 Earlier this month, EME joined nearly 2,000 leading experts from the marketing industry at Mumbrella 360 Asia - the region’s largest marketing and media conference, held at Singapore’s Marina Bay Sands. At this conference, the industry’s biggest players come together to forge connections, ask pressing questions and share their secrets and strategies to achieving success. Speakers and panellists were invited from leading global companies such as Unilever, Johnson & Johnson and Prudential; tech giants like IBM and Netflix; media leaders such as CNBC; NBC Universal, BBC and Vice; and up-and-coming companies like Lazada, TikTok and Twitch - all of this in addition to the marketing industry’s biggest firms: Ogilvy, Kantar, Hubspot, UM and Accenture to name a few. As you can imagine, it was an action-packed two days of knowledge sharing and information overload. In this blog, we share some of the things we learnt. Promotion by Emotion Several of the keynote speakers emphasised the need for brands to strive to push out emotional content, rather than the typical barrage of rational and functional marketing messages that brands constantly churn out. Why? Because emotional content is more likely to be shared and engaged with, and it is also more likely to be remembered by the consumer brain. Since consumer behaviour is 99.9% driven by the highly emotional subconscious, there’s an emergence in neuro-marketing among companies and agencies, as well as media companies, for getting their messages across. This means marketing with behavioural economics instead of neoclassical economics - instead of using typical functional selling points like “a product is cheaper, bigger and tastes better”, there is now a shift to “a product gives you happiness, makes you feel safe and strengthens your relationships”.  Coke’s “Choose Happiness” is a strikingly obvious use of emotional marketing. Trigger Happiness We learnt that while generally an average of 50% of purchases come from word of mouth, 80% of what triggers word of mouth is good brand experiences, not only functional from end to end (everything works, nothing is broken) but also meaningful (not only is nothing broken, it was so easy to use because my needs were anticipated). To take this up another gear: company’s should aim for pleasurable experiences (not only is nothing broken and the platform quite easy to use, the content was hilarious and brightened my day).  Where can customers rank their experiences with your brand?
(For)give Me Another Try Building close relationships with customers is also a good hedge against future misdemeanours. Customers who have a connection with brands and companies, whether with positive brand associations or great brand experiences are not only more likely to make a purchase or tell a friend (this we knew already), but they are five times more likely to forgive a brand for mistakes made. This is crucial in the world we live in, considering such mundane things like a five-minute response delay or misspelled customer name could result in customer loss in this age of fast-paced and hyper charged customer service (the age of the pampered customer). Just (keep) do(ing) it Big brands are becoming all about predictive personalisation. That is, using data-driven content automation to enhance customer experiences and keep people coming back. In our digital age this is as easy as simply relying on users’ behavioural history with the brand’s platforms in order to determine the perfect algorithm for developing content that their users will find interesting, engage with and most importantly lead to sales or conversions. If you’re still unclear what this means - just scroll through Facebook and note that you keep seeing more cat videos ever since you spent a whole day watching cat videos. Go your own way Lastly, we learnt that we should be wary of “best practices” because it’s those disruptors who break the mold of best practices that truly find success. Startups and early stage companies especially are most likely to pattern growth strategies based on existing companies, which could be a crucial mistake[c1] . From a VC firm’s keynote we learnt the key steps for bootstrapped growth: identifying the brand’s purpose, building brand assets, identifying platforms, developing powerful stories, growing advocacy and loyal customers and of course, tracking. This is a good guiding light to follow, since doing too much in the short-term could be harmful for long-term growth if these short-term activities are not linked to long-term strategies. All in all, it was great to link up with the region’s very best marketing professionals, and we can’t wait to take back everything we’ve learnt and apply them towards the growth of EME’s fast-growing portfolio companies. Do you agree with what we’ve shared? Have anything to add? Drop us a line at [email protected].  Myanmar – land of the digital leapfrog! More phones than people! It’s all true, but stating that something is, is not the same as stating what it means. Does it mean that digital infrastructure is changing millions of lives every day? Yes, we’d say so. Does it mean rapid adoption of mobile applications by a great proportion of Myanmar’s 50-60M population? No, not really. Is there a range of startups successfully taking advantage of digital leapfrog Myanmar? There’s less of a “range” and more of a “few”. This post tries to lift the fog on Myanmar’s leapfrog headline and uncover some truths to success in this now famously digitising economy.
