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 | Mark Chang Mun Kee Founder JobStreet |
Cris Prystay 01.28.08
Selling Internet job listings in booming Asia seems like a cinch. But it was Mark Chang's caution that's made JobStreet a success.
When Malaysian Mark Chang started online job-listing company JobStreet in 1997, he figured it would earn him a regular paycheck and allow him to be his own boss, but he didn't expect anything more. "I really thought it would be a mom-and-pop kind of thing," he says. Fast-forward ten years: JobStreet is now Southeast Asia's largest online employment company. It's growing in Hong Kong and India, and it's entered Japan.
The company, whose clients include the likes of Dell (nasdaq: DELL - news -people ), Siemens (nyse: SI - news -people ) and Canon (nyse: CAJ - news -people ), serves more than 45,000 employers and 4 million registered job seekers. Asia's sizzling growth has meant plenty of business in industries from banking to manufacturing desperate to fill jobs. "When the economy is strong, companies need to keep expanding, so we get a lot of companies coming back to us," says Chang. "When the unemployment rate in Singapore, for example, dips so low, companies must look outside of Singapore for labor. A company like us, on the Internet, can reach out to Malaysia, India, Indonesia, the Philippines and tap job seekers across the region."
In July, in fact, it formed a joint venture in Japan that will advertise for engineers from around Asia to work in Japan's technology sector. Japanese electronics makers have moved most of their factories to other parts of Asia, but they still need midlevel engineers in their research and development centers back home. JobStreet also has branched into other services, such as providing custom-made recruitment software for multinationals. Dell's Malaysian call center hired it to screen candidates and compile shortlists for the personnel department. Shell picked JobStreet to design and manage the oil giant's global online employment site.
JobStreet is still small, but its profits and revenue are growing fast. The company hasn't announced its 2007 results yet, but Shin Kao Jack, a technology analyst at OSK Investment Bank in Kuala Lumpur, estimates that net profit hit $9.6 million, a 40% jump over 2006. Revenue reached $24.6 million, he figures, up 24% from the year before. It listed on Malaysia's technology exchange, the Mesdaq, in 2004, and the shares are up 46% over the past year, to a recent 54 cents. Last year the company landed on FORBES ASIA's list of the best public companies in Asia-Pacific, with under $1 billion in annual revenue.
How this Kuala Lumpur startup flourished beyond its founder's expectations has very much to do with the founder himself. A soft-spoken engineer, Chang, 43, has an innate conservatism that led him to seek advice from people who made sense and to shrug off the myriad Internet experts and would-be investors who urged JobStreet to grow fast. This helped the company sidestep the dot-com bust in 2000, which wiped out many of his competitors. When Asia's economic boom resumed, JobStreet was well positioned. Along the way Chang, who wrote much of the software that powers the company, had to learn to relinquish control of the technical stuff and don the mantle of chief executive.
After graduating from the Massachusetts Institute of Technology with a master's degree in mechanical engineering in 1990, Chang returned to Malaysia and took a job as an engineer at a catheter factory in Perlis, a rural state on the Thai border. He spent his evenings and weekends tooling around the Internet. In 1995, figuring he was ready to set out on his own, he started Malaysia Online, the country's first commercial Web site. MOL offered the usual portal services, including online classifieds, and Chang quickly noticed that the job listings were popular. That led to JobStreet.com.
The site's growth soon bumped into a problem: Malaysia's then slow Internet speeds were putting off some job seekers. So he wrote software enabling the site to match jobs with job seekers and automatically e-mail them when a suitable opening was posted. That way they didn't have to keep logging on to the system to conduct fresh searches of the listings.
By 2000 Chang had decided he had too much on his plate with MOL. He spun off JobStreet into a separate company and sold MOL for $3.2 million to Vincent Tan, the chief executive and controlling shareholder of Berjaya Group. He then plowed $2.6 million into JobStreet and began building the site in earnest. Malaysia's large electronics manufacturing sector, which boasts Dell, Intel (nasdaq: INTC - news - people ) and Motorola (nyse: MOT - news - people ) plants, formed the core of JobStreet's early clientele, later followed by industries such as banking and hospitality.
