How 3 friends turned their unwanted items into a $550 million business

These 3 thirty-somethings are using A.I. to build a billion-dollar start-up
These 3 thirty-somethings are using A.I. to build a billion-dollar start-up

Snap, list, sell. It's a simple enough idea, but one which would become a multimillion-dollar business for the three university friends.

Siu Rui Quek, Marcus Tan and Lucas Ngoo are the brains behind Carousell, a Singapore-headquartered online consumer-to-consumer marketplace which observers are calling one of Southeast Asia's next $1 billion unicorns.

The three friends started the business in 2012, after being inspired during an internship in Silicon Valley. In just seven years, they've won the support of top investors and earned a valuation of $550 million.

"We got so inspired by heroes like Jack Dorsey, Mark Zuckerberg, Drew Houston of Dropbox," CEO Quek told CNBC Make It, referring to presentations they watched from the famous founders of Twitter and Facebook. "The one commonality all of them had was just this whole fascination for using technology to solve problems and make a big impact."

"We figured the best way (for us) to do that was to solve our own problem," he continued. "We had all this stuff which was underutilized, unused, no easy way to sell them using the mobile phone, and we decided to build that app."

Carousell's co-founders from left to right, Marcus Tan, Siu Rui Quek and Lucas Ngoo.

Returning to Singapore after their internship, they did just that, focusing initially on items like electronics before expanding to categories including clothing, property, autos and even jobs.

Carousell works like other online classified platforms, and lets users buy and sell unwanted items online by uploading a photo and the relevant details.

In that way, it is similar to sites like eBay and Craigslist, which Quek cited as early inspirations. However, right from the start, Quek said the trio were determined to make their Southeast Asia-centric model a mobile-first solution. They believed it would simplify the process and better suit regional users, for whom smartphones had largely leapfrogged desktop computers.

"We were really hooked to using the iPhone as our main computer," said Quek. "I think we got spoilt by the simplicity of apps like Instagram. We wanted something that was familiar to us, something very mobile-first: Snap to sell, chat to buy, something very social."

That simplistic approach proved popular with users. Within three days of launching in August 2012, the app was ranked second among the top free lifestyle apps in Singapore.

It's a strategy Quek said is fundamental to the company's mission of inspiring "every person in the world to start selling and buying."

To help with that, Carousell now draws heavily on artificial intelligence (AI) to speed up the selling process. Image recognition, for instance, will automatically identify items and apply the appropriate categories and tags.

Ultimately, Carousell wants to reduce listing times from 30 seconds to just three.

"We're doing a lot of things around AI," said Quek. "We want to make selling even simpler, so today you can already take a photo, your category will be suggested, your title will be suggested, your price will be suggested."

Carousell's three co-founders from left to right, Marcus Tan, Lucas Ngoo and Siu Rui Quek.

That focus on technology has proven appealing to investors too. After receiving an initial $35,000 university grant to kick-start the business in 2012, Carousell has now won more than $150 million in funding from major names including Rakuten, Golden Gate Ventures and 500 Startups.

"Carousell's actually one of the stronger AI companies here in Singapore," Vinnie Lauria, managing partner of Golden Gate Ventures, who led the investment in Carousell told CNBC Make It. "They actually have a very large team working on machine learning."

Today, the app is live in seven countries — Singapore, Australia, Indonesia, Hong Kong, Malaysia, the Philippines and Taiwan — and has recorded 250 million listings and 71 million sales. Its latest deal with global online marketplace OLX Group, worth $56 million, took the company's valuation to $550 million.

Analysts say that could put Carousell on course to become a $1 billion unicorn start-up — adding to the 11 to be born out of Southeast Asia so far.

However, Quek insisted the founders are not chasing such titles. Instead, they're concentrating on monetizing the business by growing online ads, premium user packages and subscription services, with a focus on their Singapore and Hong Kong markets. Last year, Carousell boosted revenues fourfold and cut losses.

"For us, we've never really obsessed around unicorns, or valuation," said Quek. "It's always about how can we serve a community. If you do that really well, I think valuations, titles like unicorns, it's a byproduct and will come because of that."

In 2018, the trio turned down a $100 million offer for their business, determined to make a success of it on their own. But according to Quek, they've still some way to go.

"I constantly tell the team we're less than 1% done," Quek said of his 400-strong team.

"Five, 10 years from now, we want Carousell to be creating this lifestyle where second hand is the first choice," he said. "It just makes so much sense. You save the earth. You save money. You make money. You go on to create opportunity for other people. It's just win, win, win all around."

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