I never owned any luxury fashion until last month.

Before, I struggled to justify spending US$100 on a black t-shirt with the italicised words “agnès b” emblazoned on the front when a shirt without the six characters would cost a tenth of the price. Some would call me stingy, whereas others would shake their heads and think, “He just doesn’t get it.” They were right; I didn’t.

Luxury fashion is a US$108 billion market and will hit excesses of US$130 billion by 2025. Clearly, enough people “get it”, creating a robust global demand unabated by COVID-19.

Luxury fashion is not merely about the raw materials, craftsmanship, and high quality of that agnès b t-shirt, but the aspiration to communicate economic status, social status and consumption. What we wear symbolises who we are (and who we are not).

The challenge of digital with luxury fashion

Despite the e-commerce boom since the early 2000s with the likes of Amazon, only nine per cent of luxury goods sales in 2017 happened online, paltry in comparison to the industry average of 27 per cent of total fashion sales online. Factor in the COVID-19 impetus on fashion, and online sales are still expected to amount to only 25 per cent in 2025. What might explain this?

Consumers want to “touch it, feel it, try it” when it comes to fashion, especially luxury fashion. Most of us probably had the experience of browsing fashion sites, thinking, “Oh! That looks good on the model, and it’ll probably look good on me”, only to be disappointed upon receipt of the merchandise, a size too small, cutting too loose, colour tone off, the fabric feels cheap, the list is endless.

These issues are exacerbated when it comes to luxury fashion. It is no longer about fit or feel but the optics we perceive ourselves. Throw in the white-glove, personalised service from well-groomed, polite and beneficial ambassadors at physical luxury fashion stores. It is little wonder that experiencing haute couture digitally is lacklustre at best. 

So what can we expect when luxury fashion brands take a step into the metaverse, sinking deeper into the digital? Will consumers bite? What will the experience be like? Will it be a step up from the status quo of purchasing the physical online?

Also Read: The power of paid communities and NFTs

Luxury fashion in the metaverse remains an unknown, but brands are experimenting

	Wearing physically	Wearing virtually
Purchasing physically	The safe bet (I touch, I feel, I see, I buy)	?  (What happens here? Will I even buy digital apparel?)
Purchasing digitally	Not ideal (Maybe it will work…is there a return/refund policy?)

To explore some of these issues, I outline four strategies luxury fashion houses are experimenting with as they attempt to transform digital fashion from lacklustre to experiential. 

Broadly, luxury fashion houses experimenting in the metaverse have to answer two questions in their approach toward Web3:

• Do we want to go phygital by bundling digital fashion with IRL physical pieces, or keep it digital-exclusive?
• Do we want to strengthen our position as a coveted luxury or increase our accessibility to a broader audience (that is affluent nonetheless)?

The purists: Digital-only + coveted luxury

The purist approach focuses on limited-edition, high-priced, digital-only merchandise. Purists tend to draw clear boundaries, and a metaverse strategy should be targeted solely at the digital realm and not cross over into the physical world (at least not yet). In addition, luxury comes at a price, and only the elite can access it in limited quantities. Examples of this strategy include:

• Dolce & Gabbana: Collezione Genesi was a nine-piece collection that sold out for more than US$6 million in October 2021, including gold and silver dresses (titled “The Dress from a Dream”) embellished with shimmering beads and crystal accents, as well as two gold-plated and gem-studded silver crowns, called The Lion Crown and The Doge Crown, the latter being sold for 423.5 ETH, or US$1.27 million at the time of auction. It is interesting that Dolce & Gabbana first adopted this Purist approach before rolling out their second initiative as Adventurers (discussed more later).

• Nike and RTFKT released the Dunk Genesis CryptoKick virtual sneakers for the metaverse for US$4,000 to US$9,500, with select limited-edition pairs exceeding US$100K.

• Luxury jewellery and watchmaking brand Jacob & Co. sells the “first-ever NFT watch”, an SF24 Tourbillion timepiece, for US$100,000 at a 24-hour auction on the ArtGails NFT platform.

The purist strategy is centred around creating an aspirational desire among the luxury fashion house’s digital-savvy audience, introducing pieces inaccessible to most consumers due to limited quantity and exorbitant price tags.

Furthermore, even as most metaverses like Sandbox and Decentraland are being built, the lack of immediate utility transforms from a ‘bug’ to a ‘feature’, a not-so-subtle message that the collectors of these pieces have demonstrated sufficient wealth and status where utility is not of consideration. The work can remain merely as a collector’s artefact.

The consuls: Phygital + coveted luxury

The consul approach builds on similar aspirational desires as the purists but extends luxury fashion from digital to include physical pieces that act as accompaniments. Examples of this strategy include:

• Givenchy is a French luxury brand that collaborated with Mexico-based airbrush artist Chito to create an exclusive collection of 15 NFTs. The “Chito x Givenchy NFT” collection features an array of cartoonish characters and symbols, some of which are animated and others bearing the Givenchy logo. These NFTs are printed on streetwear-adjacent pieces and accessories and retail in select geographies and stores. While the physical apparel is non-exclusive and remains relatively accessible, the 15 NFTs remain exclusive, with a minimum price of 5 ETH/US$10,000 at the time of writing.

• Bulgari bundled the launch of their exclusive watch, the Octo Finissimo Ultra, which claimed to be the thinnest mechanical watch in the world at 1.8mm in thickness, with an engraved QR code that yields access to a unique non-fungible token (NFT) representing digital art. Only ten pieces were produced at the cost of US$440,000. 

• Balmain’s collaboration with Barbie to launch the Barbie x Balmain-branded apparel line, along with three NFTs, sold between US$12,490 and US$21,379. Each NFT is accompanied by “a one-of-a-kind BALMAIN x BARBIE collector fashion”.

Select fashion houses have also pushed the boundaries of what physical entails and ventured beyond wearable apparel to exclusive merchandise. Examples include:

• Gucci’s collaboration with SUPERPLASTIC to create SUPERGUCCI, ten unique NFTs, each accompanied by a handmade Italian ceramic sculpture designed by both Gucci and SUPERPLASTIC. At its peak in February 2022, the average secondary market price for a SUPERGUCCI exceeded 15 ETH/US$30,000 at the time of writing.

Similar to the purist strategy, the combination of an ostentatious price tag and limited edition triggers the scarcity mindset in consumers for the consuls.

