“You Shouldnt Think About Scalling in the Beggining” StackTrek conversation with Ray Chan, 9Gag founder
You Shouldnt Think About Scalling in the Beggining – Ray Chan, Founder
9GAG founder Ray Chan. 150 million audience a month. 1 billion Instagram views a month. “You shouldn’t think about scaling at the beginning.”
Startup IO’s founder Billy Yuen and 9GAG’s founder Ray Chan chat about his story, challenges, and what he has learned in his startup journey.
Bill: What got you interested in launching your own company?
Ray: We never thought about launching our own company. It was more like an accident. What we were trying to do was solve our own problem, which was an easy and civilized way of sharing funny pictures between friends. We kept running the website and kept adding more team members. Then we realized that we’re already affecting their careers. So three or four years later, we decided to start our own company to make it bigger. It was a happy accident.
Bill: So initially, it was just a project. When you decided to turn it into a real business, has anything changed?
Ray: Back then, it was just me and my partners. You can make decisions just thinking about yourself but now you have a lot more people to consider because you have more responsibility because you now have your teammates.
Bill: And what is the biggest surprise you’ve learned about this social sharing industry?
Ray: The biggest surprise we had is how similar teenagers and millennials are from different countries. Before you graduate, no matter where you are, you live a similar life to others. It doesn’t matter if you’re in Hong Kong or Brazil or France or Indonesia. Every teenager and millennial has the same thoughts and share the same troubles. Those are the things that are very similar across the world. This is something that surprised me.
Bill: Okay, so what’s the most difficult challenge you’ve faced when you launched 9GAG?
Ray: There’s a saying called “the best is yet to come” but within our team, our version is “the shit is yet to come” because there are always new challenges. When we first launched the website, the biggest challenge was how to get people to come to our website; then after we started our company, the challenge was how to set up a good team and how to find good people to join our team; then after you have good people, the challenge was how do we make them happy. So the challenges keep coming and, to be very honest, it takes a lot of time to learn how to do better. I think there are new challenges all the time but that’s also the interesting part of being an entrepreneur.
Bill: Were there any problems with the co-founding team?
Ray: Yeah, I think I want to kill my co-founders every day. But the bottom line is we complement each other. I have two technical co-founders so for programming, they make the final decision on tech related matters. I have another co-founder who is working on design so he makes the final decision on that. For me, I’m responsible for the product so I make the final decision on that. We have different views on the order of the company but we know that we all have a common goal, which is to make a great company. I think that explains why, after almost nine years, we still have the same 5 people in our company.
Bill: Sometimes getting funded is only a beginning of a new challenge. Trivago Co-Founder Rolf Schrömgens once told me, a startup raising lots of money is a challenge because overnight you are running bigger operations. What’s your take on that?
Ray: I think our situation is a bit different because, early on in 2012, we’ve only raised USD$5 million. But even after we raised our money, we didn’t expand quickly because we always believe that having more money doesn’t mean you have to waste more money. We always want to do everything ourselves first, so we’ll know how to do it best. Then we hire people who can do better than us, to take over and make it better.
And we usually do things step by step. That’s why getting funded doesn’t present new and big challenges for us. I think some of our investors always want us to spend more because that’s the main reason why they invested in startups. They want you to spend the money and to go make the company bigger fast. But the good thing is we don’t give out a lot of equity to our investors so that we can have the final say. But you can see a lot of companies, they raised a lot of money then they expand really quickly and then they die. It’s kind of like having a heart attack.
I think as a founder, at the end of the day, it’s your own choice to decide how your company should work. If you can’t even resist your investors’ opinion, then you should just let your investors run your own company.
Bill: So back then, when you first raised your money, what was the reason for raising it: for survival or for financing growth?
Ray: The main reason was neither survival nor growth. The main reason was to get a larger support network. We want to be a global company. And to become a global company, you need experience and connections so we decided to take on investors that can help us in those two areas.
Connections are the things we lacked the most because we were based in Hong Kong and many tech/social media veterans are in the U.S.. Thankfully, our investors were early investors of Facebook and Twitter too and some of them even worked there. So whenever we have an issue, we can just email them and then they can guide us to get the problem fixed right away.
They also have experience on scaling teams and building companies with global impact. We really want to have those kind of savvy veterans on our side. So the money was not the reason why we raised funds; it was all about acquiring connections and experience.
We are also lucky that we can pick our investors. Of course, they pick us too. It works both ways. We picked the ones who have operating experience and have a very good reputation among startups. This is something we look for when we were raising funds.
Bill: So connections and experiences are the two things you look for when you raise funds. Is that the same reason why you chose to go through both accelerators: Y-Combinator and 500 Startups?
