Interview: Groupon Singapore – Acquired for $24 Million in Less than 1 Year
This is part of the Successful Businesses Interview Series, where I feature successful businesses that are making a difference in others’ lives.
The seventh and last interview in our Successful Businesses Interview Series features Groupon Singapore, the most popular deal-of-the-day website in Singapore, and part of Groupon conglomerate worldwide.
If you’ve not heard of Groupon, it’s taking the consumer market by storm. Launched only 3 years ago (2008), Groupon now serves more than 150 markets in North America and 100 markets in Europe, Asia and South America and has amassed 35 million registered users! (Wiki)
So how does Groupon work? Firstly, they negotiate with a merchant for a sizable discount on their product/service (usually 50% and above). Then, they promote the merchant’s product/service on their site Groupon.com, where consumers gets to purchase that item at that discounted price, on that day.
The deal is valid for 24 hours – When the day is over, the deal is over as well. The deal is only confirmed if a minimum number of purchases is reached. If the minimum quota is not met, the deal is called off. The consumers don’t get the deal and the merchants don’t sell anything. Hence, collective buying power is the key driving force behind Groupon’s concept (i.e. group coupon).
The next day, a new deal is promoted on Groupon’s site. The cycle then repeats.
The model works very well because (1) For the merchants, they get to (a) clear excess inventory (b) drive quick awareness of their business and quick sales (2) For the consumers (us), we get a large discount – one we’d never have gotten if we were to purchase individually. We benefit from the collective buying power. Both merchants and the consumers get value from having Groupon as the middleman.
I’ve checked out some of Groupon’s deals, and some of them are massive. Discounts are almost always 50% and above, and there is a wide coverage, from restaurant meals, spa treatments, vacation holiday packages, ice cream, concert tickets, magazine subscriptions, to even dance lessons. Each country has its own set of Groupon deals – if you live in Chicago, you’ll get access to Chicago deals, while people in Singapore get access to the Singapore deals, and so on.
An example of a Groupon Deal. This is a $20 dining coupon for Swensen’s, sold at Groupon for $10. You get to save $10. That’s 50% off!
One watch out on using Groupon or any deal-of-the-day service for that matter is to ensure you truly have a use for the product/service before purchasing. The last thing you want to do is to buy something because there’s a discount and it’s a time-sensitive offer, and not because you need it. That’s just consumerism at work. As long as you do that, then you’ll find Groupon a perfect way to save money.
I had the extreme pleasure of interviewing Karl and Christopher Chong, who are brothers and owners of Groupon Singapore. I first met Chris on Channel News Asia’s Blog TV last Dec – we were guests on the episode on bucket lists. As with David from Udders, we didn’t get to speak much then as we were rushing to get ready for the program, but kept in touch after that. So when I started the successful businesses interview series, I immediately thought to approach Chris/Karl!
While Groupon Singapore is HUGE today (it’s the top 100 site in Singapore!), it was only 1 year ago (May ’10) when Karl and Chris first started it! Can you believe that? Imagine you can start something today and have it blow up into mega proportions in just 1 year from now, with the right attitude, smarts and know-how. Are you going to keep waiting or are you going to get started right away?
At that time, Karl had long been on the lookout for an opportunity to start an internet company, because he saw the potential in new media. One day while working in NYC, he came across an idea which he thought would gain traction – A group buying site, where consumers get together to purchase a product/service at a discount from a merchant. At that time, the trend of group buying sites was rising in US.
He did his research and decided it was now or never. He quit his very lucrative job in investment banking in US, and contacted his brother, Chris, who was studying law in Australia, to join him in this endeavor. Chris then deferred his studies, came to Singapore. With that, both of them launched their company called Beeconomic (Be-Economic) in 2010, with the deal-of-the-day concept I described above.
