Tech in Asia $30M Acquisition by SPH, News Industry Evolution & Fragmented Media Consumption - E341

In this discussion, Shiyan Koh, Managing Partner of Hustle Fund, and Jeremy Au talked about three main topics:

1. Tech in Asia Acquisition: Shiyan and I delve into Tech in Asia’s acquisition by Singapore Press Holding and how this move is set to reshape the tech news landscape across the region. We assess the company's $30M valuation and discuss the revenue figures, growth rate and synergies that made it an attractive acquisition target. They also reflect on the broader implications for regional tech journalism across the various players.

2. Entertainment & Media Industry Evolution: We discuss the evolving business models in the entertainment and media industry, citing examples like Spotify's $200M deal with Joe Rogan, the growth of niche Substack newsletters like Packy McCormick's and The Generalist, and the success of independent platforms like Stratechery and Acquired.FM. We also explore how AI is revolutionizing content creation in terms of translation and distribution, thus changing the business model and venture scale outcomes.

3. Fragmented News Consumption: We examine the current fragmented nature of news and media consumption where information is scattered across different platforms, from blog posts to Substacks to podcasts and TikToks, and how these new channels are fostering innovative business-building approaches. We discuss the consequences of this fragmentation, such as the challenges in defining truth in an age where platforms algorithmically promote content engagement, implicitly displacing users from consuming fact-checked, authoritative sources.

We also touch upon the importance of adapting to new market trends, how the interaction between media and technology impacts startup founders, the role of advertisers in media economics, and niche audience monetization.

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(02:06) Jeremy Au:

Morning, Shiyan.

(02:09) Shiyan Koh:

Good morning, Jeremy. I see some bed head.

(02:09) Jeremy Au:

I know, right? Well this time around I am in Ho Chi Minh City traveling I'm at the Monk's Hill Ventures AGM and we're hosting startups and LPs for our conversations. So very excited. And, as always, the food is excellent. So I've definitely been filling up on the spring rolls and every single thing. Yeah. What's been up with your life, Shiyan?

(02:29) Shiyan Koh:

I just got back from 3 weeks in the US so a lot of catch-up. And then trying to prep for the fintech festival this week where there's a ton of people coming into town and meeting other investors and companies. Yeah, November is shaping up to be busier than I expected.

(02:42) Jeremy Au:

It’s always busy. Hopefully, the December school holidays are kicking in. So I think that's going to be a bit of a lull while everybody takes a break. That's the plan.

(02:49) Shiyan Koh:

I need to catch up on my sports, Basketball season started, football season's in full swing. So, yeah, hopefully get a bit of time off.

(02:56) Jeremy Au:

Yeah.

(02:57) Shiyan Koh:

But yeah, it's been good. So what's on tap this week, Jeremy?

(03:00) Jeremy Au:

Well, first off, we just want to say thanks to Jeslyn Lim. She recently wrote a nice note to us saying that she really enjoys the fact that we covered the Southeast Asia tech news gap for her. And so she's really been enjoying the regionalized insights and learnings. For example, the layoffs of various companies, but also what we are seeing in the trends and market. So yeah. Yay for us, Shiyan. Pat ourselves on the back. There we go.

(03:21) Jeremy Au:

The second thing I want to talk about is the big news of the week is really the acquisition of Tech in Asia by Singapore Press Holdings. So we previously talked about Singapore Press Holdings in account of the findings for the audit regarding the circulation numbers. And we've also previously hosted Tech in Asia on the podcast, for example, with Maria Lee, talking about COO responsibilities. So, Shreyan, any thoughts that you have?

(03:42) Shiyan Koh:

I mean, I think good on the team, right? They've been at it for, I think, 10 years. So I think it's one of these hey, startup journeys are not short. It's a marathon and not a sprint. If I recall correctly, they were one of the earliest Singaporean or Southeast Asian companies to go to YC. And maybe you could just say like the beginning of an era, end of an era kind of thing that, one of the originals made it out. And so I think, the reported number is 30 million acquisition price and 8 million of revenue last year. So that's sort of 3. 7, 4x, roughly, revenue multiple and I think you saw that growth has slowed, and so it's not a growth business anymore, no one's paying up for that but it is a nice tuck in for SPH to kind of bulk up their startup coverage as which does have in The Business Times, I believe a section that covers it, but it's not a main focus. If you read the BT, I think most of it is much more focused on large companies, and multinationals rather than the startup ecosystem. So. It should be a nice compliment to their existing assets. I saw last night at drinks and said, well, do you have any advice?

