 Today we have with us a very special person. His name is Arun Tang and he is the founder and CEO for Karo which is the Southeast Asia's largest automotive marketplace. This year they have completed five years and you know what a way to complete five years honestly right when the pandemic came back on to us but nevertheless despite the pandemic, the used glass marketplace has seen some significant shift particularly because of the shared political economy coming down. People wanting to be more individualistic rather than in close quarters with everybody else. So there has been a definite shift for Karo which is only upwards and there has been a great growth that has been seen by Karo during this time and also to say that they are back on track with their plans which is to actually build a billion dollar business in the next couple of years. So welcome Arun, we're it's delighted to have you here at Entrepreneur Media as we start the tech talk series and really understand for me how the used car and the automotive space is now building up particularly in the post-pandemic times. So let me start by asking you this you know the today I mean five years back we were talking about no car ownership actually hiring a cab and you know sharing a cab and you know it's almost been said that people in the coming years might not want to buy a car but then came the pandemic and suddenly we're seeing a huge surge in people wanting to actually own a car and being very individualistic about their vehicle. So what are the changing trends that you have noticed in the market particularly the southeast Asian market post the pandemic and the growth trends that you see for car ownership or automotive ownership in the times to come? Yeah first of all thank you so much for having me today right I know always a pleasure to speak with you know you guys at Entrepreneur and I think you know the question really was you know what are we seeing in terms from our standpoint as a marketplace you know post the pandemic and stuff like that. I think first of all you know I will always say this is you know we actually grew revenues more than 500% year on year September to September so to speak right so you know when we were talking about this today versus where we were back almost a year ago we have seen a dramatic shift in the market right so maybe just earlier this year or even late last year the market was still pretty much on the download kind of from the use car standpoint you know even for the new car and stuff like that but when the pandemic hits I would say you know March was when it really hit but let's just say that you know by January February you start seeing innings right so by February March you know what we saw was that there's a lot of factories that shut down right so you know we're talking about new car factories and for us we largely deal with use cars right so as a result we are sort of like going to be sitting in because you know what we need as a result is constant sales of the new car market across various geographies and you know that drives the use car consumption as well and so in February March we basically observed that hey you know what the new car factories are shut down what that means that there's a downstream impact on use cars right that also basically means that hey not many people are going to buy new cars or for that matter even if they buy the new cars they're not going to get their new car in time so this set off a series of you know unfortunate events so to speak and by the time June happened I mean by the time it's like from March April May June and stuff like that I think by March April we would probably at the worst ever in terms of record revenues low right record low revenues in that sense because nobody would just basically a allowed to travel b for that matter you're not even allowed to to purchase and stuff like that but that shouldn't took for a change very rapidly right in post June July August September but you know we saw rapid swing in terms of numbers right this is primarily driven by the fact that what we see the market at least today is that more and more people are choosing to have their personal mobility you know for that matter their own vehicles and sometimes their own motorbikes or for that matter bicycles right to move around versus being in a public transport scenario or in the private higher vehicles and stuff like that right so for us we are I would say a beneficiary as a result of this you know so when people are more wary of the fact that hey you know if I'm taking a public transport I might be more susceptible to to certain viruses and stuff like that then you know they would naturally choose to want to drive a vehicle in their own sort of confined space and as a result business to be very honest has been brisk for us over the last few months right but I must do say that this is something that we see for now and we see that this is probably a trend moving forward for the foreseeable future at least for Singapore and places like Malaysia where we already post recovery so to speak already we are in recovery which is you know Malaysia is another story by itself but that's the case but for certain countries like say Indonesia or even the Philippines and stuff like that where where we have presence like for instance in Indonesia we are seeing a lot more I would say we're seeing a lot more demand actually on online sales of cars as well right so one of the things that we offer is that we are not a really a traditional used car dealership right so we are what we call ourselves an online used car dealership and what we do is that we enable consumers to even businesses right to buy vehicles and to end online and that's what we're trying to do and what we have seen in fact I was just having this conversation with the last distributor a few days ago and we have seen you know enormous uptake I mean this is we're talking about you know a few hundred percent increase in terms of leads or even conversion so to speak where people are more okay you know we've like okay you know what I'm okay not seeing a vehicle at all I just want to buy it off you straight away and the car can be in Jakarta but we are able to then push it off to say Surabaya to Bali, Bandung