A rare breed of Singaporean has managed to make it big in Silicon Valley. Besides high-profile
Creative Technology, Interwoven Inc is one success story of which many people probably remain
unaware. Peng T ONG, founder of the enterprise content-management provider in 1995, led it
to a successful listing on NASDAQ four years later. The company value exceeds US$390 million
in market capitalisation. Before Interwoven, Ong co-founded Electric Classified Inc, the creators
Answering the call of family, Ong returned to Singapore in 2000. Despite facing a dearth of
local expertise in developing commercial software, he set up Encentuate, an enterprise-access
security firm. Now headquartered in California, the start-up caters to customers in industries from
healthcare, biotechnology, and government to financial services.
A board member of the Infocomm Development Authority of Singapore and the Action Committee for
Entrepreneurship, Ong sees an urgent need for the country to create high value-add companies in the fast-moving
global market. The founder and chair of Encentuate shares with INNOVATION's Lay Leng TAN his candid views on
the challenges entrepreneurs face.
What convinced you of the potential of setting up Encentuate?
Ong: I look for what is ridiculous in the world -- you look at
something and think, "This is stupid!" and then only consider the
problems that will require some new and deep technology. In the
case of Encentuate, ask yourself how many passwords and access
codes for log-ins you have. We provide the answer with increased
security, more convenience, and fuller tracking. The problem solver
needs to have a clear grasp of what kind of technology you can
build and why that technology differentiates the product.
What motivated your start-up after the dot.com bust?
Ong: 9/11 happened. I set up a security company in December
2001 because it made sense given the increased focus on all forms
of security. Of course I already had the idea before then. I was
thinking about building a software company, and the depressed
market meant one could hire good people more easily.
What did you do to make products from the technology?
What is their uniqueness?
Ong: I don't just build technology; I build products, and the
technology happens to be created as part of the products. We
have seven pending patents covering our software. These patents
provide greater defensibility against lawsuits.
A single sign-on (SSO), an authentication system, allows
users to access multiple data sources via a single point of entry.
When users log in to an application, our software remembers
the passwords and other related access credentials so they don't
have to input them again the next time they access the application.
The technology to do this can be highly specialised.
But ours is a more generic technology that can perform tasks
other than just logging-in. It can get users to information faster,
increase the security of the system, audit who gets in and out,
and deal with compliance issues. So it becomes a much broader
platform -- identity management and access automation at the
end point, instead of just SSO.
Therein lies our strength. There are too many security point
products today. When companies deploy different point products
for different problems, they soon will be running hundreds
of security solutions in their IT department.
We encourage our customers to think about their future
needs -- stronger authentication, information access workflow,
log-in audits, compliance enforcement and auditing, provision
management... whole bunch of necessary functions for IT
departments. With Encentuate's solution, an IT department
can turn on the various functions as they realise the requirements
in the future, without having to deploy yet another
How does a new entrant compete in a crowded market?
Ong: The first thing you do when setting up a company is make
sure you don't compete head-on with the big guys. Instead, you
find a small corner for which customers need a solution and collaborate
with the big guys. Of course, you must have some sense
that the "small corner" has the potential to be a very significant
market in the future.
You also make sure your solution works well and your targeted
customers will buy it. When starting up, direct sales works
best because it allows you to interact directly with your initial
customers. However, direct sales does not scale as efficiently
as selling through channels. So you want to piggyback on the
big companies and other established resellers. Partners like IBM
help us to scale.
How did you source for seed funding?
Ong: I seeded the company myself. Later, I attracted venture
capitalists in Silicon Valley to invest. We are still open to future
What challenges did you face and how did your experience help?
Ong: The major challenge is that Singapore does not have much
software product development capability. Very few people here
have actually built commercial products, so we have to train our
engineers from scratch.
I am used to a faster-moving market and ramping up companies
(as it was in the dot.com boom). When I began in 2002,
the market was very slow so I had to plan for a slower ramp. My
background helped because I knew what to do to build a company,
but it also hindered because I was used to a faster pace.
