Recently, the Singaporean founder and CEO of Visier remarked that the reason there aren’t more Singaporeans running large companies is that culturally they are too risk-averse. This cultural aversion to risk plays a significant role in why it can be difficult for B2B companies to scale their sales operations in Southeast Asia and why many tend to shift their focus to the US once they reach a certain point.

Based on my experience, it generally takes 12-18 months of knocking on doors in the region before prospective enterprise clients take a start-up seriously. In Singapore, it’s seldom a question of whether the product is a vitamin or a painkiller, or whether it’s able to increase sales or reduce revenue. More often than not, it boils down to: “Who else has worked with you?”

This leads to early-stage companies being forced to climb the brand totem pole, starting with smaller, lesser-known local brands, working up to recognized regional brands, and eventually moving on to larger multi-national prospects. This can be particularly challenging because the issues that companies face differ based on their size, and different development strategies are needed to succeed in the enterprise market.

Loss Avoidance vs. Value Creation

The focus on loss avoidance rather than value creation means that most Singaporean companies fall into the late majority in the technology adoption curve. This doesn’t need to be the case, but it would require a significant cultural shift to occur. Risk is not inherently bad—it’s a necessary part of life. If you never took a risk, you’d never leave your bed, and that wouldn’t be much of a life.

Howard Marks recently wrote that winning in markets requires having a few winners but fewer losers, or having many losers but more winners. “Neither maximizing winners nor minimizing losers is necessarily enough.” He drew an example from the Wimbledon final, where Alcaraz beat Djokovic by hitting more winners at the cost of having more unforced errors as well.

This doesn’t mean that risk is inconsequential, but it is an inherent part of playing the game. Companies can do well even if they fail sometimes, as long as they have more successes than failures or if the outcomes from successes are larger than the failures. Most of the time, risks in business partnerships can be ringfenced, ensuring they are bound on the downside (i.e., the maximum cost is the contract value).

The US Beckons

Given this mindset, many Singaporean start-ups turn their attention to the US and other developed markets once they prove out some level of product-market fit because it’s easier to scale. This transition can be made more difficult if they have been nurtured by Singapore Inc, where they are lauded in the local press and cultivate relationships with government-linked entities.

While these relationships can help build a foundation of reference customers and develop the product further, they can also hinder the company from asking how they could expand more aggressively internationally. Often, these companies feel that they’re doing well, even if they aren’t thinking big enough.

Summing Up

Personally, I’m incredibly fortunate to work with some tenacious and relentless Singaporean founders early in their entrepreneurial journeys. They are optimistic about solving challenges in their markets, but they are typically hamstrung by the reception they receive from more established domestic companies.

More founders are starting to focus offshore earlier in their journeys. Without a shift in attitude locally, it’s likely that the next generation of entrepreneurs will want to skip a step and begin their journey in the US or other developed markets, which would be a real loss for Singapore Inc.