Let’s start with some basics from a macroeconomic perspective. Myanmar has the lowest income per capita of any SEA country. When incomes rise, people have a greater ability to consume. To begin with, most of this consumption is taken up with better food – meat and sugar consumption increases. But until incomes rise beyond around USD 3.5K (Indonesia today), people don’t tend to spend much more on non-essentials. At around USD 5K (China in 2010/11), things have changed significantly: people buy pets, vehicles and other luxuries. Myanmar is at USD 1.5K on average. That means the average person is giving one thing up to get another. Evidencing this point, one study of rural solar home systems (in Sub Saharan Africa) found people who bought the systems would then consume less meat and sugar. This leads us to two observations: 1) let us think more about 10-20M then 50-60M people if we’re selling even a low-price product, because a lot of people just can’t afford new things. 2) If people are going to sacrifice nutrition to buy your product, it’s going to have to more value than a balanced diet. That’s some real value we’re talking about – in the example above, people with a solar lantern have clean light inside the home and avoid smoke and fuel costs and danger of fire. Even Candy Crush can’t compete with that. Unless selling to the very low income, people may not need to give up sustenance for your product but the concept remains: all decisions include giving up the next best option (opportunity cost) so you have to deliver tremendous value to have people choose your product / service. Indeed, the Irrawaddy recently stated that minimum wage earners spend 85% of their income on rent. The next issue is best expressed in plain terms: if someone with limited education or need for an electronic device suddenly has one, they’re going to receive less immediate benefit from it than your average urban college kid because they simply won’t appreciate how to maximise its utility. People often talk about “customer education” – upskilling the customer to use your product. The conversation goes like this: “OK, it’s a good idea, but will people use it?”, “Yes, we just need to make sure we do a lot of customer education.”. That’s fine in principle, but education in general has huge free rider issues, as any garment factory owner can attest to. Example: If factory A provides training at a cost of $10 per person per month, factory B could hire the person for $5 per month more salary after they have been trained Factory A. In other words, customer education is expensive and there’s little guarantee you’ll see a return on your investment (you could teach customers to use your ride hailing app, but then they’re better equipped to use all ride hailing apps). How then, do you create a product for the mass market that people will use? Let’s consider Bagan innovation Technology (BiT) (not an EME portfolio company). BiT have around 14M users of their Burmese language keyboard. They got into the market early with a solution that everyone needed. They also have a bookstore. To drive people to the bookstore, they leveraged monks and monasteries – places and people of education. Finally, they have a fortune-telling app that is growing exponentially – BiT tapped into something people are already spending money on and made it cheaper and more efficient. In summary, to reach millions you have to offer something useful, better than the alternative and that people find true value in. The key is “people”: unless you fully understand your customer, you can’t know what they will value. A final point on reaching scale in Myanmar. In fact, in Southeast Asia because this isn’t unique to Myanmar. There is a lot of reason to consider offline and online approaches to reach or maintain customers. Tech has leapfrogged, but trust is catching up and offline approaches are easier to trust in (see a person, touch a product, go somewhere to get service, etc.) Just look at Shop.com.mm with their agent model or bricks and mortar shop, or BiT who initially reached customers through monks. The same is happening in Indonesia with Bukalapak agents or Storeking in India. People often don’t want to consider the expense of being offline and there’s little hype around opening shops (versus launching apps) but in markets where trust is limited and exposure to technology is still new, there’s a good reason to go beyond Facebook marketing to scale. That reason is: unless you innovate in how you reach and maintain customers not just your product, you’re unlikely to succeed in this economy.  Twelve months, six investments, three new hires. Since launching in October 2018, EME has had a stellar year, if we do say so ourselves. We’re not getting ahead of ourselves yet though. As we see it, we’ve set a high bar for ourselves for 2020 and beyond. When we meet startups we often ask what they’ve learnt in their short-lived experience trading as a company. There are no magic answers to this question, rather it’s a way to see how founders reflect, adapt and strategise. This post focuses on our reflections after twelve months investing in early-stage companies in Myanmar.
