Edit : I made a mistake in Groupon multiple. Groupon trades at 2.5 times revenue not total sales transacted. Using sales transaction, Groupon trades at 1.4 times at current $12 shareprice of 8B market cap. So Dealguru sale at 50/38 = 1.3 times or so is quite fairly valued. It also means there is no obvious valuation upside for Dealguru holding on the ibuy shares.
This post follows from my post about Patrick Grove's Empire. Earlier this week, got news that iBuy ( a new vehicle which will list on ASX) has entered to buy DealGuru and 2 other deal sites in the region. The deal will form an instant A$70M revenue business and the CEO of the entity will be Patrick Linden from Dealguru.
This is again a good move from Patrick Grove of Catcha Group. He buys these companies via 1/3 cash and 2/3 share swap at 1 times past 12 months revenue and he will unlock value in their respective markets and then the ASX market will accord them a better multiple which will then result in win win for not just Patrick but for the guys who sold the business to him. Take note that Groupon is now valued at 2.5 times revenue past 12 months. So there is an easy 2.5 times capital gain here.
Whats more, because he intends to raise about 33M from IPO investors and probably some bond investors, this means he is using OPM for the combined entity. That is a cool Series B/C done via IPO route again! Really love the guy.
How about the guys who sold and what does it mean for the deal industry or ecommerce industry?
Well, i have only met Patrick Linden a long time ago before he started Dealguru. Came across as intelligent, nice and sharp person. Insead grad i think....
Anyway, he and his partner each own about 18% of the company, so they get S$2.25M cash first and end up owning about 4% of combined entity. I think it is a smart arrangement all ways. That way , they are committed to growing the business and if it grows 2.5 times, then Patrick and partner are looking at real money. For example, at present value, their stake is each worth about $7M give or that. But if share price increases 2.5 fold... then it is a deal worth about S$14M.
But they should take note that they need to replicate what iProperty did and they are up against much stronger players like Groupon, Taobao, Q100 etc. Basically there are so many big and small ecommerce players and deal sites are not focused yet.
So happy for Patrick and partner. And patrick linden has a new challenge to run as CEO with Patrick Grove as chairman. Rebate I guess will be happy since they own 62% and have a successful exit.
As for other deal site clones and other ecommerce players, this deal may not be that great. It offers a new competitor that is listed and regional. And it also values them at 1 time revenue which is quite a lot lower than the Series A rounds where i am hearing valuations of 1.5 to 2.5 or even higher valuations.
Feel free to comment and share!
Thoughts on startup scene in South East Asia. While effort is made to be accurate in terms of numbers, i may sometimes get the data wrong. My purpose is to share what i know and what i have learned over the past 23 years. Feel free to leave comments or to email me. And if you are keen to learn more about Angel Investing pls visit https://www.angelcentral.co/investors/membership
Tuesday, December 10, 2013
Monday, December 9, 2013
Patrick Grove's Empire.
Kudos to Patrick Grove again. He is truly a strong deal maker. For readers who do not know Patrick's background. I will cover the iBuy and Dealguru thoughts in another post. But first...
Patrick was from the first dot com boom and started this general portal called Catcha which was meant to be like Yahoo for SEA. They raised money and were all geared up for IPO. But market crashed in April 2000 and they missed the window. What happened next is quite a tough period as Patrick and partners bought out their investors and pivoted the business into an English magazine publisher based in KL. They grew that until some in 2007 or 2008 when he went back into the dot com area with his purchase of iProperty in malaysia and at the same time pushing the malaysian Catcha Media into becoming a reseller for MSN and other digital media properties.
What happened next is what i admire him for.
He somehow managed to string together a bunch of in principle aquisitions and concurrently IPO on ASX the iproperty group. Between 2008 to 2013, the company used Other Peoples Money from IPO, European investors and rights issues to expand regionally with mixed results. iProperty is super successful in Malaysia but has lost out to Propertyguru in SG. Current market valuation is A$355M or about S$400M. iProperty sales is at A$15M last 12 mths with a loss of 1.5M or so. Mostly winning in MY market.
He is a significant shareholder via Catcha Group which owns about 23% of iProperty. He is majority shareholder of Catcha group. So what he did is to structure the initial deal, build up a team of good executives from REA group (top Australian portal) and then get the business to work in this region. 1.5M loss is not a big deal if iProperty can continue to grow and scale. And their losses are reducing. So to outside investors, he has proven his ability to deliver to shareholders so far.
Also to note, this market valuation i am sure has helped Propertyguru get the price they wanted for their deal. So it is not always a bad thing that your competitors get good deals!
The next thing he did was to list the malaysia Catcha Media at a RM100M valuation. Much lower valuation since the market is KL and also magazine publishing is less sexy. In testament to his deal power, he has recently merged it with Says.com and has gotten the Says guys to try to grow this business well in MY. But i think the lesson is that KL investors value dot coms a lot less than in Australia. I believe investors right now are still valuing Catcha Media below IPO price.
The next deal he did was last year when he entered the car market but IPO yet another low revenue and profitless firm on ASX leveraging on his success with iProperty. iCarAsia is currently doing what iproperty did 5-6 years ago and trying to build up car portals in SEA. Market cap of A$71M on barely annualized 1.5M revenue!!!!
Whether iCarAsia can become another iProperty really depends on execution next few years. Will be interesting to watch.
So what he has effectively done is to seed fund privately and do his series A, B,C via the stock market. The ability to IPO at Series A/B round is where his magic is.
Most recently, he created a new company to enter ecommerce space via acquiring key deal sites in 3 countries. Will talk about iBuy in another post.
Patrick was from the first dot com boom and started this general portal called Catcha which was meant to be like Yahoo for SEA. They raised money and were all geared up for IPO. But market crashed in April 2000 and they missed the window. What happened next is quite a tough period as Patrick and partners bought out their investors and pivoted the business into an English magazine publisher based in KL. They grew that until some in 2007 or 2008 when he went back into the dot com area with his purchase of iProperty in malaysia and at the same time pushing the malaysian Catcha Media into becoming a reseller for MSN and other digital media properties.
What happened next is what i admire him for.
He somehow managed to string together a bunch of in principle aquisitions and concurrently IPO on ASX the iproperty group. Between 2008 to 2013, the company used Other Peoples Money from IPO, European investors and rights issues to expand regionally with mixed results. iProperty is super successful in Malaysia but has lost out to Propertyguru in SG. Current market valuation is A$355M or about S$400M. iProperty sales is at A$15M last 12 mths with a loss of 1.5M or so. Mostly winning in MY market.
He is a significant shareholder via Catcha Group which owns about 23% of iProperty. He is majority shareholder of Catcha group. So what he did is to structure the initial deal, build up a team of good executives from REA group (top Australian portal) and then get the business to work in this region. 1.5M loss is not a big deal if iProperty can continue to grow and scale. And their losses are reducing. So to outside investors, he has proven his ability to deliver to shareholders so far.
Also to note, this market valuation i am sure has helped Propertyguru get the price they wanted for their deal. So it is not always a bad thing that your competitors get good deals!
The next thing he did was to list the malaysia Catcha Media at a RM100M valuation. Much lower valuation since the market is KL and also magazine publishing is less sexy. In testament to his deal power, he has recently merged it with Says.com and has gotten the Says guys to try to grow this business well in MY. But i think the lesson is that KL investors value dot coms a lot less than in Australia. I believe investors right now are still valuing Catcha Media below IPO price.
The next deal he did was last year when he entered the car market but IPO yet another low revenue and profitless firm on ASX leveraging on his success with iProperty. iCarAsia is currently doing what iproperty did 5-6 years ago and trying to build up car portals in SEA. Market cap of A$71M on barely annualized 1.5M revenue!!!!
Whether iCarAsia can become another iProperty really depends on execution next few years. Will be interesting to watch.
So what he has effectively done is to seed fund privately and do his series A, B,C via the stock market. The ability to IPO at Series A/B round is where his magic is.
Most recently, he created a new company to enter ecommerce space via acquiring key deal sites in 3 countries. Will talk about iBuy in another post.
Monday, December 2, 2013
When to give up
I had a rather disturbing tea session with a passionate startup entrepreneur 1+ months ago. We chatted for about 2 hours and it was revealed that he has basically thrown in everything he has but the kitchen sink in terms of his personal resources and energy. The business has pivoted 2 times and he is hoping that 3rd time lucky this dec. Basically has enough cash for 1+ months of expenses left. Core team has changed a once over last 2+ years. And there is still no traction. He was almost in tears when he shared his experience and that is when i knew he was probably being very honest and perhaps it was a form of release to talk it out too.
Now I usually try my best not to tell people what to do because i believe there are many routes to success and sometimes there is no one size fit all answer for startup decision making. What i like to do is to share what happened to me and situations i know well and let the listening decide if i am relevant in what i am saying.
But in this case, i found myself quite sure he should give up. Here is my reasoning for when an entrepreneur should give up on a startup, take some time off, get a corporate job, regroup before deciding to startup again maybe 1or more years later.
If one or more of the below fit your circumstance, perhaps you should consider giving up.
1) KPIs for traction not happening despite 1 or 2 or more pivots. Usually a startup will set usage metrics for each month and key ones for every 3,6, 12 months. If you are not even remotely hitting these metrics (read 50% or more) in spite of spending on marketing and tech to iterate and improve, then perhaps the market is just not there as you envisage it.
2) Core team leaving in droves or all gone. Worse still, key founding partners change. This is a clear sign that the faith in the vision is gone. It can be due to (1), it can be due to your personal leadership style. Either way, it means you will have more problem getting the business growing. You will be spending time on people hiring, mgmt, on boarding and generally HR firefighting issues.
3) Pivoted more than twice with no results. And duration is more than 2 years. Personally, i would give anything up to 1.5 years for a startup to show some results. Results can be funding, revenue, traffic metrics etc. But i put it as 2 years as some people may be more patient than me.
It is also telling that in our digital space, 2 years is a very long time. eCommerce exploded in the last 2 years, so assumptions made in 2011 and probably being revised and pivoted now in 2013.
I know this can be contentious as there are companies that succeeded only after 2 years. But i think it depends on where you are at in (1), (2). If you are just getting by, some revenue, good team, then you have runway to hang on and try more times.
4) Mental and physical health facing major issues. If you are falling sick all the time, unable to concentrate, cannot sleep well, basically body going to hell and losing your mind, i think it is time to throw in the towel. Entrepreneurship is a great experience but not at the expense of your life. It is very selfish to expect your loved ones to suffer so greatly with you.
Feel free to comment and add on.
Now I usually try my best not to tell people what to do because i believe there are many routes to success and sometimes there is no one size fit all answer for startup decision making. What i like to do is to share what happened to me and situations i know well and let the listening decide if i am relevant in what i am saying.
But in this case, i found myself quite sure he should give up. Here is my reasoning for when an entrepreneur should give up on a startup, take some time off, get a corporate job, regroup before deciding to startup again maybe 1or more years later.
If one or more of the below fit your circumstance, perhaps you should consider giving up.
1) KPIs for traction not happening despite 1 or 2 or more pivots. Usually a startup will set usage metrics for each month and key ones for every 3,6, 12 months. If you are not even remotely hitting these metrics (read 50% or more) in spite of spending on marketing and tech to iterate and improve, then perhaps the market is just not there as you envisage it.
2) Core team leaving in droves or all gone. Worse still, key founding partners change. This is a clear sign that the faith in the vision is gone. It can be due to (1), it can be due to your personal leadership style. Either way, it means you will have more problem getting the business growing. You will be spending time on people hiring, mgmt, on boarding and generally HR firefighting issues.
3) Pivoted more than twice with no results. And duration is more than 2 years. Personally, i would give anything up to 1.5 years for a startup to show some results. Results can be funding, revenue, traffic metrics etc. But i put it as 2 years as some people may be more patient than me.
It is also telling that in our digital space, 2 years is a very long time. eCommerce exploded in the last 2 years, so assumptions made in 2011 and probably being revised and pivoted now in 2013.
I know this can be contentious as there are companies that succeeded only after 2 years. But i think it depends on where you are at in (1), (2). If you are just getting by, some revenue, good team, then you have runway to hang on and try more times.
4) Mental and physical health facing major issues. If you are falling sick all the time, unable to concentrate, cannot sleep well, basically body going to hell and losing your mind, i think it is time to throw in the towel. Entrepreneurship is a great experience but not at the expense of your life. It is very selfish to expect your loved ones to suffer so greatly with you.
Feel free to comment and add on.
Wednesday, October 16, 2013
Brandtology Deal Thoughts
(Made some amendments to data about Brandtology numbers below after reading FY2012 statements and also included more about people behind it).This is one of the stories which have been quoted quite widely in media and rightly so! Here is what i have gathered.
Eddie Chau and a few other founders which include Kelly Choo and Roger Yuen of Clozette started Brandtology back in 2008 with great foresight that with social media growing, there will be a strong demand for media monitoring of these platforms coupled with analytics tools. From what i can see, they raised about 1.75M in ordinary share capital and built up the business. Then in 2009, they got funded by Walden Seed Fund for 2M for a 25% stake. So just 1 year later, the firm was valued at 8M post money.
Eddie is a seasoned entrepreneur having already built up and sold e-Cop prior to this venture. His other more outward facing cofounder is Kelly Choo who is a frequent startup event speaker. Nice guy whom i met before as co-panelist. Roger Yuen is probably an investor with about 2.5%. I chatted with Roger in his office at Clozette. Nice "qianbei" who has been in tech much longer than me.
Brandtology was sold to Media Monitor a largish private firm based on out Australia for an undisclosed sum in Feb 2011. This is a short 2 year later. From what i can see, it is a partial sale of about 50% for the working shareholders and a complete exit for Walden. That makes sense since revenue for FY ending March 2010 was only 1.4M or so and clearly acquirers were buying a future story and they need the team and not the VCs. And so that readers do not think this is a skyhigh valuation deal, i believe in 2011, 2012 revenue probably grew dramatically because by FY2012, revenue is at 9.3M or some with 1.3M profit if i can recall what i read accurately. So about 5-7 times sales is not unreasonable.
Shows us that keeping management around and incentives via earnout equivalent structures probably makes a lot of sense and Brandtology current numbers look good. According to their site, they have 200 staff now. Win win all round. Media Monitor (now called iScentia) gets a good growing company whose revenue x8 in 2 short years, Eddie and shareholders got to exit 5-6M in total and still retain half their stakes for upside.
Of course, valuation must have been above 8M for Walden to exit. Sale valuation should be about 12-15M to give a min IRR of 25% for the 2 years. This is pure speculations since we cannot obtain actual sale value publicly. Also, shareholding for the company to me is quite reflective of this kind of deal. Eddie had about 42% stake after Walden came in. I always believe in the CEO/key entrepreneur/owner approach whom the buck stops at. That person needs about min 35% and up. His 2-3 other individual shareholders/founders like Kelly have much smaller stakes (5+%). Whether that incentivises them is another story but my take is that salaries can always help to mitigate a lower equity stake for the cofounders. But to me 5% is about bare min but we have to pay these co-founders properly or increase their stake with time.
What is interesting in this deal is that Media Monitor too has undergone much change. They themselves have been acquired by a PE fund and integrated together with a bunch of other media assets. It will be interesting to see how the PE guys play this one. IPO? Trade Sale? Time will tell. Hopefully the Brandtology team can participate one more time in that exit given that they kept about 50% stake.From what i can see, as of 2013, they are still holding the stake.
Eddie Chau and a few other founders which include Kelly Choo and Roger Yuen of Clozette started Brandtology back in 2008 with great foresight that with social media growing, there will be a strong demand for media monitoring of these platforms coupled with analytics tools. From what i can see, they raised about 1.75M in ordinary share capital and built up the business. Then in 2009, they got funded by Walden Seed Fund for 2M for a 25% stake. So just 1 year later, the firm was valued at 8M post money.
Eddie is a seasoned entrepreneur having already built up and sold e-Cop prior to this venture. His other more outward facing cofounder is Kelly Choo who is a frequent startup event speaker. Nice guy whom i met before as co-panelist. Roger Yuen is probably an investor with about 2.5%. I chatted with Roger in his office at Clozette. Nice "qianbei" who has been in tech much longer than me.
Brandtology was sold to Media Monitor a largish private firm based on out Australia for an undisclosed sum in Feb 2011. This is a short 2 year later. From what i can see, it is a partial sale of about 50% for the working shareholders and a complete exit for Walden. That makes sense since revenue for FY ending March 2010 was only 1.4M or so and clearly acquirers were buying a future story and they need the team and not the VCs. And so that readers do not think this is a skyhigh valuation deal, i believe in 2011, 2012 revenue probably grew dramatically because by FY2012, revenue is at 9.3M or some with 1.3M profit if i can recall what i read accurately. So about 5-7 times sales is not unreasonable.
Shows us that keeping management around and incentives via earnout equivalent structures probably makes a lot of sense and Brandtology current numbers look good. According to their site, they have 200 staff now. Win win all round. Media Monitor (now called iScentia) gets a good growing company whose revenue x8 in 2 short years, Eddie and shareholders got to exit 5-6M in total and still retain half their stakes for upside.