and stuff like that doesn't really matter right so so for that matter we provide the consumers the experience that they want and desire at this point in time which is contactless right you know for that matter pass free and you know easy way of doing it end to end online and stuff like that so these are the couple of trends that we see out my group I mean currently right now at this stage in time primarily because driven by the the whole pandemic situation sure and what kind of selling trends are you seeing I mean how are people selling their vehicles are they actually selling it to upgrade themselves to another vehicle or are they selling it just because you know they would rather go on a bike instead of using the car so what's it that you think that I okay so first of all I would say that if you have a car and you if you intend to do not drive a vehicle and stuff like that this is the best time to sell a car because what we are saying is record sale prices in actually pretty much all the markets that we have seen right Indonesia Singapore Malaysia included the prices is today in my opinion at least at least 15 you know percent higher or so than it was a year ago right pre pre pandemic which is a little bit weird but if you look at it from a supply demand standpoint there is a genuine lack in supply of the market because you know I started this conversation by saying that hey there's a lot of people that is trying to buy a new car but they do not have to really buy a new car because the factories were closed so as a result they were no new cars to buy so as a result the the market is sort of being stuffed off of supplies on new cars I mean use cars right so as a result you know for you right now if you're trying to sell a vehicle actually the pricing trend is perfect for you right as a seller now as a buyer unfortunately that also means that the cars are also on the higher end than you was a year ago so in terms of pricing trend we are saying that you know it's really trending upwards um you know and and we see these across all markets that we are in right Indonesia Thailand Malaysia Singapore included yeah okay um you know let me also sort of touch upon the tech side of caro now I understand that you have a very unique algorithm which does the pricing right there online so my question is that you know what what is the what is the the mind that you I mean what is what is largely the the parameters on which this algorithm is based or you know what makes it so special and also what is the human intervention within the pricing of the vehicle that you do at caro yeah so pricing is a is a very important indicator to be very frank uh for us as a company but of course there are other things that we do that's even more interesting in my personal opinion like you know computer vision stuff and things like that but let's talk about pricing since you asked right and and and you know it's true right from our end if you give us uh enough information not too much just basically the actually or your make model and the age of the vehicle we can tell you uh to a 90% degree of confidence how much to buy this car for in today right from this point in time and how we have built it and you know the question was how how we how what kind of parameters and stuff like that I can't tell you but I end up I tell you have to kill you but the long and short of this is that uh we we rely a lot of a lot of historical information within our system right so you know every day hundreds of thousands of cars are transacted across our platform across Southeast Asia right so as a result we we know like for instance a given car especially if it's bread and butter car like a Toyota Corolla you know a pro duar a proton and stuff like that we will know okay how much is this car last sold for in a wholesale market and as a result from which we can extrapolate very nicely based on the age you know the condition of vehicle uh again you know because all cars are inspected we can then back into a number and tell you say okay this is the range because the range needs to exist primarily because of the condition of the vehicle all right so that's that's the that's the model that we have and that honestly is what we call from a computer science standpoint an expert model so you know we built it based on interviews with experts and certain market information like in Singapore's case you know a good determinant actually is the COE prizes at about in time it changes every two weeks all right in Malaysia's case a lot of it is determined by market right so the market and the Malaysian numbers varies quite erratically day to day in that census result because it's purely driven by market forces um in Thailand in places like Indonesia and stuff like that pricing is to be honest much easier primarily because the banks have certain guidelines on it right the banks certain publish publish certain guidelines on pricing and as a result pricing for that method in those markets are erratically easy right but for us you know we always pride ourselves as a really a tech company right and we always look at ourselves versus you know any of the other competitors or the the the adjacent businesses and stuff like that and the key difference between us and any of the teams that you have running these businesses is that we are all uh I know most of the majority majority of the management team I would say 60 70 percent of us are actually computer science by training or technical by training by anyhow right that basically means that we really understand technology and for that matter we understand how to implement tech across the full spectrum of of the car ownership right everything ranging from you know uh using uh computer vision to do simple things like LCR carpet recognition to even things like you know recognizing dense right recognizing your your you know the damage the level of damage of a vehicle and as a result tell you you know we do what exactly and how much does it cost to fix this particular bumper right that you have because that's that's how much information we have and that's how much emphasis we place on on everything we do from computer vision down to machine learning right uh but yeah I also know there's a lot of interesting