負責區塊鏈投資，尤其專注東南亞市場。學生時期曾於 AppWorks 實習一年半，2015 年政大企管系畢業後正式加入擔任分析師，主要參與投資案相關業務，最得意的案例是協助 CHOCO TV 從 A 輪一路到被 LINE 併入。是我們的年輕人趨勢專家，2019 正式升任經理。平常熱愛嚐鮮、美食以及旅遊。
這類在 NFT 發展初期，出現的各種原生消費行為，與其說是購買單一數位藝術品，這些行為更像是買了這個社群的會員資格，可說是數位身份的象徵。當人人都把 Twitter 上的個人頭像，換成自己擁有的 Bored Ape 時，另一種數位身份 (Digital Identity) 的認同與價值也就此展開。而在數位當道的時代，數位身份比現實世界的身份地位來得更重要。如同 Hashmask 在自己的 Blog 寫道：
Sometimes I feel that our digital sense of identity has already surpassed our physical sense of identity in terms of importance. This holds true, particularly among younger generations. Nowadays, having an Instagram-worthy photo of a moment seems to be more important than the moment itself. And the trend will only accelerate, not go back. In the near future, our identity will most likely be fully digital. Who you are online will be more important than who you are at home and in the physical world.
David is an Associate mainly focused on investments. He previously lived in the US, but was drawn to the Greater Southeast Asia region by the growth opportunities and the wonderful people here. He spent the first five years of his career as a consultant at IBM, where he became intimately familiar with the enterprise software and services needs of Fortune 500 companies. Later, he focused on building predictive models and solving optimization problems for large companies, and gained an appreciation for the role of data and algorithms in our lives. He joined AppWorks in 2020 after receiving his MBA from Columbia Business School, and also has a B.S. in Mathematics from the Ohio State University. In his free time, he tries to stay active and is always looking for opportunities to hike or trek, often seeking the trail less traveled.
Hiring is a tricky thing no matter who you are and what the role is. But it’s doubly hard when you’re a startup founder and you’re making a key hiring decision in a new market you’re expanding to — you can’t afford to make any personnel mistakes this early on, especially when runway is limited and potential investors are gauging your execution on a promising new source of growth. And with advances in technology and globalization, the opportunity to enter another market has never been available so early, magnifying the importance of getting things right as a growing startup.
However, there are a few pitfalls that we as leaders and organizations succumb to at times, which can disproportionately impact hiring decisions in new markets. It’s good for leaders to be aware of these early on, well before you are ready to make such a hire, as it could take a bit of marinating to gain self-awareness. Here’s how people often go down the path of making the wrong hire:
Humans hate uncertainty… You’re expanding into a new market — a market that you’ve perhaps visited many times, whose people you’ve worked with and partnered with in the past, and on which you have done plenty of research. But let’s face it, if we’re being honest, when it comes to truly understanding the market, we can’t hold a candle to a native. And that’s totally okay! We can assess the uncertainty of the market, think of all the ways we might be wrong, all the ways we might fail, and all the ways we could hire the wrong people, and come up with a course of action which maximizes our expected return. Right?
You’re expanding into a new market — a market that you’ve perhaps visited many times, whose people you’ve worked with and partnered with in the past, and on which you have done plenty of research. But let’s face it, if we’re being honest, when it comes to truly understanding the market, we can’t hold a candle to a native. And that’s totally okay! We can assess the uncertainty of the market, think of all the ways we might be wrong, all the ways we might fail, and all the ways we could hire the wrong people, and come up with a course of action which maximizes our expected return. Right?
Unfortunately, that’s just not the way we are wired. Humans hate uncertainty. A 2016 study found that our stress levels were directly correlated to the uncertainty of the outcome, rather than the outcome itself. Not knowing how we’ll do on an exam is more stressful than being certain we’re going to fail. Receiving a call from your boss out of the blue is more stressful than knowing that she’s calling to fire you. And not knowing whether or not your startup will live is always more stressful than knowing it’s the end of the road.
