Webs-TV Digital International CEO Morse Chen is a magnet for controversy.

On January 11, Webs-TV announced it had acquired Blockbuster’s Taiwan operations, the first time a “virtual” company has taken over a bricks-and-mortar business in Taiwan.

Based on appearances, it is easy to underestimate Morse Chen’sindomitable fighting will. The baby-faced 38-year-old with bright, intelligent eyes is not physically imposing and almost invariably dresses in student garb – a white shirt tucked into a pair of jeans. But he has the agility and quickness of a small wolf, having survived the worst of the Internet bubble burst, only to emerge in the past two years as a David who swallows Goliaths. In all, Chen has acquired seven companies, including GigaADSL and Yam.com, as he drives relentlessly toward his goal of building the world’s leading Chinese broadband multimedia website.

His sudden rise has jolted Taiwan’s Internet sector out of a long slumber, and symbolizes the intrepid risk-taking spirit that has begun to emerge in Taiwan’s online commercial circles. 

“His strong gambling nature allowed him to fearlessly do what he wanted and create a completely new world,” says Jason Chiang, chief executive officer of InsightXplorer Limited, an Internet market research firm. 

Surpassing PChome in Six Months?

After Webs-TV integrates GigaADSL, Yam.com and Blockbuster, the resulting combined advantages in broadband, traffic, content and distribution will leave it well positioned to vie with No. 1 Yahoo! Taiwan and No. 2 PChome for the top spot in Taiwan’s home Internet market. Serving 8.2 million users, Webs-TV also has plans to acquire Sina.com and develop Blockbuster’s online video rental business, and may also offer residential security services in partnership with its biggest shareholder, Taiwan Secom Co.

“In the next six months, we will overtake PChome,” Chen boldly predicts. “We want to be the Taiwanese Internet’s biggest opposition party.” 

Webs-TV’s rapid ascension to the top is remarkable, considering that at the beginning of 2006 it had just over 30 employees and paid-in capital of NT$80 million. What has transformed it in the space of a year into Taiwan’s biggest broadband multimedia website with over 1100 employees and NT$720 million in capital?

The poverty and hardships Chen faced in his childhood molded the relentless drive and indomitable will that so characterize him today. His parents divorced when he was five, leaving him to be raised by his grandparents. As he grew up, he was often on the edge of starvation and forced to handle whatever difficulties he faced on his own, including helping raise four younger brothers. He began working when he was in the eighth grade and dropped out of high school to work full-time. While his classmates were buried in their books studying for the college entrance exam, he was busy toiling in a Taipei pub to pay his younger brothers’ school fees.

Chen tasted the bitterness of failure early in his working life. Riding the wave of liberalization in the telecom sector, he formed a company called “Morse Signals” at the age of 24. But with paging systems quickly substituted by the cell phone, Chen’s enterprise went bust, leaving him NT$68 million in debt at the age of 27. 

At his lowest point, Chen worked alone in an empty office located in an alley off Bade Rd., at times shedding tears in the company of only a stray cat he had picked up.

“The lesson of failure was that I would never again get involved with products that have short life cycles,” Chen recalls. Once he figured that out, he became even more driven to succeed.

He once again decided to launch a new venture, taking to heart the words of Yam’s founder Chen Jen-ran: “The Internet is the poor man’s atom bomb.” Chen took another gamble, this time betting NT$5 million on Webs-TV, which had been established seven years earlier. When a panic enshrouded the industry after the Internet bubble burst, he still demanded his small staff of six to be at work on time and do morning exercises to boost morale.

“I became disciplined the hard way, because without discipline, you’re finished,” Chen firmly stresses.

Chen’s many ups and downs and eloquence enabled him to repeatedly gain financing and support from leading entrepreneurs. Webs-TV shareholders include Taiwan Secom chairman Lin Shiau-shinn, First International Computer Group chairman Dr. Ming J. Chien, and Polaris Financial Group chairman Wayne Wen-cheng Pai.

“They’re all self-made entrepreneurs, bosses who see in him a reflection of themselves when they were young,” says Webs-TV board director and long-time Chen partner Cheng Ching-chang, in explaining Chen’s success in raising capital.

For all of Chen’s success, there are also those in the industry who have their doubts. They approve of his acquisition strategy that will merge upstream and downstream players in the Internet value chain, but contend that he will face a major challenge in handling the debt and financial pressure brought on by the takeovers. Even with the financial backing of strong partners, Chen’s ability to derive income from his group of enterprises will determine how he’s judged.

Also, Chen’s persistence and discipline have been the keys to his rapid rise, but they could hinder the future management of the company.

Chen is known for his hands-on management style in which he attends to every detail, even interviewing applicants for administrative assistant openings. While that style succeeded in a company with 30 workers, it will be put to the test in a 1,100-employee corporation. His controlling nature, for example, may have been behind the decision of a number of Yam.com’s technical people to leave after Webs-TV acquired the popular Web portal. Growth can occur in the blink of an eye, but trust and management are concepts that this king of acquisitions must still master.

Translated from the Chinese by Luke Sabatier