Startups’ Southeast Asian expansion and the ‘Moneyball’ approach

The 2011 film Moneyball depicted the innovative challenge of the Oakland Athletics, an underdog team in Major League Baseball. General Manager Billy Beane, played by Brad Pitt, led the team to a 20-game winning streak using a data-driven approach despite operating on a shoestring budget. This isn’t just a cinematic tale; it exemplifies a core strategy in modern business.

The ‘Moneyball theory’ of achieving maximum impact with minimal resources offers valuable lessons for Korean startups looking to enter Southeast Asian markets.

Since 2006, I’ve been immersed in Singapore’s venture capital and startup ecosystem, advising numerous Korean companies on their Southeast Asian expansion strategies. Throughout this process, I’ve consistently emphasised the ‘Moneyball approach’. The Southeast Asian market is more receptive to a ‘small ball’ strategy—focused on precise tactics—rather than a ‘big ball’ approach that relies on massive capital investment. This is akin to a baseball strategy that prioritises improving overall on-base percentage over relying solely on home run hitters.

The rationale behind this approach is as follows:

Firstly, Southeast Asia is not a single, unified market. While grouped under the ASEAN banner, each country has distinct legal systems, economic structures, and cultures. For instance, Singapore and Cambodia, though both Southeast Asian nations, have vastly different levels of economic development and business environments. Therefore, the approach used for large, homogeneous markets like the United States or China is unsuitable here. Instead, a tailored strategy considering each country’s unique characteristics is necessary.

Secondly, the economic scale of the Southeast Asian market is often overestimated. In fact, the combined GDP of the six major countries is about US$3.5 trillion, merely twice that of South Korea’s US$1.7 trillion. A significant portion of this is concentrated in Indonesia, which accounts for one-third of the total. Vietnam, despite having twice South Korea’s population, has only a quarter of its GDP. This suggests that the market may be more limited than Korean companies anticipate. However, considering the region’s high economic growth rates and young demographic structure, its potential remains significant.

Lastly, the Southeast Asian startup ecosystem is still in its infancy. While the region boasts around 30 unicorns, the startup ecosystem has only been developing in earnest for about a decade. The overall infrastructure, human resources, and capital markets are still immature compared to not only the United States but also South Korea. For example, there are significant disparities in startup founder resources and the number and scale of domestic listed companies. Consequently, it’s challenging to directly apply the startup growth models we’re familiar with, such as rapid expansion through large-scale funding and quick exit strategies.

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In this context, an effective expansion strategy is the ‘Point-Line-Plane Strategy’. This approach doesn’t view Southeast Asia as a single market but focuses on individual countries or major cities. For example, concentrating on metropolises like Singapore, Jakarta, and Ho Chi Minh City, and combining this focus with specific industry sectors to accumulate small successes. In other words, it involves concentrating small-scale investments on ‘points’ where specific cities and sectors intersect, thereby increasing ROI and success rates. The strategy then involves connecting these successful ‘points’ to form ‘lines,’ and ultimately expanding into ‘planes’.

This approach is well-suited to the Southeast Asian environment, where achieving economies of scale through large-scale investments at a regional level is challenging. Starting from small points and gradually expanding—this strategy embodies the true ‘Moneyball theory’ for entering Southeast Asia.

The film ends with the song lyrics, ‘I’ve got to let it go. And just enjoy the show. Just enjoy the show’. For startups stepping onto the stage of entrepreneurship and global expansion, I hope they embrace this journey without fear and enjoy it wholeheartedly. As the saying goes, ‘Genius cannot overcome a person who tries, and a person who tries cannot overcome a person who enjoys’.

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