How are you different from a venture capitalist company?
In the West the whole venture/internet world is developed and it is very clearly defined. You are an entrepreneur, you are a young kid, you have an idea to start a business and there is an investor and he says ‘I am a guy with money, I will give you the money, and I will mentor you and guide you’. They are very clearly defined roles.
It was never part of our grand plan to combine investors and entrepreneurs, but we did. So not only do we start companies, we also invest in them and we drive them ... We call it venture equity.
There is private equity, where you take control of a company and you fix it, and then there is a venture capital world where you don’t take control of it, you leave it in the hands of the Mark Zuckerbergs of the world and you guide and mentor them. We are kind of in the middle. We help to get them to that early stage.
How is your product marketed/produced?
A lot of the products you see here [in Australia], are there [in Asia] 5 or 10 years later. The two or three [key] things we are doing are looking to the West to see what they are doing and then launching it [in Asia].
Within that, we have to localise products, localise ideas and start to tweak them. So I will give you the example of realestate.com.au. We essentially brought a direct replica of that business model to Asia (iProperty), but with one little important twist. In Australia, most of the property is known as a secondary property ... you would buy second-hand property, ie someone has lived in it before. In Asia, a majority of property bought and sold has never been lived in before. So, here [in Australia] a majority of the [marketing] money is spent by the agent, whereas in Asia it is the property developers spending the [marketing] money ... So the product is completely vulnerable to that segment of advertisers, developers, big corporations ... So you have to customise products.
How did you raise money and get your start-ups listed on the ASX?
Those willing to take very risky bets on start-ups are focusing on very large domestic economies – America, Russia, Brazil, China. In the rest of the world, it is hard to find someone to give you a lot of money for your amazing internet idea.
The early stage internet companies find it very hard to find funding in countries with less than 50 million people – the economics just don’t make it worthwhile or interesting to Silicon Valley. Australia, Malaysia, Singapore, and Thailand have this problem.
The first stage was that I met real venture capitalists in Silicon Valley, but they said ‘Sorry, we only invest in China, India ... because there are a billion people’ ... So we asked ‘How are we are going to raise money for these things?’
We said ‘Let’s go to Australia, we know that Australia understands the business model (of realestaste.com.au), and if they are willing to bet on mining stocks, maybe they will bet on this’. To get the iProperty IPO (on the ASX) done I would have met every broker in town.
Eventually, I found one broker who took it on ... who took me on a mini roadshow to meet a few investors. We went on a “pre-roadshow” ... they were not interested ... so we re-analysed it and said ‘Let’s look at realestate.com.au, let’s not look who are in it now they are so big, but let’s look at who invested when they were a 25 million dollar company’.
We [then] found a bunch of investors who had been in very early. They liked small companies, they liked early stages, and they liked very high risk. So we found those four or five guys, who were no longer shareholders and we met them. And every single one of them said they would invest tomorrow.
I went to those guys with something they had already seen work and make money, so the bet was not on the idea, the bet was ‘Do you think I know what I am talking about and can make it happen?’ So then it became a very easy sell.
