YONG HUI YOW: What is iflix all about?
PATRICK GROVE: iflix is a subscription-based video streaming service for Asia. You pay a small fee each month, and for that, you can stream video content from all over the world. We have a huge selection of content from Hollywood, China, India, and Korea – all on one platform made available to everyone. Local content is also very important for the platform, so we put in a lot of effort to ensure we cater to viewers who want that content. On top of that, we aim to eventually become one of the biggest creators of original content across Asia.
YONG HUI: Why did you choose to go into video streaming after property and car portals?
PATRICK: Firstly, as the 350 million-odd middle-class in South East Asia becomes more affluent and tech-savvy, entertainment is the next major thing they will look for. People first needed a home, and then they needed to get around so they bought cars. Now, as they’ve progressed further, entertainment is the natural next step, and we see this as a huge opportunity in Asia.
YONG HUI: Do you watch TV shows yourself?
PATRICK: Yeah, actually I do. I quite like Entourage. You know, some of them actually have quite intellectual plots. There are so many of them, and I do enjoy them when I have the time.
YONG HUI: You’re famous for taking a few companies public quite early in their lives. When is iflix going to do an IPO?
PATRICK: Maybe in two years. Right now, we are just really focused on building the business, and expanding throughout Asia. I just got back from Dubai actually, where I met with several potential partners to bring iflix to the Middle East. Our aim is to have 60 million paying customers over the next two years, and then we will be ready to list.
YONG HUI: Back in 2000, why did Catcha want to do an IPO so quickly, within a year of its founding?
PATRICK: We were very fortunate that back then, it was easy for investors to understand what we were doing, mostly because we were basically the South East Asian version of Yahoo!. And Yahoo! back then was probably one of the largest, if not the largest, internet companies in the world. We were getting a lot of media attention in the region, and there was a technology IPO boom in America. Many bankers were telling us that we should leverage on that, and do an IPO ourselves. I was really young at that time – just 24 years-old, and I was like: why not? So we founded the company in June of 1999, and filed for an IPO in February 2000 to list on the Singapore Exchange (SGX). In April of 2000, we got the approval. We got a valuation of about 600 million ringgit for the business.
YONG HUI: Then the bubble burst. What happened to Catcha?
PATRICK: So we were about to do our IPO, and while we were on our road show, the NASDAQ crashed, and we obviously had to abort the IPO because no one was going to give us money. After the cancellation, we got billed for US$2 million for all the bankers, lawyers and accountants who had worked on our IPO. So even though we did not go through with the IPO, we still had to pay the bills. It’s like building a house. Even if you have a half-completed house, you still have to pay for whatever work that have already been done. The company was US$2 million dollars in debt, and I had to go on a debt restructuring road show instead. On top of that, my board resigned. We spent the next seven years paying back the debt and re-building the company – from 2000 to 2007.
When you have very little, you quickly realise your only way out, is to build products people actually want.
YONG HUI: How did you turn the company around?
PATRICK: We had to scale back the business drastically, and that unfortunately, involved laying people off. We went from 150 employees in multiple countries to about 25. For that, we were being slammed in the press day in day out. But we realised the funding landscape had changed, and we needed to act accordingly. And what happens is you start to get really creative. When you have very little, you quickly realise your only way out, is to build products people actually want. That’s when you also learn how to collect money from people who owe you money. After that, we basically tried many, many ideas and kept pivoting. During those seven years, I was the CFO, Head of Sales, Head of products – I was the Chief Everything Officer. In the corporate world, there is a person hired to do every little task, whereas in a start-up, where you have financial constraints, you end up doing everything yourself, but that’s how you learn how to iterate your ideas to what actually works. In hindsight, the bust made us a much stronger and resilient business.
YONG HUI: When you had to lay people off and scale down the business, how did it affect you?
PATRICK: In building a company, there are a lot of things which are difficult to do. You have to raise money, sell to customers, hire, manage, and many other things, but nothing’s more difficult than to have to lay off people. It is much easier when people are not performing; it is still not easy, but you know it’s something you have to do. But when you have people who are great at performing, and who you know are the right people, but you have to let them go because you cannot support them anymore, it is just an incredibly painful and difficult thing to do.
