Block 71

Small World Group Incubator started in January 2010 as one of the initial group of 7 NRF TIS group.  It has been an interesting journey over the last 4 years.

To date we have started 15 companies, closed 5, sold 1 and have 4 of the companies nearing $1M per year in sales.  All that is pretty normal for the statistics of a seed level VC here in SE Asia.

Initially we worked out of offices provided to us by Nanyang Technological University at the NTU Ventures buildings.

But in November, 2011 we moved to “Block 71” which was an older building slated to be torn down so that newer and shinier buildings could be put up.  Building is the national sport of Singapore.  Block 71 was rescued from destruction by some folks at the National University of Singapore and made the home for startups.  In all fairness Block 71 is a partnership between the Media Development Authority of Singapore, NUS and others.

Small World Group Incubator took 4000 sq ft of space kept it relatively open except for some conference rooms and began adding companies to the space.  Today it looks more like a USA garage than a Singapore start up space.  It has 3D printers, CNC laser cutters and machining centers, soldering station, electronic measurement equipment, fixed wing and hex-copter drones, LED lighting, embedded energy monitoring and much more.

And wouldn’t you know it, but now Block 71 has an article about it in the Economist.  You can find it here.

Overall the article is a pretty good tale about how this single building became such a successful nucleation site for startups and it shows how when you create sufficiently distilled interactions things can transform pretty fast.

Write me with questions at flevinson@smallworldgroup.com

 

Posted in Essays, Investing, Singapore Incubator

Thoughts on Water and Startups

This past week I gave a talk on  water to a group attending TechVenture 2013 in Singapore.

This is a conference centered on startups in Singapore and SE Asia.  Perhaps about 1000 people were in general attendance, but my talk drew about 50 people.

Here is the presentation I gave.

Generally, the problem with innovation in the area of water technology is that the basic inventions can be made and that is where papers get published, ideas can create buzz.  But water is so basic, so important and so prone to being difficult over time and under different circumstances that  companies mistake innovation for the nitty-gritty nuts and bolts of making a solid long lived product.

Finisar makes fiber optic transceivers and these sell today for well below $20 even at 10 Gb/s.  But what makes these parts so remarkable is that when the end customer gets them they are plugged in, and run 7/24 for up to 20+ years and it is quite likely that every single bit they transmit is received error free for the life time of the product.  They are inexpensive, reliable, accurate and all beyond any normal standards we see in ordinary life.

And it has to be the same for water.  1B, yes one billion, people are without clean drinking water on a daily basis.  And no shiny idea from a small company installed in a village will likely stand the test of time working under mishandling, bad weather, changes in water input quality, etc. that is required to deliver trusted water for drinking to the village year after year.

If you think you know how to do this at the same level Finisar delivers transceivers, then give us a shout here at Small World Group.

Yeah.

 

Posted in Essays, Green Perspectives, Singapore Incubator, StartUp Ideas

Welcome to the NEW Small World Group Website

OK, now you see us differently we hope.

We are the same people generally we were for the last 5 years but we have more experience.

Over the last 5 years we have helped start more than 15 companies.  They are all generally in the areas of clean tech, optical systems and novel materials.  Nearly all of these companies have been able to complete their MVP or minimum viable product and they have sold the product to a few early customers.  Some have gone on to make 2nd or 3rd generation products that are better and where improvements are based on customer feedback.  Some have engaged in licensing deals or raised more money from new investors.

What is key?  What is different?

We feel that our model of strong engagement with our companies, where we help them with technical, financial, sales, market decisions and not just listen and give advice at periodic board meetings is working.

We have closed some companies but in nearly every case the companies reached the MVP and revenue milestones but the revenue did not scale or grow as their plans thought it should.  In these cases we could not justify additional funding to chase what was a failed plan.

This is what venture capital is about … testing technically based, scalable ideas.  And accepting the decision of the market and customers.

We hope you will find this new site more open, empowering for you to share your ideas for businesses with us.

Maybe we can make magic together.

Posted in Essays, Investing, Singapore Incubator, StartUp Ideas

Singapore Update

A new Blog was launched this week by an early partner in Small World Group’s efforts in Singapore.  It’s author is Chris Vargas and he has moved his entire family to Helsinki, Finland to engage with the start up scene there for a year.  You can read his first post here.

In the post, he argues that Silicon Valley is less a “place” and more a state of mind.  I resonate with that.  See what  you think.  Welcome Chris!

After reading Chris’ first post, I was motivated to generate one of my own.  So today’s post is a summary of where we have come in the 3 years since I returned to Singapore and began working to start an Incubator here.

