How to do Business and Hire Locals (for $400/Month) in Vietnam
In this audio interview I chat with Chris Zobrist, Founders Grid member and founder of the Saigon Hub – a vibrant co-working space in Saigon. We chat about the startup ecosystem, finding talent and general rules and tips for doing business in Vietnam.
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Topics discussed include:
- Why Vietnam?
- Difference between regions
- Company set-up
- Finding talent and hiring locals
- Co-working / office spaces
- Sales / Marketing
- Technology infrastructure
- Tips (and common pitfalls) for entrepreneurs who are considering venturing into Vietnam
Chris: Hi guys this is Chris from foundersgrid.com. Today I’m joined by Chris Zobrist who founded Saigon Hub in Vietnam. It’s a co-working space.
Chris Zobrist: Hi good, yes. Thank you.
Chris: Tell us a little about yourself. Where are you from and how did you get to Vietnam?
Chris Zobrist: Sure, sure. So I was born in the US but actually my mother was born in Vietnam and grew up here; so I was born in US and I am half Vietnamese so that was kind of my initial reason for coming back to Vietnam and the first time I came back it was quite an amazing experience for me. I’ve always loved business and entrepreneurship. I’ve always loved certain amount of businesses and to me Vietnam is like the perfect environment for that.
Everything here, there are so many opportunities and the population itself is quiet young and energetic and culturally everyone wants to be doing their own thing and have their own business so I think culturally as opposed to a lot of other places I’ve been to, and the US included, people are just content being employees and managers of big companies in contrast to Vietnam where everyone wants to be an entrepreneur so for someone who enjoys entrepreneurship, it’s a great place to be.
Chris: Great. Okay, so tell me a little bit about Saigon Hub. Where did the idea come from?
Chris Zobrist: Yeah sure. So like many businesses there is kind of a long story but I’ll give you the short version of it. Basically a year back I had my own office for my company, it was an IT outsourcing company and I changed my business model so that a lot of my staff no longer needed to come in to the office to work.
They were actually working remotely from their homes and this was because they were working in US time zone. Before that they were working on Vietnamese time zone so they needed a physical place to be for me but then I shifted the business model to make them all be remote and working directly with the US developers.
So I had this big office that was kind of empty and at the same time I had a lot of friends who were entrepreneurs and they all were working out of coffee shops or their own homes and I said, Hey look, I think we can all benefit by working in the same place.
We are all doing different types of businesses but we all have different type of expertise that we bring to the table so just come here and work, and I wasn’t even thinking about charging people at that point but after working there for a few months they came back and were like, we really like working here and we feel bad that we’re kind of getting this rent free, can we pay to rent seats here by the month and I said sure and at that time I haven’t even looked into co-working spaces before, it never just occurred to me.
But when you have customers who are telling you that they want to pay for something you’re offering, that sounds like a good opportunity to me as an entrepreneur. So you flash forward a year we still have that first co-working space going in my old office and its 40 seats and it’s taken so we earlier this year opened up Saigon Hub which is 80 seats, about 300 sq.mts total so there is a lot of space and what’s even more beneficial about having such a big space is that we are able to now host startup related entrepreneur events here regularly.
So every week we have like two or three really interesting speakers and events and mentors and stuff here which kind of brings in more potential entrepreneurs. So it’s a very great ongoing community here that we have.
Chris: How many members do you have now and what’s the split between foreigners and locals?
Chris Zobrist: I’d say right now we have about 40 members in Saigon Hub and then combine that with the other 40 in the first space and they’re actually connected in some ways; they’re very nearer to each other.
Distance wise it’s about a 5 minute walk from the first one to the Saigon Hub and then members can actually go in between the spaces so they can choose which space they want to work at. They just pay one membership which gives them access to both spaces so that’s kind of cool. And sorry what was the other part of the question?
Chris: What’s the split between locals and foreign entrepreneurs?
Chris Zobrist: Yeah so I’d say it’s about fifty-fifty. Most of the foreign entrepreneurs here are kind of expats who’ve been here for a while or have moved here recently or are either freelancing or building their own products businesses and their target is global markets and I’d say the other 50 percent are locals who most of them have actually studied abroad so they fit into more of that international kind of environment and are very English speaking and very progressive in terms of technology, technical knowledge and also design concepts so they fit in really well with the foreign entrepreneurs.
