Eye on CFO - Richard Tsiang, CFO Yahoo! Asia

Inside Yahoo!Æs Hong Kong offices, thereÆs no mistaking a corporate culture at work.

Dressed in the new economy uniform of slacks and a Ralph Lauren shirt, Richard Tsiang smiles when he’s asked if Yahoo! has a policy on suits. That is almost to say, he’s not allowed to wear one.

Richard Tsiang - CFO Yahoo! AsiaThe recently installed chief financial officer and head of strategy for Yahoo! Asia replies: "Yes we can. And we’re also allowed to scoot along the corridors as well on our Razors. We’re flexible because we hire good people. In fact we have a golden rule – Don’t hire bozos"

Inside Yahoo!’s Hong Kong offices, there’s no mistaking a corporate culture at work. Two custom-made purple and yellow sofas greet you as you arrive, and Tsiang reports that the office is soon to get a fussball machine – like the one Chandler and Joey have in Friends. Yahoo! staff can play on it any time they want.

So is this a workshy culture? "Not at all," says Tsiang. "The people here love what they do. We literally have to kick them out the office, turn off the airconditioning and tell them to go home."

The Australian-born and Mandarin-speaking Tsiang is an old economy guy who has successfully made the radical transition to the new economy – and has done so very quickly. Known to his friends as ‘The Abacus’ for his skill with numbers, he was hired by the Santa Clara-based Yahoo! to bring his full range of old economy skills into what is rapidly becoming the bluest chip of the dotcom world.

He carries two titles – he’s both CFO and head of strategy and reports straight into head office. The latter title probably only formalizes the role that most CFOs are increasingly taking throughout Asia.

But what’s the difference between being a CFO in an internet business and in a ‘real world’ company?

"I can’t speak for other internet companies, only for Yahoo!," he replies. "But the rate of change in the internet industry is so much faster than the real bricks and mortar world. Whether it be in terms of emerging technologies or strategic alliances, or whether it be in terms of business development opportunities. So you’ve got to be a lot more nimble, especially in emerging markets, where you’re really at the frontier trying to work out and identify killer applications. The CFO then becomes critical because he has to value those opportunities. The CFO has to come up with the pros and cons and put it in a risk matrix and measure it."

The skills that Tsiang brings to Yahoo are both extensive and diverse. He’s a former fund manager and also a former head of M&A at BTR, the old British conglomerate.

As he puts it: "Being in the investment management world I had to understand business models and know how to make money from them. It’s about putting that within a risk framework and granting a probability to the likelihood of achieving those goals. It’s also about assessing management and being able to quantify management strategy – and taking the hype out."

He continues: "From the M&A side, I understand the due processes that need to be observed. We are a US company and we’re a stickler for detail. We don’t apologize for that. As a chartered accountant I have the basic necessary financial skills. So it’s a combinations of these things and, obviously, experience."

What does he mean by experience? "Well" he says, "for example, trekking round China, getting your shoes dirty and understanding how business is done. Understanding the importance of government relations in China or how to network in the Philippines. How you fund businesses in countries with capital controls. All these types of intangible things which all add up to helping you assess viable opportunities. It’s all a function of walking the streets and meeting people. Business in Asia is as much about avoiding making costly mistakes as it is about picking winners".

Given Yahoo!’s heady expansion in Asia, Tsiang will be kept busy with M&A deals. Luckily he’s had a lot of experience in this area, and since Yahoo! is one of the few profitable internet companies in the world, it is a buyer of choice.

Buying and selling is exactly what he did in London. "At BTR I was head of M&A in London. We had 1,600 profit centres. It was a very diversified, non-focused company that needed to be cleaned up. I was charged with creating a strategy alongside the chief executive and then deciding which businesses were core and which weren’t. We then decided which businesses to divest and which to expand in. That was a great experience. I had a heavy responsibility and had to visit the businesses and see how the human interaction worked. What makes a business work? Have there been any other issues aside from market conditions? Have there been management issues, etc? So it wasn’t just top down – but bottom up too."

The Asian operation’s investment activities will be driven by Tsiang. His key concern is the creation of local language content and distribution. This will be done organically and by acquisition. Does he have a figure for how much he plans to spend?

"That’s difficult. The issue is whether we buy or build. We’re reassessing that the whole time. As such we don’t have a gauge, any predefined limit for what percentage will be acquisition and what will be build. It’ll be a combination of both and we will always be opportunistic. However, be it investments or capex, there is a strict return requirement. The slow pace of broadband development in some markets may cause us to go slower. At the end of the day we’re responsible to shareholders and we don’t want to go into markets that don’t have monetization opportunities."

He’s not keen to talk about valuations, but he admits it’s a buyer’s market right now: "It’s fair to say that a lot of the hype has been taken out of the internet sector in Asia. Yahoo! is an acquisitive company and we’re prepared to acquire anything that helps us localize, whether it is content or applications. Clearly it’s cheaper to do that now than it was before."

A large part of Tsiang’s experiences in Asia have been in China. As a fund manager he made trips through western China visiting businesses as varied as pig farms and glass factories. And nor is he a stranger to Sichuan banquets of bull’s penis. So will his acquisitions and investments be very Sino-focused?

"It’s very hard," he says. "China is a highly regulated environment. And Yahoo! is very cautious, and we won’t do anything unless we’ve complied with all the government regulations. Some people say we’re being too cautious. But there are companies – we don’t want to name names – that have gone in and procured licenses that can be revoked by a higher authority and they’ve commited capex to do this. Yahoo! would never do that. We are cautious and we don’t do bad deals."

What is his view on India? "India is a fair way behind China. Part of that’s to do with infrastructure. And the strategies will always be different. The common denominator is a huge population. The alliances we do in China may have more of a mobile phone influence than in India – because mobile penetration is much bigger in China. But you can’t transplant one strategy onto the other just because they both have large populations."

In fact, Yahoo! has just launched its Indian site. Tsiang uses that to make a point about the Yahoo! culture: "There are no egos here. There are no politics. No finger pointing. People are given a task and if they can’t do it they will call other people in to do it. We launched Yahoo! India two three months ago. That required production, engineering, marketing and senior management resources from all over the world. That was done in record time, and we’re extremely proud of that. If we were an organization that said, "This is my task, this is my function" then we would never have got Yahoo! India up as fast as we did."

His job means he has to understand the big picture, and understand Yahoo!’s technology and where it’s leading the overall strategy. But, he smiles, "That doesn’t mean I need to know how to install a mail server. I’m a finance guy after all." FA

 

 

 

PROFIT AND LOSS

NATIONALITY: Australian

EDUCATION: B.Comm., MBA, University of Melbourne

CAREER: PricewaterhouseCoopers; Roach & Co, (Merrill Lynch); BTR Plc; Allard Partners

PASTIMES: rowing, streethockey, journalism