Lessons From Singapore

From the time I first visited Singapore a few years ago, I’ve been in love with the place. Everything about it has seemed so perfect to me, from the buildings and infrastructure to government policies and education. It’s a city that just works, and you’ll never run out of things to do there. Its citizens are hugely patriotic, and it continues to attract top talent from around the world.

I’ve also been astounded by Singapore’s growth. Less than thirty years ago, New Zealand provided aid to Singapore. Now, its GDP is over two and a half times that of New Zealand, and is growing at a much faster rate.

Recently, I’ve been trying to find out how Singapore achieved this growth and turned itself around, in the words of Lee Kuan Yew, “from third world to first”. It went from a nothing-country, with no natural resources and screwed-up politics, to an international powerhouse in a few decades. How many other countries can claim the same feat? And what aspects of Singapore’s growth could be replicated by other countries, like New Zealand?

There are huge numbers of factors that contributed to Singapore’s growth. But through reading Lee Kuan Yew’s memoirs (the leader of the PAP, the leading political party that turned Singapore around) I’ve found a few key things that the growth can be attributed to. Indeed, Lee Kuan Yew himself gives them huge importance, and says that they helped to turn Singapore around.

Read these points, and consider them on their own, regardless of your pre-held views about Singapore. Whatever you think of Singaporean politics, we can all learn from and discuss these policies.

Here in New Zealand, and in most western countries, it is largely looked down upon to live in government housing. Government flats (“council houses”) are rented to people who need them, and are in most cases very run down and not in pleasant areas of cities. But it’s precisely because they are rented that they end up being run down.

In Singapore, the government builds and sells most of the apartments. It doesn’t rent them. People are allowed to purchase the apartments under certain conditions, for example by being a recently married working couple. They purchase the apartments at low cost from the government and are entitled to the capital gains from the property.

Lee Kuan Yew says that because they let people own their property, people have a vested interest in making Singapore a better place. The value of their property is tied to Singapore’s success, and therefore they want to improve Singapore. Also, they take pride in their house and wouldn’t dream of damaging it. It is because people own their houses that people care so much about Singapore, and work harder than they would otherwise.

Why don’t we pursue similar policies on a large scale?

In Singapore, politicians are regularly paid over SG$1million per year (the Singapore and NZ dollar are about 1=1). In New Zealand, and most countries around the world, we’ll scoff at this and call it ludicrous. “There are people working for $12.50 an hour and they’re earning over a million!?”. But in New Zealand, we will never have as many talented people willing to run our country with what we pay them. Many people are not altruistic, and are not willing to take huge pay cuts to work for the government.

Singapore takes the view that to get the best people leading the country, you need to pay them what they’re worth in the private sector. As a result, they’ve had incredibly competent leadership, and have seen huge success.

Think about it. Before you go up-in-arms against high pay, think about whether having the best leaders available to us is something that you want.

Singapore’s healthcare system is among best in the world. Unlike New Zealand, they don’t call it “free healthcare”. But let’s face it – healthcare isn’t free in New Zealand. You pay for it every day of your life, in higher taxes.

Instead, every worker has a compulsory health savings account that they contribute to each day they work. If they fall ill, they pay their medical bill out of this savings account, which adds up over the years. The savings account is transferable amongst family, so you can use money from the account to pay for anyone in your family’s health bills.

“But what if you run out of money in the account!?”. Then the government steps in and pays the rest for what you need. You’re not left without help when you need it, but the government doesn’t pretend that you’re getting something for free.

Because the health system runs privately, it has healthy competition, and they are forced to continue to keep the highest standards in the world and use the newest medical equipment. In this way, you could say it’s a better health system and cheaper than in New Zealand. Because it’s more efficient, people get access to it at a lower cost.

Lee Kuan Yew made it one of his first priorities in office to reduce the power of the labour unions in Singapore so that Singapore could become a true meritocracy. He found that people couldn’t hire and fire at will in too many industries, so there was mass complacency and people were very inefficient at their jobs. By reducing the power of the unions, Singapore became based on merit – and this has allowed the competitive, high-achieving, productive society that Singapore is today.

