How I Launched This Company

Welcome to Cloudflare TV, our session on how I launched this company with Steve Melhuish. And I have to check, even though I've now known Steve for years, am I pronouncing your last name correctly? No, but nobody tends to anyway. The whole family even pronounces it differently. I say Melhuish. Oh Melhuish, oh gosh, I was way off. It's fine, it's fine. Steve is okay. I know how to spell it and I just usually call you Steve when I see you. Okay. And I didn't even think to check before the interview. That's terrible. It's okay. We're here for half an hour with you to learn about launching companies. We're likely to have watching this budding entrepreneurs, wishful entrepreneurs, people partway through their journeys. And you have launched Property Guru, which is a well-known real estate platform, or maybe that's not the word you want to use. So we're going to get to that in a minute, across ASEAN. And you've also launched a new company now. So before we go into Property Guru, why don't you tell us a little bit about what you're doing right this minute in terms of the company and business you're building and the values that you are espousing with that? Well, thank you. So yes, as you said, I'm not an entrepreneur. My most recent business has been Property Guru and I've had three startups. And also I'm a venture capital company, working with a venture capital company called Wavemaker. And I've also been angel investing. I've invested in about 25 companies over the last 16 years or so. But the focus in the last 18 months has very much been around sustainability. Two years ago, the climate records were getting broken all over the place. And the drums seem to be getting louder and louder with record floods, record temperatures being recorded, record decade on record, record temperatures in 2019, oceans heating up. And it seemed like that was all accelerating. And based on all the research, I realized that it's not going to affect me necessarily and my generation so much, but it's definitely going to affect my kids and their kids. With up to a billion environmental migrants as a result of climate crisis, if things continue the way they are. And so at that point, I decided that I had to try to do my own little bit to support that, both in terms of how we behave at home as a family and what we consume and how we consume, but also in terms of working with companies that are trying to make the world a better place. And so there's about 10 or 11 companies which today I'm working with, ranging from air quality, solar power, food waste, replacement dairy, using cell-based technology, etc. So yeah, that's what keeps me awake at night, trying to do my own little bit to make the world a better place, both in terms of climate and also from a social point of view and the people that could be most impacted, particularly at the bottom of the pyramid. I think some people, a common term for that is social impact investing. And I guess what I've learned about it over time is there is this mix that fits with your entrepreneurial bent, which is doing the right thing, but also finding a way to make it profitable so that people keep investing. And it's not seen as charitable, but actually something that's not only good, but creates returns so that it's kind of self-sustaining. Is that correct? Yeah, I mean, if you think about the spectrum from, in terms of how investment takes place, everything from investing in everything for purely financial return, including things that are doing harm, to trying to steer clear from things that are doing harm, to nowadays slightly overused and ESG, you know, similar environmental, social and government best practice, through to impact investing and then philanthropy at the end. So, you know, maybe more businesses, maybe less financially, organizations are less financially viable, sit in the philanthropy space. But I guess where I'm focused is very much around the impact investing space, which is companies that are trying and organizations that are trying to solve big problems, in many cases, using technology and with the aim of, you know, improving and having an impact on climate and also social impacts of people and planet, but also with financial return, you know, so they are financially sustainable businesses as well. So there's 11 that I'm working with are all in that space and what would be impact investment organizations. Are they all in Asia? Are they all part of the Southeast Asia startup ecosystem, where I know you're a key player? They are all in Asia, they're all hedge queued in Asia. So for example, one of them is in Bangladesh, but the majority in Southeast Asia, but one in Bangladesh. Yeah. And how do you, how do you find those? One last question on these before we go back to your other startups. How do I, what, yeah, yeah, it's, it's a combination of sources. I mean, some of it's just through, through network, word of mouth, you know, I work with a whole bunch of impact investors, and people are involved in the impact space. I'm obviously heavily involved in the last 16 years in Southeast Asia in the startup scene. And so many of these are, you know, startup or, you know, scale up organizations, just happen to be focused on that particular niche. So it's a combination of different things, different areas. And so I see two or three a week in a busy week. So there's plenty of opportunity. And yeah, and some, some great people who really want to make a difference. And that's, that's what's been so encouraging, seeing some, some really experienced entrepreneurs starting to shift into this, into the sustainability space. And, and there is, of course, a big wall of money coming, you know, it's driven from the funds, it's driven from regulation, and it's driven from consumer activism as well. And so there's increasing pressure on existing organizations, and also gaps and opportunities created for startups in this space. So it's very, very exciting. And, and yeah, I feel very grateful to be to be in that space. And I'm on a, I'm on a journey, I'm still learning as well. I'm a little bit new to the to the