A glimpse at the Bangkok startup scene

18 Dec 2012

The secret to a good startup is one of those elusive holy grails in the world of technology. Silicon Valley has found the magic combination, as has the regenerated parts of East London. Elsewhere in the world, many governments are still trying to find the magic ingredient.

Bangkok recently saw Rackspace and Chartio hold a small meetup for entrepreneurs in Bangkok and for Rackspace to plug its startup program. Unfortunately, less than a dozen people showed up, but it provided a valuable glimpse into the startup scene here in Southeast Asia.

The Thailand leg of the Asian tour saw most of the startups led by expatriates. Virtually everyone had disaster stories to share about immigration, work permits and Thailand’s board of investment. For each work permit, the company needs to hire four equivalent local staff and foreign shareholding is limited to 49%. That is, unless special dispensation is granted from the board of investment, a process that takes a few months but itself is fraught with subjectivity.

I shared one story with the crowd of a Canadian software company I interviewed a while back that had to keep investing in the Kingdom to renew its BOI status. The problem is, while investment in the knowledge economy is bringing in workers and knowledge transfer, the company had to keep buying new PCs to meet the dollar value needed every year and throwing away the perfectly good old ones to make the pencil-pushers in the various ministries happy. In the end, that particular company’s CEO left Thailand and went into politics in Canada instead.

One chap complained about graft and being conned out of government procurement projects with ever-changing rules to kick his company out and then having that illegal rule revoked without giving him the chance to be reinstated. But he is still here due to a combination of being fed up with freezing Nordic winters, and also lower taxes.

Many complained about the education system. On one level, the system teaches children to memorize by rote and recital, not by understanding. On another, there is a severe lack of marketable skills and manning software development teams was extremely challenging. HR was done by word of mouth and loyalty was almost nonexistent.

Thailand has a major problem in its lack of a proper data protection law and weak intellectual property laws (or rather, draconian laws and virtually non existent enforcement, in my opinion). This, and immigration visa issues, has led countless startups to be incorporated as a foreign company in Singapore but for the actual coding to be done here.

As for cloud? Well, it is happening. The floods last year showed people how it was not just an alternative but a better way of doing business during a disaster. But an SLA is still a rather mystical term. When UIH launched their fiber service going up through Cambodia and Vietnam to Hong Kong, one of the launch customers was Dtac. I remember talking to an engineer on how much of a risk it was to go by an SLA rather than running the fiber themselves, but it was a calculated risk they took to shave off a few milliseconds in getting to California.

It’s happening, but that’s the sad thing. Cloud should have happened by now in the corporate space, past tense. It should be the norm, not a risk.

Elsewhere, one of the entrepreneurs was describing his real-estate rental website. Connectivity does play a big part in that the type of broadband and maximum speeds provided is now high on the list of questions especially for expats who flee cold climates and come to live in Thailand during the winter months.

The issue of data sovereignty came up a few times. The fear of the US Patriot Act was one issue, but more common was the European data protection laws and how working with European data was challenging in that one either had to host the data in a safe harbor country or keep it within the EU which then has its own challenges in terms of latency and QoS.

Two more startups were working on payments (virtual credit cards) and B2C commerce. In a sense, the difficulty of doing business here helped them as it kept out the big players in the field.

Interesting. Now, what would have transpired with a decent crowd of more than a dozen minds, I wonder.

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