Message for Readers

If you find this blog post useful to your work or if you have interacted with me and have found my sharing helpful, you can pay it forward as follows :

1) Share what you know freely to all who are able to listen with no expectation of reward.

2) If you make big bucks, donate some of that to charity and give back to tech by becoming an angel investor or LP. You can learn more about AngelCentral at https://www.angelcentral.co/investors/membership


Friday, May 26, 2017

Finally SPH has a new CEO

So SPH has finally changed CEO. Board issued a statement thanking former CEO Alan for his contributions though if we read the quote, it just states what he did without numbers to back it up. Reading between the lines.. it's perhaps the best they can do.

I know how strong SPH position was back in 2002 in the media advertising space. And my general take is that they have grossly underperformed their potential last 14 years. But we don't make decisions on feel but on facts. So let's see if the facts support my gut.

SPH from 2002 ( year Alan was made CEO) to May 2017 has returned about 60% including all dividends. That's a return of 3.3-3.4% annualized. To see if that is a good return, let's compare against 3 metrics. First GDP growth between the same period. Second, the return of STI in the same period. Third ad spend in Singapore between the period.

First, GDP for Sg has increased 230+% between 2002 to 2016. If we assume same proportion spent on advertising, it's clear SPH has failed to keep its proportion of advertising revenue dramatically.

Second, STI index was 1786 jan 2002 and 3219 now. And if we factor in the 3% dividend yield, we are talking about 122% returns. More than GDP and again more than double SPH returns.

Third ad spend in the period grew by about 50+% from 1.5b to 2.3b or so. Harder to find accurate data here. But that's a 53% increase in potential top line for SPH even if they just keep market share of ad spend. But in 2002, SPH had operating revenues of 903m and in 2016 it was 1177m. That's a meager 30% growth in revenues when market grew 50% and GDP grew 233%! And I am being kind to use operating revenue as it includes property.

So the data does show that SPH has underperformed badly under the old Mgmt. As a shareholder briefly via ETF in the period, I must say I would be so pissed with mgmt if I really just held on to my shares.

We have a good quality and well intentioned business and political elite in Singapore. So I am asking our powers that be who own SPH to start calling a spade a spade faster. Not so much faulting the polite face saving departure statement but more of how we can allow such underperformance to last for 15 years. The board should have taken action and removed mgmt earlier.

SPH Mgmt shares is 43.05% owned by govt or govt linked entities with a further 9.5% owned by Dbs which is 30% owned by temasek. The rest are the 2 local banks and Great eastern. So changing CEO is not outright but well within the temasek/govt ability/role.

I really worry for singapore inc if we continue to allow underperformance to be allowed to fester like that. Much of our future economy is tied to our GLCs doing well and growing well while we groom and build up more locally owned enterprises from private sectors. So temasek and Singapore inc needs to be tougher on our CEOs! 

We see other worrying developments happening with Singapore Airlines, Keppel,SMRT, Comfort and Sembcorp Marine who are all being tested by disruption. For now, I still feel our GLCs have a huge important role to play and have proven that our Singapore Inc model works historically but if they don't have high standards of Mgmt to ride on disruption and end up all following SPH path, then I think we might have to admit more private citizen ownership of corporates is a more stable configuration for our future economy. I hope not because so far there are clear benefits to having strong state ownership of GLCs in area of unemployment and stability.


Btw, many people are joking about the incoming CEO. I don't know enough about NOL situation or container logistics market to judge whether he did a good job in NOL and so whether is a good choice or not. But I do know we should hold him tightly to performance of SPH moving forward. It's a tough job to turn around a slowly sinking ship but he needs to figure out fast and reflate those revenue sails. 

Tuesday, February 28, 2017

Why we need more startups!

(This is an op ed piece i wrote on why we need more Startups)

We frequently hear about startups being sold for many millions and how these deals make instant millionaires of their founders and investors. While it is clear how successful startups can benefit their stakeholders, it is less obvious how these establishments can contribute to Singapore’s economy.
Using examples from my experience building and running a job portal service, I would argue that there is a need for more startups here in Singapore – and that building a larger and stronger startup ecosystem here will benefit Singapore’s economy.

