Behind RedDoorz’s cost optimization methods

Cost Control is a series where we talk to founders to suss out cost optimization methods.

“No billion-dollar company was made by cutting costs,” Amit Saberwal, CEO and founder of RedDoorz, tells Tech in Asia.

That’s definitely a strange message to start with, considering we’re here to talk about cost optimization methods. But Saberwal believes “the best defense is a good offense” and advises founders to focus on growing the company’s revenue to control costs. When the gap between revenue and costs widens, the latter automatically diminishes.

Amit Saberwal, founder and CEO of RedDoorz / Image credit: RedDoorz

Just last month, the Singapore-based hospitality startup told Tech in Asia that it had broken even in two of its key markets – Indonesia and the Philippines – in the fourth quarter of 2022.

This comes nearly three years after RedDoorz had to take belt-tightening measures including layoffs and salary cuts in order to survive amid the pandemic.

Nevertheless, Saberwal thinks founders should be mindful of what cost optimization measures they take as some of them could make the company unsuitable for future growth, particularly since this funding winter is temporary.

Focus on a specific goal ⚽🥅

“You have to give your company a specific goal, and basically a great goal to give is revenue,” says Saberwal. He cautions against telling teams to grow revenue and reduce costs at the same time since they could get confused about what to focus on.

Source: Giphy

The problem with being overly conscious about costs is that the company gives too much control to accountants and support staff, which the CEO says results in the sales team being stifled by red tape.

Don’t throw people at processes 🤖

The right automation systems can reduce non-revenue producing costs by 50% to 70%, according to Saberwal. Automation is especially helpful in back-end processes such as customer service, finance, and partner support.

“If there’s a back-end process that requires to be improved or automated, you tend to throw people at it,” he says. Saberwal cites how companies use call centers for customer support functions instead of getting a chatbot service that could answer customer queries.

RedDoorz rolled out a marketplace model under its KoolKost brand that failed, wasting eight months of tech efforts.

Outsourcing may not decrease costs 💁‍♂️💰

Disciplined experimentation helps ⏱️📐

Don’t slash too deep 🗡️🪵