Loyalty cards are inefficient and generate a lot of waste. Even digital ones. A while ago, I was at a music shop and decided to preorder a music album for a friend.

To my delight, I received two chops on Perx, a loyalty card app I recently featured. But to my dismay, I was eight chops away from getting my reward. And it’s extremely unlikely I’ll step into the store ever again — I’m just not an avid music listener.

Here’s the problem with loyalty cards: They don’t always capture loyal customers. And when they don’t, they’re a burden to merchants.

This is a problem Singapore-based startup Squiryl hopes to solve. Unlike other loyalty card apps, it allows users to swap stamps — or acorns, in their lingo — with one another.

Suppose I have two acorns at a restaurant I’ll never visit again. I can use the Trades feature to exchange acorns with others by putting up an offer. For example, I can offer two acorns from Fisherios Fish n Chips in exchange for three acorns at a Puma store.

While critics might argue that such trades defeat the purpose of loyalty cards since it diverts customers away, Squiryl co-founder Mulyadi Syariffudin disagrees.

“We gave up the [advertising] agency because we believe in burning our boats so that we can’t turn back.”

Customers who don’t like a product are unlikely to come back to the store anyway. So, why not exchange them for another customer who willingly traded for your acorns? With some acorns in hand, customers are more likely to visit a store since rewards are more easily attainable.

“If you lose one, you get another one. That’s the worst scenario. In the best situation, customers that get acorns spread the word, resulting in more sales for merchants,” he says.

While past apps have tried universal currency, merchants revolted because consumers can effectively get points at one brand and use it to redeem rewards at another. Acorns, on the other hand, are always tied to a merchant. They can only be used on one particular brand at a time.

The net effect is greater market efficiency. Instead of taking a slice of a small pie, Squiryl hopes to enlarge it by making the concept of loyalty points more relevant for customers.

They’re essentially hoping to do what Google did with Adsense: Making an entire industry more efficient, resulting in better returns for both merchants and consumers. Except that while Google is achieving this with algorithms, Squiryl is doing it with social exchange.

This social element is at the heart of Squiryl’s vision. Ultimately, they aim to be the universal social network for loyalty points — a fundamentally different approach from their competitor Perx, which is more of a marketing tool than anything else. Squiryl is working on more social features right now.

How Squiryl works:

Mulyadi was candid in his interview about competing with the more well-funded Perx, and how Squiryl lost out initially in the battle for merchants. Perx gained the advantage in Singapore with a clustering strategy — by targeting merchants in a particular area, those who didn’t use the app felt left out and wanted in too.

Even though Squiryl is forever free, merchants on Perx were hesitant to switch to another loyalty card program. Another painful lesson Mulyadi learnt was the importance of putting their product out there fast, even though it may be flawed.

Mulyadi also admits that Squiryl doesn’t have as much marketing muscle as their Saverin-funded competitor, and as such are less visible to consumers. This is painfully obvious to me — as I stroll around Singapore, the Perx logo is visible on storefronts everywhere, while Squiryl seems obscure.

But he and co-founder Alan Lee are a scrappy bunch: They’ve managed to amass 15,000 downloads and 6,000 monthly active users despite their constraints. About 100 store locations are on their program, issuing out a total of 9,400 acorns in March and April. They officially launched at DEMO Asia 2012 in March, six months after Perx.

Squiryl is determined to catch up. They have already set up an office in Indonesia and hired a sales team there. Their BlackBerry app will launch in a few days time, while their Android app will unveil in mid-June. They are working feverishly hard to get Indonesian merchants on board, aiming for 500 outlets and 150,000 users in Indonesia by November.

Mulyadi isn’t aware of any prominent mobile loyalty card app in Indonesia. Over there, the loyalty card scene is dominated by credit card programs, but he argues that these loyalty schemes build brand affinity for the credit cards rather than merchants.

It’s still too early to tell how the loyalty card battle will pan out. There’s still a lot of untapped retail real estate in Asia, and I’m curious to see who will be the first to develop loyalty programs for the white-hot mobile commerce industry. I’m also interested to see how Mobipoint and Spoqa will perform in South Korea.

The Squiryl team. Photo: Squiryl

For both Alan and Mulyadi, it’s a race not just against competitors, but against the clock. Both of them are married, and Mulyadi has four young daughters. Having bootstrapped all the way, the co-founders find themselves with a runway of six to twelve months.

