The will to change the world

Young people are finding that working for startups is more appealing

When Chinese Premier Li Keqiang recently visited Zhongguancun, the technology district in Beijing often referred to as China's Silicon Valley, he was told that the startup job-listings website Lagou.com had helped more than 1 million IT workers land jobs since it was set up less than two years ago.

Lagou.com's story of speedy success is a typical one in Asia, where there will be many "high-growth startups employing a great many people in just a few years", says Ma Rui, a partner in Beijing with 500 Startups, a global company that invests in new businesses.

"I think in China this is just a starting point," Ma says, adding that the "relative strength of wages" offered by startups is also important. "In China I have seen developer salaries in startups grow 20 percent every year, and now they have become very lucrative jobs indeed."

Justin Hall, principal with Golden Gate Ventures, a venture capital company focusing on Southeast Asia, agrees, saying "successful startups will hire at a tremendous pace".

Their optimism about the potential of the sector to create jobs is not misplaced, says PingWest, an online tech news portal.

China has pledged more steps to encourage entrepreneurship and boost job creation, and the State Council plans to support startups to spur employment growth.

Its plans include support for small businesses' efforts to hire university graduates and encourage skills training, especially for unemployed and rural residents, as the government pins its hopes on startups to help generate jobs and steady growth.

Li had earlier called for more proactive policies to meet the target for creating 10 million urban jobs this year. This goal is the same as last year, though the number of jobs created last year was 13.2 million.

In India, Prime Minister Narendra Modi is treading a similar path. Recently he announced a government plan to set up a self-employment and talent utilization mechanism to support all aspects of startup businesses, from credit to incubation.

Small businesses are the backbone of the nation, Modi said recently, noting the contribution that startups make in providing jobs to about 120 million people in India.

According to the report Global Entrepreneurship and Successful Growth Strategies of Early-Stage Companies, policymakers around the world are seeking to drive job creation through the development of entrepreneurship.

The report, by the World Economic Forum in collaboration with Stanford University and Endeavor Global, a nonprofit organization, cites Singapore, where the government has been providing a nurturing environment for startups for some years.

The city-state has invested S$100 million ($75 million; 67.4 million euros) in local startups, as part of its S$16 billion budget allocated to its scientific research and development program.

Meanwhile, in Malaysia, there are now plenty of supporting mechanisms for new entrepreneurs, including physical infrastructure, business advisory services and access to capital, says the Mansfield Foundation, an organization that promotes collaboration between the United States and Asia.

Startups are having a major impact on employment in the region, says Raman Chitkara, global leader in the technology practice at PricewaterhouseCoopers. However, he says, for this phenomenon to continue, the high number of successful startups in the region must be sustained.

"Establishing that history (of success) will generate more startups, which will then create employment opportunities and build that job machine," Chitkara says.

The inherent entrepreneurial spirit and risk tolerance among Asian cultures are traits that help get people into startups, which in turn is fueling the growth of startups in the region.

"Opportunities to work on disruptive technologies and business models, along with the prospect of associating with rapid growth and wealth creation, act as a strong magnet for the workforce," Chitkara says.

"However, it should be noted that the opposite could also be true, depending on the business climate, with the dot-com bubble serving as a powerful reminder."

Many Asian countries have very large young populations, with millions of people entering the workforce every year. Some countries do not have a large manufacturing sector. Even in countries that do, such as China, the trend is increasingly toward mechanization, especially as labor costs increase.

"This is an intriguing prospect, and certainly one to be taken very seriously," says Jaideep Prabhu, a professor at Cambridge Judge Business School at the University of Cambridge.

"Asian countries will have to look at other models of job creation. Young people entering the workforce will themselves have to consider going from being job takers to becoming job makers.

"In such a milieu, startups and more generally small and medium-sized companies become the engines not only of growth but also job creation."

Even if many of these startups employ only between 10 and 50 people, this would still help to increase levels of employment, Prabhu says.

Startups are not only generating jobs. With the rise of the on-demand economy, they are also providing people with additional income sources, says Edgar Hardless, chief executive of Singtel Innov8, a venture capital fund.

"For instance, the transport-based startup in Indonesia Go-jek needs drivers to make deliveries, thus giving motorbike owners an alternative source of income."

By increasing disposable income and reducing unemployment, startups will help fuel growth in the region to a fulfilling level, he says.

Jobs with startups are also often seen as fulfilling, because employees tend to be intimately involved with many aspects of building the business.

Another reason for the increase in startups in Asia is the fact that they have become "culturally desirable and sexy", Hall of Golden Gate Ventures says.

In recent years there have been many prominent examples of hugely successful entrepreneurs worldwide that appeal to a younger generation.

"There is not only the aspirational monetary upside of being part of the next billion-dollar Facebook or Uber," Hall says, "but also there are many benefits to being part of a startup that big companies simply cannot provide."

These include "better work-life balance, a better working environment and more passionate and culturally aligned colleagues and bosses".

Such factors are among the reasons young job aspirants prefer startups, according to Kris Gopalakrishnan, co-founder of Indian technology company Infosys and chief mentor of Startup Village, a technology business incubator in the southern state of Kerala.

In addition, the idea of lifetime employment with one big, stable, paternalistic employer no longer holds true in many parts of the world. Many young people are increasingly seeking fulfillment and excitement in their jobs, and big companies are not necessarily their top choice.

Prabhu of the Cambridge Judge Business School says that large companies are struggling to gain the trust and interest of young people.

"Increasingly, big business around the world has come to be seen as bureaucratic, inert and hard to change. Young people entering large companies today may feel they are being swallowed up by harsh, uncaring machines that only exist to achieve efficiency and maximize shareholder value."

Working for startups offers opportunities that more younger workers find appealing, experts say.

"Young people these days are both idealistic and practical," Prabhu says. "They want to change the world, and the perfect vehicle for achieving this is to set up your own venture with a few of your friends."

krishna@chinadailyapac.com

(China Daily Africa Weekly 06/12/2015 page7)