After securing $425 million in two separate Series D rounds, travel booking platform Klook is now focused on growing its presence in the Western markets as well as deepening its footprint in Southeast Asia, according to its co-founder and chief operating officer Eric Gnock Fah.
“In Southeast Asia, we’re just scratching the surface so we do want to deepen our roots here. We’re also currently expanding to Europe and the US – we grew from a team of only three people a year ago, to now 40-50 people in Europe. We’d also like to expand our services – besides tours and attractions, we now offer many more varieties. So we can push on that to cover food, restaurants, events, concerts, and others,” he told DEALSTREETASIA on the sidelines of Wild Digital SEA 2019.
Founded in 2014, Klook offers attractions, tours, and local experiences as well as local transport and railway services around the world. SoftBank Vision Fund had led the startup’s extended Series D round closed this April.
The Hong Kong-based startup was said to have achieved a $1-billion valuation in its first Series D round closed last August, after two other local startups – GOGOVAN and Lalamove hit the milestone.
Gnock Fah hinted there may be collaborations among the unicorn startups within SoftBank’s portfolio companies – something that Singapore-headquartered Grab’s president Ming Maa had noted in the past. SoftBank first invested $250 million into Grab in 2014.
“Fundraising was not about capital, in fact, it was less so for us because we just raised $200 million prior to that SoftBank round. But what really convinced us that it will be a great partnership is that after speaking to the team and Masayoshi Son – understanding what is it that he’s trying to build and the ecosystem which has Grab, Tokopedia and so on. We see how all of these things, in the end, will exist commonly in just one ecosystem,” he said.
In 2018, trip bookings on mobile devices tripled and accounted for over 75 per cent of total bookings. Gnock Fah said the platform has been growing at a triple-digit growth rate and expects Klook to maintain its momentum for the rest of the year.
Interestingly, prior to founding Klook, Gnock Fah had no experience in the travel industry. He served stints as an investment analyst with Atlantis and Morgan Stanley in Hong Kong.
One of his key learnings of being an entrepreneur for close to half a decade is to acknowledge one’s limitations.
“In the first few years, you tend to do everything and anything, you tend to feel like as the platform grows, you want to continue to manage everything. But that’s just not possible. So to be able to scale, you need to be able to set up the right processes with the right people. Knowing your own limitations and getting the right help and getting the talent is very important,” he shared.
In less than a year after your $200 million Series D round, you went on to raise an extended round led by SoftBank Vision Fund. Why did you choose to work with SVF?
It’s been a long conversation with SoftBank, actually – not in terms of negotiation but in terms of getting to know each other – what is it that they want to achieve. Fundraising was not about capital, in fact, it was less so for us because we just raised $200 million prior to that SoftBank round. But what really convinced us that it will be a great partnership is that after speaking to the team and Masayoshi Son – understanding what is it that he’s trying to build and the ecosystem which has Grab, Tokopedia and so on.
We see how all of these things, in the end, will exist commonly in just one ecosystem. The second thing is the artificial intelligence part which Son is very keen on. I believe that there are three revolutions – the internet, mobile and then AI. Today, we still don’t see how much of it is being applied to businesses yet but in some parts of our business operations, we’ve been applying to make things more efficient and so forth. So being a strong believer in that is what really brought us to be part of this ecosystem.
What will the fresh capital be used for?
We will continue to invest in technology. Second is our geographical expansion. In Southeast Asia, we’re just scratching the surface so we do want to deepen our roots here. We’re also currently expanding to Europe and the US – we grew from a team of only three people a year ago, to now 40-50 people in Europe. Third, we’d also like to expand our services – besides tours and attractions, we now offer many more varieties. So we can push on that to cover food, restaurants, events, concerts, and others.
You’re more than just a regional company, you’re global. So what’s the main challenge in expanding the business into different continents?
Southeast Asia is a much younger market, even when we’re in Hong Kong, Taiwan and other parts of Asia – the range is broader. In Europe and the US, the range expands even more. We call ourselves a mobile-first company, which is true, but I think it is even more true in Southeast Asia because it’s a younger market. The rest of Asia it’s both mobile and desktop. But in Europe and the US, it’s more of a desktop play. So we’ve been putting a lot of innovation into mobile but now we have to move some of it to desktop to get more out of it.
How difficult is it to manage the capital that you have raised?
Investors want us to spend more in order to grow faster, which is what we’re trying to do. Managing the capital has been fine. It’s good to have that war chest because I feel that in the digital economy, there is no barrier as to where one company should be in. You’ve seen ride-hailing entering the food delivery business, and a travel company doing something else. So it’s about expanding that fabric more and more – so having a war chest for that is very important.