(04:41) Shiyan Koh:

What's the hardest thing about doing an acquisition? I was like, oh man, it's always integration, right? And integration is not just Hey, who's responsible for what? It's culture and I think often when you bring startup culture into a more established business, there can be differences in how you operate or how you think about the world. And so being really clear and upfront about what the principles are and how you want to operate are essential to making the acquisition work and not having the talent walk out the door, which, because in most businesses, that's the valuable thing. It's the people and the know-how. So, I think it'll be interesting to see, but, I mean, having said that, SPH does have a new management team. So, perhaps this is the kind of beginning of a new era for local news.

(05:21) Jeremy Au:

Yeah, my two quick reactions are first of all, I just want to thank Dealstreet Asia, Jon Russell at Asia Tech Review, as well as Der Shing, at his blog post for being some of the sources for these numbers and analysis here. One thing that, I also noticed is that it's unclear whether 30 million is in Singapore dollars or USD so far. And so potentially if it's USD, then maybe the multiple is closer to 5X. That's one. And then two, they are reported public numbers in terms of growth rates of about 6 to 7% on an annual basis. So putting some specificity on what a low growth and I think in the context of venture capital, good growth. That's how fast it's growing at 4X, even 10X or 3X and then, something that's good might be like 2X, for example. And so, at 6 to 7%, the year it's definitely more of a mature business in terms of the growth profile. So I think that's putting some numbers on the first side. And I think to me, I can't help but wish obviously the best of luck. I think that Singapore tech media and the Southeast Asia regional scene needs more transparency and less opacity. So, I really hope that the integration and the merger goes well. That's for the benefit of everybody in the ecosystem.

(06:25) Shiyan Koh:

Yeah, and I think, a big part of their business is not just the the reporting and the news, but also like events to convene the community. And so hopefully, I think with a bigger parent as well, they can continue to invest into that part of the business.

(06:37) Jeremy Au:

Yeah. I like how both Jon Russell and Der Shing kind of said like the obvious buyer, is Singapore Press Holdings. And I think it made me think a little bit, which was that it is true that it is the obvious buyer now that it's happened. But I guess, I've never really thought of these regional publications being natural buyers, maybe because haven't necessarily seen a lot of acquisition activity in the past, but now that they mentioned it, it did remind me that DealStreetAsia was acquired by Nikkei, right? And That's something that happened years ago. And, people still, write very profusely at DealStreetAsia and people still forward articles about DealStreetAsia because that focus on breaking the news. And, I think that goal to always be like the first to crack that news segment on layoffs or acquisitions or valuations has really been I think one of the differentiations for DealStreet Asia has continued even under the acquisition by Nikkei.

(07:24) Shiyan Koh:

I mean, it's interesting, because even if you go from 10 years ago to now, there's been a huge evolution in the news industry. And so I think, it's funny to think about startup news as its own segment, but it actually is. So, first of all, here we are. We are part of that segment. But there have been ,TechCrunch is probably one of the originals. But you've got specialist newsletters, basically, that cover certain sections. So, in product management, Packy McCormick's Product management newsletter probably has an insane number of subscribers. People who pay Stratechery, Ben Thompson's podcast plus newsletter. People pay 100 a year for that, and he's built a nice business there for himself. Acquired. I think Ben Gilbert just announced he's leaving his fund to focus on the podcast full time and so you're seeing more and more different types of business models for media and we see a lot of them in the startup space, which makes sense. People are interested in startups. They're interested in innovating and changing things and figuring out if there are ways to actually cover interesting topics that they care about and build a business for themselves.

And so I don't think that they're necessarily venture scale outcomes, but they can actually be really great businesses for a small group of employees. And so, that's been pretty fun to see as well.

