From left to right: Manwoo Joo, COO, Jackie Cheng, Co-founder & Chairman , Jeff Kuo, Co-founder & CEO, Reiny Song, Co-founder & CTO
Source: Gogolook
Have you ever received a call from a telemarketer or a scammer? Have you ever received a call from a number you didn’t recognize and wonder if you should pick it up or not? About one in two people in Taiwan use Whoscall, a caller ID app developed by Gogolook. Whoscall provides service not only in Taiwan, but also in Japan, South Korea, Hong Kong, Thailand, Brazil, and Malaysia. It has reached over 80 million downloads globally and owns a database of over 1.6bn phone numbers, the largest in East Asia. Although the products developed by Gogolook are popular, just like many start-ups or internet companies, Gogolook once lacked a feasible business model to sustainably generate revenue. This troubled the team for many years. In addition, after Naver’s acquisition, the three founders saw their roles change from owner-operators to professional managers. During those three years, the founding team still led the company in day-to-day operations, but it increasingly became clear to them, that in order to continue to expand their innovative business beyond the foundation that they had built to that point, it would be necessary to make a very difficult decision regarding the company’s capital structure. In a figurative sense, they were about to take Robert Frost’s road less traveled.
Before our interview began, Jeff Kuo, CEO and Co-Founder of Gogolook, and I were talking about Palantir, a company that listed on the NYSE at the end of September this year, with a current market cap of over US$ 50 billion. Palantir employs big data and AI technology to help the government and enterprises detect fraud, and fight crimes and terrorism. Jeff shares the following thoughts with me, “When Gogolook was actively exploring possible business models a few years ago, Palantir was one of the companies we benchmarked ourselves against. Palantir and Gogolook have a lot in common. We both specialize in AI and big data analysis, focus on fraud prevention, and cooperate closely with the government and financial institutions."
Gogolook was founded in 2012, by three friends who got to know one another during their student days. In 2013, the company was acquired by the Korean Internet giant Naver. In 2015, Gogolook acquired Call Defender, the Hong Kong caller ID app, thereby accelerating its expansion into the global market. 2016 was the year I met the three Gogolook founders, Jeff, Jackie, and Reiny. It was also the year when Whoscall first began to construct their commercial business model. In general, after a startup is acquired, the founding team often leaves the company within a few years. However, the Gogolook team decided to do things a little differently than the founders of most acquired start-ups; and they would tell you that has made all the difference.
Should We Give Up the Rock Solid Foundation We Built?
Jeff recalls, "We had just started the process of commercializing our business in 2016. Although we knew that Whoscall had accumulated a vast database, we didn't exactly know what to do with it at that moment. We felt the timing was right for us to make some kind of move, but were we willing to give up the rock solid foundation we had already built? The three of us had discussed the possibility of leaving Gogolook before, and our conclusion had always been that we would want to start our own business if we did leave. We discussed a lot of ideas for new businesses, but inevitably found the ideas we liked best all centered on the database owned by Gogolook. With such a good foundation, we wanted to continue to innovate, to protect more people, and to amplify our influence. At that particular moment, we figured that what we did was worth doing for a lifetime." Jeff smiles and continues, "so we decided to come back to you (QIC) to explore our options."
After restructuring Gogolook’s shareholder structure through a series of transactions over the following two years, the founding team regained control of Gogolook with the assistance of institutional investors in Taiwan; and set its sights on an IPO as the common goal. “We are very lucky,” said Jeff, with the emotion evident in his voice. "We are truly grateful for all the assistance we have received along the way, from our existing and new shareholders, QIC and many, many others. Our Korean COO was originally appointed by the Korean parent company, but he chose to join Gogolook, and moved to Taiwan together with his family. Although I am back to about the same level of cash liquidity that I had when I started this business, I really feel fulfilled!"
A Better Foundation for Accelerated Growth
Although they are still running the same business as before, the mentality of the founders actually significantly changed due to their re-investment in the business; and it became the starting point of a virtuous circle. Jeff explains, "Since we were burning our own money, we started asking ourselves questions like, ‘Are certain overseas business trips really necessary?’ or ‘Is there an alternative way to accomplish the same objective?’ As for our marketing budget, we tried our best to find ways to lower costs and achieve a better outcome. As a result, we achieved breakeven in just a few quarters after regaining control of the company. We were once entrepreneurs who talked about our dreams, but now we have taken the first step towards becoming pragmatic business leaders. As we have accumulated more experience, we’ve begun to pay more attention to keeping costs under control and maximizing cash flow.”
