Debunking myths about entrepreneurs

Business Times - 07 Jul 2009

SME INC

COMMENTARY

Don't be obsessed about raising capital, forget about first-mover advantage; instead, find a niche market and focus on customers

By KAREN CHO

SUCCESSFUL entrepreneurs are a rare breed because they face so many obstacles. And one fundamental flaw in the system makes it even harder for entrepreneurs to realise their dreams.

According to Joe Tabet, managing partner of Melcion, Chassagne & Cie, a group of international senior business advisers dedicated to helping entrepreneurs, many highly motivated entrepreneurs would have trouble working with institutional investors - which is counter-intuitive because these investors are usually seen as primary financiers.

Entrepreneurs have the hunger for creating businesses, but also a strong need to be flexible and in control of their destiny. This naturally generates tension with investors who need predictability and accountability, which often creates problems.

'Most investors do not realise that there is a disconnect between investors and entrepreneurs,' says Mr Tabet.

'They end up fighting with entrepreneurs, saying they are impossible to manage, which results in destroying value for every one. We believe there is a philosophical and cultural mismatch to start with.'

Mr Tabet, who is also the author of Hors Piste! - a book that debunks many myths about being an entrepreneur - was speaking to INSEAD Knowledge on the sidelines of the Global Entrepreneurship Forum held recently at INSEAD's Europe campus in Fontainebleau, just outside Paris.

Among other things, Mr Tabet thinks that entrepreneurs should not be obsessed with raising capital from prospective venture capitalists (VCs). Rather, his advice is to avoid over-funding the company from the start, because it's a recipe for disaster.

According to a Harvard study on the Inc 500 (fast-growing companies ranked by Inc. magazine), less than 5 per cent have raised VC funding, and 67 per cent have less than US$50,000 in capital. Entrepreneurs should look for financing in a much broader sense, tapping into other sources such as clients or suppliers, before giving away any equity.

'From the entrepreneur's perspective, the VC model looks more like gambling, and the chance of the individual entrepreneur making money once they enter the VC game is probably as low as winning the lottery,' said Mr Tabet.

'We have observed that many entrepreneurs are kicked out of their own company in the year following a major investment round. All this makes the individual entrepreneur's chances of success in this game quite tiny. In many cases, it's pretty much like Russian roulette - entrepreneurs often get 'killed' by investors because of this mismatch.'

Another myth that Mr Tabet debunks is first-mover advantage. Citing e-Bay and Google as examples of companies that were not the first to move in their space, he says that they were still able to achieve phenomenal success despite not being 'new' as such.

He also gives kudos to Swatch, which he says was not that innovative from a pure product perspective - it just tweaked the formula and made wearing watches made of colourful plastic very hip.

'I like the notion of small giants - companies that identify a niche market and secure their place in their eco-system, pretty much like the Blue Ocean strategy concept,' he said. 'You don't want to be where everyone else is.'

Mr Tabet's advice is to find a niche market and focus on customers. 'I think the more you understand your customer and your eco-system, the more likely you will succeed as a new company.

'If you have the right people with the right mindset, who are smart enough and open-minded to adapt to market needs, you come up with solutions that are faster to generate revenue. This is how entrepreneurial companies gain an advantage over larger firms.'

In fact, Mr Tabet says that his firm has noticed a correlation between companies that do not have VC funding and higher levels of creativity. 'They struggle, but they end up finding better, more robust and sustainable solutions than funded companies,' he said.

'In my opinion, the real competitive advantage that entrepreneurs have to secure their success is to focus on what money cannot buy. Whatever money can buy is a commodity.'

While he is not against entrepreneurs teaming up with external investors, he says it is important that both sides understand their own strengths and weaknesses - and anticipate conflict.

VCs, for example, are very good at investing in innovation and fast-growing companies. What they need to realise is that they are not always on the same side as the entrepreneur.

Entrepreneurs, on the other hand, are very good at starting up businesses. But they are quite bad at mastering the capitalistic game. Mr Tabet says there is one part of their life cycle they do not manage well: 'Very few entrepreneurs manage their own personal exit and anticipate it. Those who don't do it, unfortunately in most cases, will see it happen to them without them being in control any more.'