As the concept was new in Singapore, the brothers had to educate the local businesses and convince them of its merits. There were a lot of resistance from merchants to sign on. But the brothers persisted and pushed through, focusing on the potential and value of the concept. As Chris put it, they had to “knock on the doors of businesses and convince them to work with us”. By no means was easy – It was a lot of hard work, a lot of learning on how to handle rejections, a lot of business savviness, and a lot of smart planning involved.
With their extreme, hard work, it wasn’t too long before their efforts finally paid off and the concept gained some traction in the local market. In Dec ’10 (less than a year after it was launched), Chicago-based Groupon got wind of their business, and decided to acquire it in the same month for $24 million USD. Beeconomic then became rebranded as Groupon Singapore, and today Karl and Chris are the owners of Groupon Singapore, now a ubiquitous brand name locally.
In this interview, Karl and Chris openly share their story, the obstacles they faced in starting Beeconomic, how they came to be known and acquired by Groupon, and their experience in their entrepreneurial journey so far. I hope you enjoy this feature.
I now bring to you, Karl and Chris Chong from Groupon Singapore/Beeconomic:
Q1) Tell us more about you, Karl and Chris – Who are you and what are your passions in life?
Hey-we are Karl and Chris Chong, co-founders of Groupon Singapore. Currently we are working with our team on building Groupon Singapore into a household name- primarily through offering a smorgasbord of great deals with cool businesses. We’re excited to be part of Forbes Magazine’s World’s Fastest Growing Company and the last year has been has been nothing short of what our passions are in life-learning, meeting and working with great people and providing a service that keeps our customers happy.
Q2) What is Groupon?
Groupon is a deal-of-the-day website that features discounted gift certificates usable at local or national companies. We started in 2010 as a group buying site that offered daily discounts of up to 90% on everything from spas, to restaurants, to activities, even Resort World Sentosa shows.
(Celes: Resort World Sentosa is a new casino resort in Singapore offering attractions, hotels, spa, casino and meeting venues.)
Q3) Who do you target?
Our customers are working professionals, eager to uncover new businesses but wary of traditional advertising. Instead of leafing through brochures and pamphlets, Groupon sends you one email each morning with a list of deals for different types of businesses-rock climbing, or a massage.
Many Groupon customers check the website daily, and because of the variety of the deals – whether it’s photography or scuba classes or international cuisine – each customer is bound to find something that interests them.
Q4) When did you start your business?
May 2010. We gained a first mover advantage being the first to start up in Singapore, allowing us to build relationships with premium businesses. Locals enjoyed our “sweet deals” and our subscriber base grew at hundreds per a day., thanks to our $5 referral program.
(Celes: Their referral program has now been upped to $10 per referral. So if you recommend a deal to a friend via Facebook/Twitter/Email, you’ll get $10. Great way to drive quick awareness and volume for their business)
Q5) How did you first come up with the idea for Beeconomic?
Karl: I had been on the lookout for some sort of entrepreneurial opportunity for a long time. As part of the new media generation, my hopes centred on establishing an internet company.
The idea to start a group buying site came to me when I stumbled on a website selling discount vouchers for a month of indoor climbing while working in New York City. This was during the recent global economic downturn a few years back, when group selling websites offering discount vouchers started to surface in the U.S. I bought the climbing voucher and was sufficiently moved to think about whether this was a trend that would gain traction not only in NYC and the U.S. but overseas as well.
Though born in Malaysia and now an Australian, I have strong roots in Singapore through his parents, and wondered if I could bring the group buying site business model to Singapore. I did online research from my desk in NYC, focusing on Singapore’s demographics, internet penetration and the extent of credit card transactions online. I also looked for possible competitors in the city-state as the barriers to entry into the group buying site space are rather low.
After my research, I concluded that Singapore would be an ideal launch pad for a group buying site because, Singaporeans are always looking for a bargain. I felt that I could capitalise on what was close to a first-mover advantage. Still, I couldn’t do it alone. I roped in my brother, Christopher from Australia, convincing him to forego plans that he had to travel for an extended period.
Beeconomic.com was subsequently launched in May 2010.