It also allowed Singaporeans to travel to top companies and universities around the world, and allowed foreigners to work and study in Singapore. No one expected anything, but knew they had to work for it – and therefore everyone worked to their full potential.

This also helped to create a strong financial centre, which is the core of Singapore’s growth (although a reduction in taxes, especially capital gains, also helped to achieve this).

Ignore your prejudices for a moment and just think about if any of this could be applied to New Zealand, or whatever country you’re from. My aim is to get a debate going. If the consensus comes out as a “no”, that none of this could realistically work in New Zealand to create growth and prosperity, then so be it. But if some of these could help to improve New Zealand, then let’s get thinking about it and doing something.

These points have come from Lee Yuan Kew’s book From Third World To First. He’s also written other memoirs, titled The Singapore Story. He is someone whom I admire hugely. It is not often that someone can say that they led a modern powerhouse from nowhere to a position of such power and wealth in a matter of decades.

Don’t just change the world. Improve it as much as you possibly can.

A month ago I wrote a post titled “Don’t change the world. Improve it.” I talked about my frustration with the huge amount of talk about “changing the world”, and how I believe this focus on change rather than “improving the world” leads many people to feel satisfied and successful with mere change, rather than large improvement.

I now realize that what annoys me even more are the people who try to improve the world, but don’t improve it as much as they could have.

There are a huge amount of smart people on this planet. From engineers at Facebook to biologists discovering new forms of life, there are people who have the knowledge and skills to improve the world. Indeed, many of them do improve the world. They don’t just change it, they fundamentally improve it. This is good.

But too many people don’t improve the world as much as they could.

They’re satisfied once they have improved the world and have earned respect from other people for this improvement. And they stop right there.

Yes, Facebook improves the world. It enabled the Arab Spring, which is something that could not have occurred six years ago. Facebook also has many of the top engineers in the world. Can every single one of those engineers say that their skills are being used to their utmost potential to improve the world? I highly doubt that.

To entrepreneurs creating the huge numbers of mobile and web applications: Yes, many of these apps do improve the world. Yes, many of them make you a fortune. But are you spending your time creating the thing that would allow the biggest improvement in the world?

Math geniuses working at large Wall St. banks making fortunes, biologists, physicists, doctors: ask yourselves. Are you really improving the world as much as you possibly can with your skills?

In some cases, people will underutilize their skills but make a bigger impact. Salman Khan, the creator of the Khan Academy and someone who I admire hugely, for example. He is an incredible mathematician, and was working at a hedge fund before he left to start the Khan Academy full-time. The extent that he uses his skills now (at least publicly) is teaching advanced calculus to high school students. He isn’t fully utilizing his skills, no, but he is having an immense impact on the world of education, and I am sure he can feel satisfied knowing he is improving the world. Even still, perhaps he isn’t improving it as much as he possibly can – that I cannot answer.

If you’re a teenager starting a company, or in your forties and want to quit your job and start one, don’t just go and create a new mobile app. Think to yourself first whether you’ll have the biggest impact you can with your current circumstances.

It seems as though all the brains in the world these days are rushing off to Silicon Valley and starting mobile apps that “help you share your photos more easily with your friends”, and “make your nightlife better”. They may improve the world. But I beg the founders to think about whether they could be having a bigger impact.

When I wrote my last post, I had a few people commenting and asking how I’m improving the world. I gave this answer:

“I’m creating a library of experiences and advice through They Don’t Teach You This In School (http://tdtytis.com).

It’s helping people in over 120 countries [now 150] gain an emotional and social education that they otherwise couldn’t gain. Where Khan Academy provides an intellectual education, TDTYTIS is providing the other side to education – social intelligence.

I’m also helping people to remember their personal history and communication through Duo (http://duoboard.com). People are by nature nostalgic, but the Internet does not allow them to be because we lose the vast majority of our communication. Duo changes that.

These are not just changes – I’m not just creating a product because it’s cool to. They both fundamentally improve the world, because they solve clear problems.

This is just the start for me, but it’s a start that I believe in and will set me up to solve the huge problems that I see with the world.”

Before you ask, I can tell you that I am improving the world as much as I possibly can right now.

