A New Generation of Entrepreneurs Makes Its Mark

"If not a restaurant, it would be something else. A true entrepreneur is willing to tackle any line of business," says Ting Wei-chun, his eyes flashing, when speaking about Ringside, a restaurant he opened recently.

After graduating from junior college, Ting transferred to the Department of Business Administration at National Taiwan University. While at NTU, he opened an Internet shopping site. "My brain was full of ideas about new businesses to start," says Ting, who was born in 1975. "I even considered improving upon the '0204' premium-rate 'adult service' telephone system." After graduating from university, he found jobs easily with his prestigious degree. From trade to logistics to electronics, Ting always earned enviable salaries in whatever field he worked.

"But no matter how good the pay, I never lost the desire to be my own boss." In the middle of last year, Ting's entrepreneurial concept gradually took shape. "Taipei has many excellent performance groups, and yet many of them lack chances to perform. My first idea was to combine a restaurant with a theater and the performing arts."

With its low bar for entry, the restaurant industry is a choice that never goes out of fashion. To test his concept's feasibility, Ting and his former classmates, who work in banking and finance, brainstormed the idea. When they reached the point of conceptual maturity, Ting then asked them to invest.

From conception through investment, these good friends were willing to back his venture because of their firm belief that combining haute cuisine with the performing arts would provide something new for Taipei and meet Taiwan's societal need to develop creative industries.

Ringside is located in the basement of a building on Ssuwei Road. On a weekend night "Little Liu," formerly head chef at the hotel Landis Taipei, is supervising in the kitchen. Several of the original dishes he created for Ringside, including "brandy-apple-glazed duck breast" and "lamb chops with herbs and Indonesian miso" have made a name for Ringside in Taipei's culinary community.

Nevertheless, at this moment the lamb chops, which combine Japanese miso with a satay-flavored sauce, have temporarily lost the attention of the guests, who are instead held rapt by the ClownMime performance troupe.

The creative side of Ringside has earned rave reviews, but it's a tough business to manage. "There is a huge difference between high season and low season in the catering industry, and personnel turnover has been higher than anticipated," Ting notes. "Moreover, delegating authority hasn't been easy. Originally, I thought I could just hire a dining manager without having to be involved in the daily nitty-gritty. But because the dining manager couldn't apply sufficient pressure, I've had to jump in and manage the servers myself."

Ting lacked catering industry experience, so when he had professional questions, such as how to control the quantities and arrival time of purchased food, Ting sought out his classmates. They introduced him to old hands in the field, from whom Ting learned on the job. He also designed a spreadsheet, so his chef wouldn't have to be groping in the dark when purchasing food. After Chinese New Year's, when Ringside had been open for three months, the restaurant moved out of the red and into the black. It meant that he could "look straight into the eyes" of the dozen or so friends who had invested NT$21 million all told.

On weekends Ting used to enjoy going to friends' villas and playing tennis, but now his tennis racket cover is gathering dust. "If the business failed, I could still find work with a good salary," says Ting, who regards his communication skills and ability to integrate resources as his strong suits, "but when you have to face so many investors, it's hard not to give it your all."

A view of Silicon Valley. The development of high-tech industry in Taiwan was closely connected to the growth of Silicon Valley. The great numbers of scientists and engineers who returned to Taiwan in the 1990s after working there brought with them its entrepreneurial spirit.

Entrepreneurial character

Having left a high salary and a set schedule with ample leisure time to write a business plan, Polaroid founder Edward Land once described entrepreneurs as people willing to put all their eggs in one basket, gamblers who chose either to hit a homerun or strike out. It's a characteristic that makes them quite unlike prudent professional managers, who stress spreading risk.

Born in 1976, Aevoe founder Steven Huang is another member of the 1970s generation who chose to start his own business rather than take the easy way.

From a young age, he was a brilliant student, and he had an entrepreneurial father who, whether his business ventures succeeded or failed, would always get up on his feet again. "Once I entered the graduate program in electrical and control engineering at National Chiaotung University, there were many entrepreneurs among the laboratory instructors and the students ahead of me in the program," Huang explains. "Among them was Chien Yu-wei, who was responsible for technology development in the team that founded Silicon Motion Technology [Taiwan's first IC design company to be listed on the NASDAQ exchange]."

Having been steeped in an entrepreneurial ethos from a young age, Huang developed a business plan based on his own videophone technology even before he finished the program. The plan won first prize at the Technology Innovation Competition 100, sponsored by the Advantech Foundation. He used the same technology for his master's thesis on dual-mode videophones. He succeeded in obtaining ROC and US patents, and his technology began to attract the notice of venture capital firms. When he established Aevoe, Huang was only 26 years old.

Nevertheless, walking the road less traveled is never easy. In the process of founding a company, there are numerous variables that can't be anticipated in business plans.

