Hi everyone and welcome to another episode of SME show where I bring unproven entrepreneurs around Asia and reverse-engineer the strategies and tactics to succeed. Now in this interview, I interviewed Jeffrey Liu the co-founder of GuavaPass.

Now, what GuavaPass is it's a platform base marketplace business that connects consumers like you and me who is interested in fun fitness classes with boutique local studios in countries around Asia. So some of the countries that he's already in within the one year of operations, he's in Singapore, Bangkok, Hong Kong, Dubai. Shanghai, Manila, Jakarta and Taipei.

Now, in some of the things you will learn in this interview is, firstly is how a mini break that he took got him to start a start-up that is now very successful in about 10 months in the running.

More importantly, I think one of the things that will be a very big interest to a lot of you listeners is that how within 10 months of running the show, he got about hundreds of thousands completed gym classes bookings in less than a year, so without further ado, let's get on with The SME Show.

Marcus: Hi Everyone. It's Marcus here again from the SME show and today I've got yet another interesting guests here with me, his name is Jerry Liu. He’s the co-founder of GuavaPass. Well, first and foremost, thank you very much for doing this interview, Jeffrey.

Jeffrey: Thanks for having me.

Marcus: Wonderful and I think prior to doing this interview, we had a brief chat to this and we found a couple of very interesting things. I think first and foremost, I would love to hear a little bit of your background Jeffrey.

For a lot of people who are curious about what GuavaPass does, It's a platform marketplace business which allows consumers to attend fun fitness class in regionally. At the same time, in a very short of time after you launched, you got about hundred thousands of bookings.

So yeah first and foremost, let's get into your background and love to know more about your previous professional background and how you got started into GuavaPass.

Jeffrey: Sure. I'm actually originally from Hong Kong and I grew up in different countries around the region. I spend some time in Hong Kong, Taipei, Singapore and as well in Manila. Definitely remember what life was back in the 90's. Very different than today but very exciting time growing up in Asia during this period.

I ended up in the United States where I was originally in finance, worked for Lehman Brothers. I ended up joining hedge fund in Chicago and it was very exciting as well. This was back in 2009-2010.

So I spend some time there and I kind of gained the owner and entrepreneur mind-set starting from that point. I went back to Singapore to help a friend of mine in launching a fund out here in Singapore.

I also went to business school at the University of Chicago and got my MBA there. It was then when things got really exciting. It started through a random chance of encounter invited by a friend to Los Angeles just to meet someone and it turned out to be the co-founder of MySpace. And if you guys remember, MySpace back at the time was bigger than Facebook.

This guy who owned MySpace sell it and I think he ended up for over billion dollars. He's also a very seasoned entrepreneur. The cool thing is, within ten minutes of meeting him we headed off and he essentially offered me a job to work for him. So I spent the last 3 to 4 years in Los Angeles working in this really interesting company called BeachMint.

At one point in time, they are one of the fastest growing e-commerce sites in the US and we were funded by excel, where the top A list VC's is. The company scaled up very quickly where we grew from 0 to 150 employees and $0 to $100 million funding in 24 Months.

We were pioneering basically the Social E-commerce company, the first of its kind where we were selling billions online of women's fashions like shoes, jewellery and more. Apart from that, a lot of these very influential celebrity figures like Justin Timberlake, Mary-Kate Olsen and Ashley Olsen are really building this incredible brand and engaged followers.

I basically learned from the experience on how to build a social community where people are very engaged. So I spend about 3-4 years there running corporate development as well as running the analytics group and we ended up merging with Condé Nast in New York at the end of 2014. Later then, initially, was planning on taking a hiatus.

I came back to Singapore, where my family was based and three weeks later I was introduced to my current partner, Rob. It started off really well and we talked about all the things that we are passionate about. There's this chemistry between us and to me, it's very important to have this prior to choosing co-founder and partners.

The whole concept of healthy living really rose to the surface and I've always wanted a healthier lifestyle. It's something that really inspired from my experience living in L.A. Prior to my time in L.A, I was a pretty normal

kid who likes to have fun and live the lifestyle that a normal average person live. I then realize that it's a different lifestyle in LA where people were very passionate about being fit, eating healthy food and the good thing was I was working in Santa Monica which the capital of fitness in the US.

So when I came back here in Singapore, I was looking for this ecosystem and I realize that Singapore was a couple years behind the US, in terms of this healthy living movement.

But there is very strong genuine interest of healthy living in Singapore and we started to see a lot of different establishment that began rising in Singapore and it inspired us to look for this opportunity and start with it.

Marcus: Tell me about the problem you see before you started GuavaPass? I think Rob saw some very interesting opportunity when he came to Asia.

Jeffrey: My partner usually uses the "Back to The Future" as a reference, where we are jumping into a DeLorean, going back in time and the great thing about him is he is actually from New York City. As you know, New York tends to be the trend setter from fashion to fitness and any kind of thing that you could think about.

He felt like he saw the future when he came out to Singapore. He saw that there's a massive opportunity for fitness. Similarly, when I came back, I saw the same thing and thought that there's this massive opportunity for fitness. We started to try these spin classes and yoga class. We then realized that the quality of the classes is much higher than what you find in gyms. We also started talking to different consumers and they aren't aware that there's this kind of fitness out there. So at that time, I realize that there's a pretty large opportunity to bring exposure to this community.

Marcus: So GuavaPass started from there? Where you saw that there's an opportunity in fun fitness?

Jeffrey: Exactly. And even if you are interested in taking classes, the second problem is you started Googling and have a list of classes and have no idea what's good and what's not.

