Founder’s Corner: Paktor, and taking dating in Asia to the next level
Welcome to Founder’s Corner. Our ongoing series on our founders and startups. It’s an intimate window into the lessons they learned building their companies and creating new value in new markets.
We had a sit–down with Joseph Phua, founder and CEO of Paktor, one of Asia’s leading dating apps, to talk to him about how the Paktor story started, how it evolved, and what he sees on the horizon. The app has a strong presence in Malaysia, Singapore, and Indonesia, and is stretching out to countries like Taiwan and Japan.
4 years ago, with the internet in its infancy, online dating was anathema. It was clunky, sometimes creepy, and virtually no one was using it. In 2016, online dating is everywhere. A myriad of apps suit different dating purposes, and even chat and social media apps double as dating apps. Although there’s still a select group of people who are turned off by online dating, it’s now ubiquitous.
In Asia, the story is a bit different. There’s frontier markets, emerging markets, and developed markets all wrapped into a bundle. But one thing is clear, the rising young and single population is hungry for dating apps. And since it’s new territory for the region, it positions Paktor well. Despite all the older local Asian websites and foreign dating apps already in Asia, Paktor is a veritable first mover in the app category. Arguably, the most important category.
In 2013, Joseph got dumped
In 2013, while finishing up his MBA in Chicago, Joseph Phua, founder of Paktor, got dumped. By 2013, Tinder was only out for a year, Okcupid was still mainly US-centric, and Coffee Meets Bagel was barely on the dating scene. With his newfound singlehood, he tested them all and was excited by them. As he forecasted his destiny back to Singapore after graduating, he realized there were few options back in Asia for dating apps. It was only natural that he build his own.
By June 2013, according to Joseph, he had “gained a lot of traction”, something that kept him hopeful, considering the humble investment of $5,000 to outsource for the first version. The growth encouraged him to push into multiple markets with the team hungry for more progress.
Within the next 6 months, Paktor launched in 12 different countries. With $3 million worth of investments from friends and family, Paktor was able to expand. A year later, Paktor secured another $3 million from Vertex Ventures. The company has expanded into new markets, securing further funding in multiple rounds.
Although today Paktor must face evolved competitors and increased competition, there are many lessons to learn from Paktor’s rise and its future.
Tips from Paktor
We sat down with Joseph to dig into his insights into building Paktor to what it is today. In his storytelling, he’s optimistic about the future of Paktor and bullish yet cautious on markets still open for online dating.
Gender balances in dating apps
One of the problems that Joseph noticed when building Paktor was the dilemma of the genders. Dating apps were always lopsided. There were more men than women. So his first insight was to make it much easier for ladies to get in the platform and much harder for men to get in. The result was a game theory solution where the platform has a more balanced set of singles.
The lesson here is, when you’re building a 2-sided marketplace, make sure to balance the two sides. By balancing, the network effects are more sustainable.
Expanding your markets
When Paktor first launched, it entered 12 countries. For many in the region, their biggest question is when should they expand beyond their local market. For Joseph, it’s a matter of temperament and stability.
“I think really, one of the keys to our success is that we were lucky. When we arrived onto the scene, there were 13 other players. We got funding and we all made mistakes, but we picked the right 2 to 3 markets after securing our first market. By being strong in one market, we could fund the growth of subsequent markets.
The dilemma of being dominant versus being stable is that if you choose dominance, than it’s hard to make money. Our philosophy is that you need a pot of gold first that can fund your expansions. And it comes down to knowing when you are ready.
For us, when the uncertainty dissipates and you are not filled with fear than you can move on. The numbers give you a feel where you can manage your fear. But at the end of the day, it’s a balance between confidence versus fear.”
Today, Paktor operates in six core markets, with three of them being the backbone of the business.
Seeing clear opportunities
For some, it’s unclear where Paktor stands in a very competitive and complex market. But Joseph thinks one of the keys to being a good entrepreneur is seeing what others don’t see, and optimizing the business around those opportunities.
“What we’ve learned over the years is that this is not a winner-takes-all market. Tinder dominates many markets, but in some markets it lags behind.”
With Paktor, on the ground, and close to the users, it has many touchpoints that translate to new markets for growth. This is especially true of Japan, where Joseph says you must be even more localized.
“In Japan, we couldn’t be seen as a foreigner, and had to be localized to their population. We have to re-engineer the app so people feel that we are Japanese.”
On the success of Paktor
Joseph’s journey at Paktor has been a surprise for him and a learning journey. For Joseph, the earlier enthusiasm has turned into a careful maturity about the future. He shares his final insights on the company:
“If I had known I would have picked a different industry, because this is very hard. The thing about the dating industry, keeping people constantly engaged, what the industry needs is a breakthrough in content or models that is engaging while also being used for data.”
This may be one clue into how and why Paktor has been embarking on new models like 17Media. According to Joseph, “Dating cannot be your only market, since many apps are minimally differentiated. So you have to break out of dating somehow.”
Social Entertainment is an industry with plenty of potential for growth and mobile livestreaming is its newest frontier. While desktop livestreaming is already popular, especially in countries like China and Korea, mobile livestreaming has redefined the landscape with the proliferation of smartphones. This presents all new opportunities. Fueled by the ever growing mobile smartphone penetration around the world, mobile livestreaming has the potential to grow beyond the desktop. In the past, interaction is limited to near-real time where users can post comments on status text, photos, or videos. The level of engagement through other social media is nowhere as close as livestreaming. Livestreaming enables idols to engage directly with fans, instead of fans talking to copywriters employed by the idol.
This is why 17 Media makes sense. 17 Media became popular with teenagers sharing photos and earning monetary rewards from the number of likes they receive from users on their photos. In addition to this, 17 offers the ability to livestream directly on the smartphone. Though it was founded in 2015, 17 has dominated the Taiwanese livestreaming market. With Paktor’s recent deal to gain a controlling stake in 17, Southeast Asia will be in the headwinds for 17’s livestreaming service. Partnering with MNC Group, 17 Media has begun its Southeast Asia entry in Indonesia.
2017 promises to be a unique year for Paktor. Referring to the early days of Paktor and the new frontiers, Joseph reflects, “We likely won’t see this crazy growth again. Next year is a year where we will rediscover ourselves. Rebuilding ourselves fundamentally, taking the time to discuss, pushing to breakeven — pushing to innovate.” Indeed, livestreaming may just be the start of Paktor’s entry into expanding the dating frontiers.