Online Payment Master

Despite never planning to become an entrepreneur, Aung Kyaw Moe’s online payment business, SinaptIQ, expanded within six years to three subsidiaries. Aung’s success was founded upon his fearless determination and unflagging spirit that repeatedly transformed obstacles into opportunities. Director’s  Pattamaporn Kittipanachol spoke to him to find out what drives the IT entrepreneur.

Although SinaptIQ rings few bells, its privately held subsidiary PaySbuy is Thailand’s top business-to-consumer internet and mobile payment provider among five listed competitors. In October 2007, PaySbuy hit headlines in an THB 85 million acquisition by Total Access Communications (DTAC)1. This quirky David and Goliath tale is one of the serendipities in SinaptIQ’s founder’s life.

Twists of fate

Aung Kyaw Moe (pronounced ‘Ong Joe Mo’) is a tall 33 year old whose preternaturally stern demeanour contrasts sharply against his disarming frankness.

“I never liked computers,” discloses Aung after spending two hours discussing IT, encapsulating the contradictions of this whiz who qualified for five Microsoft certificates, including that of an Engineer and Software Developer.

Growing up in Rangoon, Aung dreamed of becoming a doctor. His scores on the national examinations did not qualify. His parents wanted him to study other degree programme at National University but he chose to study Computer Science at private school against their will.

“To earn money for tuition and avoid my parents, I worked as a night shift butler for two years” at the posh The Strand Hotel. Sleeping during the day and attending evening classes, Aung worked from 11 pm – 7 am.

During his second year, Aung won several academic awards which garnered him a teaching post as he completed his third and final year at the school’s branch in Phnom Penh, Cambodia.

Graduating with an  external Bachelor Degree from London Guildhall University, now part of the London Metropolitan University, he taught for a year and a half before quitting to pursue a Masters degree in the UK. Because the British Consulate in Phnom Penh did not issue visas, he flew to Bangkok, anticipating a two week holiday. His plans were dashed when his application was denied.

As a Burmese national, “I could stay in Thailand without a visa for one month but I had to find a job within two weeks.” Securing a job teaching programming in Bangkok, the 23 year old embarked on a new adventure.

Innovator in-training

The financially distressed school and its staff were subsequently sold to Juris Asia, a French computer programme development company. Traveling extensively to collect raw data, Aung gained a broad overview of the  Asia-Pacific region to develop search websites for databases covering law in China, India and Thailand, targeting “foreign business people who wanted to invest in these countries. The idea was very good but it was too early.” In 2002, funding dried up due to difficulties in collecting payment because e-commerce was not prevalent in Asia.

Juris Asia nimbly switched to mobile payment systems. As a system architect, Aung’s ‘Mobile Payment Club’ for Bank of Asia (BoA) was recognised by Visa as ‘Best of its Kind in Asia’.

After winning three prizes at international software programming competitions organised by HP and Nokia, “The people [there] encouraged me to quit my job and start my own business.”

Establishing SinaptIQ

“In April 2003, I quit. I was 26. It was time to find something for my family - I had a newborn son, and hoped that I would get investments from Nokia and HP.” Aung shook his head; he was soundly rebuffed. 

What kept him going? “My son.”

“I started SinaptIQ to write mobile games. Three months later, I realised that thousands of developers [produced] only one or two breakthroughs. I had to look for alternatives.” 

“My friend at BoA told me of VISA3D, a new protocol developed by Visa for secure payment transactions, because I like hardcore programming and systems for security. If I got certified by Visa and MasterCard in six months, BoA would purchase my software. I developed two applications in three months.”

The licence was sold to BoA for just THB 1 (yes, one baht), “because the application had to be proven. If I don’t give it away, they will not take it. If you are just a simple programmer, especially from a Third World country, they don’t want it,” Aung responds.

In 2004, “because of our track record, we sold our application to KBANK [Kasikornbank] and Siam Commercial Bank, charging licence fees and yearly maintenance as long as they use the applications. Today, we generate about THB 2.5 - 3 million in maintenance fees.”

Serving six Thai banks, SinaptIQ’s VISA3D branded services captured 65% market share and is in the process of partnering with the seventh bank.

SinaptIQ is the only Thai Independent Software Vendor (ISV) which develops and sells proprietary software and application tools with intellectual property rights licensed to users. It is also a Board of Investment promoted company and the sole Thai non-vendor Microsoft Gold Partner.