During the early years Chang was basically winging it. "When I started JobStreet, I had no business plan," he says. "I just thought, 'I'll try it for two years and see how it goes.'" His approach worked in his favor as dot-com fever swept through Asia in 1998 and 1999 and Internet consultants and angel investors bombarded Chang with business plans and big ideas. He shrugged most of them off. "People were just handing out cash in those days," he says. "And these people had suggestions that seemed so unbelievable I couldn't sign my name to them." Some, he recalls, thought JobStreet should quickly expand clear across Asia and list on Nasdaq. "I thought they were crazy. We couldn't even list on Nasdaq now." That caution served him well. When the bubble burst, JobStreet still had plenty of cash and didn't have to fire people or shut down.
He did, however, open the door to a seasoned global investor. In 1999 he accepted a $1.6 million investment from San Francisco venture capital firm Walden International. After putting in more money in 2001, Walden owned 30% of JobStreet. It urged Chang to hire a chief executive who had more business experience, but there weren't any compelling candidates on the horizon. So Walden decided Chang should stay put--but start acting like a chief executive. That was tough for Chang. "I had to switch modes," he says. "I was acting more like an inventor than a manager. I wasn't profit-minded." To help out, he recruited two Malaysian classmates from MIT: Albert Wong as chief technology officer and Suresh Thiru as chief operating officer.
Walden also urged Chang to expand to a few key Southeast Asian countries, such as Singapore and the Philippines. And it pushed him to trim costs--JobStreet, as well as MOL, was losing money. "It was a wake-up call," he says. "They demanded that we run it like a real company."
JobStreet is now the largest online recruiter in Malaysia and the Philippines and number two in Singapore. It's not in Thailand yet but is looking to enter. And its seven-year-old India unit, which had languished in a very competitive market, is gaining traction. Last April JobStreet sold half of its India unit for $2 million to Television Eighteen India in Mumbai, which promptly began promoting the site on the air. Since then the number of registered users has climbed 25%, to 1.5 million.
While some countries such as India have strong online recruiters, there are few regional players. Hong Kong's JobsDB, which isn't listed, is JobStreet's chief regional rival. Jobsdb, which operates in 11 countries, says it counts 7 million registered job seekers.
JobStreet's move into software services got a boost from Shell in 2006. Shell bought a customized version of JobStreet's recruitment software to power its employment Web sites worldwide and outsourced the sites' management to JobStreet. JobStreet's system helps Shell screen, process and track applications around the globe. Shell Malaysia was one of its first big customers, so when the parent company, which was using six different recruitment software systems worldwide, decided to pick one, Shell Malaysia backed the JobStreet offering, according to Chang. That deal was worth $1 million, plus an annual retainer of $500,000, he says.
The Shell deal impressed Flextronics International (nasdaq: FLEX -news - people ), which then bought JobStreet's software to manage its online application and tracking processes in seven Asian countries. Flextronics, the giant Singapore contract electronics manufacturer, considered a host of well-known human resources software packages but soon settled on JobStreet. "Our margin is very, very thin," says Andy Li, Flextronics' director of talent acquisition in Asia. "We needed to look at a GE kind of effectiveness at Wal-Mart (nyse: WMT - news - people ) prices." Li liked that JobStreet was able to quickly customize the software for each country, so applicants who visit the Web site in South Korea are able to peruse job postings in Korean.
JobStreet's success has attracted overseas investors. Some 43% of the company is held by institutional investors. U.S. fund Fidelity International holds 10%, U.S. hedge fund Armor Capital 8%. Chang, the largest single shareholder, owns 12%, Walden still 2%. OSK Securities recommends buying the stock. "I like the company," says analyst Shin. "It's young and growing, and has the potential to become world class."
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