"First of all, establishing an electronics brand is much harder than one thinks. And in the early period, when bundles of cash are being burnt but there are no revenues, the pressure naturally mounts." Sales of the company's first product, a "peer-to-peer Internet phone," didn't live up to expectations. As a result, the company board took over product development, casting aside Huang's original technology, and promoting instead a portable digital television device that can be hooked up to computers. Consequently, Huang, who had been director of product technology, was shifted to the marketing department. "I could have lived off my patent royalties and looked for another job," Huang says. "But I thought about it, and it seemed rather lame to live off a patent at such a young age." He decided instead to view the change in circumstances as a learning experience.

In September 2003 a team led by Steven Huang (second from right) took first prize in an entrepreneurial contest sponsored by the Industrial Bank of Taiwan. Wu Ping-fei (center), one of Huang's graduate program instructors, also attended the award ceremony.

Generation change

The entrepreneurs of every generation have encountered difficulties when starting their own businesses. Nevertheless, the 1970s generation is gradually altering the face of Taiwan entrepreneurship as it enters the peak years for founding new businesses.

According the Small and Medium Enterprises Administration of the Ministry of Economic Affairs, 99.7% of the more than 100,000 new businesses created in 2004 were small or medium in size. Restaurants, wholesalers, and retailers accounted for 65% of them, whereas manufacturers only accounted for 5%.

From 2001 to 2004 the proportion of exports from newly formed SMEs dropped from 3.18% to 2.02% of the total exports of all SMEs. What's more, domestic sales and total sales both dropped to five-year lows in 2004. The trend has increasingly been toward smaller and smaller firms that mostly meet domestic demand.

"The biggest single reason for this is the changing industrial structure of Taiwan," explains Chang Yu-shan, dean of the College of Management at National Sun Yat-Sen University. "The era of labor- and capital-intensive manufacturing is ending. When young people open a business these days, services represent the mainstream. Technology-related firms are secondary."

For these newly created service businesses, entrepreneurs of the 1970s generation like to stress their own creativity and thinking. "Even if they are providing traditional restaurant and leisure-industry services, they try to create special features and a special style," says Chang Yu-shan. "The proprietors of the homestays and specialty restaurants that have sprung up in recent years are invariably young people who are very interested in those fields." Influenced by the knowledge economy and the rising tide of culturally creative businesses, "many of these young service industry entrepreneurs--from their attention to detail, to acquiring expertise, to developing professional know-how--take bold creative steps to find market niches, so that they can attract consumers in spite of high prices."

Apart from using performing arts to attract business, Ringside has also hired the chef of a five-star hotel, who has created one outstanding dish after another for its menu.

The next person on the job

Young people long to start service-industry businesses that will allow them to combine their dreams with work. But services based on face-to-face contact are difficult to quickly recreate or move. The models used by large international chains like McDonalds, Starbucks or Eslite aren't easy to duplicate, which makes it hard for these entrepreneurs to shoulder the burden of promoting national economic growth or earning foreign exchange.

In which case, can high-tech firms, which create high added value and stimulate the creation of other businesses, win the favor of 1970s-generation entrepreneurs, so that they raise Taiwan to its next level of affluence? The outlook isn't promising.

Taiwan's current high-tech fields, such as silicon wafer fabrication and optoelectronics, all require large investments of capital in clean-room equipment and so forth. "There's no way for the younger generation of entrepreneurs to compete in these capital-intensive fields," notes Wen Chao-tung, director of the Graduate Institute of Technology and Innovation Management at National Chengchi University.

"Take a look around, and you'll see that Taiwan has neither the research and development capabilities of a Silicon Valley or a Boston, nor the high-quality professors and students, venture capital firms and related support networks needed to nurture those high-tech companies," argues Chang Yu-shan. He says that it's folly to expect large numbers of young people to throw themselves into starting high-tech firms and leading the transformation of Taiwan's technology industry.

Back in 2001, Taiwan was not immune from the Internet fever that swept the world. Various Internet companies, such as Tomorrow Times and pAsia, were established to great fanfare. "Back then, everyone was talking about Internet companies, and the accepted wisdom was to appoint young people in their twenties as CEOs. The media was full of reports about 'the new Internet nobility,'" recalls Wei Ping-yun, a long-time observer of Taiwan's Internet development and the general manager of L7 Networks, a company he founded when he was 27. "As it turned out, when the Internet bubble popped, most of these former stars disappeared without leaving behind a model for younger entrepreneurs."

But society was still hungry for models, and the media continued to find them overseas. Numerous biographies came out about exemplary entrepreneurs from earlier eras--30-year-old foreign CEOs. The story of the Hewlett-Packard founders toiling in their garages was offered as an example for technologists around the world. Now there is Google. "The 1970s generation can't help but be anxious," says Ting Wei-chun. "Society is waiting impatiently for the next Stan Shih [Acer] or Steve Chang [Trend Micro]. But amid all the criticism of this generation for not creating companies with the size or ambition of the last, few seem to have noticed that the environment has changed."

