This article first appeared in Wealth, The Edge Malaysia Weekly on July 26, 2021 - August 1, 2021
What do Facebook’s Mark Zuckerberg, Airbnb’s Brian Chesky and Spotify’s Daniel Ek have in common?
They are the millennial founders of successful tech companies who made their wealth in the past decade. They are also notorious for disrupting traditional industries with technology, drastically changing the way people socialise, consume entertainment and travel in the digital age.
While Malaysia is not known for producing unicorns (private companies valued at more than US$1 billion or RM4.2 billion), it does not lack young tech founders with powerful drive and ambition. Among them are millennial founders who have their eyes set on creating as much impact as their Silicon Valley peers.
Some of the well-known individuals who have already exited their companies are Khailee Ng, who co-founded social e-commerce platform GroupsMore and sold it to Groupon in 2011. Ng also founded the social news website Says.com, which was merged with Catcha Media Bhd in 2013.
There are many others who are still actively building their companies. They include Eric Cheng, CEO of Carsome, the region’s largest used car e-commerce platform; and Fong Wai Hong, co-founder of StoreHub, which provides operating systems for businesses. Both companies are among the most well-funded tech start-ups in Malaysia.
These founders share a few common traits. They like solving problems using technology, their families are generally in the middle- or upper-middle income bracket, and they were not necessarily the top students in school. Their companies are still in the growth stage, so they are raising capital to grow aggressively.
In fact, Carsome is rumoured to be seeking an initial public offering (IPO) in the US, which could be via a special purpose acquisition company. In July, it acquired Australia-listed iCar Asia Ltd together with Catcha Group, which will become a shareholder in the Carsome Group.
This deal elevated Carsome to unicorn status, although the company did not comment further on the specific figures or transactions used to justify the valuation. Carsome completed its Series D fundraising last December, closing the round with US$30 million. The company has operations in Malaysia, Thailand, Indonesia and Singapore.
Meanwhile, StoreHub raised US$8.9 million in its most recent funding round last year from Temasek’s Vertex Ventures, Accord Ventures and other investors. It currently serves more than 15,000 stores in over 15 countries.
Eric Cheng, founder and CEO of Carsome, comes from a background much like some of the prominent Silicon Valley tech founders: He dropped out of university while pursuing an accounting degree, with hopes of making it as an entrepreneur.
His decision to drop out was not accepted readily by the people around him, who warned him that without a degree, it would be hard to get a proper job.
“I realised that I really wanted to get out of college and go to work, as I saw work as the next chapter where I could really pursue the things that I wanted to do,” says Cheng.
“I became a college dropout and I wasn’t the smartest kid in the family. Once, my mum told me to just go find a job out there. You could hear how much disappointment was in her voice.”
Carsome is his third company, coming after two short-lived ventures and a long stint working for a digital media company. But Cheng persevered, driven by his desire to create something impactful. It was also timely that he joined the workforce just as traditional industries were being disrupted by technology, creating opportunities for him.
“In 2008, I was very fortunate to land a job in an online advertising firm called Innity. At that time, in the mainstream advertising industry, print, TV, radio and billboard advertising was being disrupted by digital advertising,” says Cheng.
The emerging digital advertising industry was hungry for talent and willing to train new people. “I was one of those people, and that’s how I built my career to eventually become the director,” he says.
Cheng eventually found his break as an entrepreneur in 2015 when he co-founded Carsome, after observing the difficulties that people face in selling and buying used cars. He realised that the market potential for a tech solution addressing this problem was huge.
“I don’t see myself climbing the corporate ladder. I see myself starting a company that would eventually become big. I didn’t dream of making Carsome the largest used car marketplace in Southeast Asia, but along the way, we saw the potential,” says Cheng. This vision also reflects Cheng’s views about wealth. Building something impactful and contributing to society is his priority.
“Money is something that allows you the freedom to pursue things but it’s not the reason why I’m doing all this. I want to create solutions that I can feel very proud of, and wealth is something that [is incidental],” he says.
One could say that Cheng is fortunate in that he joined the advertising industry just as it was being disrupted by technology, and he spotted the opportunity for technology to do the same for the used car marketplace.
Compared with the rags-to-riches stories of entrepreneurs of the previous generations, is becoming an entrepreneur easier or less perilous now owing to the proliferation of technology?
Cheng says the widespread availability of information has made it easier for people to generate new ideas. That has made subsequent generations smarter. But it still takes hard work, he points out. Having more ideas also means more competition.
“It’s very easy to be the first but it’s hard to be the best. When it comes to business, it’s about execution — how you form your team, scale and stay consistent. On a personal level, it’s about always learning, absorbing new knowledge and trying to improve yourself,” says Cheng.
Undoubtedly, more funding from venture capitalists and investors for tech start-ups is available now as well.
The way tech start-ups grow is also different from traditional businesses. Bricks-and-mortar businesses tend to be asset-heavy and focus on profitability. Tech start-ups, meanwhile, tend to be more asset-light and aim to grow aggressively.
“For our kind of business model, it’s about capturing the market opportunity. We can turn profitable any time by just staying where we are. Most of our money is spent on growing our market. The used car market is very fragmented, so there is potential for us to capture the market at an accelerated pace. We decided to step on the pedal and go for growth,” says Cheng.
It was only in the last two years that Cheng had more financial flexibility to invest his savings as company growth stabilised. Most of his investments are in traditional assets such as unit trusts and shares.
Cheng also invests in private companies and start-ups, as he is eager to pay it forward. “I believe we have a lot of good talent in Malaysia who can make it big. I want to play a part in driving their growth,” he says.
He has not invested via newer vehicles such as equity crowdfunding, cryptocurrencies and robo-advisers because he has not had the time to explore them.
