Geeman Yip, the American-born Chinese founder and chief executive of BitTitan, a managed cloud services enablement and automation provider, believes that cultural literacy is a key element in entrepreneurial success, as well as the ability to take risks and learn from failure.
The Asia Pacific headquarters of the managed cloud services provider is based in Singapore, which Yip believes has some way to go before it can mature and compete in the same orbit as globally competitive technology startup hubs like Tel Aviv and Silicon Valley.
He said, “What does the government want? I think the government wants to establish a country of technology. Whether it be cloud or security or something like that, again, in order to do that what do you need? I need to have highly skilled workers, I need to attract high-tech companies, and I need to attract investment firms. And you can’t really do the last two without having the skilled workers. I can’t open up a high-tech company without high-skilled workers to work there. And as an investment firm, there is nothing for me to invest in. So really, that’s the challenge.”
Asked about the possibility of an initial public offer (IPO) or potential buyout deals for BitTitan, which raised a $15 million Series A round in June 2016, Yip said, “There are always discussions, as these things don’t happen overnight. And it takes many years to start that. Have we had discussions of buyouts? Absolutely. But you know there is nothing I can disclose at this time that we are ready to announce, unfortunately.”
Can you tell us a bit about your series A round last year and what sort of traction the company has built, particularly in Asian markets?
Yea absolutely. We raised a Series A round because of two things: acceleration of product development and expansion of our sales force. And really that’s what we have been focused on. And when we think about the Asian market, we have been expanding pretty aggressively up and down Asia.
I mean, we have employees in Singapore, Japan, Hong Kong, Australia, etc. across there. Those are all new to us and our team in addition to expanding our product development team in Singapore itself has been a really large effort that we have been undertaking.
What’s the role of the Singapore office and really which market in Asia is your much revenue generating ones which account for the revenue share in that region?
In Singapore, the roles that we fill are mostly developers. We have a big R&D facility; approximately 70% of our staff there is R&D. Then would be our sales force, followed by our support and administrative staff. The decision to establish a base in Singapore is real to continue our growth in the cloud world.
If I look at that Asian market, cloud computing is about two to three years behind compared to the US and the larger North American market. So as something new comes out in North America, we are really talking about two to three years before adoption in the Asian market, excluding Australia and that Pacific region down there.
And you really have two sets of countries when I think about growth. You have your developed markets and then you have your non-developed markets. Developed markets are those countries that are a little bit more into technology. Cost is not a factor, and we already see the value. Maybe there are some factors but it’s not as much as the factor.
When you think about Singapore and when you think about Hong Kong, these are more developed markets. The undeveloped markets are places like Indonesia or Manila, where technology is actually more expensive than labour itself. But that poses a different challenge because they don’t have consistency, they don’t have repeatability, they don’t have scalability. So you’ll actually begin to see it converge because the opportunity cost is greater than using the technology cost.
And when I think about Singapore – why we chose Singapore – there’s a lot of reasons. We chose it because of the internet backbone of Asia Pacific. The time zone difference, which is opposite from where we are in the United States, in order to provide 24 by 7 services. Which not only includes support but sales and R&D.
It is English speaking so people like myself and my staff can freely travel between the businesses. Taxation, business and personal perspective – less than or equal to the US. The cost of living is less than or equal to the US. It’s safe for our employees to be at. And also, it is just desirable to live. People actually want to go to our Singapore office and work and even relocate their families because they wanted to work there.
Can you discuss BitTitans’ exit path there and any financials?
Unfortunately, I am not going to be able to disclose market cap or any financials for what I can see. BitTitan has operated in a non-traditional way from traditionally backed VCs.
You know, we operate in a very profitable manner. We make sure our EBITDA is positive, which allows us to continue to grow versus having to continue to chase the 18-month cycle of raising capital. Because of that, what we found when we were raising capital is that we have choices.
We have the choice to raise capital or not to raise capital. We believe that is the same thing for the exit of the time. We believe that because of how we operate the company, we will get to choose what’s best for our shareholders whether it’s a buyout or it’s an IPO or to remain private.
There are always discussions, as these things don’t happen overnight. And it takes many years to start that. Have we had discussions of buyouts? Absolutely. But you know there is nothing I can disclose at this time that we are ready to announce, unfortunately.
In a scenario where you do have an exit, what’s next after the exit? Would you join or start your own venture fund, or perhaps event explore starting a social enterprise?
