newsmaker Impossible to build and sustain a Web service that competes with one of Internet giant Google's most used products? Singapore startup, Gothere, did just that.
Co-founder Toh Kian Khai, who also serves as the map services' director of business development, noted that "good ideas are aplenty" but it is the execution of the ideas that is crucial to the longevity of a business. Since its launch in May 2008, the company strived to keep itself relevant by offering services such as street-level mapping, driving and public transport routes and even venues for political rallies prior to Singapore's General Elections earlier this year.
Growth for its map services business is now slower than in its earlier stages, Toh admitted. However, he pointed out that Gothere's user base is still increasing, which proves the service is still attractive and relevant to users.
While Gothere is the team's first brainchild, the company now spends only about 30 percent of the time keeping the site running as it is working on a new project, he revealed, adding that he is only involved with certain aspects of the new product.
The new project--Flight Lover--is a paid Apple iOS app which helps users find cheap budget flights. It is currently available for free as a limited Web service.
In an interview with ZDNet Asia, Toh discusses how the company came about, which IT company's strategy the team subscribes to, and why connections matter to entrepreneurs in Singapore. He also shares his thoughts on a "failure culture" to encourage startups as well as why the company chose the appstore route for its new product.
Q: How did the idea for Gothere started out?
Toh: As entrepreneurs, we did decently well for a first startup. Initially when we first had the idea for Gothere, it was purely out of enthusiasm, passion and in some sense naivety of the real business world. We came together and pieced out a rough idea which was to do something that is already existing and to could do it better.
If you looked at map services then, some of the competitors were entrenched and were pretty much the market leader. To be honest, we didn't really study the market deeply but thought that we could do it better as the existing products sucked and didn't have the customers in mind.
So we went about collecting and processing tons of data before making Gothere work. The whole process took about six months: driving around to map locations, coding and making the product live. By then, the skeleton of Gothere was formed and we used Google Maps API (application programming interface) before the current product was available. We then realized that to make this work, we couldn't depend on Google Maps API because we were depending on somebody else's product.
We finished collecting the data by the end of 2008 and we launched the new Gothere based totally on our own data.
You said the company started because of passion. Did you have funding?
A couple of us had worked for a year--not amazingly long--but we kind of had enough for the equipment and worked out of our own homes where Internet connection was present.
While the company started out with no venture capital, in the end, did you went to look for any?
In the seed funding stage, the National University of Singapore (NUS) Enterprise Incubator Ecosystem played a role and we were also under the MDA (Media Development Authority) iJAM initiative, which I believed started in early 2009.
Did you still remember your elevator pitch to NUS? Or did it just accept the company under its wings?
We kind of knew friends who were under NUS' wings so they brought us in as they could see potential in the team and in the product.
Are you still under both organizations now?
The contracts aren't very clear. We've finished the iJAM funding and we've also exhausted NUS' assistance for this particular scheme. We're not really under their wings right now but we still maintain very close contact with them and still try to attend some of their events.
From 2008 until now, how have you seen Gothere's technology and user base grow?
In the early stages, it was very much by word-of-mouth. The growth wasn't amazing.
But there were a few turning points which resulted in traffic spikes--one was being mentioned in the Singapore Budget Speech 2009. Another was during the Singapore Elections rally period, because the Workers Party used our maps. We're quite concerned about Singapore's politics in general and it was a way for us to contribute by including locations of rallies on our map.
I realized that the site has been serving advertisements. Is that the only source of income?
Right now, the iPhone app is still selling.
The app is able to make money?
To be honest, it's enough to pay a small amount--enough to keep things going.
The ads were quite recently introduced, around early this year. The response has been okay, although not at a rate that was expected. Everything takes time.
Do you have plans to put advertisements in your street images?
Right now our stand is very clear, only one ad on every page and the size is fixed. We were quite hesitant about display advertising but we knew if we were to go that way, we want to do it in a very nice way--make it look attractive and usable. We didn't want to compromise the site too much.
Does the team have a tech company that you look up to?
In a way, yes. If you say to venture capitalists, "Let's build a company." They'd say, "I'll put in US$500,000 and I hope to get a return of 100 percent in five years." How do you go about making that US$500,000 in 5 years? You have to expand, so you take that US$500,000 and try to grow the business quick by hiring more people.
There's another school of thought by 37signals. Salesforce.com might say it needs 10,000 people across the world to sell, but 37signals says it only needs 20 people in Chicago and it can achieve US$10 million turnover as well.
I think we are more inclined to the 37signal's way of doing things: try to be lean and not think that big is the best.
