Business

3 college friends built a $ 1 billion used car business

Aaron Tan goes to places.

As co-founder of the newly crowned unicorn and one of the Asia-Pacific fastest growing startups, CEO of Carro is preparing for a public listing.

And with the involvement of investors, including Softbank, he does not plan to slow down.

“The question is, now that we have reached $ 1 billion, how can we reach $ 10 billion? How do we reach $ 100 billion? ” Tan told CNBC Make It.

I would not say that I tricked my co-founders into starting a company together …

Aaron Tan

co-founder and CEO of Carro

Carro – Car Hero is a Southeast Asian internet car marketplace designed to facilitate car deals using artificial intelligence technologies.

Founded in 2015 by Tan and his college friends Aditya Lesmana and Calvin Chng, it achieved the coveted $ 1 billion unicorn status in June after receiving $ 360 million in funding. The deal will amount to more than half a billion dollars, and Carro will become one of the key competitors, such as the Malaysian Carsome and the German Karmudi, in the industry standing $ 50 billion and continues to grow.

However, as Tang explained, getting there was not easy.

Striving for success

The 36-year-old entrepreneur’s story began when he was 13 years old. As a teenager growing up in Singapore, a computer genius made extra money building and selling websites.

But later, while working as a venture capitalist in the United States, he saw an opportunity to combine business prowess with his true passion: the auto trade.

Aaron Tan, Co-Founder and CEO of Carro’s Southeast Asia Automotive Site.

Carro

“When I was in the US as a venture capital for many years, I remember very well meeting all kinds of car companies – your Beepi, your Uber, your DriveShift. It showed me the dynamics of the industry, ”Tan said.

While the US car resale market was flourishing, the same was not the case for Southeast Asia. It was known for its lack of transparency: several middlemen prevented buyers and sellers from making the best deals.

We have seen a change in the behavior of car owners.

Aaron Tan

co-founder and CEO of Carro

Tang wanted to change that. So, returning to Singapore in 2015, he teamed up with his classmates at the Carnegie Mellon School of Computer Science to create an algorithm that would do just that.

“I wouldn’t say I tricked my co-founders into starting a company together, but I think I missed the opportunity because it could have been so much more interesting than what they were doing,” Tan said.

Entering a rapidly changing market

The trio was on something. In a region with a large and growing digital-savvy middle class, price-sensitive consumers are increasingly opting for pre-owned models.

“The expansion of the middle class, coupled with low car ownership in Southeast Asia, have indeed been the main factors driving new car sales, and ultimately this has also led to a revitalization of the used car market,” Justinas Lüima, senior consultant at CNBC, told CNBC. research at Euromonitor. Do it.

Marketplace Carro launched Singapore’s first car subscription service in 2019.

CNBC

Carro capitalized on this demand by rolling out its online offerings to individuals and wholesale dealers in Indonesia, Thailand and Malaysia in the following years. In the meantime, comprehensive financial services such as loans, insurance and after-sales services have been added.

By 2019, inspired by streaming giants Netflix and Spotify, the company launched Singapore’s first car subscription service, allowing users to rent a car for a monthly fee that includes taxes, warranty and maintenance.

“What we saw is a change in the behavior of car owners. In fact, the gap in the market was to look for people who want that kind of flexibility. And more importantly, they really want to try out new cars, ”Tan said.

How to deal with a pandemic

Then, in 2020, a pandemic broke out. But what has been a major hurdle for many startups has turned out to be an opportunity for Tan and his team.

Concerns about hygiene and personal safety have sparked renewed demand for private transportation options. And with closed borders and a global microchip shortage limiting car production, used car sales have skyrocketed.

Covid has definitely helped accelerate our entire digitalization both internally and externally.

Aaron Tan

co-founder and CEO of Carro

The path to an IPO

However, this growth comes amid growing focus on the automotive industry.

Transport accounts for almost a quarter (24%) global carbon emissions, of which motor vehicles account for 75%. And while governments and automakers are planning to phase out traditional combustion-engine vehicles for electric vehicles, many existing gas-eaters are simply exported to emerging markets.

Carro, for his part, said he is playing an important role in the transition to greener transportation methods.

Carro says he is helping to move towards greener transportation methods by allowing buyers to experience new vehicles such as electric vehicles.

Carro

“Our job is to ensure that vehicles are recycled or reused as soon as possible. And the second part of this is that [electric vehicles are] there is a strong tailwind for us because it drives change. For a platform like us, we are committed to any change in the marketplace, ”Tan said.

Sustainability will be one of Tan’s many agenda items as he intends to list his company over the next 18-24 months. With regional expansion, AI development, and acquisitions, one thing is certain – the trip is going to be an eventful one.

“Meanwhile, [we need to] prepare the company, control measures must be in place, people must be present, compliance must be in place, “Tan said.” Only then can we say good, we are ready to enter the market from 12 to 18 in a few months. “

Do not miss: How this 32-year-old couple is rebuilding the multi-billion dollar fashion rental industry

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