Of course, valuation must have been above 8M for Walden to exit. Sale valuation should be about 12-15M to give a min IRR of 25% for the 2 years. This is pure speculations since we cannot obtain actual sale value publicly. Also, shareholding for the company to me is quite reflective of this kind of deal. Eddie had about 42% stake after Walden came in. I always believe in the CEO/key entrepreneur/owner approach whom the buck stops at. That person needs about min 35% and up. His 2-3 other individual shareholders/founders like Kelly have much smaller stakes (5+%). Whether that incentivises them is another story but my take is that salaries can always help to mitigate a lower equity stake for the cofounders. But to me 5% is about bare min but we have to pay these co-founders properly or increase their stake with time.
What is interesting in this deal is that Media Monitor too has undergone much change. They themselves have been acquired by a PE fund and integrated together with a bunch of other media assets. It will be interesting to see how the PE guys play this one. IPO? Trade Sale? Time will tell. Hopefully the Brandtology team can participate one more time in that exit given that they kept about 50% stake.From what i can see, as of 2013, they are still holding the stake.
Sunday, October 13, 2013
How to get good advice/insights from others?
This is a tough question which I encounter quite often. Entrepreneurs frequently feel very lonely and we sometimes do not know how to even start handling the problems that are in front of us. Some entrepreneurs swear by having a formal or informal board of advisors. Others say getting advice is a waste of time. I will share my personal experience on this topic and readers can draw their own conclusions. I believe it is not a waste of time but we need to have the right mindset and approach. Learning this way frequently has high impact to my business and helps me be more confident.
1) My business never got a formal set of advisors. We did ask around back in 2001 to see if anyone would join us formally but in the end it did not work out. I remember asking a politician and a GLC MD this and they both turned us down on grounds that they were too busy. Now on hindsight, i think they were right to turn us down for varying reasons.
a) I did not attempt to align them at all. No talk of equity, no clear idea how they can add value. Not that i think it makes sense to offer advisors equity except in very special cases. But i did not know that then.
b) I like to think they liked us and were self aware. They new that their value add to our work was minimal. Both were not business owners or business coaches, so I think from their point of view, they also wondered what kind of advice or coaching could they value add with.
2) The next time i got great learning was in 2003/4 when i got to meet Mark Chang who founded Jobstreet. Obviously as competitors, he did not advice us anything but what i learned just interacting was how an entrepreneur should think and how a business is run. We must have spent at least 40 hours interacting with him.
This is an important learning point. Frequently, the best advice i have gotten is from just paying attention to what other people do and say. From there, i will notice key attitudes and mindsets they have which point the direction to where i should go. Most recently, we paid a visit to Patrick of catcha at his office and i went away with some good food for thought on the psychology of Snr Mgmt.
3) Another example of learning is when i visited eFusion office back in 2007 or so. Looking at how metric driven that business is (they had whiteboards lining almost all the walls of the office!), gave me the advice i needed. Of course, this was reinforced by what Sam shared and it pointed and confirmed for me that my business needs to be ultra metric driven. This was before it became a trend.
4) Advice can directly sought. I have experienced this in an impactful way. When i was selling the company , i got in touch with an old friend who has done a fair bit of M&A work and whom i knew was a brilliant fella (scholar, mckinsey etc). Because as entrepreneurs, it is usually the first time we are encountering many concepts and terms like earnouts, reps and warranties etc, it helps to level the playing field by getting experienced professionals on our side. Together with a good lawyer, both proved to be invaluable in understanding the entire due diligence process and in negotiating the S&P agreement.
But what they were of little help with was on mindset to have during this process. Our business had no VCs, shareholders were almost all family and 1 CTO old friend. What helped me was a group of business owners whom i meet regularly. Their sharing on similar situations and view points helped tremendously.
5) Advice & insights can also be garnered from reading online and print literature and connecting the dots with our own experience. Recently, i have been reading many HBR case studies and books by Harvard professors (my better half is taking a course there). I am the type of person who learns by reading, so i actually find that advice and insights can come very much to me via reading good quality books.
For example, "The Man in the Mirror" by Kaplan is really a good book that has much insight on leadership. And by connecting the dots with own experience, it is as good as speaking with many advisors in my opinion.
So looking at the above cases, there are a few learning points.
1) Advice seems to be best for me when it comes from fellow business owners who are more advanced along their company development. This is extremely important. Learning from the snr management team of an established business is different from learning from the actual owner. Esp if the snr mgmt in question does not own equity.
2) Advice or learned insights can come when there is a clearly defined problem which we actively seek relevant people to get their opinion on, or it can come from serendipity where i learn from osmosis when interacting with business owners.
3) Professionals can give great advice but only if they are in the field they are advising on and if we are asking the right questions. So stuff like mindset learning not so useful but stuff like what are industry norms for earn outs, or what is fair based on the thousands of warranties they have seen or how to do best SEO/SEM etc
4) The person giving advice and sharing matters a lot. You need to view what they say with the background of what they come from. Eg. an american CEO of a F500 company's views on M&A considerations is very different from a 10M businesses view. But the same CEO view on leadership and the exercise of it may not be that different. But if against a 100K startup, then it may be too alien again.
5) If you are the reading type, learning from written case studies or books can be an excellent way to learn too. Only gripe i have is that there are too few case studies written for startups and SMEs. Most are for big organizations.
Hope the above helps! Feel free to share your experience with getting entrepreneurial insights and advice.
1) My business never got a formal set of advisors. We did ask around back in 2001 to see if anyone would join us formally but in the end it did not work out. I remember asking a politician and a GLC MD this and they both turned us down on grounds that they were too busy. Now on hindsight, i think they were right to turn us down for varying reasons.
a) I did not attempt to align them at all. No talk of equity, no clear idea how they can add value. Not that i think it makes sense to offer advisors equity except in very special cases. But i did not know that then.
b) I like to think they liked us and were self aware. They new that their value add to our work was minimal. Both were not business owners or business coaches, so I think from their point of view, they also wondered what kind of advice or coaching could they value add with.
2) The next time i got great learning was in 2003/4 when i got to meet Mark Chang who founded Jobstreet. Obviously as competitors, he did not advice us anything but what i learned just interacting was how an entrepreneur should think and how a business is run. We must have spent at least 40 hours interacting with him.
This is an important learning point. Frequently, the best advice i have gotten is from just paying attention to what other people do and say. From there, i will notice key attitudes and mindsets they have which point the direction to where i should go. Most recently, we paid a visit to Patrick of catcha at his office and i went away with some good food for thought on the psychology of Snr Mgmt.
3) Another example of learning is when i visited eFusion office back in 2007 or so. Looking at how metric driven that business is (they had whiteboards lining almost all the walls of the office!), gave me the advice i needed. Of course, this was reinforced by what Sam shared and it pointed and confirmed for me that my business needs to be ultra metric driven. This was before it became a trend.
4) Advice can directly sought. I have experienced this in an impactful way. When i was selling the company , i got in touch with an old friend who has done a fair bit of M&A work and whom i knew was a brilliant fella (scholar, mckinsey etc). Because as entrepreneurs, it is usually the first time we are encountering many concepts and terms like earnouts, reps and warranties etc, it helps to level the playing field by getting experienced professionals on our side. Together with a good lawyer, both proved to be invaluable in understanding the entire due diligence process and in negotiating the S&P agreement.
But what they were of little help with was on mindset to have during this process. Our business had no VCs, shareholders were almost all family and 1 CTO old friend. What helped me was a group of business owners whom i meet regularly. Their sharing on similar situations and view points helped tremendously.
5) Advice & insights can also be garnered from reading online and print literature and connecting the dots with our own experience. Recently, i have been reading many HBR case studies and books by Harvard professors (my better half is taking a course there). I am the type of person who learns by reading, so i actually find that advice and insights can come very much to me via reading good quality books.
For example, "The Man in the Mirror" by Kaplan is really a good book that has much insight on leadership. And by connecting the dots with own experience, it is as good as speaking with many advisors in my opinion.
So looking at the above cases, there are a few learning points.
1) Advice seems to be best for me when it comes from fellow business owners who are more advanced along their company development. This is extremely important. Learning from the snr management team of an established business is different from learning from the actual owner. Esp if the snr mgmt in question does not own equity.
2) Advice or learned insights can come when there is a clearly defined problem which we actively seek relevant people to get their opinion on, or it can come from serendipity where i learn from osmosis when interacting with business owners.
3) Professionals can give great advice but only if they are in the field they are advising on and if we are asking the right questions. So stuff like mindset learning not so useful but stuff like what are industry norms for earn outs, or what is fair based on the thousands of warranties they have seen or how to do best SEO/SEM etc
4) The person giving advice and sharing matters a lot. You need to view what they say with the background of what they come from. Eg. an american CEO of a F500 company's views on M&A considerations is very different from a 10M businesses view. But the same CEO view on leadership and the exercise of it may not be that different. But if against a 100K startup, then it may be too alien again.
5) If you are the reading type, learning from written case studies or books can be an excellent way to learn too. Only gripe i have is that there are too few case studies written for startups and SMEs. Most are for big organizations.
Hope the above helps! Feel free to share your experience with getting entrepreneurial insights and advice.
Thursday, October 3, 2013
Current Record Holder for Best Multiple in an Acquistion - Hungrygowhere
Decided to write this article after reading this article on techinasia.
Deal as we know it. InSing bought GTW Holdings who owns Hungrygowhere and TableDB back in mid 2012. Great deal for NYPS, CHS class mate Dennis, UofMich school mate Hoong Ann and last partner Yung Yih. They put in a lot of pain and effort to build up the business. I met the 3 of them periodically from the day they started back in 2006/07and it is clear that they went though hard startup times like anyone else. So I am happy for them that the deal was done and that their effort was rewarded.
Deal details based on public information :
1) Sold for S$12M cash to Singtel
2) Entity integrated into InSing under Singtel Digital Media.
3) 3 main founders with 2M investment from Walden. Each of 3 main founders had about 24% stake so about 2.88M each (nice number).
4) Best deal ever in SG based on historical revenue multiple of about 16 since in FY 2012
Consider that Sgcarmart sales is only 7.5 times revenue and they had profit margins in the 30+%!
Rationale for Deal?
Singtel POV makes some sense. Great traffic on the topic of F&B. I think it Singlehandedly gives InSing good traffic moving forward if they do not screw up running HGW. There is further upside, if they can implement TableDB well. Everyone can see how strong OpenTable is as a NASDAQ listed business in USA. I also believe there was a strong acquhire element here. We may feel 2.88M is alot, but if we think that a fresh graduate scholar costs an organization about $300K and 3 years to wait... then to get these 3 founders is quite ok?
HGW POV makes great sense though i would personally feel a little early. There was probably room to grow revenues and hence profits many folds more and build the local and regional story a bit more. TableDB also was just started and so has a lot potential. But as I always believe, only the management and founders know the full details and to take money off the table will never be totally wrong.
Deal as we know it. InSing bought GTW Holdings who owns Hungrygowhere and TableDB back in mid 2012. Great deal for NYPS, CHS class mate Dennis, UofMich school mate Hoong Ann and last partner Yung Yih. They put in a lot of pain and effort to build up the business. I met the 3 of them periodically from the day they started back in 2006/07and it is clear that they went though hard startup times like anyone else. So I am happy for them that the deal was done and that their effort was rewarded.
Deal details based on public information :
1) Sold for S$12M cash to Singtel
2) Entity integrated into InSing under Singtel Digital Media.
3) 3 main founders with 2M investment from Walden. Each of 3 main founders had about 24% stake so about 2.88M each (nice number).
4) Best deal ever in SG based on historical revenue multiple of about 16 since in FY 2012
Consider that Sgcarmart sales is only 7.5 times revenue and they had profit margins in the 30+%!
Rationale for Deal?
Singtel POV makes some sense. Great traffic on the topic of F&B. I think it Singlehandedly gives InSing good traffic moving forward if they do not screw up running HGW. There is further upside, if they can implement TableDB well. Everyone can see how strong OpenTable is as a NASDAQ listed business in USA. I also believe there was a strong acquhire element here. We may feel 2.88M is alot, but if we think that a fresh graduate scholar costs an organization about $300K and 3 years to wait... then to get these 3 founders is quite ok?
HGW POV makes great sense though i would personally feel a little early. There was probably room to grow revenues and hence profits many folds more and build the local and regional story a bit more. TableDB also was just started and so has a lot potential. But as I always believe, only the management and founders know the full details and to take money off the table will never be totally wrong.
Sunday, September 29, 2013
5 Must Haves For Superior B2B Selling
As entrepreneurs, all of us are deeply involved in the sales process. Many successful entrepreneurs believe that selling is the key skill to master. Whether it is convincing investors, or clients or internal staff, we are always selling the dream and the potential of our business. So what is required to sell well in a B2B environment? I have it distilled my 13 years experience to a few key points below :
1) Belief in your company and goal - I have an unshakable conviction that what my company offers works and that clients should buy it. This allows me to be authentic when pitching. Whether it is to investors, staff, cofounders or clients. And people can smell authenticity and confidence from a mile away. It helps tremendously with credibility building.
2) Belief in value i personally offer. I believe i add value to the people i interact with. This may sound very egoistical, but what it means is that i genuinely feel that their time is well spent on interacting with me. For a client, it is because i know my product and my industry well enough to add value to their business. For staff, it is because i can help them do their job better. And i realize that because of this belief, i am genuine when dealing with people and i do not come across as just trying to sell them something.
Another way to see this is that i try to always make win win partnerships. Since i add value, then it makes sense that everyone should spend time and work with me since it is to their benefit too.
3) Persistence. Ask any sales guy and they will tell you this matters a whole lot. Sometimes, it just takes that 1 more knock or call to get a client interested in a meeting. When do i give up? Only when there is a lower lying fruit to go after. If not, i dont give up. And even then, I will pass the lead on to someone else or work on it again some time later. Of course, i don't mean to blindly keep bugging people when i say this. Use your common sense.
4) Being intellectual. Who says sales jobs are for non-academically inclined people? We need to apply intellectual rigor to the sales process. Understand what the client needs are, what their industry is about, current issues and approach from that angle. This is especially important the higher up the corporate ladder we sell.
Better yet, don't just apply needs based consultative selling. Apply genuine insights from what we learned and use it to add value to the client. A good example is the difference between a super real estate agent and an average one. The former asks all the right profiling questions, knows all about the condo/market in question and applies it to find suitable buyers for the client. Even better, the former is able to recommend correct pricing and timing of sale due to insight on the market. We always hear about owners willing to pay more to get the right agent representing them. Why do you think this is so?
5) Selling as a Company. Sales is not just a sales person's job. It is the entire company's job. A client engages with not just our sales staff but also our finance, operations and customer service people. Sometimes, they interact with our marketing staff and even our tech people. So we need to make sure that all our staff have the right client centric mentally when providing service. And we can go further than that. Why not get non-sales staff to attend sales meetings with clients. Not only do they give an added dimension to the company, they also pique the clients interest and help us walk the talk that our company is client centric.
Many companies are already doing this. It is common for magazine publishers to have their editorial staff join in sales meetings to better understand advertiser need. Or for tech consultants to join sales on pre-sales client meetings to answer more technical questions and to understand what clients are looking for.
The spinoff benefits are many. Better sales/ops relationships, quicker product improvements, better client understanding, multiple touchpoints/relationships with clients etc.
Notice i did not talk about negotiation skills. I believe if we apply the above points well, clients will pay us what we want. Feel free to share your experiences in selling!
1) Belief in your company and goal - I have an unshakable conviction that what my company offers works and that clients should buy it. This allows me to be authentic when pitching. Whether it is to investors, staff, cofounders or clients. And people can smell authenticity and confidence from a mile away. It helps tremendously with credibility building.
2) Belief in value i personally offer. I believe i add value to the people i interact with. This may sound very egoistical, but what it means is that i genuinely feel that their time is well spent on interacting with me. For a client, it is because i know my product and my industry well enough to add value to their business. For staff, it is because i can help them do their job better. And i realize that because of this belief, i am genuine when dealing with people and i do not come across as just trying to sell them something.
Another way to see this is that i try to always make win win partnerships. Since i add value, then it makes sense that everyone should spend time and work with me since it is to their benefit too.
3) Persistence. Ask any sales guy and they will tell you this matters a whole lot. Sometimes, it just takes that 1 more knock or call to get a client interested in a meeting. When do i give up? Only when there is a lower lying fruit to go after. If not, i dont give up. And even then, I will pass the lead on to someone else or work on it again some time later. Of course, i don't mean to blindly keep bugging people when i say this. Use your common sense.
4) Being intellectual. Who says sales jobs are for non-academically inclined people? We need to apply intellectual rigor to the sales process. Understand what the client needs are, what their industry is about, current issues and approach from that angle. This is especially important the higher up the corporate ladder we sell.
Better yet, don't just apply needs based consultative selling. Apply genuine insights from what we learned and use it to add value to the client. A good example is the difference between a super real estate agent and an average one. The former asks all the right profiling questions, knows all about the condo/market in question and applies it to find suitable buyers for the client. Even better, the former is able to recommend correct pricing and timing of sale due to insight on the market. We always hear about owners willing to pay more to get the right agent representing them. Why do you think this is so?
