Digital Marketing Agency - Silver Mouse

Interview with Frank Kang, COO of LivingSocial Malaysia

In year 1998, I worked as a part time for my senior doing a start-up on online education with video streaming, and education is a big market in Korea where parents willing to invest into it, some by taking loans!

Frank Kang - COO of LivingSocial Malaysia

Can you share with us a little on your background?

In year 1998, I worked as a part time for my senior doing a start-up on online education with video streaming, and education is a big market in Korea where parents willing to invest into it, some by taking loans! The start-up - ETOOS was eventually sold to SK Group, and since then, I realized that Internet is big and I wanted to do an Internet startup too.

Back then, social network was already big in Korea with Cyworld was hugely popular as a platform for people to express themselves. Mini-homepage of Cyworld is an extraordinary sensation based on the fact that over 40 million people among the entire Korean population of 60 million have this mini-homepage. Personal desire both to express themselves and to connect with each other are among various factors of Cyworld's success.

Dreaming to be "the next Cyworld success", I co-founded an online value exchange network - 'People2' to stimulate meaningful interactions between people. People2 enable users to exchange their own value through searching or browsing based on the assumption that it is possible to show their trivial value by KEYWORD.

We managed to raise an investment from Softbank but I had to serve 2 years military service in the middle and the business collapsed. I was sad and defeated but it was a good learning for me.

Why Softbank was willing to invest on you without track record back then?

I still remember that the Softbank President once told me this on their aim of contributing to start-up ecosystem in Korea:
I bought your dream, so you prove it!

In year 2008, I told Softbank Ventures that I wanted to go to Silicon Valley, which I met many interesting and talented people. I started my second start-up on social search with a partner, attracted investments but I had issues with the investor so I had to quit.

I worked on Twitter Open API afterwards and built the biggest twitter directory in Korea - Koreantweeters.com, a community with 2 million users back then. Even though it has extensive user base, I was struggling to find revenue source through Twitter platform, and yes, it was tough.

Koreantweeters.com - A Korean Twitter Community

I then met Tmon (Ticket Monster) CEO & co-founder Daniel Shin, but initially it was about the collaboration of Tmon and Koreantweeters on getting surveys and blasting deals. During that time, I was amazed by the business model of Tmon, you know, today you sell the deals and the next day money is in the bank.

That's what brought you to e-commerce, wasn't it?

Yes, no matter how fancy your start-up is, if you are not getting revenue, it is not a business! After my previous start-up experiences, I really think that social commerce is a real business!

I then worked closely with Daniel to replicate Tmon (Ticket Monster) to other countries. We were exploring Korea town in Los Angeles but the market is too small, so we decided on Southeast Asia. I came to Malaysia during early 2011 and Groupon was acquiring Groupsmore back then, and it didn't take long before Tmon acquired Everyday.com.my.

Back to the early days of Everyday.com.my, we had 1,000 transactions a day (with hotel buffet deal) without any marketing. People share and buzz about the deal through their social graph to attract friends or family to buy. Daily deals (restaurant, spa, services) are much more social and demanded compared to retail or travel items.That's why we name it social commerce or group buying.

Of course, Tmon was acquired by LivingSocial in 2011 and Everyday - Ticket Monster has been rebranded to LivingSocial in 2012.

How is the growth like for LivingSocial in Malaysia so far?

LivingSocial Malaysia office

Before the acquisition, Everyday had only 7 people in the team and it is now more than 160 in LivingSocial. We were growing 10x revenue from 2011 to 2012, and enjoying 2x growth rate so far from 2012 to 2013.

We started introducing best restaurants and beauty businesses in Kuala Lumpur, and we have now expanded to 6 cities (recently in Ipoh) covering events, ticketing, sports, services, excursions, travel packages and retail products.

In 2012, we had about 200 deals at any time and we have more than 700 deals now in 2013, Tmon (Korea) has about 10,000 though.

It is amazing that Malaysia is the fastest growing country of LivingSocial after Korea, and definitely one of the leading countries in Southeast Asia region.

The product business is an important growth segment, right? How big is it now as compared to the daily deal business?

Yes, we need to scale our product (retail) business. About 250 (42%) of the total deals right now are products, and we aim to double it to 500 (50%) by the end of October 2013.

Product business aside, we are also committed on growing our daily deal business. We want our customers to be able to find deals, anytime, no matter where they are, being 1 stop shopping destination from services to product. For example, people purchase hotel accommodation in Langkawi, restaurant, excursion nearby and travel luggage all in one from LivingSocial with the best price. We call it 'Marketplace'.

LivingSocial core values

How do you see mobile for LivingSocial?

I want to use the example of Tmon again where 50% of the sales are conducted via mobile (web and application).With mobile device penetration, I'm confident to grow mobile transactions in Malaysia as well. It's a huge opportunity!

It is interesting to find out that Koreans like to shop via mobile before they sleep, it means traffic via mobile goes high during midnights. It is a little different from Southeast Asia countries including Malaysia where mobile usage peaks before midnight.

We have also introduced paperless redemption and merchant can use mobile application to verify redemption. We will continue to build the best experience for both our merchants and customers.

How do you see the e-commerce potential in Malaysia?

Daily deal businesses are performing fantastic in Malaysia, including our competitor Groupon. We are continuing growth momentum ever since we started our business, which means this market has serious potential. We have also witnessed many international companies setting up in Malaysia and those are not coincidences as Malaysia has strong infrastructures already.

I personally hope that all the market players will do their best to provide better deals and services, creating a healthy competition with each other to wow customers. There are still many challenges to overcome, but that's a necessary growing pain for the fastest growing region. E-commerce in Malaysia is about to blossom, and ecosystem is being built by everyone involved in the business.

Anyway, it is the RM500 million market in 2016 that we are talking about.

One thing that's clear, we created an entire new market, providing a whole new experience and value to millions of happy customers.



ecInsider: Interview with Frank Kang, COO of LivingSocial Malaysia
Interview with Frank Kang, COO of LivingSocial Malaysia
In year 1998, I worked as a part time for my senior doing a start-up on online education with video streaming, and education is a big market in Korea where parents willing to invest into it, some by taking loans!
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