Want to build a $1B business in SEA? Start with a problem.

26 Jun 2019 7 min read

At the Singapore Tech Forum held this April in San Francisco, two startup founders share how they built their businesses by solving everyday problems faced by millions in Southeast Asia, and why they do so from Singapore.

Behind every successful startup is a problem.

For marketplace app Carousell co-founder Quek Siu Rui, the problem that kickstarted a seven-year odyssey building one of Southeast Asia’s most successful startups was how frustrating he found selling the books, laptops, and cameras he no longer had use for as a student in the National University of Singapore.

“If you’ve ever bought or sold something on a forum or classifieds website, you’ll remember how difficult it could be to list an item, or find something you wanted," he says. Together with some friends, he began to wonder if the tedious process could be simplified with something everyone was already using: a smartphone.

“The basis of the idea was that selling should be as simple as taking a photo, and buying as easy as chatting,” explains Mr Quek.

In March 2012, the idea of a mobile-classifieds app was born when Mr Quek and his friends built the first prototype of Carousell at Startup Weekend Singapore, a 54-hour hackathon. It won the top prize and was so well-received that some people asked to download the app right away.

The basis of the idea was that selling should be as simple as taking a photo, and buying as easy as chatting.

A year before Carousell’s inception, in the hallowed halls of Harvard University, Malaysian students Tan Hooi Ling and Anthony Tan were part of a team designing a solution to a different problem – transportation woes that their countrymen faced.

“At that time, most people in Malaysia were afraid to hop into taxis alone, especially for solo female passengers, as they feared for their safety. Visitors from overseas would frequently complain about the inability to easily find taxis and the practice of overcharging by drivers," says Ms Tan.

She herself had faced such difficulties, which gave her added impetus to become part of the solution. The team ended up designing a ride-hailing service that won second place at the 2011 Harvard Business Plan competition.

Today, their business, Grab, is the region’s first decacorn, valued at over US$10 billion. Grab served up its three-billionth ride this January, with services across 336 cities in eight Southeast Asian countries and its app downloaded over 152 million times.

Likewise, Carousell has come a long way. The startup is currently valued at over US$500 million and has helped more than 70 million items change hands since its launch. It operates in seven key markets across Southeast Asia, with an average rate of almost one new listing per second across its platforms.

The key to the companies’ success? Solving problems that have frustrated many others.

“We realised that the problem we were solving would serve more people than ourselves, and that gave us the confidence to do Carousell full-time,” says Mr Quek.

(from left) Kiren Kumar, Assistant Managing Director of the Singapore Economic Development Board, Tan Hooi Ling, Co-Founder of Grab, Quek Siu Rui, Co-Founder of Carousell, speaking at a panel on opportunities in Southeast Asia at the Singapore Tech Forum held earlier this year in San Francisco.

Turning problems into opportunity in Southeast Asia

If solving a common problem is key to success, there is no better place for a startup to be than in Southeast Asia.

The region, one of the fastest-growing consumer markets globally, is home to a huge consumer base of about 640 million, half of whom are below 30. Its young, digitally-savvy population has a mobile-first approach and is receptive to what the digital economy has to offer.

And that digital economy, says Google in its 2018 e-conomy SEA report, will reach US$240 million by 2025. The same report described growth as being powered by “the most engaged mobile internet users in the world”. Just for ride-hailing alone, over 35 million users in more than 500 cities take more than eight million rides in a single day.

“Our laser focus on Southeast Asia was baked in from day one,” affirms Ms Tan. “In fact, it was a conscious decision not to go global as we recognised the region’s growth potential, particularly with the advent of readily available mobile tech.”

She adds: “We saw opportunity. We saw a huge market with significant, unserved local needs, and the ability of smartphone mobile technology to help us leapfrog in ways that were not possible before. There is an ongoing democratisation of technology where the prices of smartphones and data plans are falling, therefore unlocking digital services through mobile technology for millions of people.”

