Businesses everywhere are trying new things to survive in the new normal, but good fundamentals are more effective than whatever new fad claims to be the answer to business during COVID19. In this episode we hear from Teik Guan Tan, as he recounts his days as the CEO of DS3 when he seized opportunities to grow in spite of the 2013 Asian Financial Crisis. Teik Guan also shares insight on the problems of simply following business trends of going online.
Teik Guan Tan today advises multiple startup founders at Entrepreneur First
, and is pursuing his PhDLessons:
- Focus is the key to success (00:01:27)
- Find and adapt to your business' competitive advantage (00:03:56)
- How SMEs can best adapt to the new normal (00:08:40)
- The power a founder has over the success of their business (00:11:38)
- The benefits of running a mindful business (00:13:41)
- Getting Pricing Right is important for growing a business (00:18:39)
- Teik Guan's view on Doing In Spite Of (00:22:46)
Teik Guan: I used to say that, running a company as a startup, you're probably making decisions based on 20% of the required information. And that is an extremely hard thing to do. So that's the edge of discomfort that you are always constantly living on a day to day basis, and unfortunately you lose a lot of sleep because of that.
Constance: At Konigle, we're proud to help amazing entrepreneurs run great businesses we've learned that the greatest superpower a business owner can have to run a high performing business is doing things in spite of. i.e., in spite of great difficulties.
Hi, I'm Constance, and welcome to the doing in spite of podcast, where we feature business owners and share their learnings.
In today's episode we have Teik Guan Tan, ex CEO of DS3. A business he built and ran for 11 years. He now advises hundreds of entrepreneurs at entrepreneur first, a Startup Talent accelerator, all while working on his PhD. Wow!
Teik Guan, it's great to have you here today
Teik Guan: Thank you Constance.
Constance: How have you been during COVID19?
Teik Guan: It's been great actually doing my PhD was really a soul searching experience for myself and being isolated and doing a lot of stuff by yourself-having the time to do it, has worked out actually much better than expected.
Constance: Yeah I was going to come to that. Usually people drop our of academia to start a business, and yet you have gone the reverse route. Why?
Teik Guan: I've been wanting to do a PhD from I would say almost 10-15 years ago when I was doing my startup. I explored the option, and now that the startup is gone and done (I would say), and I have time on my hands and I don't have to worry about the bills that I have to pay on a daily basis then, why not right?
Constance: Do you think your Phd would help you find an idea for your next business, or is it more to help move the frontier in your area of research?
Teik Guan: I would say closer to the second point rather than the first point. I mean, I'm not going in to do my PhD simply to find the next venture; I think, I think that venture building ideation process needs to go through a mot deliberate process where there is a lot more commercial thinking, there's a lot more in problem definition. While in the academia space then the focus is more on rigour, the focus is more on novelty and really trying to challenge yourself. So, fundamentally different although the topics may come up there. I would say that I'm not yet thinking about a next venture if there is. It will probably distract me so much I will complete my PhD so that's something I'm very mindful of myself.
Constance: As entrepreneurs, we are always excited about new ideas and things to do, but having the self awareness and discipline to stay focused in spite of the distractions of new ideas is one of the greatest strengths. Teik Guan chose to focus on his PHD and actively avoids thinking of entrepreneurial ventures. He recognizes how seemingly related work can hurt his PHD efforts.
Steve Jobs famously spoke about the importance of focus.In his second stint at Apple in 1997, he spoke about how Apple had quote: “People going off in 18 different directions doing arguably interesting things in all of them. Good engineers, lousy management. Focusing is about saying no. And the result of that focus is going to be some really great products where the total is much greater than the sum of the parts.” End Quote. Being able to focus in spite of distractions is truly a superpower for a business owner.
From the power of focus, to the power of adaptability, let's continue our discussion with Teik Guan.
Constance: You mentioned that you had to make a critical business change, or pivot when you were running your last business. What happened?
Teik Guan: I would say that it wasn't just one instance. We had to pivot our business model and changed our product over the time. Because there were problems that came in were always multi-faceted. We had the SARS that happened in the 2003 2004 time. We had the global financial crisis that happened in 2007 - 2008 to mention a few. And during those times we had to really push ourselves. Thankfully we will we managed to get through it.
if I were to quote Winston Churchill right, "Don’t waste a good crisis". We shrunk our product, we changed quite a few things and in fact changed even our pricing model to suit what the target customer wanted.
Constance: Let’s get a bit deeper on how knowing your own strengths and weaknesses, and being swift to be able to cut one’s losses, can not just help navigate a crisis but actually grow your business. Could you tell us more about that one time you decided to work with your competitor?