Mulyadi himself was running an advertising agency before giving it up to pursue his dream. Alan is a serial entrepreneur who is proficient in web development.

“Me and Alan, we’re very particular, we gave up the agency because we believe in burning our boats so that we can’t turn back,” he says.

Their immediate concern for now isn’t revenue — but getting user traction. They’re also seeking the right investors, having previously rejected one who wanted Squiryl to scrape its trading program.

Having family commitments have imbued them with a sense of desperation — and this could work in their favor.

“We’re different from other startups because we’re no longer in our early twenties, so there’s more urgency for us. This thing has to work.”

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.

Technology startups are today’s entrepreneurial rockstars. Not a week goes by without an announcement of a new location-based app, niche social network, or online travel discovery service.

But like many hard-luck musicians, these startups burn bright at the beginning, relying on the quick fix of seed or venture funding, only to fade later on.

That’s because they are still searching for a business model, and until then, they can’t be legitimately called a sustainable business.

In the midst of this fever, Aunty Binnaz is an online service that stands out for modernizing an un-sexy industry — fortune-telling. Yes, I’m talking about psychic reading of the tarot-card, astrology sort.

Except in this case, Aunty Binnaz’s main product is coffee-cup reading, a popular form of fortune telling in Turkey.

Started in January 2011, the business is on track to generate an annual revenue of US$1M by doing “hundreds” of readings a day, says Turkish entrepreneur Sertac (pronounced sir-tarsh) Tasdelen, who’s also an Ernst & Young business consultant, fashion photographer, and part-time model.

He is based in Singapore, while his co-founder and CTO Kaya Diker works from the United States.

Aunty Binnaz’s business model is straightforward. It is a Turkish and English website that enables users to upload pictures of their empty coffee cups to any of the 30 carefully selected and listed fortune-tellers.

Customers pay a US$6 fee per reading, which can be received either via text or voice recording. Aunty Binnaz (which is actually branded after Sertac’s mum) keeps a share of the revenue.

The company, registered in Singapore, recently added Tarot card and Astrology readers to their ranks, and has just launched an iPhone app in Turkish. 90 percent of customers are from his native country, and that market is their focus for now.

Like me, you may be skeptical about the fortune-telling business, or even the ethics of it.

But it makes a lot of business sense. Psychic reading is a money-spinning endeavor. A study suggests that one in seven Americans have consulted a psychic. In Asian countries like Japan and Taiwan, fortune-telling is huge too. That goes without saying: The Chinese are a superstitious lot.

“We grew organically. That’s the key in any startup.”

While the most rational among us might question the legitimacy of these oracles, Sertac claims he is a true believer.

“There are some people with the sixth sense,” he says, and his mum is one of them. He recounts an incident where she did a reading for his CTO Kaya and friends. Kaya is a non-believer.

Upon receiving the voice recording in America, he pressed the play button on his iPhone while he and his friends are having dinner together. His wife was serving soup.

Sertac’s mum says: “I can smell the soup, next time please put it for me also.” The recording was made beforehand.

While fortune-tellers tout their ability to predict the future, Sertac says they serve a more practical purpose too.

“In Turkey, coffee cup reading is a way of communicating problems.”

When customers share their problems with a fortune teller, they forge a bond. Clairvoyants themselves may have psychological or social problems which can be cured when they know about other people’s issues. Customers benefit too, as talking about a problem to a listening ear can be therapeutic.

“Fortune tellers have an effect for us. They don’t make things happen, but these people have a tendency to see something that you and I don’t,” he says, “we also believe in general you can really predict the future by changing yourself.”

Regardless of whether you believe in the practice or not, Aunty Binnaz’s growth is not the result of some hocus-pocus. Attribute it to sound business principles.

Sertac initially started the site as a way to keep his mum occupied. Costs were minimal, and the only marketing expense was a one-dollar daily Facebook ad. But the demand kept up, and they soon had to hire more and more psychics.

“We grew organically. That’s the key in any startup. A startup is not something you invest a lot of cash, bring all those people together, and say: Let’s go. You need a unique idea, good execution, and organic growth to a certain stage where a company can stand on its two feet without too much intervention.”

Quality control is paramount at Aunty Binnaz. They have a stringent selection process, based on a secret formula, like KFC’s secret herbs and spices. Also, psychic readers are cut if they don’t hit a benchmark of 90 percent. They are scored by customers.

