YCM CEO Series 42: Tengku Farith Ritahuddeen, CEO and Co-Founder of SKALI
Dear YCM Members,
For the YCM CEO Series 42, we have the privilege of hosting Tengku Farith Rithauddeen is the Group CEO and Co-Founder of SKALI.
Writing Credits: Jason Tan Jing Shen, YCM Convenor 2012
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Date: Tuesday, 10th July 2012
Time: 8.00pm -10.00pm
Dress Code: Your work attire
Venue: Intercontinental Hotel KL (formerly Nikko Hotel),Jalan Ampang, Kuala Lumpur
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Tengku Farith Rithauddeen is the Group CEO and Co-Founder of SKALI.
Prior to joining SKALI as its President, Farith led a team to turn around a local manufacturing company involved in the building materials industry. In his four-year stint as CEO of this company, he earned valuable experience in managing the day-to-day and hands-on operations of two factories employing 160 employees.
At SKALI, he is also instrumental in the establishment of SKALI’s new division and program called SNAP or SKALI Netpreneurs Acceleration Program. SNAP is an initiative for Asian Netpreneurs to leverage the pool of SKALI’s experience, expertise, resources and business networking. SNAP creates and adds further value for investors, Netpreneurs and communities in general by sharing an in-depth knowledge base and widening the reach of Internet opportunities.
In 2002, Farith was selected as one of the 100 Global Leaders for Tomorrow (GLT) by the World Economic Forum, Davos of Switzerland. In 2004, he was the first recipient of the Young Entrepreneur award by the Malay Chamber of Commerce, Malaysia and in 2006 was awarded the prestigious Eisenhower Fellowship for 2007 by the Eisenhower Foundation, USA.
Farith was the President of TeAM, Technopreneurs Association of Malaysia from 2004 to 2007. TeAM has been formed by a group of Malaysia Technopreneurs and to assist in the development of the Digital Economy in Malaysia.
He is also a co-founder and current advisor of the New Entrepreneur Forum (NEF) which among other established to promote the development of Bumiputera ICT entrepreneurs or Technopreneurs. He sits on other advisory boards both in the public and private sectors which focus mainly on Industry and Netpreneur development in Malaysia.
Farith obtained his Bachelor of Arts in Economics from Carleton University in Ottawa, Canada in 1992.
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The YCM Series 42 opened with a welcome address and introduction of the speaker’s background by Ms. Farisya Shukor the Master of Ceremony, followed by a brief introduction of YCM by Director Dimishtra Sittampalam. The MC then invited the speaker, Tengku Farith Ritahuddeen, CEO and Co-Founder of SKALI to deliver his presentation.
Tengku Farith started by conducting a very brief background check of the audiences and expressed his hope that the audiences will go home with substance after hearing his presentation.
“How will the future be like”?
He started his presentation by showing a slide featuring the world’s most innovative companies in year 2011 and highlighted that the ranking of companies has changed in just a matter of 12 months since year 2010. He continued by saying that this imply that competition is intense and will continue to be highly intense. Malaysia will be extremely challenged within the ASEAN countries and by China, and also by the deterioration of income of the traditional markets (i.e. US and Europe) which we sell our goods to. He emphasized that this will consequently impact the level of our personal income. He raised the question, “How do we become a high income nation when the countries that we are selling to can’t really afford our goods anymore?”. In addition to that, he stressed that what used to be the core competencies of Malaysia is no longer competitive as other countries can deliver the same services/products in a more efficient and cost effective manner. His observations of the efficiency of other countries make him worry about whether Malaysia will be able to achieve its goal of becoming a high income nation. He highlighted that developing new generation of leaders that can compete globally is the key to achieve the goal. Malaysians are in the comfort zone and we will be challenged by our way of life. Through his interactions with the youths in other ASEAN countries, he thinks that the Malaysian youths are not hungry enough for success; a shock in the system is needed to wake us up.
“Where’s Malaysia’s wealth?”
56% of Malaysia’s GDP comes from services, 28% comes from manufacturing, and 7% comes from agriculture. These three industries are facing tough industry specific challenges due to the challenges post by the change in the global economy. The government has been pumping money into the economy to make sure things stay afloat, however, this is not a sustainable solution.
“Should we be worry? What do we need?”
