2nd BFM breakaway a success; showcases three successful and different entrepreneurs, common lessons learnt
Bootstrapping a way to build toughness; mentorship and ecosystem key to guiding younger entrepreneurs
APPLE Inc's shares – worth approximately US$673 per share as of Oct 1. Imagine you bought a whole bunch of them when it was at its nadir. Then imagine if you had held on to them, through thick and through thin, over the years when it went through several iterations of various chief executives, which culminated with the comeback of founder and tech legend, the late Steve Jobs.
Imagine having hung on to those shares until now, when it is one of the most valuable shares on planet Earth. How much would those shares be worth, one asks?
Well, this is the very same question that Mark Chang, founder and chief executive of online job recruitment portal JobStreet.com, might ask himself from time to time.
“I like Apple products and so I bought its shares with whatever I could afford back when it was fairly cheap – about US$12 per share. But they kept changing CEOs until Steve Jobs came back, when the shares were at its lowest.
“I asked myself then, what has happened to this company? They seemed to have run out of ideas and it seemed as if they weren’t able to find any other CEO so much so they were forced to bring back the person that they sacked many years ago.
“I felt there was no more hope in this company and I sold all my shares in Apple,” Chang (pic) said. “Assuming the shares have split by half, it could be about 120 times the value today!”
And the crowd sighed in disbelief upon hearing that little anecdote at last Friday’s (Sept 29) 2nd BFM Enterprise Breakaway Conference.
Themed “Real People, Real Stories, Real Results” and organized by Malaysia’s first and only business radio station, the conference held at the Sime Darby Convention Center in Kuala Lumpur saw the participation of over 500 enthusiastic entrepreneurs, as well as those interested in entrepreneurship, coming together to learn from those who have been there, done that.
Chang was on stage with fellow entrepreneurs, Wong Thean Soon, better known as T.S. Wong, founder and managing director of online e-services player MyEG, and Puvanesan Subenthiran, founder and group CEO of the Privasia Group.
Moderated by Malek Ali, founder and managing director of BFM, the day-long Breakaway Conference kicked off with three above fielding questions from Malek and from the floor. It spanned everything from how they started to what kind of investments they were looking at today, to each of them recalling his own journey that took him from pretty dire straits to being successful entrepreneurs.
Digital News Asia was present during the hour-long panel session and below are excerpts of the Q&A discussion.
Malek: As an investor, does diversifying distract you? For example, Mark, you bought into Autoworld, but we don’t hear much of it today. How did that pan out?
Chang: The sale was based on the opportunity available at that time. Someone wanted to sell and we liked it, so we bought it. The traffic for this site is there and they do produce some interesting projects every year, but admittedly, the growth rate is not as good as JobStreet's.
But I view this investment as long term because we are entrepreneurs and we take a long-term view of things and we are also very patient. You may not hear about Autoworld and what we do for many years, but then suddenly you may hear of us. We have to wait for the right time.
For entrepreneurs who are successful one day, you might want to consider investing and diversifying with these points in mind.
Malek: All of you are also angel investors, where you take your personal money and park it with various entrepreneurs. Do you do it via your company or personally? Do you have any stories to share from these investments?
Wong: I’m doing it via my company because the people that we invest in are the ones whom we want to work with in MyEG due to our brand name and a subscriber base on which we can leverage. To me, investing via my company is as good as me investing personally.
Puvan (pic): All investment is done via Privasia as we’re still at a growth stage and a lot of my time and attention need to be there.
Chang: If the business has something to do with Jobstreet, then it would be the company that would invest in it. But many times, as entrepreneurs, we meet individuals – usually friends – whom we invest in that has nothing to do with Jobstreet.
For example, back in 2000, I was introduced to two Taiwanese brothers, who were buying old, out of production games software. They would rent this to those who still wanted to play them via a website. They would physically ship it to the US to those who ordered them and rent them for, say, a month.
I had forgotten about this investment but seven years later, they called me and informed me that they were going to sell the company. I was surprised that it still existed and I thought if I could get back some of my investment, I would be happy. They told me they were selling it for US$100 million to Activision! I was surprised and asked what did they do. They told me they created the game called Guitar Hero, to which I asked what was it? They told me it was one of the most popular games at that time.
Your experience with Apple, a word about it?
Chang: As an investor, we are not as smart as we think and a lot of times, we are just lucky and as for any start up, its about luck. Some do well, others don’t and often, we can’t predict whether it will be successful, just like in the Guitar Hero case. When I gave up on Steve Jobs, the rest of the world gave him a chance.
Questions from the floor
What does Angel, Series A, B, C funding mean?
Chang: Angels are people who will give you money without really understanding your business or those who would support you because they know you. Once you’ve established yourself, it’s normal to go and look for venture capitalists (VCs), who know how to evaluate your business plans and invest in your company.
