The Jay Kim Show #38: James Giancotti (Transcript)
We have an awesome guest on the show today; his name is James Giancotti and he’s the CEO of a startup called Oddup. Oddup is a research platform that rates startups the very same way that equity research analysts rate and recommend a publicly listed company’s shares. Startup investing has traditionally been a very closed and private circle, and as an outsider it’s very difficult to get true and accurate information on a startup when you want to invest in it. So Oddup aims to provide that sort of transparency by covering startups with a buy, hold and sell recommendation, very much like a public company would have.
So Oddup just announced the close of their six million dollar Series A round earlier this week, which is huge news. It’s been going viral on the newswires here in Asia. So it goes without saying that James has had a very busy week, and he’s very generous with his time. We’re lucky to have him on the show today. James is a good friend and he’s certainly one of Hong Kong’s rising stars. You know, he’s a very down to earth and modest guy. I think you guys are gonna really enjoy this episode. We go into a lot of detail about his company and specifically, we talk about how to get coverage on this platform. So if you are a startup founder, then this episode is for you. Okay, now on to the show.
Jay: Hi James. We’re very excited to have you on, and it’s been a very busy week for you, but a very exciting week. So, once again, we appreciate the time for squeezing us in. For our audience listening in, perhaps you can introduce yourself. Who is James Giancotti and what do you do for a living?
James: Great, and thank you so much for being here, firstly. Secondly, I’m James Giancotti. I’m the CEO and co-founder of Oddup and we rate startups.
Jay: Very concise, very to the point, and for the audience listening in James is being modest, because they just had a huge announcement. They just closed their Series A round, which we will talk about in depth later on. Before we do that, I want to take a little bit of a step back, because I think you have a very interesting and relatable back story. So, if you can take a little bit of time and just walk us through your background. You know, you weren’t originally from Hong Kong, but you moved up here. Where did you start your career? You had multiple … you’ve been an investor, you’ve been an entrepreneur, you’ve been an employee. Just walk us through sort of your life, basically, leading up to this point.
James: Well, it’s a long story; I’ll try to condense it. I’m a law graduate, so I studied Law at [inaudible 00:03:25] in Australia, and then after I did that, I actually didn’t practice law, which is quite interesting. I actually have a law degree, but I haven’t actually practiced it. I went straight into consulting. I went to people like Deloitte and Capgemini, and after I did consulting and sort of business management, sort of understanding and landing bigger projects, I went into an investment banking that actually brought me to Hong Kong. So a lot of people ask, “What brought you to Hong Kong.” And I always say it was love. I love money. You know, I joined an investment bank and started at JP Morgan, and after I started at JP Morgan was there we had the financial crisis that we needed to have. Worked, and started investing on the side in some startups and did relatively good out of it.
It was a passion of mine. I always was an entrepreneur, my family’s been entrepreneurs for years. Then after that I set up my own company in the background and then I joined Goldman Sachs for several years. The itch of bring an entrepreneur was always there, and after I left Goldman Sachs, I became an investor with my co-founder Jackie, in Bigcolors. We had some exits very quickly, and we actually built Oddup as a product of what we were doing as a VC, and that’s when Oddup sort of found maturity. We were investing, we were putting research reports together, and people said “This is really good. I’ll buy it.” That’s a nice thing and then all of a sudden, more and more people told us this and then Oddup was born. We started in Hong Kong all those years ago. So it’s been a very very long, but sort of interesting journey. I changed my career multiple times. I tend to get bored quit easily if I’m not excited.
Jay: Thank you for sharing that. I love your story because it’s so relatable to me. You know we both spent … I spent a number of years on the sell side, basically chasing money. The love of money, as well, is what brought me to Hong Kong and I think that it’s very, it’s refreshing and it’s inspirational when society and culture tends to romanticize entrepreneurship and startups and you see movies like the Zuckerberg movie. You think that startup founders are all millennials, and their all in their twenties, but the reality of the situation is, is a lot of successful entrepreneurs they don’t get there until they’ve had a number of years of experience in multiple different industries under their belt, and then use that experience to then start their real, or a real startup that they’re successful in. So I love your story. Again, thank you for sharing that. You were solving sort of a personal pain point, or professional pain point, if you will, at your firm, looking at startups and how to rate them. So, let’s dissect that a little bit. You have a research background as well. For those of us listening in that don’t really know how, say public-listed equity research works and how you replicated that model to the private equity, maybe you can walk us through that.
James: Sure. Well, you know I spent a fair bit of time at Goldman Sachs putting together … particularly uncovering companies like [inaudible 00:06:37] and so forth. The research is only as good as the analyst that gives it, but one of the things that particularly with public research is, is that you need to understand the companies, you need to understand the founders. You need to have information that can help move a stock price. That’s the same thing with startups. A lot of investors will say, “Oh you know, I’ve seen a hot announcement on a hot company. That must be a good company.” That’s not correct. Most startups can move with the wind in an hour. So where we’ve put together Oddup is very much like the traditional public market research, where people are getting a buy, hold, sell, a current rating, a future valuation, a current valuation, and potentially price movements in the market, but ultimately how other things affect the startup. One of the things that we made sure we did for Oddup was to make sure that we were covering the things that people do not cover. So, I’ll give you a good example. I’ll use a Hong Kong example. WeLab is probably the best example. I know we’ve covered them since being a baby boy at one million dollars, and now they’re a billion dollar company.
