2011 has turned out to be a breakout year for mobile commerce in Singapore, says PayPal‘s Online and Mobile Shopping Insights 2011 study.

The report has revealed that the country’s mobile commerce market has grown by 660 percent reach S$328M (US$259M) last year from S4$3M (US$33M) in 2010.

The study was conducted by The Nielsen Company online using a representative sample of 1,009 Singaporean online shoppers aged 18 and above. 482 of them are mobile shoppers, which in this study means that they have shopped or made purchases using a mobile phone or tablet.

The mobile commerce market is expected to grow ten-fold to reach S$3.1B (US$2.45B) in 2015, indicating that shopping on mobile devices has become mainstream due to the ubiquity of such devices.

More findings from the study below:

General consumer behavior

• Mobile shopping comprised about a quarter (23%) of all online shopping in 2011, nearly six times its share (4%) of the online shopping market in 2010.
• Mobile shoppers constituted close to half (48%) of all online shoppers in 2011, compared to about one in three (29%) in 2010.
• The median spend per head for mobile shoppers increased from S$93 (US$73)  in 2010 to S$354 (US$279) in 2011. There were 880,792 Singaporeans who made a purchase through a mobile device in 2011, compared to 364,390 in the previous year.
• The majority (75%) of purchases made using mobile devices were via smartphones.
• Singaporeans spent S$244M (US$193M) through their smartphones in 2011 – representing close to three-quarters of the total mobile commerce market – compared to S$82M (US$65)  through tablets.
• The average spend per head on tablets was S$380 (US$300), significantly higher than the average spend per head on smartphones, which amounted to S$274 (US$217) suggesting a growing market and potential for mobile shopping via web-enabled tablets.
• Four out of every ten purchases on both tablets and smartphones made at home.
• The office was the next common place to shop (18% of smartphone users and 11% of tablet users).
• Mobile shopping while commuting via bus or train or in transit was yet another preferred place for transactions (13% of smartphone users and 11% of tablet users).

Top spending categories for mobile shopping

Mobile shopping is much broader than just digital downloads with ‘fashion and accessories’ and ‘movie tickets’ seen as hot favorites for both smartphone and tablet shoppers.

• Almost a quarter of mobile shoppers indicated a desire to purchase fashion items, airline and movie tickets on-the-go with their smartphones indicating there is room for growth and that retailers have the opportunity to provide multi-channel shopping experiences in these categories.
• Tablet users exhibit a different set of preferences. Tablet users indicated they would like to purchase automotive goods and computer hardware. This suggests that compared to smartphone users, tablet owners are more likely to purchase higher ticket items on their devices due to the tablet’s larger screen size.

Graph: Top Mobile Spending Categories in 2011 in S$ millions

Shopping using QR codes
QR codes provide retailers the benefit of launching virtual pop-up stores across all channels and media and enable 24 by 7 mobile shopping to complement brick-and-mortar store locations.

• Quick Response (QR) codes are gaining popularity among Singapore smartphone shoppers. Four out of every ten smartphone users were aware of QR codes, and of those who were aware, 45 per cent had used QR codes for an average of eight transactions in 2011.
• The most common items purchased through QR codes were books, fashion items and computer hardware.
• Curiosity (33%) combined with ease-of-use (21%) were cited as the main drivers of QR code usage.
• PayPal’s QR code campaign with SMRT from February till April this year enabled an average of 500 transactions per 10,000 scans by Singaporean commuters, equivalent to a 5 per cent customer conversion rate, which is higher than the average direct email response rate of 1.7 per cent.
• Showbiz Asia saw huge mobile sales success by offering one-for-one tickets for award winning show WICKED to Singaporean commuters via this QR code campaign, resulting in close to five times increase in mobile ticket sales through PayPal as compared to sales for the same period pre-campaign.

Security concerns and lack of user-friendliness a barrier for consumers

While Singaporean consumers are increasing their mobile commerce spend exponentially, security concerns and the lack of user-friendliness were indicated as the main barriers towards greater adoption.

• 40 per cent of all mobile shoppers felt that mobile transactions were not safe enough.
• Other barriers to further adoption of smartphones for mobile shopping included “screen size is too small” and “Internet speed is slow.”

Photo: PayPal

When Daniel Charles, the founder and CEO of Global Racing Schools, first decided to get into the racing business, he wanted to open a race track in Singapore. But he realized it would cost about half a billion dollars.

“That may not be the best place to start,” he thought. He decided to scale down, and considered starting a go-cart track instead. But that proved too daunting as well.

Finally, he settled on becoming a dealer for motorsports products. Slogging his way through, Daniel, at 25 years old now, has built Global Racing Schools into a company that connects leisure and professional racers to driving experiences by over 200 suppliers in 20 countries.

“I remember an entrepreneur talking on television about the right way to get into an industry: ‘Don’t focus on getting the whole body in. Start with the toe’,” he says, “if you want to be a DJ, start by carrying amps around. If you want to be the next Zuckerberg, start by hanging around the right places and events.”

Today, the young entrepreneur has offices in Singapore, Australia, and the United States. The avid Formula One fan, looking every bit a professional racer himself with designer shades, watch, and a racing polo-tee, has handled between two to three thousand customers ever since the company was started in 2008.

A basic driving package at a race track starts from around US$600, while an aspiring professional can fork up to US$3,000 a day. Global Racing Schools takes a cut of the revenue from their partners in Europe, America, and Asia. Corporate clients have turned out to be his biggest customers.

Recently, the company has even begun offering Ice Driving experiences in countries like Mongolia, Canada, and Finland.