5) Selling as a Company. Sales is not just a sales person's job. It is the entire company's job. A client engages with not just our sales staff but also our finance, operations and customer service people. Sometimes, they interact with our marketing staff and even our tech people. So we need to make sure that all our staff have the right client centric mentally when providing service. And we can go further than that. Why not get non-sales staff to attend sales meetings with clients. Not only do they give an added dimension to the company, they also pique the clients interest and help us walk the talk that our company is client centric.
Many companies are already doing this. It is common for magazine publishers to have their editorial staff join in sales meetings to better understand advertiser need. Or for tech consultants to join sales on pre-sales client meetings to answer more technical questions and to understand what clients are looking for.
The spinoff benefits are many. Better sales/ops relationships, quicker product improvements, better client understanding, multiple touchpoints/relationships with clients etc.
Notice i did not talk about negotiation skills. I believe if we apply the above points well, clients will pay us what we want. Feel free to share your experiences in selling!
Sunday, September 15, 2013
Contribution to Singapore Conversation
I wrote this for Straits Times back in late 2012. Editor told me to that it covers too many topics and does not dig deep enough into any specific topic. She suggested that i instead write about my entrepreneurship journey. That is how this article came about!
But since this is my blog, i reproduce the old article here :)
My Vision for Singapore
Singapore in 2030 is an economically thriving, well educated, inclusive and compassionate
nation. We are a top tier global city well known for our strengths in areas like wealth
management & banking, system of governance, high density population living, transportation
hub, tourism, high technology industries etc.
Our population is confident with our diversity. We are multi-cultural, multi-religious and multiracial.
We live together in harmony and respect. We have a common set of values that drives
and unites us and this includes hard work and meritocracy tempered with egalitarian ideals,
tolerance of diversity underpinned by broad based education and a rootedness to our nation
and community built on a sense of common destiny and history.
While the vision is easy to articulate it is the details that matter. Below some specific areas
which I would like to see happen.
Egalitarian Society
We recognize that not all people are created equal, nor are they given equal opportunity due to
different genetic and environmental factors. We need to implement policies that ensure that
our less well to do citizens do not become a permanent underclass. We should be willing to
explore more subsidies for lower income healthcare, housing and education. We should revisit
our policy on the minimum wage, capital gain taxes and estate duties on the top 1%
periodically. We should also be willing to subsidize healthcare and education for the underclass.
The trick is in the balance. I do not advocate a welfare state or taxation system which
discourages enterprise and which erodes human drive. But we need to set a tracked metric to
monitor mobility between the income classes and to sometimes send a signal that Singapore is
a nation and not a corporation. For example, a modest 5-10% estate tax on estates values
above US$10M would give a good signal that we care about redistributing wealth as a principle
but it will not hurt the bulk of the people nor will it result in massive evasion since the rate is
low.
On the topic of transfers, I feel it is better to raise wages at the bottom end than to just give
more transfers which is akin to welfarism.
Politics
Singapore is a representative democracy. We have a dominant one party government and it has
served us well with some missteps along the way. I would want to see more communication
and engagement between the existing government, civil service and the people when it comes
to strategic issues and occasionally even for day to day implementations that affect many.
Some examples include foreign population numbers, housing policy etc.
I would love to see more diverse, talented and ethical individuals answer the call of politics. For
starters, the dominant party should make a serious attempt to woo talent from outside the
military, grassroots and civil service spheres. It is not about money, it is about having a vision
that inspires top talent. This will help prevent allegations of groupthink and perhaps even end
up revitalizing and changing the image of the ruling party. We should seriously consider why
our current political service is unable to match or beat the allure of a career with Google (Do No
Evil) when the results of political service has as much if not more impact on people than Google
does.
Population
For Singapore to be a thriving city, we need a strong domestic economy. While current
sentiment is for population to be capped, we should be broad-minded enough to periodically
review this number and make adjustments as infrastructure and new technologies become
available. I see a large population possible in Singapore if we are creative in our land-use and if
we are able to build a harmonious consensus for high density living. The ability to adapt and
thrive in a high density environment can even be exported worldwide.
We have an ageing population. Let us make sure our healthcare, transport and housing sectors
are upgraded to adjust to our increasing number of older citizens. But let us not also underestimate
the value of our elderly. This is the same population which has brought Singapore
from 3rd to 1st world. I believe strongly that my parent’s generation will continue to add great
value to Singapore as business advisors, family care-takers, capital owners, evangelizing tourists
and more!
Immigration should be used sparingly as a complementary policy to encouraging child birth and
not as a replacement policy. Singaporeans will happily have more children if they believe that
Singapore is a great place for rearing children and that Singapore is not a stressful place to live
in. We need to educate a population that believes in itself, that is confident and that knows
how to maintain a good work life balance. This brings me to the most important area to we
need to work at.
Education
Our future is in our people. We need to ensure that each Singaporean is trained to think
critically as a citizen and individual. Our education system has to be fine tuned constantly to
move with the times. Independence and creativity has to be encouraged even if means we have
mavericks pushing our social boundaries often. I would much rather prefer a noisy marketplace
with competing ideas than an apathetic nation of complainers.
For our national discourse to be effective, the learning of philosophy, national history and
economics are actually rather critical subjects which are omitted in our schools. They should be
mandatory learning at secondary level and up. Do away with early streaming of children if
possible and expose them equally to all subjects. Do a detailed and transparent study tracking
GEP/Top student career outcomes and evaluate with a critical eye. If something needs to give
way, then let it be our obsession with ever better academic grades. Seriously, I do not for one
moment think the current generation of straight A students are any wiser or smarter than the
generations before. They just study a lot more.
A thinking population with a well rounded education in the social sciences, arts and sciences is
our best bet against any future economic, social or political challenges Singapore may face.
Economy
We need more local champions whether government owned or private citizen owned. We need
our Nestles, IKEAs and Asus. This can only happen if a sufficient number of top talent in
Singapore choose entrepreneurship as a career. SPRING , ACE and all the other initiatives are on
the right track. We must continue to encourage entrepreneurship and continue to fund coinvestment
schemes until a critical mass is achieved in multiple industries.
There is a fundamental difference between an MNC who is here because of tax benefits and
infrastructure and a locally owned MNC or SME who is here because the owner is Singaporean.
The latter will stay through thick and thin as the decision making includes emotional ties. The
former will leave when the going gets too tough and profits go down. A good litmus test will be
the current manpower policy shifts. As a local business owner, I understand the need to raise
productivity and hire more locals. I too want to pay locals at the bottom more. They are my
fellow Singaporeans.
Community
We need to have an integrated and harmonious society. Current laws on racial or religious
speech, housing quotas should remain. But the solution lies not with rules, laws, harsh
punishment and enforcement. We need more integration of our peoples.
National Service is the great leveler and nation builder. I am a strong advocate to continue NS
for our young men just purely on this basis alone. Perhaps we can consider a similar but shorter
1 or half year stint for our young women too. SAP schools should have a quota of non-Chinese
in them so that racial integration starts in those key formative years. Having gone through a
SAP school, I think this is one area which if implemented will create even more well-rounded
students.
Summary
The Singapore I envision is a confident, compassionate and top tier nation. We build on our
strengths and play a valuable role on the world stage disproportionate to our population size.
Our people lead fulfilling lives in the spheres of work they choose and our children and elderly
are well looked after. For this to happen, I strongly believe the points I raised need to be
looked into. Not everyone will agree and I hope opponents to my views will add their voice and
reasons to this discussion.
But since this is my blog, i reproduce the old article here :)
My Vision for Singapore
Singapore in 2030 is an economically thriving, well educated, inclusive and compassionate
nation. We are a top tier global city well known for our strengths in areas like wealth
management & banking, system of governance, high density population living, transportation
hub, tourism, high technology industries etc.
Our population is confident with our diversity. We are multi-cultural, multi-religious and multiracial.
We live together in harmony and respect. We have a common set of values that drives
and unites us and this includes hard work and meritocracy tempered with egalitarian ideals,
tolerance of diversity underpinned by broad based education and a rootedness to our nation
and community built on a sense of common destiny and history.
While the vision is easy to articulate it is the details that matter. Below some specific areas
which I would like to see happen.
Egalitarian Society
We recognize that not all people are created equal, nor are they given equal opportunity due to
different genetic and environmental factors. We need to implement policies that ensure that
our less well to do citizens do not become a permanent underclass. We should be willing to
explore more subsidies for lower income healthcare, housing and education. We should revisit
our policy on the minimum wage, capital gain taxes and estate duties on the top 1%
periodically. We should also be willing to subsidize healthcare and education for the underclass.
The trick is in the balance. I do not advocate a welfare state or taxation system which
discourages enterprise and which erodes human drive. But we need to set a tracked metric to
monitor mobility between the income classes and to sometimes send a signal that Singapore is
a nation and not a corporation. For example, a modest 5-10% estate tax on estates values
above US$10M would give a good signal that we care about redistributing wealth as a principle
but it will not hurt the bulk of the people nor will it result in massive evasion since the rate is
low.
On the topic of transfers, I feel it is better to raise wages at the bottom end than to just give
more transfers which is akin to welfarism.
Politics
Singapore is a representative democracy. We have a dominant one party government and it has
served us well with some missteps along the way. I would want to see more communication
and engagement between the existing government, civil service and the people when it comes
to strategic issues and occasionally even for day to day implementations that affect many.
Some examples include foreign population numbers, housing policy etc.
I would love to see more diverse, talented and ethical individuals answer the call of politics. For
starters, the dominant party should make a serious attempt to woo talent from outside the
military, grassroots and civil service spheres. It is not about money, it is about having a vision
that inspires top talent. This will help prevent allegations of groupthink and perhaps even end
up revitalizing and changing the image of the ruling party. We should seriously consider why
our current political service is unable to match or beat the allure of a career with Google (Do No
Evil) when the results of political service has as much if not more impact on people than Google
does.
Population
For Singapore to be a thriving city, we need a strong domestic economy. While current
sentiment is for population to be capped, we should be broad-minded enough to periodically
review this number and make adjustments as infrastructure and new technologies become
available. I see a large population possible in Singapore if we are creative in our land-use and if
we are able to build a harmonious consensus for high density living. The ability to adapt and
thrive in a high density environment can even be exported worldwide.
We have an ageing population. Let us make sure our healthcare, transport and housing sectors
are upgraded to adjust to our increasing number of older citizens. But let us not also underestimate
the value of our elderly. This is the same population which has brought Singapore
from 3rd to 1st world. I believe strongly that my parent’s generation will continue to add great
value to Singapore as business advisors, family care-takers, capital owners, evangelizing tourists
and more!
Immigration should be used sparingly as a complementary policy to encouraging child birth and
not as a replacement policy. Singaporeans will happily have more children if they believe that
Singapore is a great place for rearing children and that Singapore is not a stressful place to live
in. We need to educate a population that believes in itself, that is confident and that knows
how to maintain a good work life balance. This brings me to the most important area to we
need to work at.
Education
Our future is in our people. We need to ensure that each Singaporean is trained to think
critically as a citizen and individual. Our education system has to be fine tuned constantly to
move with the times. Independence and creativity has to be encouraged even if means we have
mavericks pushing our social boundaries often. I would much rather prefer a noisy marketplace
with competing ideas than an apathetic nation of complainers.
For our national discourse to be effective, the learning of philosophy, national history and
economics are actually rather critical subjects which are omitted in our schools. They should be
mandatory learning at secondary level and up. Do away with early streaming of children if
possible and expose them equally to all subjects. Do a detailed and transparent study tracking
GEP/Top student career outcomes and evaluate with a critical eye. If something needs to give
way, then let it be our obsession with ever better academic grades. Seriously, I do not for one
moment think the current generation of straight A students are any wiser or smarter than the
generations before. They just study a lot more.
A thinking population with a well rounded education in the social sciences, arts and sciences is
our best bet against any future economic, social or political challenges Singapore may face.
Economy
We need more local champions whether government owned or private citizen owned. We need
our Nestles, IKEAs and Asus. This can only happen if a sufficient number of top talent in
Singapore choose entrepreneurship as a career. SPRING , ACE and all the other initiatives are on
the right track. We must continue to encourage entrepreneurship and continue to fund coinvestment
schemes until a critical mass is achieved in multiple industries.
There is a fundamental difference between an MNC who is here because of tax benefits and
infrastructure and a locally owned MNC or SME who is here because the owner is Singaporean.
The latter will stay through thick and thin as the decision making includes emotional ties. The
former will leave when the going gets too tough and profits go down. A good litmus test will be
the current manpower policy shifts. As a local business owner, I understand the need to raise
productivity and hire more locals. I too want to pay locals at the bottom more. They are my
fellow Singaporeans.
Community
We need to have an integrated and harmonious society. Current laws on racial or religious
speech, housing quotas should remain. But the solution lies not with rules, laws, harsh
punishment and enforcement. We need more integration of our peoples.
National Service is the great leveler and nation builder. I am a strong advocate to continue NS
for our young men just purely on this basis alone. Perhaps we can consider a similar but shorter
1 or half year stint for our young women too. SAP schools should have a quota of non-Chinese
in them so that racial integration starts in those key formative years. Having gone through a
SAP school, I think this is one area which if implemented will create even more well-rounded
students.
Summary
The Singapore I envision is a confident, compassionate and top tier nation. We build on our
strengths and play a valuable role on the world stage disproportionate to our population size.
Our people lead fulfilling lives in the spheres of work they choose and our children and elderly
are well looked after. For this to happen, I strongly believe the points I raised need to be
looked into. Not everyone will agree and I hope opponents to my views will add their voice and
reasons to this discussion.
Friday, September 13, 2013
Ethics while running a business
My topic today is about Ethics and the various experiences I have witnessed that illustrates these points. I believe as entrepreneurs, we will encounter many circumstances which test us and it is up to us how we react. How we react will determine what kind of a person we are. I am a firm believer in living a good and moral life and in the innate goodness of man. When I die, all I achieve is worth nothing as I cannot bring it along. So i would want to die knowing i did right at best as I can.
For me, it also helps tremendously that my cofounder and life partner is even more clear on ethics than I am. So with us reinforcing each other, it helps a lot.
1) Overpayment. You will be surprised that some clients procurement will make mistakes and overpay us for an invoice. Figure can range from hundreds to $10K! Our policy is to always notify the client nicely and pay back.
2) Honoring our mistakes. You or your staff will sometimes make mistakes too and basically misquote to the client. My policy is to always come clean and admit it is a misquote. And we will try our best to either honor that misquote or at least give a sweetener to show that we know we made a boo boo.
I have been on the other receiving end of this before. I had an association who owed us money. And the Executive Director had the cheek to call us down and say that his manager (who had left) signed the contract and used the services without his knowledge. I told him that even if this was true, he still owed us the money (about $4000) since i had a manager's signature in black and white. This guy actually threatened me (back then 27-28 year old) and told me that he will not pay. In fact, if we do not back off, he will complain about us to his university contacts who were my partners.
I felt so bad at that time because i could not believe i was being threatened because his organization made a mistake. (and that is assuming he was not lying). Managed to resolve this by basically giving him face and accepting half payment and the other half in contra. And i think he agreed simply because i played on his ego. In front of his staff, i counterproposed and told him we are already giving in and he should not bully a startup. But i left the room with 2 thoughts.
First, i wrote off that man and never thought well of him subsequently. Anyone who does not honor their word and who tries to bully because they can does not deserve any respect from anyone.
Second, I resolved to never do that to another person. We will honor our word even if it costs us.
3) Conspiring to cheat. Early in my business, i had a potential acquirer who was running a decent sized executive search firm. Founder claimed to be a Goldman Sachs MD. At that time naive me thought that an MD was a big shot. Now i know it is just a middle ranking position in IB. Pays about US$600K a year all in. Its the partners that earn the real money. Anyway, this guy pretended to be all interested in investing in us and naive us believed him as he had a fancy car and office.
After a bit of discussion, this guy called us and said they will invest. My partner and i were so happy we bought an $800 spa espirit spa package as a reward. Next thing we knew, they wanted our jobportal functional specs and made copies of it. After that, we never heard from them and they later when chased, said change of mind. Couple of months later, they launched a job portal. Of course it died a few years later. It was run by his mistress.
This experience taught me to be a lot more careful about people. Luckily my line depends on execution and day to day effort. Not some incredible piece of IP. It also taught me that i will never want to do that to another person.
Nowadays i take extra care to always declare conflict of interests and to always make sure i am transparent in my dealings. Many times i have had people come to me for investments who are in my job portal or related space. I always take care to tell them not to reveal anything that is proprietary and to remind them that i run a job portal which may be a competitor to them.
4) Dishonest to investors/cofounders. I think trust between cofounders is most important. Even if intentions are the best, there are already sure to be areas of conflict over roles, compensation, alignment of interests etc. But it gets worse if cofounders consciously do something that affects the basic trust. For me, if someone is willing to work with me and embark on a major risk like a new business, then he or she deserves my trust and faith unless proven otherwise. And i will feel very betrayed if my cofounder does anything to betray that trust. In fact, i think if it happens, i will probably start to work out how to disengage the offending co-founder already.
For investors, i have heard and witnessed startups who are really selfish. They signed on an investor for a venture which requires them to work full time on it and by extension that means to put in their full 110% effort like any startup. However, with a bit of setback or perhaps out of greed, they start to create a business plan for another new venture and basically try to raise funds for that. I don't know if it is naivety or stupidity but which VC will fund a founder that is unable to focus and who is perfectly willing to screw their original set of investors? And word does get around in our industry. SG is really small.
