Penang has produced several highly successful tech start-ups, but an underdeveloped ecosystem is holding things back. That’s about to change.

Curry Khoo.

I meet Curry Khoo for the first time at Starbucks in Auto-City in Juru. It is afternoon and I am actually running late – Google Maps is letting me down big time and Curry is kind enough to send me his location via Whatsapp. It is a fittingly tech-themed trip.

I find him sitting in a corner, hunched in front of a sticker-laden laptop, sporting his trademark cap and glasses. He’s an animated, chatty and passionate figure.

Curry – real name Khoo Kah Lee – remembers when he first started doing start-ups in the early 2000s. “I came from a broken family and I couldn’t afford to further my studies.” Deciding that he wouldn’t go far with a diploma, he decided to run his own business, mostly dealing with web services. His first big break came when he got his first venture capital (VC) funding – RM1mil – at age 21 for an online education project.

That failed, and after nine months the project was shut down. Curry wasn’t swayed and continued working. “It really wasn’t a wonderful journey,” he cheerfully acknowledges. “Every time I went out there, it seemed like I failed a lot.”

The problem was that start-ups were generally in their infancy back then – particularly in Penang. Jaring was a thing only several years earlier in the mid- 1990s, and Malaysians were still using Friendster. Tech start-ups in the US – either small-time players looking for their big break or giants such as Facebook or Google – at least had a vibrant ecosystem in Silicon Valley to lean on for support, whether for funding, mentorship or expertise.

Penang had nothing, not for people like Curry. If he wanted to meet up with like-minded souls, he had to drive down to KL every week, and he soon became frustrated with the state of things. Precious days and energy that could have been spent on his work were wasted on travel. So he got together with some friends and decided to try and build their own ecosystem here. They founded Tech Event 4 Penang (TE4P) and would organise events where budding start-ups could get together and share ideas, advice and war stories.

A community was born.

Goh Ai Ching.

Today, every time I meet someone who’s in the start-up business, the name “Curry Khoo” always comes up. He has become a permanent fixture in the scene. When Piktochart first started out, co-founder Goh Ai Ching said there really wasn’t an ecosystem in Penang, “but Curry Khoo has always been around!” she says with a laugh. When it comes to Penang’s budding start-up ecosystem, he’s been credited as a major driving force. Big players have acknowledged his influence; he manages Google Business Group George Town’s activities in Penang, and he was the Malaysian Global Innovation & Creativity Centre (MaGIC) Penang’s community manager until recently.

Things are different in Penang today compared to 15 years ago. Since Curry first started out, Penang has seen several very successful start-ups emerge.

Goh’s Piktochart is a web-based infographics company that allows users to create professional-level infographics without needing experience. It now has more than three million registered users worldwide. Another is Exabytes, which has become the biggest web hosting provider in Malaysia. And then there’s JobStreet.com, the largest online employment company in South-East Asia.

“Now the ecosystem is growing a bit more,” says Goh. “We have a Webcamp meetup on the last Thursday of every month at Piktochart. Start-up enthusiasts, students and kaypohs gather to learn more from experienced speakers.”

Yet Penang is still a small, quiet player in the start-up game in comparison to KL or other cities in the region like Singapore. Start-ups can be successful in Penang, but the ecosystem is still raw: “There is still the lack of an accelerator,” says Goh, “a lack of mentors who have been there and done that, especially in the new tech space, and little seed capital to help entrepreneurs kickstart their ideas.”

Without that ecosystem, Penang can potentially find itself falling victim to its eternal nemesis: brain drain, where talents are forced to go to KL or out of the country to find success. Piktochart went through the three-month Chinaaccelerator programme in Dalian, China, which was crucial to the company’s development, giving it access to some seed funding and, more importantly, a network of experienced mentors. Alvin Ooi, founder of the augmented reality advertising platform, Playme AR, says that he is looking to move his operations to KL “to find better talent.”

The lack of skilled manpower is also a problem: start-ups frequently struggle to find good coders to work on their products. Curry says he is working with technical training consultants DreamCatcher to scout for potential talents at local universities. “The talent hub is growing,” says Goh, “but very slowly. If we’re serious about branding Penang as a start-up hub, we first need to grow the talent, and that takes time.”

Douglas Khoo.

From start-up to syllabus

Douglas Khoo needed to do something.

