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Cyber Village does MSC proud
Cyber Village, led by Tony Pua, eschewed a high-profile Internet image, choosing instead the slow train to success. Today, it is about to reap the rewards.

The Edge Daily (July 20 2001)
By Mary Anne Tan

Cyber Village (www.cyber-village.net), led by the unassuming Tony Pua Kiam Wee, has shown that you don't have to be loud, have a strong public image of your brand or be PR-savvy to succeed in the New Economy. Unlike some Internet-related businesses and Multimedia Super Corridor (MSC)-status companies that have been courting the limelight to brand themselves like Catcha.com, or to get venture capitalist attention like Go2020.com, Cyber Village has shunned the limelight.

Instead, the e-business consultant, which obtained MSC status on Jan 10 last year, has quietly gone about its business of assisting other companies to fully embrace the dotcom revolution. The approach has worked very well. Come July, Cyber Village's cloak of anonymity will be stripped for good - it will have beaten all other MSC-status companies to the initial public offering (IPO) listing post.

What's even more interesting is that it will be the first MSC-status firm to go the IPO route on a foreign stock exchange. Cyber Village is awaiting the nod from the Singapore authorities to list on the Stock Exchange of Singapore Dealing and Automated Quotation System (Sesdaq), making it the first Malaysian Internet start-up to earn that singular honour.

Local search engine turned new media company Catcha.com, which spent millions building its brand, almost made it in April 2000 but had to scuttle the plan when the investing environment turned sour. Virtual mall builder Go2020 - the one-time darling of the Multimedia Development Corporation (MDC) - received the most hype, offered the most hope and got RM3.5 million in funds from MSC Venture Corporation (MSCVC), but failed to stay the course. Cyber Village, on the other hand, didn't burn millions nor was it the "pet" of MDC officials.

In fact, MSCVC gave it scant attention when Cyber Village approached it for funding in 1999, exactly two months after MSCVC went fully operational. Recalling that experience, Cyber Village founder Pua pitched his start-up on two occasions to MSCVC, which showed no interest in his company - thereby losing a golden opportunity to invest in what may turn out to be a substantial information technology (IT) winner. More so when Go2020 is now defunct and another investee company, Cosmos Discovery, which operates Octopus.com.my, recently downsized its content team.

The funding trail
To fund his push into the regional market, Pua looked for funds in January 1999 and attracted the attention of angel investor Yap Yok Foo (the father of a friend), who pumped in RM50,000 and owns 3.87 per cent, of Cyber Village. Then Asian Venture Fund Ltd, managed by Japan Asia Investment Corporation (JAIC) stepped in at the end of 1999 with a US$1 million investment for a 22.07 per cent stake in Cyber Village.

A small portion of the funds has been used to meet operational requirements leaving the rest for expansion activities. Pua holds a 32.01 per cent stake in Cyber Village. In February this year, with the economic slowdown looming, Pua thought it prudent to seek additional funding and tie up with a strategic local partner to ensure Cyber Village will weather the expected tough times. MCM.com Sdn Bhd, which has since been renamed MCM Technologies Sdn Bhd, a subsidiary of Arab-Malaysian Corporation Bhd and the largest shareholder in Arab Malaysian Holdings, became its strategic investor, pumping in S$4.7 million for a 10 per cent stake in Cyber Village.

Pua admits that aside from the additional cash infusion, which should act as a financial buffer, MCM.com's (its ultimate controlling shareholder is Tan Sri Azman Hashim) close ties with the Arab-Malaysian group leaves open the mouth-watering potential for future e-business work.

Listing a fillip to success-starved local dotcom scene
With the Sesdaq listing, Cyber Village will stand alongside the few Malaysian successes like JobStreet.com (which has yet to be listed) in the local dotcom scene that's crying out for more success stories. Pua, 29, who has been jetting to and fro from Singapore where Cyber Village has a growing presence, sees the listing as proof that Malaysian Internet companies have what it takes to match their foreign counterparts.

He says the impending listing should be seen as a feather in the cap for MDC's efforts to promote the growth of Malaysian IT firms, putting to rest the claim that MSC firms are going nowhere. Obviously, one of the first questions netv@lue2.0 asked was his rationale for listing on Sesdaq instead of the Malaysian Exchange of Securities Dealing and Automated Quotations (Mesdaq). Pua cited several factors.

"Three critical reasons come to mind," he says. "First, foreign clients are more inclined to do business with a Singapore listed company. Second, IPOs are currently a hot item in Singapore so it's a good time to capitalise whereas sentiment on Mesdaq is still very weak with poor liquidity. Finally, there are restrictions pertaining to the use of proceeds from a Mesdaq IPO.

He isn't worried that Malaysian authorities might feel snubbed by his Sesdaq listing although the bulk of his revenue comes from Malaysia. "They should view this in a positive light. It is something for them to be proud of, that at least one MSC-status company has managed to beat the odds and proven them right. And if I can do it, others can too. Personally, for me, I wanted Cyber Village to be the first MSC company to have its IPO on a foreign stock exchange and that itself is an accomplishment." Cyber Village's authorised share capital is S$100 million and the paid-up share capital is S$5.4 million.

