The title of this month’s Insignia Insights editorial comes from Olympic swimmer Joseph Schooling’s retirement announcement earlier this week. He says this as he reflects candidly on his journey and what he could have done differently, specifically after his historic win in the Rio Olympics.

“Comfort is the mother of all mess-ups” applies not just to Schooling’s own reflections of his experiences post-Rio, but hearing it also strikes a chord with the last few years for tech startups and companies and how macroeconomic headwinds have unveiled the underlying “comforts” (i.e., easy money, “move fast and break things” ethos) that have made today’s market such a discomfort to adjust to for many businesses.

We list key market trends and learnings in today’s bear market that are wake up calls for Southeast Asia’s startups to grow beyond the “comfort” of long held beliefs and assumptions when it comes to building a venture-backed technology business.

(1) The comfort of product-market fit

Pressure on unit economics are forcing businesses to rethink pricing strategies. But updating pricing to solely make up for lost margins may not be enough. A healthier approach to pricing has to be tied strongly to product development and the company’s understanding of its key customer, as we write here.

(2) The comfort of regulation and compliance

Regulation and compliance are not enough of a moat. As important as these are for innovation to mature, it’s another affair entirely to ensure innovation can be commercialized. The product still needs to speak for itself. It does, however, open up market segments, especially institutions and enterprise. Fazz Group Deputy CEO and co-founder Tianwei speaks to this with StraitsX own developments as a digital asset infrastructure business.

(3) The comfort of having an omnichannel brand

Omnichannel is not just about brand presence but also operational agility. Between TikTok, post-pandemic return to offline shopping, and thickening competition with Chinese brands, ecommerce brands need more than just storefront partners or platforms. Partners for supply chain management, order management, and even financial management for these brands are more likely to be in demand in an increasingly dynamic environment.

(4) The comfort of fintech’s rise

We’ve written extensively about the “fintech is everywhere” thesis and how tech companies are in a “gold rush” to develop their own financial services, except the “gold” is not as easy to come by with these businesses even though it is theoretically healthier compared to a pure platform play. The good news is that the “DIY” is not the only option, as Brankas CEO and co-founder Todd Schweitzer points out in the context of open finance.

(5) The comfort of the Middle East opportunity

There has been a lot of coverage in recent months about the moves Gulf countries in the Middle East have been making to drive innovation top-down. This has opened up opportunity for companies from Southeast Asia with the right technology to build partnerships and find customers in a way that might not have been as accessible within ASEAN. However, there remains the challenge of setting up operations in a significantly more unfamiliar market, as Todd shares from Brankas’s experience.

(6) The comfort of government as a customer

Singapore has made several developments in the last months impacting the innovations of some of our portfolio companies, including priorities stablecoins and mental healthcare. We also spoke to a former Singapore Civil Defense Force (SCDF) firefighter on his transition to supporting deep tech startups testing innovations with the SCDF. Amidst the greater interest from governments like Singapore in working with startups to further priorities, replicability needs to be a key consideration for these companies, balancing out resources expended to roll out with governments versus resources to diversify a customer base.

(7) The comfort of a startup’s own definition of profitability

The expectations of achieving profitability for venture-backed businesses from the capital markets has turned communicating this journey of profitability into a complexity of its own, with various stages and definitions (product-level, group-level, EBITDA, adjusted-EBITDA, gross, net, etc.). Regardless of what is used in reporting and press releases, it is important for leadership not to lose sight of aspects of the business factored in or out with regards to how it impacts cash flow (e.g., one-time significant expenses, asset depreciation, etc.).

Amidst the various ideals peddled to startups, from unicorn-hood to landmark IPOs, the true test for a company is its ability to build a real, lasting business amidst the expectations of scale. This means a company lucky enough will encounter a lot of wins along the way, but those wins may become the very reason the business does not realize its full potential. It becomes a matter of preventing complacency from taking over and realizing the constant vigilance needed regardless of a company’s highs or lows.

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