James: Part of their success is of course Simon and the team, but a lot of their success has to do with Fintech being hot, being in China, being in the right location. So when we put a report together, and this is very similar to what public markets do, we’re looking at not just the founder. Let’s look at the investors who are pulling the strings. Let’s look at the team that they’ve got. Let’s look at the location they’re in. Let’s look at the industry, as well, that they’re in. Are they hot? Are people putting money into this industry? So this is where we look at it’s not just the startup, it’s everything that surrounds the startup that gets investors and public people excited about it. So that’s really the way we put it together. It’s very similar to what would happen at the public markets, but the difference I guess with public markets versus private markets is public markets are moving every second. As soon as the trading bell rings, it’s what you can buy and sell, and get that return straight away. Where as in startups, we haven’t got that mechanism yet. It’s probably gonna come in the next ten years, but the mechanism to buy and sell so quickly, so people are looking for the long run, high risk, high returns.
Jay: I think that’s the way you approach it, with sort of doing it as a sector, if you will. Giving the larger landscape of the startup is actually … it’s a smart way of doing it and having done angel investing in the past myself, I’m guilty of also just being too granular and just focusing on the company, on the metrics. Like is the founder, how good is the founder? How good is the team? How good are my co investors? You know, looking at the data on too much of a granular level and forgetting about, oh what’s the actual environment of the sector that they’re trying to compete in. I think that that’s one area … I mean startup investing is obviously very difficult, and it’s a very closed and private circle. So, as an outsider, it’s difficult to get information on startups, and that is essentially what Oddup is trying to provide that transparency for, right?
James: Yeah, and we want to go a step ahead. When we talk about startups, a lot of people, we do get some friction on how do you know my startup. We’re not just covering startups. One of the things that has frustrated me as an investor, is actually investors taking ownership for their mistakes. So, I’ve invested in some great companies. I’ve invested in some crap ones, and a lot of investors do. I can blow my trumpet of how wonderful my exits have been, but let’s be real. I’ve invested in some bad companies as well. So, we need to look at a full total picture. One of the things I love about Jason Calacanis, a probably well-known angel investor in Silicon Valley. He’ll talk about Thumbtack and Uber, saying he got lucky, but all the other ones that went bad, they went bad. So he says that it’s the total portfolio that counts, and that’s the key thing to investing.
Besides startups, we look at the investors, we also look at the locations. So if we had a dollar, just a dollar, for every time someone wants to be the next Silicon Valley, instead of raising six million dollars, and I’ll get to that probably later, we would have raised maybe four and a half billion dollars. Everyone in the world wants to be the next Silicon Valley. Will they? Will they not? Well, probably not. Silicon Valley is Silicon Valley. They could be different versions of that in other places, but we don’t just look at these things. We look at startups, locations, industries, investors, and now we’re about to launch accelerators. A lot of people know there’s accelerators everywhere. People need to understand not just from the startup, but actually let’s look the other way around. Are the investors worth getting money from? So, we’re looking at a total picture of the ecosystem, not just on the startups that people are so interested in.
Jay: Right, okay. So let’s talk some details. So how many startups do you have in you system and rated at this moment?
James: Okay, so rated versus information. So a lot of our data is a lot of information, and we do not cover a lot of startups. It’s the same thing for public markets. There are thousands of companies on the stock market, but really 100, 120 get actually rated, ’cause they’re the ones that get the most volume. We take that approach in most of the markets that we’re in. So, let’s look at Hong Kong for an example. You know we cover about 150 companies, that we have a buy, hold, sell, an expectation and so forth. There’s also about 2,000 other startups that we actually cover and have data on, and metrics around that as well. We just don’t have a concrete conclusion on what you should do. Some investors have, actually a lot of investors are very very happy just to have the data and they’ll make that decision, which is what we encourage as well. So, total globally, as in we’ve covered Asia everywhere from Beijing down to Melbourne, and we’re of course gonna grow further into Asia with that, but we’re covering currently about 21, 22 thousand startups in the platform and about two and a half thousand actually got ratings on them.
Jay: Gotcha, and you talk about location being a key component when you look at startups and rate them. So where do you have your underground network of analysts globally?
James: Sure, so I’ll go from North to South, and then if you like, I can talk about where we’re going. So, in every area from Beijing, Shanghai, [inaudible 00:12:47], Hong Kong and then most of Southeast Asia. So anywhere from Manila, Ho Chi Min City, Kuala Lumpur, Bangkok, Singapore, and as well as covering now Sidney and Melbourne. We’re about to go into India, so Mumbai, Delhi, Bangalore. Those three cities. We’ll cover Tokyo. We’ll cover Seoul. This year, that’s what we’ll be aiming to cover more. We want a total Asia experience for investors.
