Aaron Tan is on the way.
As the co-founder of a newly crowned unicorn and one of the fastest growing startups in the Asia-Pacific region, the Carro CEO is now well on the way to listing on the stock exchange.
And with investors like Softbank getting on board, he has no plans to slow down.
“The question is, now that we’re down to $ 1 billion, how do we get to $ 10 billion? How do we get to $ 100 billion?” Tan told CNBC Make It.
I wouldn’t say I got my co-founders to start the company together …
Co-Founder and CEO, Carro
Carro – a play on the words “Autoheld” – is a Southeast Asian online car marketplace that was developed to simplify auto business with artificial intelligence.
Founded in 2015 by Tan and his college friends Aditya Lesmana and Kelvin Chng, it reached coveted unicorn status of $ 1 billion in June after securing $ 360 million in funding. The deal brings total capital to over half a billion dollars and places Carro alongside major competitors such as Carsome from Malaysia and Germany Carmudi, in an industry worth $ 50 billion and growing.
But as Tan explained, it was a journey there.
Driven to success
The 36-year-old’s entrepreneurial story began at the age of 13. As a teenager growing up in Singapore, the geek made extra money building and selling websites.
Later, however, while working as a venture capitalist in the United States, he saw the opportunity to combine business prowess with his true passion: trading automobiles.
Aaron Tan, Co-Founder and CEO of Southeast Asian auto marketplace Carro.
“When I was a VC in the USA for many years, I remember very well, I met all kinds of automotive companies – your Beepi, your Uber, your DriveShift. What that showed me was the dynamics in the room, ”said Tan.
While the auto resale market was thriving in the US, it was not in Southeast Asia. It was known to be opaque as multiple middlemen made it difficult for buyers and sellers to get the best deals.
What we saw was the changing behavior of car ownership.
Co-Founder and CEO, Carro
Tan wanted to change that. When he returned to Singapore in 2015, he teamed up with his classmates from the Carnegie Mellon School of Computer Science to come up with an algorithm that would do just that.
“I wouldn’t say I got my co-founders to jointly start the company, but I think I sold the opportunity that this could be a lot more interesting than anything they did,” Tan said.
Enter a fast-moving market
The trio was on to something. In a region with a large and growing, digitally savvy middle class, price-conscious consumers are increasingly opting for used models.
“The growing middle class combined with low car ownership rates in Southeast Asia were really the main factors that stimulated new car sales and this ultimately resulted in a buoyant used car market,” Justinas Liuima, senior research consultant at Euromonitor, told CNBC Do It.
The Carro car marketplace launched Singapore’s first car subscription service in 2019.
Carro took advantage of this demand and in the following years launched its online offer for private individuals and wholesalers in Indonesia, Thailand and Malaysia. In the meantime, end-to-end financial services like lending, insurance, and aftercare have been added.
By 2019, inspired by streaming giants Netflix and Spotify, the company launched Singapore’s first car subscription service that allows users to lease a vehicle for a monthly fee, including taxes, warranty and maintenance.
“What we saw was the changing behavior of car ownership. The niche really was to find people who want that flexibility. And more importantly, they actually want to try new cars,” Tan said.
Navigating the pandemic
Then, in 2020, the pandemic struck. But what was a big hurdle for many start-ups turned out to be an opportunity for Tan and his team.
Hygiene and personal safety concerns created new demand for private transportation. And with closed borders and a global scarcity of microchips restricting auto production, used car sales soared.
Covid has definitely contributed to accelerating our entire digitization internally and externally.
Co-Founder and CEO, Carro
“Covid has definitely helped to accelerate all of our digitization internally and externally for the general public,” said Tan.
The company’s various initiatives included a contactless “Showroom Anywhere” concept that enabled prospective buyers to view and test cars without direct human interaction. Instead, they could access the vehicle in a public parking lot by entering a contactless QR code.
In March 2021, Carro posted sales of $ 300 million – 2.5 times the previous year. The six-year start-up says it is now profitable.
The path to an IPO
However, this growth comes against the backdrop of increasing scrutiny of the auto industry.
Transport accounts for almost a quarter (24%) of global CO2 emissions, of which 75% are road vehicles. And even if governments and automakers make plans to abandon traditional internal combustion engines with electric vehicles, many existing gas guzzlers will simply be exported to developing countries.
For his part, Carro said it played an important role in the transition to more environmentally friendly modes of transport.
Carro says it is helping the transition to greener modes of transportation by allowing buyers to test new cars such as electric vehicles.
“Our job is to enable this recycling or reuse of the vehicles in the shortest possible time. And the second part of it is that [electric vehicles are] a strong tailwind for us, because that promotes change. For a platform like us, we strive whenever the market changes, “said Tan.
Sustainability will be one of the many things on Tan’s agenda as he sets out to get his company public within the next 18 to 24 months. With regional expansion, AI developments and acquisitions, one thing is certain – it will be an eventful trip.
“Between now and then [we need to] Prepare the company, controls must be in place, people must be in place, compliance must be in place, “said Tan months from now.”
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