(08:33) Jeremy Au:

Yeah I think Jon Russell is a good example. He used to be at The Ken and now he's running his own newsletter, which I don't believe has a subscriber tag. So definitely do check it out.

I think the second, of course, is that we see like BackScoop, right? So that's Philippines space, trying to be focusing on a daily insight. So feature a lot of local folks, the All In podcast is right now looking for a CEO. So they have a job description out, to kind of like report to Calacanis.

(09:01) Shiyan Koh: There you go. There's your next job.

(09:03) Jeremy Au:

But yeah, I think it's interesting to see that happening. So I think there's this interesting dynamic as a result. What's the job to be done? Because, media is media and I think we have these norms. We're like saying like here's this newsroom that we have in the newspapers and now we have a newsroom in digital, tech startup land where everyone's working from home or hybrid, expects a level editorial ethos, for example. And then now we see this great fragmentation where almost everybody's a publisher right at some level about news And the algorithm is the curation editor. So this interesting dynamic where I'm just seeing this fragmentation. I still read, for example, Singapore Press holding, Sunday Times on Sunday, because it's a nice way to relax, for example.

But the truth is, have a physical paper. I've been told also by my wife to read more paper in front of my kids, because she doesn't like me reading on my phone and modeling screen behaviors to the kids. But yeah, I think that's an interesting dynamic where you mentioned this giant fragmentation of the newspaper to all these like little articles floating around. I mean, my browser tab is a good example. You have a blogspot article, you have Feedly, you have LinkedIn articles, you have Substacks. I've owned audio books and podcasts queued up, so I'm just consuming information in such a fragmented way.

(10:11) Shiyan Koh:

Yeah, I think it's an interesting. you know, it's like a never-ending firehose of stuff. It really is. And then you wander around the internet and you just keep bookmarking more things to read. Or you find people who are saying interesting stuff and you're like, Oh yeah, I should sign up for their sub stack. I have a whole backlog of this Semiconductor industry substack that like I read one thing and I was like, wow, this is really good and then I signed up for it And I was like, oh my god, this is like incredibly detailed and way more than I thought I was gonna Learn about semiconductor industry dynamics, I think it's like a really interesting kind of evolution of the model. What you're saying about the fragmentation of media is a really interesting point, Jeremy, in that, when are we going to see the Joe Rogan of Southeast Asia who can get 100 million deal from Spotify? Just given the size of the audience that they command. The idea that you could have independent media voices that launch completely separately from any institutional platform is crazy.

(11:02) Jeremy Au:

I mean, I'm happy to chat more about that, right? I think first of all, Joe Rogan and that dynamic, the valuations that it had for exclusive show deals, I think that era is effectively over. So that was at a time of massive competition between platforms.

(11:14) Shiyan Koh:

Wait, what? We're not getting bought for a hundred million dollars? That isn't the goal of this? Jeremy, I feel betrayed.

(11:20) Jeremy Au:

I mean, I think on that side of it, it was just more like a function of Spotify really required exclusive content to bring people and create that podcast because they decided to reframe themselves from a music listening app to be more like an everyday listening app as much as possible, but also starting to add videos and so forth. So really being an entertainment app overall. And so they needed an exclusive strategy, similar to how Netflix does it. And Joe Rogan was definitely the king with that global appeal. But also I think from their perspective, a lot of people were just consuming so it became exclusive. It's not, they're only on Spotify, so you can't find them on Apple. You can't find them on different channels. And so it's an interesting dynamic where there's this data pool. I mean, obviously, Joe Rogan left a lot of money on the table because he could have made money in all the different ways if it was cross-platform.

(12:01) Jeremy Au:

But it was a good deal for Spotify because it's pulled people on and Twitch was doing that at the time. So it made sense, but now Spotify is no longer doing it. They closed down their in-house for exclusive content. Now they're focusing on honestly, like AI, right? So one of the big things they want to do is they want to do automatic. Audio translations of every podcast they have because they feel like that generates unique content, because if you have a podcast that happens to be covering Apple, YouTube, by Spotify is the only one that translates your English podcast to Thai. Tagalog. Then it's a unique contact for someone who's a Tagalog listener. So, you know, there's this interesting where that era multiples is effectively over from my

perspective.