Also Read: Are NFTs and celebrities a match made in heaven?

Yet, as the name suggests, consuls bridge the world of the metaverse and natural world with well-integrated digital and physical apparel that might give well-heeled customers an additional reason to open their wallets.

On the flip side, select luxury fashion houses have chosen metaverse strategies that expand outreach to new audience groups by increasing accessibility, not just in price but in available quantity.

In pursuing these audiences, luxury fashion houses are undoubtedly aware of brand dilution risk, as seen by the careful targeting of consumers with disposable income but have yet to consider fashion labels as means to communicate economic status, social status and consumption.

The campaigners: Digital-only + increased accessibility

The campaigners’ approach leverages the power of digital to broaden accessibility to the brand. Whereas in the physical world, the creation of fashion entails costs, from manufacturing to logistics to retail distribution, the digital world enables pieces to be produced in mere clicks, replicable for an infinite amount at near-zero marginal cost (though, in practicality, no luxury fashion house makes infinite quantities of a piece, underscoring the effort to mitigate brand dilution).

The two quintessential examples of this strategy are iconic luxury fashion brands that have chosen to engage in the metaverse at no cost (free!):

• Louis Vuitton, arguably the world’s most well-known luxury fashion brand, recently celebrated their 200th anniversary with a metaverse game titled Louis the Game. Players can dress their avatar with different Louis Vuitton monogram prints and colourways at zero cost, and 30 embedded NFTs are discoverable throughout the game. Each NFT is a collectable that cannot be sold.

• Prada also took the first step into the metaverse in collaboration with Adidas by inviting anyone (yes, anyone!) to submit a photograph using a specially-designed filter that partially removes the image anonymously. 3,000 photos were selected to create an artwork that would be minted and airdropped to the individuals who submitted the photograph. While the output leans more towards art than fashion wearable in the digital world, it reflects an unprecedented ‘opening-up’ of fashion houses to co-create and co-own

The campaigners’ strategy can best be described as ‘careful inclusion’, as exemplified by Louis Vuitton and Prada. While both have opened up their metaverse plays to a broader audience without price-gating, they have noticeably excluded their namesake-branded digital apparel.

This distance preserves the prestige and exclusivity of the brand, even as they lean into the metaverse. While others pursuing the campaigners’ strategy have included fashion items such as virtual puffer jackets and checkered beanies by Ralph Lauren, the balance between brand expansion and brand dilution remains delicate. 

The adventurers: Phygital + increased accessibility

The adventurers’ approach then boldly challenges expanding the audience and increasing accessibility while offering digital and physical.

Unsurprisingly, this is the strategy that the fewest luxury brands pursue. It is almost antithetical to the (potentially outdated) tenets of luxury fashion, exclusive, high-priced pieces sold through a delightful (and almost subservient) white-glove in-person experience.  

• Following the successful launch of Collezione Genesi, Dolce & Gabbana launched their second NFT collection, DGFamily Glass Box. Each glass box may be a Black ( common), Gold (rare) or Platinum (very rare) Box, which in turn unlocks access to a combination of digital, physical and experiential benefits. Holders can redeem not only virtual D&G apparel for the metaverse but also exclusive D&G apparel that will not be sold at retail. While each NFT is not cheap (mint price at 1.2 ETH or US$3,000 at the time of writing), it is consistent with the price points of D&G physical apparel with the added benefits of virtual apparel. 

• Balenciaga has teamed up with the popular video game Fortnite to launch an exclusive Balenciaga x Fortnite virtual and physical apparel collection, including a roster of outfits and backpacks. Consumers can purchase real-life apparel at selected stores and Balenciaga’s online store and unlock the same outfits in Fortnite. The price points of the apparel reveal a similar consistency to the brand, with shirts costing approximately US$650 and hoodies for US$1,500. 

The adventurers’ strategy combines both the physical and virtual to unlock more value for consumers. One can access virtual and real-life apparel for similar price points, offering the benefits of luxury fashion the economic and social status twice. While what is offered is by no means cheap, the adventurers potentially unlock a new segment of customers who see the ‘double benefits’.

Winning in the luxury fashion metaverse

With these four directions, we have seen luxury fashion houses adopt to experiment in the metaverse; which might be the winner?

Also Read: Disrupting new business and consumer engagement models with location-based NFT technology

I believe it is too early to tell. The metaverse vision, while exciting, remains to be in very nascent stages. Still, luxury fashion brands can increase their odds of finding ‘product-market fit’ by running multiple experiments across the four.

Two fashion houses, in particular, stand out as they have launched multiple campaigns in quick succession that different span strategies, Gucci and Dolce & Gabbana.

Gucci has emerged as one of the fashion houses leading the charge in the metaverse and crypto space. In June 2021, they were one of the first labels to enter the NFT realm with a Purist strategy (digital-only + coveted luxury) by launching a category-defining four-minute film titled Aria.

The ethereal-themed film depicting flora, fauna and garments from the collection fetched US$25,000, with the proceeds being donated to UNICEF to aid in COVID-19 relief efforts (Web3? Check. Creative? Check. Do good? Check.)

Subsequently, Gucci teamed up with Superplastic to create 500 NFTs and adopted the Consul approach. Each NFT comes with digital art and an entire 8-inch tall white ceramic SUPERGUCCI SuperJanky sculpture, hand-crafted by ceramicists in Italy. 

Most recently, Gucci adopted the Campaigners strategy by introducing the 10KTF Gucci Grail collection, where Gucci Creative Director Alessandro Michele took “a trip to New Tokyo – a floating city in a parallel universe”.

In this project, Gucci sold-out passes to holders of blue-chip NFTs like the Bored Apes Yacht Club, and the passes are exchangeable for Gucci apparel to “dress” the blue-chip NFTs. The mint price of these passes cost one ETH/US$2,000 at the time of writing, which remains consistent with the brand’s price point.

Most recently, to solidify their preeminent position as the leader amongst the pack of fashion houses experimenting in the metaverse and, more broadly, Web3, Gucci also announced the acceptance of crypto payments across stores in New York, Los Angeles, Miami, Atlanta and Las Vegas starting at the end of May.

All that remains is for Gucci to explore the Adventurers’ strategy, one that would be unsurprising for their next metaverse/NFT initiative.

