By G. Sharmila
After tasting success in China, Puan Chan Cheong decided he would try again for the American dream, which led him to Silicon Valley in the late 1990s. However, things did not go as smoothly for him as he expected, which led to a change in direction. He shares the details with KINIBIZ.
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When Packet One Networks (Malaysia) Sdn Bhd (P1) chief executive officer Puan Chan Cheong was in China in his early to mid-20s, he made millions as an investment consultant. However, he was not content with success there and decided to try his luck again in the US.
Puan Chan Cheong
“Because I did my major in both finance and management information systems, I have always had a liking for tech. So that’s why I also set up a joint venture for PC component manufacturing in China, and then because of the PC component manufacturer I went back to US again and set up a distribution house in Silicon Valley. I went back to the US again to pursue my American dream even though I promised my mum that I would come back (to Malaysia),” Puan told KINIBIZ in a recent interview.
“That was how I founded Green Packet Inc in the late 1990s. That was really the peak of the dot-com boom – at that time everyone was crazy about the dot-com bubble. Even at that time people were using palm pilots; we felt that mobile Internet was going to be a lot bigger, so we wanted to develop some real sexy technology for mobile Internet. That’s how together we funded Green Packet in 1999, and in 2000 we became a Panasonic incubatee – at that time we were developing a solution for Panasonic for NTT Docomo,” Puan explained.
Puan added that he funded Green Packet Inc using his own funds and that of business associates’, to the tune of RM20 million. However, the subsequent dot-com bubble burst adversely impacted them.
“After we burned about 20 million, we thought that by using our own funds with our product launched in 2001 we would raise a lot more money compared to from venture capitalists, but unfortunately the dot-com bubble burst in 2001, which was essentially what happened in Silicon Valley,” Puan recalled.
He said he realised that when the dot-com bubble burst, US telcos were not going to invest in them. He felt he had better move back to Asia, at a time when China was booming and he still had a good business network in that country.
“So we decided to move back – we still maintain a team of researchers in the US, but we moved the development centre here, while I myself concentrated on developing the market in China. We said we need to change, that’s why we moved here and then concentrated on selling to China,” he explained.
Asked whether he had problems finding talent in Asia, Puan said there were some initial challenges.
“Before we moved back, we had over 40 engineers in the US, so we reduced the staff strength to a team of only 78 people, whereby the key architects did the designing but the development was done in Malaysia. So we did have challenges, because the main development and design work had been done in the US,” he explained.
However, Puan said that the team in Malaysia was still able to cope. Nevertheless, from 2002 to 2004, when the business was growing rapidly, it led him to set up a development centre in Shanghai in to fill the void.
“It was very fortunate that we came back in 2001. Later we got two major contracts in China, one from China Telecom and one from Lenovo (then known as Legend Computers). At the time we really aimed high. We targeted China Telecom and they gave us a 20 million yuan contract – that contract enabled us to bring Green Packet Bhd to the listing stage,” he said.
“In 2005 I took the company public, so those were the good days we were the biggest and most profitable company, and at one time our market capitalisation was close to RM3 billion, and then we transferred to the Main Board (of Bursa Malaysia) in 2007,” he added.
However, at the time Green Packet was doing really well, Puan advised his employees that they should also look at ensuring that the company remained sustainable and that they plan and prepare for a rainy day.
“We had a very concentrated customer base, were very dependent on long sale cycles and realised that customer leadership might change because China was also going through reforms, so we thought there are potential weaknesses and threats, but we said we wanted to grow the company into a regional group,” Puan said.
In 2007, in the midst of working on Green Packet’s long-term plan, Puan was called upon by the Malaysian government to participate in the bidding for network licence spectrum.
“At the time Green Packet was doing network solutions, so we thought we could provide a lot of solutions to the network operators, connection managers and provide the licence and business management to them.
“At that time Malaysia’s broadband really sucked. Since the licences were being given to new players, we gave it a try because we believed in mobile Internet. So that was how P1 started in 2008,” Puan explained, adding that this was how they decided to offer WiMAX (Worldwide Interoperability for Microwave Access) solutions and devices.
Puan explained that although P1 was a relatively small player at the time, in phase one of the WiMAX rollout they launched about 600 WiMAX sites locally. “By 2012, we had managed to build 2,000 sites and only had half the population coverage. To provide nationwide coverage, you’d probably need more than 4,000 base stations,” he said.
“We also did a fantastic job with marketing. Unfortunately, even though our marketing had tremendous success, our network rollout and build up was lagging behind, so the consequences were such that we had disappointed the customers – in the sense that because everyone wanted to subscribe, we got sold out,” Puan said, adding that the network rollout had challenges and P1 was not able to roll out WiMAX as fast as they wanted to partly due to regulatory approvals.
“So these were the very painful lessons that we learned. That’s why I tell my people right now we have a new chance of doing it again, so we always want to put our customers first and really ensure that we will build a network that will support a tremendous and a very exciting customer experience journey. When we faced all those challenges, we had to make prompt decisions – we even had to stop the sellers from selling, downsized the team, quit WiMAX, and we had to rebuild the long-term evolution (LTE) network,” he explained.
“At the moment we have 2,000 WiMAX sites; we are in the midst of upgrading all these and we are going to expand the coverage and build a nationwide LTE network,” he added.
So what went wrong with WiMAX for P1? Puan explained that WiMAX actually had a really good start; it was the only true 4G standard because WiMAX was an earlier standard three to four years ahead of LTE.
He admitted that WiMAX was a bit too early for P1 – in fact for the majority of operators worldwide. “At the time we did our business plan, saying even if we didn’t make it as a mobile operator, all laptops and tablets using WiMAX were already enough business for us… because at the time with broadband alone, P1 had broken even in 2012. But the adoption did not happen, then LTE came along,” he said.
Puan didn’t know it then, but P1’s failing to bring nationwide coverage of WiMAX would soon open new doors for him in the LTE space. In our next instalment, he tells of the lessons he learned and how a new lease of life was found for P1.
Yesterday: An entrepreneur from humble beginnings
Tomorrow: A new lease of life for P1
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