BEYOND UNICORNS: BUILDING SUSTAINABLE GROWTH | ORIGIN

Thank you to our audience for joining us today. Welcome to our next session titled 'Beyond Unicorns: Building Sustainable Growth'. My name is Simon and I'm a reporter from D Street Asia. I'll be moderating this conversation today with these three gentlemen. To discuss unicorns and sustainable growth, we have with us Siru from Carousell, Eric from Carsome, and Reef from GoGoX. I'll allow them to briefly introduce themselves and their companies.

Thanks for having me here. Like Sur, I also do secondhand, but more focused on used cars. Carsome is the largest used car e-commerce platform in Southeast Asia. We started 9 years ago, and throughout the last 9 years, we ventured out from helping people to sell their cars to buying a car, and now we also venture into providing financing, insurance, after-sales, so it's a very full-fledged ecosystem. In that process, what we have done so far is we digitalized the entire buying and selling and even car ownership for anyone who wants to own a car in Southeast Asia, which essentially provides them a more elevated experience compared to what they've been getting traditionally, which is so much of a headache. I myself was one of the victims of that and decided with my co-founder to start that. We have life in Malaysia, Indonesia, Thailand, Singapore, we are now also going to be in Philippines, and hopefully we can explore markets in East Asia in the future as well.

My name is Reef, one of the co-founders of GoGoX. We previously called GoGoVan if more people know about it. I'm in between them; I started now is 11 years, not 12, not 9, but 11. We got listed in Hong Kong main board two years ago. Our company does is a logistic platform matching the supplies and demand. Basically if you're individuals, SME, enterprise, if you have logistic need, we are platform to match with adequate demands, ranging from any individual couriers all the way to make containers. We are operating in five regions, including 300 cities in China, we are in Singapore, Korea, Vietnam, and also India. So I think we can share more during the session.

Thank you. So let's jump right in. I'm very curious about your respective growth stories. All three of you have had very different journeys with your companies post joining the billion dollar club. Can you talk a little bit about how that and also how you've evolved your company strategies along the way? Can start with you, Siru.

Amazing. What about Carsome, Eric?

I think the whole journey for us is we spend 9 years building the business. Every other year as I describe it is almost like you're graduating from the previous grade. The challenge comes in many different forms. At the very beginning when we build a business, one of the things that we set in terms of growth is we want to be entering a meaningful market that has a huge market size, which naturally cars become one of it. We want to be able to solve a problem that is very dear to our customers so that we can capture an audience that says, 'Hey, this is what I need.' That creates that intention for us to really seek for a solution from our own experience when it comes to trading cars. Once we set upon how do we design that service at the product level, how would we use tech and data to innovate the whole process of selling and buying, the executions just came rather quick because myself and my co-founder, we see eye to eye in the sense that we want to build this into a really meaningful business. It has to be huge, it has to be something that every year as we look at the growth, we feel proud of, especially we're doing something that is unheard of prior to us starting the business. That sort of attracted a lot more talents to the business. The way we see the business is if we could help sell one person's car to another demand, then we should be able to sell this into thousands, tens of thousands, or even hundreds of thousands. How do we do that? We have to be able to build towards catering for that scale. We kind of map backwards, understanding the infrastructure that you need, the funding, the team, the marketing approach, and being able to solve the consumer and your clientele as well because as a business we don't just serve a consumer, we also have a huge pool of used car dealer demand who are procuring inventory from us. Naturally the growth became very consistent towards the kind of story that we want to set upon. Gradually from one doing selling and buying, we also see growth in providing financing opportunity, providing solutions on insurance, after-sales. A lot of this just come very much like tie in as a natural value proposition. I think it's very important when looking back at the growth story that we always start with how our customers are thinking, what are we solving. If you are able to identify that, the next thing to do is how do you scale that up in a really meaningful way. It helps you to accelerate, to go a lot faster. A reflection of that is the end result. From the first month I remember we sold 30 cars in that month, fast forward to now 9 years later, we're selling about 15,000 cars a month. You look at the scale of that growth. If you do not able to keep up with how to do that on an incremental basis, it would just stay stagnant or decline, which is what we've been always anticipating every other year how do we do that in the next year and so on.

What about you, Reef? How has GoGoX evolved its company strategy along the way?