Jay: Awesome. So, now let’s dig in a little bit deeper. Okay, so basically if it works the same way as public equities, which I’m probably much more familiar with, having a startup rated, or getting a rating from Oddup, is quite a validation metric for you. You have proven, you mentioned WeLab in the past, and you a have proven sort of track record of companies that you’ve rated, that have gone on to be very very successful. I don’t know what the numbers are exactly, but you have a very high hit rate, so to speak. That just is virtuous for the startup as well, you know to help them grow and help them get publicity. It’ll help them fundraise, access to a larger market of funding. So that’s all good when it’s said and done, but basically how does a startup get on our radar?
James: Typically, we have a rule and we stick by this rule. Usually the startup needs to have raised some money. We need to benchmark them against something. If your startup has not, and I’ll use another good example, as an example one of the rare cases, but most of the startups have to have raised something. Seed, even 15,000 US dollars, something so we can say, “Okay, they’ve received money to do A, B and C. We can benchmark them against something, ie a compnay who’s raised Series B versus C.” How much they’ve raised versus the others and where they were at different stages. It’s very hard for a startup to get rated. If they haven’t got any publicity, any measure of traction, or actually any form of visibility.
James: There’s only a vert few companies that sort of have done that successfully. The only one that I guess is a billion dollar company is Envato, who are based in Melbourne. They do PST Tutes, they do a theme far as huge graphic design market, like 99 designs. You know with 99 designs, they have raised money, whereas Envato they’re a family company so a company needs to actually have some sort of investment so that investors who are using our platform can go, “Okay, which investor gave them money? Was it private money? Was it an accelerator?” They need to have some sort of metrics so that then they can start identifying it with other companies. So that’s usually the first thing, is at least announce, even to us, even if it’s not sort of TechCrunch, or Tech in Asia worthy, at least make us aware of that you’ve raised some money.
Jay: Mm-hmm (affirmative), and then so let’s say one does pop up on your radar and they look interesting. They’ve been around, so then what’s the next step? You deploy one of your research analysts to do a bit of work? How long does that process take to do report and then to finally initiate, so to speak, on the company?
James: So typically, I love the word initiate, I haven’t heard much of that since I was in public markets. Initiate for the listeners out there is typically what we do when we’re about to cover a compnay and it then becomes part of our research platform. Until then, it’s still talked about. Initiate is a great word. So [crosstalk 00:16:20]
Jay: Forgive my bias.
James: That’s okay. So, typically once we get some data, our research team … let’s assume it’s Ho Chi Min City, let’s use Vietnam for instance. Our analysts underground will actually want to speak to the startup as much as they can. Typically startups love it. There’s a lot of coverage that you can get, even just from an announcement on Oddup. So, we just want to speak to them, just make sure that the facts and figures are right, employees, sectors are correct, and so forth, and to ensure that what their view of their company is matches us and our formula. After that’s happened, we’ll spend up to, typically the research report will take anywhere between two and five hours to write, but a lot of the metrics are actually built within our algorithm.
So we’re actually monitoring that company for a good two, three weeks before we go live with that company. So we’re looking at how they are performing on social media, how’s their traction? How’s their analytical score? Are they getting people on their site? Are people downloading their app? A lot of these things to make up the products, so that when it goes live, investors have at least a good four week period of information on that company. We’ve got a score for a four week period based on what our algorithm is. Our score changes every four hours, so it’s never going to be the same any given day. So this is one thing that we want to make sure there’s at least some data before we initiate them, or put them live on our system.
Jay: Right. So once a company is in your system, how often do the ratings get updated, on a regular basis? Also, I wanted to ask you, once a company is in your system, let’s say it goes public. Does it drop out at that point? How does that work?
James: Ah, yes yes. So we don’t cover public companies. That’s one thing that we, as our very nice and expensive lawyers will tell us, we’re not covering public companies. We haven’t got our, and this is something, we typically cover companies with less than 50 shareholders. That’s typically the case. Once you get to a company with thousands of shareholders, it becomes a mess and it’s typically a public company. So there’s a number of companies that we’ve covered in the past two years that have gone on to either lists on the ASX or have gone public in Hong Kong, or do something that’s different. So we actually stop covering them. We keep the legacy information up to the point of before they became public and then they’re not public and we’re not covering them anymore. So that’s typically how we look at it from I guess a public versus private perspective.
Jay: Gotcha, and as far as updating on … here’s more jargon. Upgrade and downgrade cycles, if you will.
James: When do we change … I’m gonna use funny languages that my grandparents would understand. So when we get buy, hold, sell, expectations.