(Celes: A lot of times it’s not about creating that next big idea – it’s about recognizing ideas that are already working and capitalizing on them. Salad Stop is such a success today because Adrien and Daniel saw that the concept of salad bars is thriving in the Western regions, recognized the trend toward healthy living catching on in Singapore, and quickly capitalized on that. Karl saw the group buying model gaining traction in US, saw the potential for it to sky rocket in Singapore, and decided to take it over.
There are a lot of great ideas around that aren’t being maximized. Rather than worry about that next big idea, think about the consumers and what they need, then look at what’s going to address the voids. Originality and planning can be quite overrated in business development – Execution is what the consumers see ultimately. If you don’t ever launch your business, your consumers are never going to experience what you have to offer.)
Q6) After you came up with the idea, how did you get started? Please walk us through how the first 6 months of your journey was like.
Chris: Starting Beeconomic was like having a baby with Karl-we’d constantly be working on it together even throughout the night. We could never leave it and it needed our 100% attention. Karl primarily worked on business development, ensuring all facets of the business would be ready in time for launch. 20% of our time was spent on the backend – Ensuring our website worked, improving the customer experience, making sure we could afford our next month’s rent, while 80% was concentrated on signing partnerships with businesses, creating buzz on our Facebook page, and trying to build a solid pipeline of good businesses.
At the beginning, it was difficult signing businesses because the model was new to Singapore – In the beginning, we had to knock on the doors of businesses and convince them to work with us. I remember reciting powerpoint slides to at least 3 business owners per a day for the first six months.
It was a steep learning curve for someone fresh out of university, but with Karl working so hard on other parts of the business I had to learn and adapt quickly. When we launched the website a huge weight had been lifted from our shoulders, people were responding positively to our website and most importantly people were buying from us. That was the biggest reward for all the hard work. After that, it was all about growing our business, our team, and subscriber base.
Since the Groupon acquisition in November the growth has been phenomenal and 2011 is going to be a big year for us.
(Celes: How far are you willing to go to achieve your dreams? This is one question you have to ask yourself. People are constantly treading in fear of X and Y, and because of that they don’t accomplish anything.
For Chris and Karl, they literally put everything out there for their goals, and that’s why they’ve become so successful. Karl gave up his high paying job in an investment bank, while Chris deferred his studies. Both put their lives on hold (Karl was living in US; Chris in Australia) and came all the way to Singapore to launch their start-up. In the first months, they rented a cheap apartment, started their business from scratch, and basically pushed their way through whatever obstacles laid in their way. Such commitment and perseverance are the key to success.)
Q7) How long did it take (after starting) before you experienced the first signs of success? What were those signs of success?
It took about 7 days (probably the most nervous 7 days in my life) after launch before we started seeing more and more subscribers and facebook fans signing up. Our deal with Bliss Spa was the first deal that sold in the 100s and that’s when we knew we were onto something.
Q8) At which point did you know with certainty that it had taken off?
Chris: I always believed in the business model, and growing up with Karl I knew if anyone could start Groupon in Singapore he could do it. However, you never really know how successful your business will be by internalising your thoughts. For me the gauge is always measured by the market or the public. My first feeling of success through Beeconomic was signing my first merchant Fika (a Swedish restaurant). That was a good day.
Q9) What went through your mind when Groupon approached you to acquire Beeconomic? What did you consider before eventually deciding to proceed with the acquisition?
We were extremely excited when Groupon contacted us, but nervous at the same time. We knew they were going to acquire one site in Singapore and we weren’t sure it was going to be Beeconomic. But after meeting with Groupon, they liked our management team and quality of deals and brands, so they shook our hands.
There were three differentiating factors that drew Groupon to Beeconomic.com – our company had a good management team; it had proven that it offered the best customer service; and it had exclusive partnerships with well-known brands in Singapore, such as Resorts World, Jitterbugs, Bliss Spa and Climb Asia. This exclusivity means that the brands cannot feature in other group buying sites.