sector, but it's, it's been good fun so far. Well, tell us about your journey, maybe from the beginning. I don't, you know, maybe not elementary school, but how did you get started in your work career? And how did that whatever you did first turn you into an entrepreneur? Like, was it right away? Did you start a company right away? Did you work for other people and branch out? Tell us a bit about it. Yeah, so, so my early childhood, the first first 18 years or so, I was an army brat. So my father was in the army, he was an officer in the army. That meant moving around every two years. There's a new home, new school, new friends every couple of years. And I'm sure that's had some deep rooted psychological damage on me, but hopefully also some positives that come out of that in terms of ability to adapt to different cultures and circumstances. And then I spent 10 years in the telecoms industry and, you know, showing my age now, but this is the 90s into the 2000s. And it was hugely exciting because the telecoms industry was in many countries was going from monopoly environment to a duopoly to full market liberalization. You had the rise of mobile, you had dot com boom happening in the late 90s into the 2000s. And on the back of that, you know, telecoms was booming as well. So, you know, the backbone for all this Internet traffic, fairly small Internet traffic, but in those days was was fiber optic and telecoms. And so the two went hand in hand. And, you know, it was it was really exciting times. And I learned a lot in those corporate days, but also, you know, really, really enjoyed it. And that's where I really got the entrepreneurial bug. Because the company I was working for, what I started working for was it was a was a competitor to the monopoly. And so, you know, one of the minnows fighting the big players, I was then leading teams, opening up new markets in Europe, as they were liberalizing, working with mobile operators, as they were allowed to do things slightly on the regulatory gray scale, cable TV companies moving in, bundling up with telecoms. And so it was really, really exciting times. And, you know, very pioneering activity. And, you know, the company I was working for when I left was a company called Cable and Wireless, which has gone through some iteration since. But this is for me was interesting, because 2001, the leadership team announced a new strategy. And it was called PI. So people, information, and entertainment in the palm of your hand. So their vision in 2001, was everyone have this kind of smart device, and it'd be connected to this thing called ASP. So application service providers, which is essentially, as we know, called cloud today. And you'll be looking, you know, information, entertainment on a smart device, fantastic vision. And they bet the whole house on it. They sold some big assets, $13 billion, bought 24 Internet based companies to really go on a journey on this. And it was a fantastic vision. But it's just just the timing was wrong. It was off by about 10, 10, 11 years. Very visionary, importance of timing, clearly. And so yes, I learned a lot during those years, in terms of, you know, and caught the entrepreneurial bug, I guess, as well. And then from there, then I spent six months traveling around Southeast Asia, my girlfriend and now wife kind of fell in love with a little bit of Asia, I started my first business, which was helping corporates to innovate, as well as helping some startups like Skype, when it was 10 people in effectively a shophouse in London. And, you know, I just I kind of fell in love with this whole digital startup and Asia. And that was on my post it note, on my wall in Europe. And that kind of led me on a journey to here in Singapore 15 years ago. And, and, yeah, been happy having fun in the startup and entrepreneurial space ever since. That's a great story. So I took a couple things away from this already in terms of ideas, but importance of timing, which is partly thought and partly luck, and really getting some experience about being a challenger brand learning how to challenge which I like. I also like that you kind of did something because you just wanted to do it like move to Asia or fall in love with Asia, as opposed to, it was a plan. You know, it's I think that there is some bit of serendipity in how everybody's lives and businesses turn out. Maybe Can you then tell us how you specifically came to live in Singapore got the idea for property guru and started building it? I don't even know if that was the original name or what happened. Yeah. Yeah. Okay. So I guess I mean, Singapore, to be honest, Steve, just probably get you to describe what property guru is. I've been on the site so much and asked you so much for, you know, offline advice and used it. I'm very familiar with it, but not everybody's from this part of the world. And maybe people aren't real estate shopping. So let's tell them what it is. Okay. Okay. Yeah. So, so I guess, first of all, you know, what kind of led me to Singapore that, to be honest, was a little bit of an accident, you know, so I had this post-it note, digital Asia startup on my wall. And for me, real Asia in 2004, 2005, where the opportunities were with China. And so I was talking to startups and VC venture capital companies in Shanghai, going back and forth from London. And then my wife's company, she worked for a large drinks company, had a reorganization and all the people had to reapply for their jobs. She was running change management, one of the change management functions for this company. And she reapplied for the job, running, doing the same role in Asia. And they offered it to her, but not in Asia was Singapore. And at that stage you went, ah, Singapore is boring. We don't want to be in Singapore is, you know, there's more, far more exciting places to be. But we thought it'd be a lot easier to go from Singapore to Shanghai than from, from London to Shanghai. And, and then that was 15 years ago, you know, the roots start taking and, and we, you know, we've been here and I'm very, very thankful and grateful for, for what's happened since, because, you