If you’ve not heard of Carro, you will. The fast-growing online car-buying platform has just reached unicorn status. And that means happy days for its 36-year-old founder and chief executive Aaron Tan.
For the uninitiated, a unicorn is a start-up that has a valuation of more than US$1 billion ($1.35 billion). Grab is another well-known unicorn from Southeast Asia, along with the SEA Group, which owns Shopee. Now it’s Carro’s turn to ride the e-commerce wave.
The platform reached this lofty status in June after Japan’s SoftBank Group spearheaded the latest round of funding, pumping US$360 million into the Southeast Asian start-up to push its value beyond the US$1 billion mark. But becoming a unicorn is just the start of the journey, says its charismatic founder.
“Does being valued at US$1 billion make it a successful business? No. This is just the start for us and we have a long way to go on our journey. But of course it’s great to become a unicorn and that’s testament to all the hard work and pain the team has put in,” he says via the phone from Jakarta, where he has spent much of his time since Covid-19 restrictions curtailed international travel. Previously, he would spend half of each week in Indonesia, Carro’s biggest market, and the remainder of his time criss-crossing Southeast Asia and China.
The online car buying and leasing platform currently focuses on four main markets: Indonesia, Thailand, Malaysia and Singapore. Since it was founded in 2015, it has quickly grown in size, revenue and headcount, with around 1,000 employees spread across the region, including 150 in Singapore.
In the financial year ending March 2021, Carro transacted more than $1 billion in car value in Southeast Asia, further cementing its place as the largest car marketplace in the region, while revenue surged to $300 million.
Carro is no fluke for Tan. He’s a serial tech entrepreneur and he’s good at it. “Entrepreneurship is not new to me,” he says matter-of-factly.
Tan was only 13 when he started his first company, and because of his youth, he had to have it registered in his grandmother’s name for legal and tax purposes. His second start-up — search engine YoSearch — launched some years later. Both start-ups were sold before he even turned 21, the latter to an Australian company.
So what would motivate a teenager to start his own company when his peers were busy playing video games and doing homework?
“When I first dialled into the Internet in the mid-1990s, I saw Yahoo and it sparked a curiosity that quickly grew. Just how do you go about building a search engine like that?”
From there, he started researching and learning more about search engines, coding and web development. Soon, he was charging clients thousands of dollars to build web pages and realised he could make a career out of it. “My thought has always been, how can I make money over the Internet?”
Unbeknownst to his mother, Tan dropped out of junior college to focus on computing and developing, enrolling at a polytechnic instead.
“In hindsight, it was the best thing I ever did. There was no reason for me to learn English, Mandarin and physics. I wanted to self-learn,” he says.
He later earned a scholarship from the Infocommunications Development Authority of Singapore to read computer science at the Singapore Management University and Carnegie Mellon University in Pittsburgh, graduating summa cum laude.
Upon his return, he stepped into the shoes of an investor, spending five years with corporate venture capital fund Singtel Innov8, overseeing investments in Southeast Asia.
This put him in direct contact with local entrepreneurs and start-ups and led him to help found technology-focused start-up hub, Block 71 (a partnership between NUS Enterprise, SingTel Innov8 and the Media Development Authority of Singapore). When work took him to Silicon Valley — “the Mecca of deals” — he launched Block 71 San Francisco, a co-working space for Singapore tech firms looking to break into the United States.
Start-ups are in his blood, one could say.
An online platform, Carro allows both consumers and businesses to buy and sell cars. It was started in 2015 by Tan and co-founders Aditya Lesmana and Kelvin Chng, who met as students at Carnegie Mellon.
With a name that’s an amalgam of the words “car” and “hero”, Carro is powered by algorithms that help customers find the best used cars to purchase quickly and efficiently. It makes the online car buying process as smooth as possible and even offers a seven-day money back guarantee, shaking up the traditional way of buying and selling vehicles.
“It’s been a challenge getting people to change their mindset when buying and selling cars. To be honest, most people don’t know a lot about cars so they don’t need to physically inspect one. But they are following how their fathers bought cars and still think they need to physically kick the tyres,” he says.