So as humans, our instinct is to minimize this stress by suppressing the uncertainty. Despite the fact that external information is always incomplete and there are many types of uncertainties we have to deal with around hiring for a new market, in our mind we make things easy. We need to make ourselves feel in control. The kicker is that the same study found that our performance level increases with uncertainty. Feeling uncertain actually brings the best out of us, which makes quashing the uncertainty even worse.
…So we often latch on to our ownorganizational ideologies. Everyone has their own ideology based on what we have experienced in life. And when we are faced with key decisions to make, our ideology is what determines our decision. In the uncertainty of hiring for a new market, we suppress the stressful unknowns and default to something—anything to reduce the stress and give us some sense of control. So we default to our organizational ideology — it’s clean, easy, and certain. We hire the smartest person. And the smartest person, as we all know, is the one who most agrees with you — the one who conforms to your ideology the most.
Ideologies come to dominate organizations. And why wouldn’t you hire the person who fits the most into your ideology? Everyone successful at the company is like that. That is because of the systematic entrenchment of ideologies in organizations — through mentoring, feedback given to employees and through the interview process. People who don’t agree with the ideology don’t get in the door, and those who do get in the door are constantly pushed to conform even more. At some point you can’t even imagine working with someone who doesn’t share the same general views. Why wouldn’t you hire the person who agrees with your ideology? After all, the company has been successful and the ideology has worked so far. With everyone on the same page, it decreases the need for bureaucratic control and increases efficiency. There’s just one problem.
The organizational ideology doesn’t always transfer to the new market. We don’t actually understand the local market that well. We don’t fully understand how it’s different from our home market, and that our ideology might not be 100% the best fit for our new market. As you’re interviewing candidates for key hires in the new market, they may express views about which users to target, how to market the product, and how to build the organization on the ground. Chances are, if the person is a native and the market is different from your home market, you will have some disagreements. This is normal and a product of you being an outsider and living in your ideology, so you should think twice before dismissing such a candidate as you would if you were hiring for your home market.
Joel Leong, founder of ShopBack (AW#13), APAC’s leading cashback rewards platform, now in active nine countries across the region, has often spoken to us about not just hiring a local person to lead the new market, but fully empowering them and giving them the leeway and resources to execute the plan that they have developed, as if they were a founder themself. Joel often moves to the new country himself for several months at the beginning of each market entry to fully grasp what’s happening on the ground, but always passes on the reins to the country manager after setting up the local team.
We reach for control over local creative units. What’s even more dangerous is that we tend to feel most strongly about creative units like marketing and local product design. Many founders and organizational leaders are well-traveled global citizens who may have even studied and worked abroad. We may overestimate how well we actually understand the customer and how they respond to the product or the marketing. When local managers are telling you something that seems totally unintuitive given what you know about something subjective or creative, our first reaction will be to resist. This is in contrast to non-creative units like finance, IT, or production — boring stuff where local requests are usually approved without a second thought. Of course, the success of entering a new market often hinges on the creative aspects, so leaders should be mindful when hiring or evaluating local resources here.
CK Cheng, founder of AsiaYo (AW#12), the Series B travel booking platform which has raised $10 million to-date, shared a few experiences with me on this topic. At the outset of market expansion, AsiaYo used a centralized decision-making structure. “I made the decisions whenever I had a strong opinion, and I would take responsibility for them,” he says.
But later, as they expanded deeper into Japan and Korea and now Southeast Asia, they shifted to a decentralized structure covering their large geographical footprint. Why? “I realized my hit rate was so low [making the correct decisions]” he laughs. “Now, it doesn’t matter if I feel strongly about something or not – I’m not the person on the ground. So I spend more time making sure that the decisionmaker has a good decision-making framework, and is connected to the right stakeholders in the organization, so that they don’t need to consult me.”
CK describes his current hiring approach in new markets as “trust over capability” – placing more emphasis on trusting the candidate over his own subjective evaluation of their capability. To increase this trust, he stresses finding people recommended within his close personal network – both his Japan and Korea country managers were second-degree connections. By hiring based on trust and track record, he doesn’t need to worry about being on the exact same page in terms of strategy and approach.
So what can we do?
