Executive Cases: Interviews with Senior Executives of Early-Stage Companies:
Bubbly – Singapore
Prepared by George Foster, Sandy Plunkett and Yinglan Tan
Headquartered in Singapore, Bubbly (FKA Bubble Motion) is pioneering mobile social communication for the masses as the only social media service that works across feature phones and smartphones, available across 2.4B+ phones throughout Asia and the Middle East. The social voice-centric service lets users easily record and share short voice updates with friends, family, fans and followers. The company has raised more than $60M+ from some of the largest venture capital (VC) firms globally, including Sequoia Capital in the United States, JAFCO (Japan’s largest VC), SingTel Innov8 (South-East Asia’s largest VC) and Westbridge Capital (India’s most successful VC).
Tom Clayton is Chief Executive Officer of Bubbly, the Singapore-based company backed by Sequoia Capital, JAFCO, SingTel Innov8 and other prominent investors. He has led Bubbly to become a leader in mobile social media across Asia. Prior to running Bubbly, Clayton was General Manger of the Mobile Business at BEA Systems, an infrastructure software company acquired by Oracle for $8.5 billion. Before BEA, Clayton helped start five different companies. At his most recent start-up, Bang Networks, another Sequoia Capital, Goldman Sachs, Marc Andreessen and Ron Conway backed networking software company, he helped build out the business development and sales-force organizations. Clayton’s other start-ups ranged from an e-commerce-focused systems integrator to a high-end audio manufacturer. He also worked as an economic policy consultant to the US White House, where he drafted the US High-Tech Economic Stimulus Policy for building out nationwide ubiquitous broadband access. Clayton holds an MBA from Harvard Business School, where he was a Baker Scholar, and a BS from the University of California, Berkeley. Clayton was a boxer before his professional career; he won a bronze medal at the US National Championships.
Q1: What was the source of the initial idea, and how did that idea evolve into a viable, growing company? How did it change over time?
Clayton: “The initial company was started under the premise there was no voicemail penetration in emerging markets in Asia. However, that turned out to be a pretty crappy business. After I spent some time doing due diligence on Twitter for Sequoia, I realized the potential of one-to-many messaging and bringing that to the masses across emerging markets via voice (rather than text) over simple feature phones. Once we launched it, we quickly gained more than 1 million users in a couple of months – and 80% of them were paying for the premium version of the service, so we immediately knew we had a viable business.”
Q2: What were the major growth accelerators for your company in the early years of high growth?
Clayton: “In the first two years, growth was driven by the reach of the service. The more operators who could deploy the service and make it available, the faster it could grow. It also had to have geographic/country concentration (i.e. it was much more powerful to deploy across three major operators in the same country vs three large operators in three different countries) – due to the strong network effect of the service. Thus, we focused our deployment efforts on a few countries at a time. Celebrities were the other factor that really drove growth – the more big-name local celebrities we got live on the service in a given country, the faster the service grew there.”
Q3: What role did key aspects of the entrepreneurial ecosystem surrounding your company play in the growth of your company?
Clayton: “There was a bit of an advantage to being a ‘big fish in a small pond’, as it made it easier to attract and retain talent and lure top notch VC investors from across Asia. Other aspects that really helped us included the super efficient Singapore government – where I could literally call any MP and get right to the top to get an answer or discuss how the system should work. They gave us a $1 million grant early on to subsidize our engineering hiring and then another $1 million equity investment to keep our incentives aligned longer term. They have also made it possible for us to recruit from all over the world – not just in the small labour market of Singapore. We have nearly unlimited visas, as long as we’re hiring ultra-high calibre engineers. We now have an engineering team from more than 20 different countries and it’s literally the best, by far, in South-East Asia. Lastly, Singapore is a great logistical hub to cover Asia. We can get to most South-East Asian countries via a day-trip and all other Asian countries are easily accessible via red-eyes; thus, one never actually has to stay in a hotel to visit any country in Asia when flying from Singapore.”
Q4: What key aspects of the entrepreneurial ecosystem surrounding your company that were absent (or existed only in a weak form) created the greatest challenges for growing your company? Please describe and discuss how you met/were impacted by these gaps in the ecosystem and their resultant challenges.
Clayton: “One of the issues most entrepreneurs in Singapore complain about is the shortage of engineering talent locally. This is definitely an issue. However, if you expand your net and recruiting search beyond Singapore to the rest of Asia, if not the rest of the world, then it is not really an issue. Currently, visas are starting to become an issue though for foreign workers. There is negative political sentiment against the increased foreign population, thus the government has significantly increased the requirements for visas, making it challenging to grow your workforce as fast as some companies need to. Lastly, there is a broader cultural issue in Singapore and most of Asia, where everyone values working for a large multinational corporation (MNC) over a start-up. Many employees see it as far more prestigious to work for HP, Yahoo! or Microsoft rather than for the next Facebook or Google. Thus, it is difficult to sell them on joining a start-up, even if it has the most prestigious VC investors and is growing like a rocket ship. Moreover, they also attribute very little (if any) value to stock options, which really minimizes a start-up’s biggest recruiting tool relative to large MNCs.”
Q5: At what stage did you invest significant resources seeking to grow your company internationally/beyond your domestic country or region? What factors were pivotal in deciding when to seek growth internationally and where to seek that growth?