1. Relationships Matter Strong relationships are formed over time and through good and bad times. When things are good, relationships tend to be easier. When things are challenging, relationships can either grow or suffer. We see that this comes down to trust. As investors, we ask ourselves “is this a founder / team we can trust to overcome challenges?” and startups should be looking to EME asking, “can I trust this investor to back me when things don’t go to plan?”. Great companies become great often by pivoting many times (Slack started life as a video game). Pivoting means admitting the first plan isn’t the right one and pursuing a new direction and for that there needs to be a lot of trust among both investee and investor. It’s hard to explain when the occasions arise where trust is deepened, all we can say is you’ll likely know when they arise. In these times, we try to be cognisant about the decisions we make today and how they affect the trusting relationship that we’ll need in the years to come. 2. Support is Crucial Early stage companies in any market need mentors and advisers to succeed. In a frontier market such as Myanmar, this is even more true. In our experience, supporting entrepreneurs is about helping them to achieve their vision. This could involve a range of things, from analysis and strategy to direct support in sales and marketing. Most importantly, it’s about working with, not against, the entrepreneurs and their team. When we make an equity investment, we’re literally buying our way to becoming a part of the company and this comes with a lot of responsibility. Our investors have trusted us to find and help scale the companies of tomorrow, and the only way we’ll help great entrepreneurs create amazing companies is by letting them do what they do best. As investors, we don’t want to change or lead the strategy of our portfolio companies, we want to encourage them to push further, take risks and do those things that will redefine markets in Myanmar. To do that, we’re constantly looking inward about our support, its effectiveness and how we improve. 3. Research is Priceless Being inside the market is crucial to investment decision making. This is true anywhere but again more so in markets that lack data, infrastructure and are going through economic transitions – like Myanmar. Our investment analysts live and breathe the market we invest in and they’ll write a full in-depth research report about each startup we present to our investment committee. This report is the output of weeks of intensive research, not just desk-based but being out in the market interviewing, testing, ordering, etc. It’s a lot of work, but it’s integral to our approach and has helped us identify truly unique companies. And it’s not just research into companies, but sectors too – EME is sector agnostic, but by researching individual sectors, we deepen our understanding of the companies within them. We’ve summarised this internally as “working with intellectual integrity”: to listen, question, test and think without bias. 4. First Impressions Last The fabled elevator pitch. Those few minutes you have to impress/sell to someone before the meeting is over and they’re gone, perhaps never to call you back or to become your next customer / investor. Most founders are probably tired of hearing about how to deliver the perfect elevator pitch and we’re certainly not going to try that. What we have seen though, is that first impressions are stickier than gum on your shoe on a hot day. This works both ways: make a great first impression and there can be a lot of flexibility afterwards but, make a bad one and you may not bring it back. Pro-tips for anyone meeting us for the first time: read our blog. People are nothing if not easily flattered and seeing you’ve read our blog will show us you care (and that you do your research). We’re also big fans of the “four Hs” (happy, helpful, humble, hungry) and tend to get on well with people who encompass these elements. 5. Questions and Candidness Count Since EME’s inception, we’ve considered it our responsibility to ask challenging questions and give candid, constructive feedback to startups we meet. Whether it’s a very first meeting or a board meeting after we invest, we’ll share our honest thoughts and recommendations. Mostly, the response to this approach is overwhelmingly positive – hopefully some of you reading this can attest to that. Of course, on occasion it backfires. On this note there are three things we have considered: 1) we’re not always right and don’t intend to give that impression, we just say as we see it; 2) we’ve met 150+ startups, so we’re a pretty good barometer of who’s doing what and what’s working / not working (we invite you to pick our brains anytime!); 3) to make an omelette you’ve got to break a few eggs – we’ll continue with the tough questions, to find those who have inspiring answers. Ultimately, we value sincerity and we’ll always be sincere with our questions and feedback. We’ve learnt it’s not always easy, but still believe it is always the best approach. --- We’ve focused here on lessons in our investment approach, more than internal operations. That probably doesn’t do credit to the amazing EME team, which is therefore the final point to this post: being good at anything means building an amazing, inspiring, committed team. I’m honoured to work with my colleagues here at EME and we love seeing entrepreneurs and founders who put their team first. To meet the full team and our portfolio companies, check your inbox for your invitation to our one-year birthday party this 20th November. If you don’t have an invitation, drop us a line and we’ll see what we can do – [email protected]. |
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