Looking at the current scenario, he thinks that Malaysians should be worry and we have reached a point where we need to ask ourselves where we need to go from here. Malaysia fell into the middle income trap where we are stuck in between, we can’t compete based on cost advantage and we are yet to be able to become a highly innovation driven country.
He believes that the right and positive attitude is what the country needs. He shared his experiences on interviewing young people and highlighted that he realized people nowadays switched job/choose a job because of higher pay. He emphasized that one must focus on value creation and make sure that he/she is worth the value that are being paid before asking for a higher salary. To further elaborate his point on the importance of attitude, Tengku Farith shared the experience of SKALI with the audiences. The first big customer of SKALI, Bank Nagara Malaysia subscribed to SKALI at a subscription fee of RM 38 per month for a simple hosting service at the very beginning and SKALI’s sales people had to travel to Bank Negara’s offices several times to provide services. In addition to that, the cost of parking that time was RM 6 an hour, hence, it was obvious that the deal was not a very profitable one for SKALI. However, with a highly positive attitude, SKALI still delivered excellent services to Bank Negara. As a result, Bank Negara was happy with SKALI’s services and after 3 or 4 months, they switched the hosting of their entire main website to SEKALI’s data center where SKALI could charge a higher fee. Eventually, SKALI managed to secure contract worth millions of ringgits with Bank Negara. He said if SKALI was dealing with Bank Negara Malaysia with a lousy attitude at the beginning because of the low subscription fee, they would have lost this important customer. Using this story as an example, he once again stressed the importance of value creation before one ask for money from customers/ before one ask for increase in pay from his/her employer.
“Escaping the comfort zone!”
He advised the young people to push themselves, challenge their own boundaries and escape the comfort zone. He believes one will never know what he/she can achieve if he/she don’t stretch and challenge him/herself. He asked if the young have the courage to challenge themselves and strive for their dream. He started SKALI not because he was being forced. He started the company because he was tired with his old job and could not see the value on the things he was doing in his job. With the aim to have a more fulfilling career and to leverage on the rise of IT industry at that time, Tengku Farith left his job which pay him good salary and started SKALI with no knowledge about IT. He managed most of the word processing of SKALI during its early days using the typing skills he acquired from his old job. He was not afraid of doing new things. He thinks that young people nowadays are scared of failure and are not versatile enough. He said, in SKALI, staffs who have taken the extra step to learn new things (i.e. sales, programming) are probably management leaders now because of the versatility that they have demonstrated. Failure is a process, we have to fail to learn and we must not be afraid to fail and make mistakes.
“What is your value? Do you know it? Where Will we be?”
Tengku Farith believes that understanding one’s own value will allow one to understand his/her competitive edge. He shared his experiences of travelling to Vietnam for work and how these experiences made him realized how highly competitive the people and companies in Vietnam are. He highlighted the point that some countries which were the top economies in ASEAN during 1940s have fallen behind Malaysia. He asked where Malaysia will be in the next 20 years if we do not react and change now looking at the current progress and development of other countries in ASEAN.
What do we have?
He believes Malaysia has a relatively stable government, versatile and open community, big savings and relatively good infrastructure. We must realize about the values and advantages that we have and make sure we fully utilize them.
Closing
To close his presentation, he emphasized again that Malaysia is at a very critical period, things are going to be increasingly challenging. We have a lot of qualities and advantages that we have to realize. We have neighboring countries that need our expertise, our knowledge, our experience, and the lessons that we learnt from our mistakes. We must go there to create and share our values for them, because if we don’t, other countries will. We have lost lots of opportunities because we were too slow. He encouraged everyone to not to be scared, instead we must go out to the neighboring countries to build network and gain experiences.
Q&A
1) What is SKALI?
SKALI help organization to use the web more effectively. It buillds solutions for organizations, so that they can manage their processes more efficiently, increase their revenues, and decrease their cost of operations. SKALI believe in open source technology, it has the platform and infrastructure for organizations to build their web based solutions and it has also recently introduced the “cloud” which is growing very fast for the company.
2) How did SKALI procure government’s contract during its startup stage?
