YONG HUI YOW: Do you work from home a lot?
WILLIAM KLIPPGEN: Sometimes. Most of my work involves working with start-up founders, so there’s no real push to be in the office.
YONG HUI: So what’s your story?
WILLIAM: I started out as an entrepreneur myself. After I graduated from university, I started a price comparison company called Zoomit. Before that, I worked as a software engineer for search at Excite. I don’t know if you’re old enough to remember them. Seven years later, in 2004, I sold the company to Yahoo. Since then, I’ve been doing angel and seed-stage investing. Most of my investments are in B2C internet companies, many of them Singapore-based.
YONG HUI: Why did you not start another company?
WILLIAM: It’s very tough being an entrepreneur. When I started Zoomit, I was in my twenties. I didn’t have any money, and the company almost went bankrupt. I sacrificed quite a bit to make it work. As an investor, I can dip my hands into many different companies, and help many entrepreneurs at once.
YONG HUI: How has Venture Capital evolved over the past decade?
WILLIAM: There’re not enough good start-ups to invest in, so when a start-up suddenly finds itself in a powerful position and wants to raise money, they go to the VCs [Venture Capitalists] whom they think can bring them the most value. The balance is now tipped in favour of the founder. Many entrepreneurs in Silicon Valley find themselves choosing who should be allowed to invest in their company – that definitely changes the game, especially for the smaller VCs. It’s no longer them hunting around for money, especially with the cost of infrastructure so low nowadays.
YONG HUI: Is that also true for Asia?
WILLIAM: In Asia, you have enormous markets and relatively little money, although there’s been lot of new money coming in this year. The VCs are also raising, including Tigris, but there are very few entrepreneurs, at least very few experienced ones. As such, they need more coaching to reach the same level as those who have done it. Nowadays, being an entrepreneur is even encouraged. This is quite different from when I started out.
YONG HUI: What about equity crowdfunding? How does that affect the VC industry?
WILIAM: I like the Kickstarter model, where you actually buy products, instead of investing money. To let anyone use their savings to invest in risky start-ups might be a bad idea. It’s not popular to say that, but I know how difficult it is to make good investments even when you spend all day doing it. Suddenly, you want to open this up to anyone who wants to profit from the whole start-up thing, without the background, knowledge, resources or the experience to make wise investment decisions? Bad idea.
YONG HUI: What are the biggest mistakes founders make when they pitch to you?
WILLIAM: There’re many different types of founders. When first-time founders pitch to investors, they often forget that they need to pitch differently to different kinds of people. They might be very used to pitching for business plan competitions or their friends, but they are very different from pitching to investors, because investors actually want to make money. There’s always this debate between Asian investors versus Silicon Valley investors. People say Twitter could never have been started in Singapore, because nobody would have given them the money as it didn’t have a revenue plan. But I’m quite sure when they pitched the idea, they mentioned revenue plans at some point, even if they said it wasn’t important then. It’s important when you pitch, to at least explain how you’re ultimately going to dominate the market, and after that, be able to charge some party for it.
YONG HUI: What’s your experience as a mentor at JFDI?
WILLIAM: A lot of the pitches I saw when I was at JFDI don’t talk about money at all, so we work with them to create a good investor pitch. The pitch itself is not everything. Fundamentally, founders need to demonstrate that they solve a real problem, show how big it is and how solving it can create substantial revenue over time. If you have all of that, the pitch is fantastic.
YONG HUI: What else do you look out for?
WILLIAM: One concept I use a lot is the time travel principle. There’s no better way to invest than when you already know what’s going to happen in the future, i.e. to travel back in time. Therefore, founders who are pitching me – if they don’t talk about their competitors in more mature markets, and don’t relate their ideas to start-ups that have failed or succeeded before – that’s a big hole. If you’re pitching me, and I know that there’re three people in Europe who had failed at what you’re proposing – that’s pretty important information. Or, they might have succeeded so why not relate to that?
YONG HUI: Is this time travel analogy consistent across industries and geographic regions?
WILLIAM: More or less. Let’s take the case of PropertyGuru. If you go back in time and look at valuation multiples the property portals were getting in the UK, US and Australia at the time Steve and Jani started their portal in Singapore, their valuation was fantastic, given that increasingly more people would get online, and move away from newspaper classifieds. It wasn’t difficult to think it was a very good investment, given they’ll dominate the market. They were also the first in Singapore, and had the best technology and marketing. There is a consistency to a certain degree in Asia, given the right team and execution.
YONG HUI: What did PropertyGuru do right?