James: That can happen on the whim. What I mean by on the whim, is that some companies will stay buy for a long time. Some companies will stay a hold for a long time. It’s our data and our research that is looking … we’re always looking at companies. So typically our analysts, and this is where I talk about 100 to 150 companies that each analyst covers, versus data that’s on our platform. So they’re responsible for looking at those companies pretty much every day they get feeds every single day, every single hour, understanding what’s going on with those companies. Plus, they’re talking to everyone in those companies anyway. They’re reaching out and providing a lot of information. So when there’s a material effect, and that’s another investment term, I’ll try not to use some … a material change as in guess what, they’re about to raise money or guess what, they’re about to be sold. We usually have that information a couple of days before it usually goes live. So we can then implement in our system some changes that potentially will happen.
Our buy, hold, sell is not necessarily this is what we think. This is basically on the returns that people are gonna get. So when a company is sort of a 50% upgrade in valuation for next year, they’re a buy. So a lot of seed companies can be buys very early on, but once they get to a Series A, Series B stage, they stay in a hold for quite some time, because it needs to be another material effect for them to change. So you’ll see that things change a lot. So if a seed compnay goes from like a five million dollar valuation and then they raise another six or seven million dollars, and so the valuation I’d say is about 20, 25 million dollars, they have actually gone from a buy to a hold, at least for an initial period. Then, of course, as they build momentum, they change. But the buy, hold, sell can change very quickly based on momentum of the company.
Jay: Hmm, thanks for keeping it, the jargon to a minimum. I think you and I can probably have a complete conversation and no one would understand what we were talking about if they’re not within the realm of-
James: Yeah, we don’t want to bore all your listeners though, Jay.
Jay: Yeah, I appreciate that, you’re looking out. I want to talk a little bit about ethics and the ethical side of rating. So this is an interesting topic, because you and I both know, having worked on the sell side, how this works for publicly listed companies. There are some horror stories, which I’m sure you have plenty of as well, of analysts putting ratings on corporate and getting a lot of push back from the corporate because it’s not favorable, and possibly from investors. So, what mechanisms do you have in place? Now granted when you deal with startups, the scale is much smaller of the companies, so they might not have as many resources to use to influence your rating. A, have you come across any situation where there was some issues with this and B, what mechanisms do you have in place to ensure that there no issues in the future?
James: Well, maybe I’ll go through the basics here. The basics are that we don’t take any influence from anyone. People say but you’ve got investors. Guess what, we’ve got Teamwork 500 as investors, and they’ve got two of the biggest portfolios in the world. They have both never never asked us to influence ratings. So, you know, there was probably two of the reasons why we chose those two investors as well, but one of the things that people need to understand is influence is the most stupid thing we could do at Oddup. What I mean by that is of we say, oh just, he’s a friend. He’s gonna change it. This is a corporate that’s gonna try and wine and dine us to try and get us influenced.” If we say the wrong thing, we’re only as good as the last research report that we do. If our research reports are crap, people aren’t gonna buy our products and we die. So, I’m very much of the obvious part, that doing those things that happen in public markets, that might suit for people because they’re in a situation where this is a small stock, it may move the needle, but we’re in a situation that we affect startups and their potential chance of raising and growing.
I, as in our own ethics, and this is what our team pride and preach ourselves on, we do never never never take influence. Why is because at the end of the day, it only affects us. It doesn’t just affect the startup. It affects us as a startup on what people do to trust us. We need to win a lot of trust so that we become the standard rating system for all the startups. So if we’re gonna be influenced by people, oh goodness me, we would file at the first corner. So this is the one thing that we’re very very passionate on, because it doesn’t benefit us and it doesn’t benefit the startup in the long run either. Having said that, we have I guess, in the past two and a half years as we’ve sort of become a much more bigger brand, we have a lot more startups reaching out to us, who want of course to get attention from us and throw themselves at us. What we do for them is give them attention by giving them an article on our page or making sure that they’re company data’s good, as in they’ve given us all their financials that we need to. Things work out in better way, but we never ever take influence that way. It’s all about having integrity and standing by.
Jay: So, as far as the buy, sell, hold ratings go, would you say that once a company gets downgraded, so to speak, from a hold to a sell, is there a chance of turn around? I mean, a startup’s lifeline is sort of at stake at that point. What would you say the company’s odds are of turning that around and actually being able to crawl back to a hold, and potentially a buy in the future?
James: I’ll use our data that we’ve got on the companies that are a sell, there’s been … and typically if I look at all the companies, there’s typically about 15% buy, about an 8% to 12% sell, and everything else would tend to be a hold. So that’s what the makeup of the 100%. For the sell companies, we’ve had quite a few companies that have been sell, and investors have loved it, because there’s high risk but there potentially could be a high return. So they’ve jumped on them and actually turned them from a sell to a buy. Things can turn around very fast in the startup. So, typically when we have a sell, we have very very very good reason to put as a sell. IE: we know the company is shutting up shop, or we know the compnay has filed for bankruptcy. So a sell is typically a very obvious sign, but for companies that we’ve seen, and a lot of things people track to employee movement, if a lot of employees are resigning at the same time, you go okay, there’s some problems here. There’s a lot of companies that can be changed around very quickly. For a public company, if you put a sell, and it’s bad new like that, you know it could effectively destroy the stock price.
