Reflections of a Singaporean Dot Com
Entrepreneur
Mr Lim Der
Shing, 37 is currently the CEO of JobsCentral Group. He co-founded the company
in 2000 during the dot com crash and grew it into one of the largest online
career media companies in Singapore. JobsCentral was acquired by CareerBuilder
in 2011. He is happily married with three very
energetic boys. This article is written in his personal capacity.
Background
My cofounder
& I started work full time on JobsCentral Group during the dot com crash of
2000. It was a tough time as nobody wanted to fund us and so we had to
bootstrap our business. I can still recall our first sale which was for $9 and
we actually cashed the cheque when we received it. We paid ourselves a monthly salary of S$500
for the first 9 months. Fortunately for us in 2001, we pivoted our job portal business
and found a good niche in campus recruitment. We executed on that plan and managed
to bootstrap our business to cross S$1M in sales by 2004. We also got other co-founders with complementary
skill sets to join us in those very early years.
In 2005, we
made a major decision to expand our business back into the job portal business.
Leveraging on our 5 years of campus recruitment experience, we expanded quickly
and by end 2010, we were one of the largest locally owned dot com with over 1M
jobseekers and 10,000 employers using our services. In 2011, we were acquired
by the #1 job portal in the USA – CareerBuilder for the price of a small listed
company.
Currently,
my team and I still run the regional business as professional management. We all
give back to the startup community as angel investors and by sharing our
experiences as mentors. I have gathered some key learning experiences in my
twelve year journey and I would like to share them below.
Attitude & Mindset
I have lost
count of how many times I have obsessed over some minor detail throughout the
day. Whether it is a watching out for
competitor advertisements, or vexing over a small feature bug or even just
checking the site every 30 minutes to ensure applications are working fine. I
have found that being obsessive ensures success. I also found that when I am
obsessive over my business, the various short and long term problems and issues
are percolating in my mind all day long. Then sometimes, as if by magic, a
solution or path will present itself that frequently works well for the
business. And this usually happens when I am doing something totally unrelated
like jogging or even sleeping.
Besides
being obsessive, most successful entrepreneurs I know are street smart,
curious, very competitive and take failure in their stride. Of course, being
well educated helps too. This is especially important when scaling beyond 100
staff as many business school type principles and work process issues start to
become increasingly relevant.
We
frequently read about successful entrepreneurs whose core motivation is to
solve a problem or scratch an itch. Most I have met are driven to build an
empire and many simply like to win. I once had a dinner with a very wealthy
entrepreneur and he let slip that there are about fifty families ahead of him
in terms of net worth in Singapore. I laughed at that time, but upon
reflection, I realized that he is dead serious. Net worth is how many
entrepreneurs keep score even if they will not admit it.
Are there
many potential entrepreneurs in Singapore with such traits? I believe so. We
are a highly competitive, well educated society and are famous for being
willing to work hard. We just need more success stories where entrepreneurs of
varying educational and economic backgrounds succeed spectacularly. With these
role models in place, a safe and well paid job with a MNC will seem less and
less attractive.
Team Selection and Management
My team works
well together. We have clearly defined roles and the team is willing to report
to one person. Each member of the team is better than me in what they do and
frequently, all that is needed from me is to get out of the way. What works is
to be totally transparent in terms of how each person is paid and also to be
transparent when it comes to the accounts of the company. Every year, we
collectively review and agree on our own pay and bonuses. Once the trust is
built, then we can all focus on improving the business.
I have found
that managing a team of talented owner managers requires me to manage my emotions
very well. There have been many incidents where I have to swallow my pride or
put aside anger or disappointment in order to make sure that the best decision
is made for the business. It gets easier with time but it is still very much a
challenge. I believe that is why some entrepreneurs chose to do it alone and
just pay professionals to do the key functional jobs. You can always remove a
professional manager but it is much harder if that person is also a significant
shareholder.
Most
startups I see today are a team. I think a team makes the most sense still
especially if you intend to raise funds. Investors like to know that there is a
team that complements each other and that their money is in the hands of not
just one person. New startup teams need to have a clear idea of roles. They
should decide who is the leader, how will pay be decided and sign a joint legal
agreement called a shareholder’s agreement to spell out these details and
contingencies.
Fund Raising
Back in
2000, nobody wanted to fund us. We were a bunch of fresh graduates with no
money or experience. As such, we were
forced to grow organically with just $100K funding from savings, family and
friends. We built a habit to always be
cash flow positive in all we do and to grow at our own pace. We kept focusing
on clients and what they needed. Fortunately for us, it worked out well.