5) Sweat the small stuff. It is easy to cheat your own company. All you need to do is to claim entertainment expenses that aren't strictly entertainment, or pay your personal mobile, petrol bills via the company. My stand is that this is fine if you own 100% of it since technically that is your own money. But if you have external investors or other cofounders who are not aware of this, then it is their money you are stealing. It is better for cofounder dynamics to be transparent and just work it in?
From investor angle, most investors will not sweat the small stuff and will not begrudge you some extra claims that are actually for personal use. We rely on your personal integrity and how you view things. Strictly speaking, the shareholder agreement will say that your annual compensation cannot exceed $XXK without their agreement and so you can declare such items to be part of your legal compensation. So do that.
6) Sales people who lie. Wow! I have seen so many examples of this. Basically it is quite common to hire sales staff who seem to view ethics as something that one can be creative about. You can create the best commission systems to tie reward to actual performance but there will be sales staff who will spend time and effort to game the system. And this includes outright conspiring with the client if they have a good enough relationship.
My philosophy in office is to accept no unethical behavior. If we can prove that you tried to cheat us, we will terminate on the spot without recourse and i will be happy to tell all subsequent background checking employers the reason for termination. I dont care how much money you bring in for the company. I strongly suggest readers do the same, life is too short to have to hang around cheaters.
I am sure you will encounter many more experiences that will test you. So try to do the right thing!
For me, it also helps tremendously that my cofounder and life partner is even more clear on ethics than I am. So with us reinforcing each other, it helps a lot.
1) Overpayment. You will be surprised that some clients procurement will make mistakes and overpay us for an invoice. Figure can range from hundreds to $10K! Our policy is to always notify the client nicely and pay back.
2) Honoring our mistakes. You or your staff will sometimes make mistakes too and basically misquote to the client. My policy is to always come clean and admit it is a misquote. And we will try our best to either honor that misquote or at least give a sweetener to show that we know we made a boo boo.
I have been on the other receiving end of this before. I had an association who owed us money. And the Executive Director had the cheek to call us down and say that his manager (who had left) signed the contract and used the services without his knowledge. I told him that even if this was true, he still owed us the money (about $4000) since i had a manager's signature in black and white. This guy actually threatened me (back then 27-28 year old) and told me that he will not pay. In fact, if we do not back off, he will complain about us to his university contacts who were my partners.
I felt so bad at that time because i could not believe i was being threatened because his organization made a mistake. (and that is assuming he was not lying). Managed to resolve this by basically giving him face and accepting half payment and the other half in contra. And i think he agreed simply because i played on his ego. In front of his staff, i counterproposed and told him we are already giving in and he should not bully a startup. But i left the room with 2 thoughts.
First, i wrote off that man and never thought well of him subsequently. Anyone who does not honor their word and who tries to bully because they can does not deserve any respect from anyone.
Second, I resolved to never do that to another person. We will honor our word even if it costs us.
3) Conspiring to cheat. Early in my business, i had a potential acquirer who was running a decent sized executive search firm. Founder claimed to be a Goldman Sachs MD. At that time naive me thought that an MD was a big shot. Now i know it is just a middle ranking position in IB. Pays about US$600K a year all in. Its the partners that earn the real money. Anyway, this guy pretended to be all interested in investing in us and naive us believed him as he had a fancy car and office.
After a bit of discussion, this guy called us and said they will invest. My partner and i were so happy we bought an $800 spa espirit spa package as a reward. Next thing we knew, they wanted our jobportal functional specs and made copies of it. After that, we never heard from them and they later when chased, said change of mind. Couple of months later, they launched a job portal. Of course it died a few years later. It was run by his mistress.
This experience taught me to be a lot more careful about people. Luckily my line depends on execution and day to day effort. Not some incredible piece of IP. It also taught me that i will never want to do that to another person.
Nowadays i take extra care to always declare conflict of interests and to always make sure i am transparent in my dealings. Many times i have had people come to me for investments who are in my job portal or related space. I always take care to tell them not to reveal anything that is proprietary and to remind them that i run a job portal which may be a competitor to them.
4) Dishonest to investors/cofounders. I think trust between cofounders is most important. Even if intentions are the best, there are already sure to be areas of conflict over roles, compensation, alignment of interests etc. But it gets worse if cofounders consciously do something that affects the basic trust. For me, if someone is willing to work with me and embark on a major risk like a new business, then he or she deserves my trust and faith unless proven otherwise. And i will feel very betrayed if my cofounder does anything to betray that trust. In fact, i think if it happens, i will probably start to work out how to disengage the offending co-founder already.
For investors, i have heard and witnessed startups who are really selfish. They signed on an investor for a venture which requires them to work full time on it and by extension that means to put in their full 110% effort like any startup. However, with a bit of setback or perhaps out of greed, they start to create a business plan for another new venture and basically try to raise funds for that. I don't know if it is naivety or stupidity but which VC will fund a founder that is unable to focus and who is perfectly willing to screw their original set of investors? And word does get around in our industry. SG is really small.
5) Sweat the small stuff. It is easy to cheat your own company. All you need to do is to claim entertainment expenses that aren't strictly entertainment, or pay your personal mobile, petrol bills via the company. My stand is that this is fine if you own 100% of it since technically that is your own money. But if you have external investors or other cofounders who are not aware of this, then it is their money you are stealing. It is better for cofounder dynamics to be transparent and just work it in?
From investor angle, most investors will not sweat the small stuff and will not begrudge you some extra claims that are actually for personal use. We rely on your personal integrity and how you view things. Strictly speaking, the shareholder agreement will say that your annual compensation cannot exceed $XXK without their agreement and so you can declare such items to be part of your legal compensation. So do that.
6) Sales people who lie. Wow! I have seen so many examples of this. Basically it is quite common to hire sales staff who seem to view ethics as something that one can be creative about. You can create the best commission systems to tie reward to actual performance but there will be sales staff who will spend time and effort to game the system. And this includes outright conspiring with the client if they have a good enough relationship.
My philosophy in office is to accept no unethical behavior. If we can prove that you tried to cheat us, we will terminate on the spot without recourse and i will be happy to tell all subsequent background checking employers the reason for termination. I dont care how much money you bring in for the company. I strongly suggest readers do the same, life is too short to have to hang around cheaters.
I am sure you will encounter many more experiences that will test you. So try to do the right thing!
Tuesday, September 10, 2013
Honing our bullshit meter
I am writing this post because i realize there is quite a lot of bs running around in our industry and in the business world in general. Many businessmen somehow seem to believe that they need to "talk big" and make their business sound bigger. Many reasons for this. Personal face thing, help them sell more, help them recruit people better etc. While i feel that some bs is needed especially for the latter 2 reasons, standing from the listener point of view, we need to hone our bullshit meter well. I think i have a decent BS detection system developed over the last decade. I share some thoughts here :
1) I cannot understand what they do. I believe i am a rather smart guy business/academic wise. So if i cannot understand what the business does and how it makes its money, chances are it is all BS and the speaker is being deliberately obscure to mask a lack of business model. No founder is that bad at explaining what their business does.
2) Evasive or muddled about details. When asked about headcount, sales numbers, location of office, dont give any detail but instead continue to talk big about what they do. Or they give some general statistic. For example, 1.99 shop lady used to have a headline i noticed that says she built a $30M in sales business. That sounds great! Except if you read the small print, it is $30M over lifetime of business! Online, i read an article about Mindvalley that does the same time. We all know $10M in sales in 1 year is impressive. $10M in sales since inception over 6 years is much less so.
3) Unbelievable or constantly updated Linkedin recommendations & updates etc. Anyone who is running or has run a growing business knows that we spend all our time figuring out how to grow more. So if someone is spending loads of time making themselves sound good on linkedin, i kind of feel they probably dont have much going on inside.
In fact, an extension of this is people who attend so many startup conferences. You should be spending time on your business to make money. Don't waste time meeting too many fellow startup entrepreneurs. It is like blind leading the blind. Talk to people who have succeeded in any business to get the right mindset and for industry knowledge to success stories from your industry.
4) Expenditure don't gel with claimed profile. Many examples of this.
Eg 1: Guy who claims to have exited 1,2,3 businesses and yet need to raise a 300k seed round. We need to get it straight.... if we transferred ownership of our internet business to another firm for 50k or 100k or even 200k, it is because our business failed. When we start Internet companies, the exit has to be at least 7 digits to even vaguely be called an exit. So rather than say I sold it off, I would respect the person who says the business failed and I managed to at least recover 100k for my investors through an asset sale. Then learn from the failure. Who are we fooling if not ourselves?
Eg 2: guy who claims business is doing very well but has little headcount, or need to raise capital, or somehow just seems to concerned with small things for the picture to be right. A general point from personal observation and I could be generalizing. But most people i know who really have made their money really do not sweat the small stuff.
5) name droppers. There are some people I meet who seem to know everyone! And they are hoping by association it makes them sound good. Yes, networking helps and if u do it well, can open some doors. But incessant name dropping just reeks of insecurity.
Readers do feel free to add your personal encounters. I am sure there are many. Bottom line, I hope fellow entrepreneurs can be more honest. You don't need to bullshit to succeed in business. You just need a great product, marketing and loads of paying clients on a profitable basis. Let your revenues and profits do the talking. If we look carefully at the real successes today, there are mostly below the radar. Food for thought.
1) I cannot understand what they do. I believe i am a rather smart guy business/academic wise. So if i cannot understand what the business does and how it makes its money, chances are it is all BS and the speaker is being deliberately obscure to mask a lack of business model. No founder is that bad at explaining what their business does.
2) Evasive or muddled about details. When asked about headcount, sales numbers, location of office, dont give any detail but instead continue to talk big about what they do. Or they give some general statistic. For example, 1.99 shop lady used to have a headline i noticed that says she built a $30M in sales business. That sounds great! Except if you read the small print, it is $30M over lifetime of business! Online, i read an article about Mindvalley that does the same time. We all know $10M in sales in 1 year is impressive. $10M in sales since inception over 6 years is much less so.
3) Unbelievable or constantly updated Linkedin recommendations & updates etc. Anyone who is running or has run a growing business knows that we spend all our time figuring out how to grow more. So if someone is spending loads of time making themselves sound good on linkedin, i kind of feel they probably dont have much going on inside.
In fact, an extension of this is people who attend so many startup conferences. You should be spending time on your business to make money. Don't waste time meeting too many fellow startup entrepreneurs. It is like blind leading the blind. Talk to people who have succeeded in any business to get the right mindset and for industry knowledge to success stories from your industry.
4) Expenditure don't gel with claimed profile. Many examples of this.
Eg 1: Guy who claims to have exited 1,2,3 businesses and yet need to raise a 300k seed round. We need to get it straight.... if we transferred ownership of our internet business to another firm for 50k or 100k or even 200k, it is because our business failed. When we start Internet companies, the exit has to be at least 7 digits to even vaguely be called an exit. So rather than say I sold it off, I would respect the person who says the business failed and I managed to at least recover 100k for my investors through an asset sale. Then learn from the failure. Who are we fooling if not ourselves?
Eg 2: guy who claims business is doing very well but has little headcount, or need to raise capital, or somehow just seems to concerned with small things for the picture to be right. A general point from personal observation and I could be generalizing. But most people i know who really have made their money really do not sweat the small stuff.
5) name droppers. There are some people I meet who seem to know everyone! And they are hoping by association it makes them sound good. Yes, networking helps and if u do it well, can open some doors. But incessant name dropping just reeks of insecurity.
Readers do feel free to add your personal encounters. I am sure there are many. Bottom line, I hope fellow entrepreneurs can be more honest. You don't need to bullshit to succeed in business. You just need a great product, marketing and loads of paying clients on a profitable basis. Let your revenues and profits do the talking. If we look carefully at the real successes today, there are mostly below the radar. Food for thought.
Sunday, September 1, 2013
Breaking News - SG linked startup Viki acquired..
Viki has been acquired for 200M by Rakuten apparently.
This is great news for our industry as it is the first 9 digit
acquisition and not investment. I met the CEO Razmig once at a Jungle
Ventures and he was a smart guy.
And best of all Viki is a classic example of a platform play that can scale globally! Hopefully of the guys who made millions, some are SG funds and SG investors/founders. Then they can set aside some $$ and brains to give back to SG eco-system.
And best of all Viki is a classic example of a platform play that can scale globally! Hopefully of the guys who made millions, some are SG funds and SG investors/founders. Then they can set aside some $$ and brains to give back to SG eco-system.
Case Study on deal that did not work - SHOWNEARBY
For every success, there will be at least 10 failures alongside. I remember when we first started a job portal, there were easily 20 others in the market. Names like RecruitAsia, JobPilot, FutureStep, JobCulture, Jobhunter etc. All gone by 2004/05.
So i thought it will be fun to read about a company that was founded in 2007, got a lot of publicity and got a nice cash injection of S$3.5M from a listed company no less in 2010 but failed and was sold away by the same listco early 2013 for just $1. I say failed because site looks like no activity since 2011 and founder clearly moved on already.
So here is the story from outside. I like this type of forensic work and i hope that readers will do their own and learn from these numbers and experiences.
1) Founder - Shownearby founded by Douglas Gan whom i met once and only impression i have is that he is energetic and enjoys the whole entrepreneurship thing. Don't know him well enough to comment more. Maybe readers can add comments. You can read what i excerpted from GYP 2011 annual report :
"Douglas is an entrepreneur with over 10 years of dot-com experience across South East Asia. He is currently Chief Executive Officer of ShowNearby, a location-based services company incorporated in November 2007. Douglas started his dot-com journey when he was 16, expanding his first web hosting business across South East Asia and Europe. Five years later, he sold the business to Skydio which was acquired by Webvisions Group. In 2002, Douglas started a popular online youth community, OhGenki.com, which spanned Singapore, Malaysia, Thailand, Indonesia, Philippines, China, Taiwan and Hong Kong. OhGenki.com was sold to StreetDirectory in 2007. Douglas was also a consultant for dot-com businesses such as GARENA, PropertyGuru, HungryGoWhere, Skydio and StreetDirectory. Douglas graduated from Ngee Ann Polytechnic with a Diploma in IT."
So if someone wants to work with him, should ask Steve, Forrest or Dennis from the various companies he mentioned what he actually did for them. All are good success stories. I am not sure about skydio, they are a smallish acquisition for webvisions. I am also sure GYP will not have much to say too since shownearby failed for them.
2) Business model - Location based directory. Wanted to cover everything. That is how i met Douglas, he wanted to have our jobs as part of his data pool. I guess idea is to monetize the resultant traffic from being a central point of discovery and search.
Can visit their web site and see the milestones as declared by them.
http://www.shownearby.com/press/milestones/
I have long learned to always read such milestones and what many entrepreneurs say with a lot of skepticism. There are entrepreneurs who believe in bullshitting their way to success (there is some article running around saying that now), i personally subscribe to the low key and let your profits and revenue do the talking model. Keeps me a lot more grounded especially when I realize just how big other businesses are in the non-internet space. There is a very thin line between required promotion and confidence and outright bullshit for the sake of personal ego and looking good. But that is another story which I will definitely write about.
Does model make sense? Location based obviously has some merit but I think trying to be the discovery starting point is a lot harder and the position is kind of dominated by streetdirectory and google maps. But even these two, I tend not to use them for discovery as opposed to directions and location search.
3) July 2010, managed to get Global Yellow Pages to invest 3.5M for 53.15% stake valuing them at 6.6M or so. It was subscription for new shares and so Douglas did not actually exit in any meaningful way. But valuation was good for SNB. In 2011, SNB only contributed 204K in revenue for 9 months and contributed to a loss of 600K! Valuation easily 20+ times sales but of course it is an investment valuation and not an exit. I wonder what GYP was thinking when they invested.... granted they became controlling shareholder and maybe can make sure the money is spent properly. They must have really believed in the team and potential market.
Readers need to really understand the difference between new share subscription and vendor sale. The former is investment for company to grow, the latter is exit. Latter only happens when your company has realized value or your story really damn fantastic.
Investment in your company is just that, it is investing cash to help you realize the 3 or 5 year P&L plan that you projected to investors. It can be subscription of new shares, it can be convertible loan, all achieve the same effect. So see it as just start of your startup journey and not the end ! It is definitely not an exit and not time to any spend or take your eye off the ball.
Why did GYP do it? Obvious for them, they are a business under siege for years as their directory services dwindle to nothingness thanks to the internet. Amazingly it takes so long! So they have been wanting to enter online spaces to replace those revenues. But strangely almost none of their online products work.... that is another story by itself i am sure. But to their credit, they did buy eFusion solution which at least is profitable and now have gone into F&B and Tours...
4) Anyway back to main story. fast forward to 2012, just a short 2 years later, SNB has flopped. Douglas is no longer listed in the annual reports as management. What happened? We can only guess or if we can grab Stanley who is a seasoned media magazine entrepreneur who now owns a large stake in GYP, he will tell us. My guess? Grossly mismatched expectations. To enter at valuation 6.6M, GYP expected a lot which clearly was not realized. 3.5M is a lot of money to manage and the vision and team must be strong to execute it well.
Douglas is now running a beautybox site i believe. Best of luck to him. At least he is truly quite a committed entrepreneur - never gives up!
