Big Pot of gold
Like a tsunami, the dot-com wave crashed into Malaysia, setting imagination aflutter with dreams of Internet millions. The rumblings from the United States where folks were tweaking the Internet to be the most effective business medium ever, was "do it or die."
A steady stream of stories coming out from the world's largest economy talked about teens adopting the Net to start business ventures. The buzz was in the air. Investors sitting on piles of money were perking up, sitting up and taking notice. Heck, they were throwing money at these Net players. People were talking about retiring before 40. Forget your parents' way of earning a living. This dot-com thing is it.
Dot-com mania was everywhere then. You could not get away from it even from the comfort of your own home, with radio stations screaming out somebody's "great" dot-com venture. Huge sign boards sprung up on highways. Government officials not wanting to be left behind, made statements encouraging Malaysians to jump onto the bandwagon (and make the country proud). And just like in the US, local cyberpreneurs started talking about IPOs and big money.
How things have changed, from those heady days in late 1999 and early this year. The Nasdaq correction in the US sent shudders around the globe. The tech index lost close to 35 percent of its value, after investors and venture capitalists pulled the plug. And dot-coms all over the world, Malaysians included, were caught unaware.
"I was literally caught with my pants down," admits 30-year-old Brian Fernandez who had quit his cushy corporate job to start up JustCarsNBikes.com in February.
"Dot-com is almost a dirty word nowadays," he laments during an interview. "The current environment is really tough for guys like me and we are really feeling the brunt of the downturn," Brian continues.
A catch-22 situation
For guys like Brian, the now sluggish mood in Malaysia as far as dot-coms are concerned, is no laughing matter. Money is a serious concern now. "Venture capitalists says they will help but they want to see transactions now ... but how do we do it without some kind of funding to help us go out and do just that?"
VCs are also not loosening their grip on the money bag after losing some serious money during the Nasdaq meltdown in April. But now, Brian is determined to plod along in this unfavorable market. He plans to launch a limited business-to-consumer (B2C) model next month with only enough money to last till the end of October. Treading on thin ice? You bet.
Stick to your strengths ... for now
So are dot-coms a dying breed here in Malaysia? Not so, argues Chok Kwee Bee, executive vice president for the Walden International Investment Group. She thinks Malaysian dot-coms would do well if they concentrate on building up a solid base for business-to-business (B2B) transactions.
"Forget business-to-consumer (B2C) models right now ... can you name me one successful B2C venture in Malaysia? People should heed what the market dictates," Chok adds. She is also of the opinion that locals should not wallow in the hype that is constantly around them. Malaysia with its own conditions and virtues, should capitalize on its own strengths. For instance, many feel that locals stand a better chance to be successful in cyberspace if they abandon pure plays for the moment and go into the business of e-enabling Old World companies.
"Another lucrative area for Malaysia is to set up commodity exchanges for timber, construction materials on the Internet. I believe some of these ventures are also getting off the ground. These are good starts," Chok adds.
It's a money thing
An image problem?
But one troubling fact is that not many venture capitalists are investing in local dot-coms, something people like Brian must be fretting about. Walden for instance, has hardly made any investments in Malaysian cyber players even though the group has injected funds into several Singaporean and Hong Kong dot-coms. It is an open secret among dot-coms and venture capitalists that Malaysia lacks the infrastructure conducive for big financing. In fact, there is more "action" in Singapore than in this country. In the dot-com era, Malaysia is more like the country bumpkin compared to our urbanized VC-savvy little neighbor down south.
Media Shoppe chief executive officer Christopher Chan agrees with this assertion. He says Malaysia has an image problem which could prove to be an hindrance to attracting venture capitalist funds from abroad.
"Forget about ideas and business plans for a minute. When I was in the US two years ago to raise funds, potential VCs were more interested in the politics of the country. I had to spend time defending the country's image, this after the capital controls and other political issues cropped up," he says.
A dash for the border!
No one argues the fact that these issues are strictly within Malaysia's sovereign rights to deal with as she sees fit, but these factors could spook VCs in the long-run. A situation could arise where these money men could avoid even good solid local dot-coms. Money is hard to come by and local dot-coms are looking elsewhere. And the obvious winner this time round is the Singaporeans. Just one glance at the newspapers gives one a fair idea about the extent to which the Internet has entered the consciousness of Singaporeans.
There has been many instances this year alone where many budding Malaysian Internet businesses loudly proclaimed their desire to list in Singapore. It is as if the local tech index, the Malaysian Exchange of Securities Dealing and Automated Quotation (Mesdaq) doesn't exist.
It's the gold rush all over again
Think outside the box!
Chan whose company has Multimedia Super Corridor (MSC) status, specializes in IT solutions. He has also opened an office in the US recently. Business must be good; he is travelling to Australia this month to close a deal with a local business chamber.
"Another reason why I am a little skeptical about Malaysian Internet plays is the fact that there are so little creative thinking here," he says.
"The world does not need another me-too product. Malaysians must realize the gold rush is now, even though it may look like it has slowed down ... everything is an opportunity," Chan stresses. He points out the fact that the Singaporean government has been literally giving away money to dot-com wannabes (housewives, students, you name it) who want to tinker with ideas.
" Singapore is creating something like 200 dot-coms a month. Sure, many of these ventures will fail but that is not the point ... the point is they are taking the bull by the horn and getting tougher in the Internet environment."
Malaysians are once again playing catch up to their brethren down south. But first things first. Venture capitalist Chok says locals must shed their shy nature and reluctance to share their ideas for fear of someone else stealing them.
"Remember, ideas are a dime a dozen ... you still need to execute them to completion and that means you have to network. If you are not outgoing, you cannot succeed in the Internet business environment," she stresses.
By her estimation, there are about 200 start-ups in the country. While this number may look impressive, that is just the figure Singapore churns out EACH month. It is time for Malaysians to get their act together--the government and private sector--and realize speed is everything.
The Internet environment will certainly not be kinder in the future. If Charles Darwin was alive today, he would have instantly recognized his ideas concerning the survival of the fittest in today's Internet business jungle. But that is scant comfort to people like JustCarsNBikes.com's Brian Fernandez who may get swept away in the dot-com tsunami.