I started TDTYTIS and Duo without a minute of real-world business experience. I started them with hardly any money. I started them with my time very limited as I complete high school this year.

I feel proud knowing that TDTYTIS is helping thousands of people in over 150 countries learn life lessons that they couldn’t otherwise, and knowing that Duo is helping people be nostalgic – something which I believe the vast majority of humans fundamentally are. In thinking back, of course there are things I’d do differently, but I feel good knowing that at each step of the way I wouldn’t have done something entirely different.

In the process, I’m gaining experience and learning huge amounts. I’ll also have a lot more time later this year when I’m done with school. This means the amount that I’m able to improve the world will continually increase, and I will increase the amount that I’m improving the world along with that. Like I said in that quote, this is just the start for me – and I’ll be solving the biggest problems I can find going forward.

Think about it. Ask yourself whether you could be doing more to improve the world. And ask others the same thing. If more of us can gradually answer that question with a “no”, the world will be making leaps and bounds.

Why I’m In Love With PandoDaily

Most of you who know me are aware that I follow tech news avidly – if there’s a day where I haven’t heard about a new financing deal or startup launching, I’m probably either so sick I can’t lift up my phone, or on a plane. But something that probably only my closest friends know is why I read tech news so avidly, and what I do with all the news that I digest.

For a while now I’ve been keeping a notebook (started in Evernote, moved to pen & paper, now in Penzu) where I’ll write about the tech news each day. Some days I’ll only write a couple of lines (yes, slow news days), and yet other days I’ll be writing heaps (conference days, big announcements).

Individually, each note isn’t very important or interesting. But as a whole, they provide a curated, annotated record of the technology industry over the past couple of years. I think this is hugely valuable.

At the end of last year (2011) I read through the notes that I’d been taking for the year. In the space of maybe an hour, I was able to look at the broad picture of where technology has been heading and the progress that has been made in the space of a year. I avoided getting caught up in the little details of daily tech news, and instead could look at the core progress that had been made and the roles of different companies and individuals in that progress.

PandoDaily is a new tech blog that launched just a few weeks ago. It was founded by Sarah Lacy, who used to be with TechCrunch. Here’s the post she wrote introducing Pando, and explaining why she started it.

“We have one goal here at PandoDaily: To be the site-of-record for that startup root-system and everything that springs up from it, cycle-after-cycle”

The moment I read that, I knew that I’d be reading PandoDaily for the rest of my life. And I can say “for the rest of my life” with a high degree of certainty, because Sarah’s also said that she’s not building the company to sell it.

My passion for following daily tech news, and recording it, is to see the impact that technology is having on the world, and the progress it is making. Existing technology blogs provide the daily tech news, but none of them have the focus that I love, on recording tech news for permanence, in order to see the big picture. That is, none of them did until PandoDaily.

Pando’s focus, combined with Sarah’s goal of not selling the company, gives us a website we can trust to provide us with the big picture of the tech industry, year after year, for decades into the future.

I love Pando, and I’d love to be a part of it.

New Zealand In My Eyes

I love New Zealand.

I’ve lived here for about half my life. I was born in Washington DC, but moved before I can remember (and I’m not entitled to US citizenship). Since then, I’ve also lived in the Cook Islands, the Philippines, and Spain. I’m lucky in that I’ve seen enough of the world to know what makes New Zealand so great, and also what holds us back.

Whenever I’m overseas, I’ve always felt as though I’m a representative of the entire country. At the schools I’ve been to in other countries, I’ve always been the sole New Zealander (and these have been big schools). Everyone has known me as “the Kiwi”, and I’ve always been proud when called that.

Growing up as a representative of New Zealand – and being lucky enough to know what that means – has given me a truly huge respect for this country. Most of what people say is correct. We are a bloody inventive bunch. We’ve got values and a heart. We are friendly and happy. We have a stable and uncorrupt government, no matter who’s in power and what anyone says. And we’re lucky enough to have an abundance of the colours blue and green – some of the best and most beautiful natural resources in the world.

Going forward, it is of utmost importance to me that New Zealand not only remain relevant in the world, but emerges as a clear leader in the world.

