JOEL NEOH is best known for being a successful young entrepreneur, having co-founded and exited two companies. But any entrepreneur worth his salt would have had a taste of failure, and Neoh is no exception.

“People don’t really talk about failures. But part of success is accepting failure fast,” Neoh says during his talk at the Securities Commission Malaysia’s Synergy and Crowdfunding Forum (SCxSC) 2015.

This was one of the 10 things Neoh learnt in his journey as an entrepreneur, where he founded group-buying site Groupsmore and later sold it to Groupon.

After the disposal, Neoh worked for the global company and grew the business in Malaysia to become a market leader.

After Malaysia, Neoh rose to be head of Groupon in Asia-Pacific where he was tasked with turning around the company’s operations in several countries in the region. But in 2013, he failed to rescue its operations in South Korea.

“In my five years with Groupon, South Korea was the toughest market for the company. Of the 48 countries Groupon was in, South Korea was one of the smallest. It was actually the toughest and worst for us because we were losing a few million dollars every month,” says the 32-year-old.

“Although the business was [worth] about US$1 million annually, we had only 2% market share.”

In South Korea, Neoh was given a specific task: cut costs but keep growing. “Being an entrepreneur, I was very optimistic, so I thought I was a superman and I could fix everything,” he says.

Neoh and the team tried every way to do so, but after two weeks, he realised that their efforts were futile. “I told the board that actually, the real proposal was to shut down the business there. There’s no way to fix it. It was hard to say that because the task they gave me was to fix it, but I couldn’t,” Neoh recalls.

“There was a pause for 10 seconds on the phone, then my global CEO said, ‘Joel, I’d expected you to say that earlier’.

“At some point, you’ve just got to call it quits. You just can’t continue.”

That episode taught him to accept failure fast and move on. And that story did not just end there.

Neoh says after that, they came up with another brand for South Korea, and three months later, they bought a company that is more suited for the market. Today, the company is worth many times more than before.

When is the best time to call it quits?

Neoh’s point prompted a question from the floor: When do you know it’s time to call it quits?

According to Neoh, entrepreneurs should always think like investors and ask themselves four questions in relation to their business — How big? How fast? How much? How long?

In any startup, the founder is the biggest investor as he invests his time in it. So, he needs to know how big the company is going to be, and that depends on how many issues it wants to solve in society and in how many geographical areas.

When it comes to how fast, it usually depends on the entire team’s performance.

According to Neoh, investors usually look at track record, and that means they want to see how much traction is accumulated within a certain period; the more traction within a shorter time, the better.

“As opposed to having 500 customers in two years, an investor would be much more interested if you have 10 customers in one week. It’s about momentum and acceleration,” says Neoh, who recently left Groupon to set up his startup KFit, which is a regional fitness sharing platform.

The third question is: What valuations can your company fetch? You can’t sell yourself too high or too low; it has to be reasonable.

Lastly, investors would want to know how long it would take to get back their investment. If it takes too long, it will not be worthwhile.

Essentially, there isn’t a fixed answer to the last question as it depends on many factors. However, the four abovementioned questions should be asked if one ever ponders if it’s time to quit.

For full coverage on SCxSC 2015 and equity crowdfunding, visit http://edgy.my.

This article first appeared in #edGY, The Edge Malaysia Weekly, on June 22 - 28, 2015. Read more here

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