WILLIAM: PropertyGuru was one of the first to let people sort by price per square foot and other ways of sorting properties, which made it a very powerful tool. It took iProperty for instance, four more years to launch something like that, because they were not technology-driven. At the time, none of the property portals could match them. Not even SPH. Even if the business model is widely known and not difficult to grasp, it comes down to executing in the right way, and having a founder team which is complementary. The founders need to show that they have all the necessary skill-sets to execute. Execution is everything. It was an interesting case study.
YONG HUI: How do you assess a founding team?
WILLIAM: It’s difficult. They need to know at least the fundamentals of running a business, in areas such as technology, product and marketing – these core skills have to be retained in the management team, ideally. The founders should also genuinely respect each other, and be on the same level.
YONG HUI: What if the founding team does not have the core skills?
WILLIAM: If the founders don’t have the core skills, then they need to be mature enough to understand and realise that. Then they have to attract people with the skills to come in, and to incentivise the person with equity. That is a very hard for a young founder to do, but it is very important for the person to realise that, and face up to his or her own shortcomings. We all struggle to understand areas in which we are not strong, regardless of whether you’re 45 or 55. However, it is better to retain the core knowledge within the founding team, because the chances they will be mature and self-aware enough to bring someone with the skills in, and give them enough equity to motivate them, are very small.
YONG HUI: People have said that Africa for instance, would leapfrog desktop and laptops, and go straight to smartphones. Does time travel work for hardware as well?
WILLIAM: It doesn’t necessarily apply to hardware, or all software. When I think about the time travel principle, I think about business niches which open up because the market becomes large enough. For example, before you have a critical mass of internet users, you cannot really start an online travel agency successfully because there’re simply not enough users. Before SMEs are connected to the internet, you cannot really run a SaaS platform successfully. The prices of devices have also been going down, accelerating the adoption of technologies in less mature markets. Together with existing knowledge from mature markets, and better systems, the amount of time it takes to get to the same level of adoption in secondary markets is much less.
YONG HUI: How are you like as an investor?
WILLIAM: I’m very transparent. I can be impatient, and sometimes I’m not very subtle. I can be very passionate, and offer too much help. I have even designed logos for my start-ups. I just designed a logo last night actually.
YONG HUI: They don’t pay you for that, do they?
WILLIAM: Only a few times.
YONG HUI: Have you always wanted to become a designer?
WILLIAM: Yeah, but maybe in my next life.
YONG HUI: What about Tigris?
WILLIAM: At Tigris, we see ourselves as the concierge. You ask the concierge where you should eat, the best time to see the sunset – but, he will remain at his desk when you are out exploring! He will tell you everything you need to know, and even if he doesn’t know, he will refer you to people who might tell you what you need to know. He’ll offer suggestions in a way which doesn’t start a fight. His job is not to insist on anything, but to be a provider of knowledge and advice. That’s the ideal investor or VC. We also have a team of mentors including Steve [Melhuish]. We have about thirty mentors onboard, all founders in the digital space. They have come onboard as soft venture partners to engage in several companies with a profit-sharing model. People like Steve – you cannot employ them. Why would Steve work for a VC? He would either be a partner, or just retire. But he’s very happy to come in as a mentor and work with specific companies. I’m very grateful for that as it benefits everyone – the companies, himself, and Tigris.
YONG HUI: What happens when you disagree with founders?
WILLIAM: If I disagree with a founder, it’s usually because I can see that they’re really going down the wrong path, which threatens the existence and future of the company. In such a situation, I will try to explain why I disagree, but I cannot try to use any kind of power to force the founder to change his mind. As I become a little bit older and wiser, I’m okay with disagreeing. Sometimes, I have to sit in at board meetings and see that things are being done differently from what I want, and that’s fine. You can’t make decisions for people.
YONG HUI: Why not?
WILLIAM: Most decisions we make are wrong initially. At Tigris, we prefer continuous experimentation. At Tigris, we prefer experimentation. We encourage you to create mock pricings, mock products, mock advertisements which you only run for a hundred people on Facebook. You can target only one company on facebook, or everyone under the age of thirty working for the Government for example. You test for the responses, which give you an indication of the demand for what you’re trying to sell. With this method, you know you’re going to fail nine out of ten times, but if you succeed, the value of that would be so high that the cost of those nine mistakes would be gone. This helps founders make data-driven decisions, instead of making gut-driven or ‘I think that is right’ decisions. Worse, you’re just listening to people telling you what to do because you’ve no clue. You need to know what you have to do for your context. I’m very careful not to insist or suggest anything. Instead, I will say, why don’t you try that, spend two hundred dollars and then report back the data you get. If the data says it’s a good idea, then it’s not my suggestion, but a decision based on actual evidence.