While there are websites offering similar driving experiences, they are usually confined to a country, say, France. He isn’t aware of a company in Asia that’s offering these packages in various exotic locales.

“Don’t focus on how much money you will make; find something you’re passionate about. If you just look at money, you will forget that you won’t make money for a very long time.”

Daniel epitomizes the old-school, gut-it-out, learn-as-you-go kind of entrepreneur; a throwback to an earlier time. With no mentors, outside investment, or industry knowledge, he jumped into the dealership fray against grey heads with more experience, armed with nothing but savings from his previous businesses and his dream of building a global racing empire.

“There was no one to guide me or incubate my business. I didn’t know anyone in the industry either. When I showed up on the scene, everyone asked, ‘who’s this new kid on the block?’”

Being young certainly was a disadvantage, and people tended not to take him seriously. He had no grounds to stand on.

Being young also meant that while his friends were out partying and having fun, Daniel would be going on business trips and attending meetings.

“I didn’t have much fun. What kept me going was the joy that comes from creating something new,” he says.

The rough idea for Global Racing Schools came to him while he was still in Nanyang Polytechnic.

A client in his dealership business, who has been buying motorsports products for his child, asked Daniel if he knew where his child could train to become a professional racer.

Since there are so many schools and courses around the world, with so many locations and dates, the challenge is to sieve through all of them and find the quality ones.

Daniel realized that this pain point is something he can address. He worked on his business even while serving his two-year mandatory National Service stint in the Army. Since he worked regular hours as an engineer, he had time to execute on his business after work hours.

Global Racing School essentially serves two kinds of customers: First, corporations and individuals looking for unique experiences to gift someone, and second, aspiring professional racers looking for advice, consultation, and management.

Since it could cost up to US$8M to train a child from the age of six to become a Formula One driver, securing the right partners and racing schools is critically important.

“Suppliers will always tell you they can do it. But only we know what they can do, from a neutral standpoint. We know the pros and cons of the partners we work with.”

The challenge with building Global Racing Schools was that he was focusing on a niche market seeking for global experiences.

He had to build from scratch a network with suppliers. With a limited marketing budget, he used Google Adwords and SEO techniques to target customers. It took three years before he finally turned a profit.

“When the whole world doesn’t believe in you, you have to believe in yourself. Don’t focus on how much money you will make; find something you’re passionate about. If you just look at money, you will forget that you won’t make money for a very long time,” he says.

Moving forward, Daniel hopes to establish offices in more countries. While most of his customers come from Singapore, he believes that by having a sales force to meet corporate clients in more places, he will be able to dramatically widen his client base.

Starting a business is something that has always been in Daniel’s bones. In Primary school, he would sell drawing blocks and rent neckties to students that did not bring them. He has even founded a tuition center and a restaurant, which he has since shut down.

Daniel is now working on his fifth company, this time in the fashion line.

To this day, aside from the $5,000 capital he started out with, he has never needed another cash injection. He starts his next business from the money he made from the previous one.

While he isn’t close to building his race track yet, he is certainly one step closer to that ideal.

At ViKi, a staff runs a visitor through what the company does.

Palpable tension was present just before Blk 71 opened their doors to visitor for Walkabout Singapore, held last Friday.

As I sat in one of the offices with Kristine and Vinnie Lauria, co-organizers of the event, we wondered how many people would actually show up. Sure, there were 550 email signups, but there’s no telling how many of them might actually appear at a particular venue.

The worries were soon put to rest. Chatter filled the empty hallways, and a bunch of students stood outside the office, peeking in curiously. Time to get to work.

Held for the first time in Singapore, Walkabout is a one-day event where startups open their doors and bags of potato chips to curious visitors. The event originated with Walkabout New York City, and attempts to replicate the open-door, collaborative nature of Silicon Valley.

“Over there, there’s always a night party or product launch going on every week,” says Vinnie, who brought the event to Singapore with his wife Kristine. Alex Vayl and Karen Tan from Voxel are co-organizers.

As much as the event emulates the culture in San Francisco, Walkabout Singapore is all about the startups here. It aims to put the country on the map, telling people that there are a lot of cool startups here that they wouldn’t otherwise know about.

The event shows people that tech startups isn’t just about coding either. All kinds of people — designers, marketers, and business folks — are needed to make a company function.

Says Kristine: “Someone tweeted me and asked: I do linguistics, is there a role for me? And I thought that’s funny, because my first intern at PBWiki was a lingustics student. So I said, absolutely!”

About 75 companies participated in this event, with 35 offices open to the public. The startups are spread out all over the island, although most of them are concentrated in the central areas of Raffles Place and Tanjong Pagar. Blk 71, near Fusionopolis, is home to a large number of companies.

Check out an interactive map of my journey during the event:

-
What struck me about the roving participants was how young and diverse they were. Kristine tells me that IDA Singapore, a government agency, had bused down about 60 or 70 students from various schools.

There were plenty of entrepreneurs and aspiring entrepreneurs, sure, but also students, lecturers seeking guest speakers, executives, and even Ministry of Manpower staff seeking opinions on the government’s manpower policies.

Attracting diversity has been a deliberate goal of the organizers. Says Kristine: ”We want to say to students: ‘Look what’s going on. Come and be part of us. You don’t have to go into banking, or finance, or go to an MNC to be a lawyer’.”

The event is also an in-reach to fellow members of the community, an attempt to boost the scene’s reputation and self-image.

She says: ”People here are always looking at Silicon Valley and saying it’s bigger, brighter, and bolder there. But in fact there’s a lot going on in Singapore; look, there’s a scene here, and we should be proud of it. We need to have a voice, and be loud.”

