories. What is MaGIC doing to ensure there is sustained interest and development? For example, after the Asean Accelerator, how is it going to help these companies? So many startups have been launched at such events or programmes, but many seem to disappear.
“I don’t think that’s entirely true,” says Yeoh. “I think that people don’t know about these startups because they are not tracked, which is why we’re going to launch a startup database later this year.”
She says MaGIC has established a partnership with CrunchBase, a sister site of US-based tech blog TechCrunch, that acts a directory of startups, profiling the companies, the amounts of funding they have raised, and where they are in their lifecycle.
“We’ll be sharing data and schema with CrunchBase. Any company that is documented on CrunchBase, we get the data; any company that is documented on MyMagic will be on CrunchBase too,” says Yeoh.
MaGIC intends to run two batches of the Asean Accelerator every year, and in the upcoming national Budget that will be unveiled in October, is asking the Malaysian Government for an allocation that would allow the programme to run for a few years at least.
“We will be tracking these startups throughout this stage on our database, so we will know what happens. Like I mentioned before, we look at the whole lifecycle of the startup, so this includes all the routes to exits,” Yeoh says.
“I think it’s a matter of focus because MaGIC cannot boil the ocean, we cannot do all things for all people. We are starting here, but we’re not losing sight of what it takes for startups to exit, and how.
“We are trying to figure out all these things as well,” she adds.
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