It’s Not the Technology That is the Problem, But the Mindset!

By Verghese V Joseph –

Colin Kleine, co-founder and Chief Strategy Officer of Scalerr, a technology consulting firm that serves as a growth catalyst for tech companies, with expertise in scaling and raising capital via international expansion has so far helped at least 250 startups scale their businesses.

With over 30 years of recruitment experience, Scalerr has worked with some of the biggest players in the industry as well as some of the most exciting start-up and scale up businesses. These companies include Deel, Forter, Foundr and many more. Scalerr has been working closely with SG Tech as well as Enterprise Singapore to help SME’s expand their business abroad.

In an interview with AsiaBizToday, Colin shares his thoughts on changing web landscape, talent crunch and use of automation in industries. Excerpts

Q: To begin with, your assessment of the year 2023 – hits and misses for the high-growth technology startups and scaleups.

A: The tech sector in Southeast Asia has experienced significant growth, which has resulted in high demand for tech talent throughout the region. Interestingly, even as other economies show signs of deceleration, tech jobs in Southeast Asia appear to be relatively stable, and startups maintain a positive outlook.

Digital innovation, favorable economic policies and a dynamic consumer market have contributed to ASEAN’s ability to maintain stability and growth during the less favourable global economic environment. The adoption of generative AI in Southeast Asia’s tech sector is hence likely to play an even more significant role in shaping the region’s technological landscape and fostering innovation across various industries.

In recent months, the IPO market has received a significant boost, thanks to prominent listings by Instacart and Klaviyo.  This surge in activity has resulted in higher proceeds compared to the previous year.  In the last six months, the number of IPOs in Southeast Asia rose 16% while IPO proceeds increased 5%, according to Deloitte data.  Furthermore, innovative tech companies such as Aspire and Deel achieving or being close to reaching profitability is a good indicator of the sector’s resilience amidst the current global economic headwinds.

However, 2023 has not been without challenges. Geopolitical turmoil in regions like Ukraine and Israel has impacted technological innovation by affecting resource allocation, human capital, supply chains, and research collaborations. Moreover, some companies are prioritizing software development or launching entirely new business ventures over other critical aspects such as GTM strategies and customer success that are crucial for sustained business growth and profitability. Neglecting these aspects can undermine the overall health of the business.

Lastly, with the decline in global venture capital, many technology companies that were seeking to raise capital need to be open to pivot in their capital raising strategy in order to secure funding from their investors.

Q: Southeast Asian tech startups have been experiencing major growth in the past couple of years, but with success always comes challenges such as incomplete infrastructure, web landscape challenges (data privacy, security, payment systems, etc), how do firms like yours help startups cope with these?

A: Every country is different, and they all have their own unique requirements that startups need to consider when expanding internationally. There is never one size that fits all, and it is imperative that startups conduct in-depth analysis to decide on the best GTM strategy that would set them up for success. This has to be done for every single market that a startup plans to expand into.

At Scalerr, our aim is to make global expansion as smooth a process as possible, working closely with our clients at each step of the process. Building on our years of experience, we have developed a database of recommended vendors and companies, who can assist these startups to ensure that they have all bases covered, whether it be data privacy, security, or payment systems. Leveraging our deep relationships with our expansion partners, we tailor bespoke solutions for each startup looking to expand, matching them with the right partners to assist on matters like company incorporation, finance logistics, and suggested channel partners.

Q: In 2023, the war for talent has intensified with the continued shortage of qualified employees and with the increased number of people working from home, and many finding a better work/life balance, we are seeing a great resignation and quiet quitting movements. Your take on the lack of lack of tech talent?

A: Contrary to the common observation of a lack of tech talent, what I see is actually
a lack of knowledge on the part of companies in how to attract the best talent, and from where. There is also limited understanding of how to adapt to different working environments.

Some degree of flexible work conditions has now become the norm. You can fight it and miss out on staff or accept it as a part of life.

Furthermore, startups in places such as Singapore and Australia make the mistake of thinking they need to hire people from within the market; in an environment of remote work and Employer of Record providers, companies can cast their net beyond smaller and highly priced markets, and instead look to regions that have abundant tech talent, such as Indonesia, Vietnam, and South Korea. 

Q:  What sectors or industries are poised for growth in 2024 that investors should keep an eye on?