Karen Cho is an INSEAD Knowledge staff writer. This article first appeared in INSEAD
Knowledge's website (http://knowledge.insead.edu) in June

Business of conquering minds

Business Times - 07 Jul 2009

SME INC

After selling 22 pre-school franchises, MindChamps is now looking at M&A to produce qualified teachers, reports CHEN HUIFEN

THE broader economy may be in the doldrums, but that has not stopped the pre-school sector from flourishing. Just ask David Chiem, founder, chairman and group CEO of education services provider MindChamps Holdings. His company sold 22 franchises for its pre-school - even before it had a school to show.

At a price of $65,000 - not including set-up costs like rental and teachers' salaries that each franchisee has to fork out - the feat is not to be sneezed at. 'Even though we didn't have a model, we had an incredible curriculum,' says Mr Chiem. 'And with the branding we already have, I think people trusted us.'

Mr Chiem is no stranger to overcoming long odds. Listening to his story, you cannot help but marvel at his life experiences, which could be the plot for an inspirational drama.

At the age of nine, he fled Vietnam with his family when the country was being overtaken by the communists. Through sheer luck, the boat they were in evaded a pirate attack because of a passing Singapore container ship, whose staff later gave the refugees so much chicken rice they had leftovers when they landed in Malaysia.

'This is why Singapore always has a special place in my heart,' says Mr Chiem.

The family ended up in Australia. And even though Mr Chiem could not speak a word of English at first, he topped his class in six months. Later, in senior high school, he graduated top of his cohort in English, art and maths.

The turning point in his life came at the age of 13, when his sister heard an audition call over the radio. 'It said, 'Looking for 13- or 14-year-old Asian boy, must be able to swim',' says Mr Chiem. 'Back then, I couldn't swim. But when my sister heard it on the radio, she said, 'Why not you?'

'She said it as a joke but when I went to bed that night, that line was in my head - 'Why not me?' I just kept on asking that question. I thought if it isn't, that's OK. I'll just give it my best shot. If I don't give it my best shot, I won't know.'

So he learned to swim - and became the first Asian to get a leading part in an Australian TV series, called Butterfly Island. But that was only the beginning of his story. The experience taught him the power of having a positive and open mind.

'I just thought that to live a life without realising the full potential is one of the saddest things to do,' he says. 'For me, the question of why not me is a powerful question. What I realised was, the quality of the questions you ask yourself at a non-conscious level play a critical role. Just that one question led me to believe and pursue my dreams.'

Mr Chiem was so enthusiastic about the TV role that he called the casting director regularly to ask whether a decision had been taken.

'I'd make sure I had a 20-cent coin and as soon as the school bell rang, I'd run to the nearest public phone and call to ask if they had made their decision,' says Mr Chiem. 'They'd say, 'No, not yet, call back on Friday'. And on Friday, I'd ring them up on the dot and they'd say, 'Call back on Monday'.

'So every time they said to call, I called. Frank, the director said that by the time he heard that story, the decision was made - 'You and this other boy are just as good as each other, but if your mind is that strong on wanting to make it happen, it's yours'.'

This notion was to become one of the fundamental elements for MindChamps, a training institute that thrives on teaching students what it calls the 'champion mindset'. Incorporating neuroscience research done by academic and author Allan Snyder of the University of Sydney, MindChamps espouses 'how to learn' rather than 'what to learn'.

The company roped in experienced educators and theatre practitioners to come up with programmes that engage students and help them focus. As Mr Chiem points out, the cinema world has always engaged the non-conscious mind to communicate. One of MindChamps' notions is to leverage on that art to deliver its programmes. 'So content is not the issue,' explains Mr Chiem, who studied acting at the prestigious Theatre Nepean in New South Wales. 'We have to upgrade the software of how to engage students' minds to teach the content, so the content becomes a part of them, not drilled by rote so much that they hate it.

'If kids hate learning, we have a problem, because in the 21st century world you've got to keep learning, un-learning and re-learning. Because what you just learned, in two years' time, may be obsolete.'

Although MindChamps was conceptualised in Australia in 1998, the business was started in Singapore in 2002, as Mr Chiem saw Singapore as a more appropriate launchpad to target the Asian market, which places a high emphasis on education. Since then, its specialist school has expanded to Hong Kong, where a wholly owned subsidiary employs 11 staff. In Malaysia, it has a partnership with an international school in Kuala Lumpur, offering specialist programmes.

The decision to enter the pre-school market was driven by a desire to expand the applications of research findings.