Dolce & Gabbana is the luxury fashion house that deftly navigated from the Purists to the Adventurers is Dolce & Gabbana. After their record-breaking success from Collezione Genesi, the launch of DGFamily Glass Box reflects the boldness of their strategy, leaping from digital-only to phygital, and from coveted luxury to increased accessibility.

As discussed earlier, the adventurer strategy potentially unlocks a new segment of customers, such as yours truly.

Last month, I bought a DGFamily Glass Box collection, marking my first luxury fashion purchase in the physical world and digitally.

I admit I still am a far cry from the target customer luxury labels would want to target. Still, the prospects of receiving both physical and digital branded apparel did strike a chord within me, as I envision my future metaverse avatar dressed similarly to me in real life.

As to whether this will be the first of more luxury fashion purchases, only time will tell. What is certain is this, haute couture brands are just getting started in the metaverse + real-world play and are proclaiming loudly to the world – gm.

Disclaimer: I own several NFTs, including the Dolce & Gabbana DGFamily Glass Box, which was recently revealed to be a Black Box (the least rare of the collection). This article does not constitute an endorsement or recommendation and should not be taken as investment and financial advice. All views expressed are my own.

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The COVID-19 crisis has claimed another startup victim in Southeast Asia. Kaodim Group, an online marketplace for local and professional services in the region, has announced that it is shutting down its operations.

The prolonged pandemic-induced lockdowns and their knock-on effects in operational disruptions, labour shortages and higher running costs led to this situation. Kaodim considered and exhausted all options before taking the extreme step, its Co-Founder and CEO Choong Fui Yu said in a message on its website.

“So it is with a heavy heart that we announce that from July 1 2022, Kaodim and all its affiliate platforms will no longer be operational,” he said.

Also Read: GoBear shuts down amidst decreased demand for its financial products, services

“Although our recent recovery has been strong, the last 2+ years have been incredibly challenging. The prolonged COVID lockdowns and their “knock-on” effects in the form of operational disruptions, labour shortages and higher running costs (especially on the service provider side) have significantly impacted our business and the quality of service we are able to deliver. More recently, these challenges have compounded further with inflation and rising costs. This has affected customer demand, service provider fulfillment, margins and in turn, our earnings. Ultimately, we feel that we can no longer grow the business meaningfully for the long term, in line with our mission and ambitions,” the CEO added in the message.

Founded in November 2014 by Jeffri Cheong and Choong Fui-Yu, Kaodim operated as an online platform to provide a way to hire hundreds of services — from house cleaning and home renovation to photography. Users were matched instantly to a highly rated service provider at a competitive fixed packaged price.

The firm operated as Kaodim in Malaysia and Singapore, Gawin in the Philippines, and Beres in Indonesia.

In November 2017, Kaodim raised US$7 million in a funding round led by Square Peg Capital and an affiliate of SIG Asia Investment. Previously, it received a US$4 million Series A round led by Venturra Capital, with participation from Beenext, 500 Global and East Ventures in November 2015.

Since the pandemic struck, many high-profile startups in the region have ceased their operations. Among them are Singapore-based Honestbee (grocery delivery), Singtel-owned HungryGoWhere (restaurant reservations), and GoBear (financial products comparison); Indonesia-based Sorabel (fashion e-commerce), Airy (budget hotels aggregator), and Stoqo (food ingredients provider).

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Engineers can imagine a new frontier and make it happen. Without them, low-noise earthquake-proof bullet trains that could hit 200 miles per hour will not be a reality since 1964.

We would still be vacuuming with clogged up vacuum bags and poor suction powers if James Dyson did not imagine bagless vacuum cleaners in 1991. Today, a SpaceX rocket launch can be 97 per cent cheaper than a Russian Soyuz ride in the ’60s, thanks to engineers who asked for rocket boosters that can be returned to Earth in a reusable condition.

It is evident that the power to realise the future lies in the hands of your team of engineers. It is thus imperative that leaders empower them to drive creative technology innovation in the business that they are operating.

Engineer, don’t code

At Funding Societies, we always encourage our engineers to ‘engineer, don’t code’. Engineers solve problems while coders implement solutions.

For technology innovation to happen, we need to involve engineers in the process of ideating solutions instead of simply asking them to follow through and execute. This means that we must consciously expose engineers to end-users and the market to deepen their understanding of the problem.

Problem-solving is not a mindset unique to engineers. It is also applicable to business persons in the firm. By having a solid understanding of the problem, we will be able to devise and continuously improve on strategic and targeted solutions that will propel the business forward.

Baby steps are the way forward

According to Boston Consulting Group, 70 per cent of large-scale digital initiatives fail primarily due to organisational inertia from deeply rooted behaviours. This is unsurprising as large-scale projects are daunting and filled with risks.

Taking such a large risk can do more harm than good, as employees may be reluctant to cancel and repeat failed attempts, translating to higher project abandonment rates. As much as leaders can push a new company culture of trying new ideas and being open to failure, employees will still likely be unsure of what to do and still be paralysed by the fear of failure. Trying to revamp the company culture overnight never works.

Instead, leaders can ease in with incremental risks. I’ve learnt from experience that the best foot forward is to take small steps. Your team will feel more comfortable with the manageable level of risk, speed, transparency, and uncertainty.

Also Read: Hiring a VP of Engineering if you’re an early stage startup: Dos and don’ts

Through risk management, you will be able to build a culture of innovation over time. If you fail, adjust and retry. This builds resilience.

People and culture are the two greatest assets in a firm. Leaders can guide their team towards small, measurable improvements to build both. This encourages a bias for action and reduces inertia. Baby steps are, ultimately, still progress.

At Funding Societies, we remind our engineers to set blocks of time for focused work. As leaders, we can facilitate this by limiting meetings and questioning the purpose and necessity of meetings.

The truth is that scheduling a bunch of meetings throughout the day can keep your team very aligned. Still, you are also disabling your engineers from contributing significantly and doing actual work. There is a fine balance between asynchronous and synchronous time to ensure that the team has pockets of time to do deep work.

(Many quick) baby steps are the (best) way forward

Scaling is scary and understandably so. According to Boston Consulting Group, complex platforms and ecosystems fail at a rate of 45 per cent during the scaling phase.

However, I find that when you take many baby steps quickly, each step is easier to take, and each fall is easier to recover from. The cumulative distance travelled will be further than if you took your own sweet time to take a wide stride every now and then. When you lose your footing, these vast strides will also give you a harder fall that is tougher to bounce back from.