(12:37) Shiyan Koh:

Take the money while it's there, right?

(12:39) Jeremy Au:

Yeah. I mean, I think it was great for Joe Rogan to take it. I wouldn't have told him to walk away from hundreds of millions of dollars just for simplifying his platform to one platform, by the way. He didn't do anything different after that.

(12:48) Shiyan Koh:

I mean, I think Matt Levine has a post about this, right? Which is hey, if you told a founder you have two options, take the crazy amounts of money that SoftBank is giving you, or build a slow and steady business. The rational thing is to just take the money.

(13:01) Jeremy Au:

Yeah. If your advisor is sitting down with them, you would also be like. Take the money, but I think the tricky part is like taking the money and spending it well after that is probably the second half of that piece of advice.

(13:12) Shiyan Koh:

Well, he took the money, and then he took his money out. He is the only one who made money on that whole thing.

(13:14) Jeremy Au:

Yeah, that's awesome. I mean, WeWork just declared bankruptcy and we've known that for quite a while it was headed there because of the headwind, because of all of the debt they have. It's a classic, right? You know, asset duration mismatch, right? It's just like, everybody thinks they can make money on okay, if I lock it in for a long term. And then, everybody's going to make money because it can block in a lower price, but then what happens when the market turns? Which is why it feels like we're just like learning that over and over again. Hopefully we remember this in 10 years or 20 years, Shiyan, when this happens the next market cycle.

(13:56) Shiyan Koh: Yeah, we will be the old gray hairs and be like "I remember back in 2022..." And everybody will be like "Ah, you old conservative people. Live a litte. YOLO." or Whatever the next version of YOLO is

(13:58) Jeremy Au:

Yeah, sign that 50-year lease right now, we're going to make so much money in the next 50 years because based on my current economic model, that assumes all these macro factors are all the same, you're just going to make bank by locking in for a long time, but turns out, when the market changes, then you end up losing money for a long time. And I think that's a tricky part, right? I guess looking back to the media side, also, one thing that reminds me is that think media and tech media obviously has a role in all of this. I mean, they broke the news for WeWork, a lot of investigative journalism. I've been reading a book Billion Dollar Loser regarding the WeWork saga that was later adapted for the TV show WeCrashed which I have not seen a TV show yet.

But I think it's been interesting because I met a WeWork executive and I was talking to him about WeCrashed and I was like, Hey, is it sensationalized? And he looked at me and said, Hey, he thought that WeCrashed, the show was like less sensational than what he actually saw, and I thought that was really amusing. So I thought it was interesting. What do you say? Like what, you know, truth is stranger than fiction sometimes.

(14:55) Shiyan Koh:

I mean I think that's true. Humans are incredibly variable is probably what I would say. So whatever you think of as some band of normalcy in your brain, the standard deviation possibility is way higher than you imagined.

(15:05) Jeremy Au:

Yeah. And I think that reminds us of the current media storm around SBF and FTX. Right. We discussed this some time ago and now we're seeing a lot of the stuff come out. I thought it was interesting.

(15:15) Shiyan Koh:

Yeah so, It's madness. It is madness. But I think there is always this tension which is like, what can you say versus what can you not say, and what will people tell you. I guess if you read a news story where it's unnamed sources said XYZ thing, it can be a dangerous sort of game to play, because people don't want to be named, but they'll tell you stuff, but you could see people using that for ill purposes to generate false rumors and things like that. And then you have the other specter of AI, false news and spreading and all those sorts of things. But I think the flip side of media, is this crazy power and now the distribution is so much cheaper and faster. There's a real responsibility. If you go back to like old-school journalism, there's a real responsibility to report the truth. And then now I think we live in an age where people are always like, well, what, who gets to decide what the truth is? Which I think is a very challenging. That's like a whole other episode.

(16:03) Jeremy Au:

I mean, it's kind of like a weird era when there was like one newspaper and they all had editorial ethos isn't it kind of a weird era around the standardization of production of information and news because then, we created these safeguards where governments regulated these printing and press acts to create some level of editorial ethos, but it turns out, humans, like you said, are very favorable and they talk stuff all the time and add a spin and stories and forget details. I think that's like the normal human condition, right? Is this that now we're allowing everybody to be able to say whatever they want to say. I mean, TikTok is a great example. I was just walking down the flight, you know, when you depart, and I always use that time to see what people are consuming in the last 10 minutes of internet access before we take off.

