For twelve years, Tan Teik Guan has been carrying the weight of the company and its employees on his back, first as DS3‘s CTO and then as CEO in 2006.
One wrong move could affect not just his 50 employees but also their families. It’s a huge burden to bear, especially since a startup lacks the stability of a large company.
“I didn’t just have my own kids to think about — all my employees are like my children,” he said.
But his reprieve finally came. In April this year, the management successfully sold the Singapore-based IT security firm to Gemalto, a multi-national corporation in the same industry. DS3 has been making profit by selling authentication software to banks.
While the specifics of the deal cannot be disclosed, he and the other co-founders, Zvi Efroni and Kelvin Teo, are happy with how it turned out.
For Teik Guan especially, who left his cushy government job to join an unknown company as the first employee post Dot-Com bust, the rewards were especially sweeter.
“Oh my gosh, it was a huge burden off my back,” he said.
Teik Guan and DS3 are part of the second generation of Singapore’s tech entrepreneurs that are starting to see the fruits of their labor. The first, represented best by Sim Wong Hoo of Creative Technology and Ong Peng Tsin of Match.com, made their fortune in the Dot-Com days.
DS3′s contemporaries include HungryGoWhere, which was sold to SingTel last year, sgCarMart, which was acquired by Singapore Press Holdings, and PropertyGuru, which partially exited after raising a USD 48M round.
These companies were all connected by the fact that they thrived despite the lack of a startup ecosystem in the early to mid noughties.
“The region lacked that pool of people who can roll up their sleeves and bring you through different stages of a company,” Teik Guan explained, adding that while the situation is starting to change, such management expertise is still hard to find.
“You can count the number of exits with your hands. There aren’t many.”
On being a CEO
Because of the lack of guidance, the company at times was forced to take things a little slower, or as the Chinese saying goes, ‘cross the river by feeling the stones’.
As a result, early on, DS3 devoted most of its resources on systems integration, while keeping some time for the more fun stuff — R&D.
Eventually though, the management team saw potential in DS3′s research and decided to steer it towards being a product company. It was not an easy choice to make.
Ultimately, a CEO’s job is to make the right decisions that will keep the company from stagnating. In Teik Guan’s view, CEOs need to avoid strategic decisions that will reinforce the status quo, and instead aim to help the company jump to the next level.
“Jumping is really scary. You can jump up or, more likely, jump into a hole. But if you don’t make these decisions, your company will become mediocre,” he said, ”these decisions will eat into you when you’re eating, sleeping, and bathing. It dominates your life.”
It doesn’t help that choices had to be made with only 20 percent of all available information, making C-level management more of an art than a science.
Take DS3′s partnership with IBM as an example. Before the tech giant came into the picture, DS3 had a cosy relationship with Sun Microsystems from 2005 to 2007 that moved the company along.
But the management team realized that working with IBM could take them even further. Since working with a partner like IBM would drain most of DS3′s resources, they had to decide whether to cut the partnership with Sun Microsystems. It meant weaning off the lifeblood that was sustaining the company. And that was scary.
“Many companies that partnered with IBM got run to the ground. They require a lot from you.”
On hindsight, the decision turned out to be the right one. In 2010, Sun Microsystems was acquired by Oracle, which led to a lot of uncertainty. Whatever working relationship DS3 might have had with Sun would have been put at risk. Teik Guan called it a “lucky break.”
Do-or-die decisions are not just restricted to the big, strategic ones. Sometimes it’s as simple as deciding how to pitch to an important potential customer.
In DS3′s case, it can come down to figuring out whether to pitch a systems integration deal or an in-house product deal. Making the wrong choice could cause negotiations to fall through.
Faced with a lack of information, CEOs often have to rely on other tools in their arsenal when deciding where to go. Listening to the gut is one, the other is their moral compass, consisting of a set of internal values.
Teik Guan believes that even before joining a startup as a co-founder or CEO, individuals must be certain of what they stand for, and make sure that their values are aligned with the prospective company. Not doing so will screw up both the CEO and the company.
This principle also led DS3 into sealing a fundraising round led by venture capital firm JAFCO Asia. While not the best offer from a monetary perspective, Teik Guan found himself reassured about going into a working relationship with both JAFCO Asia and Infocomm Investments (IIPL), which joined the round.
The folks at IIPL helped Teik Guan refine his pitch for investors. He learned that funds, at the end of the day, care most about making a return on their investments and where the company will be in 5 to 10 years time, rather than what the company is doing now and the great products it has.
JAFCO Asia, meanwhile, sounded sincere and understood what DS3 wanted to do. Teik Guan liked their story, the consistency in which they told it time and again, the timelines they gave, and the parameters they wanted.
“They didn’t want us to change the business model. They bought into our vision. But they just wanted us to run a little faster,” he said, adding that while JAFCO Asia requested monthly reports, they weren’t intent on being micro-managers.
While Teik Guan is adamant that every startup must have an exit strategy, he doesn’t believe in running a company with the goal of being acquired. His aimed to stabalize the company to the point where it would be able to prosper on its own.
“I was running the company towards an IPO. But if an acquisition happens, then it happens.”
Relieved that his employees are now being taken cared of by Gemalto, Teik Guan is now cherishing the experience of working in an MNC and spending more time with his family. At this stage, he’s keeping an open mind about the future — which means he hasn’t thought much about contributing back to the startup community in Singapore and the region.
But he knows what he doesn’t want to do. Starting another company and going through the entire entrepreneurial process is out the question, at least for now. The idea of “mentorship” repulses him too — he does not believe in dishing out armchair advice and instead wants to put his skin in the game should he be involved in anyway.
As for going down the angel investment route, Teik Guan wouldn’t give a firm answer, but he seems open if the right opportunity comes along.
“For me, it’s not about sowing seeds and striking the lottery. But if a team is worth helping and its worth my time, then I’ll do it,” he said.
Teik Guan has always been about seeking new experiences and challenges. Startup investments just might be a new frontier to get him excited. Not that he has committed to anything now.
“Ask me again in two or three years. I’m just enjoying what I’m doing at the moment.”