By G. Sharmila
Exabytes CEO and founder Chan Kee Siak had it relatively smooth going when he transitioned from being a college student to a full-time technopreneur. In this article, he tells KINIBIZ of the crazy thing he did in the beginning that inadvertently ended up killing most of his competition and how the company grew forward.
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Thirty four-year-old technopreneur Chan Kee Siak is the first to admit that he has had crazy ideas in the past. And not just a handful, either.
“Oh I have had many crazy ideas along the way. I think the first few years were really crazy because I had just started the business and I knew nothing about accounting. So I dumped all the money I made into advertising. I didn’t know what was profits and losses, how to recognise revenue, and how to accrue it. So whatever revenue I collected was dumped into advertising.
“At the time, The Star’s InTech pullout was very popular, so I bought a quarter-page ad and advertised every week in it. If I look back, that’s probably one of the craziest things I did and because of that, I killed a lot of the competition. Those who know accounting, probably wouldn’t have done that,” he laughed.
How did he survive while he was spending all his money in advertising?
“When I advertised, I got even more customers and more money to dump into the business. So it created a snowball effect, and I still recall meeting one of the competitors who said that he sold his business because of us. He’s in the data centre business now,” Chan recalled.
How many competitors did he have when he started out and how many are there now?
Chan reckoned the numbers are about the same.
“There are about 10 companies in total in Malaysia in the same business, plus we have a lot of overseas competition as well,” he said, adding that he reckoned that the web hosting business in Malaysia is worth about RM100 million a year.
According to Chan, Exabytes has about 30% market share of the web hosting business in Malaysia and is also the leading player in terms of revenue.
What does he find most challenging in the market today?
“I think the challenge is always humans. Humans as in talent, most of the time it’s not technology-related issues but human issues. Customers are also human, so if you can manage human expectations well, then you can run the business well,” he shared.
Has he found talent hard to come by?
“I think they (talent) need to share the same vision, and see the opportunities of working in the company. So I think for our industry it’s not so bad, because the Internet is cool for the new generation and now we’re branching out more into e-commerce and we’re a Google partner, which adds to our cool factor. So we’ve managed to attract new talent,” he said.
Chan Kee Siak
For the uninitiated, Exabytes also offers e-commerce solutions, apart from its web hosting services. “We didn’t get involved in e-commerce suddenly, we started getting a lot of enquiries from customers and the demand made us consciously know that e-commerce is coming, because now the infrastructure and ecosystem are ready, however, we have yet to see many e-commerce players out there. So there’s strong demand but very little supply,” said Chan.
“In the past, it was very complicated to own and run an online store; you needed to buy a hosting account, buy software, do the configuration yourself and a lot of people ending up giving up as a result.
“So we thought we needed something more user-friendly, something easier to start with. We wanted a platform that people could use to start selling online easily. We came across a Malaysian startup with a good platform and we acquired a majority stake in the company and we rebranded the company to ez.my. That was in 2010, when we got started in the e-commerce business,” he explained.
What kind of e-commerce services do they provide?
Chan explained that they have two products, namely EasyStore and EasyParcel. EasyStore is a platform that allows sellers to run an online store, which has tools such as shopping carts and payment gateways.
Chan said this is different from eBay and Amazon marketplaces, where sellers place their products on other people’s portals. The EasyStore platform allows sellers to have their own branding and domain names.
“We also have EasyParcel, an online booking platform where you can compare the prices and services of different courier companies. Then you make a booking from the EasyParcel website. It’s similar to Booking.com or Agoda.com, except this is for courier services.
“We’ve brought in a lot of technology, because Malaysia’s courier services are generally behind in technology. We fill that gap, because e-commerce is not complete without logistics. We’ve done a lot of integration and digitised a lot of processes.
“We work with PosLaju, Skynet, Nationwide, Airpak, and a few more we are currently doing integration with. We launched both the e-commerce products in August last year and the growth has been tremendous,” Chan enthused.
Does he get more e-commerce demand from Malaysia or abroad?
“Our e-commerce business at this stage is 100% focused on Malaysia. Most of our customers are in Malaysia and so internally, we said that the first 10 years for Exabytes would focus on hosting, now the second 10 years will focus on e-commerce. We’ve got another five to six years to go,” Chan said.
He shared that for the entire Exabytes group, about 60% of revenue is domestic and 40% from overseas, where web hosting supplies the bulk of the revenue. “E-commerce is still very small if you look at total revenue contribution, but it is growing,” Chan said.
In 2014, Exabytes recorded RM32 million in revenue (ended as at March 31, 2015). The company is projected to grow by up to 50% by the end of financial year 2015.
According to Chan, the fastest growing segment of the business is EasyParcel.
“The e-commerce business is experiencing almost 100% growth quarter-on-quarter,” he claimed.
He shared that for EasyStore, Exabytes has 2,000 paid customers or merchants and for the free version, about 10,000 to 15,000 customers.
How does Exabytes compete with international hosting providers to win Malaysian customers?
Chan said they do it by offering local presence and support, as well as brand awareness and reach locally.
“You can buy from US providers at maybe even cheaper prices, but when you have issues, you have to make a phone call to the US, which costs you. In addition to that, you have a time zone difference. So only a small population of those who are tech-savvy will buy from overseas providers. However, with small and medium enterprises (SMEs), being Asian, they want local presence and support,” he explained.
Has he turned away a client or business opportunity?
“Yes, we have. From time to time we’ve had customers who’ve wanted to host an online gambling or pornography site, these are the customers whose content we consciously know we should not host them, because it is illegal and it will create a lot of problems for us,” he shared.
On whether Exabytes has received interest from foreign investors or potential partners, Chan cited its recent partnership with Google and Japanese company GMO Payment Gateway Inc (GMO-PG).
The partnership with Google, which was announced in February, is an ongoing partnership, Chan said.
“We were invited by Google to become its partner, with that we have direct support and direct access to Google. That is handy because we have a lot of customers with us who have businesses and want to advertise online. They use Google AdWords, a lot of times they burn money unnecessarily or do not know how to use AdWords.
“We help our customers manage their AdWords campaigns. It is a win-win situation for us and customers, because we help them grow their businesses and then these customers will potentially upgrade their online stores or hosting services. It’s a healthy, ongoing lifecycle,” he explained.
In May this year, Exabytes also entered into a partnership with Japan’s GMO-PG. The partnership helps service Japanese e-commerce SMEs which are using Exabytes’ EasyStore solution.
Chan has said in the past the e-commerce market in Southeast Asia is expected to grow at an annual average rate of 37.6% from 2013 to 2018, making it an attractive sector for Japanese merchants.
“Our relationship with Japanese companies started in 2007. We had some networking, as well as collaboration and experience sharing with a Japanese hosting provider. We built some contacts and last year we bought a Japanese company called Yusonyx based in Singapore. So through the network, we got to know GMO-PG.
“We find that Japanese companies want to branch out of Japan, they want to export so they use our platform to create a Malaysian version of their online stores,” Chan explained.
In our next article, Chan talks about the e-commerce scene in Malaysia and his plans for Exabytes.
Yesterday: Success beyond his wildest dreams
Tomorrow: Exabytes is going places
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