And a good chunk of people just consuming TikTok. And some of them were like, effectively, news segments that were, captured like eyewitness footage and so so forth.

(16:51) Shiyan Koh:

But yeah, I mean, I think there's a lot of disinformation, right? Like people are saying I don't know,, some of it is like the business model of you want more people to click and watch. And so the things that generate clicks and watch time were like outrage, and disgust. And so people try to push those things. And then the more people click on them, the more the algorithm promotes them. And so, people are sharing clips of things that they label as specific incidents, but are actually repurposed from other things, and I don't know whether we've trained ourselves to check and say is this true? And instead of just getting sucked into that outrage cycle.

(17:25) Jeremy Au:

Yeah. I mean, they have this classic phrase, which is like " One man's a terrorist, another man's freedom fighter". So in this case, maybe one person's disinformation is another person's truth. There's the awkward reality is that, you know, the definition of truth has always been a very slippery subject..

(17:39) Shiyan Koh:

Yeah, I mean, there was an article in The Times about I don't know, it's like a Los Angeles Jewish mom reaching out to her African American, former preschool teacher and talking about The current conflict and like their different points of view on it. And it was interesting because it sort of replayed their conversation but it also in the comments talked about what they hadn't said to each other but were thinking in their heads. That would have, I don't know whether it would have improved the conversation or not. But it's people are also afraid of overstepping so they don't necessarily always say everything in their heads and then that leads to conflict and confusion. So, I feel like we've gone really far off the startup news topic. It's much more philosophical.

(18:20) Jeremy Au:

It's not philosophical, right? It's about media and technology interacting which is as a function of startup media, because, we expect a certain level of authority, millennials in our new cycle and I think that's changing dramatically. I mean, the economics actually also incentivize that, like you said, right? So you look at TikTok, it's about engagement. If you look at a lot of the platforms, they don't want you to leave their platform. So Twitter, right has been an all acts. Remove headlines from links that you provide and those links were like the ones that went to press organizations. So basically, they're kind of removing the clarity in some ways of your ability to leave Twitter, which is not as fact-checked, I would say, than that of news organizations, which has still have some, I would say, newsroom ethos requirement. So let's just say that and then that happens for LinkedIn as well. The algorithm does not promote you to go to articles outside LinkedIn. So, there's a wall garden, there's a soft wall. And so if you post a link that points outside LinkedIn, then somebody who's browsing LinkedIn sees something very interesting. They see the BRAVE Southeast Asia Tech podcast, they click on it, and it bounces out. The LinkedIn algorithm is not a fan. And so I think this dynamic here, which is, the consumption platforms where we're consuming stuff is becoming, it has the incentive to become that production platform itself and to keep people that wall.

(19:35) Shiyan Koh: Yeah.

(19:35) Jeremy Au:

So I think circling back to how we started, we talked about Tech in Asia acquisition, and you mentioned something interesting, which was how do we think about the outcomes. How do you think about outcomes from your perspective, Shiyan?

(19:44) Shiyan Koh:

So I think maybe you think about okay? 30 million, that's like a lot of money, right? You could be like, hey, that sounds pretty good to me. But how long did it take to achieve that? And also, how do we think about that number relative to what was invested? So, I think 13 million went into the business. Over the course of the last 10 years 30 million coming out. So, I mean, the waterfall should be positive, right? Everyone should get paid out unless there's some crazy liquidation preference. But I think, traditionally, when you think about a venture scale return, if you're like pre seed investor, you probably want something like a hundred X. And then if you're kind of like a later stage investor, you probably want 10X. And then even later stage, three to 5X. And so, that doesn't really clear the bar here for the types of outcomes that you're looking for in the portfolio.

For the founder, I think it said at the end, he has 15%, so he probably cleared four and a half out of the deal. So four and a half over 10 years, 450K a year. Not bad, but is it the homerun you wanted to have hit? And I think the interesting thing here is the question of if you'd raise less money and gotten less diluted, even though it's a more modest exit, the founder could have made more money. And so I think that's an interesting learning from media businesses in general, which is if you think that the end exit isn't going to be that big, you might want to think about raising less money in the early days to build it up so that even a more modest exit turns out to be a great win for you as a founder and founding team.