The above illustrates the concept of rapid iteration, a term for problem-solving by quickly making a lot of changes. While you expose yourself to risks with each change, it also allows you to learn fast and multiply successes to make progress.

Success is a numbers game, celebrate failure

No firms want to fail, and you do not see Key Performance Indices (KPIs) promoting failure. However, this mindset should be changed.

Thomas J. Watson, the pioneer in the development of computing equipment for IBM, once said that “The way to succeed is to double your failure rate.” Success is a numbers game. The more times you try, the more times you succeed.

The longer you try, the less number of attempts you accumulate, and the lesser times you win. This is all simple mathematics.

To reduce the time for each try, the attempts themselves need to be on a small scale. As such, promoting small incremental changes works well in this model. Leaders can measure attempts, highlight learnings and correct them if they are on the wrong course.

Team members need to feel comfortable with failing regularly and quickly to achieve this. This means that leaders must shift away from blaming and celebrating failure and learning. This can sound contradictory, but it is necessary.

Funding Societies hold blameless post-mortem reviews after each failure incident to ensure that everybody learns from the mistakes made. During these reviews, we develop clear steps to improve processes and systems to prevent any recurrence of the incident.

At the end of the day, failure is never an individual’s fault and should be viewed as a learning opportunity. Leading companies like Google also make this approach of having blameless post-mortem reviews. Mphasis trainings batches of 10-20 people, both new and old employees, in “out-of-the-box” learning by encouraging them to ‘struggle’ with difficult problems and finding their solutions.

There is no such thing as a perfect system; every system can and will fail at some point. Engineers need to create, iterate, refine and sometimes even kill off software.

When errors happen, we need to retry or continue operating in a limited manner until the problem is resolved. This reduces risk through design and improves the system quickly, cost-effectively and dramatically over time.

However, how do we work with system failure? Leaders can set an appropriate error budget to quantify the amount of time your system can exhibit errors without any adverse business impact.

In Funding Societies, we make it a point to have a team of advisors continually decide and revise the error budget. Too small a budget and spend too much time on fault tolerance features instead of user features. Too big a budget, and you may lose users.

Engineers are a creative bunch who changed the world

Many people believe that the engineering mindset is purely rational and methodical. While it is logical and driven by reason, the mindset is creative.

Also Read: 5 productivity tools for busy startup founders to stay focused in 2022

Most engineers were drawn to the career due to a fascination with how things work. Since engineers can connect the dots and solve problems, they often think outside the box and visualise alternative solutions and scenarios.

Behind every innovative idea is an engineer. As society continues its rapid growth in technological advancements, engineers face problems they have never seen before. This is why training your team of engineers to think over and beyond is crucial.

3M, Google, and Facebook have all initiated programmes that allow employees to set aside time to work on creative side projects where they can fail safely. This led to post, Gmail, Google Maps, and AdSense, which continue to be staples in our day to day lives today.

At Funding Societies, we strive to create a space and time where engineers can be productive. After all, no creative work is done in a tight nine to five schedule.

On top of this, we also block time out for our engineers to do innovative work through hackathons and dedicated ‘spike’ tasks in sprints for research. This way, we encourage our engineers to build innovation skills as part of their job instead of adding on extra work.

In fact, these hackathons provide a fun platform for our engineers to build any project of their choice that is aligned with a broad theme such as ‘solving SME problems’. We support them throughout the ideation and iteration stages as well.

The hackathon outcomes are not limited to the honing of innovation and technical skill sets but also include feelings of solidarity through bonding amongst engineers across departments and numerous new and exciting ideas that add value to Funding Societies as a whole.

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Playdex, an online marketplace that allows gamers and guilds to rent gaming assets from NFT owners, has received US$2 million in seed funding.

Investors are PDAX, a leading cryptocurrency exchange in the Philippines, OrangeDAO, and Buko Ventures.

Tinder Co-Founder Justin Mateen, Magic Co-Founder Aaron Kemmer, CSVE Ventures Managing Partner Nina Teng, Yaw Yeo of XA Network, Lazada PH Chairman Ray Alimurung, and Wing Vasiksiri also participated.

The startup will use the capital to accelerate product development, scale its community, and integrate more games into the platform.

Also Read: NFTs: The good, the bad, and the future

Playdex was founded in the Philippines by Xendit senior software engineer and P2E guild founder Daniel Laborada; Coins.ph Founder and former CEO Ron Hose, Head of Operations and Marketing Thea Santos, and Engineering Lead Eduard Iskandarov; Bernadette Misa, a Yield Guild Games Manager and P2E guild founder; Luis Sia, Co-Founder of PayMongo; and Wesley Dela Cruz of the PayMongo Growth team.

Playdex is an easy-to-use platform for the skyrocketing blockchain gaming market. “On Playdex, metaverse gamers can play and earn immediately without buying expensive NFTs. Guilds (organised player groups) can now focus on training and scaling their communities, no longer burdened by the hefty financial costs of gaming assets. While NFT owners can earn from their assets passively,” said Co-Founder Hose.

“By creating a digital platform where NFT owners can upload their assets for guilds and gamers to rent, we unify previously fragmented and informal transactions and make them streamlined and seamless,” added CEO Laborada. “Playdex empowers more people to have easy access to NFT games and reap the economic benefits of blockchain gaming.”

Playdex enters a nascent industry rapidly gaining ground. Leaders in the segment include blockchain game developer Animoca, which has raised funds at a US$5 billion valuation. Epic Games, the creator of gaming’s cultural phenomenon Fortnite, with 250 million players, has raised US$2 billion.

Also Read: More than hype: 3 reasons why NFTs are here to stay

Additionally, with 80 per cent of the Philippines’s 110 million-strong population below 25-years old, and over one million daily active users playing blockchain games, the island country has become the greatest use case proving blockchain gaming’s ability to bring millions into crypto at a staggering speed and scale.

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Winter for tech startups is here. VCs are encouraging companies to extend their cash runway as much as possible.

Sequoia Capital also shared in a recent Founders’ All Hands that “Companies who move the quickest have the most runway and are most likely to avoid the death spiral.”

“Investors are underwriting your ability to produce free cash flow durably. To believe that, they need to see durable growth and improving profitability,” adds Sequoia Capital Partner Ravi Gupta in his recent note.