I think the first step is just awareness — being aware that all people have certain tendencies that are ingrained in our psychology. And that sometimes it works for us, but other times we need to take a step back and be very conscious of our blind spots, such as when we enter a new market, whether that’s geographic or otherwise. This is not as simple as it sounds when you are a manager or running a company; making a wrong decision in a new market is a scary thought and can lead to major consequences. It is easy to acknowledge that everyone has blind spots, but only when one understands the root of our own personal management psychology can we truly make an informed, unbiased decision.
When you’re making the hire, you might consider giving a long look to that candidate who firmly disagrees with you on the approach but has a proven track record of success in the new market. This way, you’re conscious of your own pitfalls and can actually use it to your advantage, by finding someone who disagrees with you in certain respects. And you can have confidence and trust in their execution given their prior record. Feel and embrace the discomfort that will surely come with this decision which stems from natural human tendencies. Let go, trust, and empower. This takes tremendous mental discipline but could be a practical way to make better hiring decisions.
【We welcome all AI, Blockchain, NFT, or Southeast Asia founders to join AppWorks Accelerator】
Sophie is an Associate in the investment team. Before joining AppWorks in 2020, Sophie had 10 years of experience covering public equities. She was part of the portfolio management team at Neuberger Berman, focusing on emerging market opportunities. Prior to that she served as a research analyst at Credit Suisse, JPMorgan, and London-based Autonomous Research. Sophie holds a Master of Finance with distinction from Warwick Business School and BS Finance from National Taiwan University. Her passion and expertise, however, extend far beyond just researching companies and industries. She is also an author of two published poetry books and holds a keen interest in human psychology and human behavior.
Whilst founders and early investors often regard an initial
public offering (IPO) as an end goal, public market investors rather see it as the company’s first
debut, akin to the NBA draft. With that said,
there are some key qualities that the capital
market looks for in a public company. In fact, there is already a standard of
what is regarded as a ‘good IPO.’ I believe by understanding this, mid-to-late
stage founder-CEOs can design a more
structured roadmap for going public, or even rethink whether
an IPO is actually the best option for their company. This piece of article is more written for growth
stage founder-CEOs. However, if you’re an
early-stage founder, I believe this article can also shed some light on what is ultimately valued the most
in the sometimes arcane process of filing for an IPO.
Trust is what helps
companies earn long-term loves in the public market. It’s a playing field with big guys that have already proved their sustainability, building layers upon layers of trust as
each quarter passes. Trust is cultivated not only through data (a result of management and
operation), but also through market reaction. This means, executing a good or even strong IPO is indeed very important because
the trust is then solidified from day one.
Three qualities: Growth, Size, and Momentum
From my 10 years of experience in both brokers and asset
management firms, I see growth, size, and
momentum the three qualities that
overwhelmingly dictate the success of an IPO. Usually
a banker would prepare a scorecard, rating a handful of factors that
advise the parameters of a public offering. But, these three in particular have
an outsized impact on a company’s debut, and understanding
their underlying mechanics can help founders
become more informed before they enter the negotiating room and differentiate true advice from sweet words. I will also introduce
a few unfortunate case studies to help illustrate the importance of these factors.
Growth
Growth, like in any fundraising process, is the most important factor. In the public market, growth expectations are not as high as in private, early-stage startups where 100% month-over-month is the norm. However, a 3-year compound annual growth rate (CAGR) of 50-60% is still an ideal benchmark to strive towards, at least for a technology company. Consequently, timing of an IPO is a key consideration for startups; list while there are still strong growth prospects, otherwise poor market feedback is all but certain.
Candy Crush Saga, a staple among every grandma’s home screen, had gone through such pain. Its Irish parent company, King Digital Entertainment (delisted in 2016), first filed for an IPO in September 2013. Soon in December 2013, news about King’s consideration of delaying the IPO due to market concerns about the sustainable growth of the company had spread. Back then, Candy Crush Saga accounted for over 75% of King’s gross bookings and it has already reached 500 million downloads, topping the charts of the iTunes store. From the IPO filing, monthly unique players (MUPs) had already declined in the latest quarter by 6.5% , whilst gross bookings and revenues dropped 2-3%. This implied a negative signal for the growth expectations post IPO. The resulting impact on King’s stock price was evident, down 16% on the day of the IPO, with its valuation dropping US$ 2 billion (from US$ 7 billion) in the span of two months. Moreover, the follow-up financial reports confirmed the market’s concerns; King delivered a mere 20% in revenue growth in 2014, and subsequently declined 25% in 2015.