Teik Guan: Maybe i would give some background story of what I have done, and despite of what everyone tells you rightly or wrongly, it changed the way we look at things. And this was when we built the first product way back in 2003.
We put in our RnD, we built it, we spent a good 9 months to a year building the product out. And we were in an RFP bid for a bank where we submitted our product and submitted our bid. And at the point of time we were faced with the industry leader here. And the way we thought we could win the leader was to really underprice the leader. Our pricing was essentially half of what the competitor was charging. And we felt that since we were local, we had both the locality advantage as well as the pricing advantage. And unfortunately we were on track to lose the deal. Because there were a lot of considerations that were not put in place. First of all, the bank wasn't a fully local bank, it was a subsidiary of a larger global bank. And because the bank was already using our competitor’s product, it was a no brainer.
And we were extremely demoralized. We felt that we did everything right, we even felt that our product was better, but we couldn’t win the deal. This was when we really pivoted. I mean you ask yourself: what were you very good at doing? And on hindsight, this sounds like a great story, but I'll be frank with you it wasn’t easy. I have had long conversations with the bank manager. And he told me this: "DS3, you guys are really good at providing a complete turn-key service. You guys are really good at getting the backend done. But this product is a really a front-end device, and you have no track record here, I cannot give it to you! That’s just it.
And this was when I understood the word pivot perhaps never came to my mind then, it seems to be more fashionable nowadays to call this word. It was something that really struck me to say that: you really need to work on what you’re really really good at.
This is the edge that you have. And if you work towards your edge, then you can definitely do well. So we pivoted the product. We pivoted along the edge that we have, which is the backend server. Long story short, the customer eventually split the project into two. We deployed the backend; we worked with our competitor who deployed the front-end, and this became a very happy problem for us because subsequently from there we got good references and we managed to sell to even more.
Constance: This realisation - for Teik Guan as to what his business’ real strength was, and acting swiftly to cut his losses helped him truly unlock success for his company. In his own words, he says:
Teik Guan: This was a example I would say in where you really need to understand when you try to pivot. We gave up a good 6-9 month of R&D work when we built our front-end device. And we gave it all up, although we spent a lot of resources on it, this was not what we were good at. We were always good in the backend. And if you pivot along the backend, and you focus on it, and change the way you then engage the market, you can actually do well.
Constance: Teik Guan was not held down by previous beliefs or swayed by sunken costs. Adaptability helped him swiftly pivot to a new strategy, and focus helped him commit to his company’s strengths. This superpower turned the tide for his business, and gave it the momentum it needed to grow.
Teik Guan also shared his concerns for SMEs today as they try to adapt to COVID19 and it’s new normal.
Teik Guan: Yeah I'm hoping to speak about the whole pivoting side of things, which has been really top of my mind. Something that has been irritating me for a while. Many of the- much of the mainstream information that is being spread out there, criticising in some ways or telling telling businesses that "Hey you guys should just be considering a new business model. You guys should pivot to online, or pivot to ecommerce, or pivot to something that's virtual and that should be the way to solve COVID". And I'll give you a even more fundamental example right, I mean if there is this little coffee shop that's around the corner and and this coffee shop gets great business because of the locality of the this coffee shop not because of the food, then asking this little coffee shop to go online really just doesn't make sense. The business owner for this coffee shop needs to understand that this is a physical advantage that that the business has, and how he or she can take advantage of it is more important than simply just going online and trying to trying to get Grab to do their food. Because we understand that when you start to go online: marketing, branding and a lot of other considerations that many business owners have not actually put a lot of emphasis in, comes into play and in a much bigger way. So so that's something that I feel the the mainstream information that's out there is not doing a lot of justice to many of the SMEs who might unfortunately be burned because of this.
it's very close to my heart and and it's it's very scary when such broad recommendations come up without really helping the business owners think about why you go online and what needs to be done in order for that to happen.
Constance: But during a crisis, time is of the essence. How do you make these huge decisions that impact your company so much, especially when many things are so uncertain?
Teik Guan: I used to say that the running a company as a startup you probably making decisions based on 20% off the required information and that is an extremely hard thing to do. You're making a lot of decisions both small as well as key decisions across the a short and medium term time frame and you're very mindful that good decisions bring the company forward very far but a single bad decision can essentially crash a company. So so that's the edge of discomfort that you are always constantly living -I would say- on a day to day basis and unfortunately you lose a lot of sleep because of that. And I would say that the best decisions unfortunately tend to be the ones that you take a some contrarian view or is how we put in the today’s topic: in spite of.
