Silicon Valley spends money on people, Asia spends it on marketing


If you’re around Asia’s startup scene long enough, you’ll start to hear the same tunes over and over again: solve a problem, target a big market, develop a regional strategy, and build a great team. But the reality of how people do business in Asia is often nothing like the advice you hear. You can tell by looking at how Asian companies spend their money. I wonder if you’ve seen this too.

While talking to one of our community users at Tech In Asia, who is originally from Silicon Valley, he made the insightful point that Silicon Valley companies will raise a large fund in order to hire “gray hairs.” Google is a clear case of this. Eric Schmidt was hired as adult supervision. The same is true of Apple. Steve Jobs had to convince John Sculley to run his company for him. New examples include Yahoo’s ferocious acquihires, Uber hiring Andrew Chen (among others), Facebook poaching Google employees, and more. It’s no wonder the Valley’s top giants ended up paying over $400 million in a poaching lawsuit.

They know how important it is to have the best people working for you, and they’ll pay a lot. It’s what all the fundraising is for: salaries and stock options. This is not about getting any old person with some experience. It’s about the company’s willingness to pay top dollar for top talent.

Put your money where your marketing is

In Asia, my sense is that the only players we see doing that are the Valley bigwigs like Uber, and the Rocket Internet companies. Rocket Internet companies, specifically, are known to hire McKinsey veterans and train them up to be managing directors and cofounders (granted, they also have massive marketing budgets). Lately, they even hired former Amazon managers to lead the charge. Instead, Asia’s rising stars seem more keen to hire newbies-to-train and dump most of their budgets into marketing.

Go to all the top Asian tech conferences and see how many people have been in the industry for over a decade in the auditoriums and on stage. Check out the next generation of post-series A companies. Their founders are usually the oldest and most experienced people in their teams. Are you guys seeing this too? Or am I missing something?

If this is true, it makes sense. Asian markets are so new that allocating budget to educating the populace on your product is a good use of money. It’s also a symptom of how young the Asian ecosystem is, in general. There aren’t many people worth six figures on the continent. Might as well spend your fresh funds on marketing; it’s a safer bet.

An Asian thing?

But is this really sustainable? The reason why Valley up-and-comers spend so much money on “gray hairs” is because they bring processes, systems, and experience that make world class companies tick. They know what works. That’s why they’re paid so much. If you spend all your dollars on marketing, at the end of the day, all you’ll be left with is an okay business and users you probably don’t understand very well. You end up building a team full of young folks who are building bigger and bigger sandcastles every fundraising round.

Of course, the crux is: Asia’s startup ecosystem is so young that there aren’t that many people who’ve seen the rise and fall of booms and busts. Arguably, Asia is still in its boom period. It’ll be another decade or so before sufficient people of that level are available for employment.

I don’t see any real solution to this problem besides raising large funds to pull in top flight Valley folks to help build your business. You just have to be ready to fork over your hard-earned cash to entice them.

The thing is, it might not be in the DNA of Asian founders to do it. They want to work with other Asians, and the hierarchy of Asian culture makes it hard to bring in someone who “knows better than you.” At the end of the day, Asia has to find its own way. It’s Asian stubbornness at work.

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Founded by two travel and technology professionals with years of experience in Asia, Representasia specialises in sales & marketing representation throughout Southeast Asia for travel/hospitality technology providers and travel-related startups, as well as providing marketing consultancy services for hotels and travel businesses in the region.

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