Ray: Yes. In the journey of running your company, it’s good to get some help from your investors. But you also need some peers who are experienced in the same stuff you do because investors’ experience may not be as applicable to you as a founder. Having peers with experience building their own company, they can share with you their challenges and solutions. For example: when we were raising funds in 2012, we didn’t know anyone in Silicon Valley. We were just five guys from Hong Kong. Most of our investor introductions were from our batch mates. We don’t keep in touch closely all the time but you know if you need help, they’ll be there to help you.
Bill: What are the things you’ve learned in accelerators besides getting connections?
Ray: There’s a lot of talk about hustling. It means you really have to work hard and work smart. In Hong Kong, people just believe you have to be able to work smart; you don’t have to work that hard. But the thing is, when you look at all the successful companies and founders, every one of them worked really hard and also worked really smart. That’s something basic but it’s still very inspiring.
Another thing we’ve learned is that you shouldn’t think about scaling at the beginning. If all you think about is scaling, you will just do all the things big companies are doing. You have to do something that doesn’t scale yet, something that the big companies won’t do because it’s not effective to them. That’s one of the biggest learnings we learned at YC.
Bill: I assume you watch HBO Silicon Valley. Given your experience in Silicon Valley, and you have lots of startup friends there, how close to reality do you think that show is?
Ray: I would say it’s really close. In fact, I talked to one of my friends who was one of the script writers at the show. He told me that it’s the easiest job because you don’t really have to create much. They just really have to take notes from what they heard from the investors and the startups, and use those notes to make the TV show. That’s how close the show is to reality.
For founders, you laugh at certain points and certain episodes because it happened exactly to them. And on the other hand, the show also helps you see potential challenges down the road, even if you haven’t come across those certain challenges. Many of those things that happened in the Silicon Valley show are real, except they don’t all happen to just one company.
Bill: Would you recommend every startup to watch it?
Ray: I really recommend it but only if you have time. If you want to waste 20 or 30 minutes of your time, then watching an episode is a good choice.
Bill: You’ve experienced the startup scene in both U.S. and Hong Kong. Have you seen any fundamental difference between U.S. founders and Hong Kong founders?
Ray: Yeah, definitely. Even between Hong Kong founders, there’s a difference, because fundamentally every individual is different. The same thinking can apply to the U.S. founders. A lot of people try to generalize based on the culture because they think culture has a significant impact on the founders. But to be fairly honest, everyone is really different because of their family, their background, their education. But if you want me to generalize, I would say U.S. founders generally have more confidence in themselves. Also, individualism is relatively more important in the U.S and American founders care less about academic results. That’s why you see a lot of U.S. founders who started when they were really really young.
Another thing is that in Hong Kong, the people who want to start their own company are the business people and not the engineers. That part is quite different when you compare the two ecosystems.
Bill: You’ve mentioned about culture, let’s talk a little bit more about it. In Asia, sometimes when you start something as an entrepreneur, you might have to answer to your parents. Did your parents ask you why you took this path?
Ray: I think I’m very lucky in that regard. My younger brother is my co-founder so we both faced our parents together. We are very lucky in a sense that our parents don’t really care what we do. They just want to make sure that we are responsible people to our family and the society. That’s why they tell us that no matter what we do, just make sure that we pay for the family and our own responsibilities. I think our non-typical parents made the burden lighter.
For example, I picked up my degree at college when I studied Law. My young brother studied Architecture and my younger sister studied Medicine and is now a doctor. Both me and my younger brother studied professional subjects but did not become professionals. If our parents are the typical Hong Kong parents, I believe they would be really disappointed but luckily our parents are kind of weird and different. (laughs)
Bill: They seem very open-minded.
Ray: Yeah, I would say very open-minded. I think that makes things easier for us. They never try to stop us and that’s already a blessing.
Bill: In your situation, your brother is your co-founder. Did you convince him or did he just volunteer to be your co-founder? Because just like you, he earned a professional degree, which means he has already invested a lot of time in that profession already.
Ray: No. The reason why we studied the professional subjects but didn’t become professionals was because we didn’t really study in school. Hence we got really poor grades. So for us, our opportunity cost is actually really low.
I think for a lot of people, before they study the subject, they think that they’ll like it. After they do study it, they realize they don’t want to do it for life but they pushed ahead anyway and enter that profession because they’ve spent 3 or 4 years studying that particular subject. But when you have poor grades, then you don’t have to continue down that professional path because, most likely, you won’t able to find a really good job in that profession. So the opportunity cost is lower.
In my brother’s case, he studied architecture and he found out that he really like designing but just not designing buildings. He likes to design apps and websites. He enjoys doing it and that’s why it was pretty natural for him to join us and become my co-founder.