Chart: KING already showed a decelerating trend of MUPs and Gross Bookings in the last reported quarter (4th quarter in 2013) before IPO.
Size
Size is a very important factor, but often overlooked by many startup
founders; although, it may matter less if the growth rate is significant, say 80-100%
year over year. Size encompasses both a company’s market cap and daily trading value and collectively determines the number of investors that can potentially
participate. In Asia, the most ideal professional fund size is at least US$ 1-3
billion, which means an average position would be minimum US$ 20 million. This
implies two things: (1) since most funds are
not allowed to own more than 10% of the company, there’s an implied minimum market cap of US$
200 million; and (2) even if a fund is willing to trade for 60 days (three
months of working days) to buy enough shares,
it means the daily trading value needs to be US$ 1.6 million at least (assuming
a fund would not trade more than 20% of the amount to avoid affecting the
price). However, the math here represents the bare minimum case. Most investors consider US$ 500-1,000 million as the bottom threshold for market cap, with anything below yielding
very little appetite.
Many startups in Asia might face issues here. In Taiwan, it is a very common experience.
For example, we have Kuo Brothers (8477
Taiwan), one of the main e-commerce players that was listed at a valuation of
only US$ 30 million. This already implied a potential daily liquidity lower
than US$ 1 million, greatly limiting the size of the potential investor
pool. I was fortunate enough to chat with the chairman of Kuo Brothers Jerry
Kuo and get his thoughts on this matter: “We certainly recognise the limit from
our size, which actually leads to Kuo Brothers being greatly undervalued.
However, coming to the public market still has its beauty, especially in talent
recruiting and business expansion, at least for Kuo Brothers at the current
stage. I believe in time the market will recognise our value as we grab more
shares from this highly potential market in Taiwan.”
Despite many Southeast Asian stock markets sharing similar features as Taiwan’s, founders in this region have long recognized the necessity
to expand and reach a certain scale before even
thinking about filing for a public offering. Sea
Group’s 2017 IPO on the NYSE paved the way for
Southeast Asian startups. It was the first unicorn from the region that went public at a valuation of over US$ 4 billion. Many other
unicorn startups in excess of that size including Grab, Traveloka, and Gojek
are now on deck.
Momentum
Momentum is the last but
no less critical factor for a successful IPO. When I
say momentum, I mean the market reaction in the first couple of days or months preceding
a company’s first day of trading. Some may regard
momentum as a function of trading or
expectation management. I would define it as a
reflection of a founder’s ability to deliver on their promise to the market. Momentum is generated only
if a company achieves, if not exceeds its forward-looking guidance. It is about
execution. If there are any technical matters to take into
consideration, at most I would suggest avoiding setting your listing window
during major political or economic events such as elections or Fed meetings.
I would categorize momentum into three stages. These stages
all matter, but it’s better if a
company builds a strong momentum throughout, or at least exhibits a gradually recovering trend.
Stage
1: The IPO day – I would recommend that
a company must never underestimate IPO day. It very often sets the tone of the
market reaction. It is a direct reflection of the market’s appetite or view of
the IPO pricing, and future growth potential. When deciding the IPO valuation, higher doesn’t necessarily always mean better; a valuation on the high
end could lead to inflated expectations and therefore a higher probability of
price correction on IPO day.
Stage
2: Before the first reporting –
Investors tend to build some buffer in their model. They tend to apply some, if not a major discount to the
guidance outlined in a company’s IPO prospectus. That
is why expectations are rather mixed and vulnerable before the first reporting.
Do not do anything that leads to further doubt. Again, it is about execution. A
company should deliver what it has promised, signalling that the
business is on track and in good hands. Any mistake (or misfortune) at this stage
could instantly break investor trust, requiring
an extensive amount of time and effort to rebuild it.
Stage
3: First reporting day – A company
should deliver a good set of results that are in line with the guidance provided during the IPO process.