For a startup, there’s always an investor out there that goes, “Okay, this is an opportunity for me.” So those sells can become buys pretty quickly. A sell is sometimes never a bad thing, it just could have been that they’re overpriced, as well. So that’s the other coin, where you’ve got companies like, let’s talk about last year or year before that when food delivery services were the flavor of the year. So there’s humongous valuations on these companies and then of course a lot of them, you know a lot of them they’re not necessarily a bad stay, but when we say sell, it could be the best time to exit. So let’s say you’re at Series C or at Series D, and there’s a sell on it. That doesn’t mean the company’s gonna die, it just means that actually we think the growth has hit its peak, it’s going to be business as usual, so if you can get out now and sort of cash in, then that’s a good thing. So it’s simple. Typically like it would in the public markets, selling doesn’t necessarily mean the company’s going to die, it just means maybe it’s hit the peak that they need it to.
Jay: Oh, that’s pretty interesting. How you say that, selling can be also a an opportunity. I find that pretty fascinating, a fascinating way of looking at it, as well. So, right now, it seems like a large part of the bell curve distribution is within the hold segment. Is there any sub-rating, or is a hold a hold?
James: A hold is typically where we don’t see, and when looking at valuation increases … so I guess the audience out there, when we talk about these sort of terms, when we have a hold it means that, and remember holds can change every day. It can be hold by tomorrow based on what some of the material that has come to us, but a hold means that we don’t expect their 20 million dollar valuation to be 25 million dollar valuation tomorrow. We expect it probably 20.1, 20.2 tomorrow. So, a hold is typically where we see a compnay sort of at the stage of, okay they need to grow to the next stage, so they’re staying on a path at this point in time. Things don’t happen immediately, like as quick as they can.
For holds, it’s typically like they’ve just raised money or they’re in a situation where they’ve been sort of … their traction or their downloads or their users are pretty much stagnant. So they’re not necessarily dead, but they’re not necessarily gonna grow, but they’re gonna be at a comfortable space at least for the next two or three months. So hold is, a lot of startups are in that stage, a lot of startups are in that stage, because they raise money and they they need to find people to work for them, or they need to sort of spend a lot of time to get to the next stage of growth. I think hold is actually a very safe space to be, ’cause it means that you’re still getting your hands dirty until the next experiment works for you.
Jay: Right. Now, you also rate investors on your platform, is that correct?
James: We certainly do.
Jay: So this is very interesting.
James: We don’t have a buy, hold, sell on them yet, but probably a lot of startup founders would like us to. I don’t think we’ll do that yet.
Jay: What are some of the metric you use to rate an investor, or analyze an investor let’s say.
James: You know, I like the analogy someone told me. I like the analogy that you’re only as good as the children you have. So if you have one star child and when terrible child, even though you love them all, there’s one that really stands out. Someone told me that, I didn’t say that but someone told me that. You know, it’s the same thing as an investor with their startups. Their investments are their children. I go back to my investor Carmen Chad, who’s probably one of the best and most connected ones in the Hong Kong, no question. She’d always call all her startups her children, and she’s got quite a lot of startups. So, as children we need to prove to our mom and dad that we’re doing really well.
The same thing for the investors. The investors, we look at their total portfolio, the good, the bad. So an investor’s rating is based on the startups. How many have sold? How many have failed? What’s the traction on each of them? So, a good rating for an investor is very good, particularly because they need to raise money as well from LP’s. There’s so many investors out there, and LP’s who put money in want to put it on the best possible investor they can. So, this is one thing that you know, an investor needs to be rated based on the companies that they’ve got and so they’re people they get money from need to also be check on as well.
Jay: Right, and so you recently also had a tie up with Reuters, is that correct?
James: Mm-hmm (affirmative), yes.
Jay: Well can you talk a little bit about that?
James: Yeah, well that was quite exciting, particularly because we actually started … we had made the announcement last September. We started talking to them, oh goodness me, about nine or ten months beforehand, and we were at a stage we just sort of finished seed, and then low and behold this huge opportunity comes to us. We’re like, mind my language “Crap!” ‘Cause we were such a small company then. So my co-founder and COO Jackie, she looks sort of like that, and that’s been an amazing experience for us, because Thomson Reuters us they had others to talk to and they spoke to us, and they said “Look, your data’s the best we’ve seen, and we want to actually give that same sort of data to our users on [Icon 00:30:52].” So we built that, and that was quite a long lengthy experience. One of the things we took from that, is that as a startup you can move very fast. Working with a corporate takes some time.
