Today we sat down with Sopheakmonkol Sok, the co-founder and CEO of Codingate and the Cambodian Young Entrepreneur Smart Technology Award 2016 and Forbes 30 under 30 Asia 2017, ASEAN Founder of Year 2017, ASEAN-India Young Leader of Year 2018 and Global Startup Founder of Year 2019.
Codingate is an IT and Digital Transformation consultancy based in Phnom Penh, Cambodia, that develops web and mobile applications to help businesses enhance their business processes.
Mäd & Codingate have been collaborating together in the past year on launching, on behalf of EFG/RMA Groups, an innovative new food-delivery platform called Hungry®, that promises always-free super-fast delivery, and the ability to order from multiple trusted brands simultaneously.
Mäd: So tell us, how did you get started? What was the idea behind Codingate?
Sopheakmonkol: It’s quite an interesting story, and it starts in 2013 when I came back to Cambodia from the Czech Republic, where I was studying IT management, and I had this vision that I could help Cambodia by spreading the use of technology. I started by lecturing at Economy and Finance Institute and working at a social enterprise, and in June 2013 I met a group of talented young students that were studying IT...without having laptops!
They simply could not afford the necessary equipment, but they still managed to learn a lot, and they even received scholarships to PNC.
So, I started to discuss how we could solve this issue and actually get laptops for these students, and so we started to ask around if any friends, colleagues, and companies needed IT services and how we could work together. Within 3 to 4 months, we managed to get the 11 laptops required, and these talent students also had paying jobs.
This worked well for everyone because it meant that as soon as we started Codingate, we already had an impressive portfolio of work and happy customers. For a Professional Services Firm, I cannot stress enough the importance of a record of high quality work...as this is the main way that you will win new business.
Mäd: Yes, that hugely important, and something that we’ve noticed as well. It’s not enough to just do the work, but having high quality case studies is crucial. So, in some ways, Codingate was not really started immediately as a typical idea of starting a business and making money? You saw a problem that others had, and found a way to solve it and then ended up with a growing company!
Sopheakmonkol: Yes, we didn’t start Codingate with the idea of making money, but more to create a place where we could help Cambodia and contribute to the community by employing young people and giving them meaningful work, as well as helping companies find high-quality IT services to help them focus on their business. What’s amazing is that we still have three employees that have been with us right from the start, and their growth as individuals and professionals has been amazing.
Mäd: Starting a business is never easy, what were your main challenges when you first started?
Sopheakmonkol: Yes, it’s not easy! The main issues is that you know one or two things that you’re good at, but running a business is much more than that, and so you have to tackle things that you do not have experience with. In my case, that was sales, marketing, and finance.
So, I had to learn a significant amount, while making mistakes along the way, and then eventually hire good people in all the key functional areas to ensure that the company could grow. So yes, having to be just one person juggling multiple roles was for sure one of the most difficult things in getting started, and the second most difficult thing was managing cash-flow on a month by month basis.
Each time you hire someone new or you spend some money in a business, you’re making a commitment that you must try to uphold. Ensuring that we always had enough projects and thus enough cash to fund operations and have some breathing room was difficult at the start, but that is something that all businesses struggle with in their first few years as they find their footing.
The good businesses overcome this and flourish, and unfortunately many businesses never make it out of this situation and fail.
Mäd: Yes, managing cash-flow is absolutely vital for a startup, and it’s something that we stress that management should keep track of on a regular and consistent basis. We even wrote an entire insight piece of the importance of keeping your eye on free cash flow.
Free Cash Flow (FCF) is one of the most important metrics that management should keep track of on a regular and consistent basis.
Sopheakmonkol: This said, it’s been a highly enjoyable journey, mostly due to the passion of the team with regards to technology, even when there were 30 people in one small office!
Mäd: Looking back on your journey, what advice would you give to others who are thinking of starting their own business?
Sopheakmonkol: Whenever you're starting something new, you'll face plenty of obstacles, and the most important thing is that you stay with your core values, that you know what you stand for and you don't ever trade it off.
You should also think of money and profit as a side-effect of what you're doing rather than a primary motivating factor, as otherwise it tends to shift your mental calculation and decision making in a strange way.
The other key thing to remember is that a business is just a collection of people, and so as you grow and hire others it is important to focus on working as a team and not to have an "I am a boss" attitude with your team members. Encourage discussion, debate, and a healthy level of disagreement to ensure that the best ideas surface to the top.
Finally, it's important to enjoy what you have and what you are doing at any given time. You'll spend a lot of time at work to build something meaningful, and so it's important that, overall, this is time spent in a positive manner.
There are also lots of advantages to starting small, that you do not realize until you've grown bigger. Decisions are made more quickly, team members know each other better, and communication is much easier and less formal.
Mäd: There is always a great interest in the daily routine of people who have had a degree of success, because there is an idea there that if you have the same habits of people that have already accomplished something, you too can accomplish something important as well. What's your typical day like?
Sopheakmonkol: In the first three years, I was at the office pretty much at 7am every day, and that was required because there was a lot to do and I was wearing multiple hats. After that initial stage, I could relax somewhat and now I come in at sometime before 9am.