Fortune-tellers are given a set of guidelines to adhere to. They cover the use of language, tone, and the introduction, body, and conclusion of their readings. While everything is customized for the customer, the product contains the essence of the company’s values.

They don’t shy away from saying negative things too, although they present it in the most acceptable way possible.

“We don’t say, ‘you’re going to die tomorrow, but something like, ‘please be careful’.”

Aunty Binnaz isn’t just about revenue, but also social impact. Many of the fortune-tellers are hired from outside the existing job market, who may not be working for personal or circumstantial reasons.

Sertac treats all his staff like family, sending personal letters addressing them as such and keeping up to date with their lives. He has a bonus scheme for fortune tellers that stay long-term. Overall, he claims that his staff can earn up to double a normal government-related job, and it comes with flexible hours and the ability to work from home too.

“Starting a business is a childhood dream of mine. I believe that sometimes, you don’t push things, they catch you if you have a open heart.”

As a result, he has been able to keep turnover rates low.

“We want to create a bigger impact in Turkey; not just earn 100 million dollars in revenue. The social impact is what makes me proud and go to bed satisfied.”

What’s interesting about the business is the diversity of fortune tellers on the site. They include an ex-banker who just quit corporate life, a social study expert, a psychologist, an artist, and even an engineer. Some do it full-time, others part-time as a hobby.

The people who seek their services are diverse too, ranging from high-level corporate executives to housewives. A loyal customer even gets multiple readings a day from different fortune tellers, just so she could cross-check their prognosis.

While Turkey is its key market, Aunty Binnaz is keeping an eye on the world. The fact that Sertac operates from Singapore reflects the company’s outlook, although good infrastructure and transparent business and taxation rules factor in as well.

The Asian market is particularly enticing, since forms of fortune-telling like palmistry, astrology, and Feng Shui have continued to flourish. The company could potentially create localized sites with local ‘aunties’ for each market, and is open to engaging strategic partners, investors, and even franchisees to take the business further.

But in the near-term, he plans to expand the pie in Turkey first. He’s also quitting his job as a business consultant to work on his startup full-time.

“Starting a business is a childhood dream of mine. I believe that sometimes, you don’t push things, they catch you if you have a open heart. This project found me,” he says.

By now, Chumby’s demise is well known among fans and tech enthusiasts alike. The US company was most well known for its Chumby devices, which are intelligent, Internet-connected versions of otherwise dumb objects. However, it fell by the wayside soon after Apple changed the consumer electronics industry with the iPhone and the iPad.

In reaction, Chumby pivoted to producing a software platform for smart TVs, but that didn’t work out either. Their journey ended officially in late April. Andrew “bunnie” Huang, or just bunnie as he is often called, had front row seats to the San Diego company’s fall. He was serving as its co-founder and vice-president for hardware engineering.

Recently, we visited the Singapore-based entrepreneur for an interview, revealing some interesting insights about the inner workings of Chumby.

1) They lacked the mentality needed to be a successful hardware company.

The original Chumby: An Internet alarm clock with a touchscreen.

Andrew highlighted the unique challenges faced by hardware companies that set them apart from software companies. For one, getting early stage venture capital funding is difficult, since the sort of hockey stick growth desired by investors is difficult to attain for hardware companies due to the need to ship physical units to physical retail stores.

Hardware companies also need to deal with the holiday sales cycle that is part and parcel of the consumer electronics industry. In the United States, for example, sales of computer game titles during Christmas season can be ten times more than an equivalent span of time in the summer (this in-depth interview has more).

Television sets are extremely vulnerable to the sales cycle, since they are big ticket items that are purchased by families only once in a while. Christmas season is usually the preferred time to get one, since major sporting events like SuperBowl and March Madness are held early the following year.

In the case of Chumby, they found it challenging to adhere to the “ship or die” rule, since they are more of a software company with a hardware component.

Bunnie explains: “Culturally, it was hard for me to put across the fact that if you miss one cycle you’re going to have to struggle until you reach the next. There’s the sort of mentality that says, well, if you miss the Christmas season, it’s okay because there’re online sales and online retail channels. There were doubts about whether is it really the case that so much happens in Q4.”

2) They couldn’t pivot quickly enough because of too much soul-searching within the executive leadership.

