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Taiwan entrepreneurships should start from where it is strong, says Ed Yang, partner of ID Ventures America
Joseph Tsai, DIGITIMES, Silicon Valley

Having worked as vice president and CTO of Hewlett-Packard's (HP) Personal Systems Group and Computing Systems Organization for over 20 years in Silicon Valley, Ed Yang, currently a partner of ID Ventures America and a mentor of many young entrepreneurs, has been keen to contribute to the entrepreneurial industry.

He believes Taiwan has many leading edges in technology development, and transforming innovative technologies into applications and solutions for use in Taiwan's existing industries will be a good direction for Taiwan's entrepreneurship market.

New trends, new thinking

During the past 20 years, Taiwan's IT supply chain has built a firm manufacturing business foundation by providing OEM/ODM services to Wintel. Although the gross margins from the business have been low with slim profits, the experience gained from the cooperation with upstream players such as Microsoft and Intel is precious. Not only has it sharpened the Taiwan supply chain's manufacturing skills to reach the level of the current Made-in-Taiwan quality, many of Taiwan makers' operational abilities including cost control, production efficiency and flexibility have also been significantly enhanced, allowing them to quickly respond to first-tier vendors' design changes.

However, in the ever-changing world, Taiwan makers now face strong chellanges from competitors, and they can no longer rely solely on their capability of cutting costs. If the makers do not make some adjustments to their OEM/ODM-oriented business models, the past success may become an obstacle to Taiwan's industrial transformations, Yang said.

According to Yang, since Taiwan's IT enterprises have mostly focused on the downstream manufacturing side of businesses, only their US clients know about what customers need, dictating product positioning. For Taiwan makers, it has been difficult to understand customers' needs and the latest market trends. With fewer and fewer students in Taiwan willing to study abroad, Taiwan's enterprises will also have difficulty finding talent that has working experience at first-tier international companies.

This has already become a major problem for Taiwan's industries, as enterprises will need to recruit workers who can think and act in response to international market trends and customer demand, and who can conduct in-depth analyses of the company's business strategy from an international perspective. Focusing only on finding or getting better product specifications will cause an enterprises to end up becoming a follower of others.

Enterprises also need to think clearly about what their core strengths and values are and use their limited resources to accentuate their such strengths and values. Enterprises do not need to be able to cover all areas, but needs to focus on creating differentiations and find partners who can complement their business. Finding good partners is a very important process for a company and picking first-tier companies is a must; however, prior to that, the enterprises will first need to grow its competitiveness and show the vision of their future development to attract first-tier companies.

As for the directions of Taiwan's entrepreneurial market, Yang believes Taiwan should begin from where it is strong at, maybe choosing one of its traditional industries: Twian should first understand it thoroughly and then create solutions with new technologies to open up opportunities. For examples, Yang noted, Taiwan's agriculture can be enhanced by Internet of Things (IoT) or artificial intelligence (AI) technologies and applications, while the textile industry can innovate through adoption of new materials such as nylon fiber for heat- and fire-resistance applications or smart clothing, which has now become a popular topic.

Key personality traits for entrepreneurs

In his experience working in the venture capital industry, Yang has seen numerous cases of success and failure, and he believes passion, humbleness and flexibility are three major personality traits for an entrepreneur, and these are what he mainly looks for when interacting with business starters.

Passion is about whether entrepreneurs have belief in what they do and whether they are keen to realize the belief. Yang has seen many entrepreneurs willingly taking out loans to pay employees' salaries, showing how determined they were about fulfilling their goals.

When beginning an entrepreneurship, the entrepreneur is often being criticized and challenged by people around him or her. Some entrepreneurs are rather stubborn about their ideas, but during the process of launching products or services, there are usually many places that require adjustments. If the entrepreneurs can be humble and flexible, but remain unwavering towards the key direction, it can help reduce the chance of failure.

Yang also stressed that many entrepreneurs have technology backgrounds, but once their products have been released to the market and their businesses have grown to a certain level, the companies need to begin considering adopting an operation model of a formal enterprise. They may need to make decisions in terms of marketing, product positioning and other business matters, rather than just the technical side of the product. If the entrepreneurs have not been trained for handling business, cooperating venture capitalists would usually suggest recruiting a professional manager as the companies' CEOs with the entrepreneurs shifting to the role of CTO.

Many technology people tend to believe that they can accomplish all by themselves, but the most important thing about operating a business is to invest the limited resources into the right markets and places, Yang said.

Beside the personality traits, the ability of telling a good story is also a necessary skill for an entrepreneur. With entrepreneurships during the early stage usually filled with uncertainties, whether an entrepreneur is capable of convincing investors to spend money and time working with him or her is a key to success.

Another key factor for an entrepreneur to keep his/her company competitive is to maintain a entrepreneurship team of diverse backgrounds. If a team is filled with members with similar backgrounds and characteristics, despite the convenience in communication between the members, it would be difficulty for such a team to achieve a breakthrough. Silicon Valley has been known for its diversification, with talent from various places including India, Israel, the Middle East, Eastern Europe, China and Taiwan gathering together and brainstorming.

In the past, Taiwan relied on the PC industry to boost its economy. But the definition of PC needs to be upgraded from personal computer to personal computing, as the former now sees limited growth and technology breakthrough, and the latter includes some of the latest applications including IoT devices and smartphones.

Seeking new business opportunities from the Internet side or the things side of the IoT business and trying to think outside of the box will surely start generating new ideas for Taiwan's entrepreneurs.

(Editor's note: This is part of a series of interviews focusing on the problems and opportunities that Taiwan-based startups face. The interviewees are venture capitalists and angel investors from Silicon Valley and Taiwan.)

Ed Yang, partner of ID Ventures America

Ed Yang, partner of ID Ventures America
Photo: Joseph Tsai, Digitimes, May 2018

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