It can be hard for even the strongest entrepreneurs to succeed in cutthroat Silicon Valley. But throw in simmering civil conflict, an almost non-existent Internet infrastructure, a military junta that is still in the early phases of transitioning to democratic rule, and developers more familiar with ColdFusion than Ruby on Rails, and one might reasonably think that it would be nearly impossible for any company, let alone an Internet startup, to succeed in such an environment.
For Rita Nguyen, though, this is the everyday life of building the first social network in Myanmar. Nguyen is no stranger to the region or its conflict, born in Vietnam during the war and eventually fleeing to Canada with her family after the Republic of Vietnam fell. Nguyen would eventually study at the University of British Columbia, and worked in a variety of marketing roles early in her career including Electronic Arts, where she led the community management team.
While at EA, she was approached by a leading video game executive in Vietnam, who showed her the burgeoning startup scene underway there in 2009. After spending much of her life in Canada, Nguyen decided she wanted to spend more time in the country of her birth. “I decided to spend a year away from my career, knowing that it would not be my career long-term.” She wanted to build her own company, but didn’t know exactly what that would be and decided to go exploring.
Something must have clicked, because Nguyen has been working from Southeast Asia ever since. Vietnam is a “marketer’s dream” according to Nguyen. While Western consumer markets are saturated with messages, markets like Vietnam are much earlier in their development, and thus, a lot of products have never even been seen by the public before. This was even more the case in Myanmar, which Nguyen visited after the suggestion of a friend.
Building An Internet Startup In A Country Without It
Myanmar at first didn’t seem like the kind of place to build Rita Nguyen’s startup dream, but her interactions with locals propelled her to build a business in the country. “There was so little infrastructure, ” she observed, “but there was so much passion and interest in technology, and so much of it was untapped and unfocused.” Back during the military junta, which controlled the country from 1962 to 2011, much of the Internet was blocked, particularly to websites outside of Myanmar. That meant that the only way to access the Internet was using subversive tools to get around the firewalls, creating a generation of hackers that are now key to Myanmar’s startup hopes.
That hacker culture, though, remains quite elite. Total Internet penetration in the country hovers around 1 percent of the population, much of it concentrated in the largest city of Yangon. And while prices for mobile services have declined dramatically, they remain out of reach for most consumers in the country. Today, one of the few popular websites is Facebook, which is used less for communications (since so few friends and family are members), but more to share controversial news and discussion. Many files are still shared via Bluetooth on mobile devices. Yet, the new government has deep optimism that it can increase access levels to greater than three-quarters of the population over the next few years.
Given such a gestating market, finding a product to build was a challenge. A nationwide consumer culture does not exist in Myanmar, so there is a lack of guidelines and best practices on consumer tastes like in the West. Plus, “there were clones of everything, from Eventful to Yelp,” Nguyen notes, making it difficult to find an entry point. In the end, the difficulty of determining what consumers wanted was precisely the sort of problem that could be solved through technology.
Nguyen ended up developing Squar, a social platform that aims to create a community around content while actively collecting data on users and sharing analytical insights with advertisers. “There are 60 million people in the country, and no one knows anything about them,” Nguyen points out. Such a model is of course common in the West, but it broke new ground in Myanmar. She brought in two engineer friends and developed an MVP in May of last year, and a few short weeks later, Squar was in the Google Play store for Android.
Finding Investors And Profit
One gauntlet facing startups in emerging markets is finding the necessary funding to continue operating. Venture capitalists in Silicon Valley often perceive startups even from Portland and Boulder to be exotic, let alone from cities like Yangon or Karachi. This reality tends to encourage a culture of bootstrapping and a focus on profitability at all times, even in more developed innovation markets like Singapore and Korea.
Nguyen’s experience fundraising is typical of other frontier entrepreneurs who perceive a real culture clash between investors attuned to emerging markets, and those who are not. “If you talk to investors who do a lot in frontier markets, they very rarely ask how you are different from Facebook. But when you talk to people from the west, it’s the first question. They often think in terms of comparables, but the market just isn’t ready for it yet.” Nguyen notes that she didn’t have competitors in the marketplace when she started, and that there was no need for differentiation. “It’s actually just an awareness thing” in these early days. Nguyen’s startup remains one of the few venture-backed startups in the country.
Another misperception of frontier markets is that there is little money to be made outside the developed world. While the WhatsApp acquisition last week may change those views, it remains likely that VCs in the West will continue to focus on the American and European markets. Yet, there is incredible profit possible for companies that target emerging consumers properly. Nguyen notes that Starbucks and Korea’s Lotteria brands are now in the country, and are packed even at prices out of reach for most inside the country.
There is of course billions of foreign direct investment flowing into the country, much of it going to utilities and other nation building priorities. There were more than $1.8 billion foreign investment projects approved just during the spring and summer of 2013. But that money is failing to connect into the local startup scene. Nguyen is disappointed with the current state of affairs: “There are all of these kids who are passionate, and there is all of this money coming in, but it is not connecting.”
One bright spot, which might be surprising to those in the United States, is that the telecommunications companies have been in the vanguard in Myanmar, assisting with innovation and partnering with entrepreneurs to produce more apps and content. Most consumers in Myanmar have a pre-paid mobile service plan, which means that telco companies have to constantly encourage their consumers to return to refill their SIM cards.
Longer-Term Development
Of course, it is still early days in the country. Nguyen says that, “no one really knows anyone there since it has been so closed. Everyone is trying to understand what is going on and what the consumer mindset is.”
She also hopes to build a pipeline of female engineers into the startup ecosystem. She says that the pipeline for female engineers is actually higher than that for males, but many women don’t go on to work in technology, but instead end up working in other roles. She is hoping to develop better outlets, and catch students shortly after graduation before they are lost in the labor market.
As with any startup, there are always clouds of risk on the horizon. Myanmar’s government has been supportive of opening the Internet, but as the stories out of Ukraine, Venezuela, and Thailand can attest, events on the ground can change very rapidly. While millions of consumers in Myanmar will gain access to the Internet in the next few years, there is no telling how they may behave or what they might desire. That is the excitement of building on the frontier, though, and people like Rita Nguyen wouldn’t have it any other way.
Images by Rita Nguyen with permission