So that whole experience of building that took a while, but once we’ve launched it, it’s been exceptionally successful. It’s been a product where Oddup is available on Icon, and for us it’s helped us get corporate clients that didn’t understand the brand of Oddup, but do understand the brand of Thomson Reuters, and so they’re happy to buy a plugin from Thomson Reuters with Oddup in it, versus buying Oddup. We see that quite a lot with our corporate clients, where they’re saying “You know, I like you but you know, I need to go through another cost center, but if I just buy your add on via Icon, it’s an easy sell.” So that’s helped us also with sell as well. That been really really great thing for us. We actually really quite enjoy working with Thomson Reuters.
Jay: Great, so as a corporate or potential client, how do I subscribe to your service? What’s the revenue model like? Is there a free version, freemium or how does that work?
James: Okay, so I’ll look at … we’ve got multiple products that we’ve got and so for people who’ve got iOS, you can download the app and you can actually start getting a lot of data for free if you just download the iOS app. The Android one will be coming in the next month or so, and so we do love the Android users as well, so we’re not saying no to them. That’s gonna come soon. Oddup.com is free. You can get some basic information for free, and we like giving that because a lot of people who like startups aren’t actually ready to invest or they’re just no ready to spend money on a subscription immediately. They just need to get their toes and feet wet before they start. Then of course you can pay for two things. One is being a single report, where people will buy information on a company where they want to get the full analysis from. Or two, they will spend 499 a month and get access to everything.
You know, we’re rolling some new, and so as a corporate though, you can do the same thing. Apply on Oddup.com and subscribe that way, or two, if yore a Thomson Reuters user and actually want to use that interface, just … there’s a button on Thomson Reuters that you hit request, you get an access and one of the lovely people from Thomson Reuters will reach out and make that all happen for you. But we’ve got more products coming our way, in particularly on making it accessible. One of the things we believe in Oddup is that Oddup is, we’re a bit like … I like to use the analogy of Coca Cola. We’re producing a product, but we tend to be sold in multiple forms. You know, at 7-11 or McDonald’s, and Oddup is actually heading that way where we’re providing our data to a lot of people to use on their own product, and that’s where our newest product to come out is the API. People, if they want to, potentially build their own sort of database or use their information in their own system, which is quite a lot of our corporate clients, that can actually just buy our data and put it in. That’s what we see a lot with corporate clients particular, who have their own interface for their own clients, and just need that data to help improve their own product.
Jay: That’s very exciting. So, now speaking of exciting, let’s talk about the news of the week. You guys just raised your Series A six million dollar round. First of all, congratulations. I know that this is a huge milestone. You know, you of all people who’s business it is to rate startups, know how difficult it is. You wrote a really good piece; I highly recommend our listeners to go over to Forbes where James is a contributor. You wrote a really good piece on lessons learned, so to speak, of the entire process of raising that round. So you wrote a very powerful post on Forbes. Please tell us a little bit about some of those lessons that you did learn, and the Series A round.
James: You know, I’m very pro-entrepreneur, so it’s funny that we have Oddup, which some startups go, “Oh, don’t rate my startup.” Actually, we’re a startup as well, and probably not a small startup anymore, but we’re still a startup. So, one of the lessons learned is that people look at fundraising like it’s a hobby, or it’s something … fundraising is a lot of work, like a lot of work. It takes a lot of time to do it. So one of the things that has been very key is to give those lessons to other people, because guess what, one of the things that I have learned as an entrepreneur is as you build success, make sure that success passes on to other people so they can learn.
So I’ve had that from my mentors and I want to make sure that if I’m a mentor even by association from Forbes, let me make sure that that information comes fast. There’s been a lot of challenges, particularly when you grow a company. When you’re seed, you’ve got an idea of like this is a great team, great founders, let’s just put money and hope for the best. When you’re at Series A, you actually already need to be at Series B. The environment particularly at the moment, is much harder for companies to raise. So if I was to look at Oddup where id we raised in 2015 with what we had, we probably would have raised faster.
The reason for that being was that more people were more hungry for investment. Since there’s been elections in the US, there’s been some concerns I guess for returns for investors on other startups, it’s been much harder to raise. That’s one of the things I wanted to point out. But, particularly when you raise money, you need to also look at who you’re raising for. One of the lessons I learned, I guess potentially as being an investor and watching other startups though, is who is actually going to be your investor. One thing I love about our investors is they’re very strategically placed. We said no to a lot of people. That may sound very egotistical; it’s actually not that way. Investors are like relationships. You want to make sure you’re with your friends that you love. So raising is all about the investors who can help connect you, and make your business grow to the next level.
Jay: So, the process of raising is not just to look at raising money to survive, it’s looking at raising money to get to the next stage and making the company not about Jame Giancotti anymore, it’s more about Oddup. Oddup needs to be going long after James Giancotti is ever involved in it anymore. That’s really where people need to see Series A at. They have to get their mindset away from, “Oh, I started a startup, we’re gonna grow.” That’s fine when you’re two, three, five people. When you’re now like at nearly 50 people, you need to go actually there could be someone better than me to do it, so let’s build a company so that someone even better than me can run it to even be a better company. That’s one of the things that a lot of entrepreneurs get wrong, lots of them do. They keep on thinking about me; they shouldn’t think about me anymore. They should think about the company that they’re raising money for.
