On Aug 25, a former CTO named Julian Ee blogged about how he got screwed over by a Malaysian startup that delivers cooking gas named GrabGas — which had also recently secured funding from Digi. The post got out of control and the blog post went viral.
Here’s an overview of the situation (to cut a long story short):
Ee claimed he was joined GrabGas with the promise of being an equal to the Co-founding team, saying they invited him to be “one of the shareholders”. But Ee’s claims GrabGas was using a the word ‘shareholder’ to mislead and bait him into joining the startup.
He also questioned why GrabGas did not invite him as an early employee and offered him an incentive equity package, instead of saying ‘shareholders’ and generally being vague about everything.
Julian finally left after a negotiation which he thought was unfair. GrabGas had offered him:
10 per cent at two years vest + RM1800 salary – 2-3 per cent = RM30k for tech alone (the market rate is around RM40k-RM60k)
Also Read: Why I did not cover the GrabGas controversy
e27 has reached out to three startup key players in Malaysia, Curry Khoo (Penang-based startup connector), TC Wu (ex-CTO at recomN), and Victor Chua (Investment Director at Gobi Partners), to comment on the issue.
Please note that the opinions stated are solely personal, and don’t represent the thoughts of GrabGas, Ee or Digi.
Curry Khoo: Young startup founders need to communicate better, and key players must be careful when vetting for startups!
According to Khoo, such cases are pretty common in Malaysia. He lamented that young entrepreneurs hardly go into details these days, especially those in their 20s.
“They like to assume a lot and think that everyone is a mind reader. Not to mention being blinded with the glamour of the startup industry often portrayed by tech media and TV shows,” said Khoo, who is currently busy preparing for the upcoming Second Startup bootcamp.
Based on his experience, Khoo also questioned the ways of young startup founders when dealing with their daily tasks,
“They lack documentation and record. Even something as simple as keeping a record in GoogleDoc and sharing it out, you hardly see the page go beyond third page on the Doc file. Moreover, they like to use Whatsapp and FB messages to discuss important things (i.e. salary, equity share) instead of meeting in person!”
Khoo advised all startup founders to discuss everything openly in the beginning. “Host a face-to-face meeting regularly, and bring out the requirement and term from time to time. Manage expectations accordingly.”
He went on to say that startups are lean and there is no standard or refer point when it comes to share percentage and salary, which makes it even crucial to have an open discussion to avoid misunderstanding.
The Penang-based startup connector repeatedly stressed the importance of integrity, credibility and track record, “Young entrepreneurs these days are always rushing to decision and conclusion. They did not do their research properly or talk to enough people when hiring or finding partners. Sometimes I even see in FB that they’d publicly announce that they’re looking for a co-founder! I mean, seriously? Finding a co-founder is like looking for a wife!”
In Khoo’s view, industry players like government agencies, organisations, and accelerators need to be careful when vetting for startups. He also mentioned that over-glorification of the startups could lead to their downfall.
“In Malaysia we have MDEC, MaGIC and Cradle, that are meant to help local startups and entrepreneurs, and in Julian’s case, he was supposed to get help or advice from the government agencies, so did he? I didn’t see him mention any of the government agency in his post. So, what happened?”
Khoo also mentioned several parties that play a huge role in the Malaysian startup scene:
“Government agencies should do their due diligence before promoting and empowering startup/founder to be on the stage or represent the country,” he said.
“Did they do a background check on the startups, the founders, the co-founders, their technical skills, readiness, attitude etc.? I also think that sometimes they tend to over-glorify the startups/founders. While the intention is good, it can be damaging.
“Corporations and accelerators like 1337, Digi, WTF, IV, and Maybank also need to check out the startups that will be part of their programme. If you take in the wrong startups, the founders could misuse the opportunity for their own personal agenda, like how we see it happen to GrabGas. Most accelerators will tell you that one of the main reasons startups fail is because of internal (team) issue.
“Meanwhile, organisations like Startup Weekend, TEDx, Drinkentrepreneur, and Startup Malaysia must be really careful about who they appoint as their representative, the host or the person that was taken in as speakers and mentors.
