Vodien internet solutions: From building websites to powering the digital back-end of business

• Main Authors: GOH, Kenneth, DULA, Christopher
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: Entrepreneurship; Entrepreneurial management; Entrepreneurial ventures; Business growth; Growth strategy; Evaluating business investments; Entrepreneurial and Small Business Operations; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/303; https://smu.sharepoint.com/sites/admin/CMP/cases/SMU-20-BATCH%20%5BPDF-Pic%5D/SMU-20-0012%20%5BVodien%5D/SMU-20-0012%20%5BVodien%5D.pdf
• Institution: Singapore Management University

The case is set in mid-2015, as Vodien Internet Solutions’ founders Alvin Poh and John Jervis Lee consider their company’s journey from a small-business serving web design and development studio to a full-fledged web hosting company, which now aspires to become the dominant player in the Asian market. Vodien began in 2002 as a business dreamed up by two enterprising university students that built its customer base by advertising online. It pivoted in 2006 to phase out time-intensive client design solutions by focusing on web hosting. Six years had passed since Vodien had become a fully realised Asia-based hosting and support company. The future of the company is tied to scaling up its operations and making the hires needed to fuel its growth – a far cry from the bootstrapped, two-man operation that it had started with. But Poh and Lee are wary of bringing more players to the game. Vodien needs the capital to expand, and they have, up to that point, run a lean business, directly re-investing profits into the company (both founders drew low salaries so that the company would have greater financial resources). As they consider their options, whatever they choose, a measurable return on investment is crucial for the good of the company. Expanding into new countries requires aggressive, experimental moves that are capital intensive. The duo could: 1) reinvest their own capital, drawing into their personal funds, 2) take on more debt as a company, 3) sell out to a private equity fund, or 4) merge with an existing web hosting company. What would be the most appropriate choice, and how would they arrive at the right decision? This case would familiarise students with the relationship between start-up growth strategy and sources of capital. Students will consider the implications of growth financing options - such as bootstrapping, debt and equity financing, and mergers - on the the start-up’s growth strategy.