A: Some sectors and industries that are poised for growth in the region are:

  • Cybersecurity: The worldwide cybersecurity market is poised for significant growth, driven by the incorporation of cutting-edge technologies, including IoT, machine learning, and cloud-based systems.
  • AI: AI is absolutely booming and being embedded into everything from marketing, healthcare, and autonomous cars. The artificial intelligence (AI) industry is on a trajectory for substantial growth in the coming years with many businesses and industries embracing AI to improve efficiency, automate tasks, and gain competitive advantages. AI is being embedded into everything from marketing, healthcare, and autonomous cars.
  • Blockchain: With a significant number of students leaving universities skilled in coding on the blockchain, there will be a larger and more skilled workforce available to work on blockchain projects. This is likely to lead to advancements, new applications, and a broader adoption of blockchain technology across various sectors, making it an exciting and dynamic field for the foreseeable future.
  •  eGaming and eSports: In 2023, while Asia remained the center of growth for the global esports market, the esports fandom is expected to grow globally.  The revenues are expected to reach $1.5 billion by 2024.
  • Clean Energy Technologies: The global transition to net-zero will demand a massive increase in clean energy. Immediate policy and industry action are key to progress the energy transition at the speed and scale required to meet net-zero targets by 2050.
  • Augmented Reality/Virtual Reality:  The AR/VR sector is showing a promise of growth in various sectors.  The demand for augmented and virtual reality in healthcare is increasing due to its precision, high accuracy and reduced recovery time. In the gaming industry, the demand for AR-enhanced mobile games and VR gaming experiences is gaining significant traction as well. The increased demand for video conferencing and remote collaboration tools, partly driven by the COVID-19 pandemic, had also sparked interest in AR and VR technologies for a range of applications.

Q:  What fintech solutions / fintech verticals are most investors attracted to? What other verticals in the fintech space will likely see growth in 2024?

A: Investors have shifted their focus from assessing future business valuations to a profit and loss (PNL) model when considering which fintech companies to support. This change in approach comes in response to the increased cost of capital and heightened market volatility. In terms of verticals, the most likely to attract investors are fintechs utilising the following:

  • AI & Automation: There are banks all over the globe using legacy, slow and outdated systems and processes. We can expect to see a continued rise of solutions that assess credit risk, remove slow manual processes etc. Companies that use artificial intelligence or automation technologies to automate tedious banking, financial services and insurance processes is likely to attract investors
  • Financial Inclusion: Financial inclusion aims to provide underserved and unbanked populations with access to essential financial services, such as banking, credit, and insurance. A significant proportion of unbanked and underbanked individuals reside in emerging markets such as Indonesia. These regions offer substantial growth opportunities for investors as they represent large untapped customer bases.
  • Embedded Finance: As embedded finance simplifies financial transactions by allowing users to access and manage financial products and services within the applications they already use daily, we can expect to see more banks, insurers, fintechs and the likes integrating financial services directly into their digital platforms.

Q: Ways in which startups can unlock their full potential and drive growth and innovation?

A: Unlocking the full potential of startups and driving growth and innovation requires a combination of strategic planning and effective execution. Some key steps that the startups can implement are as follows:

  • Hire the right advisors: work with people that have battle-hardened scaling experience (whether on their board or for general advisory) who know how to scale a startup in a lean and agile way
  • Hire the right commercial teams. Don’t overspend on key commercial hires and instead focus on hiring folks that have helped other (and related) startups scale.
  • Hire people who are young and hungry, that are looking for the next step up in their career; but ensure that every single person you hire has solid tenure, and a track record of achievement at a fellow tech startup.

Q: How can startups optimize their processes and harness technology to attract, vet and hire the right talent?

A: Often, it’s not the technology that is the problem, but the mindset.  Rather than seeking to hire people who can come in and functionally do a job, a business should seek to hire people that have proven “been there and done that experience” from a fellow startup. For instance, if you currently lead a fintech company with 50 employees and aspire to expand your team to 200, consider recruiting individuals from a startup that has successfully transitioned from 50 to 200 employees. These individuals possess the invaluable expertise needed to execute a proven growth strategy.

As my mentor taught me, every single problem can be solved for a startup by bringing in people with expertise in overcoming that problem. If you keep adding staff who have proven startup and playbook experience and can continually bring your business to the next level, then you would not have to tell them what to do, as they would be able to come in and tell you and your co-founders what to do instead. If you keep adding people who level up your company, you will become a unicorn. Conversely, if you keep hiring people who add no strategic value or insight just so you could fill the role, then you will remain an average business.

Q: Challenges and opportunities for technology startups in the coming year.

A: A key challenge for tech startups in the coming year is having to adapt to the current fundraising environment. Tech companies whose offerings are B2C or B2B2C can expect a downturn in sales due to a fall in consumer spending.

In the present fundraising environment, market volatility and economic uncertainty can make it challenging for technology startups to secure investments. With investors becoming more cautious, the availability of capital for startups might be impacted as well. To navigate this challenging landscape, technology startups must adapt their fundraising strategies. Tech companies operating in business-to-consumer (B2C) and business-to-business-to-consumer (B2B2C) markets can expect a downturn in sales due to changing consumer priorities and reduced spending on non-essential products or services. Tech companies should be prepared to adapt to these fluctuations by diversifying their product offerings or marketing strategies.

With that being said, there remain ample opportunities for tech startups. Tech startups can thrive in 2024 by aligning with investor expectations, leveraging the opportunities presented by a global downturn, and addressing critical global challenges. Circumstances like these can create fertile ground for innovation and growth and startups that demonstrate resilience and adaptability emerging as the winners in a downturn market.