Before deciding to proceed with the acquisition, we considered several things. We looked at the culture that Groupon has and whether it was a good match for our team. We visited the Groupon Tokyo office and discovered that both Beeconomic and Groupon have a very young, driven and entrepreneurial workforce, and a culture that’s very similar – we take our work seriously but we don’t take ourselves seriously. We also considered what else Groupon could bring to the table, other than financial backing, and the most important were knowledge and exclusive partnerships with international brands including GAP, Starbucks and Starwood Hotels and Resorts.
(Celes: If your business is ever presented with a proposal for acquisition, be sure to evaluate the terms of the deal. Look at (a) your business vision, whether this move matches that vision, (b) whether it lets you serve your consumers better, and (c) whether it’s a win-win-win proposition for the acquiring company, you, and your customers. These are important things to consider before you take on a deal.)
Q10) What would you say are the biggest drivers of your success today?
Chris: In business, I would advise people to work hard and learn to sacrifice. When Karl and I started Beeconomic, we focused on it with our full energy. There was nothing more important then building the business. We learned that from our parents, who showed us the merits of hard work as they built their printing business throughout our childhood.
My second largest priority is People-being kind to everyone and giving them your care and time.
Q11) Looking back, what were the biggest obstacles you faced in your entrepreneurship journey in the past year? How did you overcome them?
Chris: My biggest obstacle over the last year has been self-doubt. I think at some point in any entrepreneur’s journey you’ll come to question whether you’re doing a good job or whether you could improve in any way. There were times where I lacked the confidence to embrace the risk side of entrepreneurship in the same way my brother has. It’s definitely easier learning from someone who has the guts to just go out there and risk it all.
Q12) What are the biggest lessons you’ve learned in this journey?
Chris: Kindness goes a long way. When you’re operating at a speed of growth where you’re hiring 5 new people per a week, you have to remember people are people. They each have backgrounds, they respond to kindness, they should be given your time and effort. As Karl and I grow Groupon Singapore, we want to ensure we build the right sense of business philosophy. One where kindness is given precedence, where results are rewarded accordingly and where we view our customers as one of our most important company assets.
(Celes: Whether you’re a sole proprietor or overseeing a team of people, in the end we’re all working with people. Our consumers are people; our clients are people; our team members/employees/contractors (if any) are people too. Recognize that and respect them as individuals, and you’ll go a long way in not just your entrepreneurial journey, but your journey in life too.)
Q13) If you are to start all over again, what are the top 3 things you’d do as you start your business?
Chris: Firstly I’d put myself in the customer’s shoes. From my life lessons, what do I like, what do I not like, what works for me and what doesn’t. For example we worked extremely hard to keep Beeconomic’s website design very simple, based on our frustration with annoyingly complicated websites.
Secondly, make your product or service the best in the market (even if that means spending more). We continually strive to improve our customer service to the highest standard, for example our Groupon Promise allows customers to seek a full refund if they aren’t happy with any Groupon experience.
Thirdly, spread the word. Learn how to market your business in the smartest most effective way, whether through SEO or a Groupon deal.
Q14) How would you advise someone who is just starting his/her business and wants to bring it to the million-dollar mark and beyond?
Be prepared to work extremely hard and make personal sacrifices. Be passionate about what you’re selling, and don’t sell anything you wouldn’t buy yourself. You will always face some form of rejection at the start, so you need to really believe in your product and keep on trying. If you want to make millions, you’ll need to invest heavily into marketing and be able to scale up your business quickly.
Q15) What’s next in your plans?
We want Groupon.sg to become the premier City Guide that people can rely on to find the best food, spas and fun activities Singapore has to offer.
Special thanks to Chris and Karl for this interview! Chris and Karl Chong are the co-founders and owners of Groupon Singapore. To find out more about Groupon and check out its latest deal for today, visit www.Groupon.sg.
This is part of the Successful Businesses Interview Series, where I feature successful businesses that are making a difference in others’ lives.
Tags: beeconomic, christopher chong, groupon, interview, karl chong, millionaire, success, successful businesses