The net proceeds from the listing will be used for three purposes:

Business expansion in the form of investments or new acquisitions of businesses that are synergistic with its line of e-business.
To finance the development of Cyber Village's new Knowledge Centre that will be located in its present office in Kuala Lumpur.
As working capital and for capital expenditure to upgrade infrastructure, among others.

Pua says the listing is expected to be before the end of this month. He views this momentous event as a "surprise" for he had not seriously considered a listing until a Singapore merchant banker told him that his company would be a shoo-in for listing on the SGX-Sesdaq. The merchant banker was right.

The story of Tony Pua
Reminiscing on the tough early years, Tony Pua says Cyber Village has come a long way since its inauspicious beginnings in March 1997. The eldest son of poultry farmers from Batu Pahat, Johor, Pua would have been expected to take over the family business someday but his parents never put pressure on him, preferring that he make his own way in life. Smart move.

Pua did his secondary education in Singapore on an Asean scholarship from the Singapore Education Ministry before going off to the UK on a Malaysian Tobacco Corporation (MTC) scholarship where he earned a second class (upper division) honours degree in philosophy, politics and economics from Keble College, Oxford University.

However, when he returned home, he gravitated to the financial services sector and opted to work for Andersen Consulting (now renamed Accenture) as a consultant. "I was fascinated by the methodology and integrating of technology and I have always believed that technology was the way of the future and that it is the natural way to progress. Number-crunching is what I enjoy most so that's why I decided to work for Andersen Consulting," he said.

After two years, Pua decided to strike out on his own. Cyber Village, which was just a germ of an idea, became a reality after Pua realised there was a demand for e-business consultancy when local firms began to entertain seriously the idea of moving into the Internet and the e-commerce platform.

With his combined savings and those of his parents amounting to RM20,000 and another RM30,000 chipped in by three buddies, he went ahead to open an office in Overseas Union Garden, Old Klang Road, KL with only four staff. Typical of many entrepreneurs, the trying early years saw him going for months without drawing a salary and almost every sen he earned was poured back into the fledgling business.

He recalls how he practically lived on trains then for over two years. He would take the night train to Singapore, arriving there at about 7am and showing up for work at the Singapore office at 9am. Then taking the train out at night and showing up for work in the Malaysian office at 9am the following day! A far cry from those character-shaping days, today, he flies in and out of Singapore.

Today, the staff strength is 71. These employees who currently hold a 7.84 per cent stake under the Employees Share Option Scheme (Esos) should see a return on investment of around 10 times and the three buddies' investments of RM10,000 each should see a return on investment of around 35 times - a fantastic return for a three-year wait!

The winning ingredients
Pua feels that Cyber Village's success lies in its competitive cost structure, an advantage he has always been very keen to exploit. "Cyber Village secures its clients and projects from all over the region, including Singapore and Hong Kong. But the projects are developed in Malaysia where the costs are considerably lower than across the Causeway, hence our competitive cost advantage over foreign rivals," he says.

Pua's other strategy is to hire top talents that he badly needs to ensure Cyber Village stays attuned to the constantly changing marketplace, both locally and abroad. To do that, he has to headhunt or conduct interviews personally. He has to sacrifice his weekends just for interviews, he says. But he has to do it as so much of what consulting practices do depends on the skill level of the people they have and Cyber Village now works on more complex projects than before. Cyber Village focuses on four key sectors: e-procurement, distribution (both of which fall under the business-to-business platform), consumer and financial services.

Last year alone, Cyber Village managed to complete three major projects - IslamiQ.com, touted as the world's first syariah-based Islamic portal; Apanac.com, a property portal for Optixlab Sdn Bhd, the incubation arm of public-listed Renong Bhd; and My2020.com Sdn Bhd, a subsidiary of Berjaya Group Bhd, which operates My2020.com (www.plazab2b. cc) and handles the re-engineering of the procurement processes of the Berjaya Group's companies. More recently, it assisted in the development of Telekom Malaysia's mega million portal, BlueHyppo.com. With such projects, it is no wonder Pua puts high priority on training.

To help train his staff, Cyber Village plans to develop its own Knowledge Centre, an online information centre designed to play a critical role in the knowledge dissemination process. This online centre will give all its consultants access to important information regardless of their locations while a physical library will be set up to complement the online knowledge centre. It will house materials related to business and technology. The Knowledge Centre, financed by proceeds from the listing, will conduct training for internal and external parties.

The path to profitability
Cyber Village has seen encouraging growth in line with the tremendous interest in the Internet and e-commerce sectors. By the end of 1999, it had completed more than 20 e-commerce related projects. Its turnover was S$578,000 in 1998, dipped slightly to S$546,000 in 1999 due in part to the Asian crisis and rocketed to S$3.059 million last year. Its gross profit was S$328,000 in 1998, S$464,000 in 1999 and S$2.225 million last year.