When the iPhone became popular, they were in a state of denial. At first, they didn’t think the smartphone from Apple would be a competitor, but they were wrong. Although Chumby developed ‘widgets’, they had difficulty explaining the concept to consumers. Apple came along and changed the game with ‘apps’. Soon, every smartphone had them. Chumby was blindsided.

They embarked on the task of adopting to the terminology of apps. They changed the references on their website, but even that took the team some time to get used to. The concept of pivoting was culturally difficult for the company. As a result , they took too long to execute on their new strategy of creating app platforms for smart TVs.

“It took us a year to get into the space. There was some debate about how to do it. We actually did pretty well, but if only we moved a little quicker, a little faster. When we started executing it was fine. But at the top level there was some soul-searching, wandering; we went into staff meetings wondering about a lot of thing,” he says, ”We should have had more crisp decision making.”

3) With so many moving parts to their company, getting consensus from the various leads was a challenge.

ChumbyOne: Same as the original, except with a plastic casing.

Chumby’s products spanned hardware, software, and the cloud. So they had many managers that took care of different elements of a product, and consensus was necessary from everyone of them to move the company forward. Even if one piece could not agree to the new strategy, it could hold back the entire team.

“In a software startup, on the other hand, you have one or two people making the decisions, they tell a few minions to go this way, and you change,” he says.

Transitioning from touchscreen app interfaces to a smart TV design was hard, since apps for smartphones require touches while televisions had the remote control. Not only must the team change the user interface, they also had to create a new distribution method, style of Flash, server integration, and the whole vertical stack.

Things would have been easier if they started on smart TVs from day one. But pivoting meant that a lot of past work had to be undone.

“A lot of people had to go back and rip up their code. There’s a lot of inertia inside and it was very difficult to get over that.”

Reflecting on whether they could have done things better, bunnie says that consensus making is an art, and it really depends on the team composition and personality. For example, in the instance where the company’s management board is split 3-2, the two that disagree with you can be the ones putting in the most money, so even a majority vote wouldn’t work.

To orientate everyone in the same direction, the visionary needs to have strong beliefs, although using a hammer to bash through things will not always work.

“You have to get the right tools, sometimes you need persuasion, sometimes facts, and sometimes fear. It depends on the personality of people you’re working with.”

4) Adobe’s abandonment of Flash was the last nail in the coffin.

The Chumby8: An Internet photo frame + tablet

The tech landscape has changed a lot since the company started in 2006. While Apple’s entry into the mobile phone space caused Chumby to pivot once, Adobe’s abandonment of Flash indicated that it was time to give up.

Although they were making moves internally to adopt HTML5, it was not happening fast enough. Already, a lot of other platforms are adopting HTML5, and Chumby itself would need another infusion of capital to pivot one more time.

Bunnie realized that since there was already so much money invested in the venture, it does not make sense to pivot again. Instead, clearing the table and starting afresh was the better option, if one can stomach doing a new startup.

“Our Investors said, this is it. Maybe some bridge money can come through, but we found ourselves saying, someone has to buy us or we go out of business. It’s like gravity, you can’t defy it  for too long.”

Chumby sought out acquirers, but even that proved to be a challenge. Despite the hype about Instagram’s acquisition of Facebook, the market as a whole was sluggish. Consumer spending has not soared, and the economy was not booming.

In a white-hot market, people will bid and play off one another. Chumby had expected a whole cast of characters to be natural acquirers, including tier one OEM partners whose products would be affected if they went bust.

“Except that all of them are hurting so badly right now in terms of cash and ability to execute. Chumby put their technology into the Sony Dash, for example. There are a lot of those out there. But Sony just laid off 10,000 people. How can you justify an acquisition of technology when you fire so many staff? The macroeconomic picture was poor for companies and our partners.”

In the end, Technicolor bought some of their assets. Despite leaving the investors with a substantial amount of debt, it was still a fair outcome because very few people ended up without a job.

“It wasn’t like we laid them off and left them on the streets. The same office had the same people, just a new boss.”

Photo: Joi Ito, Spiegel

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.

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.

This electric car from London uses Horizon's fuel cells.

We just love hearing stories of regional startups that’ve made it big internationally. Southeast Asian companies like Charles & Keith, Banyan Tree Holdings and 77th Street have held the limelight in recent years and are still going strong.