Chris: Are you seeing most of the entrepreneurs of Saigon Hub creating products for the domestic market or for the international market?
Chris Zobrist: Yeah for the most part the entrepreneurs here are working on global opportunities and I think there are very few who are doing domestic and I think its probably because the domestic market here specially from web and mobile products is still so small so it’s hard to monetize whereas if you go global, you’re basically unlimited in terms of scale so I think that’s what most of the members here are focused on.
Chris: What are some of the opportunities that the members are working on?
Chris Zobrist: So some of them are working on truly global scalable products so we have one team here from a company called SupportB and they’ve been with us for over a year and they provide collaborative email support software to global companies you know SMEs, Fortune 500s the whole works and they’re growing very fast and they’re based here and they have staff here and India and US as well so that’s one example.
Another example is a team working on a social network for Myanmar. Myanmar is probably one of the most fast emerging markets right now because they just opened up and so there’s just tons of opportunities for them and that space there. So these are just a few examples.
Chris: Cool. So going back to Vietnam what are the difference between the regions, the two hubs, Hanoi and Saigon?
Chris Zobrist: Yeah I would say there are actually three distinct regions in Vietnam where you find packets of people, very smart technical people locally so I’d say the biggest of course is Ho Chi Minh City or Saigon, the old name for it and people use those interchangeably.
So I would say for Saigon definitely the largest pool of both talent and entrepreneurs and its really the commercial center of the country so you’ve got probably ten to twelve million people living in the city and a lot of multinational corporations here with their headquarters here and sadly it’s a much larger pool of potential collaborators, partners, employees and everything that you would need to grow your business.
Contrast to this, I think the second biggest place in Vietnam is Hanoi and Hanoi is really the government center so you find that most of the business and people there have really tight connections to the government and kind of the NGO sector, World Bank and all those guys are based up there coz of the embassy are there and such.
The people up there the entrepreneurs tend not to have as good as a pulse on how to build a very customer centered business. A lot of businesses that thrive up there are succeeding not because they deliver excellent products or services to customers but more because they have some relationship at the top; this is just what we are.
And so I mean they tend to focus a lot more on those sorts of insider relationships and rely heavily on those as opposed to building just really great products and having a really great relationship with your end customer.
So I think that is a pretty big difference in terms of mindset that I’ve seen between the local entrepreneurs that are based in the two places. As a foreign entrepreneur it’s much much easier to work from Saigon or Ho Chi Minh City just because the English skills are much better down here. There’s much more emphasis here on selection for locals who can speak English very well and I found that English speaking is actually kind of a deficit up in Hanoi just because it’s not emphasized so much.
And I really mentioned the third region Da Nang actually which is the biggest city in the middle of the country. It’s often overlooked but actually I think Da Nang in the future has a real potential to grow into a significant startup hub just because the local government there is very progressive and they want to attract foreign investment and want to attract really great people and so I’d say that could be a potential hub in the future.
Chris: What kinds of programs or schemes are they using to attract foreign investors and entrepreneurs?
Chris Zobrist: I think right now they’re targeting mostly IT based medium businesses and outsourcing and they’re trying to get more into that innovation space but actually its tough coz being government its really tough to understand how to go about fostering innovation and the Vietnam government has actually just borrowed a significant chunk of money from the world bank , a 100 million dollars that they’re going to be investing into developing innovation ecosystems here in Vietnam so that’s being led by the Ministry of Science and Technology here which is based largely in Hanoi so we’ll see how that trickles down to different regions and such.
Chris: If an entrepreneur wants to visit Vietnam to get some work done and to possibly hire some local workforce do they need to set up a company or get a special work permit, visa? How does that work?
Chris Zobrist: Sure I think it’s much easier than that, like for example when I first came here it was about 7 years ago and I kind of started slowly as I was on a three months tourist visa and you can actually do a lot just with that.
They’re not gonna be watching what you’re doing and stuff very closely so you’re kind of staying under the radar and you know it wasn’t until I had about maybe eight people working for me, I finally rented a house actually and had my office in the house and probably eight staff before the local police guy came by one morning and was like what are you guys doing and I was, oh nothing much.
