What’s your perspective on fundraising?
Fundraising is the most time consuming thing ever. It’s frustrating and it’s a lot of time wasted for chances of success that are very limited. When you look at fundraising you have to do a little homework before so you don’t spend your days pitching to investors who have no interest in your business whatsoever, and no interest in the region you’re involved in. It’s difficult to pitch for Southeast Asia and it’s even harder to pitch for Vietnam, because very few investors know what is really happening here.
The first $500,000 are not too difficult to find as there is a lot of seed stage investors in the region, but after that, only a handful are willing to invest further. Let’s also be realistic – investors think about exits. We’re not talking about unicorns – but they want a proper return on investment. And you haven’t had many in Southeast Asia, and none in Vietnam. If you look at the number of acquisitions, there are almost none. Ok you have Alibaba that bought Lazada, but for late stage investors, they got a dollar for a dollar invested.
There is 10 times less VC funding in the whole Southeast Asia than in India alone. You read startup related articles in the media and think you’re going to raise millions of dollars on a good idea, but that’s not the case. There are a few companies in Southeast Asia that have snapped up most of the funding and it’s likely to continue. When it comes to fundraising, you should rather build your business as if you wouldn’t need a single dollar invested to be profitable. This is really the best advice I can give. Of course you need a little bit of money to jumpstart your business, you need to be able to raise seed, but try to get to profitability as fast as possible, because you have to be ready to wait for two or three years before raising a first round with an institutional investor.
What’s great about Vietnam is its stability. Not being able to see at least a couple years in the future is the scariest thing for investors. But there are disadvantages, like per capita GDP and infrastructure. And there’s not much data on Vietnam – if you’re not in the country you don’t know what’s happening. This only gives you access to investors who have invested here already, or have an idea what’s happening here, and that’s not many.
Why are you doing leflair.vn?
Because we believe that Vietnam is where we can bring the most value to the people. There is a lack of options for shopping. Purchasing power is growing much faster than the ability for distributors to bring more products and more brands. There’s a very big consumer base that is very connected and very frustrated.
When you launch a business you want it to have a very big impact on a lot of people. When people go from low income to middle income, the first thing they want to do is buy those branded products that they weren’t able to afford. We give people that opportunity. We make those products more affordable for them, and it’s stimulating.
It’s not a matter of funding; it’s not how many millions you can burn. It’s the quality of the product you can source and how you can connect these products to the people. In terms of competition, it’s much less competitive here. In this kind of environment, you can spend more time focusing on bringing value to customers. In other, larger businesses you may spend 99% of your time not thinking forward but thinking, am I the cheapest, who is the competitor that’s cheaper than me? You get thousands of people trying to reduce the price of an item by 50 cents. It’s insane.
Is it difficult to find people on your team who think like you?
No, we’re very lucky. You have a lot of talented people in Vietnam. You have a lot of people who want to join a company that has a big vision and wants to change things.
How did you choose your co-founders?
Definitely by looking at their skills and if they’re complementary. I’m good at a few things, my co-founders are good at totally different things.
There’s that great saying: if you want to go fast, go by yourself, and if you want to go far, go with others. It’s true. Working with co-founders takes a lot of time. You have to run most of the stuff by them and then you have a lot of discussions. When you’re by yourself you do it in a second. But on the other side, the more people you have to check on your ideas, the more you will have people tell you something is awful. And you definitely need good people, especially if you want to do ecommerce.
If you’re good at sales and marketing, take someone who’s good at operations and finance. You definitely need a strong tech person. Keep things lean, as it will definitely kill you if you need 100 people to run your startup.
I know it’s not a very precise answer, but only you will know when you meet the right co-founders. You have to believe that you cannot do what you want to do without that person. It’s a little bit of a marriage as well. You need to have a strong opinion of your co-founders. Because in tough times you need to believe that this is the smartest person you’ve met in your whole life. When everything is going south, it’s very easy to say it’s your co-founder’s fault. You need to strongly believe that anything they do is the right thing.
What are some basic skills you should have when getting into ecommerce?
You need a decent understanding of finance for retail. You need knowledge of how to run a P&L. You need to be able to read all your accounting books, and make cash-flow forecasts, because this is a very cash-related business. Knowledge in operations is very important. That’s the hidden part of the iceberg. You think sales is tough, but operations is the toughest. It’s really difficult to build good operations, as in warehousing, delivery, being on top of all your KPIs. You definitely need skills in merchandising. And you need skills in tech.