It should be clear to everyone by now that the world is in a rough spot at the moment. Both Europe and America – long the leaders of the world – are clearly on unsustainable courses. Power is shifting. New leaders will emerge over the next decade. China is clearly one, but there is room for others.

I’m writing this post right now because: 1. New Zealand is heading in entirely the wrong direction and will decline in power and wealth over the next decades, and 2. I want New Zealand to be a wealthy world leader.

There are people far more experienced than me talking about these things. Sir Paul Callaghan explains why we’re going to become poorer and more irrelevant on our current course. Derek Handley shows us an alternative path, and inspires us to take action. Andy Hamilton tells us about the role of smart enterprises in a brighter New Zealand future.

New Zealand currently has two key sources of value that give us our place in the world: tourism and dairy. Let’s examine these going forward, drawing on the insights and statistics of Sir Paul Callaghan.

New Zealand has 1.3 million FTE (full-time equivalents, essentially the number of jobs available). We also have a per capita GDP of approximately $40,000. In order to maintain our current GDP of approx. $125billion, we need a GDP of $120,000 per job. Tourism in New Zealand produces around $80,000 per job. That’s two-thirds of the per-job GDP we need to sustain our current GDP, which means the more tourism we export, the poorer we become. We are immediately doomed if we at all try to increase tourism, which is what a large majority of people currently seem intent on doing.

Dairy, in contrast, produces $350,000 per job. Sir Paul Callaghan says it succinctly – “Without dairy, we would be desperately poor”. However, dairy is finite in capacity. We only have so much land to farm on, and we’re not too far off its capacity.

I’ll repeat: the current course that New Zealand is on will not allow us to even sustain our current GDP, let alone grow.

Countries like Singapore and Hong Kong didn’t grow through their natural resources (they don’t have any). And remember, thirty years ago New Zealand was providing aid to Singapore. Now they both have GDPs twice as large as ours. New Zealand will never become relevant in the world, as Singapore and Hong Kong are, if we continue to focus on growth through our natural resources.

Throughout New Zealand’s history, our key weakness has been our physical distance from the rest of the world. It costs huge amounts and takes a long time to export to other countries. It takes ages to travel anywhere. We’ve actually done remarkably well exporting dairy and tourism, considering this.

In the twenty-first century, New Zealand’s physical distance from the rest of the world became a competitive advantage. Well, it would have, if we’d pursued other sources of growth.

The Internet. You’ve heard it before. It breaks down physical barriers. That’s what it does best. No longer do we write physical letters, or need to travel across the world to see people. No longer do books and newspapers need to be printed and sent here. No longer is New Zealand restricted to growth through bringing people to the country or sending goods out.

The Internet is the biggest opportunity New Zealand has ever had, and ever will have. It allows us to achieve growth and sell products at absolutely no additional cost to what it costs other countries to produce. We can reach the rest of the world in milliseconds, compared to the previous days. Furthermore, our physical distance from the rest of the world becomes a competitive advantage to us because the smartest people in the world will want to come and live and work in a beautiful, pristine island.

And here New Zealand is building a national cycling track to encourage tourism, destroying areas of forestry to turn it into farming land, and then selling great chunks of our land to the Chinese.

The stars are aligned for us. Global power is shifting at the same time that the Internet gives us another path to growth. I refuse to let my country miss the biggest opportunity it will ever have. I refuse to let New Zealand become poor and irrelevant, when it could become a rich world leader.

This post marks my commitment to doing whatever I possibly can to create a rich and powerful New Zealand. This will be a core tenet of my life.

Watch Sir Paul Callaghan and Derek Handley’s talks. Follow Derek’s advice on what you can do right now. Think about the New Zealand that you want and how we might get there.

To finish, I’ll quote Derek, as he says it best:

“As we continue through the twenty-first century, New Zealand can choose to be an idle bystander, or it can choose to be a shaper of this century. The former path is a path to failure and irrelevance as a country – and those failures as a collective will cast a long black shadow over the Land of the Long White Cloud for many, many years to come”.

3D Printing Business Models

I’ve been re-reading lots of old Economist issues these holidays – it’s incredible to see how much things can change in a year. One article I read was titled “Print Me a Stradivarius”. It talked about 3D printing technologies, their uses, and their progress. It’s an absolutely incredible technology, and I have no doubt that it will revolutionize a large majority of physical-good industries on the planet.