Back to like 11 years ago, the reason we have this company is actually solving our own problems. Before starting GoGoVan or GoGoX, me and other two co-founders were doing another business basically deliver lunch boxes. It's empty lunch boxes without any food in it, with advertisement, and then send it to a restaurant for free. So we have to take the lunch boxes literally from the manufacturer and then send it to restaurant. At that time, as free kids just graduate from university like one or two years, I don't think we can afford any delivery guys or hire something. So at the end, in Hong Kong, it's a special environment that you have all these call centers. You give them a phone call, they can line you up with a van driver to help you to do delivery. At that time, there's a bunch of different call centers in Hong Kong and each call center maybe have a connection maybe from 10 to the biggest one maybe 800 to 1,000. But the problem is every time you call them, you won't get an answer when will you have a van or if you ever have a van come in your way to help you to do delivery. Unfortunately, because the counterparties we were dealing with were restaurant owners or restaurants which have a very strict peak hour, during the lunch hour you don't do delivery to them, during the dinner hour you don't do delivery, so it's a very tight delivery window in between. Every time if we deliver something late or even we cannot deliver, we got blame and even you give them for free they don't want it. So we kept saving different drivers in our WhatsApp numbers, we create different groups. 11 years ago you can only store like 10 numbers in a group, so we have tons of different groups with a lot of drivers inside. Whenever we have an order, we would leverage these groups and blast them with the order. Whoever is available, they come. But then we have another problem: because once we blast the message to all the groups, a lot of drivers reply, a lot of drivers come, but we only have one order to deliver. Then we have a problem dealing with all those angry drivers even though they don't do deliveries, we still have to pay them. So we had to figure out how to solve that problem. We create a platform, put every driver inside, then we solve our problems. One of the funny use cases is because one of our co-founders' father, he's a contractor, so he actually called those call centers every day because he has to arrange different deliveries for his stocks and for his workers. At the end, we become his call center because we have the most drivers. He's calling all the different call centers, he just call us and we can actually find him a van. So at the end, why don't we create a platform so that we can grow the platform and then become everybody: if you have logistic needs, you just go to a platform and then you just sort it out by yourself and get all the notifications, you don't have to worry if somebody's going to call you or not. Our purpose is typical Hong Kong parents: if you work, you need to give some money to your parents. So our aim is basically have a system sitting aside running itself generating income while as free kids we can just play PS5 or whatever, at that time PS3, we can still play and generate enough income to give our parents so that we can do our own thing. That was the best wishes at the very beginning. But actually after running it, it's very different from what we thought. It's a lot of phone calls, you have to deal with different drivers, some clients you have to help them a lot in order to complete the transaction. So we grow all the way. For this 11 years, we experienced a lot of difficulties. We always say that we almost broke three times. I think one of the most close call is that we just raised for four months after, like one day just a month before Christmas, our financial controller come to us and say, 'Okay, after the paycheck next month, basically your company will go bankrupt.' So it's a lot of different challenges that we face during this, but at the end it's a fun journey and very lucky we got listed. I think it starts another chapter. It's not about listing that you can do actually now; we have much more work to do and have to manage the expectation much more seriously because when public, everybody's expectation is different. So it's another challenging phase.

Very interesting thoughts from a unicorn that's gone public. Maybe we can switch gears here to a market related question. With the global macroeconomic uncertainties, how are you viewing the markets you operate in? I know all of you operate in Southeast Asia for example. Is that shining as a bright spot and what are the opportunities and challenges in those markets? Reef, maybe you can continue and start.

First of all, I think Asia is still a growing market. Look at different continents. When you look at Europe, when you look at US, those continents may be very well developed, the growth rate is not as sexy or as fast as Asia. Asia is tons of different countries grouping together, and each country definitely have their own difficulties. I can share for example when we entered China in 2015, there were more than 200 competitors inside. You won't see that in Singapore or any other countries. There's 200 competitors basically each cities have their one or two own apps, and combined together is 200 apps together, and you have fierce competition. Basically after two years, the 200 companies went all the way down to only three survivors. So you see different challenges. As we operate in different countries in Asia, there's a lot of localization that you need to do because each country has their own ways of doing things. For example, logistic is basically at a high level you can say it's just shipping one to another place, A to B, but actually there's a lot of process involved, a lot of different vehicle types involved. We originally call GoGo because in Hong Kong or we start with Hong Kong, cargo van is the most common transportation mode in terms of logistic. But if we go to Singapore, it's not about van only, it's about fleets or even different motorcycle. In South Korea, actually 80% of fleet are motorcycles and they are very familiar with A to B instant delivery with the motorcycles. In Vietnam, it's a different story. They can leverage motorcycle and tricycle even you have a fridge or something like this TV, it can be shipped by a motorcycle. You don't see it in Hong Kong, you don't see in Singapore, it's impossible. So it's a lot of learnings in different country, a lot of challenges in how you adapt the company to actually fit in the local culture so that you can grow your company in different perspective.