Side note : GYP recently had a share placement to raise $7+M. So that 3.5M is really not small change to them. it mattered and perhaps was quite wasted. I would love to buy Stanley a lunch though and figure out what happened not just for SNB but their entire internet strategy. Maybe I can help... Who knows..
3) July 2010, managed to get Global Yellow Pages to invest 3.5M for 53.15% stake valuing them at 6.6M or so. It was subscription for new shares and so Douglas did not actually exit in any meaningful way. But valuation was good for SNB. In 2011, SNB only contributed 204K in revenue for 9 months and contributed to a loss of 600K! Valuation easily 20+ times sales but of course it is an investment valuation and not an exit. I wonder what GYP was thinking when they invested.... granted they became controlling shareholder and maybe can make sure the money is spent properly. They must have really believed in the team and potential market.
Readers need to really understand the difference between new share subscription and vendor sale. The former is investment for company to grow, the latter is exit. Latter only happens when your company has realized value or your story really damn fantastic.
Investment in your company is just that, it is investing cash to help you realize the 3 or 5 year P&L plan that you projected to investors. It can be subscription of new shares, it can be convertible loan, all achieve the same effect. So see it as just start of your startup journey and not the end ! It is definitely not an exit and not time to any spend or take your eye off the ball.
Why did GYP do it? Obvious for them, they are a business under siege for years as their directory services dwindle to nothingness thanks to the internet. Amazingly it takes so long! So they have been wanting to enter online spaces to replace those revenues. But strangely almost none of their online products work.... that is another story by itself i am sure. But to their credit, they did buy eFusion solution which at least is profitable and now have gone into F&B and Tours...
4) Anyway back to main story. fast forward to 2012, just a short 2 years later, SNB has flopped. Douglas is no longer listed in the annual reports as management. What happened? We can only guess or if we can grab Stanley who is a seasoned media magazine entrepreneur who now owns a large stake in GYP, he will tell us. My guess? Grossly mismatched expectations. To enter at valuation 6.6M, GYP expected a lot which clearly was not realized. 3.5M is a lot of money to manage and the vision and team must be strong to execute it well.
Douglas is now running a beautybox site i believe. Best of luck to him. At least he is truly quite a committed entrepreneur - never gives up!
Side note : GYP recently had a share placement to raise $7+M. So that 3.5M is really not small change to them. it mattered and perhaps was quite wasted. I would love to buy Stanley a lunch though and figure out what happened not just for SNB but their entire internet strategy. Maybe I can help... Who knows..
Thursday, August 29, 2013
Studying the Hardwarezone deal
HWZ was one of the early pioneers of the internet business. They got
some funding and were bunch of NUS undergraduates who decided to make
their over-clocking hobby site into the CNET or ZDNET of asia. For those
of us who have such long memories, HWZ came up in the same timing as
firms like AsiaStockWatch, LycosAsia, MyScissors, ejazz, MPHonline
etc... crazy stuff in a crazy time. HWZ main leader is Jackie Lee who
now runs ClickTrue. Total business guy. Another founder/shareholder is
Eugene who is now Snr mgmt in SPH magazines.
So here is what i can see. As usual, best effort basis and do not guarantee accuracy of data.
Business Model : Advertising in niche area of technology media
Platforms : Magazines, HWZ portal + super popular forum
USP : Bundled sales approach, so one stop for media buyers/marketing depts. Cleverly used Forum to boost overall traffic numbers.
Amount Funded : S$2.751M for 1.763M shares
Shareholders : Jackie - 25.9%, Eugene - 8.7% + 2 more even smaller individuals <5%, Angels & VCs - the rest or about 50%+.
Acquisition : Sold to SPH Magazines in 2006 in what was the first M&A of a profitable internet company after the dot com bust and the subsequent cold shoulder the world gave internet companies from 2001 to 2005! The firm was valued at 7.1M in cash up front with i am sure an earnout for subsequent 2-3 year performance. So maybe 10-12M in total? That is about 10 times profit which is what SPH will offer back then. Notice how they have changed tack for sgCarMart deals. really teaches us that timing matters a lot! But cash in pocket is cash in pocket.
2005 P&L is revenue of 5.9M with net profit 1.25M or about 21% net margins. Very good numbers considering it was back then in 2005! They were an obvious first mover and did so well. By then, their forum was already #1 in SG for all topics. I have met a few HWZ people over the years, the original team all good! So why did they not continue to grow the business overseas and scale further? Here is what i think happened - pure conjecture and could be totally wrong.
1)Market size they were reaching market potential in SG and cannot see themselves scaling up much further. HWZ was branching out in Golfing mags and other mags. The comment i have on this is that frequently such mgmt assessments are not too accurate and if we have an innovative and motivated team, there is always new areas to expand into. Also, going regional would also be a good decision since their platform is scalable, they have decent core SG revenues and profit to do so.
2)Founders tired. This one quite likely since i too faced such a situation 7-8 years into business. And perhaps their key mgmt shareholding did not motivate them enough since Angel/VC over 50% stake. A bit like the sgcarmart guys too who had a big passive shareholder. At 12M, Jackie took home 3.1M, not bad for 2006. If he bought a house, it would be worth 6M today. Anyway, whatever their reasons, i always maintain that selling is never wrong since the founders obviously were fine to sell and it is their company. Only they know all the details and situation so my advice is to never second guess yourself once you make a decision.
Fast forward to 2008 which is 2 years later and the HWZ revenue is now 9.3M so revenue growth of 57% over 2.5 years. Many of the HWZ people either have left or are integrated within the SPH Mag family. Eugene himself is now Deputy MD i believe. Jackie is more entrepreneurial so he has cleverly got SPH to own a minority in clicktrue and is out running it as the main founder/shareholder. All in all a good success story for all of us to learn from.
So here is what i can see. As usual, best effort basis and do not guarantee accuracy of data.
Business Model : Advertising in niche area of technology media
Platforms : Magazines, HWZ portal + super popular forum
USP : Bundled sales approach, so one stop for media buyers/marketing depts. Cleverly used Forum to boost overall traffic numbers.
Amount Funded : S$2.751M for 1.763M shares
Shareholders : Jackie - 25.9%, Eugene - 8.7% + 2 more even smaller individuals <5%, Angels & VCs - the rest or about 50%+.
Acquisition : Sold to SPH Magazines in 2006 in what was the first M&A of a profitable internet company after the dot com bust and the subsequent cold shoulder the world gave internet companies from 2001 to 2005! The firm was valued at 7.1M in cash up front with i am sure an earnout for subsequent 2-3 year performance. So maybe 10-12M in total? That is about 10 times profit which is what SPH will offer back then. Notice how they have changed tack for sgCarMart deals. really teaches us that timing matters a lot! But cash in pocket is cash in pocket.
2005 P&L is revenue of 5.9M with net profit 1.25M or about 21% net margins. Very good numbers considering it was back then in 2005! They were an obvious first mover and did so well. By then, their forum was already #1 in SG for all topics. I have met a few HWZ people over the years, the original team all good! So why did they not continue to grow the business overseas and scale further? Here is what i think happened - pure conjecture and could be totally wrong.
1)Market size they were reaching market potential in SG and cannot see themselves scaling up much further. HWZ was branching out in Golfing mags and other mags. The comment i have on this is that frequently such mgmt assessments are not too accurate and if we have an innovative and motivated team, there is always new areas to expand into. Also, going regional would also be a good decision since their platform is scalable, they have decent core SG revenues and profit to do so.
2)Founders tired. This one quite likely since i too faced such a situation 7-8 years into business. And perhaps their key mgmt shareholding did not motivate them enough since Angel/VC over 50% stake. A bit like the sgcarmart guys too who had a big passive shareholder. At 12M, Jackie took home 3.1M, not bad for 2006. If he bought a house, it would be worth 6M today. Anyway, whatever their reasons, i always maintain that selling is never wrong since the founders obviously were fine to sell and it is their company. Only they know all the details and situation so my advice is to never second guess yourself once you make a decision.
Fast forward to 2008 which is 2 years later and the HWZ revenue is now 9.3M so revenue growth of 57% over 2.5 years. Many of the HWZ people either have left or are integrated within the SPH Mag family. Eugene himself is now Deputy MD i believe. Jackie is more entrepreneurial so he has cleverly got SPH to own a minority in clicktrue and is out running it as the main founder/shareholder. All in all a good success story for all of us to learn from.
Thursday, April 18, 2013
Analysis on sgcarmart deal
Buyer : SPH
Seller : 3 main founders, 2 smaller co-founders, 40% investor JDB.
Terms : $60M cap.
My guess?
1) 2 year earnout ala Hardwarezone and shareinvestor. But with JDB a savvy player, most likely the earnout is a proportionate one rather than a cliff.
2) 60%, 25%, 15% payout.
Analysis? Deal makes a lot of sense for SPH. It costs a lot to set up and market a new portal and there is no guarantee they will win. See their efforts over the last 10 years on property, jobs and cars. So this way, at least the executives at SPH are sure to win for the next 3 years in the car space. Deal makes sense for founders. A valuation of 11 times sales or 25 times PE is very good and fair. Also, the shareholding does not fully incentivize the working founders as JDB took a big chunk in the early days for a low investment of $800K.
Pitfall? Can SPH integrate and run sgcarmart well together with the all-important founding team? That is the multi-million dollar question. We will wait and see.
Payout? Based on shareholding, gig winner JDB gets 24M pax, each key founder about 9.5M max. The 2 smaller ones less. This assumes max payout of course. Good deal all round.
======================================================================
update after getting hold of their P&L for FY 2012 and combining with SPH reports.
As expected, the deal was a fair one both ways. I was wrong on payout ratios though.
1) SPH paid 53M already. (see their latest annual report).
2) SGCM profit is 3M net on revenue about 8M give or take. So the 60M valuation is about 20 times historical PE, SPH did not overpay.
Still great deal all round but the valuation is far more reasonable and not a crazy one. So looks like the Hungrygowhere guys still the best deal in terms of valuation multiple.
Seller : 3 main founders, 2 smaller co-founders, 40% investor JDB.
Terms : $60M cap.
My guess?
1) 2 year earnout ala Hardwarezone and shareinvestor. But with JDB a savvy player, most likely the earnout is a proportionate one rather than a cliff.
2) 60%, 25%, 15% payout.
Analysis? Deal makes a lot of sense for SPH. It costs a lot to set up and market a new portal and there is no guarantee they will win. See their efforts over the last 10 years on property, jobs and cars. So this way, at least the executives at SPH are sure to win for the next 3 years in the car space. Deal makes sense for founders. A valuation of 11 times sales or 25 times PE is very good and fair. Also, the shareholding does not fully incentivize the working founders as JDB took a big chunk in the early days for a low investment of $800K.
Pitfall? Can SPH integrate and run sgcarmart well together with the all-important founding team? That is the multi-million dollar question. We will wait and see.
Payout? Based on shareholding, gig winner JDB gets 24M pax, each key founder about 9.5M max. The 2 smaller ones less. This assumes max payout of course. Good deal all round.
======================================================================
update after getting hold of their P&L for FY 2012 and combining with SPH reports.
As expected, the deal was a fair one both ways. I was wrong on payout ratios though.
1) SPH paid 53M already. (see their latest annual report).
2) SGCM profit is 3M net on revenue about 8M give or take. So the 60M valuation is about 20 times historical PE, SPH did not overpay.
Still great deal all round but the valuation is far more reasonable and not a crazy one. So looks like the Hungrygowhere guys still the best deal in terms of valuation multiple.
Analysis on Asian Food Channel Sale
I do not know Hian Goh or Maria. Usually i know the players in the internet space since many are my friends or i have met with them over the years of networking. But i am a very competitive person and so when someone gets a big newspaper announcement about their exit, i am driven to find out the details of the deal. I hope to write a lot more on this topic to help readers learn how to analyze such deals and to get a more transparent market. Information is usually obtained via internet search or ACRA reports. If they are estimates, i will say so.
1) AFC made about 8M USD in revenues and lost 2M USD in FY2011. So unless 2012 improved dramatically for them, chances are AFC is a loss making entity that Scripps bought with revenues of maybe 8M USD. I discounted the contra deals they booked as revenue in 2011.
2) Scripps is a medium size american MNC with about 10B market cap. So it is a genuine good buyer. This is important since there are some bs deals that somehow get mentioned. Eg. some startup buy another startup for no cash. Scripps trades at about 4 times sales and 15 times PE. These 2 metrics are important since they determine the rough range which Scripps will pay for.
3) Mr Hian Goh owns about 550K shares of the company. Maria slightly less. Company has issued about 8.8M shares in total over the years raising some S$20M. Amazing how they managed to convince investors to invest throughout years of losses. I would not invest but i guess i am not as rich as their investors. All big names.
4) Mr Finian Tan said he got back 100% returns on vickers investment on ST article. Vickers invested a few rounds so hard to say. But first round was about US$2.5 to $3 per share. Subsequent rounds were 3.5 each. So we can safely say company was sold for about $6 to $7 USD per share? With 8.8M shares that is a sale price of about 50 to 60M usd. Or about 5 to 6 times sales. Compare to scripps market valuation of 4 times, it feels about right. No PE valuation to speak of since i do not know their profit if any.
5) Founders Hian and Maria get to exit with about 3-4M USD and maybe a good job with scripps and some potential earnouts. I think they got some share options too which should add another 1+M for them. So total exit should be from 5-6M USD. Of course if my initial estimate of 50-60M USD is wrong then it will be lower. Possible to be lower as parent company only gets 4 times on market. Anyway, good for them!
1) AFC made about 8M USD in revenues and lost 2M USD in FY2011. So unless 2012 improved dramatically for them, chances are AFC is a loss making entity that Scripps bought with revenues of maybe 8M USD. I discounted the contra deals they booked as revenue in 2011.
2) Scripps is a medium size american MNC with about 10B market cap. So it is a genuine good buyer. This is important since there are some bs deals that somehow get mentioned. Eg. some startup buy another startup for no cash. Scripps trades at about 4 times sales and 15 times PE. These 2 metrics are important since they determine the rough range which Scripps will pay for.
3) Mr Hian Goh owns about 550K shares of the company. Maria slightly less. Company has issued about 8.8M shares in total over the years raising some S$20M. Amazing how they managed to convince investors to invest throughout years of losses. I would not invest but i guess i am not as rich as their investors. All big names.
4) Mr Finian Tan said he got back 100% returns on vickers investment on ST article. Vickers invested a few rounds so hard to say. But first round was about US$2.5 to $3 per share. Subsequent rounds were 3.5 each. So we can safely say company was sold for about $6 to $7 USD per share? With 8.8M shares that is a sale price of about 50 to 60M usd. Or about 5 to 6 times sales. Compare to scripps market valuation of 4 times, it feels about right. No PE valuation to speak of since i do not know their profit if any.
5) Founders Hian and Maria get to exit with about 3-4M USD and maybe a good job with scripps and some potential earnouts. I think they got some share options too which should add another 1+M for them. So total exit should be from 5-6M USD. Of course if my initial estimate of 50-60M USD is wrong then it will be lower. Possible to be lower as parent company only gets 4 times on market. Anyway, good for them!
Creeping Ambition
I wrote this in indirect response to what i felt was unrealistic expectations on the part of MDA officials. I was actually trying to make the point that a MDA manager/Exec/deputy CEO has to be sensitive when commenting on a startup that is out there in the trenches trying to make something work. I encountered above said officials who actually made me feel that they looked down on a startup simply because it cannot scale to the magic 100M revenue figure their KPI required. And the ridiculous thing is that a dot com business that makes 5.5M can be making 2.3M in profit (eg sgcarmart). That is more profit than what the CEO and deputy CEO and managers in the IDM office of MDA make combined. Instead, I feel they should be encouraging as that is what their office is meant to do.
As for creeping ambition... unfortunately, my story as a founder ended when i sold the firm in 2011. I have learned a lot in terms of how to scale up further and how to work under a MNC structure but i no longer have a shot to build a 100M dollar company. But for my situation, i think it is the right decision. Industry is competitive and developed already.Perhaps the next business then. =================================================================
(Final post on sgentreprenuer.Posted 2009)
Resident Contributor, wonderdoggy (aka Der Shing, JobsCentral) posted a lengthy comment in response to fellow resident contributor, Aaron Chua’s article, “4 Issues With Singapore Startups”. We decided it was too good to be left sitting in the comments and have decided to republish it as an article.
Der Shing writes: Interesting article from MDA point of view. I interpret the 4 points as follows : a) instinctive business sense b) ambition & scalability c) win win partnerships d) internal capability (manpower, ops & sales) Here is my personal POV on the 4 based on my experience running a not-ambitious enough internet business :)
(A) Instinctive Business Sense We learned through trial and error what works and i learn alot by reading very widely about other businesses. Personally I read economist, INC, Wired, NYTimes, Fortune weekly. I am rather obsessive and i actually try to count the revenue of restaurants/businesses i deal with. Just as a fun exercise. I am constantly benchmarking against competitors within and outside industry. Most entrepreners i know have this tendency. I am sure for IDM guys it should be no different.