Horizon Fuel Cell Technologies, a Singapore company dealing with ultra-light and low-cost energy storage solutions, is right up there with the best of them.

Making hydrogen fuel cells, which are essentially long lasting power generators that generate electricity from gas, has been a global challenge for decades now and this was where Horizon decided to step in and make fuel cell their main focus.

That was in 2004. Eight years on, they are now the world’s largest producers of micro-fuel cells in consumer and industrial applications. It has successfully brought a wide range of products out into the market, with sales spanning 65 countries in total.

We spoke to Taras Wankewycz, Executive Director and one of the co-founders of this green technology company, on its success formula and what it takes to be on top of their game.

SGE: Tell us more about your company.

Taras: The company was started in 2003 in Singapore and under it we created several subsidiary start-ups that are market or application-focused, including another Singaporean-based company called Horizon Energy Systems (HES), which is focused on ultra-light aerospace and military applications technology.

Besides me, we have a few other founders and founding shareholders that includes members of the family that started Volkswagen and Porsche.

SGE: What gives your products that competitive edge over competitors?

Taras: We have two different value propositions over incumbent technologies (batteries or combustion engines), depending on which fuel or energy storage technologies we apply to our fuel cells.

The first value proposition offers much lighter-weight energy than the best possible batteries, as such we’re able to offer up to three to four times more energy for the same weight – an immediate impact in any aerospace application where batteries are used today.

For the second value proposition, we offer energy stored at a much lower cost as compared to batteries, or in some cases, even diesel. This is relevant especially in larger off-grid remote locations where choices for power supply are limited.

Our competitors are typically limited to a single technology or market, which in turn limits their ability to grow, and increases their business risk substantially. Having investigated the sector as corporate venture investors in the past, we were able to take a completely global and differentiated approach to the space…so we ended up choosing a very unique and diversified development path.

SGE: Was it a strategic decision to start the company in Singapore?

Taras: I am not sure it was when we did that, but it turned out to be strategic. Looking back, Singapore is a safe-haven for western high-tech investors looking at Asian deals, has strict accounting practices, and good shareholder protection. Singapore is also positioned as a window to the world, when it comes to demonstration of new technologies. The Economic Development Board (EDB) invited us to establish our base in Singapore at an early stage – and so we did.

SGE: What major obstacles did you guys face and how were they overcome?

Taras: We faced countless obstacles in all areas – ranging from technology development, to people, as well as financing – so on and so forth. We had to learn quite a few things during our journey.

Our main obstacle was fundamental – the mainstream commercialization of fuel cells. In our domain, fuel cells are conventionally very expensive and also they need hydrogen to function, so then the question is where can clients get hydrogen? Since fuel cells consume more fuel (hydrogen) as power scaling go up, fuel becomes a major obstacle to making fuel cells a reality.

We minimized our problems by reducing the power scales to a bare minimum and start in a power-scale segment that can rely on packaged hydrogen, cartridge-based products or solutions where hydrogen can be produced by clients “on the spot”.

Furthermore, we were able to reduce fuel cell costs dramatically, which has been our most important differentiation factor from other competitors.

SGE: What are your company’s highlights so far?

Taras: We had a breakthrough in 2006, landing Time Magazine Best Invention for one of our first products — a miniature real-working hydrogen fuel cell car and refuelling station. We became famous for that product, and most people still associate us to it till this day.

We expanded internationally into China with three manufacturing locations and R&D, and into the US last year. We started an Aerospace/Defense division in Singapore and powered a couple of new record-setting electric flights for unmanned platforms in the US, together with a NASA-backed team – and in the German Aerospace Center (DLR).

We have since begun customization of fuel cells as long duration electric power solutions for UAVs in several countries, all of which originate from Singapore. We have also developed an incredible desktop hydrogen station for small hydrogen cartridges, which can be used to recharge cellphone or smartphone batteries. The new device was covered in MIT’s Technology Review, Eco-Solutions on CNN, and Popular Science, and  many more.

SGE: Has achieving market leadership changed anything in the company?

Taras: Internally, we still function in small entrepreneurial teams. The achievement has attracted many eager entrepreneurs to join our quest. But instead of becoming competitors, we cooperate and exploit each others’ strengths. This is a new networked and cooperative business approach, which is accelerating growth for all involved.

SGE: How has your company’s achievements been recognised by Singapore and its government?

