Breaking into markets traditionally dominated by big players can be daunting but logistics software company Sypher Labs has proved it is up for the challenge.
In the first of a four-part series on how smaller firms made their mark, Jacqueline Woo speaks to founder and chief executive Shamir Rahim to find out how the company carved out its own niche.
Q. How did Sypher Labs come about?
A. I'm actually a molecular biologist by training, and I spent seven years doing stem cell research related to pharmaceuticals and medical devices. But I later realised it was really expensive to set up a biomedical start-up.
There were, on the other hand, some really neglected industries, with logistics being one of them.
For as many as 80 per cent of the companies here, planning is still done very manually - on whiteboards, notebooks, at most spreadsheets. It's not surprising, given that not a lot of technology start-ups give attention to this space.
Most small and medium-sized enterprises cannot afford to buy the relevant automating software as well because most of what is available in the market today will cost them hundreds of thousands to millions of dollars.
You're looking at family-business transporters who have five or 10 trucks, maybe 50, and there's no way they're going to spend that kind of money.
This was a real acute problem that we saw in the industry and wanted to help solve, so we set up the company in late 2012. I took out all my savings, which wasn't much, about $50,000.
Q. Tell us more about the firm's flagship product, VersaFleet.
A. VersaFleet is a cloud-based, simplified automating app that companies can use to manage their fleet of land transport vehicles, so it's very intuitive to use and is easily accessible from anywhere with Internet.
The software helps companies complete their logistics planning in just seconds, compared with what would normally take them an hour or more.
More importantly, the app is based on a monthly subscription model, which makes it very affordable for any SME.
Automation has become even more important today in logistics because of the whole e-commerce explosion. For example, a driver at a logistics company who used to do 10 deliveries a day is now expected to do 100 deliveries a day.
An operator who previously planned 100 trips a week now has to plan 1,000 trips a week.
With this higher volume from e-commerce, you can't use the same old methods.
Q. What are some of the challenges the company faced in its early days as a smaller player?
A. I do not have a formal background in logistics, but we didn't want to build something nobody uses, so we had to spend a lot of time trying to understand the industry.
We spent at least half a year talking to and shadowing operators and drivers.
We literally built the software beside them so they could test it early on to see what made sense and what did not.
There was the challenge of coding quickly, which is still something we focus on today.
We have re-coded the app at least five times now. We cannibalise our own code so that our customers don't experience any downtime at all because it is a core business- to-business app.
It has to be up all the time for their operations to continue smoothly.
As for funding, we were very fortunate to get a start-up grant from Spring Singapore just months after we started. Without that, we wouldn't have been able to get to where we are today.
Later in 2014, we also received $589,000 in seed funding for scaling up VersaFleet and entering new markets. The round was from a Singapore-based incubator firm, Get2Volume, together with the National Research Foundation.
Q. How did Sypher Labs manage to carve out its own niche?
A. Big players like SingPost and DHL have invested millions or more in such automating technologies, but these innovations are then limited to just them.
To get to the SMEs, where inertia to adopt something new was pretty high as well, we really had to price our product at their level. It puts pressure on us because the revenue per customer is lower so we need to find more customers, which is still a challenge.
But we're pretty proud to be able to still offer them a product they need at affordable prices. This has reduced the barrier for adoption by a lot.
Most of our competition today comes from Silicon Valley. Hopefully, that will remain a sustainable advantage because the way logistics is done in the ASEAN region is quite unique compared with that in North America.
We call them lorries, they call them trucks.
We measure in metres, they measure in feet. Even the ecosystem is different, and our product has been designed to factor that in.
Q. What is the next step forward for the company?
A. Right now, we have paying subscribers globally, with most of them coming from the ASEAN region. We have reseller partners who distribute our product in Australia, Malaysia as well as in Indonesia.
So we are looking to grow, specifically in China and India. We are already in talks with players who are much bigger than us and can be our "big brothers" in taking us to those markets.
Both India and China are much, much bigger so manoeuvring them will be different all together.
It is still early days, but we hope to iron out these commercial agreements by this year
and start marketing our product there by the turn of the year.
We are also building an entirely self-serve, frictionless process so that anyone anywhere in the world can sign up and start using our product even if we do not come into contact with one another.
It will be something like Spotify, where subscription comes easily and instantly.
Hopefully, this will come through by this year as well.
We also decided that someone in the company should get some formal training to get a better sense of the industry, so I'm doing my Master's degree in supply chain management at the National University of Singapore.
This article was first published on March 16, 2016.
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