STARTUPS DRIVE INNOVATION
In Singapore, over 20 job portals sprung up between 1999 and 2000. During those years, revenue from recruitment advertisements for incumbent print media players was estimated to be between S$120-150M. By 2015, the total estimated spending on recruitment advertising including print had decreased to S$70M, of which approximately 60% could be attributed to online platforms. This was in spite of Singapore’s GDP growing by more than 300% over the same period.

In this regard, job portals have helped to create massive savings in recruitment advertising for employers. On top of cost efficiencies, job portals have also generated substantial time savings for jobseekers in the application process, and for employers who now use software to screen and manage applicants.

Without job portal startups, the incumbent print media players would likely have taken a longer time to roll out digital platforms to avoid cannibalizing existing products. They would likely have also charged higher prices on their digital offerings to maintain their revenue.

The development of online recruitment portals is a good example of how startups can disrupt industries and change consumer behaviour through new technology. In the process, such efforts also result in great economic efficiencies for the industry.

STARTUPS TODAY, SMES TOMORROW
Many startups will fail. From the pool of more than 20 job portals established in 2000, only 3 to 4 still exist today.

These high failure numbers are a natural feature of a healthy startup ecosystem. The job portal companies which survived are no longer startups, having grown into mid-sized enterprises employing around 50 to 150 staff in Singapore alone, making tens of millions in revenues and paying taxes on their profits.

Hence, by encouraging startups, we are essentially securing a pipeline of potential SMEs to represent ‘Singapore Inc.’ in the future. Moreover, by raising the quality of our startups, we can expect to see larger and stronger SMEs.

Furthermore, some of these high growth startups in disruptive or blue ocean fields will grow past the SME stage very quickly to become smaller-scale multinational corporations (MNCs). Razer and Garena are good examples of such companies that have taken much lesser time to spread their wings overseas.

TESTBED FOR LARGER COMPANIES
Not all startups end up failing or growing into SMEs. A number are also acquired by MNCs or Large Local Enterprises (LLEs) which are interested in the startups’ technologies and know-how or are keen to access their geographical or niche markets.

Many larger organisations find in-house development and innovation challenging, and have turned to acquisition and venture investments as alternative y to create new products or expand their customer base. For example, SPH acquired real-estate listing portal Streetsine a few years ago, as part of their plan to grow their property advertising business. Another example is Zendesk’s acquisition of chat service provider Zopim to boost their chat product offering.. Recently, we also observed the National Research Foundation (NRF) supporting local corporates such as CapitaLand, Wilmar, YCH and DeClout to establish and scale up corporate venture funds to focus on engaging startups.

BUILDING A STRONG ENTREPRENEURIAL WORK ETHIC
The value of a strong entrepreneurial work ethic also cannot be overemphasised. At JobsCentral, we hired more than 300 people over the course of 14 years. I dare say many of our early stage employees learned a lot more with us and became more entrepreneurial than if they had joined a larger organisation. These experiences served many of them well when they went on to work with MNCs and LLEs.

Startups provide an experience for their staff that is more akin to going on an adventure filled with ambiguity. Founders and pioneer employees are required to take on multiple roles and be comfortable with regular change.  In general, employees who have been through the startup journey are trained to think on their feet, are comfortable with changes and making decisions, and constantly seek to innovate and improve on their products.

These traits are invaluable to any company. Hence, having a vibrant startup landscape in Singapore will contribute to the pipeline of entrepreneurial and innovative talent who can support the future needs of the economy.

Netting the greatest benefits from a strong startup ecosystem would require us to bear in mind two key considerations, ownership and the respective role of government and the private sector.

OWNERSHIP MATTERS
We want to encourage more local ownership of companies, because locally owned companies are more likely to continue to base high value functions here and returns on capital will be better captured here. This applies especially to startups and entrepreneurs supported by government incentives, which tap on public funds contributed by tax payers.

JobsCentral was 100% owned by Singaporeans, and although costs were higher compared to neighbouring countries, we located our IT and design team here to tap on local expertise. At that time, most of our competitors had only sales and marketing outfits here. Likewise, I have noticed that the majority of the Singaporean-owned enterprises do base strategic and higher-valued operations here. And if an exit happens or if dividends are paid, there is a higher chance of profits and capital gains being retained and spent here since the proceed are paid out to locals.

However, even as we continue to support locally owned companies, we must continue encouraging foreign entrepreneurs to set up base in Singapore. Currently, we simply do not have enough good entrepreneurs and startup employees to build a strong ecosystem on our own, and we have much to gain from remaining open to new entrants and ideas from abroad and we should remain open to new entrants of new ideas and businesses here.