This has always been true for him. When he was eight years old and living in Negeri Sembilan, he would borrow his uncle’s gas grass cutter and cut neighbours’ lawns for pocket money. Then he grew up and went into advertising.

And then he met up with an American partner on a business trip to China. Neither spoke Chinese at the time – they had at least that much in common – and found themselves hanging out quite a bit. This was in the mid-1990s, when the Internet was still the exciting new thing instead of the everyday utility it is today, and they talked about how China was still behind the US when it came to the Web.

So they decided to put some money together and start something and see what happens. Their one rule: do not go into something that involves acquiring a heap of licenses or payments, or anything that could “get us in jail”. So they launched sports website Shawei, which eventually became the leading Chinese sports website in the country, averaging a million page views a day. The company started out with five people, and employed about 90 by the time it was sold in 2000. It was good timing, too – the US market was just about to crash. “We managed to just scrape by.”

Douglas (no relation to Curry) is a “serial entrepreneur”, and Shawei wouldn’t be the last start-up he would be involved in. But not all of them would be success stories. After Shawei, he and his partners launched a women’s website. The demographics of Chinese internet users at the time were 99% male and one per cent female, but they were confident this would change and this was the right time. Soon after they launched, nine other competitors quickly followed suit.

“All of us failed miserably!” he laughs. “The women population, while it was growing, didn’t even kick in until our third year.”

Timing, as it turned out, really was everything. “If you’re too early, there’s no market. If you’re too late, you’ve got a gazillion competitors.”

This failure didn’t discourage him. He would go on to work on several other start-ups, until he and his partners launched travel search site Qunar, which New York Times would describe as “one of China’s fastest growing online travel sites”. In 2011, Baidu purchased the company for a cool US$306mil. “It’s time to relax and just enjoy life,” Douglas said to his late wife.

Except that he couldn’t. He was in his mid-40s, still too young to completely retire. He had to keep busy, somehow. So his wife suggested something with a social element, to give back to the community. They eventually started the Sunshine Foundation, with the aim of supporting education and helping people who grew up poor like he did.

The Coding Shophouse.

Among the first projects undertaken by the foundation is The Coding Shophouse. Located on Lebuh Melayu, it offers a three-month programming course for programmers and nonprogrammers alike, and aims to provide students with the programming background they would need when they enter the start-up world. “What I’m trying to do with the coding school is to try and solve the issue of the lack of programmers in the market,” says Douglas. “That’s fundamentally one of the issues a lot of start-ups talk about. If we have a lack of programmers, it means that start-ups don’t flourish.

“It would be easy for me to set something up in KL. But I feel that KL has too much noise. I thought that Penang would be a nice test market.”

If the Shophouse ends up being a success, Douglas wants to open more schools in other small markets in Malaysia, like Ipoh, Johor Bahru or Kuching. “I would like to give an opportunity for people in the smaller towns and cities to develop as entrepreneurs. If there’re enough satellites around then people don’t have to go down to KL for jobs. Hopefully, with an ecosystem that’s growing, talent is retained in each city.”

The first intake began in June, with 15 students, and ends in August.

The Coding Shophouse at Smart Centre in Bayan Lepas. The first intake began in June with 15 students.

The Shophouse, as of press time, is still undergoing renovation, but investPenang has allowed classes to be held temporarily at its Smart Centre in Bayan Lepas. Students do not need to have any programming background to join, which is something some students have struggled with – at least initially.

“Quite a number of them said that their intention is not to work as programmers,” says Douglas, “but to actually do startups. The thinking is that they should have some foundation in coding, so that when they actually go off and do their start-ups they can do some of the programming, or at least be able to speak to the programmers in their language. And I think that’s great. I should have learned coding when I was doing start-ups – it would have been a lot easier.”

“Every developer wants to do their own stuff,” says business graduate and Coding Shophouse student Pua Kai Yeow, 24. “They’re not (always) interested in helping your ideas. If you want to create your own product, why not equip yourself with the minimum set of coding skills?”

“The vocational system that we have in Malaysia needs to be updated,” adds Douglas. “It’s good to be able to teach people how to be a plumber, an electrician or mechanic, but I think in this day and age we should be moving them further up the value chain.”

