When learning all about how Lifestyle Asia came into being and grew into the recognised online platform for luxurious lifestyle it is today one can only nod in approval to how true their tagline ‘Pioneering the online luxury space’ is.
Hearing their story, told by co-founder and Singapore-based Richard Nilsson, also gives perspective on the incredible internet and digital media development since then, when luxury brands, as in one example, still stuck to the position that they “would never go online”, when the three Swedes started out.
This business case also describes the sort of challenges, opportunities and many pitfalls when building a business in Asia; in this case the establishing of company with regional operations within media B2C consumer marketing.
This September LifestyleAsia.com, after months of work on a makeover, launched its redesigned, much sleeker and very stylish website. This also coincides with celebrating ten years in business for the Swedish trio who have steadfastly navigated takeover offers, constant cash flow difficulties, growing without major investors, bad advice, and the consequences of believing in themselves – and in others.
Richard today describes their concept as Asia’s premier online luxury and lifestyle magazine with a focus on curating original content in both old and new luxury. It’s for mobile savvy individuals whom seek out the latest trends an information with a particular interest in luxury – watches, jewellery, cars, fashion, wine & dine, travel, beauty and events across Asia’s lifestyle destinations.
Stureplan, Stockholm as template
But we have to go back in time to October 2005, eleven years ago, and Stockholm, Sweden, where this media firm within upscale lifestyle has its origins. There, the trio of young inner city Swedes, Christopher Lindvall and Sebastian Svensson in addition to Richard had already grown tired of the duck pond (satirical comparison of an all-too-small country and its elite to a pond of quacking ducks), the inner circle of faces that are always the same and conversations that are quite superficial.
But Stockholm also gave some inspiration for the adventure to come, in the form of the website and magazine stureplan.se (among others) and the trio’s common interest in lifestyle and luxury in general.
“We used to patronize the clubs and were interested in fashion and all that and followed those web sites.”
“We were running around, picking up chicks, and used to sit on the weekends and follow up on the previous night’s events but also talk about how tired we were about life around Stureplan and about what we could do; perhaps start something somewhere else, and felt it would be fun to explore the world.”
Coincidentally, Christopher had a friend over in Hong Kong who had enticed him with what a fantastic market there was over in the Far East and that as Asia’s New York Hong Kong lacked a good platform for English readers about what one can do, shopping, where to travel in the region, clubs etc.
Settling down in Hong Kong
After contemplating this idea the trio decided to visit Hong Kong for the first time on a discovery trip.
“We walked around there in t-shirts in December, feeling free, in what seemed like a really cool city and thought it was fantastic, with palm trees and all. There was a buzz, very hectic and people everywhere. You had ten Louis Vuitton boutiques, and so many nightclubs and restaurants. And you could walk into 7 Eleven at 3 am and buy a bottle of vodka,” recalls Richard.
“We met Christopher’s friend and people within nightlife and fashion, hotels etc. and presented our idea of a digital lifestyle magazine. And the response from those we met – partly from within the sector and people in the bar who seemed to be in the know (wearing the right type of clothes, was knowledgeable) was so good that in February 2006 we moved to Hong Kong!”
They came there with no business plan and a few screen dumps a friend working at one of the Stockholm-based websites had provided them with as a favour. And so, without a website, they set out building the boat and trying to sell their concept.
After being fooled on paying way too expensive rent for a really shabby apartment they got assistance to find a better, however unfurnished one, that they equipped with three mattresses, minimal work desks, a phone line each – and a fax machine.
They had to send media kits to potential customers via fax. Nobody answered anyway and email was out of the question back then.
Also, still being very early days in Hong Kong, it turned out to be very difficult to get customers to spend advertising on online banners.
“Only those that could sell something via clicks did it, but it was very difficult with the luxury brands – where we had planned to make money.”
Bite the bullet
Then it was the small matter of building the website, where the Swedes’ naivety was put test. Their Hong Kong friend had recommended a company in India as the right guys for the job: this company was the “most professional he had ever met through his other daily job”.
“We said O.K. We had gathered some money but had very small resources and kept our spending very low. That website effort cost us SEK 200 000 which we paid in instalments. It was expensive back then, and very few could build sites. Today when we build a state-of-the-art site we might pay SEK 300 000 and then get a fantastic website. The problem was what we never got a final product that we could launch. We felt that this might not work.”
Even though their Hong Kong contact persisted that it would all materialise at the end it didn’t. With the launch planned for July 2006 only three weeks away the Indians confessed – and demanded more money to continue.
