In the 1980s and 1990s, Taiwan’s collaboration with Silicon Valley has fueled the success of its indigenous semiconductor and personal computer industries. Now, as the island nation strives to build an innovation-based economy, how can it learn from the experience of Silicon Valley?
Last week, Meet, in partnership with Startup Island Taiwan, invited two Taiwanese-American entrepreneurs -- Kai Huang, (co-founder of RedOctane, acquired by Activision Blizzard) and Steve Chiang (EVP of Worldwide Production and Studios at Warner Bros and co-founder of Tiburon Entertainment, acquired by EA Sports) -- who are based in Silicon Valley, to a fireside chat to share their startup stories and what Taiwanese entrepreneurs should pay attention to while building their own company. Their words are slightly edited for brevity.
Q: How do you make sense of the difference between the startup community in Taiwan and Silicon Valley? How can Taiwan learn from Silicon Valley?
Kai Huang: “I’ve spent some time in both startup ecosystems, in Taiwan and Silicon Valley. Fifteen years ago when I started angel investing, we came back to Taiwan every year, and that’s when I started to delve into the local startup ecosystem. So I’ve seen a fair amount of startups over the past few years.
First, I think everyone understands that if you just want to run your company in Taiwan, the market is way too small. It might be a great business, but not a venture scale business. So as you build your company, you should really look at Taiwan as the initial experiment, and from the beginning, have your mind set on which other markets to do next. [This is] what happens a lot in game and app development. When you’re in your development phase, you don’t think about launching in your target territory right away. You have a plan to launch in different markets. For a US-based company, it’s usually Canada or Australia, where you have a safety net before going to, for example, Europe or China. This is one of the first things I would think about: if you start in Taiwan, you have to think about what the other markets you want to go into and how to build the company around that. Use Taiwan as a test point to work out the pace and figure out what products to build.
The second thing is to understand branding and its power. My brother and I started RedOctane in 1999 and it was acquired in 2006. It was primarily for one big game, Guitar Hero. Right away from the beginning of the company and the product, branding is very critical: How do I build this brand holistically, how do I present our company to the media and consumers, and how do I build this lasting brand that they’re going to understand?
Last, I think the scale of process is something to be mindful of. It’s great to get that early traction, build that product, but you have to scale and scale really quickly. We were lucky enough to be at the right place, at the right time, but we wouldn’t have succeeded if we weren’t able to scale. A lot of that scaling is about hiring the right people and getting talent in place. You can get some initial traction and raise some money, but knowing how to spend it and scale is critical. The ecosystem in Taiwan is still young for startups, so there may not be tons of experience there. But it’s going to happen. And when that happens, we want to make sure startups are on that path.”
Steve Chiang: “I’m not as familiar with the Taiwan ecosystem, so here are some thoughts based on my experience. What Kai talks about is, if you’re building a product in the US, your audience is 300+ million people. A lot of that does come back to perspective. When I was in EA Sports, the green light process takes about a hundred million dollars. That’s a lot of money in the 90s. There’s only a handful of games that can generate that money. And that’s the mindset and thinking that goes into the product design, development, and marketing. You try to think about how to get things through a hundred million dollars. If you think about consumers, you think about billions of users. You have to start with a broad mindset and then figure out the steps. Focus on consumers, think about user experience and what you’re building for. Try to work backwards from what you’re trying to drive, test and iterate.”
Q: How should startups scale in different markets?
Steve Chiang: “From a lot of companies that have scaled, [I think startups should pay attention to] usability and accessibility. Like Apple is taking what has become complicated computers and simplifying it, so my dad can use an iPhone and a Mac. You look at Google back in the early days, the story goes: Sergey [Brin] was getting email every day, which has 50 or 60 words, and that was the number of words on the homepage of Google.com. They were shooting for very clean, simple, user-centric [page] with accessibility like “hey, user is asking a question and let’s give them an answer.” They also focus on the speed of search response. And then you remember Yahoo, for which Google used to be search engine. They put all the stuff on the page.
The nice thing is that you can use cloud-based user testing. You can do fast surveys using Google. You can test in the market with the consumers. Start with the core foundation of user experience: what their motivation is, what they’re trying to do, and how fast we can get there. If you think of everything in free-to-play or Amazon, there’s really this funnel: how many clicks on the product page, how many clicks the buy button, how many get to the cart, and etc. These key performance metrics can help you shake the experience, and with the right metrics, you can optimize more. Ideally, you’ll find the right formula to scale.”
Kai Huang: “One of the most important things is really trying to narrow down to ‘what you’re delivering to your customers.’ That’s not always easy. In a startup phase, your idea shifts all the time. But as an example, one of the things we understand after launching Guitar Hero is the idea that people want to unleash their inner rockstar. So we create a game that’s fun and mass-market. Everybody can do it. A real guitar would take you several years of really hard work and you probably still wouldn’t be a rock star. [But with our product,] within two minutes you feel like a rock star. It’s really about finding that, and once you find that, it goes into the basics. Generally speaking, it translates. The best idea translates. If it’s simple, it translates well. You still need to do some testing. Every country and its people are different, so you might need to adapt. But I think that’s a critical part of branding.
It also goes into other parts of your business. As an example, once we figured out about unleashing the inner rockstar, it became easier for us to figure out what products we wanted to do. Like a product that we, unfortunately, didn’t release, was a karaoke game. In Asia, karaoke is of course popular, but in Europe and the US, people are more afraid to sing, I think, socially. The idea is also unleashing their inner rockstar. You can pick up a microphone and sound awesome. Once you have your value proposition, it drives everything behind your branding and also product development and other aspects of your business.”
Steve Chiang: “What you build and what you don’t build is just as important. That’s the prioritization that focuses around really understanding what you’re driving to and make sure you deliver on that better than anyone else in the world. You have to have this mentality to be the best and be hyper-conscious about what other people are doing better and what you don’t do as well.”
Q: How should startups react to the challenge from bigger players in the market?
Kai Huang: “If there’s no competition, you’re probably in the wrong market. The market is too small. You should expect competition at some point. It’s usually when you reach some kind of success, but even in a startup stage, I’ve never seen a startup doing something that none of the existing tech companies is doing. You’ve just never heard about them because they’re too small, in their early stage. I always expect competition and that happens with us many times. Whenever we launched a successful product, we had competition. This goes back to what I was talking about earlier: your core value proposition to your consumers. You always come back to that. This is what we’re going to focus on and differentiate -- because this is what we think we do best.”
Steve Chiang: “Competing with big companies in some ways is scary, but at the same time it’s not. These companies have billion dollars R&D and investments, but they also have thousands of priorities and they have innovator’s dilemma. In some ways, when we talk about competing with Activision or EA, they’re not going to take a FIFA free-to-play. They earn a billion dollars on FIFA globally. If they go free-to-play, they might give up on a billion dollars globally. You have to understand these different players, who have different priorities. If it’s on their priority 50 or 200, you have to believe you can out-iterate, you can do it better and faster.”