Jay: You wrote “If you are raising to survive, then you’re already out of time.” Which I think is so key, and it just hits on the fact that it’s so difficult to fundraise and it’s an ongoing process. You just need to be working on it constantly, thinking about the future. Thinking about growth. To makes it even more of a milestone for you. So we’re so happy. Obviously Oddup is a rising star here in Hong Kong and it’s one of our homegrown local champions. So we’re behind you 100%, obviously. We’re very happy at the CEO’s success. So let’s talk about what plans you have in store now that you’ve raised a very nice round Series A. Obviously keep growing, keep growing. What plans do you have to scale in the future?
James: Look, it’s quite amazing where we are right now. We took a breath for … let me tell people. People need to understand I guess about the whole process of fundraising and who you fundraise with, and then how it relates to growth. So, one of the biggest investor in our realm is Times of India. So for people who don’t know who Times of India are, they’re just a humongous media company in India. We wanted to go to India, and we thought how better to do it than with someone. So India is going to be certainly now in plans this year, there’s no questions, no ifs or buts about that and there’s a lot of work happening there. The growth for Oddup is not to just be the startup rating system. It’s to actually be startup, you know to be one of the startup ecosystem platforms where we build our product based on startups, not just about rating startups. It’s all about the startups and everything that goes around startups as well.
One of the things that we’re trying to grow on is particularly our distribution. So, one of the things that we’ll be focusing on this year is distributing to multiple channels. So you could see that there will be places in India that are pretty big names in India. You see that it’s of course happening at Forbes. You see that it’s happening at Thomson Reuters. That where we’re trying to enable more companies to do that. So that gonna be part of our growth plans this year as well. From a geographic perspective this year is all about Asia. Next year is all about the rest of the world. So one of the things we want to do right, I guess it’s been good to be number one in Asia, but we want to be number one full stop. So we’re gonna grow and keep on growing and make sure at this stage, by the end of 2018, 2019 that it’s not just a good homegrown Asia company for Oddup, it’s a good … Hong Kong could be proud to say that Oddup is a household name around the world.
That’s where we really need to go to. So there’s, from that Jay, there’s a crap load of work to do, like a lot, and do we’re in the flurry of hiring a lot of people. In the flurry of building our more space in different places. We’re building bigger offices in all the parts that we’re in. We’re just growing and so the focus is just to keep on doing what we’re doing, but to keep on growing at the pace we are. We should have some really interesting new people mid-year of where we’re headed to.
Jay: Exciting, so exciting. What does Oddup look like in five years from now? You know, I like to ask this question to startup founders and different people have different answers. It’s not a crime to say that you want to be a publicly listed company in five or ten years time. Either because I think that’s what a lot of people strive for, and if you impact that many people as a publicly listed company, then more power to you. You’re helping the world be a better place. So what doe Oddup look like in the next five to ten years? What do you see?
James: Well, maybe I’ll answer the public company question. We have investors, and if we are lot listed, or had a significant material event in the next ten years, there would probably be some sort of concern for them. So, you know, look if you ask me in ten years, we’ll most likely be listed, but that’s a long way away. The question is where. That’s probably the question of where it gets listed rather than if it gets listed. I think that we’ll have all those metrics to do that. The one thing that I wanted to mention in the previous response is that a couple of people in Hong Kong, some of the great successful companies in Hong Kong have said that we’re one of the few companies that can be that household name. So this is probably what we want to do. We love being a champion, but we’re one of many champions on Hong Kong. There’s great companies like WeLab, Easy [inaudible 00:42:17], Lalamove, a lot of great companies coming out of Hong Kong lately, but we want to be that company that just says, You know what?
I can’t believe that, and public people will paint us with that brush, that’s a China company. Or a Hong Kong China company. People in the US. So this is one of the things that we would love to build a brand that is just known everywhere in the world. We’d like to sort of be, I think if you ask me in five to ten year, I think we will be a big media/data company. What it involves, I don’t know. There will be probably things that come from that. Anything’s possible, but one thing I do want to see in five to ten years is Oddup is still around and people are still using it. That’s really what it comes down to. I can only really look at the next 18 to 24 months. After that it becomes too far in advance to sort of think of where we’re going and what things in the world will impact what we’re doing.
Jay: Right, and speaking of household names, I asked you this the last time we met. Oddup, for our listeners, what does Oddup mean and where did that come from?
James: We get so many questions of why the name.