Constance: Taking decisions in spite of lack of information and being able to stay sane even with this discomfort is truly a superpower of the business owner.
I think this is a good point a segway to what you do today, which is that you now advise hundreds of entrepreneurs. What’s key for a business to overcome challenges and find success?
Teik Guan: It's a deliberate position that I do when I advise many of the start-ups is that I don't look at the founders as as part of a company, but the founders as individuals themselves. So if we have the innate belief that founders or individuals themselves can really grow something and grow an entity to something bigger than themselves and in fact change the world because of that, and working with them towards that goal itself: it allows these individuals to make decisions themselves that will really benefit the company.
So it cannot be that me telling this founder that this should be the way the company is going. Or that should be the way, or you should price it this way, or you should not sell to that customer. That's that's not how advice should be given, I mean we want the founder to each he or she himself to to understand the implications when certain decisions are made, and when the current start up with current entity is on track to benefit from the decision or do in fact: unfortunately on on the downside, may be he had he or she is closed down the company and restart another, so that bigger or better outcome can happen. It comes across a little abstract right now but I believe that it's not so much a specific startup that can be successful but more of whether a founder can be successful. If I can help the founder be successful then at some point of time he or she will be successful: whether or not in this startup or the next one that he or she works on.
Constance: It’s the driver of the car not necessarily Car right?
Teik Guan: Precisely
Constance: So it's the business owner that’s fundamental to the success of any business. They are the driver of the car, or the captain of the ship so to speak.
At Konigle we’re always thinking deeply about how the our product can help us run mindful businesses, and we found that helping business owners Be mindful of where the company is puts the business owner in a better position to make good better decisions. This is also a philosophy you put in practice during the DS3 days. Can you share how you used this approach grow of your business?
Teik Guan: it's really a difference in I would say perception right there. Do you believe that people make the company or company makes the people? At some point of time there is this shift that happens. When we were much smaller you know it seems that the company was the central beacon that everyone just ran around it, and we used the company to move the people forward. But, as we grew and we started to have more employees and obviously more ex-employees as well, it started to have a mind of its own where everyone looked at a company in a different way and everyone contributed both the culture as well as the growth of the company. When that happens you realise that at different levels, the companies able to progress beyond what a single CEO or even a management team can do and become really just on its own. Really because of the people.
At least that was the experience I had and then I'm really really thankful for many of the employees of which many of them are still my friends and then we still keep in contact with each other. if I were doing then go back to how you say a mindful business itself it reminds me of this this one time where this many few times that got scolded by my employees. I can name two.
The first was very much in the I would say the customer interaction standpoint. Bear in mind that when I was running company from something so small as a 3-4 man team to something as big as a 40-50 person company, I I still held onto a lot of the very niche thinking where I engaged very closely with many of our early customers. They could call me anytime I will respond to them. And typically I say yes to everything they asked me to do. So my service manager gave me a scolding she she said that: "Can you please stop saying yes to everything that your customer tells you!" She says no, because the customer is being unreasonable, and the customer says, "if you say no I'll just call Teik Guan and he will say yes!"
I think there was a wake up call for me I mean my service manager has taken on more responsibility, and more I would say ownership of the company that I was prepared to recognise. And I was very very thankful for that. She was willing to say no because that was the right thing to do.
Constance: Wow, so you were just essentially getting scolded by your employees. I'm not sure if many business owners would take it like you did. So what were your thoughts initially when it happened, and what changed for you?
TG: I would say that it hit me at 2 levels, right. On the first level the culture of the company which I was building unconsciously allowed for this communication to happen. And I’m very thankful for that. Because of this, I would say I definitely had to spend at least a bit of time, to think about what was the feedback that came to me. The feedback the way of scolding, but feedback nevertheless. On the other hand, I would need to reexamine, the way I deal with my existing customers. And, I would say the biggest change i did for this was to restructure my company. So in the past it was very much me making most of the decisions, and the team running and carrying out those decisions. I restructured the team. It wasn’t to create a hierarchy, but to allow them to have this means and have their say in the organization. You want a company that can grow beyond what you can do.Re-examining your role, and really evolving as the company evolves.
I would say quite often what a business owner does for a company where it is a 5-10 man company, versus a CEO when the company is a 50-100 man company, is very different. And if you do not have the sufficient awareness or if i were to follow the theme of this conversation: if you dont have the mindfulness both internally and externally to remind yourself where your company is, where your customers are, and what your customer’s customers are actually doing. And if you do not have this awareness all the time reminding you on what has changed, then you don't grow. And then that unfortunately becomes a dangerous path that spiral towards the negative side of things.