And I said well I’m actually starting an IT company and so he said do you have a license and I said no I’m working on it so then it was probably another six months after which I was operating and collecting revenue from my customers who were mostly in US for about a year before actually needing to finalize the company and to get a license and stuff so you can do a lot you know by flying under the radar.
Chris: And what is the process of incorporating a company in Vietnam?
Chris Zobrist: It’s pretty straightforward so there are several different options and it really depends on your financial situation. If you’ve lot of cash saved up or if you have some significant cash flows it’s pretty easy to do a foreign direct investment company where you are the 100 percent owner.
But if you want to do a bootstrap, you know like 500 bucks or something less you can do a local entity and then you would use kind of like if you have a good relationship with a local person you can trust then they would help you to open the company and they would technically be the main shareholder but then you would be their right of attorney or something and you’d be able to sign all the company documents and control the bank accounts and stuff.
Chris: So as a company secretary?
Chris Zobrist: Yes, you can do that in less than $500. Takes a couple of weeks actually to set up a local entity like that whereas a foreign investment company or a joint stock company with foreign owners will take about maybe two or three months to get a formal setup and maybe cost 5k or something
Chris: 5k dollar, right?
Chris Zobrist: Yeah.
Chris: Okay. What incentives are there, programs issued by the government with the foreign direct investment company?
Chris Zobrist: No, not as such. There’s not specifically any grants that the government makes available for specific types of investment at this time. They do offer tax incentives like for certain types of IT or software companies they will given a five years tax shelter kind of thing, so those are some incentives but in reality it’s like you got to bring your own capital to the table. There aren’t any subsidies for that kind of stuff here.
Chris: What’s the corporate tax in Vietnam?
Chris Zobrist: It’s about 20 to 30 percent but in reality most companies that are operating here hire accountants whose main job is to like minimize the tax that you would pay to the government so very few people actually pay high amounts of tax so that’s just the accounting culture you get into, you see.
Chris: Tell us little bit about the talent that’s currently in Saigon and what’s the process like to find them and also to get them on board?
Chris Zobrist: Yeah, sure. I think that the easiest way and this is also what I’ve used back in the day when I was bootstrapping my first company here is actually to go through the social networks.
So you would start by you know making some friends and then asking people who know other people who can do certain things that you need to do and through the social networks, that’s how I primarily find good people. And the few times that
I have dome more of phone over recruiting on some job posting websites here including VietnamWorks and CareerBuilder just came in and another local company.
Those tend to you know maybe good qualified applicants on paper but their motivation is not guaranteed. So I’ve always had the best result finding good people through people that I know who also do business here, who are pretty well connected in different communities. It’s like being able to build up and access that social network and using social capital that’s really important here for finding good people.
Chris: I mean in general how motivated are they?
Chris Zobrist: Vietnamese, especially if you’re talking about developers, designers can be very motivated if they feel like its not just a way to make money but that they can gain some real experience coz again a lot of people here want to understand how to do business and if they can learn that through working with experienced entrepreneurs from abroad then they’ll put a 100 percent of their focus into helping build a great company.
Chris: Right, so they understand in developing relationships?
Chris Zobrist: Yeah, for the most part. This is again specific to Saigon which is where I’ve been based mostly. Its quite a different environment in Hanoi where they’re much more kind of I don’t know if you’d call it competitive as opposed to collaborative and everyone there just wants to kind of do their own thing as opposed to work together to build something great together. It’s like a very different kind of mindset up in Hanoi.
Chris: Apart from designers and developers, what other type of workforce are there that could be of any interest to a foreign entrepreneur?
Chris Zobrist: Yeah, I think that actually one of the biggest advantages to Vietnam is that you can just hire smart people to help you with all the admin stuff. That’s been the one thing that I think has allowed me to have the freedom to be able to expand into new businesses.
And you know when I was doing my first business in the US, I basically had to run around and do everything. I mean there is so there is so much leg work involved and it’s so expensive to hire a personal assistant or something to help you to with those things that it’s just not practical.
In contrast to that in Vietnam, you can hire really great PA for $400 a month and they will be on top of everything you give them. So in terms of execution and just ease of being able to get stuff done I’d say it is the 80-20 rule; the 80 percent that you as a business owner need to focus on is not so much filing the papers for taxes or dealing with fixing up something in the office, it’s really that 80 percent of your time should be focused on how to make a better product or how do you make your customers’ experience better, how do you find new customers that would fit in to your business model and then you can put off that 20 percent of leg work and grunt work onto one solid PA who can help you with that.