By 2010, it will establish new offices in Kuala Lumpur and Shanghai. Malaysia was chosen as “the predominantly Muslim country can serve as a gateway to the Middle East.”

Subsidiaries

SinaptIQ’s subsidiaries: PaySbuy, DCC and 2C2P focus on different aspects of e-commerce. Aung compares SinaptIQ to “a mouse that looks for cheese”. By being the first mover with proprietary applications in adapting products that have “worked well in other places like the US or Europe, but it doesn’t exist yet in Thailand or Asia” to suit clients and local regulations creates traction. New business ideas are implemented by subsidiaries, while research and development remains centralised. 

PaySbuy
SinaptIQ’s first subsidiary was PaySbuy, modeled on PayPal whose entry was blocked by the Bank of Thailand (BoT). Serving as an electronic wallet (e-wallet), users can store funds from their credit cards or bank accounts to make online payments or deposits to another PaySbuy account.

Suchote Cheewakoset, the manager implementing SinaptIQ’s project at KBANK, informed Aung of this vacuum. No neutral payment platforms existed since other systems targeted subscribers only like Advanced Info Service’s M-Pay and True Money.

“Suchote quit his job and we started our venture in 2004 with 51:49 ownership. I supported him in IT development and system architecture while he handled marketing and bank compliance with the BoT and Ministry of Finance (MoF).”  But “around 2005 we ran out of money. A group of Thai angel investors invested THB 12 million, raising capital to THB 15 million.”

No regulations governed the e-wallet industry so the MoF issued an “Electronic Card Licence” to the six companies in 2006, stipulating minimum registered capital of THB 200 million. PaySbuy requested a two year extension. With more than 400,000 consumers and 2,000 merchants generating THB 50 – 100 million worth of monthly transactions for a healthy 1 – 2% in commission, capital increased “to THB 50 million, but THB 200 million is very hard for organically growing companies,” Aung recounts.

This ruling raised barriers to small local firms. The scramble for funds inevitably erodes founders’ stakes, rendering them vulnerable to takeovers by cash-rich foreign companies. PaySbuy was sold to DTAC, the number 2 ranked mobile operator, after a yearlong search. It remains relatively independently and “is still number one in Thailand.”

DCC Company Limited
Established in April 2006, DCC runs on a programme designed by Aung, managed by Premin Suchato, Aung’s Sasin EMBA classmate and SinaptIQ’s COO.

Dynamic currency converter (DCC) systems exist abroad but this subsidiary was the first to offer an online real-time application in Thailand. Users are given a choice of paying in Thai Baht or a foreign currency. Its transaction volume recently breached THB 2 billion.

Personal Turning Point
Besides 2006 heralding Aung’s daughter’s birth, he also enrolled in Sasin’s EMBA programme, “a turning point” in his life. “I did not want to go to Sasin at all. I’m a hardcore developer and technologist, not a CEO,” he laughs. “I went to Sasin because I needed to speak the language of the investors and understand what they understand.”

He “learnt a lot about balance in life” from his classmates and became “more mature and less aggressive. In the past I did what I had to do, regardless of obstacles. I didn’t care if others got hurt. Although that attitude helped win a few milestones, I lost a few friends along the way. Now, I learn to compromise and reflect on my mistakes.”

Without Sasin, “I would not have met all these people and acquired the lessons I needed to learn how to run the business.” Besides Premin, two classmates joined his company.

2C2P Pte Ltd
Established in Singapore in 2008, 2C2P is a joint-venture with Douglas Abrams. They met in the Technopreneurship class Douglas taught at Sasin as a visiting professor. 2C2P, coined by Aung, derives from “Credit Card Payment Processor”. The idea was sparked by services offered by an American company, Cybersource, which does “not have any branches in Asia. We aim to be a similar company for the Asia-Pacific. 2C2P leverages on six years’ e-commerce experience from SinaptIQ. If you buy something online, we settle the payments and deposit money to the sellers’ accounts at night. We also handle dispute management.”

In September 2008, 2C2P signed a funding agreement with Expara IDM Ventures, co-founded by Douglas to tap into SGD 600,000 - SGD 800,000 seed money and another USD 1.5 million by 2010.