First a simple summary –

  • we have started 12 companies in Singapore plus 1 in the USA
  • we closed 2 of the companies (or are in the process of closing, more on that in a bit)
  • we raised more money for 3 of the companies in follow on fundings; all were increased valuations
  • 8 of the companies have strong clean tech focus
  • 1 company has a unique sports gadget
  • 3 companies have internet/web roots
  • 1 company brings a unique value proposition to emerging markets for computing and connectivity

Of the remaining 11 companies, 2 are currently seeking funding and have reasonable prospects.

One of the surprising results has been how long some of the companies have been able to stretch the money we invested.  Each of the companies knows that they must finish their initial product, sell it to some early customers and have those initial sales transact at reasonable gross margins for their industries.  We see that now happening for most of the remaining companies.

Our key investment thesis was that we wanted our “saplings” to be frugal with the money, learn how to be a full company with sales and customers and not think like a development group.  We funded our first company 24 months ago in October 2010 and now we see this transformation happening in each of the groups.  Hurray!

In Singapore, so many plans we saw initial had voluminous discussions about “markets” and how the new company would meet market needs.  We have worked consistently to tell them not to focus on markets … little companies have to focus on customers.  And now this is working.  HP and Apple can address markets, little startups must focus on initial customers.

We also have worked to create a “culture” in the Incubator.  Our culture is customer centric technology and business development.  My partner in Finisar, Jerry Rawls, was fond of saying that culture eats strategy for breakfast (lunch) (Peter Drucker is the root origin for this, I think).  And by this he meant, that Finisar’s culture – again one of fanatical customer satisfaction – would always trump us being clever, smarter, first to market.  And it is this same approach which we now work daily to maintain at the incubator.

And it is working!

This week on Wednesday, Sept 26, we will hold our 3rd open house where each of our companies present and tell their evolving stories to potential investors.  Most don’t need money so this session is about investors getting to know them BEFORE they engage.  They can hear plans, talk about customers and sales and then watch the companies for another 4-8 months before any money transacts.  It is a different model that has its origin in our culture.  We sell results not futures, teams and their accomplishments, not so much patents and promise.

 

Posted in Essays, Green Perspectives, Investing, Singapore Incubator, StartUp Ideas

10 Year Perspectives … And A Future Prediction

When Finisar went public in November 1999 our IPO was one of the hottest of all time.  We opened at $19/share but traded upwards above $100/share very quickly in the first few days.  It was a heady ride up for a while and a frightening ride down when the bubble burst in 2001.

During the .com bubble people spoke of the 4 horsemen of the Internet.  Here is the list as I recall it –

  • Cisco – the routing and networking leader who stock had doubled nearly every year for the previous 10 years and who had beat the street estimate for their quarterly earnings by $0.01 for 40 straight quarters
  • Sun MicroSystrems – the server and unix leader whose engines served up the web pages we were so eager to consume
  • EMC – the storage champion whose Symmetrix(TM) storage units held the evolving content
  • Yahoo  – the leading portal and search engine of that time
Each of these were undisputed leaders of that time and in people’s thinking there were so strong that being replaced did not seem possible.
If you ask that same question today – Who are the high tech/web leaders, the surprise is that all of these have been replaced.  In some cases because they have failed to live up to their legacy and in some cases because their importance has simply diminished or their products have become commoditized.
Here is today’s list –
  • Apple – the leader in mobile platforms, content distribution and the “gold standard” for computing
  • Google – the leader in search, web ad based revenue, and so much more including their own mobile platforms
  • Amazon – the leader in eCommerce and in cloud services via AWS
  • Facebook – the leader in social networking
Each of these companies is larger than the previous 4 in so many dimensions.  Facebook has nearly 1 billion users!  Google has deep knowledge of so much of the web and its total user base.  Amazon delivers nearly every product from diapers to eBooks to lawn equipment.  Their product base is larger and the number of customers may make them the largest retailer in the world by some metrics.  And then there is Apple, the largest market cap company in the world AND it was proclaimed dead and not attractive as even a dirt cheap acquisition just a bit before 2000.  Such changes.
Let me add one more data point.  What did this list look like in 1988-1990?  Then the list was –
  • DEC (Digital Equipment Corp) for the compute/server leader
  • AOL/CompuServe for the portal
  • Seagate or IBM for storage
  • ATT/Lucent for networking gear
Here is a table that summarizes this.
Best Tech Companies Over Time - Click to Enlarge