YONG HUI: But they understood why you had to do it.
PATRICK: Yes, they did understand, but it was still the hardest thing.
YONG HUI: How did you motivate your staff when the situation seemed so gloomy?
PATRICK: You motivate them with the problem you are trying to solve, and hopefully, it is a problem big enough, which makes them passionate and inspired. You have to foster a sort of environment where people feel independent, and are proud to solve the problems you want. It has to be a place where they feel they belong, one where it would be a fun journey they would want to embark on with you.
YONG HUI: How has this entrepreneurial life affect your personal relationships?
PATRICK: It is never easy. Yes, it can be very straining on relationships because starting a company consumes you completely. It’s much more than a full-time job. Being involved in a start-up is like having a baby. You have to work on it constantly – 24/7. You don’t take a break. My ex-girlfriends always told me they felt my company was my wife, and they were my mistresses. My current girlfriend, however, is also an entrepreneur, so we both understand each other’s positions. It's working out for both of us.
YONG HUI: Since then, you have been through four IPOs. What do they all mean to you?
PATRICK: They were all different and interesting in their own ways, but there was something uncanny which stuck out. For two of our IPOs, the date given to us to list was September 11. The Stock Exchange assigned us the date; we didn’t choose it. What are the odds of that happening twice? But the funny thing is: ever since 9/11 happened, no company listing on that date ever traded up. However, when we went public with iCarAsia, we broke that mould, being the only company that did so then.
YONG HUI: Why is going the IPO route generally your strategy, as opposed to raising more money privately?
PATRICK: The IPO route has worked for us, and it’s the quickest way to raise money, but that’s because we have the track record, and have great relationships with the fund managers to whom we go back each time we list a company. These are investors who had supported us and continue to do so. Raising money from venture capitalists takes up a lot of your time. It can take anywhere from six months to nine months to close a round, and at the same time, you have to build up your company, and not take your hand off the wheel. As an entrepreneur, you need to be able to balance your rollout plan, with when you think you will receive funding. In an ideal world, someone will give you all the funding you will ever need but that never happens, and is probably not ideal from an equity standpoint. The IPO route is obviously not for everyone, but it has worked well for us.
YONG HUI: Why did Catcha then become more of an investment group?
PATRICK: We learned over time that if you put talented managers in charge of a business once it was up and running, it allowed us to focus on starting another business. We decided that we could bring proven business models from UK, America and Australia to South East Asia and execute really well, and with speed. iProperty and iCarAsia are examples of those ideas. What is often misunderstood however, is that you can simply just replicate ideas and concepts locally and things would just work. That’s not the case because you have to tweak the concept for the specific market. For example, take the car market in South East Asia, as compared to many mature western markets. A newly middle-class family or person buying his or her first car typically wants a new car, and would more likely make a trip to the local Toyota showroom. In other places, people make a trip to the second-hand dealership on the street. Understanding the specific nuances of a particular market is very important.
If you want to build a sizeable business, you have to choose a big problem to solve, and if enough people have that same problem, you end up having a very big market, and a potentially very big business.
YONG HUI: How do you access a team pitching to you? What are crucial things?
PATRICK: I always look out for the team. Are they really smart? Can they execute? It’s not so much about the idea, because that will change and evolve. The idea you start with is never the idea that ends up working really well. For example, for us, what we started off doing would not even work in today’s context anymore. If the team is really smart and they persevere, and they are passionate about the problem they are solving, they may eventually figure it out. I like people who are hungry, work really hard and enjoy doing so. I also look for highly-scalable businesses. If you want to build a sizeable business, you have to choose a big problem to solve, and if enough people have that same problem, you end up having a very big market, and a potentially very big business.
YONG HUI: What’s the future of online classifieds?
PATRICK: The online classifieds world has to move from being just a leads generation kind of business, to one where they become transaction-based businesses, and that’s what we are trying to do. People will become increasingly comfortable with even buying big-ticket items online, and this behaviour means that over time, online transactions will slowly eat into traditionally commission-based markets, which are huge markets. This disruption will happen over the next ten years. Large and unchanging companies don’t last forever. If you don’t change, you become a dinosaur, and you know what happened to the dinosaurs.
