4 things you must know when building a tech startup in Myanmar

Rocket Internet is famous for being very data-driven when delving into emerging markets around the world. While some moves look quite logical, you might be curious as to why Rocket Internet has set its eyes onto Myanmar. Investors believe it is a risky place to conduct business because unlike other developing countries, Myanmar still hasn’t demonstrated its growth potential.

But still, Rocket Internet has opened four classifieds businesses there: for real estate (House.com.mm), for cars (Motors.com.mm), for jobs (Work.com.mm), and a general listings site (Ads.com.mm). Is there something Rocket knows that we don’t? Erwin Sikma, Rocket’s managing director for classifieds in Asia, tells you four things that they see in that country.

1. Myanmar is poised for strong growth

Sikma says that Rocket Internet enters emerging markets with huge potential for growth and a strong need for secure, easy-to-use, and high quality platforms. While Myanmar is one of the least developed countries in the region, it is showing tremendous development already.

Sikma argues that Myanmar’s internet penetration is rising rapidly and will boom when the new telecom infrastructure starts being laid out in 2014. Although growth is in order, there were only 60,000 internet users in Myanmar last year (about 0.16 percent of population), and that makes Myanmar a very challenging environment for any tech company to grow

Currently, Myanmar only has a mobile phone penetration of 7.08 percent. But the country expects to get that number up to 50 percent by 2015. 3G is going to roll out in Myanmar next year too.

There will be a large influx of international companies, investors, and foreigners coming into the country. All of these parties will contribute to Myanmar’s strong economic growth in the coming years. That will all lead to an increase in affluence among the population. Sikma adds:

2. E-commerce business is tough in Myanmar

Credit: Sustainable Business Myanmar

For a very young market like Myanmar, it might not be the wisest move to open an e-commerce company there. Myanmar’s financial, payment, and logistics infrastructure are still in the very early development stage.

Since opening up its borders two years ago, there are about 28 foreign banks setting up its representative offices in Myanmar. But still only 10 percent of the population has bank accounts.

Regarding payment methods, Thailand’s 2C2P is looking to solve that problem by bringing offline payment methods to e-commerce, just like it did in Thailand. And there are definitely players eyeing to solve the logistics issue too there. But for now, Myanmar is still a country with loads of infrastructure challenges.

Hence the reason why Rocket Internet chose to launch classifieds businesses in Myanmar.

Classifieds is a service whereby there’s not much need for online payments, logistics, and financial infrastructure. Users can find the information and items they need online and then set up a way to deal with the seller personally. The classifieds sites don’t need to offer online payment services nor deliver any products as it is only the middle man between two parties. It needs no warehouse to stock up items.

3. Tough for startups to attract talent

One of the main challenges for Rocket Internet in Myanmar is hiring top quality talent. There are four reasons for this. First, there aren’t that many people in Myamar with a advanced degrees, good English skills, and solid business experience. Second, there is huge competition for talent as many other international companies like Telenor and Ooredo prepare to enter Myanmar.

Third, part of the educated workforce are still working abroad. And fourth, just like any other developing country, Myanmar’s educational system is still quite underdeveloped and there haven’t been a lot of business activities in the last decade.

Despite all that, Sikma says that the vast majority of Rocket Internet employees in Myanmar are locals. The team has experience in running the classifieds business model in several emerging markets and is supported by the knowledge, operational expertise, and funding of Rocket Internet.

While Rocket Internet has quite the resources to pull it off, the same thing cannot be said for normal startups.

4. You need to do lots of ground work to educate people in Myanmar

Burmese with access to the internet are using email (mostly Gmail), Facebook, and some news websites. They are spending more time on the internet due to the internet’s improved speed, availability (at home, at work, more internet cafes), and the rising attractiveness and quality of websites targeted at the local market.

Myanmar still has some ways to go before catching up to its neighbors in Southeast Asia. To help educate the market about the online world, Rocket Internet had to first make sure that its site was available in Burmese so people could understand it.

Then it is all about grunt work. Rocket Internet educates its clients during one-on-one discussions, training sessions, and on a daily basis over the phone. Its support team makes sure that the clients and users understand how to use their websites while implementing improvements based on user feedback.

Not only that, Rocket Internet also does lectures at schools, participates in events, and does all kinds of offline and online marketing to explain the websites and help people make their first steps on the internet.

So when you step into Myanmar, don’t expect to win the market simply by sitting in your office chair and coding.

Myanmar is definitely an attractive market with its own challenges and hurdles. It still remains to be seen who will be the kings in Myanmar’s internet world in the years to come, but what Rocket Internet and others are doing right now would definitely benefit the country a lot in terms of economy and talent development. Sikma says:

(Editing by Terence Lee)

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