Bill: When we talk to founders about to start or not to start, many of them said their parents is their deciding factor. Your thoughts on this?
Ray: I think it doesn’t really matter because, after all, your parents can only help you until you grow up. Once you become an adult, you should make your own choices. I’m not saying you should be rebellious and stuff like that but there are ways that you can pursue entrepreneurship without your parents worrying too much. For example, you can start with a part-time job generating some income and, through that, your parents would know you are actually doing something. You’re not just doing nothing at home. After all, your parents don’t really care whether you pursue any specific career. They just want to make sure you are healthy or you don’t become poor and that you can have a better life than them.
Bill: One of my investor friends’ philosophy is ‘you have to pitch to your family first and then if they green lighted then you can pitch to him’. What do you think about that?
Ray: I think that make sense also because, as an entrepreneur, and especially when you’re the CEO, you have to talk to your investors right? It’s always about telling a story. If you can’t even tell a convincing story to the closest people in your life then how can you convince a stranger to give you money? Millions of dollars of money, in fact. I think that is a pretty good thinking.
Bill: Let’s talk about tech. Are there any technological trends that you’re paying attention to?
Ray: To be very honest, we don’t really pay attention to trends. I will read about it and try to understand why people are crazy about it but that’s it, unless the trend is applicable to our business and to our product. Because from my perspective, trends are changing more and more quickly. 3 or 5 years ago, Instagram didn’t exist. 2 or 3 years ago, Snapchat didn’t exist. In fact, many of the most popular technologies that we use today didn’t exist 12 years ago. So if the trend is moving very quickly, why bother to stay too updated? What we do instead is focus on things that don’t change and we try to understand them. For example, people still want entertainment no matter what platform they are on. Those are the things that don’t change and those are the ones that are worth investing our time and resources and energy in. I think that’s a better way to adapt to this fast-changing environment in tech.
Bill: Any goals that you can share with us?
Ray: We’ve reached one hundred fifty million audience per month and we got a billion views on Instagram a month. But the thing is, there are still tons of people who don’t know 9GAG and haven’t seen the content of 9GAG. I think those are the things that we want to do — to make sure that everyone who is our target audience will know about 9GAG or at least see some content of 9GAG. Those are the things that we want to do, and it’s doable.
Also, what we like to do is help our content creators make a living by creating funny and interesting content. This is our vision of open content creation. It means we don’t create the content. Instead our users are the ones create the content. I assume users want to work for themselves because that gives them more freedom. We can be wrong but based on this premise, what we are trying to do is help them help us by providing them a platform to make a living through creating funny content.
And someday, we’d also like to achieve distributed content. Distributed content meaning the content doesn’t have to be on one single platform; it can be on Instagram, on Facebook, on YouTube or on Twitter.
Bill: I also know you ventured into games recently.
Ray: Yeah, we’ve had an experiment in 2015, and we worked with a gaming company in Indonesia. We created and published some games. But after that, we stopped. Mainly because if you do game publishing, it’s another business. It’s a difficult business for us to learn because games have so many categories. It’s easier for us to know which content users would like by using data and our experiences. That’s why after the experiment, we started to focus back to the core of 9GAG, which is delivering funny content to our users.
Bill: Cool. Last question. Give one advice that you can share with “wantrepreneurs” out there.
Ray: First of all, it’s not really an advice but more like a general view on advice. I think that most advice aren’t that useful because, after running a company for some time, I came to realize that there aren’t universally true advices and everything depends on the situation because the founders are different, the portals are different, and the challenges are different.
For example: hire the best people to join your company — it’s a golden rule of startup advice right? But if you are a nobody, how do you hire the best people? So even as true as that, it may not be universally applicable. That’s why everything depends on the situation.
Let me give you another example. There’s this old saying, “Failure is the mother of success.” But the truth is there’s no correlation between failure and success. When you think about it, successful companies don’t have to fail before that; it’s not necessary or a sufficient condition. People in Silicon Valley advocate failure only because by advocating that, they can encourage people to try more.
The main thing that we get from failure is the learnings, not success. Therefore, we should celebrate the learnings. And those learnings are kind of like victories because you’ve earned new experiences so you now know what you should do the next time. But all these learnings don’t guarantee your success and that’s why I don’t believe in, “Failure is the mother of success.”
I also think that failure is kind of overrated. What we should do is learn from our successes whether it’s big or small. We should celebrate our successes and also celebrate our learnings because if I ask people to celebrate failure a lot, then they just fail a lot because they have very low expectations.
After saying all that, I still think you have to read a lot of advice or practices so, as a founder, you can apply the right kind of knowledge to your own company when its suitable.
Also, remember that it’s always your own company, not the investors’ or the users’. It’s the founder’s. No one but you have to make the final decision.
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