It’s been a bit of a rough week for South Africa. With SAA ailing, Eskom crumbling, and mayors falling, it’s a week that have…
This year I launched five startups from nowhere. Here, I’ll tell you how it happened; how I ended up venture building before I knew what a venture builder was, how I manage to get through two lawsuits in the space of six months, and how I raised US$7 million without telling investors what they were investing in.
How I began
Towards the end of 2014, the Malaysian property market was looking as dead as a dodo, (not good for my property development company), so I started looking for something to keep myself busy.
My last tech venture had been back in 2010 when I co-founded and ran ThinkProperty.my which became Malaysia’s 2nd largest property website in no time. 18 months after launch we had gotten acquisition offers from both iProperty and PropertyGuru and sold for the then highest publicly announced amount paid for a website in Malaysia.
Part-time job site
In November 2014 I was chatting with a Canadian expat, Fazila, and she mentioned to me that there were no good part-time job sites in Malaysia. After a quick check, I agreed and thought I might as well leverage my experience in classifieds. However, I couldn’t find anyone to start this business with. I wanted to start lean to see if it worked, so it was not worth bringing in an ex-investment banking colleague from the UK. The easy option was a 19-year-old part-timer at my property development company, Daniel.
Daniel had impressed me despite only doing menial tasks as an intern because he worked with so much passion and he always worked for the team.
Key takeaway: whatever you do, even if it’s a basic job, do it well. You never know who you’ll impress.
On March 2015, we launched Scoot on a WordPress platform. It was a disaster of a launch; the site was terrible. Poor Daniel — he had put all his savings into this and it looked like he’d lose it all. I wasn’t too bothered, though.
For several months after that, Daniel struggled to build a good tech team, and everything essentially grinded to a halt.
Key takeaway: have an awesome vested techie on board.
I got increasingly involved and helped to sort out the mess while Daniel went from dreaming about being the next Elon Musk to wishing he’d done what he was supposed to do — become a pilot.
In August 2015, a close friend of mine, Fawad, was about to leave Malaysia. He told me he had been thinking to start a payroll SaaS focusing on Malaysian businesses — a huge opportunity, as every employee in the country needed to have their payroll run. Fawad suggested that, because he couldn’t, I might as well do it.
At this time, Daniel was beginning to manage our jobs site well, so I thought why not. After going back and forth with Fawad, we finally agreed to do it as 50:50 partners. We would both put in US$ 75,000 to get going. The fact that Fawad was now highly vested because he had put down his own cash had greatly increased my confidence in the venture. Key players need to have skin in the game — the more the better. The business would later be called PayrollPanda.
Job site pivots
In September 2015, after months of struggling with our Scoot programmers, we pivoted towards mainstream jobs, as there was an obvious gap there. The pivot was slow because our tech team was useless. We fired the lot and relaunched with a new team on a more stable and scalable platform — node.js — advice we get from Fawad. All of our websites are now built on this platform.
T-shirt crowd-buying Site
In October 2015, I read about a T-shirt crowd-buying website in the U.S., teespring.com, that was approaching unicorn status. I thought we could do that for Asia.
As this was going to be the third venture, I thought we could give these a name and a website — LaunchPad. Soon after, this German PhD student from Melbourne University, Alex, sent me an email saying he wanted to work for the company. One Skype interview later, I gave Alex an offer and within a few weeks, he was here. Alex looked at everything objectively. With him, you couldn’t argue with facts — and the facts always supported him — I wasn’t sure if it was his academic background or because he was German. Probably both.
Around the same time, David, a lawyer, also contacted me. He was interested in a new venture after selling his business in China. David was a shrewd Chinese businessman who would blurt out whatever he thought.
These two guys would go on to co-found Teeyoot, a T-shirt crowd-buying website to dominate Asia.
Omid, a nutcase programmer I’ll talk more about later, got the website up and running within months. We got off to a cracking start, with sales going through the roof. I was already deciding the color of my Lambo Huracan — probably yellow — while Alex picked a Ferrari and David was getting an S-class.
The same month, we started a new ad campaign “Don’t use JobStreet, because everyone else is, use Scoot instead.” Comparative marketing like this is a no no in Asia, but we checked and it seemed to be legal, so we thought heck, let’s do it. We got tons of sign-ups; business was suddenly looking good.
A few weeks later we got a letter — JobStreet was suing us! They really didn’t have a leg to stand on, but going to court was just not worth it. We played hardball, but we began to shit ourselves because we realized they could bring in defamation and that’s really serious in Malaysia. We begrudgingly apologized, they accepted. Phew! On to the next battle.
In November 2015, we were getting applications from some incredible grads. One of them was a small Chinese Malaysian chap, Pei. He had one heck of a CV, but that’s not what I liked most about him. What I liked was that he showed a real passion for tech startups.