'In our research, we realised that for a lot of gaps in primary and secondary years, the roots can be found in pre school,' says Mr Chiem. 'For example, when a kid is at pre-school, they love to learn, but when they go to primary school sometimes they could end up having a negative relationship with learning. If we can build the love of learning and nurture the positive relationship to learning, children will take that love for learning into primary school, and half the battle is won.'

Although MindChamps has sold 22 franchises for its pre-school, revenue from the sales cannot be booked until a franchisee has signed the tenant lease for a target site. By the end of this year, Mr Chiem expects to have 12 pre-schools, including the first outlet that opened at HDB Hub last year and two that were recently opened by franchisees on the East Coast and at Tampines.

So confident is he about the pre-school sector that Mr Chiem expects that business unit to be listed in about five years. But growth in the pre-school market depends on the availability of qualified teachers. So MindChamps plans to take a stake in a teaching academy to offer diploma and graduate diploma programmes in pre-school and early childhood teaching.

'We could do that ourselves but it might take a year to get all the licences,' says Mr Chiem. 'So we're negotiating an M&A now. If the deal goes through, the academy will come under our brand.'

Although the pre-school market remains buoyant, MindChamp's specialist school has been affected by the economic downturn, with student numbers falling some 20 per cent this year.

Fortunately, the company has been preparing for the launch of two new business units. Early this year, it introduced school workshops for teachers and students, aimed at developing life skills such as leadership and team building, creativity and time management. Another new arm, MindSpace, offers after-school care services, including homework and life coaching.

With so many new businesses, MindChamps will be focusing on the Singapore market this year. 'I think next year is the year when we will take the franchise to the region,' he says, adding that the target markets will be Malaysia, Thailand, Indonesia, Vietnam and China.

But he hesitates to forecast if this year will be a profitable one, in lieu of investments being made. 'As a group, I would say in 2010 it will be a total turnaround because of new units like Hong Kong, the pre-school and new franchisees opening,' he says. 'That will be our very strong year. Now, we have no gearing at all.'

Asked about a recent investment exit by Hong Leong Group, Mr Chiem says the parting is due to the two organisations having very different perspectives on education.

'Like in a marriage, when the vision is not aligned, it's best that both parties move forward, and we are very happy that we came to an amicable decision,' he says.

New KL index makes debut in tepid market

It's back to the 1930s for US economy

Business Times - 04 Jul 2009

Once again, a president has pushed through job-creation policies which aren't aggressive enough

By PAUL KRUGMAN

OK, THURSDAY'S jobs report settles it. We're going to need a bigger stimulus. But does the president know that? Let's do the math. Since the recession began, the US economy has lost 6.5 million jobs - and as that grim employment report confirmed, it's continuing to lose jobs at a rapid pace.

Once you take into account the 100,000 plus new jobs that we need each month just to keep up with a growing population, we're about 8.5 million jobs in the hole.

And the deeper the hole gets, the harder it will be to dig ourselves out. The job figures weren't the only bad news in Thursday's report, which also showed wages stalling and possibly on the verge of outright decline. That's a recipe for a descent into Japanese-style deflation, which is very difficult to reverse. Lost decade, anyone? Wait - there's more bad news: the fiscal crisis of the states.

Unlike the federal government, states are required to run balanced budgets. And faced with a sharp drop in revenue, most states are preparing savage budget cuts, many of them at the expense of the most vulnerable. Aside from directly creating a great deal of misery, these cuts will depress the economy even further.

So what do we have to counter this scary prospect? We have the Obama stimulus plan, which aims to create 3.5 million jobs by late next year. That's much better than nothing, but it's not remotely enough. And there doesn't seem to be much else going on.

Do you remember the administration's plan to sharply reduce the rate of foreclosures, or its plan to get the banks lending again by taking toxic assets off their balance sheets? Neither do I.

All of this is depressingly familiar to anyone who has studied US economic policy in the 1930s. Once again, a Democratic president has pushed through job- creation policies that will mitigate the slump but aren't aggressive enough to produce a full recovery. Once again, much of the stimulus at the federal level is being undone by budget retrenchment at the state and local level.

So have we failed to learn from history, and are we, therefore, doomed to repeat it? Not necessarily - but it's up to the president and his economic team to ensure that things are different this time.