Many have turned to layoffs and hiring freezes. Over the past month, more than 80 tech firms have reported layoffs, according to the layoff tracker site Layoffs.fyi. This includes unicorn and publicly listed companies like Linkaja, Zenius, JD Indonesia, DataRobot, Netflix and Paypal.

Layoffs can damage employee morale and may even prompt high-performing employees to leave. What if we could pull other levers to drive down cost?

One of the key expenses leaders could look at is reducing cloud costs, especially since more than one in three organisations have cloud budget overruns of up to 40 per cent.

Thus, it is no surprise that cloud costs are one of the first things companies such as Coinbase and DoorDash are looking to cut. Technology leaders in Southeast Asia also share the same focus, with optimising cloud infrastructure cost is the top initiative by 75.23 per cent of our leaders here.

What are the challenges faced when controlling cloud costs?

Many businesses struggle to keep cloud costs under control, with 66 per cent of executives saying that cloud usage is “higher than initially planned this year”.

The first reason is due to the lack of visibility.

Also Read: 5 ways startups can effectively leverage cloud agreements to propel growth

In a recent 2022 Cloud Infrastructure report by Spot by NetApp, 70 per cent of technology leaders reported that they could not effectively monitor and optimise cloud costs.

This makes it difficult to control costs and predict sudden spikes. As usage patterns change, so do costs. Without a clear understanding of how usage patterns affect costs, predicting or controlling spending is difficult.

Thirdly, DevOps experts are a rare breed today, and many startups struggle to get the right talent on board. Several big tech firms have set up regional headquarters in Singapore and scaled up their tech hiring. Smaller tech firms have acutely felt the pinch in talent.

It’s estimated that by 2030, Asia Pacific will be short of the 47 million tech talents needed to meet growing demand. True enough, while 96 per cent of tech leaders say FinOps is important to cloud success, only 10 per cent were able to build a mature FinOps practice, according to Spot by NetApp’s 2022 Cloud Infrastructure Report.

With engineering talent being rare and also expensive, you want them to be building products that add value to the business and help you build a competitive edge instead of spending time managing complex IT infrastructure.

What can startups do to optimise their cloud costs?

The first step is to get visibility into your current consumption. It becomes difficult to make cost-related decisions when you can’t accurately view billing data or cloud spend data over time.

For a start, you need a proper dashboard. Tools that can automatically discover and map your infrastructure can help you get that full picture, not only showing information about instance counts and summary costs across all of your cloud accounts but also providing the ability to look at that information organised by tags, pods, clusters, services, and applications.

India’s leading BNPL startup, ZestMoney, reduced its EC2 spend by around 60-70 per cent with the help of Spot by NetApp.

Also Read: How cloud computing is helping startups navigate the new normal

Their first step was to dig into their cloud spend and get actionable insights with Spot by NetApp. They were able to automate the right-sizing of instances for cluster efficiency enabling significant cost savings.

“DevOps was being asked why infrastructure utilisation was at around 50 per cent for 100 per cent of the actual cloud spend. Cloud Analyzer allowed us to easily see our spending alongside clear, actionable insights to increase efficiency in our infrastructure and cut costs,” explained Ganesh Narasimhadevara, Director of DevSecOps and Platform Engineering.

With visibility, companies can then start to focus on optimisation. One of the common methods is to commit to reserved instances or Savings Plans for one year or three years in exchange for savings of as much as 75 per cent.

However, doing this manually often comes with many challenges.

Firstly, predicting and forecasting consumption is often difficult and not accurate. “The thing about cost reduction is you have to figure out how many resources you want to buy in advance, right?

“You have the concept of reserve instances, which made it very difficult. In our business, we go up and down, we scale up during sales periods, and our traffic is very unpredictable,” explains Ninjavan’s CTO Shaun Chong in a recent interview.

Another key challenge is the sheer amount of engineers’ effort and time to optimise cost. This tedious process requires them to identify the exact amount of CPU and memory needed for every container, pod, and deployment. Manual methods are also inefficient and error-prone, leading to troubleshooting that, in turn, affects application availability.

In a recent Forecasting & Scenario Planning Session for Sequoia portfolio companies’ founders, partners encouraged Founders to “build muscle” by doubling down on product innovation.

“The reason is, long term, the best product tends to win, and that is more true in an environment of scarcity than in an environment of abundance,” they explain.

With that in mind, you want your engineering team to focus on innovation that helps you build a competitive edge instead of spending time on tedious tasks.

Given these challenges, many technology leaders see the value of automating cloud optimisation. It is quickly becoming the tech industry’s new norm.

An automated cloud cost optimisation solution brings significant cost savings as it can fix many issues that contribute to high cloud costs. It instantly reacts to changes in applications’ demand and adjusts the resources to avoid cloud waste and over-provisioning.

At Spot by NetApp, we’ve helped many startups in Asia, including ZestMoney, Trax, PayMaya, and Practo, lower their cloud compute costs by 60-90 per cent.

One of them was Series A startup, SignalVine, which increased its EC2 savings by over 283 per cent. On top of that, they could eliminate internal efforts required to manage their Reserved Instances, freeing up valuable resources to help grow their business.

No one knows how long this downturn will last, but the common consensus is to extend your cash runway.

Also Read: How companies can nurture the next generation of tech talent today

“I have no idea if now will be the same, better, or worse than the 2000s crash. But bad times can last multiple years, and if you can make decisions now that extend your runway, that’s probably the right call,” shared VC and former Meta CTO Mike Schroepfer in a recent tweet.

Given these realities, startups want to avoid being asset-heavy, low-margin, and high burn. A key lever to pull which would make a huge impact on your balance sheet is to reduce cloud waste and optimise cloud cost.

When we act fast and plan well during downtimes, it can even help us acquire market share. As shared in Y Combinator’s letter, “Remember that many of your competitors will not plan well, maintain high burn, and only figure out they are screwed when they try to raise their next round. You can often pick up significant market share in an economic downturn by staying alive.”

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Super, a social commerce platform serving smaller towns and rural Indonesia, has closed a US$70 million oversubscribed Series C financing round led by global VC firm NEA.

Insignia Ventures Partners, SoftBank Ventures Asia, DST Global Partners, Amasia, B Capital, and TNB Aura participated. Bain Capital Chairman Stephen Pagliuca, Kleiner Perkins’s former General Partner Eric Feng’s Goldhouse, and Xendit CEO Moses Lo also joined the round.