At this stage, I think it’s safe to say investors are coming to you instead of you pursuing them. How do you choose which investors to work with?
I think it’s very important to find the meeting of minds. So they’re long-term investors who believe in our vision, and also what they really committed to how they want to help the business. That’s what we really look for. We don’t look for just cash. It has to be more than that – could be helping us to open our minds to something new, all these are very important. We also don’t look forward to investors who like getting involved in our business – I think the investors have done very well in that, they know when they should be providing the advice and that the company is still run by our own management team.
Travel booking has become a crowded space since Klook started in 2014. How do you stay ahead?
Only with more players can the market grow faster. We’re talking about pushing online and mobile. So we’ve seen that with ride-hailing, e-commerce and with players like us, it’s expected [that the market will get crowded] and I think it’s a good thing. How do we cope with this is we invest a lot of our resources into the supply, making sure that we have enough and differentiated supply and provide that supply and investors to our partners around the world. The difference between a hyper-local business and a travel business is the network effect that our business needs.
So whether it’s a regional airline, or hotel, or e-commerce companies that are regional won’t be able to create the network effect as effective as we do. And that’s when we come into play by partnering with them. We have many collaborations – for instance, we partner with Shangri-La Hotel’s concierge service, something that we’re disrupting. But we look at this as a partnership, as to how the concierge business can be revamped and how we can play a part in that. So it’s a win-win.
Is profitability a priority?
The priority now is growth. But we’ve been managing the profitability part very well and very much in control of the wheels of the company. So anytime we say, we want to be profitable, it will be an easy task for us to do. And I fundamentally believe in the travel business.
You have reached the unicorn status in your Series D round announced last August. Is that an important ambition for the company and the co-founders?
The ambition is building a global brand that is relevant – not just in APAC but in the US and Europe, I think that is much more of an excitement for me. Because as I look around in Asia today, I don’t think I’ve seen a digital consumer platform that has made it outside of Asia. Even within Asia, it’s hard, you’ll have companies that focus on China, or we have companies focusing just on Southeast Asia. But we already broke that barrier in Asia and now we want to go global. On that path, reaching a $1 billion, $2 billion or even $10 billion valuation, I think it’s just part of the journey.
So is an IPO on the table?
IPO is not on the table because we have very supportive investors who are very deep-pocketed so in terms of funding, they can quickly power us to grow the platform, users and service offerings. So IPO is not in the immediate future.
What is Klook’s current growth rate?
We are still growing at triple-digits and we registered over $1 billion transaction value last year. That’s still a very, very promising position for us.
What’s your biggest challenge in growing the company?
I think the digital economy, including ourselves – its growth is outpaced by the growth of talent. So that’s putting a lot of pressure in finding the right people with the right skill sets. And that has prompted us to invest more into our own people who then move up and train the fresh hires that we bring in.
As someone who has zero experience in the travel industry, how has it been so far to start and grow a travel business?
It’s a double-edged sword. The good part is that we don’t carry the baggage of the travel business – meaning it’s not a travel agency trying to go online. Okay, I won’t say it’s baggage because it’s your bread-and-butter. But that’s also where your focus, resources and then [going online] will be a side business. So we come in with a clean slate – and we have a different way of doing things and that’s contributed to the growth of the company.
The flip side is credibility. There are many giants in this space who are our suppliers, like Disney, Kuala Lumpur International Airport (KLIA), Universal Studios – they’re all established businesses. So in the beginning, getting that credibility is quite difficult but we’re glad we made it. Today not only investors are keen to come on board but also businesses, in general, are keen. So we take a more curated approach by making sure what we bring on really matches with the consumers’ interest and is able to benefit the partner rather than just bring in their world onto our platform without managing the demand and supply pacing.
What’s your key learning of being an entrepreneur?
I think it’s very important to admit your own limitations. In the first few years, you tend to do everything and anything, you tend to feel like as the platform grows, you want to continue to manage everything. But that’s just not possible. So to be able to scale, you need to be able to set up the right processes with the right people. Knowing your own limitations and getting the right help and getting talent is very important.
Hong Kong has produced more than one unicorn startup in the last few years. How do you think the local ecosystem has evolved in recent years?
It has definitely become much more dynamic compared to when we started. And with the Greater Bay area that is already starting to take place, it benefits Hong Kong in terms of leveraging these regions’ expertise. For example, Hong Kong is strong in the corporate sector that could provide services like legal and financial but what we lack is engineering talent. And bordering Shenzhen and the Guangdong province, you have many tech startups. And there are a few success stories in Hong Kong now, so younger talent are more keen to join such companies instead of only thinking about joining corporates.