Siru, I know you mentioned in the beginning that expanding your presence within Southeast Asia is almost like opening a new startup on its own because the region is so fragmented. Can you tell us a little bit more about that, what you are seeing in terms of opportunities and challenges?

Do you agree with that, Eric? Large market?

Totally agree with the two of them. I do think that net-net it's positive. Whatever happening in the world today, it's not that positive to Southeast Asia economy, but it already showcased from the last two years how the GDP growth has been respectively or on positive note. That really comes down to looking at more localization type of problems. For example, in most of the countries that we're operating, economy wise, used car market wise, financing everything else is doing well in most cases. But there are isolated cases like in Thailand because of the interest rate high, so NPL just showed up quite a bit for hire purchase. Last year is 80% growth in the repossession process cost compared with all the years before. This kind of numbers is unheard of, and it's really much down to how do you navigate between these problems. For us, our approval rate to the banks when the people are submitting their applications is up to like 70-80% where the norm is like 40-50%. So you need to be able to design a way where your team is able to react to problems like that. So that's the first part where the economy itself in Southeast Asia even from a region perspective to a country perspective is very self-sustained, and that kind of attracts some of the new opportunities from investors and companies. We see a lot more Chinese EV brands nowadays eagerly going into Southeast Asia because of the opportunity that we are seeing. Number two, I think the capital market has become so much more affected, which also makes it a lot more expensive for companies like startups raising funding or even raising private credit. So it's not a very favorable environment. I think Southeast Asia, you see that happening right now to a lot of companies. I think you will see a lot more consolidations happening for companies not really reacting quick enough to that. We sort of endorse what Reef just mentioned about competition because I do think that competition has kind of died down quite a bit in most of the countries we're in. We had a lot of copycat versions at the very beginning, first maybe three, four, five years. Every now and then you see someone trying to do it whether it's a sophisticated one or just a wannabe, but it's there. But you don't really see that kind of environment anymore. It's very much focused on how do we continue to do our best and continue to bring the numbers up in a way that is good for us. Especially right now we are profitable already, that's the very key cornerstone for us to reach. It further endorsed the way we've been doing it is different from a lot of others.

I have one last sort of food for thought question to wrap us up. Maybe Eric you can continue. If you were speaking to yourself 10 plus years ago as a young startup founder when you first started out, what is one piece of advice you would give yourself and are there changes you would make if you were to start over?

That advice I remind myself every other year. Like I mentioned earlier, it's almost like going into a new syllabus every year. Now it's the ninth year, tenth year when I do the business again, I feel that a lot of the things that I've learned before helps, but it's going to be new things that I need to learn to really embrace the next challenge that I face. So it's the same thing: you just need to keep up the startup mentality. I feel that's very important. I see we are doing that because we are the only one that actually wearing our own company shirt and we are all on the stage right now. This is the true startup mentality where no matter how big you grow, we are like 1,000, 2,000 people, similar size probably more, we also have 2,000, 3,000 people. Technically it's not a startup, but I feel that's very important, a fundamental mindset fix yourself in keeping that up.

What about for GoGoX?

There's a lot of mistakes that we made. I don't think it's worse. I think the biggest mistake at the very beginning is don't talk to anyone unless you sign NDA because we got copied right away. Spend wisely. One of the stories is that we start the company with five co-founders with only $2,000 Hong Kong dollars. Although at the end, the bank that I check because we are listed we have to fact check all the story, I found that the bank is only $116,000 inside. But I think it's how we spend the money wisely. At very beginning, one of my co-founders shared properly out. If you have a choice, we don't spend like $5,000 buying a printer while we only have like $16,000 in the bank. So there's typical this is really young self making some mistakes in doing business. But at the end of the day, it's just a part of the journey. We make mistake and then we grow again, and then we make another one and then we grow stronger and bigger. So that's the whole fun journey all the way.

Wonderful. What about for Carousell?

Wonderful, and we're right on time. Thank you so much. Please join me in applauding our wonderful panelists. Thank you so much for joining. Thank you guys. Thank you.