The usual
silicon valley model is to raise funds via angel investors. Once the product
has traction, the company will raise further funds via Venture Capital firms
(VCs). This model works well if the
business is very scalable and can grow revenues rapidly. However, after observing
and speaking with many local and regional startups, I feel there are not many
that can meet the rapid growth and large market criteria for raising VC funds. Generally speaking, the final exit has to be
at least worth S$25M to justify a Series A round at S$5M valuation. The only
exception is unless the exit happens in 1-2 years like the Tencube or
Hungrygowhere case.
In terms of
raising capital up to S$600K, there are many options nowadays thanks to the
plethora of co-funding schemes from MDA, SPRING, ACE and NRF. A good skilled team
with a viable business model should be able to find funding up to this level.
What is missing is the Series A round from S$1M to S$5M. However, I feel this is a consequence of our
market rather than something that the government should step in to help on. Entrepreneurs
should use their angel round and grow to justify their next round. Very often,
it will mean they have expanded into an overseas market and/or are breakeven or
profitable in Singapore already. In both cases, they will need to show a clear
path and vision to grow to an eight digit valuation to justify a VC round. We do not want to waste taxpayers money and
end up funding many S$1M to S$5M rounds which cannot scale to the required exit
size.
Overseas Expansion
We are a
conservative bunch of entrepreneurs. We take only calculated risks. So we did not expand overseas until 2009 when
we were clearly profitable in Singapore with sufficient management resources.
We have since expanded into Indonesia this year and will enter more ASEAN
markets. Many entrepreneurs expand far more quickly and it depends on many
factors like whether they are first movers, expected capital investment, market
readiness, management team depth etc.
The current
situation is that many startups feel a need to go global from day one. They
believe that having a regional story is of utmost importance. To some extent
this is true especially if the startup is trying to raise money. However, it
would be best to have at least firmed up their home market processes and basic
business model first. This ensures that
the business does not end up failing on both home and foreign markets.
Mergers & Acquisitions
We had a
grand total of 4 possible buyers during the five year period from 2003 to 2008. What I found
out is that the valuations offered by Asian firms are really quite poor
compared to western suitors. We were offered valuations that ranged from 5 to
10 times PE even though we were growing at 40% per year. The attitude I found that
works best is to not plan for an acquisition. Before we were cold called by our
current shareholder, we already decided to just hunker down and build the best
possible business. Since we were already profitable, there was little pressure
to sell or raise more capital. This also
helped us much when negotiating since we staying happily private was always an
option for us.
Today, while
there is definitely more activity in terms of M&A in the region,
entrepreneurs should always remember to look for clients first before looking
for buyers. We need more highly profitable local outfits and/or highly scalable
regional/global outfits. Both will then be sought after by different type of global
buyers. The exits will be eight, nine or even ten digits. And the founders who
exit can then become role models and investors for other startups.
Contribution to Singapore
I feel
strongly that entrepreneurship needs to be nurtured and considered as a career
path for all Singaporeans. We want both top students and school dropouts to start
up. By deciding to start a business, my
team has generated a hundred new good paying, high productivity jobs for
Singapore. We help thousands of employers cut costs by improving their
recruitment process and we are now helping spur the digital startup community
via our angel investments and mentoring.
Imagine if there are thousands more such stories in all industries doing
the same!
The various
schemes by ACE, SPRING, MDA and NRF are all on the right track. We need to help
locally owned SMEs as much as possible. While most of us may never make the same
revenue numbers like an MNC can, some of us will do well and the long term
rewards will be substantial. I strongly believe that a Singaporean owned
company will stay in Singapore through thick and thin in a way that a MNC will
never do. SMEs may expand overseas and sell overseas but the profits will be repatriated
and spent via their Singaporean shareholders.
Mentors & Government Help
I have been
fortunate to have met and interacted with many entrepreneurs through the course
of the past 12 years. It really is true that not only do we need to meet the
right person, ask the right questions but also we must be at the right stage of
development and frame of mind to benefit. I have learned the most when speaking
to fellow entrepreneurs who run similar sized or larger companies. Talking to
professional managers helps when I have a specific functional problem. For
instance, during our acquisition process, I consulted accountants and lawyers.
They were useful in so far when I was discussing specific points of law or
financial terminology. But the best learning points I got were with fellow
businessmen who have bought and sold companies and who were able to share from
personal experience.
With respect
to the many government grants and funding which are offered to digital
startups. I would advice new entrepreneurs to go for them but go with the
mindset that even if you fail to obtain a grant, you still have a good plan to
succeed. In fact, if we look at recent eight and nine digit exits/investments
like PropertyGuru, Reebonz, Beeconomic, JobsCentral, and Hungrygowhere, none of
us have taken any form of government funding.
Entrepreneurs should always start with ourselves and blame ourselves if
anything goes wrong. I cannot stress this enough. Only when we see ourselves as
the root of all our business problems, then can we act to overcome them.