Commentaries: This unicorn had an exceptional quarter 📈

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Dear Readers,

A couple of days ago, I heard horror stories of co-founders not being on the cap table. If you happen to be one of them, please go sort things out. It doesn’t sound right. The CEO – your fellow founder – could be playing tricks, and you wouldn’t have a clue.

Anyway, this week has been rough for me. I didn’t have proper sleep because my 2-year-old baby is having nightmares. 😓 But that’s no excuse, I still gotta carve out time to write this week’s Commentaries.

You can find last week’s Commentaries here. If you’re a TIA subscriber, you can read all our Commentaries here.

Enjoy and TGIF!

– Willis, Tech in Asia

Stories with commentaries

Trending on Tech in Asia:

1. Living up to a big valuation ⛰️
Carousell’s US$7 million revenue last year was modest, given its over US$550 million valuation – i.e., 79x of its 2018 revenue. Automotive marketplace iCar Asia has a valuation multiple of 6.7x revenue, while Frontier Digital Ventures (FDV), which operates classifieds in emerging markets, has a multiple of about 5x revenue.

In this report, seasoned entrepreneur and investor Lim Der Shing shared that a 10x revenue multiple for Carousell “seems reasonable.”

In other words, Carousell has to generate about US$55 million in annual revenue to live up to its valuation. CEO Quek Siu Rui expects revenue to double in 2019. Even at an annual revenue of US$14 million, there’s still a huge gap to fill. Nonetheless, the company seems to be in good shape, thanks to some help from Naspers. There are sufficient resources and time for Siu Rui and team to create magic. → Read more

2. Marketing first before product-market fit? 🤔
“If you are going by our line items, marketing is not exorbitant. It’s what we need to do to build our brand in a country that doesn’t have a lot of tech companies. From a financial perspective, it does make sense,” said Hussain Elius, CEO of Bangladeshi startup Pathao.

Startups need to come up with a better way to justify their marketing expenses. It doesn’t make sense to spend so much on marketing if the unit economics is bad (i.e., CLV ‹ CAC ) and/or the funnel is leaky (i.e., high churn).​ With a leaky funnel, every dollar spent will just hurt the company more. This video might be useful for those who want to understand more about growth.

That said, I do hope Pathao’s new focus on ecommerce (on top of food delivery and ride hailing) will turn out OK. Good luck.🤞 → Read more

3. Alibaba’s ecommerce problem 🛍️
The Chinese tech titan’s shoppers are on course to spend a record US$1 trillion this year, according to a new study from Emarketer, and they’re expected to spend even more in the next couple of years. But as more competitors pop up, Alibaba’s percentage of ecommerce sales could see a dip.