President Barack Obama and his officials need to ramp up their efforts, starting with a plan to make the stimulus bigger.

Just to be clear, I'm well aware of how difficult it will be to get such a plan enacted.

There won't be any cooperation from Republican leaders, who have settled on a strategy of total opposition, unconstrained by facts or logic. Indeed, these leaders responded to the latest job numbers by proclaiming the failure of the Obama economic plan. That's ludicrous, of course. The administration warned from the beginning that it would be several quarters before the plan had any major positive effects.

But that didn't stop the chairman of the Republican Study Committee from issuing a statement demanding: 'Where are the jobs?' It's also not clear whether the administration will get much help from Senate 'centrists', who partially eviscerated the original stimulus plan by demanding cuts in aid to state and local governments - aid that, as we're now seeing, was desperately needed. I'd like to think that some of these centrists are feeling remorse, but if they are, I haven't seen any evidence to that effect.

And as an economist, I'd add that many members of my profession are playing a distinctly unhelpful role.

It has been a rude shock to see so many economists with good reputations recycling old fallacies - like the claim that any rise in government spending automatically displaces an equal amount of private spending, even when there is mass unemployment - and lending their names to grossly exaggerated claims about the evils of short-run budget deficits. (Right now, the risks associated with additional debt are much less than the risks associated with failing to give the economy adequate support.)

Also, as in the 1930s, the opponents of action are peddling scare stories about inflation even as deflation looms.

So getting another round of stimulus will be difficult. But it's essential.

Obama administration economists understand the stakes. Indeed, just a few weeks ago, Christina Romer, the chairwoman of the Council of Economic Advisers, published an article on the 'lessons of 1937' - the year that FDR gave in to the deficit and inflation hawks, with disastrous consequences both for the economy and for his political agenda.

What I don't know is whether the administration has faced up to the inadequacy of what it has done so far.

So here's my message to the president: You need to get both your economic team and your political people working on additional stimulus, now. Because if you don't, you'll soon be facing your own personal 1937. -- NYT

• The writer is a Princeton University professor of economics and international affairs, and last year's winner of the Nobel Prize in economics

Factors expected to drive market returns in 10-15 years

Business Times - 06 Jul 2009

By OH BOON PING

LONG-TERM trends seldom change and, therefore, sustainable structural factors will continue to drive market returns over the longer term, according to fund manager Schroder Investment Management. In particular, the fund house said that the major investment themes that should dominate in the next 10 to 15 years are social demographics, climate change and a capital investment 'super cycle'.

'It helps us to understand what will come into focus a few years later and stay ahead of the market,' said Adam Farstrup from the firm's global equities team.

In terms of social demographics, the global population is forecast to grow from the present six billion to nine billion by 2050 - 86 per cent of whom will live in emerging markets, Mr Farstrup said.

More importantly, China has an ageing population problem due to its one-child policy, while Japan's population could shrink by half in 2100 - meaning the healthcare sector provides interesting opportunities going forward.

In addition, Asian consumers now have the spending power to drive healthcare demand as wealth capital appears to be shifting away from the West to this region.

As for climate change, Schroders sees a concerted effort worldwide to develop fuel-efficient technologies, especially in Asia where economies could be hit hard by changes in weather conditions. Based on estimates, the total cost of climate change may reach some 6.7 per cent of GDP in major South-east Asian countries by the end of this century.

This is set to provide new investment opportunities, and Schroders is positive about the wind power segment, compared with other sources of clean energy, due to its lower cost of power generation. Auto companies and property developers with fuel-efficient technologies should also benefit from the 'green' movement.

Meanwhile, the strong growth seen in newly industrialising countries and the urgent need to replace ageing infrastructure in developed markets will translate into a dramatic increase in capital investments and spending. Coupled with strong population growth and urbanisation, this will benefit players in the utilities, transportation and energy space.

In the spirit of ecstasy

Business Times - 27 Jun 2009

Through world wars and global recession, Rolls-Royce holds its head high as the standard bearer of ultimate luxury. By Ven Sreenivasan

YOU can get there in any car. But you only truly arrive in a Rolls-Royce.' Tom Purves' passion is obvious. The 60 year-old CEO of Roll-Royce Motor Cars is proud to be the number one salesman of the century-old British carmaker which sets the standards for luxury and style in the industry. And justifiably so.