Participants I’ve spoken to felt positive about the event.

John Berns, who does technical business intelligence at mig33, says he was between 30 to 50 visitors come to the office. “It was cool, you get to talk to a lot of people that didn’t know about our business. It made me think about what interests different people, and they come here with really interesting questions,” he says.

Esther Chun, an aspiring entrepreneur who’s a top 15 finalist for Ideas.Inc Business Challenge, felt the event was a good chance to network with and get a behind-the-scenes look at the various startups.

She observes, however, that not all the offices have the Walkabout logo, which made them hard to locate. Some of the offices located in the Central Business District were pretty quiet too.

The afterparty at Helipad though, was raucous, with participants wriggling for room and raising their voices above the din (fun fact: Walkabout NYC had no afterparty).

That, I suppose, is a good sign.

View our photo album of Walkabout Singapore.

Before Perx co-founders Andrew Roth and Jon Sugihara started work on their loyalty card mobile app, which is now the market leader in Singapore, they ran successful daily deals site PLAYhawaii.com. It was on track to generate US$2M in revenue a year.

Based in Hawaii, they expanded their business to Asia, founding Maiplay last year with Facebook co-founder Eduardo Saverin as an investor and advisor. They launched in Jakarta and Singapore, entering a heated field dominated by Groupon.

However, they dumped their daily deals business within months. They sold PLAYhawaii.com and launched their loyalty card mobile app in October 2011. They’re now based in Singapore.

What sparked the change was their belief that daily deals is a lousy way to acquire loyal customers for merchants. The hunch paid off: At the time of the interview, Perx had close to 40,000 registered users, and about 400 merchants in Singapore, with 10 to 20 new locations each week.

Their partner merchants are not lightweights either. Big brands like Popeyes, Famous Amos, and Dunkin Donuts have come on board. With pole position in the country secured (around!, Pointpal, and Squiryl are competitors), they are now working with a partner to scale their business to other parts of Asia.

“When we call merchants, we really had to tell them not to hang up as we’re not a daily deals company.”

Perx works very simply for consumers. Once they open up the app, they will find merchants that are near their location. They can get a “chop” from the merchant every time they spend, simply by scanning a QR code. Rewards can be redeemed once they hit a certain amount of chops on a loyalty card. To date, Perx has registered 160,000 chops.

Elaborating on the problems with the daily deals model, Jon points out a fundamental conflict between daily deals sites and merchants: While sites like Groupon and LivingSocial are concerned with procuring as many deals in as short a time as possible, their clients are actually after loyal customers.

“When we call merchants, we really had to tell them not to hang up as we’re not a daily deals company. Merchants were fatigued with group buying sites,” says Jon.

Deals, which can give a discount between 60 to 80 percent, tend to attract bargain hunters, and merchants hate that. Perx weeds bargain hunters out, simply by rewarding users after one chop instead of offering a steep discount right away.

Perx differentiates itself from other loyalty card apps by offering not just analytical tools as a value proposition, but the ability to increase revenue and decrease costs for merchants through “Chopmobs”.

“Offering just a replacement for a paper loyalty card doesn’t excite CEOs,” says Andrew.

Perx’s Chopmobs have been rather successful in generating top-line revenue for merchants, through increasing sales by 30 to 50 percent in any given week. The company takes a commission from the sales, or 25 percent of the value of reward items.

After accounting for expenses, merchants are still making three times more money than if they were to run a daily deals campaign, claims Andrew. Merchants that have tried Chopmobs include The Coffee Bean, which earned a 50 percent increase in revenue during the campaign, and Salad Stop.

“You don’t need to discount yourself steeply anymore,” he says.

While increasing customer spend and loyalty is their key differentiation, Perx is not shabby in other areas too. They claim to offer “tons” of analytics, something that wasn’t possible with paper loyalty cards.

They also have proprietery algorithms in place to determine if someone is a potential fraud, for instance, taking a picture of a QR code and passing it around. Users will get flagged twice, and will get suspended if they don’t respond via email.

Nonetheless, fraudsters are nothing to worry about, since most customers are honest and the net benefit is still positive.

When it comes to app design, they have decided to keep things simple by focusing on merchants instead of themselves.

“You don’t see Perx branded all over. We don’t have cute mascots. We want to focus on merchants and not on us,” says Andrew.

He is probably referring to Squiryl. They also do not believe in the concept of trading chops as a viral mechanism, which is something that Squiryl does. This is because merchants want people to come back to them, not to others. It helps the app, but not the merchants.

Instead, Perx offers the Perx Wheel, which gives users a chance to win prizes while spreading the word on social media.

“What would you rather have? Someone posting abour your brand in their Facebook wall? Or someone trading your chops away?” says Andrew.

“We don’t want to send invoices to small merchants all the time. We don’t want them to feel like they’re getting cut everytime they get a chop.”

Looking ahead, Perx is in the midst of implementing new features to enhance its value to clients and users. They are partnering with major POS providers to print QR codes on receipts, which means they won’t slow down queues anymore. The code is also one-time use only, which means it’s impossible to pass them.

They are also experimenting with a new form of advertising that would make banner ads seem as passe as bell bottom jeans.

It is called sponsored chops, and here is how it works: Users who get a chop from Merchant A will receive an extra chop for free from Merchant B. This extra chop is actually paid for by Merchant B, and Perx uses revenue from sponsored chops to subsidize Merchant A’s costs of participating in Perx. Call it a quadruple-win situation.

He first unveiled the concept publicly at e27′s Echelon 2012 Singapore Satellite event, and Perx went on to win the Judge’s Choice award.