know, I, I continue to continue my angel investing here. I ended up being asked to come and run a startup mobile content startup here and in Singapore. And, and then in 2007, the, the real estate market kind of exploded and that's what led to, to Property Guru. So, so what is Property Guru? So Property Guru is a online property platform and it connects buyers and sellers together. So we have 25 million people every month looking for property, whether it's to buy or rent across five countries. And we work with about 50,000 real estate agents and real estate developers across those markets in Southeast Asia, in five countries. And we connect the two together. It's a marketplace. And the sole objective and the prime, well, the primary objective of what we do is to make the consumer journey on property a lot, a lot easier because it was quite complex and quite challenging. So, you know, we want to empower consumers to make confident property decisions, whether it's to buy or to, or to rent a real estate, a real estate, basically. Can you tell us which five countries? Singapore, Malaysia, Indonesia, Thailand, and Vietnam. Five of the big six, I guess, not, so not, we're not in the Philippines. And is that a conscious choice not to go to the Philippines or is that on the roadmap? Are you allowed to share? Yeah, we, we will, we will, I mean, we will look at it at some point is we're not in a big rush to be, to be frank. The way the business model works is it's far better to be deep and strong in one market or a specific market rather than having pins on a map and being in multiple markets. And so we've taken a very steadily to go from one country, Singapore initially to then, you know, four, and then, you know, in the last two plus years, two to two and a half years into Vietnam as well. So we're not in a big rush to add new countries. What we are doing is investing more heavily in existing countries to build the consumer products and technology proposition, the brand, and the relationships between, between us and the real estate agents and real estate developers and banks in those countries. So you said the model works better if you go deep. Are you able to tell us a little bit more about the model? You told us what the platform does, but what's the, are there some insights about how the model works? So the business model is, if you think about, we're a two-sided marketplace. So we have the consumers on one side who are looking to buy or rent property. And on the other side, we've got real estate agents or real estate developers who are looking to sell or lease their property. And so for the consumers, it's a free service. You know, you can search and find, you can research, look at pricing information, look at trends, photos, videos, 3D floor plans, all those kinds of things in terms of to make your decision easier and better on the consumer side. And we've innovated heavily around that in terms of AI and machine learning and personalization technology to improve on that. And then on the other side is the real estate agents and real estate developers who we monetize essentially. So with the agents, they pay an annual subscription fee and they also will then buy discretionary additional services to provide increased exposure and more leads for their listings. And the property developers, we have a software as a service platform, which is a sales and marketing automation platform, which allows them to manage all of their marketing material, pricing information, yield management, sales and marketing into the software as a service platform, which we call FastKey. And it allows them to manage the sales and marketing process and optimize that, including, you know, maximizing yield from pricing because you can see the inquiries coming in. And then we obviously help the property developers to then promote and sell their property as well, domestically and also internationally. So for example, we're just running a large campaign for a developer in Singapore at the moment to reach Chinese buyers using, you know, digital technology, digital viewing, 3D walkthroughs and this kind of thing. And also then doing, you know, webinars and sales presentations between the buyers and also the developer in Singapore in this case. So we make money from this software as a service platform with the property developers and also from marketing. And about 60% of it comes from real estate agents, about 40% comes from property developers across all the markets. We also run a property awards business in 12 countries across Asia. So the Vietnam property awards is our awards platform. The Philippines property awards platform is run by us. We run it in Sri Lanka and 12 countries in total. And that gives us the ability to find through an independent judging process, the best properties in the market and showcase them. And it also helps us build relationships with the property developers at a CEO and chairman and owner level. That's really clever. That's really insightful to me too. It's interesting. So it's probably not necessarily a huge money spinner, I don't know, but it gives you all these relationships and an entree and a way to see the market before you go in. Absolutely. And also build relationships with the key decision makers. As we know in Asia, a lot of it's around the relationships that you have. And so that awards business has been great for us to help build some of the relationships with the key decision makers. So when we were getting ready for this talk, you were telling me that sometimes you overshare. So we're looking forward to that on this. I was wondering if you could tell us... Keep myself in check, all right? Don't overshare too much. I'll stop you. And nothing that would get any of us in trouble, but we'd love to hear a bit about some of the things that worked in building the business, and then maybe some of the things that didn't work that you learned from. And when you get to the didn't work, you had some interesting categorization that I liked, which is there are hiccups or things that didn't work, which you can control and change. And there are things that didn't