Shakeup at Vietnam’s search engine Coc Coc: Have founders exited?

Visual from the company's website.

An internal shakeup may be underway at Vietnam’s search engine developer Coc Coc with two founders having quietly exited the startup and the third co-founder is said to be following suit.

Sources familiar with the matter told DEALSTREETASIA that the two founders have sold their stakes to the Russian CEO Victor Lavrenko and other investors.

In response to a DEALSTREETASIA e-mail, Lavrenko denied the information saying “these rumours are not true.”

Co-founder Le Van Thanh said: “I don’t have plans to leave Coc Coc in the near future nor sell any shares, because Coc Coc is growing very fast now and, apparently, our prices are going to increase dramatically very soon.”

Nguyen Thanh Binh, the other founder, added: “I am still working for Coc Coc. I had to move to Ho Chi Minh City because the market here is big and full of potentials. I have no intention to sell any shares, especially now, when I see such an explosive growth of the company.”

Meanwhile, sources were affirmative that there were “secret changes” taking place inside Coc Coc.

Coc Coc has seen a dramatic reshuffle of human resources in the recent two years, said a former employee, confirming that Binh and Nguyen Duc Ngoc (one of the three founders) have indeed left the company. “Although they founded Coc Coc, they were only directors of the company’s departments after the Russian CEO took over. I was one of the many that quit the company last year,” said the former employee, requesting anonymity.

Local media reports said that Coc Coc was backed by Russia’s largest search engine company, Yandex, since its early inception, which was what, according to sources, led to these changes in the company. It was also reported that following investors were Mail.ru Group – the world’s seventh largest Internet company in terms of traffic, and Digital Sky Technologies, which poured $200 million in Facebook.

However, a Coc Coc official said, the actual investors were a group of angel investors led by Mikhail Frolkin, founder of head hunter platform hh.ru.

Lavrenko, who built Russia’s search tool Nigma.ru, became Coc Coc’s CEO, taking charge of the development strategy and fundraising.

While Coc Coc had famously declared that it would take on Google and had a quarter of Vietnam’s 40 million internet users, DEALSTREETASIA has learnt, that the startup is struggling on revenues and bottom line.

However, Coc Coc is not short of funds. Following the Flappy Bird phenomena, Coc Coc was praised as one of the most successful Vietnamese startups after it secured $14 million from Germany’s media platform, Hubert Burda earlier this year. Prior to this investment, the total funding for Coc Coc had reached $20 million.

Related story: Vietnamese search engine Coc Coc raises $14m from Gernamy’s Hubert Burda

During the FPT Tech Day in May, Thanh, as a guest speaker, shared his own experience that one of the elements that made the success of a startup was to choose the right time to receive investment. Startups are not advised to receive funding too early, he said.

Coc Coc received $30,000 investment. However, it was not a “pro” for Coc Coc, Thanh said, clarifying that absorbing the investment in an early stage made the share of interest for founders smaller as the company grew. Thanh advocated that startups should bootstrap as long as they can.

Also at the event, Dinh Le Dat, CEO and founder of advertising platform ANTS, noted the most vital part of finding investors was whether they had the same strategic thought.

Coc Coc was founded in 2007 when Thanh, Binh and Ngoc (who were studying in Russia at that time), thought of majing an effort to overcome the shadow of the search giant Google.

Information in the media by mid 2015 suggested that the browser had surpassed Firefox and Internet Explorer to be the second most popular among Vietnamese Internet users, while the revenue of Coc Coc Ads doubled, and subscription to Coc Coc search rose 32 per cent, only three months after the German investment.

In 2013, there was also rumour that telecom service provider VNPT, or the Vietnam Posts and Telecommunications Group, clamped on bandwidth for Google to open ways for Coc Coc to expand, as most of VNPT Internet subscribers claimed connection was slow when they accessed Google search or Youtube.

Related story: Investors believe in Coc Coc’s growth: Le Van Thanh

Correction: October 16, 2015: In an earlier version of this article on October 15, 2015, it was reported that three investors in Coc Coc, prior to Hubert Burda, were Yandex, Mail.ru Group and Digital Sky Technologies. However, Coc Coc has clarified, the actual investors were a group of angel investors led by Mikhail Frolkin, founder of head hunter platform hh.ru.