Teik Guan: Another anedote that I want to highlight was: which was the pricing issue. Me being from the technical side and I still retained a bit of my technical background: I was very close to the product design and product development side of things. It felt like my baby and then I held it very close to my heart. And I think I realized as a product manager I sort of look at it that it is my baby and therefore I almost want everyone to love my baby.
When I was engaging with some of our customers and we were doing a lot of price negotiations or price discussions, I practically would sell my baby for any price that my customers was prepared to pay for. And I didn't dare to ask for more because I would prefer that he loves my baby than he pays me more for my baby. And that was again a point at my sales manager he didn't tell me up front: when he went out there to the same customer and he sold it at twice the price I could sell it, there was again a very big eye opener for me that I realized that I was too close to the product itself that there couldn't detach myself who worked as a company rather than simply as an individual. So there was also another point where my employees and my partners actually taught me more than I asked for.
Constance: Its great that you’ve touched upon pricing, because its truly is a great lever to improve a company’s bottomline, as it eventually did for DS3. Mastering it is truly a superpower for a business owner. What should you get right, in order to set optimised, profitable prices?
Teik Guan: I mean for SMEs I would say one of the hardest things to do is pricing right? And especially in industries where the where the price or the value is not quite obvious, sometimes you question yourself too much when you put the bid in front of customers. And then when the customer starts to negotiate, and bang the table either virtually or physically, we start to get scared. And therefore I get scared myself and therefore I err on the side of saying: never mind. "It's it's my product, I can take the hit and as long as as long as he or she remains my customer." As you start to grow to a mid-sized organization, you realize that this is no longer feasible. I mean that there are these operational costs that will go on, and these costs will eat into not just your bottom line, but to the very existence of the company.
And so, pricing became a process that we have to relearn from scratch. We had to test our pricing. And it was at the time when we will also exploring how to expand abroad. And you start to realize that pricing even for a simple product across different markets: within Singapore, in Southeast Asia, individually in different countries, even japan and USA and Europe are all different! And are you able to maintain a coherent price and yet still have different pricing.
Constance: That is a lot of work to do something that's so fundamentally important to your business: the pricing of a product.
Teik Guan: Precisely, andwait till you try expanding, I mean even the price of a product in Singapore, versus Malaysia, versus Indonesia, versus Thailand... oh my god. It's so difficult!
I would say that even even today I probably will get pricing wrong, so its a constant struggle! The good thing about today is that I would say that's a lot more data out there. If you look back at what happened maybe 10-15 years ago, the only pricing they could get were certain competitive price sheets that you hopefully managed to scrape off the internet.
Constance: Before we continue, here’s a quick shout out from Konigle:
If you’re a offline business having an online store, Konigle helps you to optimise your pricing, track your competitor prices and understand your profit margins. All of this is packaged in an all in one software that helps you manage orders, inventory and your customers. Sign up at : www.konigle.com/DISO
and get a free demo to know how.Constance:
Of all the superpowers we spoke about today, we believe doing in spite of is the greatest human superpower. Do you agree with this statement and how has taking this approach affected your life and your businesses?
Teik Guan: Wow. I would say on the very superficial basis, I'm a relatively publicity shy person, and in spite of me trying to stay under the radar I feel extremely compelled to come out and do this podcast with with Konigle, and Constance yourself. Because I feel that that there is a lot more potential than what we see right now. And if we simply follow what the mainstream people are telling people to do, then businesses are just going to be at best: business as usual. And if we want both Singapore and the greater part of Asia and the world to really become more than what we are, then taking on this approach of in spite what other people are doing you have to choose your own path: you have to understand what other people are doing, you have to understand your situation.
In simple mandarin terms right 自弃自彼百战百胜: understanding both yourself, understanding what other people are doing, understanding what the situation is, and then, projecting yourself forward. And really if it needs you to take decisions in spite of what everyone else tells you what to do, then please go and do it. it's the only way to really breakthrough and get to the next stage.
Constance: Teik Guan, thank you for coming down today and sharing these lessons with us. These have been good lessons to ponder on. I'll see you around!
Teik Guan: Thank you!
Constance: 2020 has been a trial by fire for business owners across the world. But it has also created windows of opportunity for business owners. Teik Guan showed us the power of staying focused, adapting swiftly, and being mindful of your business. These superpowers help us do in spite of, and find success against the odds.
Thank you for listening. I'm Constance, and we’ll see you in the next episode!