“We don’t want to send invoices to small merchants all the time. We don’t want them to feel like they’re getting cut everytime they get a chop,” says Andrew.

Ultimately, banner ads suck at the moment because they offer no value to most customers. They also suffer from a case of diminishing returns, as their rampant use is having an impact on effectiveness.

Sponsored chops, on the other hand, actually gifts the consumers with something tangible. It has the potential to generate better returns for merchants, especially when coupled with the relevancy of geo-located and time-sensitive promotions.

If all goes well, Perx might be firmly entrenched as part of a new wave of innovation in the advertising industry.

“It’s why many of our investors are excited about what we’re doing,” says Andrew.

Together with the other loyalty card apps, Perx indicates a future where offering points as a reward would be dead.

“If you talk to institutions like banks and credit card companies, they will agree with you. Do you know what are the credit card points you have right now? Do you want to trade your points for toasters, napkins cutlery and stuff like that?” asks Andrew.

As innovative as they might be as a company, the co-founders don’t shy away from saying that they are great executors. With a lean staff of five and a development team in Ukraine, they were able to hash out their app from conception to launch in three months. The predecessor, Maiplay, took two months to develop, and the process included securing partnerships.

They also cite understanding customers as a key advantage. After all, the idea for Perx came about after they listened to their clients who wanted more customer loyalty and not bargain hunters.

“We know what merchants need, having worked with hundreds of them already. Small businesses don’t have time to think about marketing. They’ll either do nothing, or pay someone to just let them do it. We’re offering to do essentially all the marketing for merchants,” says Jon.

Watching each startup deliver their pitch at the JFDI-Innov8 2012 Bootcamp Demo Day, I get the sense of witnessing a child taking her first tentative steps or going to school for the very first time.

At the accelerator program, the first of its kind in Singapore, promising entrepreneurs, who had nothing but ideas, had to undergo an intense regimen of mentoring, training, and product development.

Mentors in the bootcamp came from all around the world as well as from Singapore, consisting of entrepreneurs who have gone through the whole agonizing process of creating a product people actually want.

Glancing across the room, amidst the glaring stage lights and about a hundred curious investors, those very same mentors are egging the startups on stage to succeed. The incubatees took turns to demostrate their products: Refined, refreshed, and in some cases, completely rehashed after the 100-day bootcamp.

And they rocked. The consensus among the attendees was that the pitches were polished and well-delivered. There wasn’t a single bad pitch.

Business ideas were solid and addressed valid pain points, although some were concerned about how easy it is to copy some of those products.

But the fact that the presentations were nice and shiny isn’t an accident. The pitches were appalling at first, Edgar Hardless, CEO of Singtel Innov8,  and vastly improved only with much coaching. Many of the startups pivoted after much critical feedback as well.

An extreme example is Gradeful, a mobile app for dads, which pivoted on Day 80 to become Remember, a mobile photo scrapbook for families. HobbyMash, too, pivoted in Day 50 to become FamilyKo, after realizing that it would be hard to monetize their original idea.

At the end of the pitches, the startups went to their corners and waited as investors flocked to find out more about the teams and their products.

While there was quite a lot of variety in the 11 teams, SoLoMo, a term which I use grudgingly, is still very much alive and well. Most of the startups have some element of each, and it looks set to be the wave of the future.

Analytical tools featured big as well in startups like TradeGecko, Stubb (formerly Qryo), and FetchFans, indicating how businesses are increasingly embracing data-driven decision-making.

What is surprising to me are the amount of family and child-oriented startups around. FamilyKo and Remember deal with the themes of using mobile devices to bridge the divide between children and their busy or geographically distant parents. Kark and Wildby revolve around educating children in interactive and age-appropriate ways.

From what I have seen and heard, many of the teams have generated great interest and buzz from investors, and some were oversubscribed.

Angel investing is a little like playing Poker -- lots of educated guesses.

The value of the Bootcamp in sharpening the various ideas was apparent. According to Amit Anand, managing partner of Jungle Ventures, incubators like JFDI.Asia fills a gap in the ideation stage, identifying great problems to solve (video interview).

Granted, there is room for improvement, such as balancing between frank feedback and more gentle guidance, but Demo Day was the best send-off possible.

At this point, there is still a lot for startups to do. The next step for them, naturally, is to secure funding, and whether they receive it could determine which country they would be based in.

Wayne Soh, business development manager at Plug and Play Singapore, believes that some companies might find it easier to raise money at home with their own contacts.

For angel investors, their challenge is to make educated guesses about which entrepreneurs to invest in, based on the very limited information they have about each startup: Current market positions, whether the product addresses a pain point, and whether the team is positioned to succeed.

It’s a bit like playing Poker, a fact I was reminded of when JFDI.Asia co-founder Meng Weng Wong gave us, the media, millions in Poker chips to play Fantasy Investor for a day.

It certainly isn’t an easy call to make. The ball is now in the courts of the investors and startups to work out partnerships that will take them to growth stage and beyond.

Additional reporting by Sharon Lourdes Paul. Photo album of the event here.

More coverage of JFDI-Innov8 Bootcamp and its startups here.

It was a simple party with a few invited guests, some pizza and drinks, a seemingly ordinary networking event at the Chalkboard office in Mount Sophia. No formal announcement was made, but some of the folks knew something was up.

There would be no happy ending for Chalkboard, a Singapore-based mobile advertising startup. The co-founders, Saumil Nanavati and Bernard Leong, decided months earlier to close shop. They were just quietly figuring out a way to do it.