What strategies ensure that the company will succeed and grow?
Ong: Raise lots of money. Customers, customers, customers.
Culture. People. Innovation. The last two are especially important
because they keep software companies competitive.
How do you develop innovative people?
Ong: You find smart people who can work with others. Pay them
reasonably, engage their bodies, minds, and spirits, and give them
room to grow.
Do you have a future plan or an exit strategy for your company?
Ong: You want to get to the break-even point as soon as possible
so you don't have to worry about funds and other related challenges
like fund raising. When you build a stand-alone company,
all options open up: you can merge with other companies, you
can keep ramping, and eventually go public. We'll keep within the
domain of our expertise in security because it is a big market.
What prerequisites must an aspiring entrepreneur have?
Ong: Experience. You need to be exposed to the workings of
global businesses. At the outset you have to think way beyond
Singapore, and to do that, you need experience (someone else's,
if not your own). Get a job that gives you a sense of how to build
an international company.
What about the likes of Bill Gates and Steve Jobs who started as greenhorns?
Ong: It's not just Gates or Jobs; it's the people with whom they
surround themselves. If you don't have the experience, you need to
surround yourself with the experienced. You may have vision, but
ultimately you need people who will make things happen. There are
very few such individuals in Singapore who have had the experience
of "making things happen" in the building of a global software
company. It is a huge problem if you have no idea how to build a
global company, and the people around you don't either. With trial
and error, you might get lucky. To be surer, go get the experience. If
you have fantastic technology, find someone who has the knowledge
to help you market it -- all the great companies, Google, Yahoo!,
eBay, etc. have numerous executives with rich global experience as
they were starting out, even if their founders didn't.
How successful do you see Singapore in its entrepreneurship push?
Ong: Singapore is one of the easiest places to start a company.
The problem does not arise from the infrastructure, hardware,
rules, or regulations, but in the cultural and experience base of
the population. In 2000, Israel with a population of 6 million had
144 companies listed on NASDAQ. Singapore had a population of
4 million with 7 companies listed. If you study this issue, you will
realise that Singapore is not the exception, Israel is. What is so
distinctive about Israel that allows it to do this?
Asians all over the world generally are entrepreneurial and
experience success in business. So are immigrants. How did
Singapore manage to train that entrepreneurial drive out of its
Asian immigrant population? I think the answer lies partly in
regimentation. Singapore originally needed it, and we emulated
the Japanese closely. The regimentation allowed us to produce
very high quality goods and services, making us one of the fastest
growing countries in the history of our planet in terms of gross
domestic product (GDP) per capita. Our GDP goes up because we
have managed to attract investments into higher and higher end
activities -- but we lose jobs in manufacturing simply because we
are not the cheapest place for production. The more successful
we are, the more lower-end jobs we will lose.
We don't have sufficient numbers of accomplished people
in post-industrial, high-margin businesses. I think Singaporeans
are, at the heart, entrepreneurial; so if cultural roadblocks open
up, it will happen. The trick is to realise you have to change, and
We should also get more entrepreneurs to be based in Singapore
to stimulate the entrepreneurial attitudes in our people. Education
helps the mindset to be pro-entrepreneurial, but it takes role models
and experienced hands as well. Silicon Valley's success derives
from immigrants. One-third of its founders are Asians even though
only 3-5% of the US population have Asian origins.
If you have a child that will be looking for his or her first job
in 15 years' time, and if you are fortunate enough to have a child
who wants to shake up the world, will he or she be able to shake
up the world from Singapore? I hope in 15 years, there will be
lots of areas in which you could answer "yes." It is a Catch-22
situation: if you don't have the opportunities here, the world-class
professionals will not congregate here; if the world-class communities
are not here, there will not be opportunities available. A not-very-pleasant future scenario is if our youths who want to
live the easy life stay, but those who want to make a difference in
the world have to go elsewhere to realise their dreams.
