How failure helped 6 millennials launch a multimillion-dollar international start-up
If at first you don't succeed, try and try again.
That's how the saying goes — and for six millennials from Singapore it proved to be a winning strategy after they turned a string of failures into a multimillion-dollar international business.
Henry Chan and five others co-founded ShopBack, an e-commerce platform that gives shoppers cashback on purchases made from any of its more than 1,500 partner merchants, including the likes of ASOS, eBay and Expedia.
In the past four years, the start-up has saved more than $25 million for its six million users across Asia-Pacific. But it was not a straightforward path to success. In fact, it took two failed businesses and several shifts to get to that point, as its founders told CNBC Make It.
Finding an idea
When ShopBack's founders decided to break away from their steady jobs at Southeast Asian retailer Zalora, they were certain they could shake up an industry they saw as inefficient.
Having worked in the U.S. shortly after completing his undergraduate degree, CEO Chan said he was struck by "the power of tech" and wanted to find a way to use it to help brands and consumers in his home country.
However, finding the right idea proved easier said than done.
"We noticed that e-commerce was really booming," co-founder Shanru Lai told CNBC Make It. "But there wasn't a good platform where consumers could go to discover new brands and at the same time receive cashback. We wanted to change that."
So, in early 2014, the group of 20-somethings set about creating a site that would help shoppers save money while improving marketing and reducing costs for retailers.
Learning to pivot
Initially, the founders created a flash sale site to bring shoppers one day of major savings while drumming up business for retailers, much like the American shopping holiday Black Friday.
The team quickly realized, however, that the idea would not sustain them year-round. So they set about phase two.
In its second iteration, the business, which was dubbed the Great Online Sale, turned into a three-month-long discount site.
But, again, the founders found it was flawed: Merchants struggled to accept the deep discounts, despite improved marketing, and consumers wanted to see deals all year.
So, the entrepreneurs finally settled on a year-round cashback model, which offers shoppers a proportion of their money back — often around 3 to 6 percent — on purchases from ShopBack retailers. That could be anything from food and clothing to flights and cinema tickets. At that more manageable discount rate, retailers were then able to give ShopBack commission for helping to promote their brands.
That time, the results "pretty much spoke for themselves," explained Lai, and the business saw "very fast growth" and strong customer feedback. She said that was partly because of the region's young population, and high mobile-adoption rates, which make it ripe for new consumer technologies.
"It was really through a couple of failures and kind-of-wrong business models that were unsustainable that we came up with ShopBack," said Lai.
Top business leaders frequently speak of the need to pivot and use failure to help shape future decisions. In a blog post earlier this year, Virgin's Richard Branson wrote: "Nobody gets everything right the first time ... Successful entrepreneurs don't fear failure; they learn from it and move on."
Continuing to evolve
Even once ShopBack settled on a winning idea, however, the team continued to adapt the model to respond to users.
To get started, they designed and launched a test site — then known as ShopMoolah — in just 24 hours to gauge response before investing heavily. That's much like the way Jeff Bezos launched a basic site in Amazon's early days.
"We used that just to test out the concept and when we realized it worked, after a couple of months, we changed it and rebranded it to ShopBack," said Lai.
That evolution continues to this day.
Though the cashback concept has existed for decades in other countries, it was relatively new when ShopBack launched in Asia and Lai said it has taken much experimentation to drum up business and educate consumers that they can save money while spending.
That includes appointing members of the public as chief shopping officers and giving them 11,271 Singapore dollars (around $8,151) — the highest amount a single customer has saved through the app in one year — to show how easy it is to shop and save through the app.
That strategy proved to be a big success, and it has since been rolled out to many of ShopBack's six other locations in the region: , , , , and .
Today, ShopBack processes $45 million worth of sales per month. But Chan maintained that the company is still on a learning journey and any other failures they experience along the way will be part of the ride. Indeed, he has a photo wall of "misses," including missed hires, in the corner of his office to remind him of the opportunity to grow.
"Failure is just another word for the journey to success," said Chan. "Some people get lucky the first time, but you can't have that every step of the way." It's more important to find a "good team, a good problem and to work hard," he added.
Don't miss: This 29-year-old digital nomad is making millions while traveling the US in his van
Like this story? Subscribe to CNBC Make It on YouTube!