The Swedes then had to bite the bullet and find another solution – which was to replicate a site from Sweden for their own brand Lifestyle, at a cost of another SEK 100 000.
They had no choice than to hold the launch event without a website, for which they had managed to get Svedka Vodka, Sony Ericsson, Lufthansa and the Swedish clothing company J. Lindeberg (who dressed them up to look proper).
“We had managed to convince one of the coolest nightclubs to give us their Friday for free for our important launch. A Filipino working at Disney who took us under his wings, had made sure to put us in contact with and invited what was supposedly the coolest people in Hong Kong.”
“None of the customers complained that there was no website; few understood anyway, as it was so new then. And to get an online connection in the nightclub was a challenge. So the development has been incredible. And looking back at the fact we were sending faxes to request meetings… if you say that to people today…!”
State of the art website
In contrast, Richard describes the new 2016 website as state-of-the art, were things have come a long way: “we made an entirely new site and added completely new banner formats to turn our advertisers really excited.”
“We are first in Asia with many new things. And every time we have launched a new site it’s been like that. Even newspapers here are far behind on user friendliness and how one should present articles. Step one is to continue making a much more smartphone friendly website, as most consumers will primarily be using larger smart phones. We have about 50 per cent today on desktops/laptops, so still quite high, but mobile will gradually increase to up to 80 per cent and desktop users will turn very low,” he comments and concludes that it is incredibly important that the website works seamlessly on all different devices and browsers.
They are also advancing in terms of marketing and e-commerce: “We have a completely new fashion spread, a ‘look book’ they call it, where we believe that a lot of the shopping will happen onwards. We will partner with e-commerce companies where we function as a shop window and a drop-shipping model for e-commerce where they manage the delivery of product and we only take commission. We will do the same with restaurant bookings etc. So the plan is really that Lifestyle will be a one-stop shop with the vision that everything you can read about on Lifestyle Asia should be able to be purchased via a click.”
They will also continue improving their content, as the alpha and omega to get the right readers, plus expanding to new markets.
But rewind to 2006, where the adventure started for real when they bumped into a Swedish “investment underdog”, Anders Lönnqvist.
They strived on, had a variety of customers, such as energy drinks, produced a Hong Kong version of a Swedish print magazine, and meanwhile Mr Lönnqvist needed some concierge sort of assistance from the Lifestyle Swedes. He also got curious about their business, asked for a business plan (which did not exist but they now came up with one), and it paid off. In 2007 their first 1 million Hong Kong dollars was landed, and with Servisen Investment Management as their first investor they could set up a real office, employ a writer etc.
Meanwhile, they realised they needed to focus and drop the many side projects that were coming in for good.
Also, they had many website issues, but luckily managed to get an old friend within IT from Sweden to come over, who also fell in love with Hong Kong, and started building a much better website.
As V.I.Ps on the dining and nightclub scene the Swedes could for that reason be mistaken for being spoiled brats who had arrived from Sweden enjoying the good life with daddy’s money, which was exactly what people within the Swedish Chamber of Commerce in Hong Kong, that they had joined, believed.
“Fooling around and going to clubs, yes we did that too and we probably gave such an impression, but the J. Lindeberg suites etc. we had been given for free to wear, and all the tables at the clubs were all barter deals, while in reality we took out about SEK 3000 a month in salary and lived sparsely together. But what was good with that was that we learned the value of money.”
They were also running out of money again and went to their investors. Meanwhile, the owners of prominent print media group contacted them, being interested in buying up Lifestyle and having the Swedes facilitating their new online concept.
“They had released a new magazine, and somehow found our images online from their event and said that this was what they must do to within digital.”
What then followed was that the Swedes started negotiations without the knowledge of their existing main investors.
“We were young and naïve and thought we knew everything, though we clearly didn’t.”
The deal was ruined when they brought along their surprise last-minute adviser, a banker, asking for HK 36 million, when they had already negotiated for the take-over sum to be HK 20 million.
“This was recognition that we were on the right path, that this might eventually take off in Asia, even though we felt that Asia and Hong Kong that are in the forefront when it comes to Asia embracing trends from the west, might never work anyway. It has always been at the back of our minds that we might never be able to convince the luxury brands, as it has been so incredibly challenging to convince them.”
Their main investor scolded them for their secret negotiations – after all this was his expertise, buying and growing and selling companies!
