Just of some the things we talked about with the Mangrove Capital Partners CEO and Co-Founder
This is the first time Luxembourg-based CEO and Co-Founder of Mangrove Capital Partners Mark Tluszcz visited Indonesia, and he was excited.
“My sense is that the market is ready … We have invested in a lot in India, for instance. And when I compared the two markets, I think Indonesia is more ready than India,” he opens the conversation with e27 on Friday.
“Yesterday I took a taxi and my taxi driver was chatting on the phone with someone, whether it’s using LINE or Whatsapp. I’ve never had that experience in India. I really got the sense that the basic customers here are really more tech-savvy than they are in India … People use the screen more often here than in India. People said that Indonesia is behind India by 10 years, and that is wrong,” he further explains.
Apart from his works at Mangrove Capital Partners, Tluszcz also sits on the boards of FreedomPop, JobToday, and Wix (NASDAQ: WIX). He has been named in Forbes’ top 100 global technology investors, with his most well-known achievements including turning a US$2 million investment in Skype to US$200 million when the company was sold to ebay in 2005.
In Indonesia itself, Mangrove Capital Partners had invested in budget hotel booking platform Tinggal.
“My reason for investing [in a company] is that I want to solve the problems of the world … If I can describe the problem to you in a way that you’ll understand it, then it’s a worthy proposition. If I am just selling cheap sh*t, that’s not a good idea,” he says.
Did he find any of such idea during his visit? While Tluszcz hinted about meeting some entrepreneurs that fits his criteria, he definitely can tell you about the ideas that are not.
“If you look at the tech investments in Indonesia today, a lot of money is flowing into two areas: e-commerce, which is usually bad idea except for the customers. Better deals, cheaper price. But you can’t build a better business with that … Because you know what? Amazon is coming … Every e-commerce startup here is in trouble unless you can come up with an edge,” he explains.
“The other one is ride-sharing. This is the dumbest business in the world. Clearly there is a need, but unfortunately there are too many actors. You cannot be successful here unless you have gazillion amount of money … to compete between Uber, Grab, Go-Jek. For customers, it’s a good thing because they have options. But five years from now, we’ll be back to the old system, which is a monopoly, the taxi services. One of these three will become the new taxi service,” he adds.
Tluszcz then gave an example of a German startup which pitched to him some time ago. The company is a men-focussed fashion subscription platform founded by two women. While it may sound absurd at first glance, Tluszcz was finally convinced by the idea when the founders explained the two main problems the business aims to solve: That men are bad dressers, and that they are lazy shoppers.
“Any company that wants to succeed, wherever you are in the world, you need to solve a problem. And the problem [cannot be solved] by 10 per cent cheaper T-shirt, or cheaper rides from here to the airport. That’s okay, but is that a real issue you’re solving?” he questions.
Fake unicorns and where to find them
Tluszcz has a strong opinion on what he referred as “fake unicorn startups.”
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“The definition of a unicorn, in tech at least, is a company that is valued at a billion dollar or more. Generally speaking, in the world, there are a couple of hundreds of those companies. My thesis for the last year and a half has been: Many of those are fake because they will never get sold for the same price,” he states.
“It’s a bit like celebrating that I am qualified for the World Cup final, before playing the final,” he stresses.
He also speaks about how unicorn startups did not make it to IPO because they would not be able to stand the public scrutiny placed upon their financial condition.
“Business is for profit, that’s why they were created. Unless you can show that, then you’re in trouble,” Tluszcz says.
He gave an example of Skyscanner’s recent acquisition by Ctrip. While the company was sold for US$1.7 billion, the investors did not make any money as it was also the same price that the company has raised in the previous rounds. Tluszcz believed that it was partly because Skyscanner’s performance had slowed down.
“For tech companies, the minute you slow down, is the minute you get punished,” he stresses.
But as an investor, Tluszcz is fully aware that venture capital business is all about facing failures on a daily basis, while aiming to succeed one day.
“People have to understand that venture capital is about that: Venture. Risking stuff. When I risk, I failed more than a succeed, but hopefully when I succeed, I succeed so big that everything else looks big,” he says.
“I sold Skype to ebay in 2005 … And every day, for eight years, my children are asking me, ‘Daddy. Have you only done Skype? What else do you have?’ … But luckily Wix came along, so I get to prove that it was a bit of luck, but also a bit of smart. Because I’ve done it several times,” he concludes.
Message in a bottle
Tluszcz divided his time between Luxembourg and Barcelona. The investor grew up with an international upbringing, having lived in Africa, the US, and Europe throughout his life.
He considers himself as “African by heart”, and sees the opportunity to see the world at such a young age as “the greatest gift” his parents ever gave him.
Looking at Tluszcz’s biography, one might be astonished of all the things that he listed as his passions, which range from Africa, cars, football, to wine.
Apart from investing and running a business in the field of technology, together with his wife, he also runs a cava (Spanish wine) business in Spain as a fun project.
How does running a cava business impact the way he assesses a potential investment? It all comes down to the founders themselves.
“[My hobbies and side projects] inspired me to look for great people. Because I’ve met some great vineyards, people who are so passionate about what they put into the bottle. Their entire life is all about it, from when you open the bottle [until you drink it],” he elaborates.
“And that passion is what you need to succeed in tech … You are going to be doing this for the next five to ten years of your life. I need to make sure that you are passionate about this. And if you’re just selling T-shirts for 10 per cent cheaper, I’m not sure you’re passionate,” he closes.
Image Credit: Mark Tluszcz
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