(21:03) Jeremy Au:

Yeah. And I think it's a good reminder that, I remember when that time it was hot, it was hard to build startup media publications, and then even during 2020, and 2021, everyone was stuck at home. So there's also a big rush towards creator companies as well. But at some level, a lot of the credit economy companies from my perspective end up in my head, kind of like defaulting back to a similar business model and similar outcomes, spread as the digital media space. So, I've had friends build the juggernaut, right? Have an MBA, YC backed, covering the South Asian diaspora in terms of the news. That was something that was YC-backed. So that's on one side of it.

But also I think you see a lot of create economy startups where they're trying to build individual brands and so forth. But I think at some levels, the economic and monetization is quite similar, which is, that we want to get more eyeballs. It gives us advertisers. We can create some sub-products. As a result, we can create some private-label brands, so that the monetization model looks very similar.

(21:56) Shiyan Koh:

Yeah, I think you can build great individual businesses in media. And I think if you layer on events, then you can build scale businesses, but it's like that period of audience accumulation that takes a while before you can really monetize it. And so the question is are you going to take your dilution early to try to get there? Or do you have some more organic way of getting there? And really can you monetize it along the way? Which is sort of like an interesting equation to deal with. But I think there are niche audiences that monetize really well. And so finding your niche we have a portfolio company, personal portfolio company that just takes industry verticals and helps them to launch podcasts, but not just podcasts, communities, and even has been able to launch software for these communities.

So it's really interesting in that hey, it's so niche that you can monetize them well because you know exactly what they want and people who want to reach this niche community that has high purchasing power is able to come to you and you can charge premium on the ads or the sponsorship or the podcast slots or whatever. But even more interesting than that, I think, is that this ability to then say, Hey, we've heard a need from this community and we can actually sell you software that solves a business problem for you. So you turn something from a media business into a SaaS business, where it's like a hybrid type of revenue stream. I think that's been super fascinating to watch.

(23:09) Jeremy Au:

Yeah, I think if there's a lot of opportunities, everyone's trying to create that one extra. I think if people are trying to create a digital business, they're creating the abstraction layer atop. And the question is, how differentiated that is,. Obviously, we have, Overcast. fm, I think is a great example, million dollar business from the fees they're getting is a pretty much a one man business. So I think that's a great outcome for him. We also see companies like Blueprint right by Christopher Fong, he's a zoogler. He's building a community management and launching app, right? He's targeting alumni groups.

I'm an angel investor So I think it's been interesting to see folks try to create that I think this is actually quite a tricky. Space the underlying space also there's a bit of a power law going on in the entertainment industry slash creator economy and actually creates this interesting dynamic where it's not, you need a broad middle class to create a good abstraction layer and not every vertical consumption has that. Whereas if you end up in a power law dynamic. You end up creating this concierge or talent management agency because you want to hook on to the top of that spike from my perspective, which is not an easy realization.

On that note, I'd love to summarize the three big takeaways I got from the conversation. First of all, I think it was fun to discuss the Tech in Asia acquisition. So we talked about evaluation, we talked about the revenue, we talked about their growth. And so I thought it was interesting to hear about tech news landscape.

The second thing that we did a deep dive on was also like what were the other news that we saw in the entertainment and consumption industry. So we talked about Audible, we talked about Spotify, we talked about Joe Rogan we talked about Acquired FM, we talked about All In Podcast. So I think it was a good industry overview about what we're seeing in the market trends that's out there and also what it means in terms of the business model and how founders should be thinking about building the business. Lastly, I think we talked little bit about the fragmentation of that landscape as well, how new consumption channels and platforms are generating new approaches to building in the business. So we talked about one man businesses. We talk about dilution pathways. We talk about exit outcomes as a result. So I thought that was interesting to discuss. On that note, thank you so much, Shiyan, for your time. See you next time!

(25:04) Shiyan Koh:

Yeah, see you back in Singapore. Bye!