usage of of technology that we have in the in the company to be very frank and I would love to show you more what these days if you're interested in the stroke by the office and we can show you around sure and you know I mean just taking this conversation forward given the data points that you've been able to require because of you know your consumers coming over there what kind of pivots have you done over the year I mean you know in terms of your business model from where you started to where you are currently you know that there is of course a subscription business as well there's a B2B side of the business as well so you know what what those data points actually guiding you towards uh actually going in newer directions or at least go in extended directions of the automotive business and used cars yeah so I would also say that you know we haven't really done a pivot per se right what we have done is that it's still the same thing for that matter right you know for us the mission of the business really is to provide consumers with the best buying experience right the the way we think about this is that there's many facets of this right so you know we would have businesses we started as a as a C2C business right so basically selling consumers I mean selling cars directly between two consumers and we become that platform so to speak but you know eventually we then do B2C which is honestly not too different as a business it's effectively a 2C business so to speak but the whole experience end to end stays pretty much the same right you still need you know you need to get insurance you need to get loans you need to get you know the car transferred uh and for that matter the cars vehicles check and stuff like that so for us the core business which is to enable and you know core mission so to speak which is to enable all the consumers to find the best right on themselves hasn't really quite changed right and attached to that side of the business when we talk about subscription right for us it's it's the same form it's the same thing right so for us as a company we always had the financing business right since one year each into finding the business the company itself and really leasing subscription you know we don't really do rentals but let's just say subscription which is actually honestly a very very popular product in Singapore now has been a strong success but we don't look at it as like oh we're pivoting away from selling cars and stuff like that but actually if you think about subscription it really is a form of financing it really is right and that basically means nothing more than just okay you know what uh you know in-house genie will finance this car and then for car rolls out of stuff be basically look for a home for this for this particular unit in that sense and we look we continue to try not to take inventory risks to speak right we will only basically allow for subscription or get a car for subscription only if we have a contract in place right so for that matter it's always back to the back we don't have too much if any risk at all from inventory standpoint uh and that's that's important we try to run as as set like as we can as a company and uh and yeah I'd also you know for us we see a lot of interest in subscription and we think that that's going to be the case uh moving forward but I again I would stress that there's not so much of pivot to say but it's more like as we go deeper into fulfilling our brand promise or mission and stuff like that we are offering the consumers various form of the same thing really right you know we are we are effectively selling them or rather trying to sell them a vehicle but in the form of subscription in the form of you know uh selling it directly to them in the form of higher purchase loans and stuff like that it doesn't really matter it's still the same core thing that we're trying to do yeah so from a user experience point of view do you think in particularly in this business which is used car business uh do you feel that it's uh vital or do you think it helps to also have a physical side to this business I mean you know having stores where people or just places where people can come in and actually see the vehicle no it actually is uh it depends on country to be very frank so but I would say that for now we as we launch in each market Indonesia you know uh Singapore even Malaysia and stuff like that we tend to always have a showroom all right um and this is primarily because this is this is out the middle of this Asia right where the trust I would say for for even a platform like us is on the low end right and you know if it's not us then you know even the used car dealers for that matter um and consumers tend to want to keep their tires and stuff right so as a result we we launched this uh uh in fact we just launched a few months ago uh Carol Audemore right which is a 5,000 square feet sorry rather square meters per city half an acre right uh for us to to park hundreds of cars right but the idea was more to be more for it to be like a center for consumers to feel that hey you know what Carol is a is a is a real generating company with the presence and uh to help build trust amongst the community and that really was the whole reason why we invested in that right uh because we look at this it's like hey you know what this is very important important for us to get a practical thing in Indonesia but did we then you know subsequently expanded way more than that went crazy and opened like 50 stores or another 20-30 of these we didn't right because what we generally believe is that the the economics needs to be sound and that basically means that we need to be careful and mindful about the differences between an online business and the brick and mortar business and we are not right let's just be clear we are setting up the shop because we want to complete the experience and also to to to ring fans and to bring on board people who are on the fence right because on the fence if you have a showroom and stuff at that they might be more interested to try this whole new experience and stuff because they just trust that hey the brand has presence uh and also as a result we we genuinely believe that uh we do not need showrooms