In this episode, join us in the sixth and final installment of our fifth-year anniversary summit recaps where we feature fireside chats with thought leaders and founders across industries sharing their insights on various sectors and trends shaping the future of ASEANnovation. 

While global macroeconomic situations have dampened venture funding, the growth-stage companies we have represented on today’s panel have managed to close major funding rounds. In this conversation, we learned how they have weathered the storm so far, what underlying opportunities they are looking to tap into, and advice they have for fellow entrepreneurs navigating today’s fundraising environment, given that, at the end of the day, they are all building to last.

Hear from Aaron Tan, CEO and Co-Founder of Southeast Asia’s leading auto retail platform Carro, Anderson Sumarli, CEO and Co-Founder of Indonesian retail investment super app Ajaib, and Hendra Kwik, CEO and Co-Founder of regional digital financial services ecosystem for businesses Fazz. The conversation was moderated by Insignia Ventures founding managing partner Yinglan Tan and took place on September 23, 2022, and both the episode and transcript have been edited for brevity and clarity.

For new calls every Tuesday, follow us on Spotify, Apple Podcasts, or wherever you are tuning in to the show. For daily insights from entrepreneurs, investors, and operators in Southeast Asia’s fast-changing innovation landscape, follow us on LinkedIn at Insignia Ventures Partners or Instagram at insignia_vc. 

Highlights and Timestamps

(01:42) Lessons learned and what keeps growth-stage CEOs up at night;

“…what happens is that you have your competitors, you have other comparables running, sometimes, “ahead” so to speak, in the sense that you perceive them to be “ahead” because their revenues are [growing] faster, but the truth is that their quality of revenues is bad…we are a little bit more successful than the other comps primarily because of the rare fact that we stayed true to our game. We basically ensured that we were disciplined with our costs. We ensured that we were disciplined when we went out [to different markets]. And then when the pandemic hit, it actually didn’t really affect us that much.” – Carro CEO Aaron Tan

“…one of the strongest thesis we have internally in Ajaib is that we believe the lines between savings and investing are going to be increasingly blurred over time, such that there’s no difference in the consumer’s mind…for us today, we are the only fintech we know of in the world to have a stock brokerage, a crypto exchange, and a banking license.” – Ajaib CEO Anderson Sumarli

“That move to expand has proven that not only can we build a profitable business with a good product and good unit economics, but we also can expand to other countries under the crisis. And that’s been proven to be successful. So now our vision has scaled up from just changing the way an underbanked small business in Indonesia runs their financial operation to also including countries like Singapore where more sophisticated businesses like crypto businesses exist.” – Fazz CEO Hendra Kwik

(11:41) Opportunities to build to last;

“We see that the next opportunity will be how to use Web3 blockchain technology to improve the margins and also the speed of the financial services that you can provide to traditional businesses.” – Fazz CEO Hendra Kwik

“The opportunity that we’re grasping right now is to build that relationship with this generation such that we can serve them over time through whatever financial needs they want, be it in capital markets through investing or in the crypto world or in traditional financial services or banking services.” – Ajaib CEO Anderson Sumarli

“I would not discount the developed markets…I like to think about life moving forward as not just Southeast Asia, but even the broader Asia Pacific. As our companies mature, we can go out [to these markets].” – Carro CEO Aaron Tan

(15:18) One-liner on what founders need to focus on in this environment;

“Start local in the short term, but you need to think regional for the long term because Southeast Asia is this whole unique package but you want the regional scale in order to be successful.” – Fazz CEO Hendra Kwik

“For me, it’s important to be consistent through turbulent times and really stick to your thesis bets.” – Ajaib CEO Anderson Sumarli

“Grow sustainably.” – Carro CEO Aaron Tan

About our guests

A programmer by training and a venture capitalist by profession, Aaron Tan founded his first startup at 13 and had already sold two companies before turning 21. He leads the company with years of experience in the startup scene and is committed to setting new standards for the used car industry. Aaron was awarded the ITMA Future IT Leader Award in 2021. Aaron graduated Summa Cum Laude with a BSc from Singapore Management University’s School of Information Systems, and subsequently accepted a scholarship from IMDA Singapore and graduated with an MSc in Computer Science at Carnegie Mellon University.

Prior to Ajaib, Anderson Sumarli was an associate with BCG and part of the Chief Analytics Office at IBM. Anderson holds an MBA from the Stanford Graduate School of Business and graduated Summa Cum Laude with a Finance degree in Applied Economics and Management from Cornell University. Anderson was part of the Forbes 30 under 30 Asia 2020 list along with his Co-founder and COO Yada.

