Building a business from the ground up is no small feat, and Carsome‘s journey over the past nine years is a testament to that.
Co-founders Eric Cheng and Teoh Jiun Ee have navigated through the complexities of the used car market in Southeast Asia, transforming their startup into a profitable powerhouse.
They shared their thoughts on profitability, maintaining a startup mindset, and why “growth at all costs” isn’t the way forward during the DisruptInvest Summit 2024 and BEYOND Expo 2024 in Macao.
For context, Teoh spoke at DisruptInvest Summit, while Eric spoke at BEYOND Expo.
The journey to profitability
Eric, Carsome’s CEO, reflected on their nine-year journey, likening it to “graduating to the next grade each year”. He acknowledged that challenges have come in many forms, but their focus has remained clear—entering meaningful markets with significant potential and solving real problems for their customers.
From the outset, Carsome aimed to simplify the car trading processes, leveraging tech and data to innovate. This customer-centric approach not only drove their initial growth but also attracted talent passionate about revolutionising the industry.
“When you solve a problem dear to your customers, you create a strong intention to seek solutions, and that fuels growth,” Eric explained during a panel discussion at the BEYOND Expo.
Earlier this month, Carsome announced its first quarterly EBITDA-positive result for Q1 2024, building on its success from December 2023.
According to Carsome, one big factor in this success is a 48% year-on-year increase in gross profit per unit. This boost comes from vehicle sales and is powered by Carsome’s AI-driven pricing engine, which uses big data to accurately forecast prices.
The importance of a startup mindset
Despite Carsome’s impressive scale—from selling 30 cars in their first month to selling around 15,000 cars a month now—Eric emphasised the importance of retaining a startup mentality.
“It’s crucial to keep that mindset, no matter how big you grow. We’re still learning and adapting, just like we did in the early days. This approach keeps us agile and responsive to new challenges,” said Eric.
Teoh, who is also the Carsome Academy director, echoed this sentiment, highlighting the company’s pivot from an advertising platform to a used car marketplace.
“Starting in 2015, we had to find the right market fit through trial and error. Pivoting was essential, and it taught us to stay adaptable and focused on our core strengths,” he said at the DisruptInvest Summit.
Growth at all costs?
While growth is a common startup goal for any business, Eric and Teoh believe it’s crucial to balance ambition with sustainability.
“Growth at all costs isn’t a good mindset. Instead, we focus on getting the product-market fit right. This ensures that our growth is meaningful and sustainable,” Eric stated.
Teoh also said, “We’re not just about rapid expansion. We’ve been methodical in building our ecosystem—expanding into Indonesia, Thailand, Singapore, and the Philippines. This careful approach ensures we’re providing value at every step, from financing to after-sales services.”
The co-founders are also keenly aware of the economic landscape.
Eric pointed out, “The Southeast Asian economy has shown resilience, but localised challenges like interest rate hikes in Thailand affect the market. We’ve designed our processes to react quickly to such issues, for example, maintaining a high approval rate for financing applications.”
Building a comprehensive ecosystem
Teoh elaborated on Carsome’s ecosystem strategy. “We’re building an end-to-end solution—from buying and selling cars to financing and after-sales services. Acquisitions like WapCar and iCar Asia enhance our value chain, providing a seamless customer journey.”
This comprehensive approach includes initiatives like the Carsome Academy, which aims to upskill the workforce and meet the growing demand for technical expertise.
“We’re not just focusing on internal training. We’ve created programmes for the public to gain recognised qualifications, supporting the broader industry,” Teoh shared.
Looking ahead
As Carsome enters its tenth year, Eric and Teoh remain committed to their core principles.
“Profitability is a significant milestone, but it’s just the beginning. We’re focused on sustaining this success and continuing to innovate,” said Teoh.
In a rapidly evolving market, Carsome’s ability to blend a startup mindset with strategic growth and a strong customer focus helps them stay ahead.
“We remind ourselves every year to stay grounded and ready for new challenges. That’s the true startup mentality, and it’s what drives us forward,” Eric said.
Featured Image Credit: Carsome