In the 105 years since Sir Henry Rolls created his masterpiece 10hp, two-seater in 1904, Roll-Royce cars have never failed to hold in awe anyone who loves the internal combustion engine. The car whose hood sports the Spirit of Ecstasy - the statue of a woman leaning forwards with her arms outstretched behind and above her - has survived and thrived through two world wars, dozens of recessions, energy crises, and yet continues to see steady demand from the well-heeled of the world.

'Many manufacturers make good cars,' says Mr Purves. 'But there are not many cars that stand for celebration of occasions. There are not so many cars that stand for arriving and departing in style. That's what separates us from the rest.'

Yet, the maker of the world's most acclaimed luxury car is a very different animal now compared to what it used to be.

Today, Rolls-Royce Motor Cars is owned by Germany's BMW group, after previous owners Vickers decided to sell the carmaker in 1998. Following a two year tussle between Volkwagen and BMW for ownership, Roll-Royce ended up in BMW Group's stable, while sister brand, Bentley went to VW. The Rolls-Royce's Corniche ceased production in 2002, with the new Phantom emerging as the first new model following the restructuring.

Though Roll-Royce Motor Cars Ltd is now a BMW Group subsidiary, Mr Purves insists it remains true to its British traditions, with no dilution in exclusivity and its home in Goodwood Estate, West Sussex.

'We have a team of engineers who work both in the UK and in Germany, exclusively dedicated to Rolls-Royce, tough within the BMW world. They have access to the technology of BMW, their physical assets, the wind tunnels and so forth. But they are not working on anything else other than on Rolls-Royce.'

The soon-to-be launched 200EX - which many dub the 'mini-Rolls' - will epitomise the marriage of BMW technology with the Rolls-Royce spirit.

The car - first unveiled at the Geneva Motor Show in March, and now named the Rolls-Royce Ghost - is sized between the traditional Phantom and the BMW 7 series. It is engineered to be more involving and dynamic for owners who want to drive it themselves. It has 80 per cent of its parts unique to itself, and an engine unique to Rolls-Royce.

He sees technology sharing as a natural progression. 'The industry is building more cars than it did 20 years ago, and parts, components and factories are all over the world. I don't know a car, a West European car, which is made in a single country. They bring the parts from France, Germany, Britain and Italy. The aluminium that goes into Rolls-Royce is extruded in Denmark, welded in Germany and finally assembled here in England. From the 1960s onwards, there has always been an American gearbox in a Rolls-Royce. So there have always been components in our cars which are international. Our customers are looking for the best, and they don't strongly have an opinion on where that should come from, so long as the car retains its distinct Englishness.'

Heritage plays a large part of a brand's impression in the mind of the buyer.

'From our very early days, Rolls-Royce has stood as a symbol of success. It is a celebration, if you will. I notice people smile when they get into a Rolls-Royce, as if they are enjoying their success. When you drive a Rolls-Royce, you stop for the pedestrians at a pedestrian crossing, where maybe you wouldn't have done in another car. One of our customers, and he wouldn't mind us mentioning his name, Rowan Atkinson, you know Mr Bean, has a Rolls-Royce Phantom. He is a car fan. When asked about his Phantom, he said: 'The thing I like most about it is I can take it on long journeys. When I drive it, everything about it seems right. It gives me the pleasure to shut the door. It gives me pleasure to start the engine. It gives me pleasure to start the gears and it was a pleasure to proceed. And I feel like after I've driven a whole day long, I can continue to drive some more...'

'In the Phantom, we have the largest tires on any passenger cars, and that was done deliberately. The quietness is critically important. You shouldn't hear the engine. It should be a whoosh, rather than an exhaust noise. It was once described to me by Rolls-Royce engineers being everything needs to be like a ball of silk, everything needs to work. Even the simple electrical switches on the electrical dashboard, they need to feel like jewellery when you turn them. And that is what we believe in. That is what we have done with the Phantom, that is what we're doing with the 200EX car. I think that iconic appearance, together with advanced technology that we have access to, are two tremendously important pillars of our success. If we were to stray from that, we would have substantial difficulty.'

Uncompromising position


But in an age of rapid technological advancements, how long can a Rolls-Royce car still stand apart and distinct from other great brands?

