Gushcloud's buyer: Mistakes part of entrepreneurs' journey
Gushcloud founders talk about relief after Korean group buys into company despite previous scandal
Things weren't looking good for social media marketing firm Gushcloud in March after it was exposed for trying to promote a Singtel mobile plan by undermining rivals StarHub and M1.
Co-founders and junior college friends Vincent Ha and Althea Lim, both 31, were under intense pressure, especially since digital marketing group Yello Digital Marketing (YDM) had shown interest.
Fortunately, the South Korean company did not back out and bought a multimillion-dollar stake in the company last month.
The exact figures are confidential.
Mr Ha and Ms Lim spoke to The New Paper about how grateful they were to the company that told them mistakes were part of the journey for entrepreneurs.
"The conversation with YDM started in November 2014 and thankfully, the deal was not affected by the incident," said Mr Ha.
He added that he and Miss Lim "had been open with them throughout".
LEARN FROM MISTAKES
"They told us that entrepreneurs make mistakes as part of the journey, but it's important to learn from them and to communicate these lessons throughout the organisation.
"...We have also implemented internal controls such as standards of conduct and guidelines for running influencer marketing campaigns," he said.
Influencers are people with a large social media reach, whom Gushcloud hires to push its clients' brands.
Speaking to The Business Times on the acquisition last month, YDM's chief executive Lee Sang Seok said: "Singapore is a strategic base because of its location, reputation as an established regional hub for businesses, and sophistication of its consumer markets.
"Through Gushcloud, we hope to tap the huge potential in content and data to meet our clients' needs in the dynamic digital world."
Both Mr Ha and Miss Lim now own shares in the parent company.
Gushcloud's Singapore office has a staff of 30 in an 8,000sq ft office at Lorong 4 Toa Payoh. It also has offices in Malaysia and Indonesia.
The duo came up with the idea while driving one day. They started the firm in 2011.
"We had to set up Gushcloud early because there's a life span to running a social media company. And we wanted to venture into something that had a deeper meaning and life span, and could scale into multiple countries," said Mr Ha.
But they did not have deep pockets and had to depend on shrewd investments.
Gushcloud was given a financial boost by local private equity firm F&H Fund Management, founded by Alibaba's former group chief technology officer John Wu and his business partners.
Both Mr Ha and Miss Lim come from middle-income families and have the penchant for doing business.
"I started making money back in primary school. I sold marbles, erasers and even spiders," said Mr Ha, who is married.
He said that he opened an office in San Francisco a couple of years ago to live the dotcom dream.
"But everything fell through and we lost quite a substantial amount so I shut the office and came back to Singapore," he said, adding that he has not given up on expanding into the US.
Miss Lim, who is single, found her business footing in university.
"I transferred from science to business. If I can't be a doctor, I can build a hospital," she said with a smile.
Through Gushcloud, the duo want to put "Singapore on the world map.
"We want to replicate K-wave. They transformed the music industry through K-pop, the cosmetic industry, car and electronics as well. We want to do the same through Gushcloud," Mr Ha said.
They told us that entrepreneurs make mistakes as part of the journey, but it's important to learn from them and to communicate these lessons throughout the organisation.
- Mr Vincent Ha, co-founder of Gushcloud
Singapore is a strategic base because of its location, reputation as an established regional hub for businesses, and sophistication of its consumer markets.
- YDM's chief executive Lee Sang Seok
WHY BUY GUSHCLOUD?
South Korean group Yello Digital Marketing (YDM) could have acquired a multimillion-dollar majority stake in Gushcloud last month because it might have wanted to enter the social media marketing industry without having to compete with Gushcloud.
It will also benefit Gushcloud with an increase in cash and customer relationships, said managing director of Vickers Financial Group Jeffrey Chi.
"There are likely to be synergies where YDM can sell Gushcloud's services to their existing customers.
"And leveraging such synergies could accelerate the firm's business growth," he said.
Dr Chi cautioned about some "disadvantages".
"Being owned by YDM would make it more difficult (for Gushcloud) to work with the buyer's competitors.
"Also, if growing the start-up's business means expanding into other services, the ones offered by the parent company could prove challenging as well," he said.
So, is there an option should either want out of this "marriage"?
"Someone else, or even the co-founders themselves could buy Gushcloud out of YDM," Dr Chi said.
ACQUISITIONS OF S'PORE START-UPS SINCE 2013
- 3ree
Acquired by: Always Marketing Services, China
Value: Undisclosed
Date announced: May 2015
- Gushcloud
Acquired by: Yello Digital Marketing group, South Korea
Value: Undisclosed
Date announced: May 2015
- Spickify
Acquired by: Helpling, Germany
Value: Undisclosed
Date announced: March 2015
- Nonstop Games
Acquired by: King, US
Value: US$100m (S$125 million)
Date announced: Aug 2014
- Indiescapes
Acquired by: BeMyGuest, Singapore
Value: Undisclosed
Date announced: Jan 2014
- SGE
Acquired by: Tech in Asia, Singapore
Value: Undisclosed
Date announced: Sept 2013
- EK Media
Acquired by: SingPost, Singapore
Value: $1.2m
Date announced: Sept 2013
- ThoughtBuzz
Acquired by: TO THE NEW, India
Value: Undisclosed
Date announced: Sept 2013
- Viki
Acquired by: Rakuten, Japan
Value: US$200m
Date announced: Sept 2013
- Techsailor
Acquired by: TO THE NEW, India
Value: Undisclosed
Date announced: July 2013
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