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Volker: Yes, great question.

I moved to Silicon Valley from Germany and 1996


so 20 years ago. At that time, the start up ecosystem was of course well
established in the Bay Area in Northern California, but it was very isolated. It
wasnt mainstream.
Even today, startups everywhere in San Francisco. When I moved there 15
years ago, it was really more in the South Bay around Stanford University and
in Santa Clara. From there it actually spread out and now the startups really
enjoy being in San Francisco. At the time, theas we call them geeks were
working day and night and today a new entrepreneur actually likes to work
hard during the day time and wants to have fun in the evenings.
What was seen as startups are migrating back from the suburbs into the city
centers and another good example is the tower where were sitting here, Sea
ASEAN, which is sort of center thats being built in Bangkok as a half for
startups and for entrepreneurs to go to. What really has changed is that it was
very cause prohibitive to enter the startup world 20 years ago. In order to build
software or hardware product, you had to raise hundreds of millions in venture
capital. What really has helped spread the startup ecosystem beyond Israel,
Silicon Valley, and the traditional hot beds of innovation is that software is now
almost at no cost.
Many times its free so programmers and the internet of course connectivity,
programmers can develop code not just in San Francisco, but in Laos, in the
jungle if you will. If you have 3G connection to your cell phone tower so that is
what has helped spread the startup buck from San Francisco into other
countries and how did it really take off? I would say around the financial crisis
and 2008-2009 when all the people around the world were losing their jobs and
looking for new opportunities and that camecoincided with the fact that the
iPhone had been launched, the Android operating system. All of the sudden
young people can program these mobile apps very easily outside the court yard
of Stanford University and then an event we got involved with very early on,
start up weekend helped to spread the methodology in 54 hours.
How you actually start a company from zero to the pitch to investors and a
weekend and how much you can actually build a prototype and that started
also in the US, but its been in 500 cities around the world. Startup weekend

and almost went off athe key factors that contributed and then of course,
Angel investment. 20 years ago, there was very little Angel investment because
again the investment amounts were much higher. You always started with the
friends and family around then you very quickly moved on to a venture capital
firm like a Sequoia.
These firms have been challenged by what we call micro with seasons and
super angels over the last five, six, seven years where these traditional
incumbent VC firms are now raising smaller venture capital funds in order to
be able to get in earlier in the deal flow because we want to build those
relationships with the entrepreneurs.
Interviewer: Talking about the ecosystem that were getting in seems to be
within the originated area, which was in the Silicon Valley. When you talk
about infrastructure, it seems in the US, infrastructure, intimate knowledge,
and technologies and also regular agencies have seem to provide a good factor
for creating a great ecosystem to support startups; however, is there anything
else that youre seeing that will be affected to support appropriate ecosystem
for startups?
Volker: You know its a very typical question. I travel non-stop globally and we
advise APEC, several governments, and including the Thai government in Asia.
Many governments are looking at the two or three, four hot beds like Berlin,
like Israel, and they come to us and say how can we copy Berlin? How can we
copy Silicon Valley?
Theres no solution to copy. Every ecosystem that is being built has to find their
own strength. Their own niche and their own vibe if you will. Like Silicon Valley
is predominant for technology and software where New York has more media
startups. LA has more entertainment startups.
Israel has a lot of telco and again, software startups. China is not so much
driven by product innovation in terms of building the code and building the
actual technical solution. Where its rather taking it and then customizing it
and bringing it into the local market. Each ecosystem has to find its own spot.