Best Tech Companies Over Time – Click to Enlarge

There are several things that are remarkable about this table.
First all of these companies are from the USA.  I have been asked whether I  expect any Chinese companies to be on the list for 2024.  The straightforward answer is I am not sure.  The demographics and “Asian Century” tsunamis would seem to make the answer yes.  But the corruption and Asian ways work against it because creative destruction is not practiced there.  It is just that creative destruction that we permit our very best companies to not exist in 10 years in the USA that makes the new comers to this list possible.  Even ones that go from failure to largest market cap company in the world in that time frame!  For example, in Singapore, Singtel is still the largest networking company and it was so in 2000 and in 1988 as well and the largest engineering company in Singapore is Singapore Technologies.  Creative destruction is not practiced very well in Asian cultures.  Evolution is more common.
Next, every 12 years or so the list entirely changes.  But the words “creative destruction” are not broad enough to describe what really happens.  Entire fields are redefined.  Storage at the hard disk level was important in 1988 and so Seagate was dominate, storage as a platform was important in 2000 so EMC led, but by 2012 cloud computing and virtualization has rendered storage a commodity and something that you pick up and drop as needed as a part of the cloud so Amazon dominates.  Base technology and the system architecture both change and that is best done in a very free and open platform like the USA provides.
Finally we come to the question that should have an obvious answer by now.
Who is on the list in 2024?
Simple.  None of those on the list today!!!
I can already see some of you rubbing your eyes in disbelief.
But you must think it so … the real question is who should we be betting on today that is small or down and out but who sees the future more clearly than these giants today?

Posted in Essays, Investing, Singapore Incubator, StartUp Ideas

More Less Abundance

OK, every once in a while you get a TIRADE from this website.  But hopefully it is one that teaches you not to believe everything you read on the web or in books.

Today, we take to task the book “Abundance” which was discussed in the previous column.

Here are the claims –

“… imaging toilets that require no infrastructure.  No pipes under the floor, no leach field under the lawn, no sewage system … these high tech toilets powder and burn the feces and flash evaporate the urine … Rather than wasting anything, these toilets give back: packets of urea (for fertilizer), table salt, volumes of fresh water, and enough power that you can charge your cell phone while taking a c**p …

Toilets account for 31% of all water use in America …”

And here are the facts from a US Geological Services report –

USA Water Use - Click to Enlarge

USA Water Use – Click to Enlarge

Different, right?

The fact is that the major uses of water are for power generation cooling and irrigation.  These comprise 80%.  So it is unlikely that “toilets account for “31% of all water use in America”.  Moreover, domestic water use accounts for 1% of the water use and it is quite likely that toilets account for 31% of that use so in actuality toilets account for 0.31% of all water use in America.  Wow!  A 100x mistake!

Moreover if you were really going to make a difference, where would you put your efforts in have more fresh water in circulation?  Clearly into better forms of irrigation and thermoelectric power generation.

And there are efforts well underway for both.  Israel has been developing drip irrigation and its improvements for many years.  Power plants with out using fresh water for cooling is now part of most generating plant proposals in California; there policy change is diving technology innovation.

It has a biblical ring to it … but by knowing the truth, you can set your self free to work on solutions for the real problems in the world.

Got a fact that seems wrong?  Send us your questions and we will fact check!

Posted in Essays, Green Perspectives, Investing, Singapore Incubator, StartUp Ideas

Closing 1

Small World Group Incubator has been operating now for 26 months in Singapore.  We have started 9 companies and a 10th will launch in March.

And we have had 3 companies have up rounds beyond the money we initially gave them for starting capital, these 3 are – HeyPal, Green Koncepts and Third Wave Power.

And for all of this time we had no failures but it had to happen eventually.  And so it has.

What is most interesting is that the company closed not for failure of the technology, nor of market interest.  The company failed because the founding team broke apart and under that condition we could not find a way to continue.

If any of you reading this have any conception that venture capital is about technology, engineering, business model testing, innovation, customers.  It is about all of those.  But beyond all of these it is a “people” business.  And sometimes we just cannot figure that out even if we spend months getting to know a team.

So now our overall batting average looks more realistic!

Posted in Essays, Investing, Personal Stories, Singapore Incubator, Spiritual Threads

Year End Prognostications – Apple

It has become fan-boy heaven to predict and have “insider” information to know better where Apple is going.  The easy part is to predict newer processors A4 – A5 – (what do you think comes next) or since we know Intel’s roadmap for the next 2+ years that also helps.