YONG HUI: Is gut feeling just another word for luck?
WILLIAM: Gut feeling or intuition is just a result of how the brain actually works. Our neural network fires off from what we hear and see, and they conclude without providing any explanation. The sum of everything I see makes me have a feel about you are and what you are doing. I’ve seen about 2,500 business plans in my life, and have coached about 2,500 teams. I’ve seen bankruptcies, wonderful successes – all kinds of outcomes. That has led to a lot of stored data and impressions in my head. Sometimes, that intuition is wrong, because certain fundamental things might have changed, and have rendered my past memories and experiences obsolete. Most of the time however, I’m pretty right on my gut feeling. My investment decisions are always based on gut feeling but that’s based on the stored data bank I have.
YONG HUI: Have you ever forced a founder CEO out?
WILLIAM: No, I have never thrown a founder CEO out.
YONG HUI: Under what circumstances would that be appropriate?
WILLIAM: Unfortunately, if you see something like that happen, is when the company is already going down. If the CEO is self-aware, it should be clear to him or her that he’s not doing a very good job, and that he would be doing himself a disfavour by continuing to run the company, because he has equity in the company.
YONG HUI: Does raising funds make the team lazy?
WILLIAM: It can make the team intellectually lazy, even if they seem to be working very hard. The reason for that is a start-up company goes through several stages of self-realisations and pivots, so there’s a danger that even if you raise a small amount of money, the fact that you raised money, is seen by the team as validation of the idea and product, when in reality, your idea and product need to go through at least one or two pivots. With money, you don’t tend to want to change the company’s direction, so you may just continue ploughing through in the wrong direction.
YONG HUI: What do you think of business plans?
WILLIAM: The most dangerous thing you can do as a small company is to have a business plan and stick to it 100%. This is because you will need to change your idea and product. If a company gets funded too early based off a business plan without first validating if anyone actually wants the product or service, this often leads to companies going down the drain. This is because the founders feel they had promised the investor to follow the business plan, or the investors expect the founders to follow the business plan. In such cases, the company usually never survives. You need to find out if the market actually wants your product or service first. The business plan does not know that.
YONG HUI: Tigris’ tagline is ‘Time for new ideas”. What are these new ideas?
WILLIAM: The tagline means two different things. First, because there is a digital revolution going on, it is a time to change a lot of things: old processes, and things that are offline, take them online. This also means we are a very patient investor. At least with Tigris Fund I, we never had any kind of clauses that forces founders to liquidate, because we believe that a good company can take on the world. Half the people in South East Asia are going to be online by 2020 – that’s 350 million. In India, 650 million internet users. That’s one billion altogether. This is going to move the internet markets’ main gravitational force towards India, China and South East Asia. It’s going to benefit everyone. Small businesses can run their processes more efficiently; they can sell across the world; people in less-developed countries can now use their talents globally. I like a few niches, such as marketplaces, ecommerce , business software and fintech. I think there are big revolutions happening in all these areas.
YONG HUI: Do you still return to Norway?
WILLIAM: Yeah I do. My kids are there, so I fly back about ten times a year.
YONG HUI: What’s the best thing about being wealthy?
WILLIAM: I’m not that wealthy. I guess the best thing is that I can travel the world and do things from different locations.
YONG HUI: How was the Angel’s Gate experience?
WILLIAM: It was an interesting experience, and in itself, like a start-up. I had not been on a TV show before and the producer was trying out new things. After that, my deal flow increased substantially which has really helped my investment process. As an investor, you rely on a lot of investments in order to be able to pick out the best ones.
YONG HUI: That’s how I first heard about you actually.
WILLIAM: Oh, I see. Oh my god.
YONG HUI: You’re 45?
WILLIAM: I’m 46.
YONG HUI: What do you want from your fifties and beyond?
WILLIAM: I don’t know. I’m pretty happy with life right now. I want to remain useful and see my kids grow up, have a good partner in life, be healthy and to be able to do meaningful work for other people. There’s nothing special I look for.
YONG HUI: What are things you do to let loose?
WILLIAM: I travel, snowboard, and spend time in the mountains, where I go hiking. I also go fishing a little bit. I try to keep fit, do sports, and exercise.
YONG HUI: Are you into ancient civilisations?
WILLIAM: Not really, are you?
YONG HUI: A little bit. I’m just curious if you named Tigris after the river.
WILLIAM: Oh, right. I used to have a consulting company called Euphrates, so I thought that the investment arm should be called Tigris. This is about getting things started, like how those rivers were the origins of life.