'There are Ferraris, Lamborghinis, Maseratis, Aston Martins which are sports cars that epitomise performance. A top-end BMW is a very exciting driver's car. Rolls customers come from all ages, backgrounds and businesses. But the one thing they have in common is their desire to have the finest, and the means to acquire it. That is a position which is not really challenged. It is a non-sporting and uncompromising position. It's about a desire and appreciation of refinement and luxury.'

So how is a Rolls-Royce different from a top-end BMW?

'The ride quality of a BMW could be somewhat harsher, the noise level will be somewhat higher. The whole feeling of the BMW will be one of 'where is the next corner?'. In a Rolls-Royce, you will have all that I mentioned before but the whole feeling of the car wouldn't be where is the next corner but that another hundred miles is no problem. The car is absolutely effortless. When you arrive in a BMW, you arrive in a BMW. When you arrive in a Rolls-Royce, you've arrived. And our doors are made deliberately, so you can exit the car with great elegance. The doors on a BMW are designed to be efficient, to do the job of a car door, only better than most other cars.

'There are several small things, that are not very important as far a car is concerned, the mascots on the bonnet - Spirit of Ecstasy - automatically rises and lowers. The Rolls-Royce emblem on the wheels stay vertical when the wheels go round. Every Rolls-Royce has umbrellas fitted into the doors. By the way, you can put them back into their containers soaking wet because they are made from special materials that would dry without even becoming mildew. Things like that, that actually make a difference, people remember it, and people relate to it.'

'So I would say, our approach to building the ultimate car is to produce effortless, silent, silky performance. BMW's is to build a high quality performance car for the family.'

That has not stopped Rolls-Royce from incorporating the latest most exciting motoring technology. 'The Rolls-Royce Phantom uses aluminium spaceframe that are welded together, installed by hand,' Mr Purves reveals. 'It is an interesting point: different materials, same painstaking process. The attention to detail in engine assembly is very similar, but the technology of the engine is hugely different, and the materials used are hugely different. The woodwork interior, for example, is very much the same as it was except that in the old days it would have been built up on a wooden back-frame. Today it would be built up an aluminium back-frame for two reasons - its lightness and safety.

'If we took an engineer from the 1920s into our plant today, there are many things he would recognise in today's Rolls-Royce. A lot has changed but not the process and attention to detail. And we still have the best engine technology in the world, with the Phantom 20 per cent more CO2 efficient than its nearest competitor.'

All things considered, Rolls-Royce had a successful 2008. Sales grew 20 per cent from 2007 to its 5th record year for the Phantom, which was launched in 2003. Mr Purves says every market region around the world contributed strongly to sales.

'We were about 6 per cent ahead of last year at the same time in February, and I expect us to be at level last year at the end of the first quarter. But our forward is not as strong as it was, given the economic situation. If I hit last year's sales numbers in 2009, I would consider that success. Last year we made 1,200 cars. With the new car, we should hit 2,000 or 3,000 cars a year, which would be our best'

Still, sales has been flattening out because of cutbacks in conspicious consumption.

'Certainly, circumstances have changed from a year ago,' Mr Purves explains. 'We have had customers who have asked us to sell their cars to somebody else, while maintaining their deposit for a purchase in a year's time, and this we are more than willing to do because we have long term relationships with our customers. It's quite clear that there is a reticence amongst some of our customers to display great opulence. Our cars are somewhat like a wardrobe. Our customers probably have a number of cars. Nobody only owns a Rolls-Royce. They probably also have a Range Rover, a sports car, and a BMW, of course. They'd bring their Rolls-Royce out on special occasions and holidays.'

He likens his salesmen to private bankers, who build long term relationships with customers, rather than just go for a sale. So despite the current slowdown, potential buyers will one day still come back to purchase their car.

'I wouldn't for one moment suggest that this current atmosphere is the best for our business. When we talk about our customers, we are talking about really, really very wealthy people, who even if they may lose one third of their portfolio - as many of them would have - will still remain extremely rich and extremely well-off. And the desire to own this car remains undiminished.'

Then he adds: 'In 1978, when I was in the office in Kuwait, we took the demonstration Silver Shadow out, and I remember stopping out there in the middle of a desert, at a gas station. A little boy came out, looked at the car and pointed at me, and said 'Lolls-Loyce'. At that moment you realise how strong your brand really is. A Rolls-Royce is more precious than rubies in the desert. And it's known everywhere in the world.'