But what about the real innovation you will see in the product line.  Well I am going to lay down some suggestions and you can come back to me in 1-2 years and see how it went –

  • first the laptops will become more like MacBook Airs as they drop the CD/DVD drives forever.  And there will certainly be some sort of MacBook Air/iPad hybrid that runs OSX in one config and iOS in another config but uses a single file system.
  • In the hardware front, what would make these systems so much nicer is to always have some large SSD or solid state disk drive.  But why only that, why not a mix of Flash and rotating storage.  One that is blazing fast and one that is both huge and lasts for very long time.  And make the file system so that the users don’t see it as 2 drives.
  • For that matter, why not make all 3 drives in such systems or the 2 drives that most systems have today?  2 drives you say?  yes, the cloud is drive #2 and it will grow … yes it is slow but so what, it is only used for small content storage from computer to cloud.  Users just don’t create that much content.
  • Next, it would be so nice for there to be an iPad that was really structured for older people.  Simple, never any issue about peripherals, back ups, syncing, updating and other things.  Optionless computing for those of the pre-computer generation and others who really only want web browsing and such.  Problem now is iPad is still a techy toy.
  • iPad may be marginalized compared to the other 2 platforms.  iPhone is clearly for talk +++, but not for content creation.  Mac is for content creation and when needed lugging around.  iPad is for ??? or reading.
  • iPhone moves to become your wallet and not a moment too soon.  The wallet is the last thing that I still have in my pocket (except for chapstick).  But in doing this I think it has to include more than NFC and what this will be is biometric level security.  What we lack today is a device that consistently authenticates that I am me … period.  Imagine if the iPhone had finger print recognition and maybe even layered on top of that is retina scanning by the internal camera.  Unless coercion was involved this would be a very much safer version of the wallet.  Passports next anyone?  iPhone could even unlock your computer, car, house, etc.

As an aside, the book “Daemon” is a must read for people who think computer security is just about virus, spam and phishing.  It is so much more and there are unreported attacks now that are deeply disturbing but are being kept from the news carefully by corporations who have been deeply hacked.

  • The other threads out there are about Apple moving into other forms of consumer electronics – TVs, gaming?, etc.  But in a sense they are already there.  Gaming?  I bet it is the major use for iPads today in terms of use time.  TV?  Sure if you want to pay too much for something that is already pretty well done.
  • Finally, iCloud will be so deeply embedded into the Apple community in 2-3 years but so transparent that you will wonder what you did before.  Like today how 3.5″ floppy drives feel compared to Flash thumb drives.

Glad there is not a time machine so that my mistakes cannot be written about tomorrow.  Ha!

So there are my predictions.

Posted in Essays, Singapore Incubator, StartUp Ideas

Milestone Reached!

On Friday, December 9, 2011, Small World Group Incubator received approval in principle for our 10th company.  Fortuitously, we had already schedule a party at our new HQ for the companies,  our staff and partners and for our friends we have made since coming here more than 2 years ago.  So probably about 100 people showed up over the 3-4 hours of the party.

We handed out “party favors” and here is a photo of the new SWG Coffee mugs!

SWG Coffee Mug Mugged by Me ... Click to Enlarge

SWG Coffee Mug Mugged by Me … Click to Enlarge

The office space can support more than 50 people and up to 10 companies (not all of the companies chose to locate in the space with us but most do) and we have sufficient conference rooms, a coffee machine, fridge and other amenities.

While we are obviously proud of the progress, we are also very glad to say that 3 of our starts are closing second round funding as this is being written and all should be closed by end of January.  But we note that all of the term sheets are approved and so the deals now await funding or paperwork but have agreements in principle.

What a great way to end the year!  Merry Christmas and Happy New Years to all of you out there.

Posted in Singapore Incubator

A Growing Program in Singapore

It has been 2 years since we start the Small World Group Incubator.  Much has evolved and much has stayed the same too.

We started with Dean Haritos and I as partners in this endeavor and both of us are still here.  But we have added Chong Chiet Ping and Kent Pavey as well as a junior member of our team Ken Lee.  The group works very well together and each of these people are integral to our success today.

We have funded nearly 10 companies and our pipeline remains strong and actually is strengthening in terms of interesting opportunities.  We have funded some companies outside of Singapore – notably Spinlectrix.

Our funding partner, the Singapore National Research Foundation (NRF) has remained steady and together we continue to evolve this program to enhance its success.  For example NRF is seeking to expand the program to include new incubator managers along with the existing pool.  Some of the originally selected groups have become less active but the program, I believe, is being quite successful.

Some challenges have begun to emerge from the program as follow on investing is now beginning to loom for the earliest funded companies.

So what we have is a precocious 2-year-old, one who is growing but also teething and transition from walking and crawling to running.

Stay tuned.

Posted in Essays, Green Perspectives, Investing, Personal Stories, Singapore Incubator