We got the opportunity to sit down and have a chat with the founder of KIFIT and Fave to share his experiences and expertise in the tech industry.
Could you give us a brief history of Fave?
Sure, Joel [Neoh] and I were working in Groupon Malaysia back in 2011 to 2015. Joel founded GroupsMore.com, then he sold it to Groupon. Back then, I was running the operations around Asia. In the second quarter of 2015, Joel and I both decided to start KFit, a fitness sharing platform because we had a non-compete clause with Groupon. We ran KFit for about a year, until the second quarter of 2016 when the non-compete clause ended, and that’s when we started venturing into other categories as well.
In the third quarter of 2016, we acquired Groupon Indonesia and we soft-launched Fave. We ended up buying over Groupon Malaysia and Groupon Singapore. In early 2017, Groupon Malaysia was rebranded into Fave Malaysia. We migrated the data, history, traffic and some of the employees into Fave. However, the technology and branding were home-built. In mid-2017, we launched Fave pay, and we have established partnerships with various platforms like Alipay, Lazada, and AirAsia BIG Loyalty and Boost.
Let’s take a step back to the beginning, what was the inspiration behind all this? What got you started?
There were multiple points where Joel and I wanted to do something of our own, but we were too preoccupied to put any thought into it. What triggered us to build KFit was when both Joel and I were offered two really attractive jobs when we were still at Groupon. On that same day, he asked me, “Hey, why not the both of us quit and start our own business?” We had no clue as to how all this will turn out, but we went ahead with it anyway. We told a few of our staff about our plans and the next thing we knew they all resigned and asked us, “When do I start?” (Laughs.) Funny story is we haven’t even resigned yet! Everything moved so quickly, I guess they saw our journey and they wanted to take the plunge with us together. Thus, we all resigned and formed the company the very next day. We didn’t have an office so we all gathered and worked at co-working spaces for a good 9 months. We only moved into an actual office when we had a 60 employee head count.
Did you guys secure any funding or was it all boot-strapped?
Initially, our project was all self-funded. The first external funding we got was when Joel announced that he was leaving Groupon and it went viral in a bunch of news media. The funding for that period started booming when the news of his resignation spread. I guess you can say people saw the potential in our business and they basically asked if they can invest in our business. We are thankful we managed to close a deal and raise a 7-figure sum in one day. I think the reason behind it was because the start-up scene was thriving. Take Grab for instance. In 2015 they raised USD250 million and became the first billion-dollar start-up in Malaysia. They got the trend going and people were more willing to invest.
The market was good at the time, but I think it has died down a little now. Anyone today, even if they were to do the exact same thing as we did, I don’t think the outcome would have been the same.
What were some of the toughest challenges you had to face?
There were many challenges. In 2015, when we were trying to scale the business, we decided to expand and launch in other regions like Korea, Taiwan, Australia, New Zealand etc. Sadly, all of them failed. I still remember my flight to Korea, to tell our staff about the bad news. I remember looking at their faces and telling them “I’m sorry, we failed”.
I think one of the reason why people may think that it is “easy” to make it in the tech business is because they don’t see what goes on behind the scenes. When you hear news of how much funds company A has raised, it’s typically the case where just days before their bank accounts were at the lowest. Generally speaking, the media don’t publish news like that.
What are some of the advice you would give to other people who want to start their own tech business?
A lot of it has to do with “what problem are you trying to solve in the market?” If their purpose is to get rich fast, then there are better ways compared to starting a tech business I can assure you. (Laughs.) The probability of success is maybe 1 percent. Money shouldn’t be the main priority if you want to start a tech business.
Starting a business is a long journey and you’ll have to be prepared to change your entire lifestyle. There are a lot of lifestyle shifts that are needed and most people may not realise this. We basically bet almost all our life savings into this without a clue as to whether we will succeed or not. I had countless job offers but instead I decided to venture into this. I was scared to tell my parents at first, because when we started, we had zero salary and yet we still had to cough out money to put into the business.
How competitive is the start-up scene like?
There are a lot of big players in the market such as Alipay, Grab, AirAsia, Axiata Boost, Digi, so on and so forth. They all have bigger market control, capital, and experience compared to us. The question is “How do we play?” How can we, a small player compete against these big players in the market? They may not necessarily be our direct competitor, but the market is more competitive than it looks. Think of it this way, for every meal that you eat in a restaurant, it’s likely that you’ll only use one app/platform to pay, that is if you transact digitally at all. So users either use one app, or none at all. And we have to figure out how we can be that “one app” against all the other bigger players.
Given the scenario where new, aspiring entrepreneurs are working 9-to-5 jobs and they are thinking about starting their own business, what is your advice to them? Should they go for it since you’ve mentioned that the market has slowed down in recent years?
I would say that it’s all about the determination of the founders. How much do they want to succeed? What does building this startup mean to them? Because they are going to face all sorts of difficulties and challenges, and in the end it’s all about their mental strength that is going to pull them through. There will be ups and downs and there will be days where they will cry. Many entrepreneurs suffer things like family and relationship breakdowns when they go through this journey as well. So, they have to always go back to why they wanted to start the journey.
Whenever I hear new entrepreneurs out, the goal for me isn’t to tell them the answers. The goal for me is to ask them enough question and provide them with different perspectives. They will come up with the answers for themselves after that. This is because the reason behind starting a business is different from individual to individual. Some started because of the money, some do it for the passion, some do it to build their profile, some do it to prove to their parents and so on.
The reason behind starting a business has to be strong. Of course, you might need to pivot along the way and the direction of approach can always change, but you have to have a strong end goal. Don’t be married to the idea, but be married to your vision and mission.
If an entrepreneur were to pitch to you about funding, what are the 3 aspects you’d like to hear?
For me, when I invest, I consider it a “sunk cost” because I invest as an “Angel”, so the things I look for may be different from professional investors like VCs (venture capitalists). I think being trustworthy is important. I will be willing to invest if I trust the individual. Besides that, I think having chemistry is important. Do we get along well? Do I enjoy engaging with you? It seems very subjective because everything is based on dialogue. Lastly, the both of us need to value-add to each other. For example, a gaming company approached me once and I saw potential in their business. However, I knew I couldn’t do much for them as I don’t know anything about computer games. I couldn’t add any value to their company. The best I could do for them is to be their friend and provide feedback and advice on certain aspects. The goal for me as an investor is to allow entrepreneurs to find their direction. Because when they are a small company, you’re betting on “that person”. You’re betting on the founder.
Lastly, what are the few common mistakes that you’ve noticed entrepreneurs making?
The first common mistake is the reason behind the idea. The reason as to why they wanted to start their business is not strong. The second “mistake” is that at different stages of the business, entrepreneurs are required to unlearn and relearn certain things. What it takes to run a company of 3 to 5 people is different than running a company of 50 people. You can’t have that mental block as an entrepreneur. The last mistake is that some founders are too hands-on with everything. They are part of every decision that is being made. But once they expand beyond a certain size, they can’t know everything, they can’t discuss everything, they can’t approve everything. They have to be comfortable with other people making decisions and letting them run it. A lot of founders are not willing to hire people who are smarter than them, because they might be fearful for whatever reason. But as an employer, you’d ideally want to hire smart people.