SKALI did not get its’ first business from the government. Instead, it was a search engine portal. It ran “AltaVista” for Asia, the world’s most popular search engine before the emergence of Yahoo and Google. Examples of SKALI’s clients were Intel and Motorola. During that time, there was no content management system to run portals. SKALI went to companies like Microsoft and IBM to buy a content management system, but the quotation given by Microsoft and IBM that time was RM 20 million and RM 4 million respectively. The cheapest CMS that they could find was RM 4 million. Tengku Farith met two entrepreneurs, who had the skill to produce a CMS platform. He proposed a 50-50 profit sharing mechanism where SKALI would do the marketing and the two entrepreneurs would develop the CMS platform. The deal was sealed very quickly as it was mutually beneficial for both parties. There was tender by EPF, during that time, EPF’s the counters were always flooded with people who were there to settle small matters (e.g. checking for status updates). EPF was looking for an online platform to allow people to check and update their EPS status and records. SKALI submitted their proposal for the tender and was shortlisted. The price that SKALI quoted was around RM4 million and their closest competitor was RM28 million. However, the government was not very convinced and requested SKALI to develop the platform for them first before paying them. If they are satisfy with the platform, they will pay for it, otherwise, no money will be paid. SKALI agreed to the request and eventually managed to secure the contract due to the value it was able to create for the government at a very low cost.
3) Could you give us a brief overview of the IT industry?
The IT industry changes all the time. For instance, SKALI once experienced investing in a technology and that technology became absolute after one year. Being in the IT industry, it is important to be ready to change all the time, catch the next big wave, must and leverage on the infrastructure of the ASEAN countries.
4) How much the government should be involved in businesses?
Tengku Farith believes in government sector and initiatives in stimulating the economy and developing industries. For instance, he supports and believes in government’s provision of training for graduates and Human Resource Development Funds to develop talents. However, he admitted that there are certain times where the government’s involvement created competition for the local companies. There were cases of competition between the government and local companies in terms of man power. SKALI has lost some talents to GLCs. Hence, he thinks sometimes too much government involvement would diminish the competitive strengths of local companies. He thinks government needs to know when and when not to intervene, so that the local companies will not be negatively impacted.
5) How to innovate?
Innovation is not something fancy, it is not rocket science. He used the example of how a burger seller in Ampang managed to achieve success by just doing some simple innovation. He believes innovation is simple; it’s all about creating value for customers. For SKALI, it was simple, it took open source technology to eliminate the cost from getting licensing, and charged its customers services fees for providing the solutions. This strategy allows SKALI to give its customers world class and price competitive solutions.
6) How did you lead the business from a start up from what it was to what it is today? What is required? What did you do?
Work backwards and begin with the end in mind. Think about how to create and add values for the customers. He recalled when SKALI’s customers’ websites were attacked by hackers, they hired extra security team to look after their customers’ website without paying much attention on how much this would cost them. They just want to make sure that their customers are happy. He advised the audiences not to focus on money, not to just focus on thinking about how to make billions of dollars, but think about one customer at a time, and think about how to create values for the customers.
7) Experience of travelling to other countries? How fast would the rising ASEAN countries catch up with Malaysia?
Malaysia has the competitive advantage over other ASEAN countries in terms of organization structure and culture. Some of the export oriented companies in ASEAN companies are very dynamic and versatile. Countries like Indonesia, Vietnam, and Thailand has massive domestic market which allows them to generate huge amount of revenues by marketing and selling their products to the local people. If an organization is complacent, there will not be innovation. Right amount of competition can create innovation. At SKALI, competitions from giants such as Microsoft and IBM keeps Tengku Fariths awake every night to think about strategies to win the competition and forced him to be innovative.
8 ) How can we help Malaysians to move up the value chain to increase their competency? What should we do to motivate our people to rise up to that level?
Tengku Farith believes talent development starts from teaching children. Most universities today teach students by memorization and spoonfeeding. Instead of spoon-feeding, he believes the journey to find information is the best learning experience for students. To develop talents, we need to change how we educate our future generation. On the organization level, he realized some companies are rewarding all their staffs without considering the discrepancies in performance among the staffs. Reward based on performance is the key in motivating talents. Don’t reward wrong behaviors because it would demotivate the good performers.
9) Advice for technopreneurs?
Specialize and stay focus, entrepreneur tends to get excited for lots of things. For instance, SKALI lost focus several times and went off tangent to build some other things. His advice for entrepreneurs is to stay focus and make sure they specialize and be the best in whatever they are doing.
The wonderful night finished with the presentation of token of appreciation by Tengku Nor Azah.
