Name: Carro: How 3 friends built a $1 billion used car business | CNBC Make It
Uploaded: 2021-10-04T18:45:07.000Z
Duration: 7 min 49 s
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You can get an entire car in less than five minutes — with credit approval, with insurance,

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As the co-founder of a newly crowned unicorn and one of Asia Pacific's fastest growing start-ups,

Carro's CEO is now on the road to an IPO.

Some of my friends joke that I grew a horn and stuff like that but, you know, honestly,

And with investors including Softbank getting onboard, he has no plans to slow down.

The question is, okay, now that we have reached $1 billion, how do we reach $10 billion?

Carro, a play on the words 'car hero,' is a Southeast Asian auto marketplace designed

to simplify car deals using AI technology.

The company was founded in 2015 by college friends  Aaron Tan,

In June 2021, it achieved coveted $1 billion unicorn status after securing $360 million

in funding from big name backers such as SoftBank and Indonesian-based fund EV Growth.

The deal takes total funding to over half a billion dollars and pits Carro alongside

key competitors in an industry worth $50 billion and growing.

But as CEO Aaron told me when we sat down at his Singapore HQ, the journey has been long.

36-year-old Aaron's entrepreneurial story started when he was 13.

I went on the internet in, I would say 1996, and that was when I first went on the internet

and I thought, hey, this is super interesting.

And then I effectively went into the local library and tried to understand how do you

As a teenager growing up in Singapore, the computer whizz would earn extra cash by building

But it was later, while working as a venture capitalist in the U.S., that he saw an opportunity

to combine business prowess with his true passion: trading cars.

One of the things that I found super enjoyable really is this whole buying and selling of cars.

When I was in the U.S. as a VC for many years, I remember very clearly, I met all kinds of

automotive companies – your Beepi, your Uber, your DriveShift.

What this shows me was the momentum in the space.

While the auto resale market was flourishing in the U.S., the same couldn't be said for

It was famously opaque, with several middlemen making it difficult for buyers and sellers

So, returning to Singapore in 2015, he teamed up with his classmates from Carnegie Mellon's

School of Computer Science to create an algorithm that would do just that.

I wouldn't say that I tricked my co-founders into founding the company together, but I

think I sold the opportunity that this could be much more interesting than whatever they

You pulled at the emotional heartstrings, I think.

And I think one thing that I always give thanks to is that my team tends to be very international

My co-founders Indonesians or Thais, so this makes it a lot easier for us when we enter

We don't have as much licensing issues, tax issues, because we have locals fronting

the market and that is extremely important when you are in Southeast Asia.

In a region with a vast and growing, digital-savvy middle class, price sensitive consumers were

increasingly opting for secondhand models.

Euromonitor's senior research consultant, Justinas Liuima, explained.

Expanding middle class combined with low car ownership rates in Southeast Asia were really

the main factors that stimulated new car sales, and eventually this translated into a vibrant

The new car market grew from three million units in 2015 to almost four million units

in 2019, and eventually these new cars, after the period of five to eight years, they were

Carro capitalized on that demand, rolling out its online offering for individuals and

wholesale dealers across Indonesia, Thailand, and Malaysia in the years that followed.

Meantime, it added end-to-end financial services like loans, insurance and aftercare.

By 2019, inspired by Netflix and Spotify, the company launched Singapore's first car

subscription service, allowing users to lease a vehicle for a monthly fee, with tax, warranty,

In subscription, what we saw was the changing behavior of car ownership.

Really the gap in the market was to look for people that want that flexibility.

And, more importantly, they actually want to try out new cars.

This has played very well for us for instance in EVs, where people are like I actually do

not know whether EVs are suitable for my lifestyle.

Can I try this for six months, 12 months, and you know we found a good gap in the market

But what was a major roadblock for many start-ups turned out to be an opportunity for Aaron

Concerns over hygiene and personal safety sparked new demand for private transport options.

And with borders closed and a global microchip shortage limiting car production,

Covid has definitely helped accelerate our whole digitalization internally and also externally,

One of the many things that we launched during Covid was this Showroom Anywhere concept.

We want you to be able to do a test drive, or for that matter enter a car itself,

Basically, without seeing a single human, get into the vehicle, do your test drive if

And as you're done, just swipe out and the car will just lock.

And then if you want to buy the car, just go onto the website or the app, click buy

it now and literally key in a few things, and you can walk away with the car.

As of March 2021, Carro recorded revenues of $300 million, up 2.5 times on the previous year.

The six-year-old start-up says it is now profitable.

However, that growth comes against a backdrop of growing scrutiny on the auto industry.

Transportation accounts for almost a quarter (24%) of global carbon emissions, of which

And even as governments and automakers make plans to phase out traditional combustion

engine cars with electric vehicles, many existing gas guzzlers are simply exported to developing markets.

New cars are more efficient, they pollute less, and if the country relies on the used