Yea that’s a great question. For me, I think the first thing is taking time off. I have been at BitTitan for 10 years now and however many years for me to stay out after this, so I’d definitely take some time off to spend time with my family.
I have missed a lot of opportunity with my kids and my wife working so much. I owe it to them at a minimum to at least try to make up for that time that was lost. And then after that, I think a lot about the meaning of life. It has been summed up once that the meaning of life is in three words: to learn, to earn, to return.
This is what some people define as the meaning of life. You know the learning phase is going to school, learning how to operate. Which I feel like I have been at…I will always be a student of life. I don’t believe learning will ever end. But I believe there is a lot of knowledge I have learned above and beyond people with normal roles.
You know, from an earnings perspective, hopefully, BitTitan will have a great exit. Not just from me, but for all our shareholders which I will have earned that ability, and not have to worry about earnings so then I can leverage not only that but my time more importantly. And then returning back to society in the right manner.
And when I think about what does “returning to society” mean to me. I have definitely given that a lot of thought and how do I make an impact on the world, in the community, and really just to other lives in general. And to maximise the number of people I can make a positive impact on.
One of the idea is creating a social enterprise where we are not just giving away our money but invest that and put it into organisations that we support so that they are profitable and sustainable, in that we continue to make money so that we can use those profits, or at least a portion of those profits to give away.
Think about it as compound interest. Right now if I gave away everything, then I basically just am kind of working my way to zero, versus making an investment in something and having the earnings of my investment contributing to a social cause. So I’m looking at social enterprise post-BiTitan where I have a real interest that can serve a good cause.
How do you exit a social enterprise? A social entrepreneur can come and five years or more down the line, they may want to do something else. What’s the exit route, looking at it from your perspective?
Yeah, I think the social enterprise is really a commitment to my own personal life-long goals of making an impact on people around the world really. So I don’t know if there is an exit for every social enterprise. I don’t know if I would see an exit in my lifetime around that. The question comes down to, what happens if the social enterprise surpasses my lifetime? What is that exit from that end? I don’t know. There is a lot of possibilities.
I am hoping that one day, my kids would want to continue that legacy and want to continue on that social impact the enterprise has. Whether socially impactful organisations or impacting people through our fund, another possibility is having someone else take over and run it like other not-for-profit organisations where you could generate revenue in a philanthropic way.
Either that or I could sell off everything and give it away at the end of the day. One thing I do believe is that I’m not going to pass on the capital to my kids. That is something that has to be earned. And when you go back to the “Learn, earn, return” paradigm, they are going to have to earn that wealth themselves. I will help them set them up for education, a place to live, and food on the table. But they will have to make their own living somehow when they’re older.
Going back to this philosophy of” learn, earn, return,” you’re also an Entrepreneur-in-Residence at INSEAD’s Singapore campus, which gives you some exposure to Singapore’s venture ecosystem. What is your take on it and how does it compare to Silicon Valley? What’re the next steps for it?
You know when I think about entrepreneurship and I think about innovation, and a lot of it really starts from talent. One of the things that Singapore is lacking is talent. Once you get talent then the community and the capital follows.
Talent is definitely a missing piece. What is considered talent and how do you create talent? To identify good talent you need a base of knowledge and skills that is different from what Silicon Valley, Seattle or other places with more mature tech markets possess.
It’s really centred on the attitude of and towards failure and saying “Yes, I failed,” as well as learning from that in order to define my actions to take after failure, as well as the risk appetite. And Singapore has lots of opposing forces, right? I mean there is not a lot of talent there and a lot of it is really cultural. When you look at the Asian culture, they are not accepting of failure. A lot of Asians don’t like to accept failure because failure in your parent’s eyes is not socially acceptable.
And taking risk is also not in the Asian profile. There are some risks that Asians take like gambling, but what about the risks involved in starting a company That is really the first place to start when I think about how do we evolve Singapore into a tech centre. And it really does align up with the government’s strategy.
What does the government want? I think the government wants to establish a country of technology. Whether it be cloud or security or something like that, again, in order to do that what do you need? I need to have highly skilled workers, I need to attract high-tech companies, and I need to attract investment firms.
And you can’t really do the last two without having the skilled workers. I can’t open up a high-tech company without high-skilled workers to work there. And as an investment firm, there is nothing for me to invest in. So really, that’s the challenge. How do we change that mindset? How do we get people’s attitudes to change, etc. so that people can say, ‘Yes, I did fail. But here’s what I am going to do differently.’