Chris: If employees involved with office duties and admin are $400 a month, what’s the salary range for example say first, a really good graphic designer, second, someone that’s really good at php, html and third Ruby?
Chris Zobrist: I’d say to get really talented people, locals you’d want to hire people say between $600-800 a month and if you want top notch people I’d say a $1000 or even $1500 but then you got to be making pretty substantial revenue to support those guys. So it depends on where you are at in terms of your business.
Chris: And what about sales and marketing workforce?
Chris Zobrist: I haven’t really hired too many people on that end so I haven’t had direct experience with that but I know people who have been hiring and I think it depends a lot on where your targeted customers are.
I think if its domestic stuff locals are great; for more like global markets, then having someone like someone with more significant international experience is more important and those folks are you know the locals who may be have studied abroad or worked abroad before. They can be very effective but they’ll run a bit higher in terms of salary maybe more on that $800-2000 a month kinda end but not too expensive.
Chris: Tell me a little bit about the technology infrastructure in Saigon and also the lifestyle. I’ve got a few friends that are basing their companies in Hanoi and in Saigon right now and a big draw for them is the lifestyle, the food and culture.
Chris Zobrist: Yeah absolutely. The lifestyle is a huge draw here. I tell people that where I live here in downtown Saigon is called district one and district one has the most amazing collection of food from every country you could imagine.
There’s great Japanese food, Italian food, French food as well as local Vietnamese food and from the regional Chinese food and such so food culture here is great.
There are beaches close by, really nice beaches and really nice one in Saigon is called Mui Ne that’s about 3-4 hours’ drive from here. And then in terms of technology infrastructure Vietnam is also a very unique place in that you get 3G coverage in pretty much the whole country and so that’s always kinda the base level default if I can’t get Wi-Fi there’s always 3G you can fall back on, to check emails and such and to get calls.
And then in terms of how worried I have to be to have this Skype call uninterrupted with no lag time of anything is that in Saigon Hub I have set up 3 fiber optic lines that are going to load down so you get redundancy and then we have three really good access points that are all balanced and dual band. That’s one of the biggest problems that we’ve solved for people here at Saigon Hub relative to working from a coffee shop or from your house is that the Wi-Fi infrastructure here is just top notch and you can’t beat it.
Chris: Moving on to my last question, what are some tips that you can share, what are the common pitfalls for entrepreneurs that are considering venturing into Vietnam ?
Chris Zobrist: I’d say that the biggest tip I can recommend for having success here is starting small so if you come here, you know get situated; we provide great co-working space here. There’s plenty of rooms to rent nearby and you can start with a fairly small footprint and as you kind of get a better idea and it also goes back to you now what kind of business you’re in and also what stage it is at you can start to find really good people and hire you know one person at a time if you’re hiring locals.
There’s also really good expats here who maybe working on their own things but they’ll also love to collaborate on things to bring different skills to the table. So I’ve seen teams actually formed or grow through the expats that work here actually and so I’d say that one of the biggest pitfalls that I’ve seen here is when people come in and try to scale up too fast.
They start hiring 5 or you know 10 people at one time and they try to push it too fast and then ending up with this fragmented team culture and it starts to break apart so really the idea of starting slow and scaling up like one person at a time is so that you can build a cohesive culture so everyone’s on the same page and you don’t have any conflicting kind of views or objectives or goals.
If you can grow kind of one person at a time and you make sure everyone on your team are A-players, those first 5 or 10 ten people are key to building a good base for a scalable company. If you don’t have those first hires or the right people or the people with right mindset then it’s a shaky foundation and whatever you build will end up falling apart.
Chris: That’s excellent advice. I think it applies to most regions.
Chris Zobrist: Yeah.
Chris: Where can listeners go and find out more about yourself and also Saigon hub?
Chris Zobrist: Yeah, sure. So they can go to our websites saigonhub.vn and they can also email me at Chris@saigonhub.vn. So those are the main point of contacts for us. And I look forward to welcoming any listeners to Vietnam anytime.
Chris: Awesome. Thanks Chris.
Chris Zobrist: Thank you Chris.
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