Cutting-edge technology has played a major role in the growth and success of the online car marketplace. The firm’s artificial intelligence (AI) software scans images of a car to detect potential problems while mechanics check it for defects. This speeds up the inspection process by as much as 20 percent and reduces human error by up to 80 percent, according to Carro. Robotic arms are also used to unlock and lock a car to allow a potential buyer to inspect a car any time of the day or night, without the need for a Carro inspector to be present.
While it made a name for itself as a platform for buying and selling cars, Carro has since morphed into two business models — the other being a subscription-based service for people to lease cars in a hassle-free way with a fully end-to-end service. The country’s first car subscription plan was launched in 2019 after the team noticed that the subscription model, made famous by the likes of Netflix and Spotify, was becoming more popular in Singapore.
For a flat monthly fee, you get your chosen car, road tax, warranty, 24-hour assistance and maintenance all bundled together. Customers can pause subscriptions, swap cars during their plan and choose the length of their lease. After choosing a car to suit your budget, Carro sets up a viewing or test drive. No salesperson is on site, but an agent will be on standby to provide support through a video call if needed.
“We wanted to make it super flexible to lease a car and provide a complete end-to-end service that takes care of everything,” says Tan.
Carro has also partnered with NTUC Income to introduce Singapore’s first pay-as-you-drive usage-based car insurance. The innovative AI-based insurance product calculates premiums based on the driver’s behaviour and distance travelled.
Financing is another potential growth area for Carro, which owns financing service Genie, keeping everything under one roof. But Tan has bigger aspirations. Carro, alongside the likes of Sheng Siong Holdings and FWD, had been a strategic equity partner of Razer Fintech, which applied unsuccessfully for one of Singapore’s four digital banking licences. Ironically, two of the licences went to fellow local unicorns Grab and the SEA Group.
“We need continuous cash flow in our business and lending is a big vertical. We could have added a lot of value with a banking licence such as offering instant car loans,” he says, adding that a banking licence may still be an option further down the road.
Pandemic and Beyond
The global pandemic has seen technology firms and e-commerce players benefit the most as people shift their buying habits online. Amazon, Alibaba, Netflix and Disney are some of the household names that have seen sales and profits soar as a result.
“Everything to do with technology has shot up. I never thought I’d see my 80-year-old grandmother using a QR code but that’s now part of life,” jokes Tan.
Globally, the used car industry is booming thanks to the pandemic, as people are keen to avoid public transportation. Supply chain disruptions, most notably for semiconductors, has also affected the availability of new cars. The traditional car buying process of showroom visits, in-person meetings and test drives has also been disrupted by the pandemic, opening the door for fully digital car buying — a trend that was already gathering steam among millennials and younger motorists. All this has ensured a sweet spot for Carro as an online used car marketplace.
And the firm isn’t just making waves among customers — investors have also taken notice. Among its growing list of backers are the Singapore Economic Development Board’s investment arm EDBI, tech venture capital firm Insignia Ventures Partners and Facebook co-founder Eduardo Saverin’s B Capital Group.
Carro is also growing through acquiring. It bought Jualo, an Indonesian consumer-to-consumer marketplace in 2019 and has invested US$30 million in myTukar, a car-bidding platform based in Malaysia.
Expanding into China is another possibility, although Tan admits it is “super competitive” and that “we need to be a lot bigger before we can enter that market”.
For now, his sights are set firmly on expanding within the region, only for fear of spreading his resources too thin and “dirtying” the Carro name.
“The Chinese have a saying about the dangers of pulling your lines too long. Plus, Carro can’t just enter a market tomorrow. This business is very operationally heavy,” he explains. With entry into every new market, Carro needs to set up a workshop and service centres to provide local support.
Another challenge is in finding the right tech talent to support its rapid growth, as it competes with the likes of Grab, SEA Group and other tech firms who are keen on the same pool of data engineers and programmers.
Nevertheless, it is an exciting time for the brand and its employees. Tan is eyeing a stock market listing in the next 18 months.
“It’s just a matter of where, it could be in the US or Shanghai or Hong Kong, but probably the US. As they say, it’s all ‘market permitting’,” he quips.
One thing’s for sure though. Carro is steadily on the fast track.
Art direction by Catherine Wong; Photography by Darren Gabriel Leow; Fashion styling by Chia Wei Choong; Hair & Makeup by Angel Gwee using Davines & Nars; Photography assistance by Eric Tan; Location courtesy of The Clan Hotel Singapore