(B) Ambition & Scalability This is where I think I failed. When I started up in 2000, i told myself $1M turnover would be great. You usually feel this way when you are struggling to just sell $2-5K packages. When we hit that , we said $1M profit would be great. When we hit that, we aim to do $20M turnover and have an option to list. By the writer’s standard, i think we are damn unambitious and actually i think I agree. Problem is that we benchmark ourselves against local firms and local compensation. So earning $1+M a year profit is like any CEO already right? So not bad. But when we compare with top global or even regional internet firms, we are quite lacking. One thing to note here though…. we are creepingly getting more ambitious. Maybe once we hit $20M , we will aim for 100M, then we are in the bigger leagues? So it is possible to be lacking in ambition in the beginning and slowly gain it as you can see a clearer path to growth. So not all people need start with world beating ambitions? Likewise, I think there will be many that are content with profit of $1M year in year out. Still creating jobs, still adding value…
(C) Win-win Partnerships Yes, many people are very cautious about partnerships and letting others know too much. I think the caution is usually unfounded except when dealing with adjacent entities. Then it pays to be a little more long sighted and careful. But agree with the writer, in the first 3 years, partner all you like, its so touch and go anyway.
(D) Internal Capability (Manpower, Ops & Sales) Actually this point is similar to point c. Need to trust and bring in the right skill sets. Give/Sell them equity if need be to retain. It pays off. But make sure personality and common understanding is there, otherwise can be a recipe for conflict in future. Generally, i have met quite a few web 2.0 guys. I think the problem is tenaciousness. Few players stay in a business long enough to learn thru trial and error and to make money. Many Egos are too big too. It takes time to build a revenue stream from a new business model, so give it time and be willign to make effort and changes. See the Battlestations guys, they worked quite hard and long and experimented with so many platforms. But even then, i am curious if facebook can be big bucks. $40K a month as revenue (not profit) is not a lot. Other IDM guys with tenaciousness include Mikoishi, hungrygowhere, sgcarmart, cozycot, propertyguru and I am sure many more i missed out.
As for creeping ambition... unfortunately, my story as a founder ended when i sold the firm in 2011. I have learned a lot in terms of how to scale up further and how to work under a MNC structure but i no longer have a shot to build a 100M dollar company. But for my situation, i think it is the right decision. Industry is competitive and developed already.Perhaps the next business then. =================================================================
(Final post on sgentreprenuer.Posted 2009)
Resident Contributor, wonderdoggy (aka Der Shing, JobsCentral) posted a lengthy comment in response to fellow resident contributor, Aaron Chua’s article, “4 Issues With Singapore Startups”. We decided it was too good to be left sitting in the comments and have decided to republish it as an article.
Der Shing writes: Interesting article from MDA point of view. I interpret the 4 points as follows : a) instinctive business sense b) ambition & scalability c) win win partnerships d) internal capability (manpower, ops & sales) Here is my personal POV on the 4 based on my experience running a not-ambitious enough internet business :)
(A) Instinctive Business Sense We learned through trial and error what works and i learn alot by reading very widely about other businesses. Personally I read economist, INC, Wired, NYTimes, Fortune weekly. I am rather obsessive and i actually try to count the revenue of restaurants/businesses i deal with. Just as a fun exercise. I am constantly benchmarking against competitors within and outside industry. Most entrepreners i know have this tendency. I am sure for IDM guys it should be no different.
(B) Ambition & Scalability This is where I think I failed. When I started up in 2000, i told myself $1M turnover would be great. You usually feel this way when you are struggling to just sell $2-5K packages. When we hit that , we said $1M profit would be great. When we hit that, we aim to do $20M turnover and have an option to list. By the writer’s standard, i think we are damn unambitious and actually i think I agree. Problem is that we benchmark ourselves against local firms and local compensation. So earning $1+M a year profit is like any CEO already right? So not bad. But when we compare with top global or even regional internet firms, we are quite lacking. One thing to note here though…. we are creepingly getting more ambitious. Maybe once we hit $20M , we will aim for 100M, then we are in the bigger leagues? So it is possible to be lacking in ambition in the beginning and slowly gain it as you can see a clearer path to growth. So not all people need start with world beating ambitions? Likewise, I think there will be many that are content with profit of $1M year in year out. Still creating jobs, still adding value…
(C) Win-win Partnerships Yes, many people are very cautious about partnerships and letting others know too much. I think the caution is usually unfounded except when dealing with adjacent entities. Then it pays to be a little more long sighted and careful. But agree with the writer, in the first 3 years, partner all you like, its so touch and go anyway.
(D) Internal Capability (Manpower, Ops & Sales) Actually this point is similar to point c. Need to trust and bring in the right skill sets. Give/Sell them equity if need be to retain. It pays off. But make sure personality and common understanding is there, otherwise can be a recipe for conflict in future. Generally, i have met quite a few web 2.0 guys. I think the problem is tenaciousness. Few players stay in a business long enough to learn thru trial and error and to make money. Many Egos are too big too. It takes time to build a revenue stream from a new business model, so give it time and be willign to make effort and changes. See the Battlestations guys, they worked quite hard and long and experimented with so many platforms. But even then, i am curious if facebook can be big bucks. $40K a month as revenue (not profit) is not a lot. Other IDM guys with tenaciousness include Mikoishi, hungrygowhere, sgcarmart, cozycot, propertyguru and I am sure many more i missed out.
Wednesday, April 17, 2013
Online Classifieds Heating up back now. Now all acquired!
Enough said. This is my industry so my comments back in 2007 almost all came through. I just feel short of mentioning that many acquisitions and investments will happen for the winners.
To update :
Real estate - Great guys at Propertyguru are SG #1. in MY it is iprop. Valuations in excess of 100M even though no total exits yet.
Jobs space - Only jobstreet left still independent. JobsCentral and JobsDB all acquired in 2010/2011. Jobs classifieds revenue probably 40-50M this year in SG alone.
Cars - Sgcarmart acquired by SPH in 2013 Buy/Sell - Mocca died due to execution issues, Ebay going strong. New ecommerce wave has commenced!
======================================================================= (Article first posted Aug 2007)
There has been a lot written on new internet businesses based on concepts like social networking, aggregation, mash ups etc. Singapore too has seen its fair share of such businesses but I think I am right to say that they are still very nascent and I do not know of any local ones with meaningful revenues. Except maybe xiaxue which is an excellent spunky site!
However, I do see a large battle coming up in the online classifieds space. See the number of online classifieds mass media ads running – ST701, Mocca, JobsDB, Jobstreet, JobsCentral, Monster etc. I predict much more to come. I have always felt this space warrants attention but so far few players have come in to do it. Online classifieds can be very profitable even in a small city like Singapore. I estimate the whole cars, jobs, real estate, buy/sell market is worth at least S$40M this year in online classifieds alone and it is poised to grow dramatically once someones figures out how to handle more than 1 vertical at a time.
Who are the players?
Real Estate – No clear player yet. So this space is wide open for someone to come in and make good$$. Jobs – 5 main players. Combined at about 15M revenue by my estimate. (monster, jobscentral, jobsdb, jobstreet, 701)
Cars – sgcarmart, onemotoring Buy/sell – Mocca, Yahoo!, EBay Personals – Fridae, Trevvy (all Gay sites though)… where is the local large personals for straight population? I think in the next 3 years, you will see lots more ads, lots more competition and the winner will start to emerge.
Ultimately, I feel newspaper classifieds should shrink as more people see the benefits of online classifieds with its unlimited space, search engines and transactional capability. So to all the readers who are keen on internet businesses, i think online classifieds will grow at about 30% per year min. With margins of 20+%, to me it is a very attractive business.
To update :
Real estate - Great guys at Propertyguru are SG #1. in MY it is iprop. Valuations in excess of 100M even though no total exits yet.
Jobs space - Only jobstreet left still independent. JobsCentral and JobsDB all acquired in 2010/2011. Jobs classifieds revenue probably 40-50M this year in SG alone.
Cars - Sgcarmart acquired by SPH in 2013 Buy/Sell - Mocca died due to execution issues, Ebay going strong. New ecommerce wave has commenced!
======================================================================= (Article first posted Aug 2007)
There has been a lot written on new internet businesses based on concepts like social networking, aggregation, mash ups etc. Singapore too has seen its fair share of such businesses but I think I am right to say that they are still very nascent and I do not know of any local ones with meaningful revenues. Except maybe xiaxue which is an excellent spunky site!
However, I do see a large battle coming up in the online classifieds space. See the number of online classifieds mass media ads running – ST701, Mocca, JobsDB, Jobstreet, JobsCentral, Monster etc. I predict much more to come. I have always felt this space warrants attention but so far few players have come in to do it. Online classifieds can be very profitable even in a small city like Singapore. I estimate the whole cars, jobs, real estate, buy/sell market is worth at least S$40M this year in online classifieds alone and it is poised to grow dramatically once someones figures out how to handle more than 1 vertical at a time.
Who are the players?
Real Estate – No clear player yet. So this space is wide open for someone to come in and make good$$. Jobs – 5 main players. Combined at about 15M revenue by my estimate. (monster, jobscentral, jobsdb, jobstreet, 701)
Cars – sgcarmart, onemotoring Buy/sell – Mocca, Yahoo!, EBay Personals – Fridae, Trevvy (all Gay sites though)… where is the local large personals for straight population? I think in the next 3 years, you will see lots more ads, lots more competition and the winner will start to emerge.
Ultimately, I feel newspaper classifieds should shrink as more people see the benefits of online classifieds with its unlimited space, search engines and transactional capability. So to all the readers who are keen on internet businesses, i think online classifieds will grow at about 30% per year min. With margins of 20+%, to me it is a very attractive business.
When will you call it a Business?
Article first posted in May 2007. Totally stand by what i wrote and in fact am validated by the current batch of startups which are all revenue oriented. And notice the names i mentioned. One got acquired for $12M by Singtel just last year!
==================================================
When will you call it a Business?
I have been having an email discussion back and forth with an NTU TIP alumnus and I realize that what we are talking about may be of interest to the wider community.
Below is a reproduction of my email in terms of what constitutes a real business. I wrote in an earlier email that many web 2.0 efforts are not real businesses (without any negative connotation) and was asked to clarify further.
“I am a little more old school in my thinking. To me a business needs to have a clear business model. A real business as I put it, simply means a business model that has been validated by the market place or at least seems close to being validated. And validated means not just revenues (cuz anyone can spend $2 to earn $1, but it will never be profitable) but clear path to profits. So using this definition, sites like ping.sg , sharedcopy are more of tools (really cool tools at that) but until they evolve to gather revenues and more impt show potential for profits, I would not call them a business. It is telling that I think they do not have a clear team running it full time which is a pre-requisite for any business. Not to say that down the road, they cannot gain so much traction (mindshare) and raise more money and have a full time team and grow it on the path to profits. Then I would say they have made the transistion from a cool tool to a business.
A good case would be facebook, myspace, youtube etc. Depending on when you looked at them, intiially they were cool tools, fun sites, hobbyist sites etc. Only when they started taking funds, building revenue and in youtube case, joining google, did a path to profitability appear. Then we consider them a real business. Whether sustainable long term is another question.
For Singapore, I see very little real business using the above definition. A lot of good ideas, hobby sites, cool tools but no real effort to monetize or even work full time on it. I think most high profile 2.0 example is this company called Velvet Puffin. Even though I do not like their stuff, but at least they got money, have a full time team, cut deals and are trying to make revenues and profits. It is easy to build a site, have a cool idea and stay at that level hoping for mindshare and usage. But I think we should not fool ourselves and think it is a business. It becomes one only if there is an active plan for profits and revenue and if there is a full time mgmt team to do it. Whether self funded or otherwise does not matter. That is why i mentioned Yum.sg , hungrygowhere, blurbme. At least they seem to have full time people working on it with marketing budget, sales packages to offer clients, etc etc. Everything which a real business has to have.”
==================================================
When will you call it a Business?
I have been having an email discussion back and forth with an NTU TIP alumnus and I realize that what we are talking about may be of interest to the wider community.
Below is a reproduction of my email in terms of what constitutes a real business. I wrote in an earlier email that many web 2.0 efforts are not real businesses (without any negative connotation) and was asked to clarify further.
“I am a little more old school in my thinking. To me a business needs to have a clear business model. A real business as I put it, simply means a business model that has been validated by the market place or at least seems close to being validated. And validated means not just revenues (cuz anyone can spend $2 to earn $1, but it will never be profitable) but clear path to profits. So using this definition, sites like ping.sg , sharedcopy are more of tools (really cool tools at that) but until they evolve to gather revenues and more impt show potential for profits, I would not call them a business. It is telling that I think they do not have a clear team running it full time which is a pre-requisite for any business. Not to say that down the road, they cannot gain so much traction (mindshare) and raise more money and have a full time team and grow it on the path to profits. Then I would say they have made the transistion from a cool tool to a business.
A good case would be facebook, myspace, youtube etc. Depending on when you looked at them, intiially they were cool tools, fun sites, hobbyist sites etc. Only when they started taking funds, building revenue and in youtube case, joining google, did a path to profitability appear. Then we consider them a real business. Whether sustainable long term is another question.
For Singapore, I see very little real business using the above definition. A lot of good ideas, hobby sites, cool tools but no real effort to monetize or even work full time on it. I think most high profile 2.0 example is this company called Velvet Puffin. Even though I do not like their stuff, but at least they got money, have a full time team, cut deals and are trying to make revenues and profits. It is easy to build a site, have a cool idea and stay at that level hoping for mindshare and usage. But I think we should not fool ourselves and think it is a business. It becomes one only if there is an active plan for profits and revenue and if there is a full time mgmt team to do it. Whether self funded or otherwise does not matter. That is why i mentioned Yum.sg , hungrygowhere, blurbme. At least they seem to have full time people working on it with marketing budget, sales packages to offer clients, etc etc. Everything which a real business has to have.”
Contract Work for Key Clients & Partners
This is the age old issue of making "feed the company" money while trying to build up your core product. I think quite a fair bit has been said about this. I stand by what i wrote 7 years ago esp if your business is a pure bootstrapped type which has no Other Peoples Money. Sometimes, we just need to make ends meet and so taking on a few projects is nothing to be ashamed of.
Some good examples :
1) My own company. We used to do HR software for SMEs. Each year about $100-200K to help pay the bills while we focused on growing our own core job portal and media businesses. We got pretty good at it , so much so we ended up doing almost 0.5M of this many years ago. Then we made a decision to scale back as our core business was growing and such contracts became distracting.
2) More recently, i met with 2 other internet companies who are doing the same. One is at the 500-1M revenue stage of which about 200-300K are consultancy service which the founder is providing to MNCs. Nothing wrong so long as it is clear in future, this area will scale down as it is too unscalable and obviously tied to founder being the account manager.
The other example is a more famous one owned by Singtel in the mobile arena. Now they seem to be pureplay service provider when originally the idea is to build a product and scale up.
To be clear, those of us who take this route need to understand what we are doing. There is nothing wrong with becoming a software house or SI. In SG, SME software houses which do not productize can do up to 5-10M in revenue if done well and can make 20% margins. However, it is a different business for building a platform or product that scales. And usually the valuation afforded to pureplay software solution houses is weaker since recurring revenue is lower.
============================================================================ (Article first published on sgentrepreneur Jan 2007)
Thought I will share my experience about branding and the importance of building your own brand. In hindsight and for some of you, this may seem to be very obvious. However, I think for startups struggling to make ends meet, having revenue perhaps matters more than having your brand but low revenue. Let me elaborate.
I notice that quite a lot of service firms in Singapore leverage on their partner/client’s brands to deliver what is essentially their product. For example, magazine industry has lots of contract magazine publishers who will do the artwork, editorial, sales, printing etc for a big brand. They get paid a fixed fee and a variable depending on sales. They may even get to keep all sales and no fixed fee. However end of the day, the brand is not theirs. So all effort put into building it goes to naught. Krisflyer, AA magazine, AlumNUS etc, anyone knows who actually does all the work?
A similar situation can be found in dot commers. Many dot commers get distracted. They start with a great idea. Job Portal, Food Review, some Web2.0 stuff, but when they built their prototype, it takes a long time to grow it. Along comes an appreciative client who asks them to customize something and build and maintain it for them. Most startups will take it, cuz it generates some $$. But as time goes by, the client’s site and brand is the one who grows strong. And all efforts spent improving it goes to the client not yours. What I am driving at is that while it is important to do adhoc work and skills related work (design, editorial, IT contracting), never lose sight of your core business plan. Of course, unless your business is to be a contract service provider! At the first chance, use all revenue to grow your brand and strengthen your own position.
A good example is Shareinvestor.com. Their clients came to them to do online IR pages. They made it into a core service and integrated it with their forum and investor information offerings. Now they are pretty dominant in Singapore in their niche market worth easily 3-4M a year.
Some good examples :
1) My own company. We used to do HR software for SMEs. Each year about $100-200K to help pay the bills while we focused on growing our own core job portal and media businesses. We got pretty good at it , so much so we ended up doing almost 0.5M of this many years ago. Then we made a decision to scale back as our core business was growing and such contracts became distracting.
2) More recently, i met with 2 other internet companies who are doing the same. One is at the 500-1M revenue stage of which about 200-300K are consultancy service which the founder is providing to MNCs. Nothing wrong so long as it is clear in future, this area will scale down as it is too unscalable and obviously tied to founder being the account manager.
The other example is a more famous one owned by Singtel in the mobile arena. Now they seem to be pureplay service provider when originally the idea is to build a product and scale up.