'There are many luxury car makers, and they all have a role to play. But there is only one Rolls-Royce.'

Turnaround artist shares recipe for business success

Business Times - 03 Jul 2009

Boustead CEO draws on his experience as serial entrepreneur

By CHEN HUIFEN

(SINGAPORE) If he had a young child who was a scholar, Boustead Singapore CEO Wong Fong Fui would encourage him or her to join public service or a government linked company (GLC), instead of striking out as an entrepreneur.

'Perhaps, one day, he or she can also be paid as much as $10-20 million per year as salary/bonus without taking any risk,' he told BT in an email interview. 'Why take a chance when you may lose everything (as) an entrepreneur?'

That may sound strange, coming from a serial entrepreneur and a corporate turnaround king. But it hints at the odds that individuals must overcome when they choose the entrepreneur's path.

Mr Wong himself had his fair share of hardships during his entrepreneurial journey. A chemical engineer by training, he started his first company offering engineering services to the oil and gas sectors in the 1970s. With $30,000 pooled between himself and three other partners, he set off for Indonesia, rather than start out in Singapore first 'because there was no market for me'.

'I couldn't afford to stay in a hotel so I rented a room with no aircon and no fan,' he added. 'And every night, I had to negotiate the mosquitoes but that was not a problem since I had plenty of practice as a rubber tapper when I was young.

'The challenge was huge and the door narrow. I knew there was a big market with Pertamina and very little competition. But even then, Pertamina was a huge organisation with over 100,000 staff. I had six months to size up which of those 100,000 staff was the decision maker. This is where EQ is important.'

According to Mr Wong, he made a breakthrough only when he was down to his last few hundred dollars. 'Thereafter, the rest was history and I made my first S$1 million there.'

The man went on to start new firms in trading, property and construction and is also one of the key Singaporean players in the set up of Myanmar Airlines International, subsequently taken over by the state government. He then spent what he calls the 'second half' of his career turning around loss-making listed companies, including Sunshine Allied, QAF, EasyCall and Boustead, thereby earning himself a reputation as the turnaround ace.

At QAF, for instance, he turned its Gardenia business from a $8 million bakery to a $200 million brand with leading market share in Singapore and Malaysia in seven years. More recently, at Boustead, the engineering firm has been posting record revenue and profit, hitting $517 million in revenue in FY2009, from $64 million in 1996 when Mr Wong first joined the firm.

'Although it may sound like I experienced only success, much of what you see was built on failures in some businesses which then gave me the necessary insight and taught me valuable lessons which were applied to my later businesses,' he said.

Among the key ingredients critical for becoming a successful entrepreneur is the possession of a set of skills, said Mr Wong. Because with skills relevant to the business type, one can increase the chances of success, even without money. And if one fails, there's always those skills to fall back on if one chooses to go back to being an employee.

A keynote speaker at next Friday's Bluesky Festival, Mr Wong will be sharing his experiences as an entrepreneur and manager. Although he finds the entrepreneurial spirit in Singapore growing, it is still lagging behind that in Hong Kong and Taiwan.

'If you look at those markets, they differ from Singapore in one key aspect: there are hardly any government-linked companies competing against private sector,' he said. 'This key difference means that for the past few decades, MNCs and GLCs have been tasked with driving the economies in Singapore. The market in Singapore was not as conducive as that of Hong Kong and Taiwan in building entrepreneurial spirit.

'In addition, the most critical factor in the entrepreneurial spirit is risk reward ratio, which is clearly low in comparison with Hong Kong and Taiwan. Who wants to be an entrepreneur if you, as a young and highly qualified graduate, can achieve wealth without taking any risk of your own money by working for the government? The government's policy of paying civil servants well has a negative impact on entrepreneurial spirit.'

He is of the view that Singapore will never be able to reach the same level of entrepreneurial spirit as that of Hong Kong or Taiwan, unless it restructures the reward system for risk takers. 'But then again, is their society better than ours, especially when you take into account the social order and justice, social harmony, etc?' he asked rhetorically.

The BlueSky Festival is an annual event organised by the Action Community for Entrepreneurship (ACE) and supported by SPRING Singapore. It is a platform for entrepreneurs to exchange ideas and share experiences. Mr Wong's speech will focus on building and re-inventing one's business model to tap on growth opportunities. For more information, go to www.blueskyfestival2009.sg.