Buyers and Builders
00:14:48 · Mikk, Eric Tan
[00:14:48] S0: It's such a great idea which you brought out. I remember when I was visiting those traditional business owners here in Northern Europe, every time when I was talking to the founder, I said, if you were me or if you were going after some of your competitors, who would they be and why? And you hear such great stories about your their competitors and how they think of of the business because they had sometimes fifteen, twenty years of experience. And they they just give you all the all the like, a great overview of of the market and the companies, and the the the pipeline is just getting bigger and bigger. [00:15:26] S1: 100%. 100%. [00:15:27] S0: Now, again, we met in Stockholm, and we were talking... You've been there for many, many years. So... And those companies there, some of them are buying 10, 20. They do 10, 20 acquisitions a year. They've been doing that for... Some of them for twenty years. What are the lessons? Why why you keep going back there? I mean, what I mean in here, when you're flying home, what are the conversations between you and Eric? For example, what was it this year which you learned? Because you have such a long trip back home. So what were the lessons and what you immediately start to implement in your own business and group?
00:16:12 · Eric Tan
[00:16:12] S1: I think that's a good question. The reason why we like going to the conference is it's just a congregation of all the people that have been there, done that, of various stages, and why that is great is then, we can kind of juxtapose ourselves against who have been in our shoes like a couple years earlier, because it's harder to look at, say, someone like a leaf code has been there, done that for the last twenty, thirty years, and try to learn from where they are today, but we could find someone that has been there, done it in the last five, seven years, it's a bit closer to someone like a chapters group, right? And learn from what they've been through in the recent years. In particular, I think over the years, there are many things, right, like, that we learn, being more disciplined and walking away from, you know, that deals that is too expensive, operating in a more decentralized environment, you know, accepting, accepting that, you know, maybe not every deals has to be integrated and all kinds of stuff. I think this year in particular, for me personally, is really building a culture in a decentralized operations. And why I say this is particularly pertinent is because we did eight deals in the last eighteen months. And I think by any standard is quite a lot of companies to to to be integrated into a group within a short period of time. And and and finding a balance between adding value as a new owner or new partner to the business versus letting people doing their own thing is a delicate balance, I think, that we're trying to strike. Right? Like, we don't wanna be a partner that doesn't do anything, but at the same time, we don't wanna be a partner that comes in and tell them what to do and finding a balance in a time where the world is more disrupted and more chaotic than ever, I find that quite challenging. So there's deglobalization that we see everywhere. There's war coming out. There's AI becoming front and center of work and trying to make sense of everything, but at the same time, not come in a way and telling people what to do and building a culture where everyone can navigate and be nimble in light of what is happening around the world. I find it in particular this year was quite important. So we're we're looking at some of the serial acquirers sharing their playbook. Everyone has slightly different variation of that.
00:18:27 · Eric Tan, Mikk
But I think that was the front and center of my learning earlier this year. [00:18:31] S0: Do you sometimes sell the portfolio companies? Because that's the organization we oftentimes have with the guests as well and people I talk to on on every every single day. Many of them are this... Towards this permanent hold. At the same time, they are all businessmen, businesswomen. And when a very attractive acquisition offer is coming, they are like, I'm not so permanent anymore, so they're willing to sell. What has been the experience for you? [00:18:55] S1: I think in general, we have never built in any exit scenario at our investment stage. We all assume that we're to own them forever. But like you mentioned, I think we all have to be quite practical and as directors of companies, our fiduciary duties to, you know, kind of decide for shareholders and recommend the shareholders what's the right thing to do, and when a very attractive offer come to the table, we will have to, very, honestly, and, and practically assess them, so, we have never had to confront a conversation today, but I think the general approach is that, you know, each time they will come to us and say, would you sell your portfolio companies, we will just say no, because that's not how we, how we do it, but we also have never had a situation where someone put a very attractive offer on the table yet. So all I can say is that we would have to assess it on a case to case basis, but the general principle is that we do not buy to sell.