Interestingly, they were very close to getting acquired. Chalkboard was, after all, a pretty attractive target: Sales were coming in, and they were close to breaking even. One interested party was a major firm from Silicon Valley, the other a prominent Singapore company. However, they felt neither acquisition was the right fit.

But despite the setback, neither entrepreneur took it as a personal failure. It had been a team effort all the way. The party was simply a celebration of the journey they’ve taken together with friends.

“We were disappointed it didn’t go the way we wanted, but we were not ashamed, we did the best we could with the smartest people, including the investors who gave their best. We tried,” says Saumil in an interview with SGE on Thursday afternoon.

He and Bernard even came up with an acronym to describe the totality of their experience: MIA (Market, Investors, and Ambition).

Their ambitions for Chalkboard were big enough to match the best entrepreneurs in Silicon Valley. Their investor, Joi Ito from Singapore’s Neoteny Labs, bought into their vision.

What ultimately caused them to fold  was a confluence of factors: The incompatibility between their business model and the Asian market, a weak US venture capital climate after the European Crisis, and the acquisition offers which they felt did their stakeholders (and themselves) injustice.

SGE: Did you try to court acquirers and what’s the process?

My February trip was to do that. We had a few from the US, Singapore, and Malaysia, they’re distinct group of companies. One was an acq-hire.

The challenge we faced was in one situation the investors lose and we win and get employed, but then investors doesn’t get value. Or, investors get a payout and we get into an unfavorable position. These were stark choices we were facing.

Somebody had to sacrifice, and that didn’t make any sense. Then comes the question of: Why do the worst thing and nobody wins? But then you don’t want to have resentment in relationships where you sacrifice the other group.

SGE: How did you decide when was the point you would quit?

It was after the Christmas break in 2011. Part of the reason was the European crisis, which really hampered a lot of what we wanted to do, in terms of venture capital funding. Things changed. Last quarter, investments from VCs went down 45%.

It did not necessarily impact us directly, but there were ramifications from that side of things. It’s not the Asian investors that were affected, but the US investors. We had enough money, we had even enough sales right now that are booked. About 30 percent of what investments we took in, that’s the size of money we’re letting go.

SGE: So, what about Asia? What did you feel about the market and environment there? 

Let me ask you a question, in the next few years, will a Facebook and Instagram come out of Asia? My view is that there isn’t an ecosystem conducive enough for guys to work hard for your company without revenue. Facebook didn’t have revenue for a long time. Instagram did not.

I would suspect that — now with all the buzz about Rocket Internet right now — if the CEOs from the Samwer brothers’ companies just ran with the idea and business model behind it themselves, which is basically pumping in lots of money, getting the hockey stick, and scaling aggressively, I’m not sure how much money they would have raised on their own accord.

E-commerce took off in the US but not among smaller mum-and-pop stores here. We found a very strange thing about how people behave in the Asian market. It’s not the value proposition we provide but the behavior. People here are not that ready to take a step onto the Internet.

Our initial thesis was: We want to help small businesses? It is very tough. We were hoping that if we give it out for free, in a freemium model, they would come and try out the service.

But anytime we did a marketing or news media push, here’s the difference we saw: With the lead generation we got from public relations, people in Asia would call us or email and we have to support them manually. From there we have to do sales calls otherwise there’ll be a steep drop off and they won’t try out the service. How you do sales call and handholding support for a free product?

In the US, by doing one article we were getting 20 or 30 people coming online to try us out from across the US. People in the US understood it, people here don’t.

The US market was also more sophisticated. We had different copies for both US and Singapore sites. Here, our site used simpler English. Otherwise the mum-and-pop stores wouldn’t get what we were doing.

Funnily enough, we also have a lot of money owed by customers. In Asia, there’s a lot of collection problems. We spent time chasing money, often getting cheques that we cannot cash. There was one large company that didn’t pay for 18 months. And that sum of money isn’t much to them. It was these small things that were hurting us. We were losing energy in places that were quite marginal. And hiring people to chase money just didn’t seem right.

So, as we went along, we started to realize that we need to move to the US. We needed to build our office very quickly. The challenge was that at one point we needed to move the company, or there would have been no way we could survive. It’s like a turtle hatchling, when it goes out to the water it needs to keep on swimming. However, most of our tech team are non-Singaporean, so it’s hard to move them to the US, and there’s a whole other bunch of issues.

SGE: So why not pivot to something else?

There were a lot of personal things we had to put on hold to do Chalkboard. Besides those, we don’t have any other ideas because we were so focused on doing one thing. So our choice was either we continue this, burn the capital that we have, keep these people doing some random stuff, which we were doing anyway. But it wasn’t worth it, we’re wasting the time of everybody involved.

So, let’s take a step back, clean up the slate, and start afresh. And the most important thing is, I believe in teams a lot. You want to get the right team, and the right set of goals. It’s like being a football manager, if you’re Chelsea playing Liverpool, and they play lightning fast, you’d want a defensive team. If they play slow, you want a different composition of team to play against them.

If we don’t know the problem, I won’t know what team to have. I don’t want to take a team and try to fix a problem. We were still not sure how to tackle the problem related to our ambition, whether we have the platform to achieve that. Whether we needed to change the business idea.

SGE: You mentioned the Market-Investor-Ambition acronym you and Bernard came up with. Was there a mismatch between your ambitions and investors?

The way I look at this is that when you have a billion dollar idea you have to work hard and keep plugging away without worrying about all these other distractions. Look at Foursquare, they’re going for global domination. Look at the Samwer Brothers. From their perspective, either you’re number one or you don’t bother.