Whilst reading this article I found myself thinking about the consequences of 3D printing on brands. Currently, I believe that successful brands are created through two things: creating an image and lifestyle that people find desirable, as well as achieving a scale large enough to produce at low cost and reach multiple markets. A truly successful brand (in the global sense) must be in multiple markets and be able to achieve scale that other producers simply cannot achieve.

It’s easier for individuals, or small companies, to create a desirable image and lifestyle than it is to achieve scale and reach multiple markets. This is why we see many local producers with desirable brands, but which simply never achieve success beyond a specific market.

3D printing changes the second half of this equation to create a successful brand. Specifically, it acts in a similar way to the Internet – it outsources the production of goods and services. A large brand no longer needs to create the products itself – it has the ability to sell the designs and perhaps materials, but then let the customer actually create the good in their own house.

Now I don’t see large brands outsourcing their production to consumers any time soon. But many smaller producers, who are held back through their inability to achieve scale, will look to alternative models. I believe they will focus on designing products, and then simply sell the rights to the design to consumers, who will subsequently create the physical good themselves.

All of a sudden, small brands that have never had the ability to reach global markets have the same capacity to reach global markets as large brand corporations. In fact, there are significant advantages – they can focus on what they’re good at (designing great products) and not have to worry about anything else such as manufacturing and shipping. Consumers will be able to create the product minutes after they’ve purchased the design, meaning they don’t have to wait for a company to ship a product across a country or the entire world. It’s also much cheaper since shipping isn’t needed, and manufacturing on a 3D printer will be comparatively cheap.

Large brands may no longer hold the power that they currently do. Consumers worldwide will have access to brands that better suit their image and lifestyles, and will have more options as to the exact product they can purchase and create. Why will consumers continue to be drawn to the multinational brands when they can get goods that are more precisely suited to them?

This is a huge opportunity for small producers wanting to reach global markets. I believe 3D printers with the capacity to create clothing and static goods will be cheap enough for purchase by households within five years, and maybe even sooner than that.

There are also risks. It opens up all types of static goods (meaning non-electrical, without moving parts) to piracy. Just like movies and music, someone purchases the design, sends it to their friends, and they print it for free. Perhaps a subscription model may make more sense – you subscribe to a brand for a year and get to choose a new product each month for the year.

If you think about it, retailing physical goods hasn’t changed much at all in decades. Sure, a greater proportion of goods are purchased through websites and then sent to buyers, but that’s hardly a change in model – just a change in method of delivery. 3D printing will completely change the industry.

There are surprising parallels with the music and movie industry. The big clothing and product retailers will play the role of the music and movie companies. Small brands will play the role of the upstarts. Heck, we’ll even see a version of Napster or Limewire specifically for pirating physical good designs.

If you’re a small retailer, this is your opportunity. If you’re a big brand, you can either hang on to whatever you have but eventually lose, like music and movie companies – or you can revolutionize and be at the forefront of this movement.

PS: I’d like to give credit to a commenter with username “hatterloko”, who commented on my post about the “Motor of the World”, suggesting I think about 3D printing and what it could do. If he had not commented, I may not have read the article in the Economist. A prime example of why I blog, and why I love you guys commenting – I think about things that I otherwise wouldn’t. Thank you!

The Startup Strategy Matrix

I’m currently writing an “extended essay” – a core part of the International Baccalaureate Diploma, which I’m in my last year of. The essay can be on any official subject that the IB offers, and I’m doing mine in business and management. Specifically, I’m writing on scenarios where lean startup methods should and should not be used – trying to discover set cases where it would make more sense to use “fat startup” methods.

The essay requires that I write about “commonly accepted business and management theorists and their theories”. In researching for relevant business theories I came across Ansoff’s Growth Matrix. It’s a simple grid showing the actions that companies should take when trying to grow by entering new or existing markets with new or existing products.