YONG HUI: What do you think of the media in general, from the perspective of someone who runs a media company?
PATRICK: What I’ve learned, is that the media always writes things to be better than they are when things are good, and conversely, when things are bad, they write that things are worse than they actually are. When we were in debt and things were not looking great... basically, we were going bankrupt, and we were laying people off, every single day, the media wrote pieces which were really mean, but generally true. I would walk down Orchard road and people would recognise me and say: that’s the guy in the papers; his company is going bust. But what I did then was to motivate and empower myself with all these negative articles. After we turned Catcha around, I personally rang up all the journalists who wrote negative things about Catcha, and told them they owed us a follow-up article because what they said would happen, did not. Every one of them did so. But personally, I have always been very supportive of the media because when I was a struggling entrepreneur, I was always inspired by reading about successful people and their stories.
YONG HUI: What's different now as compared to before in terms of starting a company?
PATRICK: It’s definitely easier in some ways now. Funding is generally more available now, and society is more accepting of people who go off to start their own ventures. In the past, funding was extremely hard to come by in South East Asia. There were barely a few venture capital firms in Malaysia and Singapore, and they were not open to new ideas. When I was trying to raise money for iProperty, every one of the venture capitalists told me: oh, Malaysians are different... people only use the newspapers... nobody is going use it... someone else would have already done it if it were useful... all sorts of reasons. It was the same case in Singapore. So we went to Australia to give it a shot, and they basically asked: how much do you need?
YONG HUI: You've been in both Singapore and Malaysia for a long time. How do the two countries differ in terms of their ecosystems?
PATRICK: They are very different. In Malaysia, because they have their problems politically, it actually helps foster an entrepreneurial environment. When a government isn’t very good at providing what society needs, this actually creates a culture and spirit where if you want something done, you have to go and do it yourself. This breeds individuality, independence, and creativity. You want people to be able to solve problems independently, and not be overly dependent on the government, or on people telling you what and how you should do things. Singapore, traditionally, in the past, had been quite discouraging of entrepreneurship. It was considered quite odd if you went off to start your own business instead of working for a big company.
YONG HUI: Why do you think that has somewhat changed?
PATRICK: Well, over the past few years, I think the Singapore government realised that the old model does not work anymore, and in order to be plugged into the global stage, and to foster a vibrant, creative ecosystem of talented individuals, the old mentality simply had to go.
I just want to work with really smart people, create something great, and be disruptive.
YONG HUI: What's the next five to ten years going to be for South East Asia?
PATRICK: South East Asia is going to be great. I'm very bullish. More than 300 million people are going to be on Smartphones. This is a number which is bigger than the European Union and the United States. Mobile usage in South East Asia is also higher as compared to America and Europe. And the Smartphone, for many of these people, is their first device, even before they have a laptop or a desktop, and they can do everything with it. Here’s the thing: whether or not there is a bubble, there’s no stopping people from using and accessing services via their Smartphones. People are not going to stop booking a cab using their Smartphones, nor are they going to stop browsing for jobs, entertainment, or shopping online. They sure are not going to stop playing games, and communicating on all these different platforms. These are services which everyone needs in today’s world. Fluctuations in the market do not affect the fundamental demand for technology.
YONG HUI: What have you learned about managing people throughout the years?
PATRICK: One of the things we really believe in is that regardless of someone’s age or experience, if that person is performing, expand their scope and give them more to do. Some people outside the industry may find this slightly uncomfortable. When we hire, it’s very important for us and me personally as well, that I enjoy working with them, and that I respect them as individuals.
YONG HUI: What motivates you to keep doing this?
PATRICK: I just want to work with really smart people, create something great, and be disruptive. Overall, I’m a fundamentally a very optimistic person, and I always look at the brighter side of things.
YONG HUI: Do you ever see yourself maybe taking a step back to focus on family and handing over the reins?
PATRICK: Not at all – I’m having way too much fun. I want to run Catcha forever.