Hong Kong remains a problem
Lifestyle then got another HK four million dollars from their investors and decided to expand out of their problems.
“We had not really landed Hong Kong financially, and aimed to expand in Singapore, believing that everything that works in Hong Kong must also work in Singapore, and there was a big brother syndrome. This is before the casinos and what you are seeing in Singapore today.”
Richard moved to Singapore to take up the helm and before long they had opened up also in Thailand – with the trio now in three different cities.
“The problem was that the three musketeers were now spread out and we had not really established Hong Kong. And the saying is: you can never expand yourself out of existing problems or a market that does not work. But we believed in economy of scale and other things.”
Sure as fate the global recession then struck towards the end of 2008.
“We were lucky then we had collected the new investment, and we have always been very careful, almost stupidly careful. So instead of staking fully, we have used the funds sparsely in order to survive a little longer. And that is just pushing the problems ahead of you. But we couldn’t really go for it either as there were no advertisers back then,” Richard evaluates.
Meanwhile, they had also taken some more bad advice. Their new investor in Singapore, who had bought shares from their existing investors, and who facilitated setting up Lifestyle there, advised them a supposedly “perfect partner” also for Thailand.
“Young and stupid we travelled up to meet this person who turned out to be a real con man who had bluffed around in Asia. But there was not much online assisting any due diligence back then. He became a co-owner with 45 per cent in the Thai company.”
In the end the Swedes, when confronting their new co-owner and receiving threats from him, decided that the only solution was to buy him out.
The overall situation made them decide to all move back to Hong Kong, get rid of staff and drive the markets remotely as much as possible.
But having found the love of his life in Singapore, Rickard was soon back there, though with a ban on spending money.
“I manged to build up Singapore from 2009 to where we are today, and things got better and better and we turned a profit in 2010 and also increased revenue with 200 per cent so we grew exponentially and the market started to come back, with the fashion company Burberry as customer.”
Some Northern European brands, such as Burberry being from the U.K. where there were more IT culture, understood the value of the online world better and had started early with e-commerce. (Today 60 per cent of their customers are the luxury fashion brands.)
Since then it has been something of a rollercoaster ride for Lifestyle, with 2011 down, up again in 2012, but still with liquidity problem: “It’s a very difficult business to be in here. There are no ways to get customers to pay, no collection companies enforcing payment. We’ve had a lot of hassle, going to the pawnshop with watches at occasions in order to be able to pay our staff salaries. We have done all sorts of things.”
In the past four years they have earned money and Richard anticipates that for 2016 there will be some dividend for their shareholders.
More luxury and style
Only in the last three years the market has really turned ripe for Lifestyle and since then they began rebranding themselves to be more luxury and less lifestyle in 2013, going for Swatch group (owner of Omega, Blancpain, Breguet, Calvin Klein), Chanel and Louis Vitton and those type of customers.
“And when you want to aim for those and seeing how much they spend on print magazines, and reaching very few readers, sooner or later they will wake up and move advertising from glossy print to online and that is where we have to capitalise on our first mover advantage.”
Since then a lot more effort has gone into own content, and especially ‘style’, produced by own style editors that were recruited in 2015 to take things further in this direction by producing own fashion spreads etc.
“We’ve had to produce much more content within this segment so brands feel that Lifestyle is a product they must be in as they cover our segment but also that they have the right readers; those who are luxury customers.”
“It has been an interesting journey. We expanded to Kuala Lumpur in 2011 and ran it from Singapore. And that went quite well as we had no costs. We had some freelance writer and I went up by bus doing sales and did business development.”
In hindsight he thinks they should never have established local companies in Malaysia and Thailand referring to high costs to set up and run the operations there, including lots of red tape.
“Now we are looking at Indonesia and will then go for a completely different model; with licensing and working with partners instead.”
Anticipating new owners
“All those having luxury print magazines have approached, wanting to buy us, but it has been on the wrong terms. But maybe we will not be independent forever. It took ten years to build a good company – that’s what it takes, they say.”
And Richard feels that they have not landed yet; still there are many things that can be done to extend the journey.
“There is incredible potential. When I meet the customers many know us within the industry. But there is a lot more we could do.”
He still frequently meets people who have never heard of Lifestyle Asia.
“Then I feel disappointment. It’s a failure when someone who has been here relatively long and who seems to like what we write about are not familiar with us. But when we tell people within our business sector that we have spent 10 years and USD 1 million only and taken it to where it is today they say: ‘Wow, fantastic!’”