It looks like this:

In terms of startups, the matrix is pretty useless. The vast majority of Internet startups are in the bottom right-hand corner – they are entering new markets with new products. Ansoff’s Matrix tells them that they should “diversify”. Diversification isn’t a term I associate with startups, and it doesn’t actually give us a great deal of information about what precisely the company should be doing.

However, I do think the fundamentals of the matrix (the axes) could be usefully applied to a startup-specific context.

In my research I’ve found out about a lot of startups that have used lean startup strategies (because everyone’s talking about them and they’re meant to be best for startups), only to fail by missing out on an opportunity or spreading themselves too thin. From looking at them more, these startups that failed in such a manner were either entering a new market with an existing product, or entering an existing market with a new product. I don’t believe that lean startup methods are appropriate for startups in these categories.

I believe that only startups in the bottom-right corner should utilize lean startup methods. They know absolutely nothing about their market and therefore should use the strategies to learn about their market (along with Steve Blank’s Customer Development model). Startups that are in the top-right or bottom-left corners should use “fat startup” methods. They will likely need to raise a lot and spend fast, as if they are entering a new market with an existing product they simply need to be there first, and if they are entering an existing market with a new product they need to carry out traditional product development with marketing on top to attract new customers.

Startups entering existing markets with existing products are not startups at all. There is no uncertainty – they can just get a bank loan to fund everything as there is such a high degree of certainty.

I did this up quickly, and think it should be called the Startup Strategy Matrix.

It’s very simple, but if a few startups that I’ve been looking at had taken a look at this before they began, they might have dodged failure and be doing millions in revenues. Think of Groupon clones as an example – a local Groupon clone that I saw here in Wellington began using lean startup methods, even though they were entering a new market with an existing product. They didn’t need to learn a thing about their market – they just needed to get to the market first. Nevertheless, they spent frugally and spent a lot of time testing aspects of the website. Missed opportunity and an epic failure – stupid.

What do you guys think?

Respect for the Motor of the World

I ordered some clothes online on Tuesday from a British retailer. They arrived in the mail this afternoon (Friday). I haven’t thought about mail companies or courier services in the past – they’ve always seemed a bit boring and unimpressive. But for some reason today I started thinking about how it all works and became amazed by it.

For a little parcel to be sent from a warehouse in Maidstone in the UK to my home in Wellington in just three days is just incredible. It was sent by DHL, and I could track it every step of the way. From Maidstone, it was sent to London Heathrow, then to Leipzig, then to Singapore, then to Auckland, then to Wellington where my house is.

Think about it. At each of those places it had to be transported on the ground as well, and scanned so that they could track its progress and update it online for me. It likely passed through at least six ground transport vehicles and was presumably handled by a similar number of individual humans on the way. That’s on top of the five flights it made (two long-haul).

DHL probably has tens, if not hundreds, of thousands of parcels being sent simultaneously across the globe to an almost equal number of individual destinations. And DHL is just one of the courier companies in the world (albeit one of the biggest).

Companies like DHL literally make the world go around. Without them we wouldn’t have economies or really be considered a globe. It’s a huge feat to deliver a product from one building on the top of the world to another building at the bottom of the world in three days. For fifteen pounds. This happens every single day, with millions of items (and people) and I’m embarrassed to say that I’ve never felt in awe of this machine before. In it’s broadest sense, that’s what the collection of global companies is – it’s a machine, or a motor, that makes the world function as we expect it to.

I’ll admit that I take most of the modern world for granted. Computers, mobile phones, skyscrapers, airplanes, supercars, and, yes, the ability to buy things from the other side of the world and receive it within three days. I’ve expected it without thinking about it in the past. Recently, however, I’ve been noticing how complex so many of these systems are and how great a feat they are.

There’s a couple of ways to look at all of these incredible things that the modern world gives us, in my opinion. The first is we can look at it all and say “It’s such an incredible world and individual humans are such a small part of it”. Or, the way I look at it, is we can say “It’s such an incredible world, and all of this incredible stuff was created by human beings”. Yes, it’s a machine that makes the world go around. But the machine was created, and is maintained, by humans. We’re pretty impressive creatures.

I’m gaining a healthy respect for most of the things I’ve previously taken for granted. If you take them for granted too – I hope you’re thinking about them in a slightly different way, like I now am.