Attention to costs is only one small step.
"I have a product design background. My focus had always been on how to make the best products and on whether or not the users are happy. So, I found myself consistently leaning too far towards the product side,” Jeff confesses. “As the company grew, we needed to take on new responsibilities in addition to our previously defined roles. We also had to push ourselves to think harder about how to better use our time in the best interests of Gogolook. For example, we must pay great attention to cost-effectiveness. And, in addition to offering good products, we also need to consider the needs of employees, partners, and shareholders. Therefore, we continually review our progress towards a comprehensive set of KPIs. We came to these realizations gradually, and now we see that we can only build a bigger business and help more people when we aim for and move towards the right targets.”
Jeff continues, “I am also thankful to Naver for helping Gogolook nurture a culture of best practices when the company was still small. The two most important things we learned from Naver were process management and adherence to high standards. When we first began working with Naver, I felt that their decision-making process was too slow, but later I gradually discovered that process-based management practices and adherence to high standards are the key to scaling up. SOPs are necessary to take a company from 1 to 100, especially when one expands internationally. At that time, we were moving from 0 to 1, so we didn’t understand. Now, that we are moving from 1 to 100, we find that we have a very precious foundation indeed. So, we have reorganized our internal team structure to help better execute and follow SOPs. For example, we hold one-on-one meetings with employees every month to enhance two-way communication and speed up our achievement of key KPIs. An added benefit is that employee satisfaction and retention rates have increased.”
“So, when management sets the right targets, then pursues them with better processes and greater efficiency, it is much easier to find the right business models and target markets. Our focus has always been to use ‘trust’ as our core value in creating fraud protection products for various applications. Having achieved success in fraud protection in telecommunications, the lessons we learned in doing so are helping us to extend our capabilities to new areas. Gogolook’s aim is to build a comprehensive anti-fraud solution. To do so, we are focused on the following goals: enhancing our Fintech capabilities, expanding into overseas markets and developing social media/communications software capabilities.
Leveraging Open Banking to Become a Fintech Innovator
The key features of Gogolook's Whoscall app are filtering unknown calls and protecting users from telephone scams. At first glance, it would seem that this business has nothing to do with Fintech. So, one might wonder why Gogolook would participate in the Fintech industry and where its competitive advantage lies. Jeff explains, "When we first started to explore potential business models, we tried many different projects. We even made a hardware product, Whoscall Landline. In these experiments, certain projects performed significantly better than others. The experience that we accumulated in pursuing these projects allow me to confidently say that we have finally found our proprietary area of focus, which is to help people solve the problems of "trust". Whoscall removes the trust issues when users receive calls from strangers. This is why fintech is such a suitable sector for us. The risk of fraud exists any time someone wires money, completes a transaction, makes a payment, or borrows money. In other words, trust issues are always involved when a financial transaction is made. Our expertise in AI technology and our ownership of a vast anti-fraud database makes us particularly good at solving these types of problems. It is not surprising then, that Gogolook proved to be adept at developing fintech-related solutions.”
The finance industry is broad with many sub-segments, so one might ask, “How does Gogolook allocate its resources?”
Jeff explains, “Fraud is a serious problem in the loan industry. Many people get scammed when applying for a loan. In addition, many blue-collar workers are paid in cash, and therefore don’t have banking records. Known as ‘Credit Invisibles’ to the banking industry, banks don’t have enough information to determine their credit scores, and thus avoid lending to them. To address this issue, we launched the anti-fraud loan comparison platform “Roo” in September this year. Our aim is to establish a safe and trustworthy platform to help people find the best financial solution for their specific needs. Gogolook utilizes its anti-fraud database and AI technology to provide banks with information about credit invisibles such as whether an applicant’s phone number has been reported as fraudulent, their consumer preferences based on ad data, whether they are frequently blocked, etc. This is done within the scope of data sharing authorized by the user. The data is used as an alternative data source for banks to evaluate credit risk, and it helps to achieve the vision of ‘Financial Inclusion.’ Our current business model is relatively simple. The platform enables banks to solicit loans to potential clients, then income from successfully approved loans is shared by the bank and Gogolook. Another favorable tailwind for our business is the rising popularity and deregulation of open banking. We now have an opportunity to extend the use of our platform to credit card applications, insurance purchases or retail investing. Eventually we may become a full-service financial solutions platform.”
