Established in 2011 as a digital content-focused startup, mWork morphed into MOG in August 2015 to stretch its legs to other verticals of the Internet industry in its bid to reposition itself as a mobile and internet player.
In an interview with DEALSTREETASIA, Tran Anh Dung, CEO and chairman of MOG, says, the time is right to start up and invest in the Vietnamese mobile Internet space.
Following MOG’s success in Vietnam, Dung has now set sights on taking it to Thailand and Indonesia soon.
Dung talks about his expansion plans and the internet market landscape and opportunities. Edited excerpts:
What was the reason behind transition from mWork to MOG?
Before MOG, I was with a $2-million project of FPT which aimed to allow every Vietnamese to have an FPT ID to access the services they need. Then the project disbanded, I headed to Tinh Van [another Vietnamese tech company]. Around 2011 and 2012, the mobile Internet industry, particularly mobile games, started to develop. But people then used feature phones, which required several months to distribute a game to the end users. So I started to figure out how to publish mobile content within only five minutes, and mWork was born as an intermediate distributor of digital content on mobile.
The growth of this market in the first months of inception reached as high as several hundred per cent. In late 2013, smartphones developed rapidly, while mWork services were operated very well on feature phones. And, as smartphones became more popular, users, instead of using out-store apps, switched to using Google Play or Appstore. So we had to move on and adapt to the change. MOG was launched partly because of that. Because the name mWork is so tied with the old model, it would be really hard for us to re-position our business in the market with that name. With MOG, we are setting new goals and expanding to other market segments.
So what is MOG in its new form?
MOG focuses on five verticals: games and entertainment, online advertising, e-payment, utilities for e-commerce, and utilities for end users. So MOG is not only a digital content company but a mobile and internet company. We have launched our 1Pay – an open e-payment platform and are going to launch e-wallet in the near future. Our Admatic platform allows auto ads, which means advertisers need to use only one platform to run their ads on any advertising network to optimise the spread of the ads to audience. As for utilities for e-commerce, we have not yet launched, but will build up infrastructure. The utilities for end users will firstly include mobile browser, mobile security and mobile launcher. This model has worked well in China, for example, Cheetah Mobile. The company has 443 million monthly active users, as many as half of Facebook. This is obvious that though it is just a small segment, it has tremendous power. So we will bring the success formula from an analog market and customise it to fit with the Vietnam market.
Is it difficult to develop payment gates in Vietnam?
Yes. Around 80-90 per cent of people are using cash. So we need to solve the non-bank payment problem. Companies like Momo are building their agent networks for faster service of payment such as scratch cards, via SMS or top-up points. Once we solve the agent network issue, it will be easier to develop e-payment system. Also, payment-via-bank activities are primarily based on relationships between banks and startups, so they have not formed an infrastructure for all payment service providers to join, so companies like MOG are developing electronic wallets.
Although the market is still accompanied with a lot of issues, if we are not in right now, we will lose the opportunities. Just as the telecommunications market, when Viettel, VinaPhone and MobiFone created their tripod, hardly any other businesses can compete.
So how is competition in the mobile internet market?
Let us see in each segment: gaming segment, mobile commerce, utilities, sharing economy (peer to peer), mobile ad and mobile payment. Mobile game has been dizzily developing. The local market might not be larger than others in the region, but it is still attractive. It seems to me that as VNG Corp has written such a successful story in this niche, others are hoping to follow its halo. Also, investment in this industry can generate immediate money. Currently, the big names in this market are VNG, Garena, SohaGame and Appota. This industry is an intense competition between some five or six companies. The market size is at around $200 million and annual growth can be 30-40 per cent.
Also read: Appota plots expansion as revenue jumps 200%
For mobile commerce, major players as Lazada and Adayroi are pushing shopping via mobile. Currently, most of the customers search for products via mobile but make payments in the form of cash-on-delivery. But the picture in the future will be similar to other markets, where the use of electronic payments is popular. With around 10 players in the Vietnamese payment market now, the problem can be solved in two years.
For utility, Vietnam has only a few players and the space is not strong enough to form an investment trend. VNG has voice messaging app Zalo, if we see it as a utility, Vietnamese mobile keyboard, security to block spam messages, and Laban homepage. In addition, BKAV Corp produces its own smartphone – the Bphone – that comes with BChrome browser, Bsecurity and Bkeyboard. But these are meant only for its device. Coming up, there will be CocCoc mobile browser. Vietnamese businesses have not developed utilities as drastically as the Chinese do, like Cheetah Mobile.
Sharing economy, or peer to peer, with Uber as a typical example, is forming a new trend. Local startups are seeking to do the same model, such as household services like Viecnha.vn. It is estimated in five big cities that this market can be valued at $300-500 million per year.
Meanwhile, mobile ad is a large market and is growing robustly. In Vietnam, Facebook and Google have occupied about 70 per cent market share. The remaining 30 per cent is for some Vietnamese enterprises, typically VCCorp with its Admicro platform. The market size is the same for all of these players, the thing is when it comes to the effectiveness of advertising, Facebook and Google do it better.
In the mobile payment vertical, companies are focusing on developing e-wallets. The mobile payment segment is in an infancy stage. To develop the market, it requires a systematic change. For example, if people want to pay their electricity bills via e-wallets, the power companies must develop an electronic billing system.
What is your pitch to investors?
MOG is forming a relatively complete ecosystem that includes different lines of the Internet industry. With that picture, MOG is compelling enough to investors. The verticals have large market size and high growth rate, and MOG is either a major player or the first player, for example utilities for end users. Why should investors invest in us? Look at China, there have been successful investment models. MOG is also boosting online advertising. For the game segment, we do not focus too much, because the market size is not too large, while there are also many risks. In four years, we have garnered over 70,000 online agents, more than 2,000 clients that are using our payment service and some seven million local and global users, which has been growing by around 100 per cent annually. The other important factor is the team. After four years of development, we have demonstrated that our people are capable of creating success.
If I were an investor, I would look at three things: the market size that helps investors easily exit and helps companies expand, the success model that has been clearly proven, and the team.
MOG is looking to raise $5 million in an investment round to facilitate our growth and expansion.