“I’m also not the kind of person who spends a lot of money. I still stay in the same place as when I was in high school. I do spend money on food, though. Other than that, I try to invest my money in areas that make sense,” says Cheng.
At the moment, he is fully committed to making Carsome the go-to platform for owning a car, covering the after-sales maintenance, financing and insurance renewal processes as well.
“We aim to digitalise the whole process and make it convenient. Personally, I want to continue the pay-it-forward mentality and cultivate the ecosystem in Malaysia to help more people pursue the same path as me,” says Cheng.
Fong Wai Hong calls himself an accidental entrepreneur. He graduated from a university in Australia late, having to take an extra semester because he failed a few subjects. Subsequently, he wanted to take a six-month “gap year” from job hunting, but was stopped from doing so by his uncle.
“My uncle was like, you should be a good Asian nephew and work for me,” says Fong.
So, he helped his uncle list a few items on eBay. This eventually turned into an e-commerce business called Ozhut, which operated out of his uncle’s garage in Australia and sold products ranging from motorcycle gear and kitchenware to optics equipment.
This was in 2008, when e-commerce was growing in popularity in Australia. Eventually, Fong racked up A$5 million in revenue and sold his stake in the company to his uncle.
With that first bucket of gold, Fong moved to China for six months to learn Mandarin. It was during that time that he came up with the idea for StoreHub, which aims to equip small businesses with digital tools such as point-of-sale systems. In 2013, he returned to Malaysia and started the company with funds left from selling his e-commerce business.
Fong does not see starting a business as a means to wealth creation. He took this path because he had a passion for problem solving. He also had good technical skills and happened to live at a time when technology had become more accessible.
“Technology is a tool that gives you leverage. In the past, your ability to exert a certain amount of force was limited by how hard you could punch. But with a hammer, you can create three times more force with the same energy. That’s how modern technology works,” says Fong.
“When I first started the e-commerce business, it was because I understood how Google operated and was able to create leverage, which led to sales. When technology is used properly, it can be a powerful enabler.”
Fong had encountered a problem for which he wanted a solution when he was travelling in China. A store owner he knew asked for his help in troubleshooting a software. “I spoke to the engineers who built it and told them to improve on it. But they said, ‘Why don’t you train your staff better?’ It got me so mad. I wanted to solve this problem and find solutions for offline retailers,” says Fong.
All businesses, he believes, will need to be online. But big companies with resources are ahead of the game because they know how to utilise technology. So, he wants to close the gap by helping small businesses leverage technology.
Money, to Fong, is just a tool. And, at this point, he is consumed with his goal to digitalise small businesses, which requires capital. He is also driven by the scale of the problem he wants to tackle.
“If you want to solve a problem, solve a big one. The saying, ‘with great power comes great responsibility’, is true for those of us who are privileged enough to have the ability, intelligence and resources to solve a problem,” says Fong.
Fong comes from an upper-middle-class family of professionals. His mother was an IT professional in a bank, while his father was a ship captain.
“They came from poor backgrounds. My dad didn’t go to university and started working at 18, while my mum came from a family of rubber tappers,” says Fong. Their hard work allowed him to study in Australia for almost a decade.
But deciding to become an entrepreneur made Fong an outlier in the family. “I’m probably the first business person in my extended family … I have one cousin who ventured into business but he failed a lot, so he was always seen as the black sheep of the extended family. But I really like him and he helped me a lot,” he says.
It was also a risk he took, given his unconventional background. He studied media, communication and philosophy with the aim of becoming a journalist, an aspiration he soon dropped.
“If anything, I played a lot of video games. Because of that, when I looked at my first business, it felt like a game to me. I was learning new skills and applying them in the real world. A lot of the skills I picked up from playing games competitively were transferable to running a business,” says Fong.
Some may observe that having the right skills at the right time — when the industry is ripe for disruption by technology — has allowed entrepreneurs like Fong to succeed more easily.
Fong believes it is not easier. However, success has come earlier for those who are capable. Technology lowers the barriers for starting a business, but it still requires a lot of hard work, creativity and networking to be successful.
“The big difference is that value is more instantly recognised because of technology. For instance, you don’t have to depend on traditional media to get exposure. You don’t need to sell your product through supermarket chains. You can sell it directly to customers,” says Fong.
“People used to say that business is about who you know as opposed to what you do. That is no longer true.”
On a personal level, Fong says he lives rather simply. “I’m a gamer, I don’t party hard, I don’t spend money on clothes. Someone once commented that I have more in-game clothes than real-life clothes,” he says.
The one thing he does splurge on is good food. “But good food isn’t always expensive. The best burger is not McDonald’s but a small burger joint in Kota Damansara,” he notes.
Interestingly, he does not invest in unit trusts or real estate. “In fact, my first worst investment was in real estate,” says Fong. Back in 2008, he wanted to invest in the shares of a tech company in New Zealand. Instead, his mother convinced him to invest in a house in Australia.
“Eventually, I lost a hundred grand on the house, while the shares of that company went up from one dollar to fifty dollars. From this experience, I learnt that I have to invest in the world I believe in and what is going to make that happen," says Fong.
That is why he mainly invests in shares of tech companies and cryptocurrency projects he believes in. “As opposed to speculating on currencies, I invest in cryptocurrency projects that are meaningful and have a positive force in the world,” he says.
As for StoreHub, Fong is focused on growing the company. “We can be profitable whenever we want. The balancing act is how fast we want to grow and when we want to be profitable. For us, we are growing really fast and by doing that, we can attract the right types of partners and investors.”
His immediate goal is to develop products that provide real value to merchants and to make the company a regional champion. “I believe there is plenty of talent in Malaysia and the region for us to be a world-class company. We just have to dare to believe we can.”
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