Buyers and Builders
00:30:50 · Eric Tan
[00:30:50] S1: Sure. I will try to go as in-depth as possible. And if you think it's too much, you let me know. Okay, so just now, just now I mentioned, the dynamics of the media landscape in, in Malaysia is such a, it's very diverse, because, you know, you have different language group, and hence, it's very difficult for a media buyer to really, you know, deal with, like, 10 different platforms to to buy ads and rather deal with one. So that's really the overarching thesis. Right? How do we consolidate different languages under one roof? So we sell as a network of media assets to, to our advertisers, and that's really the overarching thesis, and why it works is that, you will see a lot of independent publisher brands on the online where they're pretty damn good at creating good content, but it's very difficult to monetize and attract advertisers in a market that we're in simply because it's so fragmented. So why, what, how typically it works with some of our founders that sell the business to us is that, on their own, they might be able to generate, let's say, 500,000 in revenue and barely breaking even. And the reason why they wanna sell to us, typically, are two to three reasons. One is that they know they can't access advertisers that we have. So all the big company enterprises in Malaysia and then big names FMCG, even global names like M and M's and and Nestle, these are all our customers. And the reason why is they could come to us and access all different kind of publisher brands and and deal with us as a one stop shop. So the owners would know that, hey, actually for me, it's very difficult to access these advertisers. One is because of the dynamics of interest being very fragmented, and two is because in the industry that we operate in, there is also a lot of big agencies involved. So as an example, like Nestle might have a globally appointed agencies in in IPG as an example, and everything has to go through that appointed agencies when it comes to media buy, and and these agencies who typically want to work with bigger players like us rather than dealing with 10 different individual brands out there as a as a 10 different individual publishers out there to really help their client with their media buy.
00:33:02 · Eric Tan
So, what then happens is that if you're an independent player, it's very, very difficult to get attention to agencies because agencies interest is to play safe and to play safe is to is to work with established brands like us and allocate as much budget to us as possible. So that's one dimension why the owners want to sell to us. And another dimension why the owners would want to sell to us, is really, these are quite often creative people that don't really want to deal with the headache of running a business, don't wanna deal with sales, don't really wanna deal with compliance, taxes, finance, HR, etcetera. So when they come on board, we strip those things off them, and all we need from them is to ensure the the quality of the content remains tip top, and we have a structure where we carve out a certain resources for any sponsored content, and we work with them. So in many ways, it's win win because we can... We are pretty good at monetizing media assets. They are very good at creating monetizable media assets. So that's kinda a a dynamics that's quite unique in in the business that we're in. And hangs at a kind of overarching thesis around the media kind of buy and build approach. So how how we tend to kind of kind of look back to to your point, right? Like, do, how do we kind of, the reason I want to explain this is because I think it's quite important, I think I've shared our investor deck with you, in particular, there are many companies that when we take on, they might just be barely breaking even and we can really triple or quadruple the revenue quite quickly, is because of these dynamics. So... And it's also form parts of the due diligence, right? So when we're talking to some of these businesses, as we are talking to them, the sales team of these media businesses, we have a consolidated sales team of 15 people that talks to our client every single day. They could just bring that to the customer and say, hey, we are talking to these guys. We are thinking of kind of reselling for them. What do you think? And immediately, we get a sense of whether the the advertisers like it or not. And if they like it, it it really helps to facilitate the conversation with the and it provides confidence internally that, Okay, our business plan could work, and we can forecast ahead of time whether we can monetize the assets.
00:35:21 · Eric Tan, Mikk
So that's really a big part of value creation for for for the media business, and that forms the the bread and butter. And and that in in the last, say, four years, the growth, I would say, in particular, about half of it will come from organic growth. Simply because when we acquire into these businesses, these are quite small businesses and we really grow into it, grow these businesses into the scale that they are today, and then another half would come from the kind of acquired growth, as a mix. But moving forward because some of these assets are getting more and more mature. So as a rule of thumb, we do expect our organic growth to be between 16% to 25% a year. And then anything that's in excess typically will come from organic growth. [00:36:06] S0: Now the folks listening from The U. S, they never have to think about this. But as you said, there are different languages, same thing in Europe. So Europeans listening, they will understand exactly what I mean. So how do you consolidate the different languages, different different markets because you provide services on different markets? [00:36:27] S1: Yeah. So the the [00:36:29] S0: good And how many how many how many languages you you you cover?
00:36:29 · Mikk, Eric Tan
[00:36:29] S0: good And how many how many how many languages you you you cover? [00:36:34] S1: Primary primarily three languages. So English would be one. Mandarin or or Chinese will be one and then Malay would be the national language. So three of them. And they are all spoken in one single country. So what that means is that the advertisers would want to advertise with us to target different demography within the same country. Whereas, I think maybe in Europe, my understanding is most country has, like, one predominant language, except most people speak different languages across all the countries. [00:37:06] S0: Yes and no. There are countries in DACH regions where there are also, like, four different languages in one country. So it's it's... It... That's why it's so hard to consolidate, and that's why when people say, like...
00:37:18 · Eric Tan
[00:37:18] S1: Yeah. Our our approach is that from an editorial standpoint or content standpoint, we we allow them to do what they have been doing best. So we don't really get involved in the day to day organic content. The editorial team would know what speaks to the language, so it speaks to the audience that they target. We really only come in from a commercial standpoint where we try to cross sell all these assets to our advertisers. So you can think of the editorial team as quite independent in general, except when there is a sponsored campaign coming in, and we try to work with the authority to make sure we weave all this campaign into the language of the brand, so they don't come across as like, kind of in your face sort of advertising, but, but you're right, right, like, it's not a very straightforward, process, or straightforward strategy to execute, it took us a, a long time to really, understand how to do that, but that's also because we do have quite an experienced management team that has been in the space for the last twenty years that has seen how media evolved over the last twenty five years. You move from print to to the Internet, to social media, to where it is today, where it's very super social driven. Yeah. So I think that's kinda generally our approach where we leave them to do their thing from a content creator standpoint.
00:38:36 · Mikk
[00:38:36] S0: You said in the beginning of the call that both you and Patrick, before it all got started, you were both studying and reading Constellation software. So having met you in person, I can say you guys are like learning machines because while I was having the organization with you, Patrick had his laptop open. I've never seen someone having so many opened apps at the same time. So I was just mentioning a firm or mentioning an individual and he was immediately Googling and then just opened a new tab, did it again and again. So whenever he has more time, he will go through that. So who are you learning from? Who what is your North Star? Because you are in this, as you said, in a pretty small market. Yep. But you can learn from folks you are willing to fly to Sweden to learn learn from folks there. You are probably looking at the companies in The US. So what is your North Star and and how how does your how does your learning process work?