Taras: It’s difficult to keep up with Horizon’s progress, which is daily, and understand all the different products developed, or the markets we are in – and our global presence isn’t very visible here in Singapore. We were however recently recognized by EDB as being members of Singapore’s “creative class” of companies, which was very honouring to us.

We hope we can be an example of a “global champion” in Singapore and be an inspiration to everyone regardless of which industry they might be in. And we also want to make Singapore proud!

SGE: Having attained much success as market leaders, what’s next? New goals and benchmarks?

Taras: We have a vision to put a private zero carbon hydrogen supply solution possibly in every home. It would start with a connection to solar roofs, but in the future – we plan to remove the need for external power supply and use organic waste as a feedstock. Technology is evolving quickly, and there are signs that a potential integration of biotech such as the processing of organic waste to hydrogen, can provide free fuel that can be used to power all kinds of devices, including lawnmowers, cars, back-up generators and more. It’s a matter of time and evolution.

SGE: What advice can you give to those who wish to venture into green technology?

Taras: Focus on solving a problem that has economical and performance advantages over the status quo. This is not easy to do with what could typically be more expensive new technologies. “Greening” can be a marketing bonus, which could come and go depending on the direction of the wind. At the end of the day, the basics still apply.

End.

In here, he talks about the diversity of ideas but yet how some of the companies he saw at DEMO Asia — a launchpad for emerging technology – had small visions, but “it’s okay, you can start with a small vision but still build it up to a bigger company eventually”.

Watch out also for his advice to foreign entrepreneurs trying to enter Asia.

Check out the rest of the “quick and dirty” video interviews Kristine and I did with companies and investors at DEMO Asia: here, here, here (with investors), there and there (with investors Vinnie Lauria and Jeff Clavier).

For those who’ve been following the startup scene lately, it’s hard to miss Guyi Shen, co-founder of Singapore-based LobangClub, a price comparison app.

He was a supposed “victim” on the Dragon Den-like reality show Angel’s Gate, where the angels offered him a year’s worth of mentorship in exchange for ten percent equity — a proposition many find ridiculous (read his side of the story).

But more than that, his app has gained quite a decent amount of traction in Singapore, at 38,000 active users in a city of five million since its launch in September 2011. His challenge now is to expand to the region and generate enough revenue to sustain his business.

We caught up with him recently via email to see how’s he doing.

SGE: So what are your plans regarding expanding regionally? Where are you looking to at the moment?

Guyi: We are looking very closely at philippines right now. It’s english speaking, has a 100 million population, and the iPhone is exploding in the country right now. It’s demographic is super connected and social, and Pinoys love a deal even more than Singaporeans. In fact, I am emailing you from Manila right now.

SGE: It’s probably tougher for a startup like yours, that utilizes network effect, to go from zero to 38k, than say an utility app. What advice can you give to startups that cultivate communities and rely purely on user-generated content?

Guyi: I feel like this is by far the most important question for startups in this region. To be honest, there are lots of ideas done by startups in the region that have the proviso, “this would work, if you can get enough users…”

People here in this region look to the Valley for thought leadership on all things startup, and pretty much verbatim execute the “best practises” they see overseas. However, distribution is a very local thing, especially given the different Internet ecosystems that exist in this region, and copying stuff that works in the U.S does not necessarily work locally.

For user-generated content and community sites, the advice is pretty short and sweet, do whatever it takes to make your first users happy, usually this means doing things that don’t scale; for us, we spent a few months manually seeding the data with everything we could get our hands on, so that the very first user had a good experience when they scanned something.

SGE: On Angel’s Gate, it was mentioned that you’ve had three failed businesses over eight years. Could you tell me more?

Guyi: I wouldn’t exactly call them failed businesses (that was an AG embellishment); one was in ecommerce, one was in lead generation, and another one was in financial services. My role in all of them was user acquisition and online distribution, so I cut my teeth in extremely competitive online markets doing user acquisition.

SGE: How do you bounce back each time?

Guyi: It’s in my DNA to be an entrepreneur, so I don’t really bounce back, I just move onto the next thing.

SGE: It must’ve been tough on your wife and two kids? How do you rally their support?

Guyi: I met my wife while doing my second startup, so my wife has known me as an entrepreneur all along. I believe in the concept of full immersion and engagement, so the days I do work, I work non-stop till 2, 3am, get up at 10am and continue working. On weekends, I spend all my time with family and give them my full attention, that’s why I rarely attend any events that happen on weekends.