To be clear, those of us who take this route need to understand what we are doing. There is nothing wrong with becoming a software house or SI. In SG, SME software houses which do not productize can do up to 5-10M in revenue if done well and can make 20% margins. However, it is a different business for building a platform or product that scales. And usually the valuation afforded to pureplay software solution houses is weaker since recurring revenue is lower.
============================================================================ (Article first published on sgentrepreneur Jan 2007)
Thought I will share my experience about branding and the importance of building your own brand. In hindsight and for some of you, this may seem to be very obvious. However, I think for startups struggling to make ends meet, having revenue perhaps matters more than having your brand but low revenue. Let me elaborate.
I notice that quite a lot of service firms in Singapore leverage on their partner/client’s brands to deliver what is essentially their product. For example, magazine industry has lots of contract magazine publishers who will do the artwork, editorial, sales, printing etc for a big brand. They get paid a fixed fee and a variable depending on sales. They may even get to keep all sales and no fixed fee. However end of the day, the brand is not theirs. So all effort put into building it goes to naught. Krisflyer, AA magazine, AlumNUS etc, anyone knows who actually does all the work?
A similar situation can be found in dot commers. Many dot commers get distracted. They start with a great idea. Job Portal, Food Review, some Web2.0 stuff, but when they built their prototype, it takes a long time to grow it. Along comes an appreciative client who asks them to customize something and build and maintain it for them. Most startups will take it, cuz it generates some $$. But as time goes by, the client’s site and brand is the one who grows strong. And all efforts spent improving it goes to the client not yours. What I am driving at is that while it is important to do adhoc work and skills related work (design, editorial, IT contracting), never lose sight of your core business plan. Of course, unless your business is to be a contract service provider! At the first chance, use all revenue to grow your brand and strengthen your own position.
A good example is Shareinvestor.com. Their clients came to them to do online IR pages. They made it into a core service and integrated it with their forum and investor information offerings. Now they are pretty dominant in Singapore in their niche market worth easily 3-4M a year.
Commentary about Singapore's prospects
Hey... i am quite prescient if i may say so. Predicted very accurately the following :
1) Widening income gap. So bad it has become an election issue.
2) Accelerating income of top tier. Top 1% of wage earners now have median wage of 700K vs just 60K or so for middle wage earner.
3) Property market went crazy from 2007 to 2013. Many properties doubled in value or more. And now middle class housing and condos exceed 1000psf routinely.
Am i happy with Singapore as it is now? I think we face some really challenging issues and our current political leaders (PAP and WP) have talked about it a lot. I believe if we stay true to our goal of building a nation, we will get through this fine. Key is to think long term while still making sure short term issues are resolved. Sort of like running a company. ====================================================================== (article first posted on sgentrepreneur Oct 2006)
Want to share my thinking on Singapore’s prospects. I actually feel very positive about Singapore for the next 3 years. I started my business in 1999 and went through some really down times all the way until 2004. And for 04,05,06, I could sense Singapore riding a huge wave of growth and optimism. I believe this wave will continue until end 2008 or 2009 at the very least. Here are the everyday signs.
1. Property market surging on high end and select areas. I think over next 2 years, we will see trickle down to middle class housing and condos.
2. Stock market at all time highs about to breach 3000.
3. Go to any mall or shopping centre. People are buying and they are all very crowded.
4. Employment market very tight. Bonuses and wages will be higher this year.
Personally, I know most SMEs who are service line or high tech are doing very well. At least 30-50% growth this year with strong projections for next year. And going forward, here are the factors which will continue to drive this momentum.
1. Trickle down effect not in full force yet.
2. IRs and a construction and property boom with even more trickle down effect.
3. Singapore’s reasonably successful move to diversify our economy. Our firms are doing better overseas now.
4. Continued boom in high end service/product. Singapore’s cementing as a private wealth hub.
The downsides?
a) Disparity between rich and poor will only widen.
b) Disparity between middle class (sandwich group) and top earners will only widen.
c) We must ensure that as we pursue $$ and growth, we do not disenfranchise our less educated and less fortunate citizens. Otherwise, not only is it ethically wrong, we are creating future social and political problems.
Case in point, I know a early 30s year old who is riding the entrepreneurship wave, his family earns a yearly income of $400-500K. Same as any IB friend or admin service friends of his. His peers who did not ride the wave are still doing decently. They are professionals/ graduates who have worked 6-7 years. Their families earn $100K a year. Those friends will naturally seriously have some envy issues. But that is still ok, since all are doing well.
How about his cohort peers who are not educated (O levels, ITEs) and working in manufacturing lines. Their families are earning 30K annually. Not much saving here already. Go one step down to those who for some reason could not complete studies, and the picture becomes dismal. I know the government is acutely aware of this issue and is moving to do more even as they encourage the growth of the high end side. But sometimes I think the trickle down effect is very slow and perceptions need to be managed very well. My two cents.
Comments from anyone
1) Widening income gap. So bad it has become an election issue.
2) Accelerating income of top tier. Top 1% of wage earners now have median wage of 700K vs just 60K or so for middle wage earner.
3) Property market went crazy from 2007 to 2013. Many properties doubled in value or more. And now middle class housing and condos exceed 1000psf routinely.
Am i happy with Singapore as it is now? I think we face some really challenging issues and our current political leaders (PAP and WP) have talked about it a lot. I believe if we stay true to our goal of building a nation, we will get through this fine. Key is to think long term while still making sure short term issues are resolved. Sort of like running a company. ====================================================================== (article first posted on sgentrepreneur Oct 2006)
Want to share my thinking on Singapore’s prospects. I actually feel very positive about Singapore for the next 3 years. I started my business in 1999 and went through some really down times all the way until 2004. And for 04,05,06, I could sense Singapore riding a huge wave of growth and optimism. I believe this wave will continue until end 2008 or 2009 at the very least. Here are the everyday signs.
1. Property market surging on high end and select areas. I think over next 2 years, we will see trickle down to middle class housing and condos.
2. Stock market at all time highs about to breach 3000.
3. Go to any mall or shopping centre. People are buying and they are all very crowded.
4. Employment market very tight. Bonuses and wages will be higher this year.
Personally, I know most SMEs who are service line or high tech are doing very well. At least 30-50% growth this year with strong projections for next year. And going forward, here are the factors which will continue to drive this momentum.
1. Trickle down effect not in full force yet.
2. IRs and a construction and property boom with even more trickle down effect.
3. Singapore’s reasonably successful move to diversify our economy. Our firms are doing better overseas now.
4. Continued boom in high end service/product. Singapore’s cementing as a private wealth hub.
The downsides?
a) Disparity between rich and poor will only widen.
b) Disparity between middle class (sandwich group) and top earners will only widen.
c) We must ensure that as we pursue $$ and growth, we do not disenfranchise our less educated and less fortunate citizens. Otherwise, not only is it ethically wrong, we are creating future social and political problems.
Case in point, I know a early 30s year old who is riding the entrepreneurship wave, his family earns a yearly income of $400-500K. Same as any IB friend or admin service friends of his. His peers who did not ride the wave are still doing decently. They are professionals/ graduates who have worked 6-7 years. Their families earn $100K a year. Those friends will naturally seriously have some envy issues. But that is still ok, since all are doing well.
How about his cohort peers who are not educated (O levels, ITEs) and working in manufacturing lines. Their families are earning 30K annually. Not much saving here already. Go one step down to those who for some reason could not complete studies, and the picture becomes dismal. I know the government is acutely aware of this issue and is moving to do more even as they encourage the growth of the high end side. But sometimes I think the trickle down effect is very slow and perceptions need to be managed very well. My two cents.
Comments from anyone
7 years on and still no YouTube in SG?
Looks like i was quite right back then to say that the environment conspires to ensure that our startups do not scale into the You Tubes of the world. Things are improving with recent exits and higher valuation rounds. But we are still stuck at the 10-100M valuation and exit area. The geographical constraint and market size is really a major determining factor. And with some many other startups operating in their home country in bigger markets, it is hard for SG based one to win in say China or USA or Europe.
And i still stand by the good university statement. In fact the recent bunch of funded startups in Singapore are all from good schools and are founded by academically smart people. ======================================================================== (Article First posted on sgentrepreneurs Oct 2006)
I have been reading with interest about the recent debate in Singapore about whether we will ever produce our own YouTube type of company. Here is my take of the issue. I will confine my discussion to just dotcom type of companies since that is the area I believe I am qualified to comment on. To be brief, I believe it is difficult but not impossible for a local startup to duplicate what YouTube has done. That is to say, gather tremendous momentum over a relatively short few years and sell out to a larger firm for a world class payout. That means companies like my own – JobsFactory, Hardwarezone, Shareinvestor are all out of our league. 7.1M give or take 5M is not a world class, attention grabbing payout.
Here are some factors I believe are most important. Many have been debated before.
1) Size of market and relevance of local content.
Sad to say, this is a very real problem. Singapore market is way too small and SE Asia is too non-homogenous for effective economies of scale, even online. The way I see it, this is the major obstacle for any wannabe YouTube based in Singapore. Even the big names that succeed in USA find it tough to penetrate a non-english market easily even with cash and brand. Ebay failed in Japan, Google is losing to Baidu in China etc. Even between USA and Europe, there is difficulty. So I believe for a firm to succeed in Singapore, the concept has to be deceptively simple. Ala google style such that is does not require too much localization across the regions and more importantly, it has to be built for the big markets like USA or China. And you will probably need to start with one or the other since language and styles are so different. Chinese sites are messy with loads of flashing banners which US visitors hate.
A good local example is wholivesnearyou.com. I think it is a wonderful local site with great traffic. I estimate they are doing 5-10M page views per month which is very decent for a local site. They are very web 2.0 and very community led. However, it looks too local to me and obviously is focusing on local market.
2) Lack of vision or rather a different vision for local startups
Most entrepreneurs in Singapore do not have a vision to be a YouTube. I think our vision is to grow a good business, impact people in a good way and make good money. It is not to change the entire world. Again, I think most people in the world are like that. Americans, China PRCs are different, by default of their market size and population, doing well in their market, means conquering half the world already. Frankly, I feel there is nothing wrong with being happy and contented with what we have. One other observation I have is that many who do have world beating dreams are usually very very young startups who seriously have not done anything significant with their company. Once their company has some success, I think the environment conspires to reduce the scope of their dreams. We have exceptions of course, Ron Sim, Sim Wong Hoo, Wong Peng Kin are good cases to learn from.
3) Lack of access to good quality funds.
Even if a firm overcomes the above two and has a great product or service which is global in outlook focusing on one of the major markets that has scale. And the firm has a strong founding team with brains, strategic prowess and management depth, they will still need money to make it all work. Now, frankly if a company has such traction in a major overseas market, then I believe they will get funding from valley investors rather than local ones.
The above 3 factors to me are the most pertinant in the discussion. There are of course others I am sure.
So does that mean we have no hope? On the contrary I believe we do have hope, it is just that we are against a gradient. So if any company does succeed, I truly applaud them. Some examples which I think can have hope? The characteristics I venture to guess will be as follows : Built with a larger market in mind. Either China or USA. But business can be based in Singapore for development, taxation, IP etc purposes. Web 2.0 community led concept. Spread like wildfire across the targeted market. May not even be known in Singapore. Probably focused on young. Esp since young are slightly more homogenous across the world thanks to cross cultural influences. Simple software and at least American standard designs and branding. Many local sites (mine included) are not up to standard still. We have basic grammatical errors, branding not looked into etc.
World class credentials from management team. Sorry guys, but I do not think a couple of fresh graduates will make it unless they are from Stanford, MIT or harvard, or maybe IIT, Bei Da, Oxbridge. Pedigree attracts pedigree. It’s a fact. There are exceptions of course, but I am taking an educated projection here. Funding from similarly well known firms. Perkin, Sequoia etc.
And i still stand by the good university statement. In fact the recent bunch of funded startups in Singapore are all from good schools and are founded by academically smart people. ======================================================================== (Article First posted on sgentrepreneurs Oct 2006)
I have been reading with interest about the recent debate in Singapore about whether we will ever produce our own YouTube type of company. Here is my take of the issue. I will confine my discussion to just dotcom type of companies since that is the area I believe I am qualified to comment on. To be brief, I believe it is difficult but not impossible for a local startup to duplicate what YouTube has done. That is to say, gather tremendous momentum over a relatively short few years and sell out to a larger firm for a world class payout. That means companies like my own – JobsFactory, Hardwarezone, Shareinvestor are all out of our league. 7.1M give or take 5M is not a world class, attention grabbing payout.
Here are some factors I believe are most important. Many have been debated before.
1) Size of market and relevance of local content.
Sad to say, this is a very real problem. Singapore market is way too small and SE Asia is too non-homogenous for effective economies of scale, even online. The way I see it, this is the major obstacle for any wannabe YouTube based in Singapore. Even the big names that succeed in USA find it tough to penetrate a non-english market easily even with cash and brand. Ebay failed in Japan, Google is losing to Baidu in China etc. Even between USA and Europe, there is difficulty. So I believe for a firm to succeed in Singapore, the concept has to be deceptively simple. Ala google style such that is does not require too much localization across the regions and more importantly, it has to be built for the big markets like USA or China. And you will probably need to start with one or the other since language and styles are so different. Chinese sites are messy with loads of flashing banners which US visitors hate.
A good local example is wholivesnearyou.com. I think it is a wonderful local site with great traffic. I estimate they are doing 5-10M page views per month which is very decent for a local site. They are very web 2.0 and very community led. However, it looks too local to me and obviously is focusing on local market.
2) Lack of vision or rather a different vision for local startups
Most entrepreneurs in Singapore do not have a vision to be a YouTube. I think our vision is to grow a good business, impact people in a good way and make good money. It is not to change the entire world. Again, I think most people in the world are like that. Americans, China PRCs are different, by default of their market size and population, doing well in their market, means conquering half the world already. Frankly, I feel there is nothing wrong with being happy and contented with what we have. One other observation I have is that many who do have world beating dreams are usually very very young startups who seriously have not done anything significant with their company. Once their company has some success, I think the environment conspires to reduce the scope of their dreams. We have exceptions of course, Ron Sim, Sim Wong Hoo, Wong Peng Kin are good cases to learn from.
3) Lack of access to good quality funds.
Even if a firm overcomes the above two and has a great product or service which is global in outlook focusing on one of the major markets that has scale. And the firm has a strong founding team with brains, strategic prowess and management depth, they will still need money to make it all work. Now, frankly if a company has such traction in a major overseas market, then I believe they will get funding from valley investors rather than local ones.
The above 3 factors to me are the most pertinant in the discussion. There are of course others I am sure.
So does that mean we have no hope? On the contrary I believe we do have hope, it is just that we are against a gradient. So if any company does succeed, I truly applaud them. Some examples which I think can have hope? The characteristics I venture to guess will be as follows : Built with a larger market in mind. Either China or USA. But business can be based in Singapore for development, taxation, IP etc purposes. Web 2.0 community led concept. Spread like wildfire across the targeted market. May not even be known in Singapore. Probably focused on young. Esp since young are slightly more homogenous across the world thanks to cross cultural influences. Simple software and at least American standard designs and branding. Many local sites (mine included) are not up to standard still. We have basic grammatical errors, branding not looked into etc.
World class credentials from management team. Sorry guys, but I do not think a couple of fresh graduates will make it unless they are from Stanford, MIT or harvard, or maybe IIT, Bei Da, Oxbridge. Pedigree attracts pedigree. It’s a fact. There are exceptions of course, but I am taking an educated projection here. Funding from similarly well known firms. Perkin, Sequoia etc.
When to move office?
To carry on the story below. We grew from the 21 staff to current to close to 100. And we stayed at the science park place for 5 years before moving to the current IBP place that is about 4700 sqft. My thinking has not changed much on this. I feel rental in Singapore is so expensive. As startups we definitely want to watch our costs. So we have always only added office space when we are exploding from the current place. And we totally believe in just adding extra office units next door or next floor. That way we keep rental costs to under 2% of revenue at all times which makes sense for a company like mine.
I hate visiting firms that have huge office space. It just feels so wasteful to me. The current saga about Blk 71 really shows how startups in SG now have a much better deal. Even in golden mile i was paying about $2 psf. Now it is double that. I heard that in Blk 71, people are paying $1+!!! This is a fantastically good deal for startups who are occupying that space. It is a clear cut case of government money subsidizing the industry. No wonder MDA is considering to move tenants around. It cannot be subsidizing the same companies for such an extended period. Some food for thought for those of us who cannot understand why MDA wants to move long staying tenants out of Blk 71. In this context, i think it makes sense right?
=====================================================
(Article posted at sgentrepreneur Oct 2006)
Once you have stablized the first phase of your startup, you will need to look for a proper office. Our resident contributor, Der Shing draws his experience about moving the company office from place to place and shares his thoughts about the value of matching office environment to company growth. When I started out, two of us worked out of my room. I felt no compulsion to wake up on time and probably worked about 4 hours a day. Fortunately, this phase lasted only 6 months and I knew we had to go to a proper office. So home office is not something that works for me.