That’s the psyche from everybody, from their investors and founders: They’re going for global domination. That’s what Joi brought to the table. He allowed us to freely focus on those areas. That’s something very distinct and unique, compared to those other groups of [investors].

We don’t want to worry about a whole bunch of other stuff. For example, if you look at the startups in the US. They hired lawyers, and more. Why? They just want to make sure that their product just get shipped out in this particular time in this particular way, and they want to make sure consumers are happy.

When we told them our options and considerations, they understood where it’s gonna be. Joi and James [from Neoteny] were aware of the situation, knew things weren’t the way we hoped for. We were lucky to have them, and they were understanding and empathetic.

SGE: What are your personal plans moving forward, and how did you disband the team?

We made sure everyone in the team could find positions. Everyone was taken care of. We had a couple of guys we’ve kept on board to take care of existing clients. One of them I’m doing a project with right now. A lot of others chose to go back to their home countries because they’re more comfortable there. Some of them got into other companies.

We’ve been doing the wind up process for a while. It was just a matter of coming up with an exit plan. We started cutting our cost structure so it doesn’t burn cash and we saved some capital. We threw a party, and sold our furniture.

That’s how life is, it’s a game of poker. We go round after round. Sometimes you’re in a startup environment but sometimes in a corporate environment. We chose to wrap up, picked the ending we wanted, and when to say goodbye.

End. Interview conducted by Gwendolyn Regina Tan.

Note: Bernard Leong is also the co-founder of SGE.

A customer named Gary Tan posted a complaint on the company’s Facebook Page alleging that he has been discriminated against.

Apparently, his request to get a corner table for three for himself and a guest was rejected. However, a foreigner that came in later was able to do the same. Think Rosa Parks, 21st Century version.

What really pissed people off, however, was the response from Guy Wachs, the restaurant’s founder. He said: “Dear sir, we have an international staff including many Singaporeans and respect all people. We deeply regret your remark (emphasis mine). Guy Wachs, Director.”

A screenshot was captured of the comments, which was apparently deleted. It caught fire on the forums (examples here and here) since yesterday:

Some of you may be shocked by the venom thrown at foreigners in these forums. It’s a political issue, which I’m not going to dwell on, but here’s the gist of it: Many Singaporeans have been rather peeved lately by the government’s liberal immigration policies, and they feel like they’re not being taken cared of enough.

In this context, the tepid reaction towards the restaurant’s actions wasn’t surprising.

Regardless of who’s right or wrong here, there are many lessons startups can learn from this incident. While I’m certainly no customer service expert, I intend this article to be the start of a fruitful discussion — a departure from the mindless raging you see in the forums.

1) When interacting with customers on social media, think twice before posting anything.

The Internet forgets easily, but it doesn’t forgive. Deleted articles and comments are easily captured and live on for perpetuity. While Internet users are generally fickle-minded and move quickly from controversy to controversy, rest assured that any online misdemeanor, real or perceived, can be easily dug out online.

With that in mind, it really pays to think carefully about how you respond to angry customers. As slighted as you feel — and that’s understandable since your business is your baby — a badly handled PR situation could boomerang on you, a hundred times.

In Guy Wach’s case, perhaps that terse comment wasn’t the best way to deal with the situation. Perhaps he did it in a moment of anger, and angry heads are not rational.

2) For God’s sake, read the news.

This controversy might have been avoided had the owners been more careful about the cultural context they operate in. As far removed as it sounds, understand not only the business environment, but also the society in its entirety. This can really help you get customers.

Had the Wild Honey folks been sensitive to the anti-foreigner sentiments brewing in Singapore right now, they might not have responded the way they did.

Whether or not this favoritism towards foreigners is really happening, the managers might want to ensure it will never occur, given how Singaporeans despise it.

3) If you decide to apologize to a customer, remember to validate your staff too, especially if they did nothing wrong.

As an entrepreneur, you aren’t just a PR spokesperson. You’re an employer, leader, and cheerleader. It’s often the case that the customer thinks they are right when in fact the employees did nothing wrong. In such instances, be sure to also pull your staff aside and reassure them that you have their backs. Public chastisement can backfire and bring down company morale.

4) Deleting negative comments on Facebook doesn’t help.

Tempting as it might sound to delete the negative comments that flood your Facebook Page as a result of the negative backlash, remember that a Facebook Page does not work the same way as your company newsletter. It is not a one-way street.

Deleting comments willy-nilly might give the impression that you’re hiding something or being insincere. A balance has to be struck here: While there are comments that deserve to be deleted for whatever reasons — being racist, for example — others should stand because they’re valuable feedback.

You have to roll with the punches.

5) Customers are not always right, so there’s no need to bend over backwards for them.

You are providing a service, not a sweatshop. Customers make all sorts of demands, and a lot of them are unreasonable. In the age of social media, people like to make a huge song and dance about a company when they feel offended, so giving them what they want — an insensitive comment — is the surest route towards a PR disaster.

To defuse a tense situation when you feel they are unjustified, make your response as uncontroversial as possible, while giving the impression that you are dealing with the situation behind closed doors. No need to give a public account. Do apologize, but do it without saying that the errant customer is right.

An alternative approach to consider is to give them exactly what they want, and more besides. It is the “turn the other cheek” method.

A good case study would be this incident that occurred between OCBC Bank and a customer who demanded a cake on her birthday.

She literally got her cake and ate it. And some backlash of her own on the side.

OCBC Bank came out the winner.

NUS sends Alvin a letter saying that a change of decision is “highly unlikely”. Message from Alvin on his site:

“Please note that as you have already been considered for all your previous choices, appealing for the same choices would be highly unlikely to change the university’s prior decision.” 