This funding brings Super’s total capital raised to date to US$106 million. This includes an oversubscribed US$28 million Series B round led by SoftBank Ventures Asia in April 2021.

Also Read: YC-backed Super raises US$28M to grow its social commerce platform in Indonesia

“Indonesia’s tier-2, tier-3 cities, and rural area’s GDP per capita are 3-5 times lower than Jakarta, yet the cost of consumer goods is higher by 20-200 per cent. More than 30 per cent of Indonesia’s GDP came from East Java, Kalimantan, and East Indonesia,” said Co-Founder and CEO Steven Wongsoredjo. “Super is going after a huge untapped market; thus, we will deploy this investment to enable equitable access for people in Kalimantan, Bali, West Nusa Tenggara, East Nusa Tenggara, Maluku, and Papua over the next few years,

Wongsoredjo added that the startup would help more multinational and provincial FMCG suppliers tap into new markets in rural areas and empower more community leaders to optimise their income.

Founded in 2018, Super leverages a hyperlocal logistics platform to deliver consumer goods to agents within 24 hours of the order time. The company said it has partnered with thousands of community agents, such as individuals and warungs, to aggregate and distribute millions of US dollars’ worth of goods to their communities each month.

Super currently operates across 30 cities in East Java and South Sulawesi, mainly targeting the area with a GDP per capita (US$5,000 or lower).

The social commerce venture has launched two private-label brands. A portion of the capital will be used to develop other FMCG private-label brands in the next several years. In addition, it plans to launch cosmetics products, as the desire for this segment is rising across Indonesia.

Also Read: Leveraging social e-commerce to maximise your brand in China

As Super grows its products, services, and experiences continuously, it will launch a feature for community agents to track end-consumer transactions to help community agents offer better-tailored experiences for the end customers.

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Fostering innovation and engaging in strategic collaboration are both keys to sustaining the competitive advantage of businesses. In a conversation with e27, Morikawa Hakaru, Vice President and Head of Industry and Customer Advisory at SAP shares key insights on SAP’s strategy in scaling win-win partnerships with innovation partners as it has done through the years.

In this conversation, Morikawa-san shared SAP’s priorities in Asia, particularly on expanding its innovation footprint. SAP Labs Network is a network of SAP’s core research and development entities focused on developing and constantly improving key SAP solutions. Labs in Japan and Singapore have opened in 2020 and 2022 respectively, focusing on research and product development initiatives in digital supply chain and sustainability. “Japan is a country of manufacturing. It makes sense to focus our research functionality in Tokyo in this area to get the best practices in the country to incorporate into the supply chain of our products,” Morikawa explained.

Also read: How to build a business with scalability in Asia’s vibrant economy?

“The Singapore lab’s focus is on sustainability. Sustainability is one of the biggest topics globally. Southeast Asia will be one of the hardest-hit regions if we don’t handle this challenge from a global perspective. [If managed well], Southeast Asia can be the global frontrunner,” he added.

Fostering product innovation to build customer value

Connecting businesses to enable strategic collaborations as well as to respond to urgent needs by the times is a constant priority for SAP. The organisation has the Ariba network where many use cases of businesses who have partnered amid restrictions during COVID-19 were overcome. As an online business network for buyers and suppliers, it has allowed for a global discovery capability for buyers and sellers.

Businesses from many countries utilised this given the situation over the past 2 years. In the wake of the pandemic surges, for example, temporary hospitals in Manhattan were able to speedily procure beds and other supplies through Ariba. With job displacements involved in the pandemic, as well as job demand surges in certain industry verticals like healthcare, SAP Fieldglass — a contingent workforce management software solution — has facilitated solving HR-related shortages in the healthcare field and served as a matching platform for those workers, connecting those who lost their jobs and matching them to those who have people shortages.

Also read: The future of infrastructure is in tech innovation

This became a very relevant solution for many businesses in Japan. In the endeavour to continuously improve health delivery processes, vaccine distribution, registration, helpdesk support, and the like, SAP Qualtrics has enabled various ministries of health globally to optimise experience management for its constituents by providing deep insights through advanced artificial intelligence and machine learning, thus enabling organisations to help close experience gaps and drive improved user experiences. This solution has also been effectively used by companies to learn how to support their employees better with the remote work setup. 

Other strategic collaborations that SAP has engaged startups with are those with Green Token, a tracking solution using blockchain and mass balance accounting principles, enabling customers to know that the raw materials in business products are sustainably sourced, child labour free and ethically traded. The GreenToken by SAP solution was sourced from the SAP One Billion Lives initiative, the company’s flagship social intrapreneurship programme that aims to improve 1 billion lives through a portfolio of sustainable, shared-value impact ventures. Another startup that was acquired by SAP in 2021 is Signavio, a solutions platform designed to help organisations transform their business processes at scale.

Building strategic collaborations to strengthen innovation

SAP boasts a track record of nurturing innovations over the decades. As a transactions management company, many large companies have built their functionalities over SAP ERP as the core transactions management platform.

With its APIs, innovative businesses can access opportunities and integrate with the business technology platform. As many large businesses already run on SAP, these innovative businesses have potential go-to-market access through this common ground. “SAP has the strongest sales force, and can help bring these businesses to potential customers. [We also] showcase innovations through our experience centres in Singapore, Tokyo, and India. [They can be linked to a] global network, and can open up [more opportunities for ] innovation vendors across regions, even in Germany or New York,” Morikawa-san elaborated.

Also read: oVice, a virtual office platform, uses innovative technology to redefine remote work

He added, “SAP has a stronghold in certain areas, especially in the field of solutions for white-collar workers in the office. [We look for innovation partners to enrich] out-of-office solutions for our clients, such as IoT solutions [for example] in retail shops and manufacturing premises. We are open to innovations via partnerships, enabling] big plays in areas that are not SAP’s area. Working with innovative startups delivers solutions faster, benefiting SAP clients and SAP itself. Furthermore, SAP can help [through its] expertise in understanding the enterprise market, and can provide assistance to tailor-fit solutions, and facilitate access to business decision-makers.”

“There is a usual notion that ERP is completed, not innovating and that it’s a closed platform. [We are] open to collaboration. As a platform where data originated, there is a rich insight to realise in building business processes, which is important whether you are running a large or small business. In the age of innovation, working with SAP makes a lot of sense.”

