Jorge Valente is president of the Macanese Youth Association (AJM) and has been vice-president of the Macau Youth Entrepreneur Association (AJEM) for four years. An entrepreneur himself, in September he helped organise a delegation of 17 local young entrepreneurs who travelled to Portugal for industry research and networking, with the trip giving him a sense of what lessons Macau can learn from Portugal in the way it helps its start-ups. In an interview with Business Daily he discusses what makes a good entrepreneur, the advantages and disadvantages Macau has for start-ups, and the ever-present issues SME’s face in hiring qualified personnel.
What is your experience of start-ups and entrepreneurialism?
I started many. I studied programming and after finishing my studies I worked for Formula 1 team Williams which, although it’s a company with 20 years’ history, works like a start-up. Everyone has a project, has to innovate independently and deadlines are very short. They also work a lot in a goal-based system, meaning the way you get to your goal doesn’t matter as much as completing the goal on time. After all, the cars have to be ready for the race on time and any mistake can lead to a fatal accident. So I learned how to innovate on a tight deadline, which is normally something essential for start-ups.
After returning to Macau I worked at The Venetian, a giant company, but after a year I saw it wasn’t the kind of work I wanted to do, so I left and started a software company and after that a trading company. It was during that period that I learned how to build up a company and now I also make seed and angel investments in start-ups in California and Portugal.
Are entrepreneurialism and start-ups current global trends?
Yes; and a good example of that is Portugal, which has adapted really well out of necessity since the country was facing an economic crisis and high unemployment rates. There was a lot of unemployed highly qualified labour that would end up moving away from the country, but Portugal managed to create a good platform and some successful cases for start-ups that changed local mentalities. I only lived in Portugal for two years in the 1990’s and something that really surprised me coming back is how the crisis managed to change mentalities in such a short period.
You see young people starting their own companies and projects, start-up incubators like Beta-i and Fábrica de Startups and even foreigners who go to Portugal to create their own companies and hire local workers.
So what parallels would you draw between the business scene in Portugal and Macau?
I think Macau now is at the stage Portugal was 10 years ago, the crisis period before the evolutionary jump. Portugal’s new Industry Secretary of State João Vasconcelos, because of his background in business, knows what support local entrepreneurs need. In Macau, you see a lot of government funding that sometimes doesn’t go towards exactly what entrepreneurs need. The intention is good but it doesn’t reach its purpose. I think in Macau we have many funds but the government thinking goes like this: okay this is needed, let’s create this fund, appoint someone we think knows about entrepreneurialism to manage it. If it doesn’t work they open another and get a new person.
Is there less risk in getting investments in Macau?
Start-ups are a different process. Some entrepreneurs tell me banks don’t lend them money but of course they won’t do it because start-ups are a high-risk investment. Someone who invests in a start-up knows there are no assets to seize if the project doesn’t work. That’s why you need business angel and seed investors, because their business instincts normally tell them if an idea will work or not, regardless of whether it sounds like a stupid idea.
The government invests with public money; and all start-ups start with stupid ideas that wouldn’t attract that kind of funding. When they started Uber and Google they probably sounded like stupid ideas: who’s going to need a platform to call rides? Who will need an online page just for searching? How do you make money from those ideas?
I was in the house of the Airbnb founders in 2008 when they were only five people, and I still think that if I had given them US$1,000 (MOP7,990) I wouldn’t have to work now with US$10 million in the bank. I didn’t know what I know now at that time, and it didn’t seem like a sustainable business when the founder presented the idea to me.
Therefore, any government funds with an appointed manager can’t just spend money with ease – and probably wouldn’t invest US$20 million for someone to do a search website.
How can Macau create an ecosystem which enables start-ups to grow and succeed?
Macau, of course, has advantages and disadvantages. It still has a lot of money, which if used in the right start-ups could provide big returns for the local economy and the people involved in that business.
The biggest disadvantage is probably human resources and the local laws that regulate them, which don’t favour start-ups. In any new industry there’s a chicken and egg problem; to start start-ups you need talent but there’s not enough talent in Macau. It takes time to create entrepreneurs and if there aren’t not enough in Macau we need to import them. But how can we do that if Macau law restricts the hiring of non-residents. If I want to build a Google here I need to bring someone in from outside with an idea to develop it, and that person will have to bring maybe a web designer and marketing people to develop an idea that might fail . . . If we block the first step already, they’ll just go to another place with more relaxed employment laws.
So what changes should happen in the local labour law?
The law is not very well defined. Let’s say we want to make an exception for a certain type of job; we have to decide from where we want the talented resources, and it’s better to focus on if we want talent from Asia or from Europe. Portugal is successful because of the European Community laws that allow country members’ residents to freely move and work. In the United States, they have a huge pool of talent but start-ups can have exceptions to hire one or two non-residents, normally highly specialised workers.
In Macau, we don’t have local highly specialised workers and don’t allow start-ups to hire specialised non-residents to come and help them develop. We can see the labour law we have was made for the construction sector and works very well for that, but when you use the same law requirements for office workers it doesn’t make sense. If you interpret the law, even people that come to Macau for work meetings can be arrested as illegal workers, which actually happened in some companies I know, even in banks and casinos office workers.
Do you think the fact that Macau’s economy is still too focused on the tourism and gaming industries hampers the development of start-ups?
The low unemployment rate is a bit misleading because the truth is that there are more unemployed people [now] with the gaming operations and junkets that closed down, some of whom used to make a lot of money and are now Uber drivers. I think unemployment here will only get worse with time.
How do you persuade Macau university graduates to create a start-up instead of trying a safer job in the government, casinos or hotels?
With the government jobs I don’t think you can fight it; they’re always well-paid safe jobs with lots of holidays. However, I think most government positions are already filled and I don’t think the government will open many more. I heard of many companies where almost everyone that left went to the government. I once hired a secretary and the first thing she told me was that her dream was to work for the government; then she spent the next four years trying until she got a public employee job.
In terms of the private sector I think people need to change their mentality. I think there’s a larger acceptance now that working in casinos or hotels is not necessarily better, that the pay is good but that there are more demands.
What makes a successful entrepreneur?
Not everyone has what it takes to be an entrepreneur, and when I talk to young people from Macau I can’t see which ones will be successful but I can see immediately which ones won’t. Being an entrepreneur implies extra work, no holidays, having a dream and infinite perseverance. In innovation and entrepreneurialism many times you’re trying to develop something that doesn’t exist, so there will be a lot of people saying it can’t be done and obstacles from laws not being prepared or maybe society not being ready. Adaptability is also important. Like Darwin said, you need to adapt to survive.
For example, a lot of people forget that Amazon started like an online bookshop; they then realised that instead of only selling books and only competing with Barnes & Noble they could sell everything. Now books are a very small part of their sales and actually what gives them more money is renting online cloud data storage.
What advice would you give to Macau start-ups?
A lot of people nowadays want to do platforms – they want to be the new Facebook. Start-ups going that way shouldn’t focus too much on the local market since it’s very small. If they try to target Hong Kong, Taiwan and Mainland China, at least they will expand their market reach considerably and will have a common language. Macau also has advantages in connecting trade commerce and goods between Lusophone countries and Mainland China. The new Chinese laws for product import and export are very favourable for Special Administrative Regions in terms of trade of food and low cost products; that’s something that could help start-ups dedicated to this sector. It will probably be a better business to create a trade start-up than opening a cafe in ZAPE (Zona de Aterros do Porto Exterior).