2C2P was a finalist for the Red Herring 100 Asia 2008 Awards for playing an “important role of technology in Asia’s economy and throughout the world," stated Joel Dreyfuss, Editor-in-Chief of Red Herring.

Projects scheduled to commence in 2009 include managing online payments for SomBin (Flying Orange), Nok Air’s outbound travel service chain; processing online visa applications for the Cambodian Ministry of Foreign Affairs, where many of his former students currently serve as high ranking officials; and supporting First Meta in transforming virtual currency in Second Life®, a 3-D virtual world peopled by avatars into cash, among others. Aung also plans to launch a direct hotel reservation website without charging commission called ‘I love Thailand’ and a Microsoft cloud computing storage system that allows all businesses to comply with the Cyber Security Act towards the end of the year.

Personal Plans

“Aung always says everything is easy,” Premin jokes, referring to Aung’s endless business ideas. His innovative and optimistic outlook coupled with a solution-oriented view of problems accounts for his confidence.

“Falling in love with economics and finance” at Sasin, Aung plans to qualify as a Chartered Financial Analyst (CFA), and acquire in the requisite three years’ experience as an Asset Management consultant from one of his client’s banks.

He wants to learn how to evaluate companies and become a venture capitalist like his mentor, Douglas. “I hope to accumulate enough wealth to move to the other side of the table and become an angel investor. My goal is to achieve this by the time I’m 40, so I have about seven years left,” he declares.

Although Yangon is deprived of a doctor, we are enriched by the safety and affordability of Aung’s efforts. In a few years, we may well see Aung joining the roster of e-commerce gurus guiding future generations of IT entrepreneurs in distant shores.

“Why 2C2P was established in Singapore?”

The frustrations Aung encountered as a foreign business IT entrepreneur with Thai regulations and industry prejudice pushed him Singapore.

“SIPA and Software Park Thailand helped me start SinaptIQ and I’m very grateful for their help but the problem is that it stops there. They do not embrace foreign-owned Thai entities, only Thai-owned Thai entities.”

Language barriers

“The government encourages Microsoft to translate all their material into Thai,” as is training offered by SIPA and Software Park. While catering to Thai developers with limited English, they cannot keep up with the latest changes. “By the time the material is translated, new technology already came out.

“We would rather train a developer to speak, read and write English because it is more beneficial” because “90% of the source codes are copied from the reference websites.” With solutions and codes to programming problems posted in English language portals, programmers who “read English faster are more productive. Thai developers who only read Thai are limited to Thai portals.”

Half of SinaptIQ’s developers are foreigners who cannot attend the training complain “that they are ‘at a disadvantage and cannot progress’. I cannot retain them,” laments Aung.

Reverse Prejudice

Client perceptions in Thailand allows a Singapore-based entity like 2C2P to gain entry to bid for more projects and obtain better pricing. “Some banks issue Requests for Proposals (RFPs) that specifically ask [for bids] from foreign entities,” barring SinaptIQ. “The Thai software industry promotes ‘Buy Thai First’, customers say ‘No Thais, only foreigners’. Local companies with everything made domestically are associated with poor quality. Having foreign partners improves the image. It’s very difficult to change client mind-set. In Malaysia or Myanmar, being a local company is a winner.”

Foreign companies can charge more because clients have two-tiered budgets. “For instance, purchases from local vendors cannot be more than THB 10,000; for foreign vendors, it can be up to THB 20,000.” Aung’s friends “say that they are a company from Singapore. They use Thai developers, but they charge foreign rates.”

Investment Support

Singapore’s Media Development Authority (MDA), which provides annual grants to 2,000 companies under the i.JAM Research and Development Micro-funding Scheme, “injected a SGD 50,000 research and development grant point blank without demanding an equity stake.”

The Singaporean government “lets me own the company 100%. I invited Professor Douglas Abrams to invest in the company and take 20% equity because I believe he can bring me up to the next level.”

Foreign staff turnover is reduced. “Remaining in Thailand is a problem. Even with two Thai children, I still have to get a work permit. Developers from countries like India and Burma prefer Singapore. After three years they get their PR [Permanent Residency], so they prefer to invest their time and effort there.” Moreover, “the cost of hiring developers in Singapore is only 20%-30% higher than Thailand, compared to 50% in the past.”