What measures can the government and industry adopt to spur entrepreneurship further?
Ong: Singaporeans interested in building a significant software
company should go to Silicon Valley, even though they may
eventually end up in China or India. A growing trend in the Valley
is for companies to push their operations, other than sales
and marketing, into Asia. China and India offer a greater pool of
engineering talent and lower cost in creating intellectual property
(IP), software, and technologies than most other places in the
world. Singapore has to leverage its legal and physical infrastructure
to be in the running as an alternative. We actually do have
sufficient advantages to be worth consideration as a centre for
software development -- Encentuate, for one, is doing product
engineering in Singapore -- but we have not sufficiently marketed
Singapore to the Valley.
I am trying to get the Infocomm Development Authority of
Singapore to convince some of these Silicon Valley companies to
locate their engineering in Singapore. During the last four to five
years after the dot.com bust, the Valley has been pushing their
engineering centres into India, China, and Eastern Europe. Now
Estonia is the software hub of the world thanks to Skype. We
need that here.
I worry that Singapore does not understand how fast the
high-tech, high-IP world moves. Government incentives make
it attractive to do business here but that is not the whole story.
Grants that require a lot of internal administration and reporting
push resource allocation in start-ups in incorrect ways for growing
long-term businesses. But short-term grants do help initially
to bootstrap businesses. We should cut the red tape currently
required for grants. Maybe 5% more applicants will cheat, but
the nation will reap more returns in the end. We have to lose the
kiasu (scared-to-lose) attitude.
Some government officials understand and share my perspective,
which is a good sign. But we could do with a greater sense
of urgency and act faster. One problem in our lack of focus on
future wealth-creation businesses might be structural. The Ministry
of Trade and Industry serves as the primary economic agency
now (with a focus on the traditional manufacturing and services
sectors), but if you look at the next generation of wealth creation -- IP, software, media, design -- these sectors actually lie with the
Ministry of Information, Communication and the Arts (MICA),
more traditionally a regulatory and social agency. A good sign is
that MICA has recently been on a mission to promote the nonmanufacturing,
The easiest way to measure wealth creation is gross margin.
When we took a sample group of top Singapore IT companies,
their average gross margin was around 25% -- in sharp contrast
to a group of top US firms' (including Yahoo! and Microsoft) of
around 75%. People pay a lot more for IP.
Software, music, video, and so on are high gross-margin products.
A S$15 CD probably costs only 50 cents to make. Biotech
has a high margin only if you're making drugs or medical equipment,
but profits for pure manufacturing are lower. Chip-design
companies are no longer hardware companies because the margins
are much higher if you're just selling the raw IP of the designs.
If we don't increase the number of high gross-margin businesses,
we are going to end up sidelined economically because
we will not have something compelling to offer the world. It will
become a negative spiral. If we do it right, 15 years from now, our
kids will be able to "shake up the world" from Singapore.
A further reason for the focus on the wealth-creation businesses
is that companies are much less "sticky" than people. When I talk
to multinational corporation managers and ask them why they are
in Singapore, I get lots of good economic reasons... which is great
for Singapore. But when I talk to Singaporean business people,
the answers are less economically-based -- "I live here" is a typical
answer. As companies leave Singapore because economic reasons
to be here change, it becomes clearer we need to have more businesses
that are anchored in Singapore because "I live here."
My definition of success for Singapore is not merely whether
we can provide a reasonable living wage -- for the majority of
us, we have or soon will pass that stage. We have to look further
up the Maslovian hierarchy. We have to be sufficiently central on
the world stage so that our people, living in Singapore, have the
opportunity to be movers and shakers.
If you have talent, you can go anywhere. If Singapore does
not provide a place that is attractive enough for global players
(including our own global players), we will be less relevant before
too long. But I am hopeful. The energy our nation has shown in
overcoming obstacles in the last 40 years in building a place for
doing business can be channelled to building a place for creating
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