The COVID-19 outbreak and a new round of technological and industrial revolution are profoundly reshaping the global economic structure, leading a new wave of globalization. As the tide rises and falls in these turbulent times, globalized enterprises and institutions are striving to live with crises.
Here in the BRI (Belt and Road Initiative) Finance EMBA Program at Tsinghua PBCSF, students are actively seeking new opportunities under the Belt and Road Initiative. They are explorers of the new economy, aiming at emerging markets, bravely exploring market and technological innovation, and leading enterprises to brave the storm in the post-epidemic era. They are also trendsetting in the new globalization. For this special issue, we invite Aaron Tan, Co-founder and CEO of Carro, to share his experience of bucking trends and his insights on the future of enterprise and industry development under the new trend of globalization.
Aaron Tan, Co-founder and CEO of Carro, Student of Cohort 2 in the BRI EMBA Program
Aaron Tan and his team are driving Carro at full speed. The Singapore-based online used-car trading platform completed a $360m funding round in June that took its valuation to $1bn, making it the region's latest unicorn. But in Tan's eyes, this is just the beginning; he is planning to go public in the United States in the next 1-2 years.
Carro was founded in 2015 by Tan and two of his friends from undergrad, Aditya Lesmana and Kelvin Chng. Tan positioned Carro as "the Amazon of the used car market", so he built Carro into a trading platform providing one-stop-shop services such as car sales, leasing and after-sales. Over the past six years, he has actively deployed AI technology in the whole process of automobile trading to improve user experience. In the meantime, it is expanding its Fintech services such as auto loans and insurance.
In 2020, the spread of COVID-19 and a global chip shortage led to a decrease in car production and an increase in demand for used cars. Seeing this, Tan once again seized the opportunity to focus on improving customers' no-contact service experience during the pandemic. He also quickly brought many other services unto its platform, including insurance, loans and trading transactions, with the whole process fully automated online. Carro's revenue has grown by 250% since the outbreak and Carro was named the fastest growing company in Asia by the Financial Times in early 2021.
Foresight and decisiveness may stem from Tan’s entrepreneurial DNA. At only 37, he is already a veteran entrepreneur. Tan founded his first company in his grandmother's name when he was 13, launched another venture a few years later and sold both before he was 21 as he rode the Internet start-up wave. He dropped out of junior high school and taught himself computer science, then graduated with honors at Singapore Management University and Carnegie Mellon University on a scholarship from Singapore's IMDA (Infocomm Media Development Authority). After graduation, he turned himself into a VC investor and developed his unique vision in more than ten years of venture capital experience.
We chatted with him about the present and the future. He humbly attributed his past achievements to the strength of his team. During the interview, we repeatedly saw his emphasis on "people", including clients, partners, team members as well as the classmates with whom he is studying in the BRI EMBA Program.
1. Carro was able to raise over $360 million in Series C funding this June, becoming another unicorn in Southeast Asia. The company developed rapidly in just six years. What do you think of Carro's achievements in the past few years? What do you think you did right?
Carro's main focus is on "customer experience" as well as technological breakthroughs such as big data and AI. Internal KPIs are based on customer experience. Naturally, our word of mouth is very good. So I think what we're doing right is always putting the customer experience first.
2. What is the impact of the Covid-19 pandemic on enterprises and individuals? What kind of strategic adjustments did you make to cope with the new business landscape?
In times of pandemic, most people prefer to buy cars available in store. Many manufacturers have been unable to build cars because of supply chain problems, so there is a severe shortage of cars around the world. We saw this at the beginning of last year, and saw the opportunity it brought to the used-car market. We acted more quickly to bring services unto our platform, including insurance, loans, buying and selling transactions, and automated the whole process online.
In order to help our customers solve the problem of no-contact test drive during the pandemic, we rely on AI technology and independently develop a system to be installed on the car. Reservation buyers only need to scan the code to unlock, test drive and perform other operations. We are the only auto platform in Southeast Asia that can achieve the whole process from buying a car to receiving a car without human contact. We spent 3-4 months from technology development to promotion and application.
Our revenues grew by 250% year over year and we were named the fastest growing company in Asia by the Financial Times earlier this year.
3. What do you think are the opportunities and challenges of the used car market in Southeast Asia? What competitive advantages do you think Carro has over other used car platforms such as Carsome in Malaysia and BeliMobilGue in Indonesia in expanding the market in Southeast Asia?
In Southeast Asia, the penetration rate of online used car sales is about 7%, about 8-10 times lower than in Europe and the United States, so we think there's a lot of room for growth. Another factor is that second-hand car market is already a market with stock: in Thailand and Indonesia more used cars are traded each year than new ones.
We are positioned as “the Amazon of the used car market” in Southeast Asia, which is mainly B2C. We not only deal in second-hand cars, but also have built a second-hand car transaction platform, covering the whole ecological chain, such as lending, insurance and car-housing support. In Indonesia and Thailand, the two largest markets, we are the number one in market share, 8 to 10 times higher than the next competitor.
4. Carro currently has about 2,000 employees in four countries/regions. Do you have any insights to share on managing a multicultural team?
It's not easy. Every country in Southeast Asia is different in terms of staff quality and local culture. We need to do several things in every strategy. First, we must have local partners. I know some Chinese companies prefer to transplant a Chinese CEO when they go overseas, but I prefer to hire a local CEO. Carro's founding partners include Indonesian and Thai nationals, so it's much easier to enter these countries in the early stage, and the process will be much more effective with less effort.
Another is to find a group of people you can trust. I always start with a small team I have confidence in, and sometimes I send reliable teams to new markets from Singapore.
Arguably, government relations and people on the team are the most important factors for doing business in Southeast Asia.
5. How do you see the Belt and Road Initiative and the economic development and investment opportunities in Southeast Asia under the current international environment?
The Belt and Road Initiative is bound to be a major trend that will not be reversed, and it will develop even faster in upcoming years. From what I've seen in venture capital, there's no doubt that many U.S. funds and companies that were previously based in Hong Kong are moving down south to Singapore or Southeast Asia to start investing in this market. So I am very optimistic about the Belt and Road Initiative and I believe it will boost the regional economy in Southeast Asia.
In addition, the ancient Silk Road was a trade route for goods, but in today's environment, the Belt and Road initiative is digital and two-way. We have seen cases of Chinese Internet companies like Alibaba, Tiktok, Shein and Bigo going overseas, as well as J&T Express going to China, so it also allows us to see greater potential with bigger economic attractions and helps each other grow.
6. What changes have the two years of study in the BRI EMBA Program brought to you personally as well as career wise? Do you have any memorable experiences or memories?
The biggest reward is the gathering of elites from various countries. I have made many friends in this class, and we can cooperate more smoothly without so many worries. For example, my classmates inspired me to start an insurance business in Thailand in 2018, and I had an in-depth understanding of Fintech in Indonesia.
7. What are your personal and business development plans for the next few years? How do you deal with uncertainty as an entrepreneur?
Our next plan is to go public in the US in 12-18 months.
With regard to uncertainty, I think entrepreneurs must face uncertainty, and the most reliable way through uncertainty is always relying on the team. For example, in April 2020, due to the impact of the pandemic, our revenue once dropped by 70% to 80%. We immediately held an internal meeting to increase revenue and reduce expenditure. When we came to cost-cutting, 13 senior managers immediately said that they could go without pay for the time being. We were a team that could fight together. With this kind of concerted efforts, we broke even two months later.