Hendra Kwik is the CEO and founder of regional fintech for business platform Fazz, formed out of rural Indonesia fintech Payfazz’s acquisition of Xfers. Prior to starting Payfazz, Hendra was the Head of Growth at Kudo (acquired by Grab), where he engineered the growth of the company’s offline-to-online agent network. Hendra holds a bachelor’s degree in Chemical Engineering from Institut Teknologi Bandung (ITB), one of the most prestigious universities in Indonesia, where he was awarded the University Most Outstanding Student and graduated as a valedictorian in 2012. Hendra, together with his co-founders Jefriyanto and Ricky, were featured in the Forbes 30 Under 30 Asia 2019 list.

Transcript

Lessons learned and what keeps growth-stage CEOs up at night

Yinglan: Thank you so much for joining us on stage today. It’s really been a pleasure to work with all three fine gentlemen here. Looking younger and younger every time I see you. So I wanted to go to the topic at hand. It has not been an easy two, three years.

I wanted to start with all three of you. What are some of the lessons you’ve learned? For Carro it’s been seven years. For Anderson it’s been going three. For Hendra, five years. What are some of the lessons you’ve learned and what keeps up at night as you think about navigating Southeast Asia?

Aaron: My name is Aaron, founder and CEO of Carro. What we do is that we sell cars online. We are Southeast Asia’s number one auto retailer for cars online. If you ever need to buy a car or sell a car, in Indonesia, Thailand, Malaysia, Singapore, Japan, and now in Taiwan as well, we are able to help. 

But coming back to Yinglan’s question, about what keeps me up at night and lessons that we have learned, one thing that we have felt was that common sense will actually prevail right over time. One thing I learned at least as a result of the pandemic is the importance really of building the company profitably [and] making sure that you grow responsibly. That has been the biggest takeaway that I had. 

It’s not so easy, because if you think about life, what happens is that you have your competitors, you have other comparables running, sometimes, “ahead” so to speak, in the sense that you perceive them to be “ahead” because their revenues are [growing] faster, but the truth is that their quality of revenues is bad. So one thing we learned at the end of the day, [put] really simplistically, is that don’t look at what is happening in front of you and then assume that those guys are doing well and as a result you follow. 

I think at the end of the day common sense will prevail and we are a little bit more successful than the other comps primarily because of the rare fact that we stayed true to our game. We basically ensured that we were disciplined with our costs. We ensured that we were disciplined when we went out [to different markets].

And then when the pandemic hit, it actually didn’t really affect us that much to be very frank. In fact, sales went through the roof, we were the fastest growing company in APAC last year. The company has been growing about at least two to three times year on year in terms of topline [growth]. I think this year’s run rate revenue is already at about a billion plus. Our GPM has tripled. We are also going to be EBITDA positive this year. So this is what I learned — do not fall under the trap of seeing what’s ahead of you and just following that. 

Coming back quickly on what keeps me up at night. I don’t sleep a lot. Yinglan and I — we go for walks at 5 am, 4 am and [Yinglan] loves to do interviews in the morning. I have done it many times with him. The truth is that we really don’t sleep much. As a result, I don’t think I really have something that really keeps me up at night. 

But let’s just say that one thing that I’m really very cautious about — and yesterday I was sending out a whole note to my management team — has been rising interest rates. It’s something that may or may not affect us directly, but is super important and the top of my mind right now is the uncertainty in the interest rates environment and stuff. 

In fact, I told my team that we need to be very cautious. If we have money, wait for the fixed deposit rates to rise. Because at the end of the day, we do have quite a bit of cash, but let’s just say that I think fixed deposits rate will rise in the near term. And we have a fairly large FinTech practice as well, so we have to make sure that as we land, we do not get caught in the margin or the interest squeeze, so to speak. The net interest margin (NIM) needs to be healthy and high. I think that’s what is really keeping me up awake at night. 

“…what happens is that you have your competitors, you have other comparables running, sometimes, “ahead” so to speak, in the sense that you perceive them to be “ahead” because their revenues are [growing] faster, but the truth is that their quality of revenues is bad…we are a little bit more successful than the other comps primarily because of the rare fact that we stayed true to our game. We basically ensured that we were disciplined with our costs. We ensured that we were disciplined when we went out [to different markets]. And then when the pandemic hit, it actually didn’t really affect us that much to be very frank.”

Yinglan: That’s great. Anderson, your model has obviously evolved a little bit from mutual fund stock brokerage, now it’s a little bit of crypto, and you also have a bank. What is the philosophy behind Ajaib’s business model and how do you see the future?

Anderson: So first of all, I’m Anderson, co-founder and CEO of Ajaib. Our mission is to welcome a new generation to modern financial services. And as Yinglan mentioned, we run our business across three lines, capital markets, crypto, and banking. 