“We have seen at times where the speakers or mentors don’t really have track record, just talk cock only. Don’t do anything for the sake of doing.”
Commenting further on the GrabGas issue, Khoo thought what Sean and Jeson (GrabGas co-founders) did was wrong and unethical. “It’s sad to say these days we hardly see youths walk the talk. Judging from their conversation, it was obviously misleading.
“What they offer Julian was not fair. They are taking advantage on Julian and they think he will take the bait since he got no other option, but they miscalculate that Julian will reject the deal and blog about it.
“To be honest, at this moment, I don’t see any other way for GrabGas to fix the situation. It’s too late already.
“I think this is a good lesson for everyone to learn. If we look at the learning point, it’s better for everyone at GrabGas to face the situation now rather than much later when the company’s more established. With this news out, everyone in the startup scene will look at things in another perspective. We need to tell everyone that running a startup is NOT as wonderful as we think it is,” he concluded.
TC Wu: This is a teaching moment for everyone. Get contracts and agreements signed. Have everything clearly outlined.
For TC Wu, the ex-CTO at recommended services platform RecomN, he did not consider what GrabGas did as ‘baiting’.
“I don’t know if that is considered baiting. After all, they could have meant exactly what they meant, exactly and only a ‘shareholder’.
“We will never know if there was an intention to mislead, although how they represented themselves to Petron and investors borders on fraud and misrepresentation. Julian might have read more into it than what the GrabGas co-founders had intended, or they used that wording specifically to mislead Julian into signing up. However I think this is a teaching moment for everyone. Get contracts and agreements signed. Have everything clearly outlined,” said Wu, who’s currently working on something new.
In Wu’s view, the offer by GrabGas was pittance. “Even the RM60,000 (US$14,812) valuation of the tech is undervalued. The amount of work Julian did is easily RM200,000 (US$49,374).
“I think Grabgas needs to make it right for Julian. I am pretty sure Digi is also going to be on their case, especially with the allegation of misrepresentation by Julian on the GrabGas team’s numbers.”
Victor Chua: Layout your cost and benefits. Be clear with what you are getting yourself into.
Victor Chua, Investment Director at Gobi Partners, thought it was hard to tell whether the issue was an act to mislead or not.
“First of all, we have only heard one side of the story. So none of the outsiders, us, really know what happened. Call me politically correct, but I do think that we are not able to tell whether it’s an act to mislead or not.
“What I can say is that when you are on the sell side, there are times where you might have unintentionally over promised or over sell something to the receiving end. Hence, it is very important for any team to lay out the compensation scheme, roles and responsibilities at the very beginning of a new venture,” he said.
“A business is a business – unless you are running a non-profit – a business is really about how much you get out of it by putting in certain amount of resources/investment. To make sure you are working on the right idea, it is always good to run some guestimates on how much you are getting in return for your sacrifice.”
When it comes to whether or not the GrabGas offer is fair, Chua replied “Fair is very subjective. With any deal, there is a buyer and there is a seller. If the buyer willingly and consciously accepts the price offered by the seller, it is a fair deal. If the seller willingly and consciously accepts the price counter-offered by the buyer, it is a fair deal.
“So it goes back to my earlier point – layout your cost and benefits. Be clear with what you are getting yourself into. If you accept the terms after your analysis, it is a fair deal. If not, that is definitely not the deal for you. So in GrabGas’ case, there was no deal.”
Chua went on to say that it is more responsible to not drag or blame the external parties who have limited control or insights.
“There are indeed ecosystem supporters, investors and media partners in the market who are genuinely doing what they can to support the industry. They, however, are usually constrained by the public perception in how they perform their role.
“So to be fair to the parties who were dragged into the so-called fiasco, I think we should let GrabGas and the former CTO resolve it in a way where both parties can walk away satisfied. So in short, there is only that much the public can do. Probably good to stop spreading or amplifying the negativity and give them some time to figure things out. Again, we don’t really know what happened.
“But on the serious note, this incident sets as a reminder for startups to be mindful when they are selling as well as a lesson for the public that it is also never easy to sit at the other side of the table of the startups, be it investors or other industry players,” he concluded.