Clayton: “Given that Singapore is a very small domestic market and not a target emerging market of ours, we focused internationally from Day 1. Singapore is a great hub for the rest of Asia, so we initially focused on India, Indonesia and the Philippines, then expanded to the rest of Asia from there.”
Q6: What were the biggest challenges in building growth internationally? How did you meet or adapt to those challenges?
Clayton: “The biggest challenge and key to success was finding the absolute best first employee on the ground. This person would ultimately be responsible for working out the deals to deploy with all of the mobile operators, recruit all of the big name celebs and build the community of users locally on Bubbly. Moreover, they were a team of one; thus, they had to be scrappy and extremely self-sufficient in order to thrive and succeed in our start-up culture.”
Q7: What major role, if any, did key aspects of the ecosystem in the country(countries) you first sought international growth either promote or impede your ability to grow in those international markets?
Clayton: “Emerging markets in Asia have both significant advantages and disadvantages. On the plus side, everyone moves a lot faster. For example, deploying a service with a major mobile operator could happen in less than a month; it would easily take a year in the US or other Western markets. Moreover, these are massive markets that have a lot of low-hanging fruit for opportunity. Thus, building out a business that exploits these opportunities is extremely lucrative.
“However, there are a ton of risks and issues when going into these markets. First, it is extremely difficult to monetize mobile services in these markets, as credit card penetration is below 5% and there are very few options for electronic payments – integrating with mobile operators to deduct directly from users prepaid cards is really the only option – and that takes a long time to do. Digital advertising is still in its infancy and is dismal in size, so that’s really not a viable alternative business model at this stage. The second issue we faced in all of these countries is the unbelievable bureaucracy – everything from setting up a local entity, to paying taxes, getting audited and selling into large local mobile operators. The paperwork, time process and lack of any sense of urgency, definitely leaves a lot to be desired. Last, is corruption. It has gotten much better across all of these markets over the past decade, but it is still there and creates a hindrance many times. Local players are often not bound by or care about the international laws governing corruption, whereas Western companies have serious consequences if they go down that path. Thus, it often puts you at a disadvantage if a local player decides to copy exactly what you’re doing and offer the same service. This is where creativity is an absolute must. One needs to think about how to create serious barriers to entry to prevent this from happening upfront. Our first business, VoiceSMS, fell victim to this, so we made sure to think carefully before launching Bubbly and ways that we could limit these copycats from hurting our business.”
Q8: Seeking international growth often has both high moments and dark (low) moments. Briefly describe one high moment and one dark (low) moment in seeking international growth.
Clayton: “Well, first let me say that this is true for entrepreneurship in general. Outsiders often think that starting a company is all sexy and fun; however, after my sixth company now, I can say for certain that there are always a lot more down/dark days than there are high/up days. As entrepreneurs, we live for those high days and learn to deal with the much more frequent down days. Many first-time entrepreneurs quit rather quickly, because they had no idea how many down days there were – in even building the most successful companies.
“For bubbly, my biggest ‘high’ day so far was when I was on a business trip to India. I flew in on the red-eye and asked for a wake-up call at 9 AM. In India, it is common for a guy to bring you coffee to your room for your wake-up call. I woke up to the sound of my doorbell, not realizing where I was at first. I answered the door to the bell guy bringing in my coffee and the morning paper. He handed me the newspaper (The Economic Times – India’s version of The Wall Street Journal). On the cover was a drawing that looked like me and the cover story read, ‘Bubbly crosses 1 million users in less than 2 months’! I turned to the door guy and asked, ‘How did you know this was me?’ He said, ‘What? That’s just the paper from your door, Sir.’ I had no idea the news had leaked and it made the front page in India. At that point, the service was only live on one mobile operator in India. However, that day, the four largest operators that I was meeting with all agreed to launch ASAP. Moreover, within the next 48 hours, we had 20 of Bollywood’s top celebs join the service. Everyone had seen the article and it clearly changed the trajectory of the company.
“My ‘lowest’ moment at Bubbly isn’t necessarily tied to international expansion per se, but it is tightly coupled with doing business abroad. In Singapore, we recruit our employees from all over the world and have engineers from more than 20 countries. One Monday morning, I came to work around 8 AM with the police standing at the front door. They asked if I was ‘Thomas Clayton.’ I said ‘yes’ and they asked if they could speak to me inside. Once we sat down in my office, they informed me that one of my employees had committed suicide over the weekend. I was shocked. I had no idea she was depressed. She was always smiling and working 24/7. However, it seems she was in an arranged marriage (via her parents in India) and was extremely frustrated with it. Her parents wouldn’t listen to her. She worked so hard in the office so she wouldn’t have to go home. We were her outlet. It was extremely sad. The toughest part was that both her best friend and her husband’s best friend also worked at Bubbly and I had to tell them the unfortunate news once they came in that morning. Then I had to inform her parents and the rest of the company. It was a tough day to say the least. No case study that I had read in business school could have prepared me for that day. A different sort of emotion comes out and that is where you just learn to become a true leader and be there for others. Your sole goal is suddenly caring for everyone else and making sure everyone is going to be okay. I definitely learned a lot about life that day. One of the toughest days I’ve had as a CEO.”