Singapore faces a perennial talent shortfall. Given your migrant roots and the role of migrant entrepreneurs who play a disproportionate role in US entrepreneurial ecosystem, with some countries having a startups visa scheme, while the UK and India have overseen citizens’ schemes, could similar developments happen in the city-state?
There’s a multitude of things that you brought up there, and the talent is the key. You have to do two things: Bring talent in or you have to create talent. From a talent creation perspective, I think the culture is a little more difficult there. Again being Asian and in an Asian country, you have all these different things that are prohibiting you in the growth because of cultural factors.
When you think about other non-Asian countries like the United States, there is definitely an ability for an Asian to be successful in the area you are in. I believe that the second generation is a great generation to be successful because when you think about it – and this can apply to Singapore too – some of the cultural things change and depends on the next generation of millennials really make up the culture of Singapore.
When you think about the first generation, you have a very hard working, manual labour type of society. And they are figuring out how to make a better life for themselves. They don’t necessarily have the resources. They may not have the education. They may not have the tools. And then you have the second generation. And the second generation has the desire to be better than the first generation.
Whatever that first generation did, you want to improve the quality of life and you have kind of a chip on your shoulder. You know your parents worked hard and you want to do better than what they had. And then I feel like it gets lost in the third generation, which becomes distant from the first generation.
You may or may not have met your grandparents, you don’t have the history. You are really born into this whole generation that has worked hard and possibly is successful and then you’re kind of living in that success now. So, that is the evolution of various generations and countries.
When we think about Singapore, how do we get people into that second generation mindset? They are not living in their parent’s shoes, but rather learning from their parents and they want to do better than that and not necessarily maintain the status quo.
They ask “Is this is the quality of life that I want not only for myself but for my own kids after them?”
You bootstrapped your startup. How does this impact your view on this paradigm where venture-backed businesses have sacrificed profits to accelerate growth. And this is particularly true for online services and online markets. What’s your take, given your own entrepreneurial thesis?
Yea I don’t know if there is any right or wrong. I think there are just different ways. My own thesis is how do you build a successful company? How do you turn an idea into success? Versus hoping that it could be successful.
When I think about building the successful company, it means that you have no dependency on anyone. In order to have zero dependencies on everyone you basically have to make money. How do I create an enterprise that makes money year over year in a profitable way? And continues to grow?
It doesn’t mean that you can’t take the capital. It just means you operate differently. You think cautiously of every dollar you spend, that you spend in the most-wise fashion. And not only that but holding contingency plans, as well as what happens if I don’t meet my sales target, my expectations for sales growth.
Is that going to put me out of business? And that is my thesis on how to run a company. And again, there are no right or wrong way. There are ways that other companies run businesses. The idea is to go big or go home. It is either a billion-dollar company or it will be worth nothing. That is just a completely different mentality.
I don’t necessarily agree or disagree with that philosophy. That is just not how I build enterprises. If I were to look at it, I basically would mitigate my risk of failure by ensuring success. I could always leverage that success in other things, versus losing your money completely.
You’ve have been in the Silicon Valley for 8 years. Recently, there’s been a lot of discussion about unicorns versus dragons. What’s your take on that?
I’m not totally familiar but that’s comparing two different things. A unicorn is a company that is valued in an excess of $1 Billion where a dragon is a company that returns the amount of the entire fund of a VC.
You can’t really compare unicorns versus dragons because a dragon could be a unicorn. And a unicorn could be a dragon. Or they could usually be mutually exclusive. And they have different investment philosophies. With a unicorn, you’re basically trying to find that one company in twenty. This is how some of the top tier firms operate; they invest in a lot of things that are immature and they how that one of them becomes a billion-dollar company.
And you know each, the entrepreneur and the VC has pros and cons in that aspect. For the VC’s, they’re swinging for the fences and they are going to get something that is going to give them a patient gain from this billion-dollar exit.
But from an entrepreneur exit, you are not going to get the same level of attention. That’s because if you aren’t a billion-dollar company, then you get zero time from that VC.
From a dragon perspective, the investment philosophy is how you can return a fund in order to be profitable and grow successfully. And that means that you are going to have to be profitable and get it to grow. You’re involved in making it so that it can generate a hefty return upon exit and you do better than with a unicorn strategy.
I think these are two very different investment strategies. You could invest in both strategies, have both elements in the same company or have cases where they’re mutually exclusive.