As is typical, and justified, of this kind of event, coverage usually follows a particular recipe. ‘Large Company A’ buys ‘Small Company B’, and the context is usually from the perspective of the buyer — after all, they are the ones spending the money.
But what about the companies that sell? How does one go about negotiating with Carousell for an acquisition? How does the Founder feel afterwards? Were there some potholes along the way?
These were the questions we wanted answers to, so e27 sat down with Caarly Founder Sanjay Shivkumar to hear his perspective on the Carousell acquisition.
If there is one lesson to take from the interview is that these deals take patience, and the journey is full of ups and downs, pivots and successes. They don’t happen in months, and, as was the case for Caarly, the genesis for an acquisition can be six years in the making.
Let’s call this interview ‘After the Sale’:
At what point did the idea of ‘we might sell’ first come about? And when it did come, how did you proceed?
So basically, whenever we enter into such a negotiation it is never a straight forward issue. We did not go out shopping for acquisitions, it just so happened that both teams are aligned in building the biggest mobile classifieds marketplace.
We are targeted towards the automotive vertical, whereas Carousell is general classifieds. So it was a very clear fit from the start.
But the way it happened was, we were building up our own product Caarly, and then we went towards B2B, more on the dealer side, so we were getting supply from the dealers.
What we did was launch a mobile-first productivity tool to allow the dealers to manage their inventory. We saw a need that these dealers, mainly SMEs and traditional businesses — they needed to be productive, efficient and the most important thing was they needed to leverage technology. Keep up with user behaviour. And that is when we launched Caarly to help them manage inventory on mobile.
Once we did that, within two years we worked with about 200 dealers, so a significant portion here in Singapore. We have a good size of the inventory for cars in Singapore. And that is where the conversation started.
We started to see that Carousell did not focus on cars but somewhere along the line, organically a general classifieds would attract different verticals. So we started to see, sometime this year, that the car space in Carousell was picking up.
We just started to negotiate and saw if we could do a partnership for listing our cars on Carousell. We discussed, we chatted, we learned about each other’s team, we realised we are both very similar. Product-based people. We want to bring the most value to our users.
Acquisition aside, [the meetings] started to create this conversation of, ‘instead of just a partnership why don’t we work together to make a big impact,’ not only in Singapore, but globally. It sounds very short but it’s been …
Do you mind jumping into the ‘it’s a long story’ part?
Yeah. So whenever someone reads the news on an acquisition they think it has been like a month. I would say it has been six years.
Before we got into the technology scene, there was a very important [part] of our journey. I wouldn’t call it a person, it’s a company.
Our very first company was called Replaid. Replaid was one of the first few mobile development studios in Singapore.
And how we ran into that space was because SPRING Singapore, which is the most important trigger of all, was giving out a yearly startup grant. It was quite awhile ago. Six years ago. So that was the very first trigger that made us start our own company.
From them on, we began building mobile applications for clients.
Along the way, we realised that — and I am sure this is true across countries — when you are developing customised solutions, it is very taxing on the team. You build something and then hand it off. It is like giving birth and then giving away your baby.
We always wanted to build our product, and then sometime in 2014, we saw the need for car dealers to improve themselves.
So this was the same Co-founders?
The whole team was the same. So basically Replaid slowly stopped the mobile studio and then we went on to Caarly.
Why I say SPRING Singapore is so important was how I actually met [Carousell Co-founder and CEO Siu Rui Quek] was through a SPRING Singapore initiative. They brought us three, four years ago to Hong Kong and Taiwan and that is where I met Siu Rui. It was during that SPRING Singapore trip.
We started to get to know each other and we realised we are very aligned in how we think about product, being very product-based.
Was there ever a point when you were worried that you want the deal, Carousell wants the deal, but a third party would come in and cause a problem?
It depends on how far we were in the discussion.
When we started off, it was definitely based on trust. I had met the founding team way before we even started talking about business. So that helped, in a sense. We were not too concerned about another party coming in.
We had faith that what we were doing in Singapore was very valuable to Carousell on the whole. We didn’t think anybody could really fill that space.
In that sense, not really.
Were you ever worried that people might think you ‘lost’, and this was an out?
When you say if we think we have lost the game, ultimately it is about your fundamental issue.
What do you really want to achieve in the business?
Is it fighting off competitors? I don’t think so.
So what we are aiming to do is provide the most value. Building stuff that millions of users can use. The rest will just fit into place. So we are never too concerned about competitors.
It might be different for the competitors; they might come after us, but, from our point of view, it is always users first. Our customers are the most important.
How did you pitch the acquisition to your company as a Founder?
When we first started the acquisition talks, only the core management team knew about it. It was a new experience, we didn’t know what to expect. We didn’t know whether it was going to happen so we didn’t want to create false hope in the initial stage.
But somewhere along the line when we realised this was going to be very serious, then we obviously shared it with them.
Being product-based teams, they were more than excited. When you talk to engineers, it’s never about the salaries, it is about how many people are using my product.
So in that sense they liked that Carousell is already well-known, something they feel is ‘bigger than ourselves’.
When you tell your employees, ‘we are going to be acquired,’ does your day-to-day shift at all?
We are still running very independently, but the only thing we really get is more synergy between both teams.
So we start going in-depth and learning about stuff like digital marketing, community building.
We bring our automotive knowledge, but now we have the resources behind us to let us learn about the other important factors to running a product-based team.
How do you feel as a Founder, personally?
I think I’m approaching it from a different angle. I’m not going to retire. I don’t have kids, I don’t have a family. If I retire I’ll just die young.
We are less than one per cent done right? So this is just another milestone for us.
It’s like how a lot of startups approach fundraising: It’s just a milestone, not the end-game.
If you are asking whether we feel as if we have lost the baby? Definitely not. We are just grooming it into being a monster in the future.
There are not a lot of acquisitions in Singapore, and Carousell is actually a leader in this strategy. Do you have any theories about why acquisition is not an overly common strategy?
This is my personal point of view. It is because the companies who have the resources to acquire in Singapore — they are not trained in that sense yet. You see it changing, but not yet.
Whereas if you look at companies who are doing a lot of acquisitions outside of this country, they wouldn’t treat Singapore as an ‘A target’. It’s just too small. If you are a listed company, it just doesn’t make sense to go in and acquire a company in Singapore.
We predict that it is going to change, when you have the bigger startups coming into Singapore. And acquisitions happening because of engineering talent.
Overall, what have you learned from the process?
Try to be prepared. Make sure your documents are in order. A lot of startups don’t like to deal with that, but make it a priority. Build your own data bank; it will shorten the process in the future.
Photo courtesy of Carousell.