work, but they're out of your control. So for example, all of us who are dealing with differences from COVID, it's something that's gone wrong, not what we planned for our business, but not something we can control, as opposed to if I hire the wrong person, I could do something about that. So really curious to hear about some of the key things that worked and some of the ones that didn't into each of those categories. Okay. Yeah. So I think the things that worked has been consistently focused around that one big problem that we're trying to solve, that one big pain that we're trying to solve, which is to make the consumer journey, to remove the friction and pain from that consumer journey and empower the consumer to make more confident property decisions. And that's meant that increasingly more and more investment into the product, the technology, the user experience, the data science team, the machine learning technology that we're using to improve the user experience for the consumer, the content that we generate, the research we generate, the pricing information we generate, the ability to do financing, that kind of thing. So that was the number one objective when we first started the business. And the main reason why myself and my co-founder started it and continues to be, it's an ongoing journey. And I think we've done a great job in terms of taking where it was to where it is today. But we still have a way to go as well on that. The things that haven't gone so well, I think, reflecting a little bit, I think for the first three or four years, we just focused on Singapore. And then having built a strong, profitable, fast growing business in Singapore, we decided it's now the time to cut and paste and move internationally. And one big realization is doing that with a consumer business from one market to multiple markets in Southeast Asia is not easy. We completely and utterly underestimated the challenges of going regional. We completely underestimated the challenges of from a product point of view, a user experience point of view, an organizational development point of view. At that stage, the whole of the organization was focused just on Singapore. And then we hired 250 people. We lost 250 people. We had to rehire them. So there was no real onboarding. We're pulling people from Singapore, from the sales, marketing, HR, finance function to help in each country. So of course, they then got, they were not focused on the home market, in that case, Singapore. So Singapore momentum, you know, reduced the innovation that was taking place in Singapore, you know, improving things the whole time was suddenly then distracted. We look at mobile apps for consumers, mobile apps for agents, one market, multiple markets, multiple languages, single platform that we had suddenly became a little root off for Malaysia, a little bit root off for Thailand, a little Indonesia. Suddenly we had four different platforms as well. Each of those will have their own little bugs and things, which then you have to go and fix all those bugs separately and different on the different platforms. And we did it, we did it because we, you know, we went from one market over four years to four markets in four months. Because we thought that the barriers to entry was so low to build a property website, anyone can do it. So let's, you know, we better hurry. So the realization was that out of that is that you don't need to sprint. You know, we didn't need to go as fast as we thought we did. Because things just take longer than you think can be a lot bigger than you think. But that was a realization, you know, in retrospect, but you know, over a two year period, we almost broke the company, we stretched it to breaking point. You know, morale suffered, the business in Singapore slowed down, the innovation machine slowed down. And, you know, we then had to then backfill and rebuild. And, and a big, a big key issue for us and big learning for us was we had no regional leadership team at that point. So then we had to go and build the regional leadership team, we had to then professionalize parts of the organization, you know, build the finance function with a CFO, our first CTO, you know, our first head of HR, first CMO, and start to professionalize each function and build in the regional leadership team to be able to support the scaling. So rather than taking two or three years, which we thought would be the case to build out the international is take about six years before we actually have strong businesses. And that now the position is 50% Singapore, 50% outside of Singapore, a highly diversified business, profitable business, growing nicely. But you know, we went through some challenges in that that that that fast growth period, that was a self inflicted, controllable, we did that to ourselves. And that's that was that was a challenge from an uncontrollable point of view, I guess, other than COVID-19, I guess, more recently has been around the IPO process, you know, so we were looking to do an IPO towards the end of last year, and we were were three days before doing that. And the book was oversubscribed. And we had with investors in the US and Europe and, and also Asia lined up and, and then, you know, we work went from $45 billion to $8 billion on the Wednesday, and we were due to list on the Friday. And, you know, we were oversubscribed, so we could we could have we could have still gone, but we had big concerns that, that the price would would would suffer as a result in after trade. And therefore, we decided to pull a plug, which was extremely hard, because there's so much money, time and effort invested into that process in the previous four or five months, particularly, and particularly the finance organization as a big anti climax. But I was completely and utterly out of our control. Gosh, I bet. Yeah, it's not just because I think what happened with WeWork, it sort of tanked all the IPOs for a little while. And then on top of that, you're in the same vertical, you know, I mean, it's not the same kind of company at all, but it's real estate in a in a bigger term. So that's