They say that third time's the charm. For serial entrepreneur Henry Chan, the adage has proven true.
A mechanical engineer by training, the 31-year-old went through two failed startups before his third venture took off.
One was Ronzaro, an online tailor service in 2011 that had no sales as it had the wrong product-market fit. The other was a mobile app that searched for buffets in Singapore, but contesting views within its ranks led to the app's demise.
But a conversation some two years back with a Zalora colleague, Joel Leong, planted the seeds for what would lead to the establishment of e-commerce platform ShopBack.
As early staffers at Zalora, where they were part of the e-commerce giant's growth team, the duo were no strangers to the opportunities that e-commerce could offer.
"What we saw was that e-commerce was growing really, really fast in South-east Asia, and we realised that it's a phenomenon that's here to stay," Mr Chan, the firm's chief executive, tells The Business Times. "We looked at all the business models out there and we realised that cashback is something that has a very interesting value proposition, for users as well as merchants."
What sealed the deal, however, was the lack of incumbent players on home ground.
Says Mr Leong: "There was a (cashback firm) in every region. There was one in the US, there was one in China, and both are now billion-dollar companies. But nobody was doing it for South-east Asia. We felt that we had this 'unfair advantage' because we all had e-commerce experience. So we decided to take a leap of faith, quit our jobs, and do it."
Started with six founders and S$30,000 in capital in 2014, ShopBack offers users a percentage of their purchase money back when they shop at affiliated online stores, such as Lazada, Groupon and Expedia. It takes a "small commission" from each sale.
Within two years, the firm grew from those six founders to over 85 employees in a space at Block 71 (the local equivalent of Silicon Valley) in Ayer Rajah Crescent.
It is now in five countries around Asia (with a sixth, Taiwan, due to come online next month) and has linked up with more than 500 merchants in Singapore and 1,000 in the region, directing more than S$15 million in sales to them every month.
It receives an order every 10 seconds, which translates to 360 per hour and more than 240,000 orders every month; all that traffic comes from some 250,000 users in Singapore, and more than a million in the region.
Says Mr Leong: "The beauty of our model is that there is no risk involved for the merchants. They only pay if there's a transaction. If there isn't one, it's free. We bear the risks. And that makes it much easier to get these guys on board. Once you have no risk, it's very easy to pitch to their management."
But when queried, the duo would only describe the initial phase of establishing the business as "very painful".
"At the start, people will dissuade you. It's the Singaporean mentality, right, when you try to do something new," says Mr Leong.
Concurring, Mr Chan adds: "At the start, everybody was very negative. We don't have a culture that is pro-innovation or pro-upstart. You are trained to joined the incumbents, because it's stable and it's prestigious."
Keen to prove their naysayers wrong, they embarked on a pitching spree to raise seed capital. They didn't have to wait long.
A venture capital fund that invests in early start-ups, Accel-X, took a "leap of faith" and invested US$500,000 in seed funding in April 2014.
"It really was a leap of faith. All we had was a PowerPoint deck and two guys," says Mr Chan. "At the same time, with the same pitch, we were rejected for a grant by Spring. They said we weren't innovative enough. We still keep the letter."
When asked if they had a workable prototype for proof-of-concept, the duo bursts into laughter before replying coyly: "We said we had one, but it was really the PowerPoint deck and our idea. When they asked for (the prototype), we scrambled to build it."
A chance encounter and subsequent pitch to Willson Cuaca, a managing partner at investment fund East Ventures at an investor conference in March 2015 bagged ShopBack a further US$600,000 in funding.
But the firm, like most startups, still faced pressing issues, chief among which were talent acquisition and engagement with potential merchants.
The solution, as it turned out, "sort of came by itself".
"These things tend to come in waves; once you have a few guys on board, you build momentum and the rest will follow. (It's just that) no one wants to be the first guy to work with you," says Mr Leong.
The same rationale was applied to talent acquisition. Says Mr Chan: "The best way (to recruit) is through referrals. Once you have one good guy onboard, other good guys will hear about it. Then more will join, and suddenly you have 30 good guys onboard."
As the firm grows, it is keen to expand beyond providing simply cashback and on to value-added services for its users.
One such service will have ShopBack provide aggregated reviews and comparisons to help consumers make more informed decisions when they shop on the platform, says Mr Chan.
"Say you want to buy a phone… in time to come, we can tell you the stores that ship the phone, the different prices, and why you should buy from each store. It's information that helps you make decisions that aren't cost-driven."
The service is expected to be rolled out by the end of the year.
Another area that the firm is looking into is beefing up its risk management systems, as it has seen attempts to game its system.
Identify fraud (where scammers carry out transactions using different identities) is particularly prevalent. To combat the issue, ShopBack is in the process of implementing safeguards, such as issuing one-time passwords via text messaging to its users.
But even as the firm looks to shore up its security, it also has to deal with an ever-present threat: competition.
"The Internet is all about speed; the market leader has an unfair advantage. Today we may be the market leaders, but the industry is still very young. So we want to focus on growing the business first," says Mr Chan.
One casualty of that strategy, however, has been profitability. "Accounting wise, yes, we are not profitable. We are at a phase where we are trying to grow quickly, but we do make money out of every transaction. We don't lose money," Mr Chan adds.
The firm expects to be profitable in about 12 months.
Acquisition too have been floated, particularly as one of the largest cashback firms in the world, Ebates, was acquired by Rakuten in 2014.
But the duo have so far refused offers.
"If we sell, we would be under-selling. There are still a few more markets that we can dominate, and our current countries keep growing," says Mr Leong. "What we have learnt is that once you get numbers, everything falls into place. But if you keep dreaming but you don't do, you will die."
This article was first published on Aug 24, 2016.
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