You can actually copy some of the core ingredients that need to be in place in
every ecosystem. They are of course first and foremost, willingness to take risk.
They have to be young people that are culturally supported by the government,
by the families to actually leave their traditional jobs. I worked for Google when
I moved to Silicon Valley.
It was one of my first jobs there. That was the startup at that time. When I told
my friends in Germany I work for Google. They had now idea who that was and
that was in I think about 2001, 2000, 2001. You have to be able to take that
risk very early on and people have to be willing to engage in that.
You have to have young population because typical startup foreigners are in
their 20s and maybe 30s. Once you have family mortgages, you cant take that
risk anymore. Secondly, you need to have capital. Aside from friends and family
funding that available everywhere, you actually need to find seed investors as
we call then, Angel investors that then hand on the deals as the company
scales to serious Angel investors, which are the traditional venture capital
firms. Then there has to be an infrastructure for exits because all these
companies are built with one vision in mind as A to change the world and B to
generate revenue and profits and make money and thats typically done in two
ways.
One is to be bought by a large company like a Google and the other way is to go
public, to go IPO so you have to have a local structure, an environment in your
local country that is conducive to going IP or with a small cap company. Then
of course, the educational system and that starts and thats actually the
pinpoint in most ecosystems in Asia that the education system is not set up to
actually teach people to be entrepreneurial and to lead and think on their own.
People are taught to follow and obey to leadership. That is not how you actually
disrupt and the companies.
The educational sector has a big role and thats where the government comes
in and then again, government can push public awareness and make it cool.
Then a very important factor is also that startups and entrepreneurship is
creating stability, social stability. The tipping point in Taiwan and Chinese
Taipei, as APEC likes to say, is that when you have young people occupy the
parliament, thats when the president went to San Francisco to Silicon Valley

and look for solutions. How can we actually keep our people happy, same
happened in Hong Kong. You actually find that when people have work and
things to do, then they dont go and cause trouble elsewhere if you will. Thats
also another factor why governments in some cases like to embrace startups
and support the growth of the startup ecosystem.
Interviewer: Is itits interesting to hear you talking about the cultural
initiation to take risk.
Volker: Yes.
Interviewer: Just to keep the startup for young people to enter into societal
world or try something new. Would probably a cultural pinpoint in us in the
country. Id like ask you because I agree that you can when you has an
incubator called YCU so. You take on startup at infancy stage. What does
infancy stage startup look like and how do you incorporate the risk taking
culture intodo you try to push them to be more risk taking people or risk
taking startup into that incubator as you want. I would like you to talk about
that.
Volker: Yes, the YCU program is actually the first program. We were the first
program investor in the software startups in Taiwan that we opened in 2011,
very early on. That program has since morphed; however, whatbecause now
we are beyond Taiwan, we are active in Korea, Japan, and China. We are active
here in Thailand as a matter of fact and of course, we have made a lot of our
investments, most of our investments actually in Europe, in Austria.
What were looking for in young people and when you invest very early, its
actually the team. Its all about the team. Its about are these people fulltime or
are they havingpursuing two or three different ideas and see what sticks. If I
happen to be the unlucky investor who puts money in one of three ideas they
work on and then they just drop that then my money is gone.
I also look at failure. Have they failed in the past? You probably might be
surprised to hear that we like to see failure because that means somebody else
had paid that check and theyve learned from it so its good to invest in young

people that already have experience, prior experience. Nobody gets it right the
first time.
If you look at any of the successful companies that come out of Silicon Valley,
all of them have had previous failures or as we call it, pivots. How coachable is
the team and then how does our core strength and our team that sits in
Europe, in Asia, and in the US? How can we plug in with our skill set to
actually help these companies grow. That is an important factor for an investor,
not only to look at the business model and the team and how much you know,
can they accomplish, but aside from money that you invest in a company, a lot
of our efforts are on business development and helping scale. Here we are in
Bangkok on a meet with United Nations, again they have a very ambitious
program coming up also to help startups to reposition their thinking and
alternative social enterprises.
Then use that giant operation that UN can provide anywhere in the world to
help and plug in with our business development. We are affiliating ourselves
with small and large partners that can you know, take the right opportunity for
the right startup and then help that startup to raise more money, but also to
get customers. Frankly speaking, an important point is that people around the
world always complain that theres no money, young people entrepreneurs.
That is actually unfortunately not the truth.
We always say if they get their idea to the stage where its a product and they
actually early stage of success, which you can do very easily now because the
barrier of entry is very low today to build technology for the most part,
especially when it comes to O to O, to economyconsumer applications. If they
have the traction then the media that now exists everywhere. The tech media in
the world will pick it up and investors scout that non-stop so money will come
to them. That is not the issue.
Its a very easy way to pass on the buck to somebody else and say we need that
support, otherwise we cant be successful. What gets lost even with a lot of
investors is actually what can they really do for the company and the
companies dont focus enough on business development. Theyre focusing on
technology, technology and technology and getting that right to the point that
sometimes, they loose their competitive edge just because somebody else