I don't really have a fixed daily routine, but I actually split my time across the entire month.
Mäd: That's really interesting! We haven't heard of people splitting their time across the month before. Often people split their week according to certain functional areas, such as focussing on marketing on Mondays, finance on Tuesdays, and so on. What's the logic behind your monthly approach?
Sopheakmonkol: Essentially, I split the first two weeks of the month to focus purely on customers, marketing, and sales, and then the last two weeks of each month are spent on quality control, checking in on projects, and general ensuring that we are doing quality work.
The reason why I split my time this way is that these two ways of working are very different from each other, and I find that I cannot easily jump between the two. The marketing and sales role requires far more meetings and discussions and high-level thinking, while the later part of the month is all about executional details and organization.
The other key thing, is that I have noticed that in Cambodia it is much easier to close deals in the first half of the month than in the second half, and so this has now become my standard way of working.
Mäd: That's really unique – so what type of marketing activities do you get involved in during those first two weeks of each month?
Sopheakmonkol: Strangely enough, we actually don't do any direct marketing for Codingate, with the exception of giving and joining workshops as well as conferences.
Mäd: So it's really word of mouth that drives your sales engine?
Sopheakmonkol: For sure, there's nothing better than having a good referral from an existing client, it makes selling so much easier.
Mäd: Obviously Cambodia is a country that is growing extremely fast. What are some key changes that you've noticed in regards to your work in the last five years?
Sopheakmonkol: The key thing is that we have started to work with a significantly broader variety of business across lots of different sectors, including medical, construction, and retail. We still have our core which is B2B, eCommerce and Logistics.
Additionally, we've noticed that eLearning has taken off a lot, especially this year with COVID-19. EduTech was actually my research at university, and when I came back to Cambodia in 2013 most people said that it wasn't something that was required, and now they have really changed their mind as this global pandemic has forced everyone to adapt to distance learning.
The other key thing is that the design in Cambodia has really evolved. In 2013 you would mostly see the same three colors Red, White, Blue, representing the Cambodian flag, across most businesses. In 2016 there started to be a change, and Pi Pay was one company that boldly differentiated itself with a bright pink and from then on many other businesses started to change their approach.
We built a brand and mobile application that revolutionized the payments industry in a frontier economy. In the first year they processed $200m+, gained 250,000+ users, and ranked #7 on the App Store.
Mäd: Yes, this was a very interesting project and was something quite unique at the time!
Sopheakmonkol: The other big difference is that customers are now far more sophisticated and demanding than they were five years ago, but they are also far more open to different business models like on-demand and subscription services.
For instance, in 2018 there was a big trend of lots of multi-vendor market places such as CanaMall and Maio Mall. They all failed, but valuable lessons were learnt, especially with regards that this type of business is not only about having the right technology, you must also have the right user experience, customer service, and products that people actually love.
Now we have things like Nham24, FoodPanda, and HungryApp that are completely changing the delivery and eCommerce landscape. Nham24, interestingly, started out in food and then branched out to sell lots of other things.
Mäd: Tell us more about what makes Codingate unique in the market.
Sopheakmonkol: One of the most important points about Codingate is that we are a mature company. We've been around for seven years in the market, and so we are not like plenty of other IT companies that come and go in the space of a couple of years.
We've had a strong role in building up the technology ecosystem in Cambodia, and we work in an open partnership with clients and other companies (like Mäd!), so we know what we are good at, and what is outside of our core competency.
We believe that it is better to have several experts come together for a project, but lots of other IT companies struggle to work well with third parties, because they often have a conflict of interest, lack of trust, and no ability to collaborate well with others.
The other key factor is speed. Companies here do not have two or three years to complete a digital transformation, they need to get it done within 6-12 months. At Codingate, we focus one ensuring swift digital transformations.
A few other key points:
This is not just from me, but the entire leadership team. We honestly really care about our people and we constantly look for ways to empower them.
We work in a very collaborative way, we love sharing knowledge between ourselves, and we have a really strong knowledge domain in the IT industry here.
We never give up on a project. Of course things happen, but we always see things to a successful conclusion.
Mäd: Digital Transformation is the buzzword that is on everyones lips these days. How are you helping customers with this?
Sopheakmonkol: Yes, this is huge, but often misunderstood. Digital transformation is not only about technology, it’s about the mindset of the leadership, the organization culture of taking on new innovation. Digital transformation is about bringing innovation to the workplaces and the new process and business models that are enabled by technology.
And sometimes, unfortunately, the people who are there for 5-10 years are not the right people for the organization. They are not open for change. One of the biggest struggles is to work with these types of people, and having a mature mindset about innovation and being open to change.
Mäd: At Mäd, almost all of our employees are in their 20s, is that the same at Codingate?
Sopheakmonkol: Cambodia have 4 generation right now:
Before Pol Pot
During Pol Pot
After Pol Pot
The older generation are the ones that own most of the business, so you cannot skip them and you need to learn to communicate with them to ensure things can get done.