The market reaction on the first reporting day will anchor a basic view on the
company. If the reaction is strong, the company would have secured a
solid level of trust among investors. On the other hand, a bad reaction would take
extra effort and time to rebuild the company’s positioning in investors’ minds.
Snap’s IPO in 2017 is a great example here. Although Snap’s
share price surged 44% on the first day of trading, the stock price soon lost
momentum. Major reasons were related to the uncertainty of the IPO valuation,
which was at 62x P/S ratio vs. Twitter’s 4x and Facebook’s 13x back
then. Stock price fell 50% from the peak before the first reporting in the second quarter of
2017. However, the results made the situation worse. New installs of Snap dropped 21% year over year,
comparatively worse than Instagram’s 8% year-over-year increase in the
same period. Revenues and user growth also undershot, eliciting deep
disappointment among investors and sending the price of its stock even lower. After this, Snap hovered at a low-price range for two
years until they managed a comeback in 2019.
Focus on your flywheel
Given the qualities discussed, I hope you now have a better idea of what exactly it means to be IPO-ready. My final piece of advice echoes popular sentiment among the most common early-stage pitfalls to avoid—premature scaling. Do not prematurely go into an IPO for the sole purpose of competing against the big guys. We all agree that going IPO has its merits: It offers an exit for your early investors, and lets veteran employees realise the value of their ESOP and efforts. In the meantime, the public market is indeed an effective and open place for (friendly) funding. However one should not ignore the fact that public market investors are not like the VCs and angels who spend years watching your company grow. Every inch of your ambition, vision, and execution are now under the eye of public scrutiny, where investor reactions tend to be immediate and widely irrational. So irrational, in fact, that an entirely new field of study has emerged called behavioral finance, where a handful of psychologists and economists have already been awarded Nobel Prizes. When expectations go sour, both valuation and liquidity (trading value) drain even faster. This vicious cycle can significantly impede the value and momentum of your business, taking years to build up again.
Therefore, I would highly recommend growth stage founders put a proper plan in place when considering an IPO. Make sure you have good growth, good size, and good execution and hence can deliver good initial momentum. Only then will you be in a position to reap the full benefits of the public market.
【We welcome all AI, Blockchain, NFT, or Southeast Asia founders to join AppWorks Accelerator】
衡量每個 NFT 的價值，技術並非主要考量，最重要的關鍵，在於發行者的 IP 或是 NFT 內所涵蓋的內容。好的內容來自有特殊的歷史意義、創新的表達方式、獨到的詮釋觀點與角度⋯⋯等各種面向，也因此，媒體用心製作的好內容，在 NFT 的模式下，將有更多元、更有效率的內容變現機會。
《連線》(Wired) 雜誌創辦人、科技趨勢思想家 Kevin Kelly 在 2008 年的經典文章「1,000 位鐵粉」(1,000 True Fans) 就預言：「成功的創作者，你不需要數百萬位客戶，你只需要 1,000 位鐵粉 (True Fans)，這些鐵粉，會購買任何你創造的商品。」
對媒體來說，NFT 模式則將 Kevin Kelly 的預言更進一步實現，因為鐵粉有更方便、更實質的支持方式。以我個人為例，從小就愛閱讀雜誌、大學編校刊，從第一份工作開始投入雜誌與媒體工作 18 年，至今仍收藏許多雜誌，例如 911 事件、Michael Jackson 過世、Steve Jobs 過世、歐巴馬首度當選美國總統、Facebook 用戶突破 10 億人⋯⋯等重要歷史事件，我都會選擇我最信任的雜誌品牌，購買能提供我最權威、最具歷史意義觀點的當期雜誌來收藏，甚至會購買收藏特殊期數的復刻版；在雜誌工作時，也經常會有企業、受訪者或是教學單位，希望授權報導的文字內容、照片、資訊圖表 (通常收不到什麼錢)。在 NFT 模式下，這些行為都變得更有意義與價值，媒體有更具體的變現與獲利方式，收藏者手中具有歷史意義、特殊價值的媒體內容，也有了更客觀與便利的鑑價和割愛交易方式。