One of the biggest challenges Douglas is facing, however, is the lack of good teachers. He eventually hired 30-year-old Bryan Lim, a Singaporean who has his own start-up, The Amazing Digital Asia, which creates apps for the web or Apple’s iOS operating system.

Lim teaches the programming language Ruby, as well as Ruby-based framework Ruby on Rails, which is used to create web applications. Facebook, Shopify and Twitter were created using Ruby on Rails. Other courses tend to be only a week long and do not cover the fundamentals; it’s assumed the student already has the necessary background knowledge. Half of Lim’s students don’t have that background, making things a little more challenging for him. He has implemented a buddy system, pairing inexperienced students (he calls them “early programmers”) with experienced students (“late programmers”), and his course is not based on any existing syllabus, but on his own experiences in the start-up world.

But after this first intake ends, Lim will be off to do his Master of Science in Business Analytics at the National University of Singapore (NUS), meaning that the search for a teacher has not ended. “To be a good programmer is hard,” says Lim. “To be a good programmer who can teach is even harder. There’s also a talent shortage, and this is a non-profit, social enterprise project.” Douglas concedes that he may have to expand his search beyond Malaysia and Singapore.

In the meantime, Penang still needs a start-up accelerator, which is where @CAT comes in.

A home for creativity

Its exterior gleaming white, Wisma Yeap Chor Ee was at the centre of Weld Quay’s bustling port in the 1920s. Located on Gat Lebuh China, it is currently undergoing restoration works. Once that is done, it will be the new home of Penang’s tech activities, marrying its technological aspirations with its colonial heritage.

The building, leased out by Wawasan Open University to the state for 30 years, is the Penang state government’s ambitious plan to boost the local tech sector and bring the state’s many players together under one roof. The ground floor, for instance, will be the new home of the Penang Science Cluster and its educational Science Cafe, as well as its makerspace activities.

Loo Lee Lian.

“We want to bring tech into heritage,” says investPenang general manager Loo Lee Lian. “It’s very sexy, bohemian and creative, and there are very few places that can have this kind of environment.”

The top floor is where Penang, if all goes according to plan, will launch the state’s first accelerator in October. Dubbed @CAT (Accelerator for Creative and Analytics Technology), the accelerator and incubation space will be a safe haven for budding start-ups, allowing them to work on their projects in a secure bubble under the guidance of experienced mentors. There will also be a co-working space, and the entire top floor will be able to fit up to 100 seats.

The accelerator will be advised by an @CAT council, consisting of Ng Wan Peng, COO of the Multimedia Development Corporation (MDeC), and successful mentors and entrepreneurs including Exabytes founder Chan Kee Siak, JobStreet founder Mark Chang and Douglas. investPenang serves as the facilitator of the project and has appointed Curry as a consultant.

“There are many tech start-ups in Penang,” says Loo. “They just haven’t got a place to congregate or network. With @CAT, we want to have a launch pad for them to network, incubate and accelerate their ideas.”

This is all new territory for the state government, something that Loo readily acknowledges, leading investPenang to visit several established start-up accelerators in KL, Singapore, Hong Kong and the US. “This thing is so new to us we had to go through a learning process ourselves.

“Manufacturing will still be our core business, along with BPO/IPO. But we think that tech start-up is a potential area of growth, and we think this new millennial generation will be interested in doing their own businesses and startups.”

@CAT will have several stages: after a pre-accelerator stage where potential start-ups hone their ability in programming languages like Ruby and HTML5, these start-ups will be given some seed money and mentors will come in and go through every aspect of their projects, from their business plan to the technical aspects.

Then the list of potential start-ups will be shortlisted to the most feasible projects, where business models will be sharpened and their products developed. Eventually, graduates will be given priority to be based in state-owned buildings at subsidised rates.

Wisma Yap Chor Ee.

Wisma Yeap Chor Ee mirrors Block 71, a factory building in Singapore that has now become the heart of Singapore’s tech start-up ecosystem. It is home to more than 100 start-ups (including Bryan Lim’s The Amazing Digital Asia), and Curry is excited to have a similar concept closer to home. “With this building you can run your events, prototyping, whatever – all in one place.”

Douglas agrees. “Having a location that is a focal point for start-ups is a great step forward. Once you have a community of semi like-minded people together, the opportunities could be boundless. You could sit over coffee or beer and talk about what you’re working on, and ideas may generate from there. Whenever I’m around and entrepreneurs want to bounce ideas I’m more than happy to chat with them.”

