He may be 60, but Vincent Tan says he ‘understands the space’
Internet investments have cost him around RM290mil but yielded a RM1.3bil valuation
ACCORDING to a Berjaya Group employee who saw Tan Sri Vincent Tan in action, the billionaire founder of the Group was in “top form” during his appearance as a special panelist at the DNA-TeAM Disrupt networking session recently.
Indeed Tan regaled the audience with anecdotes, spoke about how they [him and MOL head honcho Ganesh Kumar Bangah] slashed the losses of Friendster from US$10 million to US$1 million by cutting out the operations in high cost locations, then brought a serious sense of gravity to the event by sharing his fear over the economic impact the poor quality of English will have on today’s graduating workforce and on the future competitiveness of Malaysia.
“Terrible” and “pathetic” is how he describes the level today, expressing his pity for those graduates who cannot converse well in the language.
But it was some nine minutes into his sharing session that Tan offered the rapt audience some key words of advice: “When you start a new business, you have to rough it out. Don’t expect salaries that matched what you made before because if you get a few guys like that, you will go bust before you know what hit you.”
It may not have been a piece of earth-shattering advice for sure, and we have all heard of it before, but it is well worth remembering by anyone who wants to be an entrepreneur or those who already are.
Many Malaysian companies operate in a tight-fisted manner, where every sen or penny is counted. Many Malaysian businessmen have learned to appreciate and respect that way of doing business, even those in the Internet space. Mark Chang of JobStreet is a hard-core practitioner of this style of doing business, as his own staff will tell you.
Frugality in running a tight ship ensures the company can thus strike to grab a good deal when it arises and even have access to ready bankers who want to lend it money so they can make money themselves.
Leave it to the Americans to coin this way of doing business as “lean.” In fact, I just met a start-up from Silicon Valley on Oct 21, whose founder says they have been operating in lean mode since 2007. That’s five long years in keeping his eye on the grand vision, keeping costs to a bare minimum while trying to build out revenue.
Tan (pic) did speak of this hunger too that entrepreneurs must have if he were to bet on them. And he left the door wide open to any type of technology and even to entrepreneurs who have failed before. “It is better to fail or go bankrupt in business than to go bankrupt because you maxed out all your credit cards,” he said to laughter from the audience.
Tan feels that it is better to have tried and failed than to not have tried at all. “Tasting failure makes you a more resilient person.”
And that was the main thing that struck me about Tan. He kept it “real” and came across as an entrepreneur who has made mistakes, even admitting right off the bat that because he was not focused, the Berjaya Group itself has its hands in many pies. He even described some of his decisions as idiotic and said they got lucky at times too.
But he also revealed his risk-taking and entrepreneurial nature when describing the acquisition of 7-11 chain for RM80 million (US$26 million). His accountants balked at the price tag, as with a profit of RM300,000 (US$98,360) it was at a PE (price/earning) ratio of around 250 times, but Tan convinced himself that if he kept doubling the profit of the convenience chain every year, the acquisition would not look too expensive.
But it was his experiences as an angel that people came to hear him speak about, and he did not disappoint, calling himself a “good angel while acknowledging that sometimes angels can be not so angelic.”
He shared how his initial RM2 million (US$656,000) investment in Ganesh in 2000 [not your usual angel size investment today, much less in 2000!] has today become RM90 million (US$30 million) and that the MOL Group has recently been valued in excess of RM1 billion (US$328 million) and is primed for a relisting, likely in Malaysia.
While he says he will not always take a majority, but if they are the only ones interested in an entrepreneur, “naturally we will want a majority so that the entrepreneur listens to the angel.”
He acknowledges that sometimes his investees do not listen to him as they feel that at 60 years old, he may not really understand the Internet, but Tan says, “believe me, I understand the space.”
And who is to argue with him when he shares that his total investment of around RM290 million (US$95 million) into just Internet companies over the past 12 years has today yielded a handful of survivors whose total valuation is at RM1.3 billion (US$426 million)?
And more importantly, he still has a strong appetite for investing in startups and gave his email to the world! [Disrupt was streamed over Google Hangout. A big thank-you to Bikesh L of iTrain Sdn Bhd for making that happen].
He also lent his ears to the entrepreneurs present and I think easily 30 of them made a beeline for him to give him their one-minute pitch and business card.
In the end, an entire room of entrepreneurs walked away not just inspired but also convinced that there is someone who will listen to their pitch and willing to make an investment if he likes what he hears in the idea, and what he sees in the entrepreneur.
Watch the unedited video of the DNA-TeAM Disrupt session with Tan Sri Vincent Tan.
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