The first round of funding is known as Series A, that will help a business grow to a certain stage while the other two are further series to help a business expand even further. Jobstreet’s series A was about RM3 million (US$960,000) and the next round was another RM3 million. If you’re big, you could go through Series funding; if you’re small, keep it simple, go through angels.
But my advice is to not worry too much about raising money because sometimes entrepreneurs spend too much time trying to raise money that they don’t focus on the business. Work on the business first and when it becomes successful, VCs will take notice and come to you.
Wong (pic): I agree with Mark that entrepreneurs should concentrate on the business because if you run the business well, the VCs or the money guys are going to look for you. If you had to look for them, the chances are you’re not going to be successful in raising money anyway.
What does bootstrapping mean and how do you get from there to achieve success? Also, is there a timeline before the money runs out that you have to hit the critical mass before getting stuck?
Chang: Bootstrapping is about using your own money or friends’ money to keep the business running. As someone who bootstraps, always accept free “lunch and dinner,” that means anything that’s free, please accept it. During that period, you try to develop a business model and find one that would work. The time period is about five years. If you’ve spent five years on the same business model and if it does not work, then there’s something wrong with it or the timing is not right for your business.
During this time, your business model can change. When I started off, it was MOL Online, which was a portal. We also tried PenPals, but those didn’t work. Finally, we reached something in the form of Jobstreet.com, and once that worked, other people started investing. Give it three years to try your business; be flexible, as it will change with time.
Puvan: We did a form of bootstrapping where we negotiated with our vendors for better and extended payment terms. Bootstrapping is basically about getting others to fund your business when you can’t borrow. We just made sure that there was an upside to all involved in the bootstrapping.
Wong: For us, bootstrapping meant doing projects outside our main plan. Back in 1995, we could make money doing HTML websites. Today, mobile guys could be bootstrapping by doing some mobile app projects. Due to the lack of funding in Malaysia, companies are required to bootstrap themselves. Our view is that if you are able to grow your company in this manner, you will be stronger and tougher.
What kind of advice do you have for younger people to encourage them to be entrepreneurs and could you tell us what is the lowest point you’ve experienced as an entrepreneur?
Puvan: I think no matter how well your company is doing, there is going to be a time when you feel at your lowest time. It could be a period of uncertainty and when you’re challenged. But that is the time that is going to keep you grounded and also when the best opportunity comes to you, as in these times, it forces you to look for solutions. I’m a strong believer in business plans and that’s what we must fall back on. I think business plans need to be looked at every year and refined as you go along because this helps you plan for the worst case scenario and what your way out is going to be.
Wong: To me being an entrepreneur is in your genes. In my case, I started my first business at the age of 12. I’ve had business ventures at every stage of my life. In university I started a campus student magazine and I even struggled to pass my exams because of that. Although I had a scholarship and was due to work with the Singapore government, I chose to come back to Malaysia to start on my own business. To me entrepreneurs cannot imagine life in another manner. So as an investor, I look for someone who starts a business because he’s passionate, not because he cannot find a job.
For me, the lowest point is when we cannot pay salaries and this is definitely the most demoralizing ever.
Chang: Sometimes, I experience lowest points twice, even four times a day, and wonder whether I should have given up earlier.
Malek (final question): Do you believe in the entrepreneurial ecosystem? Are you part of it and are you developing it? How do you feel about fellow entrepreneurs?
Puvan: I think the ecosystem is not like in the Silicon Valley although I think it’s getting better now than it was 11 years ago. You find entrepreneurs who come up from the old days who are a lot more approachable, a lot more real-world entrepreneurs. These are guys are competing with each other but they also know how to cooperate when needed.
Wong: My personal view is that the ecosystem is not improving. There were more VCs operating back in 1995-2000 than there are now. There are practically zero active VCs investing in technologies in Malaysia, although there may be in the region. The ecosystem must be built further by providing more pools of private capital. And we don’t think that the government should be investing but instead create these pools of private capital.
Chang: I believe that people need support so that they won’t give up and that they will see that they are not going through this alone. But putting up this structure doesn’t guarantee success. The support is there but there are a lot more elements for an entrepreneur to be successful. One of the key ingredients is your character. An entrepreneur cannot be a “yes man" agreeing to all things that people say. They must have the character that questions what else can be done to improve things, find something that a customer wants. The entrepreneur cannot be one who just sits there and says to himself, “everything is great and there’s nothing you can improve on.”
Jobstreet has been around for 17 years. I also feel that we could have arrived to where we are sooner, say eight to nine years ago. Almost half of what I’ve achieved today was wrong and were mistakes and I had wasted efforts on. If I had good mentors, I could have shortened this process. Look at Mark Zuckerberg [of Facebook], I’m sure he didn’t know a lot of things given his young age but I’m sure he had a lot of support from people around him. Thus, entrepreneurs need to find the right mentors who will fit to help and guide you.
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