“I’m betting hard on Wisma Yeap Chor Ee,” Curry enthuses. “When everyone’s in the same building, you build better relationships.”

One of the riskiest businesses in the world

The seeds of Penang’s tech start-up boom are still being planted – no one’s under any illusion that we’ll be seeing major success stories overnight. Growing the state’s ecosystem and building the next big start-up is going to be a years-long process. And as Curry and Douglas have proven, success is never a guarantee – Curry even calls tech start-ups “one of the riskiest businesses” in the world. He estimates that 85% of start-ups do not last longer than two years.

So… why do it at all? “Crazy gains,” Curry says. “MyTeksi is a three-yearold company that’s worth RM1.5bil today. Khazanah’s invested in Alibaba and made over US$1bil. The top 10 companies in the world now are tech companies. Everything we do right now is tech-related. Either you’re on Twitter, Facebook or Linkedin, or you’re using apps on your smartphone. (Tech) is huge and making a lot of money for a lot of companies.

“Yes, it’s high risk, but if you’re good enough you know how to manage these risks. It’s not like gambling; it’s still a business.”

Douglas Khoo evaluating some Penang startup pitches at the Tech Chillax Sunday event held in ViTrox, Bayan Lepas in March.

Curry Khoo and ViTrox senior vice president Yeoh Shih Hoong hearing pitches at March's Tech Chillax Sunday event.

But Penang’s infrastructure remains its Achilles’ heel. Its transportation woes are common knowledge but no less urgent. Internet speeds remain average at best, infuriating at worst, which is at odds with the state’s tech wants and needs. “Broadband is an area of concern for us,” acknowledges Loo, adding that investPenang is working with Telekom to install fibre optic broadband at Wisma Yeap Chor Ee.

Beyond that, however, solutions are few. “I don’t know why it’s taking so long,” says Curry. “(Malaysia) has among the slowest Internet connections in South-East Asia. But this is not something you or I can do anything about. It has to be up to the telcos and the Malaysian Communications and Multimedia Commission (MCMC) to push for it.”

“These things,” says Pikochart’s Goh, “although seemingly minor, affect startups like us who are trying to attract the best talents from all over the world to consider living in Penang.”

In spite of that, more and more Penangites are starting to get into the start-up business, choosing the independence – and risks – of start-ups over a comfortable corporate life with Penang’s many MNCs. “I could not adapt very well to the corporate life,” Goh admits. “There were a lot of do’s and don’ts and I was not smart enough to navigate the ‘unspoken rules’. I also really wanted to be at a workplace where people did not have the Monday blues. That seemed like a tall order in the corporate world.” The start-up life, it turns out, is seductive for people with an independent streak and who feel shackled by the corporate hierarchy.

Penang’s potential also lies in the much-talked about Internet of Things, where machines, software or sensors use cloud computing to communicate with each other, allowing for a greater deal of automation in our day-to-day lives. It’s touted as the Next Big Thing, which Curry believes Penang is in a prime position to capitalise, thanks to its established manufacturing sector and roster of tech MNCs. He says he’s spoken to several MNCs to pitch a collaboration with local start-ups, allowing the tech giants to empower these start-ups. The idea is gaining traction. “It costs (MNCs) nothing. R&D is the biggest cost for companies. These start-ups are going to do R&D for you! Let these crazy people take the risk. Empower 20 of them. If one of them becomes a success – boom.”

Taking it to the next level

There’s still work to be done. “Exposure is still lacking in Penang,” says Douglas. “In KL there are a lot of people available to mentor start-ups. I think Penang people are as intelligent as KL people, so if they are given the proper exposure, I’m sure there’d be many more start-ups here in Penang.”

The whole South-East Asia is a region on the rise, with investments pouring in and a booming start-up industry. “It cannot just be Singapore alone leading the way,” says Lim. “Nearby countries have to join forces to push South-East Asia. We have to do it together.”

Penang remains the quiet, unassuming player, but this isn’t necessarily a bad thing, says Curry. “We don’t overhype ourselves, and we focus more on quality, instead of talking a lot and nothing happens at the end of the day. The balance is there.

“But we need to push it further.”

Jeffrey Hardy Quah is the deputy editor of Penang Monthly.

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