Building a Global Brand
Gogolook targeted the global market from day one, making Whoscall available for download globally right from the very beginning. Gogolook did not initially view Japan as a primary target, as the market requires a high degree of localization in terms of product offering. Additionally, Japan is a sizeable market, requiring significant dedication of resources to penetrate. However, scam calls have become a more serious problem for Japan in recent years. Since October, there has been a large increase in the volume of fraudulent calls from overseas targeting Japan, raising concern amongst citizens and the government. Jeff explains, "Two years ago, we began doing more research on the Japanese market due to the increasing frequency of scam calls. Scam calls and scam SMS increased significantly this year around the world, including Japan, due to COVID-19. We are confident that we will be able to provide a superior anti-fraud solution to the people of Japan. We recently began an official collaboration with the Fukuoka City government, and have chosen Fukuoka City as the site of our first office in Japan.”
Southeast Asia is another market that Gogolook is keeping a close eye on. “Download trends for Whoscall are encouraging in several countries given that we have not spent much on marketing. We will continue to do market testing on a limited basis, and keep track of the performance. In many countries, the number of people who own a mobile phone is actually higher than those who own a bank account. Therefore, it is also likely that we will enter these markets directly from the Fintech front. We see a lot of opportunities in Southeast Asia but we have limited resources. So, we will move forward in this market one careful step at a time," Jeff adds.
Fact-Checking Chatbot Joins Gogolook’s Anti-Fraud Alliance
Fake news has become an increasingly serious problem in Taiwan due to the ease of disseminating information on the internet. This year, the fact-checking chatbot ‘’Auntie Meiyu’’, which has been ‘friended’ by more than 300,000 people in Taiwan, joined Gogolook’s anti-fraud alliance, taking Gogolook's goal of building a comprehensive anti-fraud solution one step further. It will also allow Auntie Meiyu to upgrade its services by leveraging Gogolook's technology. Gogolook plans to bring Auntie Meiyu to the world stage by building a chatbot with local customization through cooperation with local fact-checking organizations. Jeff says, "There are many new forms of fraud at the moment. Many suspicious messages and their senders lurk within communications apps. We hope that our collaboration with "Auntie Meiyu" will allow us to protect more people."
Jeff further explains Gogolook’s multi-product strategy, "There are many alternative ways to contact others instead of making a phone call, such as using LINE, Facebook Messenger, or Whatsapp. In addition, the cost of communicating through the internet is lower than that of a placing a phone call. We have also been monitoring the extent to which mobile phone calls are being gradually replaced by communications apps. Based on our internal data, the reduction in call volume in recent years is mainly centered on the number of calls between mutual acquaintances – that is, calls to and from contacts who are already in the cellphone users’ contact list. Calls with couriers or customer services representatives, however, are still irreplaceable. Therefore, Whoscall will continue to be a valuable tool in creating ‘trust’ for phone calls between strangers. Nonetheless, we are taking proactive measures. “Auntie Meiyu” allows us to go beyond mobile phone calls and enter the realm of communication apps.’
Building Barriers to Entry Via Sustained Growth and Innovation
At the end of our interview, we discuss the keys to Gogolook’s success going forward and how to successfully build a moat. Jeff shares his thoughts, “Our strong team of nearly 80 people, mostly software engineers and AI experts, is an important moat. This pandemic has brought many talented workers with international backgrounds back to Taiwan, allowing us to hire people with skill levels that we may not have had the opportunity to hire in the past. At the same time, if we are to retain these new hires, we must provide sufficient opportunity for them to utilize their breadth of knowledge and global experience.” Jeff thinks for a while and adds, “Looking at it from another perspective, when we first started our business, we heard that Google and/or Facebook may soon develop their own caller ID apps. There were times when we were very worried that the company might go out of business in the blink of an eye. But keep in mind that we have been working diligently for more than eight years so far. Our app has accumulated more than 80 million downloads; and with 1.6 billion phone numbers, we own the largest phone number database in East Asia. As a result, we were able to launch new products this year that are very different from our core caller ID app. Therefore, I think as long as we continue to grow and innovate, continuously accumulate data to increase our database advantage, offer excellent products and user experiences, and provide great opportunities for our employees to perform, we will have built our best moat."
If you would like to arrange a meeting with Gogolook’s CEO&Co-Founder, Jeff, please contact yvonnehuang@qtumic.com