At Codingate you are open to the older generation for management, but not with an old mindset! It’s always interesting to see how different generations work together. It’s kind of magical! Sometimes in a business all the technology is in place, but nothing changes, even if we bring in new young people. Sometimes bringing in older people that still have a fresh mindset works better as they can speak to senior management more effectively. This takes time - overall, we're a young company.
Mäd: We understand that Codingate recently moved to a new office space, do you have a particular philosophy about what a good working space should be like?
Sopheakmonkol: Oh, for sure! The key thing that we wanted to bring back with our office move was the spirit of a small startup, like in the early days of Codingate. This means having a place that feel like home, but is a good place to work... but not just for work! We want to create more of a community space where we can invite people to come in for interesting conversations.
This is extremely important because nobody can work in isolation right now. For instance, right now there is a trend in Cambodia of transition of family businesses that are handing over to the younger generation, and how do we deal with this change? The young generation have the new mindset and the education, but not the data within the business itself. Reality hits! They need to understand with the existing leadership structure, or sometimes completely restructure. And they also need to understand how Codingate can help them restructure proper IT management, and that requires conversation!
This is normally a gap that people forget about. It’s not all about technology, sometimes there are a lot of things behind the scene that will impact… often the existing management is one of the biggest problems.
Mäd: Yes... At Mäd we call this “people collecting paychecks”. For effective business transformation, either these people change their ways or they need to go.
Mäd: We see on your website that apart from offering IT services to other businesses, you have also set up some in-house ventures. We've done something similar at Mäd by developing our project management system Bloo, and we'd love to hear your thoughts on how building a product within an existing service company structure works.
Sopheakmonkol: Yes, we've built quite a few products, including Weddingate, which helps couples manage their weddings and also Sokhakrom which is a digital health platform.
These haven't "taken off" yet, but they are great examples of what we are able to achieve.
Mäd: Do you find that there is an inherent tension between building a product within a service business, because if you have a resource working on an in-house product they cannot be billed out to a client? We had a similar struggle with Bloo, having several false starts, until we completely split out the product into a different company with a separate and dedicated product team that could not be "poached" for client projects.
Sopheakmonkol: Yes, absolutely. The capital investment and business models are quite literally the reverse. A product takes 2-3 years of work and investment before it takes off, but then once it does it can really scale. A service business has far less upfront investment and, in some ways, it is the end client that takes the risk.
We're currently working on a hybrid model where we build reusable IP (Intellectual Property) that we build into our service model, and can dramatically speed up the development of popular types of businesses and requirements.
Mäd: At the foundation of any PSF (Professional Service Firm) are the people that work there. How have you found hiring and managing technology talent in Cambodia?
Sopheakmonkol: I fully agree with the statement, great quality people are the most important thing, and it's a balancing act between getting the right number of seniors and juniors. There are obviously cons to having too many juniors, but it is not also possible to have the entire company full of senior resources from both an economic perspective, but also from the fact that not all work is suitable for seniors, and sometimes juniors actually do some types of work faster!
The key thing is to hire people that have a growth mindset instead of a fixed mindset. People who are hungry for more experiences and are constantly learning more and up-skilling themselves.
One issue I am seeing now is that there seems to be a wage bubble in regards to wages in the technology sector, and I think this will have a negative impact in Cambodia because businesses of all shapes and sizes need technology, but if it is too expensive, then they cannot afford it.
This is mostly due to lots of funded startups and companies in the financial sector that can afford to pay 2x-3x the standard wages. However, normally the non-tangible benefits are not really there. You're just expected to turn up to work, sit at your desk, do what you're told, and do ask too many questions.
For younger professionals in their 20s, it's a mistake to join a company with a culture like this, but there is often family pressure to make sure that they maximize their short term earnings.
In a PSF, you learn at a rate that's 3x-5x faster than a standard business, because you learn a lot about how many different industries function, as well as new innovative solutions, different technology, and you work on a lot more projects.
Mäd: That's so true. We think that it's important for young professionals to maximize learning, because that investment will then pay back in multiple later on in their career. In your 30s, the salaries will always increase significantly anyway, but you are perhaps too old by then to drastically improve your soft skills.
Sopheakmonkol: Yes for sure, it's difficult to unlearn bad habits after you are 30, and soft-skills are often an under looked point of development early on in a career.
Mäd: So what's next for Codingate? You were invested in by ISI GROUP, and you've been in business for seven years. What do you want to achieve next?
Sopheakmonkol: We want to scale our impact, empower more people, and transform more businesses. We don't want to just provide one tool for a business, but to help them grow and scale and build a digital foundation that will last for years to come.
We are also very keen on helping other businesses explore new and innovative business models that leverage technology and great new avenues for growth.
Mäd: Are you thinking at all of expanding outside of Cambodia?
Sopheakmonkol: That is something that is possible, but there is a lot of growth here in Cambodia. The more talent here is better.
Mäd: Final question - if you hadn't fallen in love with technology at an early age, what would you have done?
Sopheakmonkol: Haha, good question! I grew up in Siem Reap, which is a very busy tourist destination due to Angkor Wat, so probably I would have liked to become a General Manager of a hotel.