Yeah, yeah. So we talked about wireless timing, and this timing, these things were great idea, great company, great product, something else happens, and you have to come back from and it clearly it hasn't impacted you guys at all other than I mean, so we ended up the year. Yeah, we exceeded our prospectus numbers quite considerably. You know, revenue grew, I think, 25 26% last year in a profitability grew by about 40 50% last year. You know, so so you know, we didn't impact us at all. But what it did highlight is that, you know, the investors tend to look at things in buckets. And you know, there's a big technology bucket. And so that when something like WeWork happens, it kind of impacts all technology businesses. Despite the fact that, you know, our business is like 85 90% gross margin business, it's, you know, the market leaders and other markets are doing, you know, 60 70% EBITDA margins, very cash generative businesses, the business model is proven and across 20 different countries. And when we prove we've proven it here in Southeast Asia as well. But it all just goes into the into the technology bucket. And so then all technology businesses suffer and maybe, you know, technology real estate, we get put in that bucket, even though the business models are completely different. You mentioned in this that you have a co founder, I think his name is Yanni. How do you guys how did you sort of share the responsibilities as you developed it? And how do you share them now? Yes, so so Yanni and I, you know, essentially co ran the business, but I was CEO. And I looked after all the sales marketing front end part of the business invest in all the investment rounds and this kind of thing. And Yanni looked at product technology in the back office, that's broadly how we got to split things. But you know, we didn't know each other before starting, we were very, very fortunate that it kind of worked out, despite the pressures and the challenges that we had over the sort of 10 and 12 years. You know, and disagreements we had, but, you know, we were eight boxes of, you know, Myers Briggs were completely polar opposites of all of the all the categories, which could be a recipe for disaster, or it could actually be something that works. And in our case, it worked. And the reason I think it worked is because we were very complementary. And naturally, then different issues and roles and challenges fell on the laps of the right person. And when we did have disagreements, it all went back to the division, the values and the culture, you know, what we're trying to build. And the fact that we sat down, you know, most Saturdays and Sundays, and to realign and talk about some of the key challenges that kind of helped. But yeah, very, very fortunate, you know, that, that we that we survived and, and thrived on on that relationship, but it could obviously go the wrong way. But in our case, it didn't. And as a little bit of luck, you know, we started working part time initially, just to get to know each other a little bit, and then went full time, you know, at the end of 2007. So yeah, it's been it's been it's been a really happy partnership. Spend more time with Yanni than I did with my wife in the first five years, you know, we were working seven days a week, 40 nowadays. And so yeah. Um, so just because we're getting close to the end of time, I wanted to focus in on you've obviously, you know, we didn't talk with the other companies you built, but you're obviously very successful. You've been a strong entrepreneur, you've weathered some storms, both of your own making and of other people's. I'd love for you to share some advice with others. We've got some insights, which I've already reiterated, but where do you go to get ideas or to to share when you need to either vent or get help? Do you how do you get advice? Right? Like, we're all coming to you for advice. But how does an entrepreneur where do they go to get advice for the people who are on this and want to know for themselves? Yeah, I think first and foremost, you know, I'm very, very thankful. I've got a amazing wife who's been incredibly supportive throughout the whole journey. And in many cases, helped me see the wood for the trees. And she's been the common in that. And also co founder, obviously helped outside of those two. I'm a member, I've been a member of an organization called EOs entrepreneur organization for the last 10 years. And particularly my group, my forum of eight other entrepreneurs who are running different businesses from stainless steel trading to beauty products to motorcycle parts, very different to my business. But through that process, it meeting for four hours every month talking about business, personal, family, community, and challenges and sharing in a completely trusted environment has been fantastic. And it's been great for me. And over above that, which has been a constant, I guess, and a more holistic, you know, approach, you know, specific contextual issues like how to build a really high performance sales organization, how to build accountability and into your organization, you know, the succession plan, you know, when I when I hired a new CEO and managed that succession plan, you know, that, you know, we had a coach for those three examples, you know, who helped address some of those challenges. So I've been thankful to have some of that as well. Yeah. Hey, we have one minute left. Is there any one last bit of advice that you'd give? You're again, super interested to have heard your journey and hear how you also get advice and hear the insights. Any one last thing you'd say to a striving entrepreneur? For thriving entrepreneurs, I'd say just just absolutely go for it. Focus on the pain, you know, the big problem that you're trying to solve. And, and then don't worry too much about having lots of smart ideas. It's a lot. It's all about execution and hard work. But focus on that pain, focus on the problem and just fixate on that. And then you will build a successful business, I'm sure. Thank you for being willing to spend the time and share your expertise. It's been great chatting with you.