ROLE OF GOVERNMENT AND PRIVATE SECTOR
Startups do not operate in a vacuum and will only thrive with the involvement and support of both the public and private sectors.

First, the Government can help to catalyse developments in sectors like Information and Communications Technology (ICT). This can be through the provision of funding tools, the facilitation of special manpower needs, and encouraging partnerships between startups and MNCs, Government-Linked Companies (GLCs), the Government, and overseas partners.

Second, the Ministry of Education can look into incorporating entrepreneurship as part of the education curriculum, and promote entrepreneurship as a career choice to be on equal footing with other prestigious careers like doctors

Third, government bodies can encourage collaborations with local SMEs by considering contracts with SMEs that provide competitive product and service offerings.

Fourth, the Government can consider taking a light touch on some regulations in specific areas, to allow more room for innovation. The idea of a regulatory sandbox for the Finance Technology (FinTech) sector mooted by Minister Vivian Balakrishnan in May this year is a good start.

Lastly, Government can also influence talent development and the channelling of talent. For instance, the recent move to adjust engineering and ICT payscales within government is a good signal that we value such skillsets.  The promotion of STEM careers is another such measure.

I also understand that the government is currently advocating more startups in high value-added and deep technology areas such as ICT and Medical Technology. There are also efforts to encourage more Singaporeans to pursue an entrepreneurial career. Such efforts should continue and be reviewed regularly for them to remain relevant even with economic changes into the future.

For the private sector, established corporations can consider setting up corporate venture funds for investments into startups, organising hackathons to foster ideas and support commercialisation efforts, creating specialised startup procurement models and engaging in partnerships with startups.

Collaboration between larger private-sector players and startups should also be encouraged. Experienced professionals and successful entrepreneurs may also consider providing angel investments and mentorship to startup founders.

HOW DO WE KNOW THIS IS THE RIGHT PATH?
As with anything worth doing, we must define and measure our startup ecosystem. Success is not just about the number (value?) of funding rounds and exits, though those are important metrics. It is also about the diversity and quality of our investor base, the calibre of employees who choose to work in startups, and the number of startups that graduate to become the next SIAs of Singapore, creating jobs and wealth for our country as they grow.

It is my hope that in 10 years’ time, our startup ecosystem will be both robust and sustainable – a core engine of growth for the Singapore economy, with a deep pool of talented founders and employees. I believe our startups will play a critical role in advancing innovation and value–creation, not just in our country, but across the world.

Monday, February 20, 2017

Entreprenuers Need to Keep Learning too!

This is an article i wrote for the CFE which was published on Channelnewsasia. Below is the unedited version.

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A key thing that I discovered through my personal experiences and from my fellow entrepreneurs is that entrepreneurship is a learning journey, and many successful business owners embrace continuous learning as a way of life.


The founding team and I built JobsCentral, over 14 years from 2001 to 2014, into a leading regional job portal generating multi-million dollar profits and employing 150 full time staff. During this period, I had evolved from a hands-on, multi-tasking founder into a strategic and metric-focused CEO. I was also privileged to have made friends with many fellow entrepreneurs through organisations like Entrepreneurs Organization and ACE.

I strongly believe that having a positive attitude towards lifelong learning, coupled with a long-term, obsessive focus on business are attributes that separates successful entrepreneurs from the rest.

LEARNING BY DOING
The most apparent way to learn is to ‘learn by doing’. Many entrepreneurs picked up skills to build, to market and to sell a great product via on-the-job lessons every day. We all make mistakes. But we always try to iterate and improve for the next round. This can be applied beyond business to many areas such as people and self-management.

When we first started JobsCentral, staff were managed with an iron fist and the management team ended up micro managing. This resulted in our first sales team leaving the company en masse. From that painful experience, we learned to manage by focusing on clear objectives and balancing between micro-managing and giving autonomy to the staff.

This incident also gave us an opportunity to learn how to better manage ourselves. Some introspection is required to prevent us from repeating the same mistakes. However, many entrepreneurs with large egos find it hard to admit to their wrongdoings.