And to answer your question, one of the strongest theses we have internally in Ajaib is that we believe the lines between savings and investing are going to be increasingly blurred over time, such that there’s no difference in the consumer’s mind.

And we’ve seen this happen all over the world. In Brazil, we see that XP, which is the largest stock brokerage in the country, went into digital banking to go after a new bank. And Nubank did just the opposite, acquiring the second largest stock brokerage going into investments. 

It is pretty crazy for me to imagine that in Brazil, arguably the largest stock brokerage’s biggest competitor is the largest digital bank and the largest digital bank’s competitor, arguably, is the largest stock brokerage.

But as we see around the world, it doesn’t just happen in Brazil. We see this happen even in Europe with Revolut becoming positive unit economics from their investment products. We see this happen in Korea with Toss, Toss Bank, and Toss Securities. We see this happen in parts of North America and Canada, and we believe that this shift will happen a lot faster in Southeast Asia than elsewhere because we are going to kickstart that trend.

And for us today, we are the only fintech company we know of in the world to have a stock brokerage, a crypto exchange, and a banking license. And it gives us an advantage in a few ways. First of all, it helps us in innovating products for customers. We can build products that others can only dream of. There’s only one other company in the world to have a crypto exchange and a banking license, and so we believe we’re gonna play a fundamental role in bringing this generation to Web3.

Also owning the banking license allows us to be able to innovate and create new products in the region a lot faster, which is important [when you’re] talking about Indonesia, where just a basic financial infrastructure is still being built right now. So it’s really important that we have full control over our innovation cycles.

So to answer your question, Yinglan, we do believe that the future of consumer FinTech in Southeast Asia and particularly Indonesia, will exist at the intersection of capital markets, crypto, and banking. And we’re in a prime spot to take out that opportunity in the next decade. 

“…one of the strongest thesis we have internally in Ajaib is that we believe the lines between savings and investing are going to be increasingly blurred over time, such that there’s no difference in the consumer’s mind…for us today, we are the only fintech we know of in the world to have a stock brokerage, a crypto exchange, and a banking license.”

Yinglan: Thank you, Anderson. Moving on to Hendra. So Hendra plays in a different space from Anderson because he banks the unbanked, and then he also crossed international boundaries [recently]. So Hendra, tell us a little bit about what you learned and what keeps you up at night. 

Hendra: I’m Hendra, I’m the co-founder and CEO of Fazz. We’re basically building the business payment and finance app for every single underbanked business in the region. We started initially with small businesses in Indonesia’s remote villages, and now we have already started expanding to the central business district in Jakarta. And recently we came to Singapore. 

The way we think about banking the unbanked is that if you look at Indonesia, there are actually 60 million Indonesians who have never had any banking services before. When we started the company, I remember I was driving my motorbike to visit all these small businesses and I saw that all of them are using paper and pens for financial reporting. They were paying for everything with cash. And then it’s just insane when you imagine that and compare that to countries like the Us where everything is already very robust, right? That’s when we decided to start the company. 

Our [mission] at the end of the day back then was not to build another bank for them, but it’s really to revolutionize the way these businesses are doing their business. We started with a very simple product and then it’s grown [from there]. And then as we saw that as Covid [came in] 2020, we were forced to think about how to become profitable. We quickly turned the company to be profitable in 2020 and then after that in 2021, we saw that the market was going back very crazily. Every company is raising rounds. And then we discussed with Insignia that we need to be more aggressive again and we quickly converted again from profitable mode to aggressive mode.

We decided to consolidate another company in Singapore called Xfers into our group. And that marked our first expansion to Singapore. After being able to show that an Indonesian business can be profitable, we decided to invest again to open a new country in Singapore. And I think that has brought a lot of positive impact to the company.

That move to expand has proven that not only can we build a profitable business with a good product and good unit economics, but we also can expand to other countries during the crisis. And that’s been proven to be successful. 

So now our vision has scaled up from just changing the way an underbanked small business in Indonesia runs their financial operation to also including countries like Singapore where more sophisticated businesses like crypto businesses exist. And in the same way, all these small businesses were underbanked, crypto businesses are also underbanked. And now we are able to provide financial services for these crypto businesses in Singapore. 

What keeps me awake at night now is this is the first time we start to expand our team to be beyond Indonesia to also include Singapore. It’s a very different culture and it’s a very different language. Most of our team in Indonesia speak Bahasa Indonesia. Now in Singapore, they all speak English. It really keeps me awake at night how to get them together as the food preferences, the culture, and the languages are very different.