to expand the business we want to continuously evolve as a as an online player uh but the the showroom in our opinion at least right now at this point in time and has been statistically proven to be the case is that it is better off with a showroom than without a showroom for now right but when we expand it is that questionable do we really need to expand more showrooms or can we expand digitally can we sell nationwide without the need for us to to be present in Surabaya, Bandung, Bali, you know Jaffa and stuff at that and can we just do a bit it's just you know with a right centre and so going forward what are the markets are you looking to expand in and are you looking to do another round of fundraise for it um I mean are you looking to go into some bigger market I mean I understand Southeast Asia has a lot of great small markets where you can expand but markets like China, India or maybe you know Middle East is that of France? Uh well let's just say again my first question right was are we fundraising and stuff at that the answer is that we are not really fundraising per se but we always have a interest in bar interest and stuff at that the honest truth is that we probably may be closing around in the next few months right so that's the that's the honest plan even though we we haven't been actively trying to fund risk per se right but we do have quite a bit of inbound so on on that second question of market expansion right and on market expansion we always look at this as like we always try to especially in some of this area we always try to look for the right partners right so I will always say never say never that's the first thing I would say like you know somebody asked me would I ever enter India and stuff at that answer it's honestly probably no but if for instance if you find me I shouldn't name names but if you find me the richest family in India that wants to do this and then say hey you know what let's do this together why not right because you know it is possible to do things especially in the right markets with the right families or with the right partners so to speak and I think that's how we always maintain an open mind about market expansion and stuff at that we are today already present in like four countries from a marketplace standpoint but you know what we don't broadly always say is that we do have multiple offices worldwide right so in fact we have seven places geographically seven locations right today already we are present in like China Myanmar and and Vietnam right so that includes the including Indonesia, Thailand, Malaysia and Singapore that's about seven geographies already yeah and I mean going forward would you look for organic growth or inorganic growth in a new market would you rather require another you know player who is already doing this digitally or would you want to go up and set up in that country from scratch? To be very frank we have tried looking and stuff at that we couldn't really find any right so that's one thing about competition we haven't really found anything too much especially in the other markets um so for us it's always good business buy right and the question for organic or inorganic is only one thing which is how long does it take and how much does it take for me to to get to where the competition is if it exists right and if it is sufficiently high then we might as well just buy it now if the answer is that you know the the barriers to entry is low whatever the the cost to acquire market and to get bigger than the competition is fast then we will normally tend to refer to just do it ourselves right or for that matter when the market is not called right like for instance certain markets there are not like you know hundreds of millions of population would probably be a non-call market for us and as a result will be markets that would be put on the on the back burner so to speak yeah but from an expansion standpoint the the plan is whether or not it's organic or you know organic I think really depends on a lot of opportunities for us to be again very absolutely frank we are looking at more licenses right you know everything ranging from your banking license insurance license you know like you know whatever multi-finance licenses those are super interesting to us and for that matter are things that we are more looking for but in terms of growing the marketplace business per se I like to think that that really isn't too much if any competition in the region and I mean you know from a point of view of subscription market business that you've started in Singapore do you also see that becoming bigger in other economies as well other markets too yeah in fact to be very frank we will approach by a few conglomerates to bring it to all the places right you know Japan Korea and even to like Indonesia the honest truth is that we are still discussing I don't really have too much things to report beyond that but yeah the plan is to of course expand the business now that we have created a platform the system the know-how in fact the suffering business is immensely profitable for us right as a business even though it's only like about two years old the whole line itself is profitable by itself and of course we would love to replicate this this whole business across the other markets as well sure and do you at some point of time also looking at doing an IPO I mean just to instead of having another fund raise or debt raise do you think that might be a strategy for you going forward the financial yeah I think the net of this is that if you look at public comparables for us right so like in in the United States there's a cabana there's room even in China in the private comparables standpoint they're all doing well right or is it car back or something in Latin America so for us of course the plan is to stay private for as long as we can but we do recognize that the company is almost five years old right as we just said right so you know we we need to think of exit plans for the business moving forward and you know it's whether or not IPOs is on the cards really depends on how the business does over the next one or two years and we think that we are definitely on track to do somewhere north of like one billion dollars revenues