Photo: Dr Mooryati Soedibyo's private collection

The garage has long been the birthplace of many great companies — Apple, Google, Hewlett-Packard, to name a few. Even Walt Disney got his start producing his first animated series, “The Alice Comedies” in his uncle’s garage before forming his own studio.

Closer to home, the humble garage also witnessed the birth of PT Mustika Ratu, Indonesia’s famed herbal medicine (or jamu) brand, in the early seventies.

The business caused many to raise their eyebrows, because not only was the person behind it a woman, she was also a direct descendant of the royal Javanese family, one who was actually raised within the walls of a kraton (Javanese palace).

It was unheard of for someone of her status to work, let alone start a business and as Dr BRA. [1] Mooryati Soedibyo readily admits, the reaction from her family was far from encouraging. “Initially, my family did not support my decision to become a business woman as it was against our ancient traditions,” she recalls.

“Only through my own determination and hard work was I able to persevere and overcome this challenge, which actually helped motivate me to become successful on my own.”

Despite not having a background in business, she drew on what she had been taught during her formative years in the palace, and started making jamu, a traditional Indonesian herbal medicine that has a long-standing place in royal Javanese history. She bottled beras kencur, an Indonesian herbal drink, at home with the help of two maids.

Later, she expanded her range of products to include herbal pills, shampoo and cosmetics, and founded her company PT Mustika Ratu proper in 1978.

Today, PT Mustika Ratu is a brand with a domestic and international presence which products can be found in Africa, Eastern Europe, Latin America as well as several countries in the Southeast Asian region. In addition, Dr Soedibyo’s business empire also includes a spa business, Taman Sari Royal Heritage Spa, which has operations in nine countries including Canada, Japan, Bulgaria, and Malaysia.

Like any entrepreneur, Dr Soedibyo has experienced her fair share of challenges, stiff market competition being just one of them. However rather than compete on price, she has always been adamant about letting the quality and heritage of her company’s products do the talking.

“[Though] there were other products similar to mine that [were] priced five times cheaper, I didn’t compete on price. I have preserved the traditions of indigenous ingredients derived from local experience,” she says, adding that the company works closely with local farmers to ensure that its raw materials are derived from sustainable sources.

Given her background, one would be forgiven for assuming that it has helped given her an edge over the competition. She is quick to point out that this couldn’t be further from the truth.

“When conducting business, the foundation of the company should not be based on the image of the founder’s family background,” she says.

“When running the family business, a good businessman or woman must be able to meet the requirements and criteria of good manufacturing practices, have a basic entrepreneurial competence and attitude, and be innovative, creative and [attuned] to future competition.”

Though she is now in her eighties, Dr Soedibyo shows no signs of slowing down and apart from grooming her daughter Puteri Kuswisnuwardani to succeed her as head of the Mustika Ratu brand, she is also turning her attention to social work.

She now plays an active role in helping draw up initiatives to help women, working closely with the DNIKS (National Institution for Social Welfare), a non-government institution engaged in the empowerment of women and the poor, as vice chairwoman. She also founded the Women Entrepreneurship Academy last year to offer non-degree entrepreneurship courses.

Considered a living legend in her home country, Dr Soedibyo has received numerous awards in honour of her achievements, among them the Best of the Best Entrepreneur award from Ernst & Young in 2003. She was also named one of the top 100 next-era CEOs in Asia by The Japan Times last year.

“Women in Indonesia are still being left behind in various fields of education provided to men,” she observes candidly, adding that apart from the lack of networking opportunities, the roles open to them are mostly limited to domestic functions. As such, the local government needs to step up its efforts to support the progress and advancement of women.

According to Dr Soedibyo, there are laws in place to help them but these statutes must be made a priority. To this end, governments have a role to play not only in creating policies to help minority groups but also in ensuring that they are implemented.

She also stresses the importance of educational initiatives in a variety of formal and informal areas” to support entrepreneurial efforts by women. By expanding their roles, society can only benefit as they work, together with their male counterparts, to “[fight for] the welfare of the nation.”

[1] BRA: Bandara Raden Ayu, an Indonesia honorary title given to Dr Soedibyo to denote her status as the granddaughter of SunanPakubuwono X, king of Surakarta Palace.