In the future, apart from observing the trends toward a knowledge-based economy and cultural creativity, mainstream entrepreneurs will involve themselves in combining high-tech with services, bringing technology--including communications, data, and networks--into people's lives by nimbly integrating them into the service industry and finding new value in different kinds of integrations.

New businesses increasingly cater to the domestic market/Source: SMEA

Hard times for young heroes

There is considerable anxiety that as the giant wheels of industry inexorably roll forward, Taiwan's creative environment is gradually losing steam in comparison to other economically vital nations.

Statistics from the UK-based Global Entrepreneurship Monitor (GEM), which was founded by the London Business School and Babson College, show that Taiwan in 2002 had a Total Entrepreneurial Activity figure of 5 per 100 among those aged 18-64. That is about the same TEA as Singapore, where young people are notorious for just wanting to go to graduate school and then find a good, secure job. For the same year, the TEAs for South Korea and mainland China were 13 and 10, showing the resolve with which the Koreans have pressed forward after the 1997 Asian financial crisis, and the determination of the mainland Chinese to grab hold of every opportunity to shake off poverty through entrepreneurial ambition.

In order to rekindle enthusiasm for entrepreneurship in Taiwan, "The government has poured a lot of money into supporting young entrepreneurs," says Yang Kun-peng, director of startup assistance at the China Youth Career Development Association. "Even retired servicemen, Aborigines and housewives all have specially designated funds and channels for assistance. It could be described as the most ample funding of this kind in Asia." Yet most of these funds are earmarked for creating traditional businesses so as to "reduce unemployment." They are of little use in supporting industrial transformation and raising Taiwan's economy to a new level.

When ClownMime starts its act, Ringside's customers put down their chopsticks and give the troupe their full attention. Ting Wei-chu says that they plan also to book tap-dance routines, hand puppet acts, comic dialogues, and other acts, with the aim of creating an entirely new form of Taipei nightlife.

Entrepreneurial education

In addition to providing startup funding, "entrepreneurial education" has in recent years become an important part of encouraging entrepreneurship. The GEM points out that for Taiwan and other middle-income nations, this is a key moment, when the use of technology must be transformed into technological creativity. The importance of creativity is only growing. Therefore, the government and society should support the basic idea of entrepreneurship among youth as quickly as possible.

In this respect, Taiwan has already taken its first steps with entrepreneurial contests sponsored by the Industrial Bank of Taiwan, the Advantech Foundation and the Epoch Foundation. In recent years hundreds of college and graduate students have participated in these contests, and the Graduate Institute of Technology and Innovation Management at National Chengchi University has even factored participation into its grades.

"Even if the participants in these entrepreneurial competitions have had good ideas and developed all manner of business plans with exquisite texts and graphics, very few have had the determination to really put them into practice," says Wen Chao-tung, director of the Graduate Institute of Technology and Innovation Management at National Chengchi University. Starting a business is a huge commitment and expense for an individual, Wen points out. To support entrepreneurship, a society must have a cultural spirit that embraces trial and error, is tolerant of failure, and values those who get up after repeatedly being knocked down.

"Students in Taiwan regard these competitions as a coursework requirement or as a springboard to jobs. Very few are really willing to throw themselves into entrepreneurship," says Chang Yu-shan, director of the College of Management at National Sun Yat-sen University, who has several times acted as a judge at the competition.

The incubator at the Southern Taiwan Science Park. Entrepreneurial incubators based at universities and academic institutes have been an important part of the American system for supporting young high-tech entrepreneurs. With government assistance, these incubators have been founded in great numbers in recent years.

Inheritance and rebellion

In his book Innovation and Entrepreneurship, the great management theorist Peter Drucker argues that the changes in human society over the last 200 years truly require an entrepreneurial society. In such a society creativity and innovation are regarded as normal, steady and stable behavior.

Innovation does in fact challenge the old order, old ways of thinking and set commercial models. To some measure, it contains a rebellious spirit, a spirit that is part and parcel of youthfulness.

The generation born in the 1970s likes to distinguish their approach from that of manufacturing-age entrepreneurs.

"The older generation did OEM work, whereas we typically believe that Taiwan should do branded work," says Steven Huang. What's more: "The previous generation was willing to sacrifice their personal lives and Taiwan's environment for the sake of their businesses," says Ting Wei-chu. "They won the world but lost themselves. Although younger-generation entrepreneurs work just as hard, we aren't willing to place career success above all. We want to grab control of our lives, make them rich and whole."