quickly and whenever we hit that mark and even just before that we can potentially look for an exit park and whether or not it's an IPO or it's an IPO in New York for exchange sx or for that matter trade so we are always open for discussion you've also entered into a b2b segment as well so what what opportunities do you see there yeah so you know we do a lot of b2b sales when it comes to like marketplace sales and stuff like that but I think if what we recently deep was this whole what we call usage based insurance ubi right so you know in this particular ubi instance we actually partnered up with nqc income right in in singapore and and offered the first pretty much usage based insurance or what we call behavior based insurance kind of product to the market right where the consumers or at the start actually the more like the fleet partners will install this particular device into the car and then as a result we will be able to reduce the premiums and this is very important especially given the you know the overhang of the pandemic we have the excess we have the vehicles but you know what we drive probably half of what we used to do but the insurance premium remains the same so that's where that's the market that we're going after right we are we're basically saying that hey you know what if you do not drive that much or if you are a good driver and with a low claim ratio and stuff like that then you switch away from you know the traditional insurance to what we call usage based insurance right which you know effectively means that you pay for what you drive and it's incredibly affordable right um I can't remember the exact rates because it really depends on on the what car you drive and stuff like that but you can get a quote instantly online and I guess you know if I was if numbers is correct you will pay um about half 40 to 50 percent lesser than what you are paying today yeah so you know from across standpoint it's an amazing business and this only made possible because we did this partnership with with with nqc income you know some bb stuff that we are doing internally sure and finally you know what what are your learnings as an entrepreneur in these five years that you've understood about running a organization from a startup you know transforming it to a large organization going global what what is it that you've been able to intake during all I can say is that you never stop learning right so um you know for myself the the organization has grown quite a bit right so today we are almost let's say give and take six six seven hundred people now across four geographies it's impossible to do it unless you have the right uh right uh reports or for that matter right management team uh you know and and you know we we kind of think of ourselves as a fairly strong team together you know most of us have been incorporated to work in you know multi billion dollar companies and stuff like that and I cannot stress enough the importance of finding the right partners with you on this journey right and for me you know as an entrepreneur I feel that uh I have learned quite a bit because my background was more venture capital right so you know I generally think at least I feel that I have and I have run companies before so this is too new but what I have found is this newfound respect for you know entrepreneurs who actually pass us even the five-year mark right stuff right because it's actually not easy and every day you are you are you are learning something new about the business that you know that no no no matter how much MBAs you do or no masters or so to speak can't just come prepare you enough for it right so what have I learned I've learned that uh when the tough uh when a going gets tough you know the tough gets going right so we just have to constantly push ourselves deliver numbers and execute like you know our life depends on it I think that is the the net of what I've learned across my last uh few months I'll write a few years uh and particularly from a pandemic point of view you know when things really came to a halting break so how how did you sort of found that resilience uh to go on and you know continue the business as if nothing is happening around so what what does it take yeah so you know I I actually switched my my habits entirely right so you know I during like the pandemic I think the first thing that I did was uh I switched out from like you know I'm doing a call right now in office but you can ask Manisha this which is I do 99% of my calls outside of office these days right whenever I'm exercising and stuff like that so I think it's very important to keep a clear mind right on what you're trying to do so during the pandemic I remember very clearly in April May I was like oh you know this is not good because uh revenues has declined rapidly and stuff like that what do I ever do so every day you know literally I was on the phone calls but I would I try to stay active right so I lost almost like you know 18 or 19 kilograms throughout this whole period and that as a result I feel uh was important because it gives me that that that time to be alone and for that matter to think more about what should I do during this time of of things and uh and yeah I know so so from that standpoint you know we are very fortunate to to be where we are today right I think not all companies can be can say the same in that sense right so you know we we are always looking at ways to improve ourselves sure great wonderful talking to you Aaron I think what you've done so far in terms of building caro and of course given the fact that pandemic was such a new situation to all of us we were not we never seen a lockdown in our lifetimes before this so you know living and trying to work and putting everybody together has been a hard task for everyone but good to see uh that you know you've been able to put a mobility business back on the road and make sure that you know it's found it's more your once again uh and helping it to grow and also expand it to other markets wonderful talking to you Eric entrepreneur today and we wish you all the very luck in terms of helping you expand your business more and more and grow to new markets thank you very much thank you so much thank you so much thanks