Being a tech entrepreneur in Singapore--and you mentioned that you have friends who brought you to NUS' incubator--do you think connections are important?
Connections are usually understated. It's actually more important than what people usually think. It saves you a bit of trouble getting things done and getting doors opened. I would say I understood the point before I ventured in. But it was reinforced.
Does this mean that having a good idea is not enough?
I'm a bit skeptical about certain things. People in the circle say that good ideas are aplenty and that somebody in the U.S. or India or China has thought of your idea. The main question is: How are you going to execute it? VCs, incubators, potential investors and potential partners are going to ask you that.
The next question they ask is: "How are you going to fight with your competitors?" Over the past few years, we've seen fads. Our year was location-based services, the next year was check-ins, now it's definitely social buying.
You see startups popping up, like social buying in Singapore now. So people will ask you the question: How are you going to outrun your competitor?
If you look at the social buying industry, Groupon basically flew out of the stratosphere compared to its competitors. And because of their huge amount of funding, they were able to buy out the smaller players. If you look at the property market in Singapore, PropertyGuru is the leader while iProperty.com Singapore is part of a group that is listed in Australia so it is still strong. They are not going to just sit there and die down or give up without a fight.
Even for startups, you still have to be aware of how you are going to be on top in the long run. That was something we did not really take into consideration when faced with Google and Streetdirectory.com.
Is there a formula to be on top?
Like I mentioned, it's whether you want to be a Salesforce.com or a 37signals. 37signals is known for a lean force but their reach is immense. Salesforce.com depends on its huge human workforce. You have to choose either one in the early stage.
The product we have, unfortunately, was restricted geographically to Singapore so that limits the opportunities. People have asked us: "How about doing one for Hong Kong or Jakarta or Bangkok?" Yes, it's possible but if you look at our Singapore account, it's not proving to be a viable business model, so what makes you think a VC is willing to put US$500,000 to expand to five or 10 cities. It's probably not going to sell.
For us, we kind of learned it the hard way but probably not as hard as others. But these things have to be thought of pretty much in the early stages. Not in the middle stage where you have one foot in and is probably not the best time to pull back.
Let's talk about the company's other product. Flight Lover started out as an iOS app. Why did the team decided to have an app?
Summarizing our experience from Gothere, we limited our product geographically.
While we have met entrepreneurs who were successful just being based in the local market such as JobsCentral which was sold to CareerBuilder. JobsCentral managed to corner a huge chunk and was the third among the top 3 players in the local market. Even though we might say that Gothere is the third biggest player in the local market, we are nowhere near JobsCentral in terms of revenue.
That we were limiting ourselves geographically was one consideration we did not take into account when we started. We started out without a clear business model, somewhat like Google did in the beginning: do something good and someone will use it. But then again, Google is one in a million. There are at least 10 search engines that I can list but it's the only one which made it. You see one success story, you're missing out on the 999 that didn't make it.
So a business model that does not clearly address traffic and profit doesn't really work for most people. We might have taken our chances too lightly on that. Marketing, distribution channels and sales were also our weak points.
The appstore basically settles the distribution for us. But marketing is still an issue--how are you going to be on top of the other apps? We're still trying to figure that out because no matter what you do, whether it is an app or a Web site, people still need to know of its existence.
You mentioned that the appstore model helps settle the distribution channel. Can you share instances where the Web is better than an app or vice versa?
The Web is more open and browsers are definitely more widely used than a particular mobile platform. But it doesn't take care of distribution. The fact is, people are still more willing to pay for something on the mobile than on the Web. It's an ingrained psychology that "I'm paying for the convenience".
As a developer, how do you decide on app pricing and when to update? For example, if you sell an app for US$5, five years down the road, you still have to maintain the server and everything. Also, users wouldn't want to see ads on a paid app.
The thing about not seeing ads on paid apps is something we agree on. But we feel that the mobile app market is still going to grow. We have about 500,000 iOS devices in Singapore. We believe that there will be enough new buyers coming in.
Right now, we are targeting the iOS platform but definitely there are other platforms we are keen to develop on in future.
Is there anything that you would like to add about being an entrepreneur in Singapore?
There's no failure culture here. In the States, people see a failed startup as a badge of honor. But we don't really see that here.
How do you think this can change?
I'm not sure. It's kind of a cultural thing that is hard to change in five or 10 years' time. I think people are kind of embarrassed to say, "I failed my first startup." The reaction will be kind of like, "Oh, you didn't make it."
But I think that as time goes by, most startups fail and it's a fact of life. But I do hope to see that the second, third or even fourth company that they do is successful and this might slowly change the culture.