With all the buzz around Malaysia’s growing startup ecosystem, sometimes it’s easy to dismiss the more obscure tech startups. VPNs, which help Internet users get around local firewalls or access content anonymously, may seem dry to some, but they face the same challenges as any startup.
Hide.me, a Malaysia-based VPN firm that has been experiencing fast growth this year and last, wanted to share with e27 some of its observations on being a tech startup in its home market. We spoke to Co-founder Sebastian S.
How did hide.me get to where it is today?
The story of hide.me is quite simple and purely revolves around our concerns for Internet privacy. We realised that governments around the word were imposing more and more restrictions on Internet users taking away the independence and privacy Internet used to offer once. We knew that this would increase and someone had to do something about it.
There was no solution available which was built around sheer quality and would ensure user privacy. From the very beginning, we wanted to make a VPN which was fast. Basically, there was a perception that VPNs slow down your Internet connection and you get bombarded with advertisements. We wanted to fight this perception and we managed to come up a with a VPN which is super fast, and obviously avoiding advertisements wasn’t that big of a challenge.
We started off as hide.io in Dec 2012 but the entire team wasn’t really convinced on the .io TLD so we kept struggling to get a .me domain and by December 2012 we managed to get the hide.me domain. From the very beginning, we haven’t put in a lot of concentrated efforts into marketing ourselves because we believed if the product is good, it would just go viral.
As far as acquiring organic traffic was concerned, we were very certain that we just need to make sure that our users are satisfied with what we are offering and Google would do the rest for us and that is exactly what happened. Right now, we get massive organic traffic through Google which fuels us. 2013 was an amazing year for us, below are some numbers for your reference:
Total sessions in 2014 grew to 14,860,894 (265.97 per cent increase)
Users (UVs) in 2014 grew to 7,902,150 (153.75 per cent increase)
Pageviews in 2014 grew to 35,981,610 (334.20 per cent increase)
How has it been operating as a tech startup in Malaysia?
Malaysia is a great place to incubate your tech ideas for various reasons. However, we have been operating in Malaysia quite smoothly and that is mainly because our business is too Internet-centric and the local whereabouts don’t really influence the way we operate. Our product is relevant to any Internet user in the world and users wouldn’t be too concerned about where the company is operating from.
Considering the nature of our business, we had to make sure we are legally incorporated in a country which respects user privacy and does not make it mandatory for us to store user logs and that is something very critical to our business. Some of our competitors who are based in UK or USA have to maintain user logs because of the local legislations, and this is something which VPN users just hate.
How do you find the ecosystem for startups developing in Malaysia?
Well the ecosystem in the country is quite favourable for startups, specially given the likes of Cradle Funds and MDEC. One of the most critical factors for any startup is the availability of funds and human resource. In Malaysia, cradle solves the problem of seed/angel funding and MDEC just does the job for good talent as it allows you to bring in foreigners to work in the country with absolutely no hassle.
Although Malaysia is yet to produce a billion-dollar company, we have some really fantastic people here who are acting as mentors. Patrick Grove of Catcha group is one example; he has provided great hope to the entrepreneurs in the country.
Who are the competitors in your space?
We are in a very competitive industry as our product is quite global. A VPN is relevant to any Internet user in the world and local knowledge does not influence the product development process a lot. So we do have new VPN providers coming up every day, but the big names in the industry are privateinternetaccess.com, hidemyass.com, expressvpn.com, and hotsptoshield.com
Have you had any funding from outside investors, and are you looking to raise any currently?
We are completely self-funded as yet but now we are passively looking for good offers from investors. We believe that we have reached a phase where we have set our basis right and we are ready to take a flight and become the leader in the industry. We have everything it takes to be at the top and we think external funding could help us achieve this goal much faster.
What have been the main challenges and opportunities?
The major challenge of the entire industry is primarily the high acquisition cost because of the users not being aware of the problems and the reasons why they should be using a VPN. So there are very few people in the market who know what a VPN is and of those who know have a distorted perception of a VPN.
Opportunities have been plenty because of the above challenge I mentioned. To simplify, the market is still close to virgin and whoever does it the best wins the user. Another big opportunity is the amount of restrictions being imposed by different governments on Internet users ranging from blocking social networking sites to news content. We knew that this would continue to increase and we need to avail this opportunity.
Some background on yourself and team…
I am Sebastian the Co-founder of hide.me with extensive experience in Internet security. I have previously worked on different projects related to Internet security and privacy. Right now, we are a small team with less than 10 people and each team member has expertise in their own domain.
Our VPN is one of the best because we have emphasised a lot on technical elements of the product, which also reflects in our team structure. We have about six out of nine members who work on technical parts of the business. To manage the commercial side, we have a team of three people who look into business analytics, communications, partnerships and over all business strategy.
What have you learned as a Co-founder doing this venture?
Well, I probably experienced some challenges while growing our startup with a focus to run a profitable business and organising it. From my point of view, it’s an amazing experience seeing the continuous developments and accessing new markets with our products. It’s nothing that would have been possible some years ago, so there is no blueprint how to run the company and how to make it successful.
We did face some real issues in the beginning — specially when it came to hiring good people — because for a small company it’s very difficult to attract the best talent. Another major challenge was to define a clear roadmap for the company in the early phases because there were so many things which were new to me as an entrepreneur and the journey was quite unpredictable, which was a major hinderance in our planning and forecasting.
Of all the choices for a startup in Malaysia, why did you go with a VPN?
I think the major reason was that we thought that we were really good at Internet security and we should be using our skills to make the lives of other people much more secure on the Internet. We as a company were never inclined to do anything else and hence we never thought of getting into any other industry. In a nutshell, I would say that it’s our passion for Internet security which lead us through this industry.
What are your projections for growth this year?
This year is going be another year of growth for us. We are expecting to grow at the same pace this year as well along with the re-occurring revenue of the users who we have acquired in 2014 allowing us to grow exponentially. We have dedicated this year to ensure that we create more sustainable competitive advantages and emphasise on things which will have an impact in the longer term. This will help us to restrict competitors to just come in and take our space. Product differentiation in our industry is very, very thin.
Any final thoughts?
I think I would just like to add a bit on how we have managed to make it this big in such a short period. Our strategies simply revolve around one simple factor and that is quality and the speed we offer. We use an IKEv2 protocol which is considered to be one of the fastest in the industry and very few of our competitors have the capacity to offer this. Our users have loved our product and they have made us viral, and to reciprocate we have always ensured that our customers are always satisfied. As the number of users has kept increasing we have continuously been investing in our infrastructure to ensure optimum results.
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