I hired him but was not sure what for. He played around with some ideas for a few months and later convinced me that we should make an Asian version of Wahanda, a beauty booking site. But then we read that Rocket Internet had some big success with the same model in South America, and was about to launch in Singapore and would probably come to Malaysia soon. We dropped the idea as fast as Ben Johnson on steroids.
Small startups can do amazingly well against much bigger competitors but any competition is bad. Best to find an easier route to success.
Pei then started work on Menyoo, a restaurant menu on your phone. But while the idea seemed great, getting users to download the app and engage with it was just too expensive. So, we morphed it into a loyalty app SaaS for retail, Mulah. The entire pivot was Pei’s doing, not bad for a kid fresh out of university.
Key takeaway: keep lean, keep pivoting, keep moving.
The same month, I met with a Singaporean VC who mentioned that she liked our venture builder model. I nodded my head, but all I thought was “what’s a venture builder?” I Googled it and realized that LaunchPad was indeed a venture builder. That’s cool because it’s nice to know we’re not the only ones doing it. I was initially concerned about starting more than one business at a time, but each venture and, more importantly, every venture builder was completely focused.
My learning was on steroids because I was involved in several ventures. I got daily reports from each business, stepping in whenever there was trouble. That, together with our highly vested venture builders and the way each venture got support from centralized resources were why it all worked.
Fundraising round 1
In December 2015, I had a chat with two of my property investors. I started going into the details of our ventures but they told me to stop wasting their time and my breath. I thought I had lost the pitch, but they said they were investing — not in my business, but in me. They agreed to put in US$1 million into the early stage ventures. That was nice because up until that point it was pretty much all my money.
Key takeaway: just like these shrewd tycoons, don’t focus your investment decision on the business plan; that will keep changing. Focus on the guys you’re investing in; you’ll be riding with them the whole way.
In January 2016, the teams were growing fast. We were around 30 staff and we launched a new office near our old one.
Paperless company secretary
In February that year, we decided to set up the first paperless company secretary service in Malaysia. After a few months, we got all the legal approvals and launched the site. Two weeks later we closed it down. The company secretary space was too competitive, and we were better off focusing our efforts elsewhere.
Key takeaway: test the market with a dummy site to gauge demand before you do all the hard work.
Time tracking software
In the same month, Fawad realized that PayrollPanda would be a more powerful product with a strong time-tracking software built-in. But it could also be a standalone business, and instead of going for the Malaysian market, the world would be our oyster. We named it Jibble.io. Frankly, I didn’t understand why this was so exciting to Fawad, but I had a lot of confidence in him so I backed him more than the idea. Fawad became the CEO of this.
T-shirt crowd-buying site shuts Down
In April 2016, Teeyoot closed down. No Lambo, Ferrari, or Mercedes S-class for us. Essentially we were making US$20,000 of sales per month early on, but the T-shirts were sold at cost. When we raised the price to make them profitable, we just couldn’t shift the damn T-shirts. We built this amazing platform, spent US$250,000 really fast, but our assumption on the price elasticity of T-shirts was just wrong, painfully wrong.
Key takeaway: when importing B2C business models from the U.S. to Malaysia, revenues will not be 36 times smaller (which is how much smaller Malaysia’s GDP is vs the U.S.), but smaller. A US$1 billion U.S. business could be a US$1 million business once in Malaysia, and that might be too small to sustain. I think we’re going to see a lot of tech businesses in Malaysia, some that are seriously funded, fail due to this oversight.
In May 2016, Alex and David were shitting themselves because Teeyoot failed. It was their first failure in life and they were both like fishes out of water. They needed a new venture, but we were thin on ideas — David even suggested we make special selfie sticks for Pokemon players. Did he really give up a career in law to sell selfie sticks? I actually asked him that, and he gave me a blank look, which I thought meant “yes, if we make some money from it.”
Key takeaway: a job is heaven compared to running a failing business.
But I had a new idea and ran it past Alex and David. Servicing your air conditioner is a massive pain point in Malaysia and there wasn’t one large aircon servicing company in the world. They reluctantly agreed to give it a go.
Weeks later, we had two desperate entrepreneurs — a PhD dropout and a lawyer — going into houses and cleaning up aircons and then chasing aunties for non-payment. (This was so they could learn the business.)
We realized it was a great cash flow business, but scaling would have its challenges. Alex and David told me it wasn’t going to work.
Key takeaway: business is brutal; your degree and law certificates don’t mean anything over here.
Alex had barely dropped out of university and he’d failed twice at business already. Surprisingly, he didn’t accept a really great management consulting job offer but picked himself up to try again. He is set to do very well. David, on the other hand, got a really good job offer elsewhere (he is one tough negotiator) and I advised him to take it.
Fundraising round 2
The same month, I spoke to my old-school tycoon investors and told them that apart from our T-shirt business, the startups were looking good. They asked a few questions and decided they wanted to give US$5 million more of funding, which was more than I wanted and a bit of a shocker.
