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Building a billion dollar business from scratch—in Singapore

Zafar Anjum | June 9, 2015
This is the story of Derek Goh, Executive Chairman and CEO, Serial System—a poor Singaporean boy from a street hawker family who built a billion dollar company

"After a year, I told my wife that I wanted to concentrate on my trading business and do Serial System Marketing," he says. The trading business frequently required him to fly to Taiwan, Korea and the U.S..

Becoming an electronics distributor

Initially, suppliers would not give distribution rights to OMO (one man operations) so he found people within the same industry and got them to be his part-time salespersons. He scouted two people for this purpose.

"When you're small, you talk to a 'small' supplier," he says. "If you succeed, they will give point of reference to bigger suppliers. From there, business can start to grow."

He courted computer manufacturer Compaq for 1.5 years. Compaq doubted Serial System's capability, afraid that it would close down and be unable to deliver orders. "After much persuasion, they started giving me some models. I made sure I delivered good service. Slowly, they started giving me more models."

To grow his business in the region, he imported electronics from Taiwan. He flew there to make contacts and developed joint ventures and slowly expanded his company.

I ask: is there a secret to making a billion dollar company? "Foresight, strategy and hard work are the basics," he says, matter-of-factly. "Service and quality are also important - these are what makes you stand out from other established companies."

"You have to build a relationship with the R&D people. Only then will the procurement and purchase happen," he says.

"Big companies will have sourcing. This means that before an overseas product comes to Singapore to be "produced" here, they want to find a cheaper source. So I have to work with the sourcing people. Then I supply whatever they need for testing. Once the price is qualified, the purchasing department will have no choice but to buy it from me."

"Product knowledge is also important," he says.

Going Public

Derek was mostly running the company as a one-man show, which was hard on him.

"I had never thought of doing an IPO," he says. "At that time, our turnover was over S$100 million."

Nicky Tan of Price Waterhouse Coopers advised him to restructure the company due to a conflict of interest. He could not run it as a one-man show if he wanted to take it to the IPO stage.

At that time, his company was growing at a compound growth rate of 80%, similar to one of his competitors, which raised many concerns from the Singapore Exchange. The IPO process was delayed for two years, as Derek had to address the various concerns.

Finally, in April 1997, the company was listed on the Singapore Stock Exchange - just before the financial crisis in October.

 

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