somewhere else in the world has developed the same technology, but had the
better B, D team. A lot of our efforts in the year 2016 are beyond investing in
startups with cash. Its actually to support them with our global network and
enable business development. For that matter, we work with large corporations
like a large German automaker, companies like Siemens that can take on
innovative solutions from startups and commercialize them.
Interviewer: Beside the teams and technology with the good B, D teams, you
invest a lot in mobile startup. Do youare there any specific market segment
that youre interested in?
Volker: We have invested B to B security and E-commerce. Actually in Vienna,
we have invested in one of the first online pharmacies there and in Silicon
Valley, in a competitor to Pinterest; however, our focus going forward is going to
move away from the B to C field. Were looking at this point more into real
tangible innovation like material sciences, nanotechnology, virtual reality,
augment reality. Like after IOT, whats next, the next big wave because we are
potentially going to see a shake out. You know, whats the barrier of entry for a
lot of these software apps, for these mobile apps. Its not very high so I believe
the next wave of investment will actually look at the real core product again
and thats going to be more hardware and software of course always, but also
hardware.
Interviewer: Id like to ask a little bit more why YC in case a startup entered
into your program, what would they get from the program at one day they
belong.
Volker: The way the programs been set up, its $30,000 US dollars in initial
funding and seed funding. Then its mentorship, well set up, as a four-week
program in Taiwan, but at this time were actually running it virtual where we
work with teams in different countries, not just in Taiwan. We dont have that
focal and the way it started initially, that focal office where we bring in like a lot
of large incubation programs that like bring like 50, 80, 100 people in one
place and run batches every three months. Our program has morphed to the
fact that its more customized to individual and in some cases we actually work
with other way around. Were looking at corporations, mid-size corporations,

and look their innovations needs and then well source the innovation from
portfolio in external, outside, and help integrate and that and thats again a
sales revenue. Its B,D effort for these companies.
Interviewer: Beside Taiwan and San Francisco, you have trouble in Southeast
Asia a lot.
Volker: Yes, a lot.
Interviewer: Of course, in China as well.
Volker: Yes, a lot.
Interviewer: How would you see startups in A to D business plans game of
Asia in the next few years.
Volker: You know whats interesting, we have worked with software park here
in Thailand on an IOT innovation lab and when I advocated that program to
large corporations in other countries and other entrepreneurs because the
thesis is to turn Thailand, Bangkok into a hub for innovation and Thais, local
Thai people with international people to build products together because
people, young people want to come to Thailand. A lot of people in Sweden, in
Germany have no idea that Sea ASEAN, the tower were sitting in here actually
exist. They think of going to Shanghai to maybe even TelAviv, certainly to
Silicon Valley so its a branding story. The opportunity here is that the labor
cost is actually not as high as in Silicon Valley, but in some cases well have to
import some of the talents and so that program is set up to position Thailand
as a hub for innovation, bring in international people here and self corporate
challenges. Did I answer the question the right way or?
Interviewer: Yes, last question though.
Volker: You talk aboutwell we talked about that is it will help. It will help
support the ecosystem and Id like to ask you in particular, for Thailand. You
talked about real estate integer, family support, capital seed, infrastructure,
and education. Which one is the priority that you think is important tothat
the government should see and support first?