But their investment was mostly in Malaysian property, which I needed to liquidate. To get some short-term liquidity, I got some investment bankers to chip in, taking it up to US$6 million — but did these guys want details or what!
Key takeaway: the bigger the investor, the less details they want.
Job site relaunch
In April 2016, after a painful few months, we relaunched Scoot. But we were still plagued with technical issues. We transitioned to a new team headed by Omid. He worked 18 hour days, seven days a week and was impossible to work with. He fought with everyone non-stop, but he was damn good and passionate about his work.
Omid sorted out the site with his Iranian buddies and our guy, Farzan. Within months, the site was solid. Finally, our tech team was helping rather than killing us. Omid later became the CTO of the business. Over the next month, we got more sign-ups than in our first year and every month until now, things have accelerated rapidly.
Key takeaway: There are no rules when hiring. Omid should have been fired weeks into his job, but he delivered. Managers must bring out the best in people and work around their weaknesses. However, managers also need to be brutal with poor performers. Fire them fast; one poor performer will lower standards and attract others of the same kind.
The same month, things began to look great for Scoot. But then we got a letter from Scoot Airlines’ lawyers who threatened to sue us and insisted we change our name. We played hardball, but they played harder — they are Singaporean, after all.
We were very likely to win because they didn’t have the trademark for our category nor did they have any flights into or out of Malaysia. However, a fight in court would have seriously distracted us and would take up cash. For the second time, we decide to give in to legal threats and changed the name.
We didn’t want to destroy the brand, and all of us were too stupid to think of making a very slight name change until our lawyer, Mr Gan, suggested “Skoot.” We felt like kissing him, and the name was changed — most of our users didn’t even notice the difference.
Key takeaway: big bullies tend to win.
Payroll team strengthening
In February of that year, a Dutch guy, Toine, had been trying to get me to invest in his startup, but after that, he told me that he was no longer involved in it. I was a bit surprised as I thought it was making great traction. During our investor meetings, I thought this guy was the one in the team that I would really like to work with. But now, here he was, jobless! It was like I had my fishing rod in the water but the fish jumped out and landed itself in my basket.
I told him to come by my office after the weekend. The next Monday, to my surprise, he turned up at our office and tried to make himself useful. A few months later he became a co-founder at PayrollPanda.
We had another hire from KFIT, who joined as a product manager. Suddenly, the team looked very solid.
Hard work pays off
Over the next few months, a lot of things started to fall into place. I could feel that we were reaping the rewards of our hard, chaotic work. Things were less stressful at Skoot, which was having a great run. (1,000 job seekers joined the site every day.) Fights with Omid went from daily to weekly, and now it’s even approaching monthly.
We launched PayrollPanda, which hadn’t lost a paying customer thanks to incredible customer support. We also launched Jibble.io, which was growing so fast that Fawad was having a hard time keeping his hair on. And Mulah successfully launched with paying customers and was growing exactly as per projections.
Key takeaway: there is no substitute for hard work.
Iranian job site
An Iranian guy, Mahmoud, joined us, and I saw leadership potential in him. (What I’m trying to say is he was the only Iranian that had the balls to stand up to Omid.) He headed a team to try an Iranian version of our job site, but soon after we realized it was distracting us. Omid needed to update two sites instead of one and he was struggling despite his 18 hour days. We needed to focus; it was a tough decision halting a good potential venture.
Technology energy savings initiative
In June 2016, this big Aussie guy, Clay, who had successfully co-founded and run the leading social media service for hospitals in Asia and Australia, walked into our office. He looked around and said “I could work here, I’ve not seen a place like this in Malaysia,” and decided he wanted to work with us to launch his next venture. I was like “heck yes,” but I told him I’d have to think about it so I wouldn’t look too eager. I later found out that Clay was once Australia’s karate champion, so I now make sure I have any disagreements with him over WhatsApp.
Anyway, Clay came up with some cool ideas for the first few weeks. Unlike most of the team, myself included, he wasn’t looking to copy existing ideas from the West. I’d ask “which app from the US are we copying?” and he’d say “this is my own idea” after which there was usually a long uncomfortable silence as my next few follow-up questions didn’t apply.
A few weeks into his stint with us, Clay was driving a new technology energy savings initiative, rolling out across Malaysia and Singapore. Clay pulled in Alex as a co-founder, who knows how to crunch numbers and analyses incredibly thoroughly. It was a great result.
And that gets us to today
In all this mess, we’ve spent US$1.5 million, and a few senior investment bankers have put in their personal money that value the five businesses at US$8.5 million. So that’s a great indication of serious value add, pretty damn fast. If we play our cards right, this may be small change in what we could add going forwards. The journey has, hopefully, just begun.
Feature image via Tech in Asia.