At this moment, these young entrepreneurs' dreams may appear a little callow and unrealistic, but with time their business plans will not merely be charting their own paths to success but also shaping Taiwan's future economy--and perhaps even its ideals about life and culture.

Fledgling enterprises can develop technology with an incubator's support system, giving them a higher rate of survival. Shown here, a lab in the biotechnology incubator in Taipei's Nankang.

Tips for the Young Entrepreneur

Management guru Peter Drucker once said, "Entrepreneurism is an activity, not a personality trait. The essence of entrepreneurism is innovation, creating new satisfaction and new value for consumers." Utilizing resources and employing new modes of production to meet market demand is the engine of economic growth and, more importantly, the reason why entrepreneurship is respected.

It is generally held in academia that entrepreneurism can be encouraged through education, but is any given person actually cut out for starting up a business? What are the necessary makings of an entrepreneur? It would seem that education is not the only factor.

• Taking the boss's perspective

According to Rocky Yang, chairman of 104 Job Bank, "Entrepreneurship is a process of accumulation. An entrepreneurial mindset must be trained over a long period of time." Yang observes that most people start out working for someone else before looking for an opportunity to become the boss. He urges employees hoping to start up a business to excel at their current jobs, to look at things from the boss's perspective. The only way to develop one's entrepreneurial eye, says Yang, is to understand one's surroundings and acquire managerial skills.

• Stick to your knitting

"When you borrow money to start up a business, it's easy to go belly up," notes Stan Shih, founder of Acer, who points out that the chances of failure increase if you rely on short-term capital or charge into business without funds of your own.

Statistics from the National Youth Commission (NYC) and the Ministry of Economic Affairs' Small and Medium Enterprise Administration (SMEA) indicate that raising capital is indeed the biggest hurdle to starting a new business. A number of government agencies have offered business startup loans in recent years, including the Ministry of National Defense, Council of Indigenous Peoples, NYC, and SMEA. Standardized loan application forms are used, and procedures are simple, but applicants must put up at least 50% of investment capital themselves.

Running up credit cards or borrowing from loan sharks are the absolute worst ways to fund a new venture.

Another big no-no is to overestimate your abilities and start up a business in a field you know little about. Acer's first big crisis came when it invested in Acer Semiconductor, branching out from memory manufacturing into the wafer foundry business. The venture saddled Acer with losses of nearly NT$5 billion.

1970s-born Wu Tsung-en, chairman of Yannick pastries, heartily concurs about the importance of money and field-specific expertise: "The three principles for entrepreneurship are 'your own self, your own money, your own field.'"

• Who you know, not just what you know

The sales training manual for IBM Corporate Software states that even for high-tech products, human connections are still the key to successful sales. He Kun-chien, senior sales manager for IBM Taiwan, offers the following insight: "Do you know anyone in your clients' middle or senior management? These acquaintances are always more important than the products themselves or after-sales service."

Wen Chao-tung, director of the Graduate Institute of Technology and Innovation Management at National Chengchi University and founder of the Skylark restaurant chain, stresses the importance of having friends and contacts. He advises: "You've got to have a network of friends and acquaintances there to give you advice and connections. You've also got to be observant, to know what others want and get startup ideas. These are resources that an entrepreneur needs."

• Focus and persevere

Even now, four years after the burst of the dot-com bubble, large numbers are still drawn to dot-com ventures like moths to the flame, and most end up failing. Rocky Yang acknowledges that Internet usage has indeed risen steadily since the Internet was put to commercial use, but cautions, "The Internet is very nice, but it doesn't solve all your problems. You've got to avoid the temptation to join the dot-com stampede."

"In the decade since 104 Job Bank was founded, we've concentrated on one single task, which is to reduce mismatches in the job market, because by doing so we can reduce waste of resources," says Yang, who adds, "There are always jobs needing filled and people needing jobs, we've just applied the Internet to the hunt."

And finally, once you've lined up your resources and gone into business, you must be prepared to fight tooth and nail to stay in business no matter what. Hon Hai Precision Industry chairman Terry Gou has remarked that once you've plunked down your money, pouring every last drop of your life's blood into the business is still no guarantee of success. A lifetime is not long enough to make all the improvements needed in a company. To run a company, you have to be in it for the long haul.

(Vito Lee/tr. by David Mayer)

The restaurant industry, with its low bar for entry, has long been a favorite choice for young entrepreneurs. But Ting Wei-chun took a contrarian approach to the field, investing a lot of capital in Ringside, which combines gourmet food with the performing arts. He hopes to create a new business model.

Ten most popular products for business startups/Source: SMEA

Silicon Valley's rich entrepreneurial energy in large part stems from the many excellent universities nearby. This is the campus of the University of California at Berkeley.

Service, mainly catering, are the most popular choice for business startups/Source: SMEA