Join SAP’s roundtable discussions

SAP in partnership with e27 is organising an invitation-only virtual roundtable session to gain perspectives from general partners and limited partners of leading investment firms in Southeast Asia. In this session, the stakeholders will discuss the challenges and opportunities for VC firms, frontier market plays and strategies, as well as deep dives into the potential of the spotlight countries in the region. They will also discuss their methods in supporting the growth of companies in their investment portfolio and key opportunities in their strategic plans for the future.

This 14 July, SAP and e27 will be hosting The Rise of Digital: Accelerating Growth and Customer Obsession, a webinar that will help startups gain insights about managing their digital offerings to be more effective and customer-centric. To learn more about this programme, you can secure tickets from our official page.

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This article is produced by the e27 team, sponsored by SAP

We can share your story at e27, too. Engage the Southeast Asian tech ecosystem by bringing your story to the world. Visit us at e27.co/advertise to get started.

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I’ve had quite a few conversations recently with founders on this topic, but one recently stuck out. A co-founding team of a company I’m fond of (but not invested in) has 90 days of cash in the bank and has had 50+ investor meetings recently. While raising previous rounds was relatively easy for them, now… crickets.

It is a difficult situation, but it can be navigated. We spoke for a while, and I thought I’d share the summary here if it helps other founders who have raised previous rounds and have a revenue-generating business.

What’s going on?

• There has been a correction in the public markets, which is now filtering to private markets
• There is a potential recession looming, and it seems unlikely central banks will intervene in the short term
• Several other issues are at play impacting confidence (inflation, supply chain, geo-political, etc.)

Investors have bigger funds than ever. Why aren’t they investing?

There has been an incredible amount raised by fund managers (across venture, private equity, private debt etc.) over the last few years. Still, the above events have created a challenging environment for raising money for founders and have put pressure on valuations:

• The previously popular method of creating private valuations based on public comps is unattractive at the moment
• Confidence of investors has shifted, meaning higher thresholds are required for new funding and (except for elite companies) potentially a new way of viewing valuation
• We are seeing instances of investors pulling term sheets (and hearing about some investors not completing funding commitments)

Also Read: Base.vn founder’s new SaaS startup True Platform attracts US$3.5M seed funding

What should I focus on?

• Work out whether you are default alive or default dead
• Prioritise survival and maintaining control, make difficult decisions early
• • Understand the potential change (depending on your stage and growth rate) in how others will appraise your company (revenue vs free cash flow)
  • Consider if there are alternative ways to achieve customer-led funding (or increase your runway), there may be options available outside traditional equity
  • If you need to let people go, do it quickly and respectfully. Help them get other roles where you can

• Ensure your updated operating plan is robust and has buy-in. It either gets you to cash flow positive or to your next funding milestone (with a meaningful safety buffer)

  • Road test your plan with key stakeholders

  • Consider getting external input from potential subsequent round investors as to what milestones they’d expect to see

Additional reading

• Adapting to endure – Sequoia

• A Framework for Navigating Down Markets – a16z

• YC advises founders to plan for the worst – YCombinator

• The upside of a downturn – Lightspeed

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

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Southeast Asia’s internet economy alone is poised to surpass US$300 billion by 2025. The wealth of opportunities offered for startups in the region is immense but startups will need to future-proof their processes in order to build scalable businesses. Startups in this region face several challenges associated with scaling in Asia, as they go from startup to scaleup mode.

Businesses not equipped with the right tools and knowledge can end up trying to reinvent the wheel —  inadvertently wasting valuable dollars on technology platforms or software in their quest to accelerate new business opportunities and scale up revenue channels.

Mentoring is therefore extremely important — allowing startups to receive the guidance needed to ensure success. Navigating the various challenges associated with scaling in Asia needs capable mentorship from those with experience in scaling up in these markets. Establishing the ability to go to market requires careful planning and organisations need access to important insider tools and insights that will enable them to build the kind of infrastructure and processes required to scale.

Learn from experts on how to innovate, grow, and scale your startup

So much more than just securing funding

Startups operating in Southeast Asia are also hampered by the lack of access to a constant source of funding that can enable scalability and accelerate growth. Even when they are able to secure funding, there is often a knowledge gap on how to spend it effectively and achieve maximum impact. Talent acquisition and retention is another area where startups often overlook the importance of building a great company culture, specialisation of roles, career paths, onboarding and other factors which affect their talent resources.

Also read: oVice, a virtual office platform, uses innovative technology to redefine remote work

Faced with these challenges, prioritising the right capabilities and infrastructure becomes highly critical. But with the right tools and insights, and propelled by a fast-growing base of digital consumers and merchants, your start up could enjoy a slice of the US$360 billion digital economy projected by 2025. In the MasterClass Accelerator 101 Series, notable industry leaders outlined the priorities startups should focus on so they can continue to scale:

• A Customer obsession: building in the usability and intuitiveness to delight their customers constantly. Invest in customer experience and customer success. 
• Driving exponential growth while keeping investment under control — going from startup to scale-up requires a change of mindset so that you build your business around the idea of scalability and use your resources optimally.
• Improve the way they run their businesses. This entails investing in talent and culture for improved productivity, optimised operations to focus on core strengths, and lower operational costs through best practices, automation, and investing in the right tech stack

How you can innovate, grow, and scale your startup: A masterclass webinar

The MasterClass Accelerator 101 Series is a new programme series by Salesforce crafted with customised offerings and designed to help startups and SMEs scale their businesses.

In the first webinar of the series held on 28th April, an expert panel of startup investors and entrepreneurs discussed the roadmap for startups moving from exploring their potential to scaling their company and actually taking advantage of those opportunities.

Also read: Alpha JWC Startup Series: pitching & fundraising through the lens of a VC

Moderated by Garry Huang, Entrepreneur-in-Residence at 500 Startups, the webinar panel featured Daisy Hoang, SVP of Sales and Success at test automation startup platform Katalon; Danny Chong, Senior Investment Director at Gobi Partners China; and Thomas Lim, Regional Vice President of ESMB Emerging and Growth Business at Salesforce. 

Apart from the challenges and priorities discussed above, the topics discussed by the panellists were: 

• What startups should keep in mind when fundraising — a discussion of the things VCs look for from startups and their founders, that get them noticed and funded.
• Current trends that VCs are seeing in startups that have successfully raised funds in the recent months
• The importance of setting a company culture to scale properly
• Focusing on your core strengths: choosing the right tech stack to support your growth
• How being data-driven can improve your business productivity and operations 
• Small business is big business. How Salesforce is ready to help startups accelerate.