Cyber Village is already profitable, with a net profit of S$645,000 or RM1.35 million last year. The bulk of Cyber Village's turnover last year was derived from the Malaysian operations which grew 1,005 per cent from S$200,000 in 1999 to S$2.21 million last year whereas its Singapore operations saw a more moderate growth of 145 per cent from S$346,000 in 1999 to S$849,000 just last year.

The company's operating expenses saw a 149 per cent increase from S$0.62 million in 1999 to S$1.54 million last year. Malaysia again accounted for most of the increase, accounting for 62.1 per cent of its operating expenses due in part to the tripling of its staff strength from 18 to 64 in Malaysia alone and from four to seven in Singapore.

Listing the start of a new phase - acquisitions
Pua believes that the Sesdaq listing is not an exit point for him but merely the start of a new milestone. "As traditional businesses see the need to get onto the Internet and become more familiar with Internet technologies, there will be greater demand for Cyber Village's services as an e-business and brand strategy consultant, its creative designs, project management services, web applications and technology, systems integration and technology training," he says. Cyber Village aims to become the leading provider of e-consulting services to organisations seeking to venture into e-business within the Asia-Pacific region.

To do this, it plans to expand to Hong Kong, Thailand and the Philippines by way of strategic acquisitions. Pua believes that going on the acquisition trail is the way forward for Cyber Village as it will not have to start from ground zero. Target companies will have intimate knowledge of local conditions and have an established clientele base that it can tap into and develop further. "We will acquire intelligently and select only companies whose core businesses are synergistic with whatever we're doing.

We are in fact about to acquire a Malaysian business that is a division of an established multinational company for RM2 million. We are close to completing the deal so I'm not at liberty to divulge details but this particular acquisition should add around 70 per cent to our bottom line," he said. This impending acquisition won't be his first. In December last year, Cyber Village acquired 100 per cent of SparkMedia, a Singapore-based web design specialist, for around S$178,000 and 53,085 shares of Cyber Village.

Never contemplated failure
Asked whether he'd ever felt the urge to give up during the early years and what keeps him going, Pua candidly says that he'd never contemplated failure despite not receiving a salary for close to seven months in the early, struggling years. "I was determined to keep going because I wanted very much to be a success and I wanted to enjoy the wealth that I knew the Internet had to offer," he says. And what would he have done if he hadn't turned to the Internet to launch his business? "I'd still want to be a consultant with either the Boston Consulting Group or with McKinsey & Co because I believe that's where my skills and interest lie." And what's the first thing he's going to buy once he becomes an Internet millionaire? "Nothing for myself but I'll buy a car for my dad. In fact, he's already eyeing one now," Pua says, laughing.

The early years
E-business was excruciatingly slow in the beginning and customers were hard to come by. To make ends meet initially, Pua had Cyber Village operating as a computer and Internet learning centre and the trading of computer hardware and software. To keep the staff busy, Cyber Village undertook an in-house project targeted at students.

KakakTua.com is a web-based tutoring service with intelligent assessment systems that was initiated in November 1997. In March 1999, this project received a major boost when it was granted RM330,484 under the Demonstrator Application Grant Scheme (Dags) and this was used to further develop KakakTua.com into a full featured online education website which is scheduled to be launched within the second quarter of this year. This is a project the staff take great pride in, says Pua.

He landed his first e-business project in December 1997, a month after he set up a wholly-owned subsidiary, CV Online, which handles the design and development of e-business application systems. That big break, the Kolej Aman project, involved the creation of a website for student enrolment online, the first of its kind for a local tertiary institution.

His next foray was into the e-commerce arena with NetFlowers Pte Ltd which runs MyFlowers (www.myflowers.com.my) in April 1998 and which became Malaysia's first e-enabled online florist. Today, MyFlowers has tie-ups with 30 florists in 10 countries including Singapore, Taiwan, Hong Kong, the Philippines, Thailand, New Zealand, Australia, India and Pakistan.

In 1998, Cyber Village (Singapore), a subsidiary, was set up as part of its regional expansion plans. By now, business was picking up on both sides of the border and in 1999, Pua decided to drop the Internet learning centre and concentrate on the e-commerce and consulting aspects. In August 1999, Cyber Village helped establish WatchesPlanet (M) Sdn Bhd which is a business-to-consumer (b2c) website selling watches globally.

Cyber Village holds a 20 per cent stake in WatchesPlanet.com, which now retails around 5,000 models of designer watches and achieved more than RM1 million in sales in the first year alone. Last year, sales shot up to approximately RM3 million. While most local e-tailers don't reveal their sales figures, WatchesPlanet must surely rank as one of the leading e-tailers in the country.

 

Cyber Village Sdn Bhd . Location Map

T111, Level 3 Centrepoint, 3, Lebuh Bandar Utama, 47800 Petaling Jaya, Selangor, Malaysia
Tel: (603) 7724 1377 Fax: (603) 7724 2377
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