This was the exact words written on the letter that I received from National University of Singapore, which happened to be the same words that got me thinking. To me, the intent was simple, to do something now or not to do anything at all. Nevertheless, I apologize if the website have misled you in any way. :) 

A Big Thank You, to the people who have supported me. :) 

Just some further clarification, I was offered Computing (Information Systems Courses), and as the skills that the website portrays, and rightly so, there are no majors in Information System Courses that are relevant to me. When I said Computer Science, I meant Computing (Computer Science Courses), which gives me an option to become a Communications and Media Major. I will be then able to specialize in Content Creations and Mass Communications Group (which is User Interaction and Experience) as well as Games Technology Group. 

While many students would give up after finding out that they’ve been denied entry to the university course of their choice, Alvin Wang is different.

Not taking it lying down, this IT diploma graduate from Ngee Ann Polytechnic created an online resume at helpalvingetintoschool.com to show off his credentials. He hopes to pursue degree in Computer Science at the National University of Singapore (NUS).

The website has caught fire on the interwebs, gaining fans and haters alike. So far, it has already garnered over 11,000 Facebook likes. It’s similar to a website started by Matthew Epstein, called Google please hire me.

On the site, he lists his skillset: Java, C#, Visual Basic, and Javascript. He also knows interface design in Photoshop, and website design with HTML, CSS and PHP, doing it since he was 13. He is currently learning iOS development with Objective-C.

Quite impressive.

“I know this is a long shot, or a shot in the foot, maybe. But I knew I had to do something, not because I think I am better than anyone. I am not, but it was never about being better than anyone, it is about being the best I can be,” he writes.

“I am starving for this opportunity.”

He also put up a video on his final year project, written in C# for Microsoft Surface:

Hungry Hippos – Final Year Project [Demo] from Alvin Wang on Vimeo.

While many have praised him for his initiative, at least one blogger has cast aspersions on Alvin’s integrity, calling his appeal a “deception.”

Adopting the pen name “Eli James”, the writer reminded readers that Alvin was in fact accepted into another course in NUS — Information Systems, a fact he reasons Alvin should have disclosed on the site.

Hence, instead of being a student taking to the web as a final recourse, Alvin was merely picky about his options.

“This campaign wasn’t about getting a talented kid into school. This campaign was about a kid who wasn’t happy with the course he was given, wanted another one, and then decided to run a campaign about it instead. And the worst bit of it was that he was dishonest about the nature of his complaint,” he writes.

Eli later on adds that what Alvin should have done is to accept the Information Systems program, and then apply for a switch after entering the school, arguing that he stands a higher chance of getting what he wants.

Other critics have also called him out for being “childish” and questioning his tactics to ”ride on the influence of social media”.

Alvin has never expected the website to generate so much attention, or criticism.

But whatever he is doing appears to be working. He has received ten interview requests from employers, TodayOnline has learnt.

He may not need to enter NUS after all.

Now, with smartphones replacing laptops as the primary Internet device for consumers, there’s a gap in the market for apps designed to make buying and selling on the mobile phones easy.

That’s where ShopSpot comes in. It is a mobile marketplace that promises to make shopping as simple as tweeting. The iOS app, which is now available for download, is developed by Thai national Natsakon Kiatsuranon and team. They are incubatees at the JFDI-Innov8 Bootcamp in Singapore.

They came up with the idea as a way to scratch their own itch. They wanted to get rid of the clutter lying around at home, but found it hard to sell in a traditional online marketplace.

“It could take you half an hour trying to sell on a website. Wouldn’t it be better if we can cut it down to half a minute?” Natsakon thought. And that’s how ShopSpot was born.

In part, ShopSpot fulfills that promise. I had some initial problems with the app crashing on my updated iPhone 4 and being unable to register with my Facebook account. But the app seems stable otherwise.

It’s simple enough to use: Putting up my $1,000 mouse from the year 2020 was a smooth process. But the app is still a raw product that could use more features, such as sorting items by category. I guess that will come in the future as well.

As is usually the case, there are plenty of such apps around in the US, like Tradyo, Antego, and EggDrop, but Natsakon claims they’re the only ones in Southeast Asia right now.

They’ve also laid down the gauntlet for any foreign companies who wants to enter the region. ”We understand local market, our competitors don’t,” he says bluntly. They may need to watch out for Snapsell though, which has a very similar value proposition. They were the winners of the recent Startup Weekend Singapore.

But ShopSpot does have a headstart. They’ve been bootstrapping in Bangkok for three years, earning revenue via web consultancy and developing other web products. They’ve raised SUS$28,000 from friends and family and another fifteen grand from JFDI.

Update: ShopSpot reaches #5 in app store category in 12 hours

If this report by Willis Wee from TechinAsia is true, Zalora is in bad shape, and the feared Oliver Samwer visited Singapore two days ago for a marathon eight-hour “motivational talk”.

These allegations are false, claims Tan Wee, managing director and co-founder of Zalora Singapore, an online fashion retailer owned by the infamous Rocket Internet.  He denies the article’s suggestion that “the meeting is probably triggered by complaints Zalora has received from its customers so far.”

In fact, Tan Wee reports that his German boss was in fact quite happy with progress.

“The exact conversation he had with me was: ‘Tan Wee, good job, things are going well,’” he says. The visit was in fact a routine one, and this was the third time they had met in Singapore.

Since Zalora launched in Singapore and Malaysia, it has received a lot of complaints about slow delivery times on its Facebook Pages. Some items were not received even after two weeks.

While he acknowledges that many of the feedback are valid, and that they’re learning, Tan Wee questions if a few Facebook comments are enough to paint an accurate picture of Zalora’s health.