00:18:55 · Eric Tan, Mikk
[00:18:55] S1: I think in general, we have never built in any exit scenario at our investment stage. We all assume that we're to own them forever. But like you mentioned, I think we all have to be quite practical and as directors of companies, our fiduciary duties to, you know, kind of decide for shareholders and recommend the shareholders what's the right thing to do, and when a very attractive offer come to the table, we will have to, very, honestly, and, and practically assess them, so, we have never had to confront a conversation today, but I think the general approach is that, you know, each time they will come to us and say, would you sell your portfolio companies, we will just say no, because that's not how we, how we do it, but we also have never had a situation where someone put a very attractive offer on the table yet. So all I can say is that we would have to assess it on a case to case basis, but the general principle is that we do not buy to sell. [00:19:49] S0: Can you give me more overview of of the of the separate pillars, digital media, b two b expo, technology sector, like software companies? Let's go one by one. What type of companies you you own? What you guys are doing? And maybe talk a little bit about the synergies on the portfolio level as well, if there is.
00:20:08 · Eric Tan
[00:20:08] S1: So on digital media business, the the primary kind of foundation of the business are digital media publishers that attract a lot of consumer attention across our social media pages, Instagram, TikTok, Facebook, which is like a Chinese platform in Asia, and and TikTok, the likes of that, and our websites. And advertisers will come to us and run campaigns on some of these pages. That will be the kind of foundation. So alongside, we also provide KOL or influencer agency services where we could upsell to our customer. We also started going into kind of the online to offline sort of integrated digital media solution where we provide outdoor advertising to some of our clients, and the whole, the whole thesis is revolves around increasing the wallet share of our, our advertisers, and how it came, the the whole idea is now they spend a million bucks a year. How do we get it to 1 and a half? And over time, we we realized that a lot of advertisers, at least at least in the in the market that we operate in, are quite lazy. They wanna deal with one media platforms rather than multiple. And we also happen to operate in a country where the language is quite fragmented. So in Malaysia, half the people speak our national language, call Malay, and then about 30% of people speak Mandarin or or Chinese, and there is maybe 70% of people speak English and because it's so fragmented as a media buyer, it can get quite complicated because multiple language, multiple audience you're trying to to target. So, our advertisers will come to us and and treat us a one stop shop amongst all the other, you know, Facebook and and meta TikTok of the world as they want to launch campaigns to to to to reach consumers. So these are all very much awareness based advertising. So today, the the media business consists of horizontal publishers business. So these are lifestyle sort of content. We also have vertical focus publishers in the automotive space, in the technology space where the the content is revolves around reviewing cars, reviewing gadgets, etcetera. We are in immersive solutions as well. So solutions like what TeamLab does in in Japan is something that we can provide as well to our our advertisers.
00:22:36 · Eric Tan
And and more recently, we went into the out of home billboard business, specifically digital billboard, like the Lamar of the world, as a kind of add on solutions to our customers, which we went in organically, so we decided that, hey, it's very synergistic, customer has been asking us, if they can buy digital out of home billboard, kind of inventory through us, and eventually, we, we decided we want to be media owners, so we went into that. So that is kinda the makeup of the digital media business today. It's it's really revolves around customer coming to us to buy ads online, and then how they provide a three sixty solutions to to our customers and and kind of monetize and expand our wallet share from advertisers over time. So that is about 85% of the whole group today. We started this business in, I think, '21. We acquired a platform business of iMedia. At the time, it was doing about 23,000,000 Ringgit, which is about 6,000,000 US in revenue. Today, it does about... This year is on track to do about 25,000,000 of US revenue. So that's that's quite skilled now as part of the portfolio. So that will be the digital media business. The second pillar that we went into last year was b two b trade expo. So b two b expo, you can think of it as a event where a supply chain of a particular industry come together and network and transact. So as an example, today, we host the three largest expo in Malaysia, one in agriculture, one in food and beverages and one in construction. So take F and B as an example, the food and beverage sector. We rent a convention hall once a year for four days. The the supply chain of the F and B would come and exhibit. So some examples would be packaged goods, could be prepackaged materials for for the particular industry. It could be machines for for, like, a coffee machine or an industrial grade food manufacturing machines. It could also be furniture companies that targets like hotel. So then the the visitors or the the buyers of the expo would be what we see from a consumer standpoint, the the group of F and B chains, right? So, it might be Pizza Hut, it might be Starbucks that comes as a buyer, and it could be hotel chains like Marriott that that comes and source for products. So, that is kind of the dynamics of the the trade expo business.