Volker: You know thats a very good question. Im spending a lot of time in
Thailand. Actually, with especially the last 12 months and a lot of the
incubators, the cool workspaces and its amazing. I remember when Huba was
founded, I went there a week before it opened and it had almost no awareness
and now theyre very famous in Thailand. A lot of the groundwork, the core
ingredients, what an ecosystem requires are set up.
Then you have venture capital firms, you have early stage investors so all that
is available in Thailand, but I think whats lacking in some ways is the passion
of some of the people I meet and looking beyond the borders of Thailand and
really looking competitors in Germany because its a global competitive market
and not just seeing Bangkok and whats not here, lets build that here. Then
maybe some bigger picture ideas. Not just to copy you know, my taxi or
whatever it is, but to look deeper and how can we utilize what we have in
Thailand in agriculture. You know, find the sweet spot, I know FinTech has
been a discussion.
Im not sure if FinTech is the right approach for Bangkok. Of course, theres
finance everywhere, in the Philippines and so on, but I know Hong Kong is
really playing that out and Singapore. Does Bangkok actually need to compete
with Hong Kong and Singapore to be the hub for FinTech? Maybe agriculture is
a much better fit as one example so I think thats what Thailand is struggling
with right now.
I saw those growing pains in Hong Kong about a year ago and I came back to a
VC conference a few months ago and they really had their story from like not
knowing what they are to we are the provider and the sub-provider and the
Prorivadelta with 60 million. Everyone is a provider of IOT solutions that are
built in Shen Shen and were the hub for FinTech. Hong Kongs problem is that
they have a lot of early stage investors, seed investors, but now serious A
funding. Then a big problem that is synonymous with Thailand is that they do
not have enough tech talent so entrepreneurs that start a startup in Hong
Kong, and this is being very general.
Compared to like an Israel or Silicon Valley, are typically more business
oriented and that means they have to outsource the product and if two
business people get together and form a tech company, they have no product so

theyre putting their efforts into managing India or wherever the outsource
talent is to get that base foundation built that typically in other countries, the
tech cofounders put together. Their real core strength of business development
is actually not even being utilized so I can see that in Thailand to a point
because I had heard that the numbers of students in engineering programs are
negative, in terms of enrollment. That is a concern, a big concern to me.
I think the government needs to really get its act together and push harder in
the educational system. Like look at the role model of Vietnam, how they have
the good program that every student that goes to the school system in theI
think the UK copied that from Vietnam. Learns how to code, initiative like that
take time. Governments dont have time. Governments always want results just
like large corporations in the next election term so this is something where the
Thai government needs to really think long term and set the base foundation
and infrastructure today to actually have the school system create more
ambitious people with higher level of education in the tech areas that they can
then you know, be competitive with engineers from Silicon Valley.
Interviewer: Probably the, that stay we want to be another Silicon Valley. We
want to be another I think important how things are like that. Find your sweet
spot.
Volker: Find your sweet spot. Thailand needs to find what it has. Tourism, very
strong in tourism, I mention, an automotive suppliers are here. You know and
look at beyond the mobil apps. Is it a nanotechnology? I know theres a Science
Park north of Bangkok, Ive been there many times. Its a big nanotechnology
center. Many people around the world has no idea it exists. Maybe many people
in Thailand dont even know it exists. Like looking at whats there and then
bringing young people closer to it.
A core mistake that a lot of governments by the way do make is that they built
innovation hubs outside the city. The area of the core city and the young people
I mentioned when we started this conversation, 20 years ago in Silicon Valley,
they did not want to be in San Francisco. That was the crazy city. Today, they
are in San Francisco and Google, Facebook, sending shuttle buses everyday to
bring them home. They go to Silicon Valley to work and party in San Francisco.

Its a core misunderstanding for governments, some governments in Asia that


actually built this innovation hubs far away from the city center hoping they
will come and they do fill them with people, but they dont fill them with
ambitious right people because theyre partying in San Francisco. Its also
important location, like we had said, Location location. Where the government
puts its money in and the efforts.