We asked our network in Thailand about the go-to mentor for startups in Thailand, and they all unanimously pointed us to Paul Srivorakul. And why won’t they, Paul moved back to his homeland Thai after graduating from UC Berkeley and a short stint at the internet company AskJeeves in 2000. Since then, he built and exited three companies from Thailand. He started a fund called Ardent Capital, and is now building his fourth ambitious project.
We catch up with him and delve deep into his 13-year journey of building companies in Thailand. Edited Excerpts:
Beginnings of an entrepreneurial journey
In 2000 my brother was working at Apple in the US and I was with AskJeeves. That was our first experience with advertising and search. I was born in Thailand, and brought up in the US. I always wanted to come back. I quit my job, and came back to Thailand along with my brother who too had quit his job at Apple.
We landed in Bangkok, and just a simple search exposed the bad advertising on top websites in Thailand. In the US, advertising got to a level where the ads were targeted and the results were actually measurable. Thai has not yet seen the new medium advertising opportunities. That is when we wanted to do something around advertising in Thailand. However, right from the beginning, we were clear that to get into advertising, one needs to start with the basics - learn content creation, web design and development, build microsites etc. We self-taught ourselves everything. We began our entrepreneurial journey in Thailand with web development, design and content creation.
Cash strapped and being resourceful
We had just 4000 USD in our credit cards combined. And we had to make it last. During the dot com bubble in the US, people would work for a large company for 3 days a week for free in exchange of desk space wherein they could work on their startup for the other two days. We cracked a similar deal with a large media company in Thailand while we were just starting out. The great thing was that we would bring clients to the office, and they would assume that the entire office was our office. This was a 100 people media company. So strategically and tactically, we were able to close very big clients very quickly. Long story short, we outgrew that media company within a year!
First Big break and genesis of Newmedia Edge (acquired by STW Group)
We got our first big opportunity when we got in touch with Microsoft for some space on MSN, they did not get back to us for two weeks because they did not have any sales people in Thailand. After pestering them a little bit, they got back to us asking if we could refer them in Thailand. That was our first real big opportunity. We were able to scale that business from 150,000 USD a year to 2.5 million USD. After scaling the business in Thailand, we got the exclusive right to Philippines as well. And that business taught us a lot. We scaled it to a 25 people team, we did content, business development, advertisements, everything to do with CMS and a whole lot. That is how we stumbled upon the idea of a digital media agency, and that is when we built a company called Newmedia which was the first real company we built, which we later sold to a company called STW Group from Australia. Along the way we did many partnerships, one with an agency called Edge in Vietnam, we merged with Edge to create a bigger entity called New Media Edge.
Trying to achieve defensibility & chancing upon the ad network idea Admax (acquired by Komli Media)
After a while at Newmedia, we were able to lock down Yahoo!l, in both Indonesia and Vietnam. We knew that these 800 pound gorillas would wake up one day and do the business themselves. So we wanted to build a defensive strategy, and that was the beginning of ad network business called the Admax. For that ad business, we were able to raise roughly about 12 million USD. The first round was from IDG Ventures Vietnam who came in first with 4 million USD. The vision was with Admax, we were going to build the ad network for Southeast Asia. We grew that business to about 250 people and we were managing many websites in Southeast Asia. The goal was not just to be an ad rep, but build and scale the technology for the ad network. We expanded to 6 countries along with Singapore. We went to Singapore and wanted to get regional revenues from there, because all the large companies have their offices in Singapore, and they want to book media properties across Southeast Asia, which was a very difficult market back then due to different languages and difficult payment structures mainly. We grew that business, and that business was eventually sold out to Komli Media.
Third business Ensogo (acquired by LivingSocial)
We learned a lot from our Ensogo business and having exited that to LivingSocial. We raised 3 million USD, and we exited within one year from then. We were a 450 people team then, we were scaling pretty aggressive, but the more important piece of that was, we finally learned the holy grail of advertising at Ensogo, we could measure every single ad that we placed and we could measure the conversations of each and each dollar spent. And we were doing this for very high end brands ranging from L'oreal to McDonalds.