Next office was in Golden Mile Complex. For those in the know, this is one of the crappiest place with red light district downstairs and regular robberies and murders. We lasted 1 year there and increased from 2-man show to 6-man show. But secretly, we were amazed whenever a new person joined us as we cannot conceive why a young degree/dip grad would want to join us. Maybe we were very persuasive :) Anyway, during this phase of startup, we had DIY PCs and hand-me-down furnishing too. Personally, I was extremely motivated and the less-than-ideal surroundings made me feel even more determined to crawl out of it. However for staff, it was a tough place to be. No one likes to say they work in an old buiiding with prostitutes downstairs.
Next office was at phase z.ro tech park, a bright yellow colour container place. We thought it was heaven. We stayed 5 years and it saw us grow from 6-man team to 18-man team, taking more office space as we grew. Still a very scrappy environment. Miles ahead of golden mile but still not a proper office in most sense of the word. Clients and interviewees would joke that we work in containers, so we took to saying it first. My people were happier here though none were from the golden mile days. Personally, i still felt very “startup” and the lack of facilities and leaky roof and floor made us feel more determined to do well. Last month, we moved to Science park. We now have 21 staff and intend to grow past 40 staff here. Finally a normal office with recept area. And guess what, I noticed that my colleagues seem happier here and it is more professional feeling. So a nicer office does make a difference! But for me, I feel as though more things are expected of us now. The scrappy feeling is diminished and we now actually have our own meeting room and storage rooms. Feeling more corporate and more part of the scene.
Next step? If we grow past our 40 staff and hence $5M mark, then I think a even larger office is in order. What next? A city office with a view? What will we be doing then? Probably more HR, Strategy, Finance stuff. No more feeling like an underdog. I wonder…
I hate visiting firms that have huge office space. It just feels so wasteful to me. The current saga about Blk 71 really shows how startups in SG now have a much better deal. Even in golden mile i was paying about $2 psf. Now it is double that. I heard that in Blk 71, people are paying $1+!!! This is a fantastically good deal for startups who are occupying that space. It is a clear cut case of government money subsidizing the industry. No wonder MDA is considering to move tenants around. It cannot be subsidizing the same companies for such an extended period. Some food for thought for those of us who cannot understand why MDA wants to move long staying tenants out of Blk 71. In this context, i think it makes sense right?
=====================================================
(Article posted at sgentrepreneur Oct 2006)
Once you have stablized the first phase of your startup, you will need to look for a proper office. Our resident contributor, Der Shing draws his experience about moving the company office from place to place and shares his thoughts about the value of matching office environment to company growth. When I started out, two of us worked out of my room. I felt no compulsion to wake up on time and probably worked about 4 hours a day. Fortunately, this phase lasted only 6 months and I knew we had to go to a proper office. So home office is not something that works for me.
Next office was in Golden Mile Complex. For those in the know, this is one of the crappiest place with red light district downstairs and regular robberies and murders. We lasted 1 year there and increased from 2-man show to 6-man show. But secretly, we were amazed whenever a new person joined us as we cannot conceive why a young degree/dip grad would want to join us. Maybe we were very persuasive :) Anyway, during this phase of startup, we had DIY PCs and hand-me-down furnishing too. Personally, I was extremely motivated and the less-than-ideal surroundings made me feel even more determined to crawl out of it. However for staff, it was a tough place to be. No one likes to say they work in an old buiiding with prostitutes downstairs.
Next office was at phase z.ro tech park, a bright yellow colour container place. We thought it was heaven. We stayed 5 years and it saw us grow from 6-man team to 18-man team, taking more office space as we grew. Still a very scrappy environment. Miles ahead of golden mile but still not a proper office in most sense of the word. Clients and interviewees would joke that we work in containers, so we took to saying it first. My people were happier here though none were from the golden mile days. Personally, i still felt very “startup” and the lack of facilities and leaky roof and floor made us feel more determined to do well. Last month, we moved to Science park. We now have 21 staff and intend to grow past 40 staff here. Finally a normal office with recept area. And guess what, I noticed that my colleagues seem happier here and it is more professional feeling. So a nicer office does make a difference! But for me, I feel as though more things are expected of us now. The scrappy feeling is diminished and we now actually have our own meeting room and storage rooms. Feeling more corporate and more part of the scene.
Next step? If we grow past our 40 staff and hence $5M mark, then I think a even larger office is in order. What next? A city office with a view? What will we be doing then? Probably more HR, Strategy, Finance stuff. No more feeling like an underdog. I wonder…
Making enough to retire at 35?
Wow! This is like reading a letter from myself written 7 years ago. How things have changed :
1)I did that half marathon. In fact, i did a full marathon the year after. Felt great to complete the marathon. Definitely one of the more memorable experiences in my life.
2) I was 1 year late. I sold my company in 2011 age 36. And yes, i collected enough immediately to have an option to retire at my standard of living. But of course, i did not retire and am still happily running the company i founded.
3) I failed totally in being less competitive. In fact, from 2006 to 2010 was my most competitive period of life. I would compare myself obsessively with other people in terms of achievements. I think that is what spurs me on. Today? I am somewhere inbetween. Still very competitive but now i try to compete on being happy and not just numbers.
4) Trip. I made many in these 7 years. Some with kids, some without. I am very blessed. been to Bhutan, Europe x 3 times, China x 3 times, Japan x 2 times, USA x 2 times, Phuket/bali/koh samui many many times etc
So do i feel i am an entrepreneur? It is a definite yes! Because I cannot imagine not running and owning a company if i am to work long term till i am in 50s. I may take breaks, I may do a corporate stint for couple of years but i will always be involved in startup scene as investor/director/advisor etc. Now i realize that entrepreneurship is part of life, it is not everything but it is very important to me. Only things more important is my family , wife, kids and mental/physical health.
===================================================================== (Article first appeared on sgentrepreneurs - July 2006)
Recently, it seems that God is trying to tell me something. I was a speaker and career panelist for Confluence 06 (for overseas students to speak to Teo Chee Hian and others) and had to speak to 200+ undergraduates on my experience in business and my aspirations. My company is helping EDB with a web site called Aspirations which is focused on providing career information to students. In both, the word “Aspirations” kept hitting me and got me thinking about what I wanted to do in life. I think most people would agree with me that we do not want to settle for a life less than exciting.
As entrepreneurs, people sometimes think that all we want to do is grow our business. For me personally, that is definitely not true by now. In fact, I see my “aspiration” as one whereby I am challenged daily but in a way that is not just mental but also physical and spiritual. And yet at the same time, I do not want to always be challenged. Sometimes, I just want to kick back, chill out and play with my kids, wife or just laze. Other times, I am so inspired by nature, I want to scuba dive the pacific islands or walk the appalachian trails. I wonder how other entreprenuers who are above 40 can plug away at the same task for a lifetime. Sheer one-dimensional passion? Lack of imagination of another type of life? What is the motivating factor that drives and more importantly satisfies? I examine some that I know thrill me.
Intellectual challenge.
This has always been fun for me. Whether it is the satisfaction of thinking of good work flow, business model, sales pitch etc. But when I compare it to the intellectual completeness of academic thought and the wit and beauty of literary and philosophical thought, then the intellectual challenge of running a business is so much more limited in scope and untidy. Physical challenge. There is an intrinsic beauty to being fit and being physically energized and challenged. I used to windsurf a lot and scuba dive. I still do a little but I think running your own business kind of occupies so much time that there is no time for the quietness that I used to enjoy with such sports.
Spiritual Challenge.
Entreprenuership fails even more on this count. To me to play the game of running a company is to play the game of capitalism. So it is always cost benefit in the long term that matters. And frankly there is little spiritual about commerce and money. So where do I go from here? As usual, the tedium of life will drag us down and remind us of the responsibilities we have to clients, staff and family. That is why subconsciously, I have always known I am not a true entreprenuer. I am like a pretend person, performing the role adequately but always aspiring for a deeper life. I know all about enjoying the journey while getting to the goals but it is tough to always focus when it is a fact that life as a business person is quite demanding in terms of time and energy.
Some key stuff I aspire for that will alleviate this sense of “ennui” or boredom/emptiness.
Run a half marathon (full is too much for me).
Make enough money to have option to quit by 35.
Be less competitive and not benchmark material acqusitions to much with others.
Need to sneak a trip (without kids) to some nature haven. Nepal? Tibet? …
Well.. this is the inner musing of an entrepreneur. I believe man are quite common in this respect. Some can articulate their inner thoughts, others cannot. But I would love to hear from others how each deals with this essential question.
1)I did that half marathon. In fact, i did a full marathon the year after. Felt great to complete the marathon. Definitely one of the more memorable experiences in my life.
2) I was 1 year late. I sold my company in 2011 age 36. And yes, i collected enough immediately to have an option to retire at my standard of living. But of course, i did not retire and am still happily running the company i founded.
3) I failed totally in being less competitive. In fact, from 2006 to 2010 was my most competitive period of life. I would compare myself obsessively with other people in terms of achievements. I think that is what spurs me on. Today? I am somewhere inbetween. Still very competitive but now i try to compete on being happy and not just numbers.
4) Trip. I made many in these 7 years. Some with kids, some without. I am very blessed. been to Bhutan, Europe x 3 times, China x 3 times, Japan x 2 times, USA x 2 times, Phuket/bali/koh samui many many times etc
So do i feel i am an entrepreneur? It is a definite yes! Because I cannot imagine not running and owning a company if i am to work long term till i am in 50s. I may take breaks, I may do a corporate stint for couple of years but i will always be involved in startup scene as investor/director/advisor etc. Now i realize that entrepreneurship is part of life, it is not everything but it is very important to me. Only things more important is my family , wife, kids and mental/physical health.
===================================================================== (Article first appeared on sgentrepreneurs - July 2006)
Recently, it seems that God is trying to tell me something. I was a speaker and career panelist for Confluence 06 (for overseas students to speak to Teo Chee Hian and others) and had to speak to 200+ undergraduates on my experience in business and my aspirations. My company is helping EDB with a web site called Aspirations which is focused on providing career information to students. In both, the word “Aspirations” kept hitting me and got me thinking about what I wanted to do in life. I think most people would agree with me that we do not want to settle for a life less than exciting.
As entrepreneurs, people sometimes think that all we want to do is grow our business. For me personally, that is definitely not true by now. In fact, I see my “aspiration” as one whereby I am challenged daily but in a way that is not just mental but also physical and spiritual. And yet at the same time, I do not want to always be challenged. Sometimes, I just want to kick back, chill out and play with my kids, wife or just laze. Other times, I am so inspired by nature, I want to scuba dive the pacific islands or walk the appalachian trails. I wonder how other entreprenuers who are above 40 can plug away at the same task for a lifetime. Sheer one-dimensional passion? Lack of imagination of another type of life? What is the motivating factor that drives and more importantly satisfies? I examine some that I know thrill me.
Intellectual challenge.
This has always been fun for me. Whether it is the satisfaction of thinking of good work flow, business model, sales pitch etc. But when I compare it to the intellectual completeness of academic thought and the wit and beauty of literary and philosophical thought, then the intellectual challenge of running a business is so much more limited in scope and untidy. Physical challenge. There is an intrinsic beauty to being fit and being physically energized and challenged. I used to windsurf a lot and scuba dive. I still do a little but I think running your own business kind of occupies so much time that there is no time for the quietness that I used to enjoy with such sports.
Spiritual Challenge.
Entreprenuership fails even more on this count. To me to play the game of running a company is to play the game of capitalism. So it is always cost benefit in the long term that matters. And frankly there is little spiritual about commerce and money. So where do I go from here? As usual, the tedium of life will drag us down and remind us of the responsibilities we have to clients, staff and family. That is why subconsciously, I have always known I am not a true entreprenuer. I am like a pretend person, performing the role adequately but always aspiring for a deeper life. I know all about enjoying the journey while getting to the goals but it is tough to always focus when it is a fact that life as a business person is quite demanding in terms of time and energy.
Some key stuff I aspire for that will alleviate this sense of “ennui” or boredom/emptiness.
Run a half marathon (full is too much for me).
Make enough money to have option to quit by 35.
Be less competitive and not benchmark material acqusitions to much with others.
Need to sneak a trip (without kids) to some nature haven. Nepal? Tibet? …
Well.. this is the inner musing of an entrepreneur. I believe man are quite common in this respect. Some can articulate their inner thoughts, others cannot. But I would love to hear from others how each deals with this essential question.
Changing Expectations - Update
Haha... this is something only a young idealistic person would need to grapple with. Currently, for self motivated people, we let them operate on KPIs and deliverables. For less self driven people, we hold them on a tight leash and micromanage more. Over longer term, i prefer to work only with self motivated ones at least as direct reportees. The key for any hire is to figure out quickly their level of self motivation.
Environment still the same . Very open concept and merit based. Workflows and processes are super important and quite a lot of my people's time is spent on streamlining and coming up with better processes as our functions are subdivided and our staff become more and more specialist. ============================================================================================== (Article first posted on sgentrepreneur - Jul 2006)
Reading some article lately in Harvard Business Review and it got me thinking that over the past 6 years of entreprenuerial journey I have changed my mindset and expectations quite dramatically. Here are some core changes I have observed. May be useful to compare notes.
1) Expectations of staff working hours.
I vacillated a lot on this one. At first, I felt that one should be objective oriented. As long as key objectives are achieved, it doesn’t matter how late you work or how late you come in. Then after 2 years, I switched over to the thinking that your working hours show how “on” and serious you are. Precipitated by a bunch of really quite not-too-engaged staff. So as management, we found overseas more squeezed towards watching hours and micro-managing. Fortunately, we had a major firing/exodus exercise and this allowed us to start afresh. Now, I am ina more moderate and enlightened mode.We have some rules and expectations of working hours but we are also objective and performance oriented. You may work late but if you do not work smart, I much rather prefer the guy who works smart. I have staff who leave at 5pm sharp each day and we do not judge them based on that. It sounds very simple, but it took us 4 years to figure it out and adopt it as a real mindset and culture of the company.
2)Dot com dream environment
Funny thing was that when I started the firm, I read a lot of management books and was very inspired by american dot coms. I believed in working smart, good collaboration, high motivation, fun atmostphere etc. So we worked 9 to 5, had an open office concept, minimal hierachy etc After 3-4 years, I looked and realized that we are just like any other SME. Only thing is that we work 9 to 5 :) Now after 6 years, I still do believe in all that brillant people with brillant people to make magic idea but it is very tempered with realism. And perhaps it is something for more boutique super high value consulting/IB firms and huge MNCs. For us, I am happy to have a fair working environment with good people who work well together.
3) Workflows and systems
When I started I used to laugh at systems and workflows. Being an almost fresh graduate, I thought it was very silly to have such things. It is so old economy. So you can imagine our company was pretty chaotic in our way things ran. Fast forward to now, I now still hate systems and workflows esp if I have to follow them but I now acknowledge the need for it. So as we grow we become more and more like the firms I laughed at…. Quite ironic. We just created a Human Resource (HR) handbook this year. Thats all I can think of for now. Will add in more items as I go along. Do feel free to add in your own changes
Environment still the same . Very open concept and merit based. Workflows and processes are super important and quite a lot of my people's time is spent on streamlining and coming up with better processes as our functions are subdivided and our staff become more and more specialist. ============================================================================================== (Article first posted on sgentrepreneur - Jul 2006)
Reading some article lately in Harvard Business Review and it got me thinking that over the past 6 years of entreprenuerial journey I have changed my mindset and expectations quite dramatically. Here are some core changes I have observed. May be useful to compare notes.
1) Expectations of staff working hours.
I vacillated a lot on this one. At first, I felt that one should be objective oriented. As long as key objectives are achieved, it doesn’t matter how late you work or how late you come in. Then after 2 years, I switched over to the thinking that your working hours show how “on” and serious you are. Precipitated by a bunch of really quite not-too-engaged staff. So as management, we found overseas more squeezed towards watching hours and micro-managing. Fortunately, we had a major firing/exodus exercise and this allowed us to start afresh. Now, I am ina more moderate and enlightened mode.We have some rules and expectations of working hours but we are also objective and performance oriented. You may work late but if you do not work smart, I much rather prefer the guy who works smart. I have staff who leave at 5pm sharp each day and we do not judge them based on that. It sounds very simple, but it took us 4 years to figure it out and adopt it as a real mindset and culture of the company.
2)Dot com dream environment
Funny thing was that when I started the firm, I read a lot of management books and was very inspired by american dot coms. I believed in working smart, good collaboration, high motivation, fun atmostphere etc. So we worked 9 to 5, had an open office concept, minimal hierachy etc After 3-4 years, I looked and realized that we are just like any other SME. Only thing is that we work 9 to 5 :) Now after 6 years, I still do believe in all that brillant people with brillant people to make magic idea but it is very tempered with realism. And perhaps it is something for more boutique super high value consulting/IB firms and huge MNCs. For us, I am happy to have a fair working environment with good people who work well together.
3) Workflows and systems
When I started I used to laugh at systems and workflows. Being an almost fresh graduate, I thought it was very silly to have such things. It is so old economy. So you can imagine our company was pretty chaotic in our way things ran. Fast forward to now, I now still hate systems and workflows esp if I have to follow them but I now acknowledge the need for it. So as we grow we become more and more like the firms I laughed at…. Quite ironic. We just created a Human Resource (HR) handbook this year. Thats all I can think of for now. Will add in more items as I go along. Do feel free to add in your own changes
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