The morning of the WIT 2017 Conference in Singapore began with a comical yet insightful tête-à-tête between two ambitious investors: Fritz Demopoulos (CEO, Queen’s Road Capital) and William Bao Bean (General Partner, SOSV; Managing Director, Chinaccelerator), on all things to do with China, money and innovation.
One critical question on everyone’s mind was who would emerge victorious in the online travel market: Local or global players?
Bean offered a slightly pessimistic view, remarking, “the big is getting bigger and the small are getting crushed,” and citing the example of how Facebook and Google currently control the majority of global advertising; or how payments and e-commerce are now owned or invested in by Tencent and Alibaba.
He did also add that “travel is insulated,” but nevertheless, its turf will be harder to defend from global players over time. “If they don’t have a shot, they’ll use money as a weapon and acquire” businesses that will let them get ahead.
Demopoulos countered Bean’s point, stating that corporate giants often struggle to specialize in more than one track, and miss many opportunities that often come during periods of high disruption. “Major giants do very well when they’re on a specific track, but in this world, there are multiple… and Jack Ma has shown us you have to be successful [in more than one].”
He evidenced how “giants missed out” on opportunities surrounding the sharing economy, letting companies like Airbnb thrive. The ‘big guys’ also missed out on the local activities space, paving the way for local players like BeMyGuest and Klook to dominate in their respective markets.
So, the big are getting bigger, but “they can be quite myopic”. It grants smaller companies and startups with a slim but existent window of opportunity to sneak ahead. But they must also be aware of common pitfalls, to avoid common mistakes that befall many entrepreneurs.
Bean argued, “the dumbest thing entrepreneurs do” is trust their gut when trying to expand their brand globally from the get go. “You cannot go with your gut, because it will take you in the wrong direction.”
Instead Bean recommended “focusing on data and trying things,” encouraging “companies to use data to back up their decisions.” He continued, “you will fail, but it will help you to fail faster” and recover sooner.
While your gut might lead you in the wrong direction, Demopoulos said caveats could be overcome by build a local team in the market you are expanding to, with the expertise that you don’t have.
“Address your limitations and weaknesses… if you don’t understand the local language, build a local team,” said Demopoulos. “Never rely on one expert. Build two teams, get a variety of knowledge coming in from different directions.”
Demopoulos also recommends studying the art of negotiation when getting in bed with investors of any kind, whether angel or venture capital. “Read Robert Green’s 48 Laws of Power… [it highlights] plenty of issues to do with power dynamics… a successful negotiation is 90% prep.”