I strongly believe that we knew how to build our management team. For us the secret was to get good people in the very beginning. We also managed to hire good people from different regions early on, and that was very important in taking the business to the next level and to gain confidence of the investors. Especially in Southeast Asia.
Raising too much money - big mistake
To be honest, I think we raised a lot of money in the advertising business and that forced us to exit pretty early, if we had raised money the right way, we would have been very dominant in these regions by now.
On starting Ardent Capital and then jumping to entrepreneurship again with Project aCommerceI was helping Adrian and their team here look at different investments, and helped set up Ardent Capital. The biggest problem we had at Ardent Capital was finding good companies in e-commerce to invest in. And the problem was everyone had the same problem, everyone wanted to raise money to solve the logistics and delivery problems. And if you fund one company they were planning to put 75% of that money into logistics. The story was same with all companies. The whole ecosystem that needed the infrastructure, it was when we realized that we need to start “aCommerce” where we tackle everything from logistics, COD, supply chain and deliveries, and make it series for brands and e-commerce players to reach customers. The founder of Zalora joined us, he had the same problem in Zalora. Solving the problems of logistics and delivery was becoming a nightmare.
At Ardent Capital, we really wanted to find an entrepreneur that was passionate about solving this problem, but we could not. So I decided to jump out as a group, and solve this problem. That is how aCommerce was born in Indonesia, Philippines and Thailand.
Where does the drive come from
We love hard problems. In fact the harder the problem, the bigger the opportunity. Anyone can launch a website, anyone can launch a mobile app, but these markets also are extremely competitive and have very low defensibility.
What do potential acquirers look for in startups from Southeast Asia
When local companies are trying to buy you, they do so because they do not want to build what you are building. But the case is different when it is a regional or a global company looking for acquiring a startup. Southeast Asia is a very hard market, it is very hard for anyone to expand here. The large companies do not come here to buy your mobile or web app, they are going to buy a 450 people team, a 200 people sales force, and a large network of publishers/customers etc. This helps build defensibility. Big companies from the West will not buy you for your tech. Focussing on operations and sales and marketing, helps build real defensibility. Startups have to think not just about product, but also about business as early as possible.
Avoidable mistakes founders make often from his own journey
One must thing to do is to have equity discussion with other founders. The number one killer of a startup is that you don’t assemble a right team at the very beginning. Putting in place your equity structure and being very transparent at the beginning is very important. Having a structure so that you can protect yourself from the internal problems and personal issues is important. We had to deal with a lot of those issues early on, being able to tackle those issues from the get-go is very very important.
The three most important things are the team, the product and the market. The product and the market can be a function of the team. So team is extremely important. In Southeast Asia, you have to very patient because market itself is very immature, so you need to grow with the market. Scaling too aggressively, raising too much money or growing too fast is very important for a startup, but it is also important to have a longer-term plan. While it is important to be aggressive and impatient, it is also important to be long-term thinking and never losing the sight of macro level picture. Sometimes, startup founders tend to forget this. So, keep your 10 year plan at least.
When entrepreneurs do not start thinking bigger at every phase of their journey, they lose out what they already have.
On Thai startup ecosystem - not many senior seasoned founders
Most of the people who want to do startups in Thailand are young, but there are not enough number of senior people who know how to build a team, motivate a team, discipline a team, fire people when you need to etc doing startups. All these things come with experience, and more experienced guys should become entrepreneurs.
Audacious Goal I am pursuing now
With aCommerce, we am aim to build the infrastructure for e-commerce in the region and help brands connect directly to their consumers. Anything from delivery and all the way up to advertising, we want to be the one-stop for brands coming to the region. Our vision is to go IPO in the next 5 years, build our stock value and consolidate all the ventures working on these problems in this region. I am very excited about the road ahead and the opportunities that are ahead of all of us!
More about Paul http://www.linkedin.com/in/srivorakul
We wish Paul all the best as he forges ahead to build the infrastructure for e-commerce in the archipelago region, and we shall bring you regular updates from him.