What we found important is for business owners not take criticism personally and to always refer to metrics to develop solutions.  For example, during the ‘group buying’ craze, we were sure that a ‘pay-per-course sign up model’ a.k.a. the ‘Groupon model’ would be very scalable. But after 6 months, indicators such as sales figures and usage metrics highlighted that traditional direct advertising models were more effective. In this situation, we admitted our mistake openly and switched our tack.

LEARNING FROM COMPETITORS, PEERS, EMPLOYEES
For entrepreneurs, on-the-job training and learning from mistakes will naturally be the longest and most painful way to learn. A faster and more effective way would be to learn from competitors, experienced hires and fellow entrepreneurs.

Many mistakes could have been avoided if there had been upfront consultation with or reference to books by people who have been there and done that.

The Information and Communications Technology (ICT) ecosystem is a great example  where knowledge gets spread rapidly via sharing sessions, media and online communication tools. I remember hosting visits for internet-based companies which wanted to understand how JobsCentral had built its strong consumer brand. Learning from our experiences helped these entrepreneurs build confidence and certainty in their marketing plans. Likewise, JobsCentral was able to negotiate a fair sale deal back in 2011, after seeking feedback from experienced entrepreneurs who had bought and sold businesses..

This sharing is not even across other sectors. Singaporean firms typically refrain from sharing information. While there is intense competition and secrecy among companies in the same sectors, there is nothing stopping entrepreneurs from sharing openly with non-competitive peers and helping each other grow.

I have personally found great satisfaction in playing a small role in helping fellow entrepreneurs build their businesses. Also, as Singaporean entrepreneurs, we must recognise that we need to operate on a regional and global stage to grow. So while we compete among ourselves domestically, we need to be mindful that we are also going up against overseas players.  It would be fantastic if we had open platforms for sharing and learning within our business community, to uplift the industries here – for instance, through our Trade Associations.

TRANSFORMATIONAL LEARNING
If we are able to learn from our mistakes, as well as the knowledge and experiences of fellow entrepreneurs, chances are that we will build a strong business.  However, to truly build a great business, more needs to be done.

For example, entrepreneurs need to understand and appreciate industry-specific processes and know-how, to be able to envision the future and achieve their goals. Our last 2 years in CareerBuilder was about transforming a global job portal into a HR Software-As-A-Service (SAAS) business.  Our management in the USA was able to observe next generation software companies like SalesForce and Zendesk and realised we would be better off in the long-term if we establish the direction to transform our company into a HR SAAS player. This insight was synthesized from studying SAAS trends and coupling that with in-house knowledge and current strengths in market positioning.

EVERYONE LEARNS DIFFERENTLY 
Each entrepreneur needs to find the most effective way to learn. I learn best by reading widely and talking to fellow entrepreneurs. The latter approach requires putting in effort to network and get to know people.  Organisations like Entrepreneurs’ Organization (EO), Young Presidents’ Organization (YPO), Business Leaders Alumni Club (BLAC), and Action Community for Entrepreneurship (ACE) are great platforms to support this. It does take some experience to figure out who and what to ask. 

Another effective way of learning for me is to read business/economy-centric newspapers, quality business cases and books written by successful entrepreneurs or functional experts. Besides acquiring information from these publications, entreprenuers need to also adopt a habit of self-reflection to apply our learning to ourselves and our businesses.

As entrepreneurs, we are always asking our employees to keep learning  and to improve themselves. Lets  also  walk the talk and take some time to reflect and embrace continuous entrepreneurial learning, too. This means reflecting on our mistakes, learning from peers, understanding our industry and having an curiosity about the world. There is always something new to learn!


Third Angel Investing Course on 27th April 2-630pm

Some of you may be aware but i have been conducting Angel Investing Workshops for people who are keen to invest and find out more about this asset class. Reception has been very good and we have trained about 56 people over the last 2 classes held in Dec last year and Jan this year.

This half day course covers comprehensively all the things we need to think about.

* How Angel Investments fit in your overall portfolio
* Ecosystem data
* Positioning as an Angel
* Evaluation of Startups
* Due Dilligence & Legal
* Post Investment Issues

Best of all, i use real data from our own portfolio as examples and to show what is really happening now.

And after the workshop, you will also gain access to pitch sessions of startups which are validated by more experienced investors. So far 2 pitch sessions have been organized.

Find out more at :

http://www.drwealth.com/angelinvesting

ps: DrWealth is the event organizer for the workshops and this is a paid event.