“In the retail environment… people only complain when they’re unhappy. So if you pick out three quotes out of 100, and say we’re in bad shape, can you call it evidence?”

The situation is quite on the contrary, he says. Many of their customers receive their orders within 48 hours as advertised, some even within 24 hours.

The portrait of Zalora falling apart due to pressure from an over-enthusiastic corporate machine appears to have no grounding.

Ever since Rocket Internet entered Southeast Asia, it has generated heated discussion among the startup community. It is a German company that is most well-known for making a killing out of creating and selling clones of the most successful Silicon Valley startups.

Many vilify them for stealing talent from young enterprises, possessing an over-aggressive and ruthless corporate culture, as well as encouraging rampant copying. Even the tech media glitterati from the West has demonized them.

But speaking to the actual people working in Rocket Internet, which owns Zalora, the picture becomes far more nuanced.

Admittedly, when SGE visited the Rocket Internet office, located in an industrial estate, it felt a little like a sweatshop. About eight workers are packed to a long desk, and there are rows of them in a large and spartan office. We estimate about 300 people, shared between Zalora and FoodPanda.

But these are not underpaid Chinese workers assembling iPhones in a remote Foxconn factory. Quite the opposite.

The engine room consists of a mostly young, diverse, and cosmopolitan workforce. Well-paid too. They come from a smorgasbord of backgrounds and work experiences, ranging from senior fashion buyers to young creatives and analytical engineers.

Tan Wee himself was a consultant at Bain & Company, a global management consulting firm, with industry experience across multiple industries. He is charged with forging together total strangers into a cohesive team, after Zalora launched months ago.

Not quite what we saw.

The last time Oliver visited Singapore, Zalora had 30 employees. The number has since grown. Everyone is so new to the company that  you can sneak in unnoticed and pass off as a staff.

As an environment where new people are joining the company everyday, Oliver saw the need to visit and speak to everyone.

Far from “giving an eight-hour motivational talk”, he spoke for only half that length. He gave a short, 15 minute pep talk about the vision of the company, which the staff described as “inspiring”. He used his pet phrase about how they are working on a “once-in-a-lifetime” opportunity.

There was a question-and-answer session too. The speech was then followed by a three hour meeting with senior management to discuss operations and plan for world domination.

Those seeking for signs of an impending insurrection might be disappointed. The mood in the office was pretty humdrum: People were working on their laptops or chatting with fellow workers. They hold pizza and beer sessions every other Friday. The office is an open, if slightly cramped, environment, with bosses sitting among the staff, giving the impression of a flat hierarchy.

Chew Xiaomin, the senior marketing executive at Zalora, likens her work experience to Silicon Valley, although she has not been there herself.

“I wanted to have a lot of autonomy, and that this place gives you that, more than any big corporate company,” she says.

No doubt, it’s a startup-like experience, with teams having to build the business from scratch. But its a very well-funded and well-oiled machine, and frankly speaking, the “founders” are more akin to well-paid employees than struggling entrepreneurs looking for their big break.

A Zalora staff I spoke to, on condition of anonymity, also painted a somewhat sanguine picture of the company. While admitting that there’s “a lot of adrenaline” in the office environment, she seems genuinely excited to be part of something cutting edge.

“This is an Internet company, you’ve got to be the fastest, got to preempt and take charge. Those who aren’t suitable won’t stay very long,” she says.

While Rocket Internet may be sucking talent from the region’s tech startup scene, there’s no denying that Zalora’s presence could potentially benefit one group: Indie fashion labels seeking their big break.

Speaking to a couple of fashion designers, both of whom declined to be named, I found them cautiously optimistic.

Although they gripe about its high consignment rates and tough demands, Zalora is seen as an additional retail channel to push their designs out to the masses.

Long queue at H&M in Singapore

And who can blame them? Singapore’s indie fashion labels have been generally ignored by Singaporeans in favor of global brands like Topshop and H&M. An opportunity to promote their labels in other countries is too promising to pass up.

While Zalora has a 45 percent consignment rate, in other words, they take a 45 percent commission off the selling price of every dress, fashion labels are willing to make that trade-off in exchange for Zalora’s marketing muscle and growing presence in the region.

It’s something competitors like Actually and A Curious Tee Pee cannot match. Generally, it’s known in the fashion industry that online retailers charge a consignment rate of between 30 to 40 percent.

“After you sign an agreement and consent to the terms, you can’t really complain right?” says a fashion designer who is listed on Zalora.

She notes, however, that the website can be hard to navigate and the way some brands appear on the site makes them look bad. Some are questioning whether having so many brands on one site is really a good idea. There’s no proper curation and the site just appears to be a melting pot of everything.

Another fashion designer believes the high consignment rates are not an issue for larger labels, but will be a problem for younger brands.

Generally, a fashion item that costs US$25 to make will sell for no less than US$100, since they have to account for sale periods as well. After Zalora takes a slice of the profits, what’s left is US$30 for the designer.

Tan Wee points out that Zalora incurs a lot of hidden costs in production and marketing. They also place a premium on customer service, citing it as their competitive advantage against other blogshops.

And despite putting up a brave front, he admits that starting Zalora in Singapore has not been without hiccups. Hiring good staff is his biggest challenge, along with the day-to-day matter of building and optimizing their logistics system.

Nonetheless, he doesn’t mind the sparse office and obscure location, which is surely a departure from his previous job.

“Everyday I feel like I’m having fun working here, and that’s sufficient for one to be engaged and happy.”

Images: kalleboo and marissaorton