But I believe the future success of this company is going to rely on this. We have engineers from Vietnam and Taiwan. We have operations in Singapore and Indonesia, and we also have some customer support in the Philippines. Now I’m really thinking how I can get all these different nationalities and cultures to work with a common vision, with a common mindset, and thinking how to work together to unlock our impact beyond rural Indonesia to the whole Southeast Asia because we believe that the business that can benefit from our solution. This [opportunity] exists not just in rural Indonesia, but also in the whole Southeast Asia. So it’s really getting all these people together that is something that keeps me up at night.

“That move to expand has proven that not only can we build a profitable business with a good product and good unit economics, but we also can expand to other countries under the crisis. And that’s been proven to be successful. So now our vision has scaled up from just changing the way an underbanked small business in Indonesia runs their financial operation to also including countries like Singapore where more sophisticated businesses like crypto businesses exist.”

Opportunities in the near future to Build to Last

Yinglan: The topic today is built to last, right? And I think we talk about defensive measures and also what keeps up at night, but what are the opportunities that you see in the next 2 to 5 years that you can very leverage to build to last? 

Hendra: Because we are serving businesses that are traditional and also Web3, we start to see what’s the advantage of the traditional business and also the Web3 business, right? We see that the next opportunity will be how to use Web3 blockchain technology to improve the margins and also the speed of the financial services that you can provide to traditional businesses.

“We see that the next opportunity will be how to use Web3 blockchain technology to improve the margins and also the speed of the financial services that you can provide to traditional businesses.”

Anderson: The way we see it, Indonesia’s a very interesting country where we have the third largest unbanked population in the world, but at the same time, we’re also one of the largest rising middle income populations in the world and also one of the largest youth populations in the world.

And so the way that we see it at Ajaib is that there’s going to be this massive new generation of millennials and Gen Zs in Indonesia that’s just about to be introduced to financial services products for the very first time. And the opportunity that we’re grasping right now is to build that relationship with this generation such that we can serve them over time through whatever financial needs they want, be it in capital markets through investing or in the crypto world or in traditional financial services or banking services. 

“The opportunity that we’re grasping right now is to build that relationship with this generation such that we can serve them over time through whatever financial needs they want, be it in capital markets through investing or in the crypto world or in traditional financial services or banking services.”

Aaron: I fully agree about the Indonesia opportunity, and I would also say that I would not discount the developed markets. We just entered Japan and Taiwan, and we are looking at other markets like Australia and Hong Kong, and oftentimes I get asked by other investors, “Why did you enter Japan?”

But long and short of it is that it’s one of the largest economies in the world, with 5.86 million cars per year. It’s a much bigger market alone than surface Southeast Asia combined for myself at least. As a result, this is super interesting for us because even if we take 10% of that market, it’s growth for us. 

While it may not be growth for them locally, it’s still growth for us as a company. As a result, I like to think about life moving forward as not just Southeast Asia, but even the broader Asia Pacific. As our companies mature, we can go out [to these markets]. 

“I would not discount the developed markets…I like to think about life moving forward as not just Southeast Asia, but even the broader Asia Pacific. As our companies mature, we can go out [to these markets].”

Yinglan: I want to add one last question because you’ve brought up a very good point which is we are seeing the rise of Singapore headquartered companies with Chinese engineers targeting global markets. Maybe talk about what are some of the things you have done to execute on that opportunity and do you see more of this to come? 

Aaron: First of all, I’m not an expert in HR. I think that we all have a lot to learn. The first thing I would say is to bring on a really good HR VP, what we call HR Business Partner, in our various countries. We learned this from our investors and so that’s one super important part. 

The second thing I would do a lot is also to hire local people from Singapore. I’ll give you an example. So when we started Indonesia, the first people that we hired — the graphic designers, the programmers — they were local. They were Indonesians, but they live in Singapore. And this allowed us to very quickly adapt the business model in Indonesia. And after a year or so in Singapore, we then asked if they could go back to Indonesia to build the business there. We did that once in Indonesia.

We did another time in Vietnam. We just did it in Japan as well. Oftentimes, people always say this — the moment I want to expand into the market, I always do a one or two years preparation. So in one or two years, I will start hiring a Japanese leader in Singapore, right? And we train them, teach them, and then we ask them to go back. Of course, the risk is they leave the company after you train them for a year. But again, this is why it’s required, and at least that has worked very well for me. 

One-liner on what founders need to focus on in this environment

Yinglan: I want to end off with one thing. So there are many founders in the audience that want to be like three of you. So if you could give them a one-liner on what’s the most important thing they need to focus on.

Hendra: Start locally in the short term, but you need to think regional for the long term because Southeast Asia is this whole unique package but you want the regional scale in order to be successful.

Anderson: For me, it’s important to be consistent through turbulent times and really stick to your thesis bets.

Aaron: Grow sustainably.