Buyers and Builders
00:03:27 · Eric Tan
And we see that in particular in this part of the world where we think there's an opportunity for us to build something that allows founders to hand over their their business to someone like us as an institution and still the legacy continue to serve the the customer. And you might ask, hey, why these few particular pillars? And this is primarily areas that we are more familiar with. You won't see us going into, I don't know, restaurant business or run a cafe or that sort of businesses. Right? So we have been in media and digital media for the last twenty odd years. In this part of the world, we're quite familiar with the nuances of running these sort of businesses around the region, classified software, an expo that was an offshoot in in some of our our online businesses. So we we really focus on these few things because we think we're uniquely positioned to to be able to build a a good business out of it. In the future, we might expand to new pillars that is adjacent to that. But for now, we want to stick to what we know best and then refocus on those.
00:04:31 · Mikk
[00:04:31] S0: Okay. That's great. Now you brought out the startup phase. I really believe it's all about those special individuals like yourself, folks, enjoying the game, building great businesses, great investment firms. So in your case as well, before starting Catcha Digital, you weren't an executive. You were a startup builder yourself, and it didn't go well. So could you maybe talk about those startup days? What did you learn, and what did you maybe even change when approaching this this new opportunity? Because I'm trying to understand, like moving forward forward in the future as well, maybe it's a great idea to bet on folks who have tried building startups, haven't succeeded and now trying to get into more traditional profitable businesses. So maybe you can share a bit of lessons there.
00:05:30 · Eric Tan
[00:05:30] S1: I'm definitely kind of one of these guys, right? I think how I went into the startup was really I found an idea that I thought I can uniquely relate to as a consumer. And I went into it knowing that it's going to be hard, but it is like one of those things where, you don't really know how hard it is until you get yourself into it, I walked away with a couple of learnings as I was reflecting on it, I think on a more professional level, I've realized that it is very difficult to fight against macroeconomic structure and and kind of long term tailwind. You just purely using a willpower as a as an individual, right? Because I launched a startup in a market where I knew it was quite difficult to raise external funding as an entrepreneur, but I kind of just went for it, like, as with all entrepreneur, our mindset is, okay, let's let's just go with it and see what happens, even though you know you're swimming against the tide, but at the end of it, I I realized that it's impossible for me to bend reality to wheel in in the market where just it's not favorable to to build startups. So, it's like for example, in Malaysia, it's not a very big market. A lot of investors would want to invest in in a big single market and someone is building something similar in China would would command, let's say, like, times the valuation just simply because the size is bigger. So it took me, like, really, really in the face to to to really understand, hey, You can't fight against a macroeconomic structure. It's just against your favor. And from then, like, moving forward from from then on, I became a lot more conscious around finding opportunities that really fits well with the long term trend and and overall kind of macro structure, I don't swim against the tide because I've been there, done that. I find it just unnecessarily difficult to to do that. On a more personal level, I think it taught me to be a little bit more empathetic. It humbles me because before that, I was doing a a bit of investment, investing in startups here and there as Angel as part of the fund, and it is quite easy to say, hey, go do this and go do that, mister founders, but in reality, it is never as simple as in in theory.
00:07:42 · Eric Tan, Mikk
We can put the best PowerPoint and excel up and tell the founders to fire a bunch of people or change a business plan, but the reality is, it's just, it's just, it means nothing if you can't execute it, which I think in, it, weirdly, it makes me relate a lot better with founders and businesses in my role today, as a serial acquirer, I think, for, for, for most cases, I think founders understand they have been through the trenches, it gives you a little bit more respect, and they understand that it did not come from a place of arrogance, but it come from a place of, in some sense, pain and, and, and, and learnings from the past. [00:08:21] S0: Okay. Now the Catcha Digital, the portfolio today, how do you structure it? Because you said you have three pillars. You have those events, software, and also digital media. Yep. Is it decentralized, centralized? How do you run it? How do you structure it structure?
00:08:42 · Eric Tan
[00:08:42] S1: It it is generally quite decentralized. So the way you structure it is that there's a HQ team that does all the M and A and the corporate development work. And then within the three pillars, there is a head of the business. So today, media is about digital media is about 85% of the whole group. It's comprises of close to about 250 employees. There is a management team that runs a business on a day to day level. Their basic remit is to hit the p and l budget and cash flow target on a year to year basis and work with the HQ team on any add on or bolt on acquisitions. So it is a buy and build sort of approach where we have a platform assets and we buy a bunch of synergistic business and bolt it on. So, our kind of relationship with the CEOs would primarily stem from four things. So, one, on a monthly basis, we sit down as board meeting to make sure that, you know, we are moving towards the right direction, executing the business plan, and if there's any sort of, incidents that happen, we wanna know the board level, making sure that we hit the numbers. Number two is primarily around funding. So let's just say the CEOs wants to invest in building billboards, Right? It's it's a business that we're getting into these days. It requires $10,000,000 of of CapEx. Then how do we go about funding it? Is this a good idea to to go into this business organically? And the HQ team will work quite closely with the operating CEOs to really decide what's the right thing to do. And the third bucket is split into kind of three point one and three point two in that we spend a lot of time to see us to think about who to acquire. And it comes both ways. Right? So one direction would be the CEOs might see a company on a day to day basis, might be a partner, might be a competitor that they meet in the market and say, hey, Eric, I would like to acquire this business. And you'll come to us and and teach a business case, and then we will, you know, work with him to figure out whether it's a good idea, and if we think it's a good idea, then our HQ team will come in as like a outsource corporate development team to help run the deal process, so that he doesn't get bogged down by the deal making process, but he continue to focus on driving the business, and he gets involved as and when we think it's helpful to come in, to talk about the plans going forward, etcetera.
00:10:59 · Eric Tan, Mikk
And and kind of the offshoot of that is that quite often, we, from HCO would meet a lot of companies that we think he should buy, and then we would then have to go back to him and pitch a investment case to him. So by and large, this would be how we operate across all the, all the three pillars. Some are more active in bolt on, some are less active, but this would be kind of overall picture of how we operate, so, kind of just to summarize it, the, the capital location is centralized, at HQ, we manage treasury as a whole, we work with the operating company to, determine the future direction, but it's very much decentralized and driven by the management team of the respective pillar, and we try not to get involved. So the overarching principle is that we don't want to be the smartest person in the board meeting. It it should be the management of the of the respective company, and we support them as and when we we think we could help with capital, it could be... We could help with network relationship, or even kinda cross portfolio companies' synergies. But as much as we can, we try to get out of their way. [00:12:03] S0: And how is it to manage those three separate pillars? And what I mean here is that are you planning to add new ones if you see a good opportunity or you just kind of stick to those three and go and expand from there?