We saw opportunity. We saw a huge market with significant, unserved local needs, and the ability of smartphone mobile technology to help us leapfrog in ways that were not possible before.

For Carousell, the growing affluence of the population offers a unique opportunity.

“As new economies emerge and people grow affluent, there has been a boom in consumption. Growing in tandem, however, are things that people do not need or use, many of which are thrown away, end up in landfills, and leads to environmental pollution”, Mr Quek explains. “Carousell sees an incredible opportunity in taking a mobile-first approach to make buying and selling simple so people can easily find new homes for things they have in excess.”

"Carousell sees an incredible opportunity in taking a mobile-first approach to make buying and selling simple so people can easily find new homes for things they have in excess,” says Quek Siu Rui, Co-Founder of mobile-classifieds app Carousell. Just last year, the company launched its integrated payment platform, CarouPay, making transactions on its app even more seamless.

Scaling from Singapore

Both companies have chosen Singapore as the base from which they are serving the region.

One reason is the city-state’s compact yet diverse business ecosystem, where startups can easily find partners in multinational corporations, government agencies, research institutes, and more, to testbed and scale their solutions.

Take Grab for instance. The company chose to build its regional headquarters and pilot many of its services here before rolling them out regionally.

“For example, with the support of Singapore’s Land Transport Authority and by working with local taxi companies, we were able to pilot JustGrab in Singapore and then roll it out across the region. We also launched GrabShuttle in partnership with GovTech,” says Ms Tan. GovTech is the Singapore government agency responsible for the delivery of government digital services to the public.

Grab piloted JustGrab in Singapore and launched it in 2017. The new service would give commuters the closest available ride, either a taxi or a car, at a fixed fare. Grab has expanded its suite of ride-hailing options in the region to include shuttle services like GrabShuttle in Singapore, and GrabBike, a motorcycle-ride-hailing service, in Indonesia.

Grab also established other partnerships to develop long-term solutions. The company launched AI Lab together with the National University of Singapore last year, allowing research scientists and students to co-create smart urban transportation solutions in Singapore and other cities. These collaborations combine the real-world experience of companies with the domain-specific expertise of tertiary institutes to create and test solutions before scaling them across the region.

Singapore’s thriving startup scene was also attested to by Mr Quek, who says: “There’s been increasing support for entrepreneurs in Singapore from the government and private sector, which has encouraged the growth of more innovative startups here. We have also seen many international VCs set up shop in Singapore over the past two years, and they’ve also committed resources to fund startups.”

Last year, startups in Singapore closed 353 financing deals worth US$10.5 billion. The 2019 Startup Genome Global Startup Ecosystem report also named the city-state alongside Silicon Valley, New York City, London, Sydney and Dublin as among the top 30 global startup ecosystems. Its startup ecosystem was valued at US$25 billion and ranked in the top three tiers globally in connectedness, performance, experience, and talent.

While Grab taps on a ready pool of skilled talent in Singapore, it discovered the perfect environment to grow a globally competitive team.

“Singapore’s society is multicultural, which makes it easy for the many nationalities who work at Grab to assimilate,” says Ms Tan, whose company employs talent from over 52 countries.

The diversity in Singapore also mirrors the different cultures that co-exist in the region. “The cities of Southeast Asia are highly differentiated,” explains Mr Quek. “As a startup based in Singapore, we grew up surrounded by these differences and knew that we had to go local to be global. We have local teams in all our markets, to ensure that everything we do is relevant and resonates with our users in that country.”

Running a purpose-driven business

By keeping in mind the problems they wish to solve and the needs they hope to serve, Grab and Carousell continue to change lives across Southeast Asia every day.

It is this shared mission of creating new possibilities in the region that keeps them going, year after year.

“If I had to give my 2012 self some advice, I would tell him to remember why you’re doing what you’re doing, because it will be a multi-year journey. Even after seven years, I feel like I am only one per cent done”, Mr Quek quips, laughing.