Scaling a business on an international scale involves tackling significant challenges in building a company culture across countries, evolving your product, and putting the right processes in place. The Masterclass Accelerator 101 Webinar provided valuable insights on how startups can scale up people and processes, build the right tech stack, and navigate the funding journey. 

Even as Southeast Asia is poised to enter a digital-first future, Startups and SMEs will need to equip themselves with the tools and insights so they can implement strategies for digitisation. The pandemic has been a major catalyst in accelerating this process of digitisation but even post-pandemic these changes are here to stay. Participants in the Masterclass Accelerator Series can learn how to view digitisation as an opportunity to grow even faster in Southeast Asia’s digital economy.

Also read: Get to know the startups in the 2022 APT 5G Challenge

The webinar series shares important lessons for Startups and SMEs on how to adapt to customer expectations, differentiate their customer experience from competitors, and the technology enablers that can help them continue scaling in the digital-first future. Learnings that will enable startups to build businesses that are sustainable and create long term value for customers and stakeholders.

To learn more about growth tips, watch the webinar during your free time and learn how to drive the future of business with growth and success in this fast-changing landscape.

Watch the MasterClass Accelerator 101: How you can Innovate, Grow, and Scale your startup webinar here.

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This article is produced by the e27 team, sponsored by Salesforce

We can share your story at e27, too. Engage the Southeast Asian tech ecosystem by bringing your story to the world. Visit us at e27.co/advertise to get started.

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Twitter recently has become profitable and beat Wall Street’s low expectations. Profitability does not solve the issues that the company has going forward.

The company is not the only social media company that has to deal with fake accounts, trolling, and foreign agents spreading misinformation to influence US elections.

These issues, combined with stagnant growth and executives quitting, have led to questions about who is actually running the company. All the solutions Twitter has offered have resulted in more problems or calls for Twitter to take more action.

According to Michael Connor, the man behind a company called Open Mic pushing tech companies to be more transparent about problems, Twitter is playing whack-a-mole with their problems. In fact, Connor says that Twitter does not even know what problem they face.

Leadership trouble

The biggest issue Twitter has is its lack of leadership due to the departure of Chief Operating Officer, Anthony Noto to become CEO of SoFi. Noto played a critical role in running the company because the CEO and founder of Twitter, Jack Dorsey, also serves as the CEO of Square. 

Dorsey has taken control of Twitter without Noto despite investors calling for a more focused CEO. Dorsey has rejected those claims and stated that the amount of time he spends is not as important as how he spends his time at the company.

The issues are more profound than that thought. Dorsey has been called an authoritarian leader that is not open to innovation, which is apparent in the lack of innovation at Twitter. This lack of innovation could be the difference between the proper handling of these issues and improperly handling these issues. 

For instance, Mark Zuckerberg has the final say on Facebook as he is both the CEO and Chairman of the Board. However, he is still open to his team changing Facebook so long as he can make the final decision on the change. This has resulted in Facebook successfully navigating their own set of issues.

Also Read: How to use Twitter to market your product as a founder

The leadership trouble that Twitter faces is the biggest issue. Once Twitter can figure out their leadership, it will be better suited to navigate the problems listed below.

Stagnant user growth

The first major existential issue that Twitter has is its stagnant user growth. They have practically no user growth but remain steady with their monthly active users. Much of this might be because of their clamping down on fake accounts, which make up a surprisingly large number of accounts on the platform. 

However, Twitter has faced issues with user growth since its inception because they do not lock its content. A Twitter account is not necessary to view tweets on the site, which means fewer users can receive advertisements.

For instance, a user can bookmark President Trump’s Twitter page and view his tweets without ever having a Twitter account. This makes Twitter a great platform for businesses, but it is terrible for generating revenue. This is an issue that Twitter will have to resolve if it wants to continue making a profit.

Fake accounts

The next issue Twitter faces is the proliferation of fake accounts on the platform. It is estimated that over 15 per cent of accounts on Twitter are actually fake accounts created by either bots or used by individuals to harass users.

This fake account epidemic ties into most of the other issues plaguing the site. For instance, foreign intelligence agencies will use fake accounts to push their fake news stories to the top of the Twitter feed.

Fake accounts are also used to manipulate Twitter hashtags, which can sway public opinion on certain topics. On the other hand, there are entire networks of accounts people use when they buy retweets on their accounts’ posts and tweets.

This makes eliminating the fake account problem one of the most important issues for Twitter. If they can eliminate the fake accounts on the platform, then most of the other problems will resolve themselves. 

Bans will be more effective, foreign governments won’t use Twitter as a weapon, and hateful users will be permanently banned from the platform.

Foreign interference and regulation

Foreign officials using Twitter to spread disinformation amongst Americans is a major issue. In fact, this is such a major issue that social media companies have been called before Congress to testify about the problem.

This has led to many rumours that tech companies will face regulation. Some US senators have even stated that the tech companies will almost certainly meet regulations at some point.

However, no legislation has been drafted, and the Department of Justice has not brought a case against any social media company concerning regulation.

Also Read: Twitter is the most powerful company in tech

At the moment, Twitter will just have to focus on removing as many foreign intelligence agencies from the platform as possible. So far, they have done well with that task. Twitter recently banned over 300,000 accounts linked to a Russian and Iranian plot to interfere with the 2018 general election. 

Dorsey has stated that there is still much more that needs to be done and that these issues will not be resolved before the 2018 election. He does believe that the 2020 presidential election will resolve the issues.

However, Congress will likely force some form of regulation on the tech giant before 2020, but that is still only speculation at this point.

Future plans for Twitter

Overall, it is great for Twitter to make a profit after 12 years in business finally. It gives their investors some relief. Their next major hurdle is to resolve the leadership issue, which can likely be solved by placing the right person as COO. 

Alternatively, Dorsey might even be forced by the company if investors are not satisfied with his leadership as Twitter faces regulation.

Investors have grown increasingly annoyed at Dorsey’s apparent lack of leadership and refusal to answer investor calls for him to step down from Square or remove himself from the CEO position at Twitter. Once the leadership issue is resolved, many of the other issues facing the company will be resolved.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image credit: Canva Pro

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