James: Unfortunately, my surname is not Oddup, or anything like that, so I can’t say … maybe I’d have to do that by default, but originally Oddup was gonna be, we were actually gonna put … when Oddup first started it was actually originally going to be something to do with betting on startups. As in rather than rate them, we were actually going to bet them, like are the odds in your favor, are they up. So Oddup was this nice little five letter domain name that was relatively back to what startup investing is. Is the odds in your favor? Are they up? And so Oddup came from that. Then I remember being in Silicon Valley when we first started. People were like I love the idea, I hate the name. Love the idea, hate the name. Whereas in Asia, it’s like I love the name, I love the idea. So we’re like okay, and so then someone in Silicon Valley said you know what, don’t listen to us. Do what you’re really good at.
So now we keep on getting the … the name is now the name. So we’re certainly not going to change it, unless people want to call it Giancotti, or they want to call it Lamb instead. I don’t see Jackie or I wanting our surnames used, so Oddup is fine. That’s really where Oddup came about. Yeah, to me it’s now, I don’t actually think of that anymore. That was when we first started. It’ now just the name and people are … there are so many crazy crappy names for startups that have ended up becoming household names as a result. So if people are happy with five letters and a dot com, then we’re happy with it as well.
Jay: Yeah, I’m excited to see, to hear it become a household name. I’m really rooting for you. James, thank you so much for your time. It’s been such a pleasure catching up. I just have a final couple of questions.
Jay: What is one last piece of advice that you could give to a startup founder, or an aspiring entrepreneur, given your vast experience working for someone, working for yourself, starting a company .. just at a big round. What is one piece of advice you can give to our listeners?
James: The one thing I see in founders is that rejection hurts, and it shouldn’t, because one of the things that I found particularly in this game is that people, and no matter what you do, people will say good or bad things about Oddup, people will say good or bad things about your Kickstarter project. So, just remember as a founder that you’ve got to take the criticism as an opportunity. An opportunity to prove people wrong. One of the things I say about this, I remember when we first started pitching Oddup. Everyone was like oh this is stupid, don’t do that. It’s stupid, it’s never going to work. And now the same people are asking to invest, those same people are asking to … “Oh this is great. I was always supporting you in the first place.”
As an entrepreneur, you want to actually probably get quite upset about that, but that’s the pettiness in you. Don’t be petty. Always focus on you know what, you’ve proved them wrong so what you’re doing is right. When people don’t like something, or give you criticism, use it to your advantage, because at least they care enough to give you an opinion. Make sure you focus on getting attention, getting some awareness of what you’re doing. So what a lot of founders don’t understand is the power of criticism, or rejection from a VC is actually the best thing they can ever have because it makes you stronger. It makes you more focused on making you more successful.
Jay: That’s right, and it’s such a internal battle. We’ve all been there where you can get a thousand likes and positive comments on your Facebook post, but the one negative one will just eat away at you for the entire day and ruin your day. It’s a challenge and it’s a mental script that you have to flip in your mind, but if you’re able to do that, it’ll just help propel you for the success.
James: And it was actually you that gave it to me. Now, it’s been a consistent theme. I guess being a founder, you have to take care of yourself. I remember speaking to you when we did Startup Grow. That’s the one thing that came through, because one of the guys actually told me this week, he said you’re destined to be a billion dollar company, but you need to stay alive for it. So one of the things I want founders to worry about is health. So mental and both physical health. That’s one thing that I now need to focus 100% on, because being a founder, being a successful founder takes a lot out of you. Even if you’re healthy, the mental part of the health can actually wear you down just as much.
So both physically and mentally you need to have the endurance. So one of the things as a founder I’m gonna give to other people is that I need, and I’ve been guilty of this big time, but I need to now take care of myself from a health perspective, so I can last the long distance. I don’t say just being physically fit, I also talk about being mentally fit, because even if you’re fit as a fiddle, you still need to have your head in the right space to make yourself successful. So that’s another thing, and Jay, your book is fantastic. It’s actually been an inspiration in my life, so if anyone, and I’m going to see you now, if everyone’s listening-
Jay: This was not planned by the way. So where is the best place people can find you, follow you, connect with you?
James: Oh goodness me. Don’t follow me. I like some peace and quiet sometimes, but in all fairness, look I’m on Twitter, I’m on Forbes. I mean, and I use these things sparingly, and I’m also of course on Oddup. So, you can always reach out to me, but one of the things I always like to do is get back. It’s not just me. I’m one part of a great time. It’s also following my colleagues, and following people who could also provide advice. So, look, yeah Forbes is a good start. That’s usually where I sort of speak my mind, on Twitter and sometimes also on Facebook Live and so forth. Those are things that I can do, and I’m more than happy to help entrepreneurs get to the next level.
Jay: Awesome, such a pleasure James. Always a pleasure. We are so excited. Congratulations again on your Series A and you are definitely on the radar. We will be tracking your progress very closely and best of luck for Oddup and for you in the future. Thank you for coming on the show.
James: Thank you so much for having me here. It’s been an absolute pleasure.
Jay: All right, take care.
James: Thank you.
Asia's latest investing trends and on-the-ground field research delivered directly to your inbox