Marcus: When you started GuavaPass, obviously you faced a lot of ups and downs and challenges along the way. What was your first biggest standing block?

Jeffrey: I think it was where we first started. We spend a lot of time building the business plan and had this awesome idea. Basically, you just have to trust your guts and dive into it. It is always to try first and when we see the results, we then need to figure out if we need to make adjustments on it.

Our plan is just to soft launch the product, where we worked with 25 premium studios to build the initial networking studios. My partner and I just casually walked into the studio without a website and business plan.

Marcus: What was the first fitness studio that you two walked in together?

Jeffrey: I think it was a yoga studio somewhere around East Coast. The studio owner was very unsure why we are waiting. We told them that we are both from the States and very relevant from what they are doing.

Marcus: So you went in, you pitched to the lady, mentioned that this is going to be something that will change the world? If I'm the studio owner, I'll be thinking who these two American guys are. Trying to help me grow my business.

Jeffrey: I think the key thing is, we have to walk into the meeting not thinking it's a business meeting, but more like on building a relationship and that is the first impression that they will get to like you. I think the great thing is, I have to a business partner who is very personal and comes from an institution sale’s background, and very easy to approach.

When we walk into meetings with the studio manager, we kind of joke about different things. Because it's a very casual conversation and it's important that you choose the right saying. You have to be credible and represent the philosophy that you are preaching.

We always roll up in our yoga gear and wearing sneakers, wherein a proper business meeting you need to wear proper formal attire and I think it's because of that we appear to be more credible.

Marcus: Ok and how did that meeting go eventually?

Jeffrey: The meeting went well, I mean she really likes the story and I think a lot of times, in the beginning, it was a lot of education. Making him understand what was the value of propositions for studios and explained to him.

We do have a lot of parties who are interested in GuavaPass. I think you just have to put the best of yourself at the very beginning and showcase what is represented and eventually, more parties will come on board.

Marcus: And what about the second fitness studio? Did it go well, similarly as the first one?

Jeffrey: It actually got a lot easier because we got the story down. I think the first 10 minutes it was still shaky and quite a lot of awkward moments.

Marcus: Yeah, because there was no website.

Jeffrey: They were like, show me your website. And we were like, you know it's under construction, but I can show you a sketch. I then realized it was much better not to show the sketch.

Marcus: Ok. So you got studios on board, how many did you have?

Jeffrey: We had 25 and our business analogy is like Uber. When you enter into the market, you have to first build supply so that you can market it outside, to make sure you can match the supply as you grow and it's all about managing expectation from both sides.

Marcus: So you got like 25 studios on board and from then on, you started growing the website. I am assuming based on the conversation that you said earlier, you probably took months to launch the whole site. Do you think it's a lot of work from your side?

Jeffrey: I think from the surface of it, it's sounds very simple and I think from the consumer's perspective, our website is quite easy to use because it's very basic. You search for classes, you filters and look for studios where it's near your area and search for categories. But the complexity of it is actually all the things that's going on the background, for example, building technology can connect with all studios so the booking system will match.

Building this whole thing is a base where you can properly identify what is going on and you eventually build recommendation.

Marcus: Now that's tough because that requires a lot of internal work.

Jeffrey: Yes, that's require a lot of work, but as an entrepreneur, we always believed in not over engineering. You need to make sure you have a functional product that people can comfortably use and that was our criteria.

Marcus: So the MVP would it be right if it's the WordPress site?

Jeffrey: It's a bit more sophisticated. I actually built a WordPress site to build the landing page. I don't have any engineering background, but I do understand the tech out of it and I was able to build the initial line and we started building the real site.

Marcus: Before we go to the engineering part and bring in the CTO, you've got your new product out and you started marketing it. Have you already started with your major funding?

Jeffrey: No, so in the very beginning it was actually supplemented from just between the two of us and we are able to make enough tractions launch and start collecting a database. And once we started, we realize that people were actually interested because people started signing pages where it says contact me when you launch and we actually contacted a lot of emails in a very short time.

Marcus: How many emails did you contact?

Jeffrey: Over 10 thousand for three weeks, all from Singapore who had very high interest. And so we secured our first angel investor who came aboard two weeks after that.

Marcus: Wow! So you got your studios and committed to it for like 10 thousand e-mails subscribers expressing interest in it. So, you took this and showed it to your angel investor? Who was that?

Jeffrey: So, we have a lot of angels from our personal network because from where both of us came from. We also have lots of friends and entrepreneur in the angel community. I saw a lot of people who were interested to be angel investors and that was the first part of the portfolio.

The interesting thing was, there's this angel network in Singapore that was called ‘The Singapore Investor Network' and it's like an Angel’s List, but specifically for people in Singapore and there was a lot of Singaporean angel investor in it.

I wasn't sure about the site, but when I started to get inbound queries and I actually met them face to face and became very confident because they are all genuine people and a lot of them were professionals and we're looking for angel investors. So, we are able to secure half of the angel just from this network.

Marcus: So, you met a couple of angels there. You have some cash and you brought it some CTO to build slightly most sophisticated product out there, what happened next?

Jeffrey: So what happened next was, it was the day of the soft launch. We had no idea what would actually happen when we turn on the website because at that point we still have no paying customers. So that would probably be one of the scariest days of our life because as an entrepreneur, you always think about the worst case scenario of how awful it's going to look.

We turned on the website and it was like zero customers. We just prayed and fortunately enough, we actually had quite a bit of traction on the first day. I think I remember it was overloading our system and there were a lot of people coming in and we started thinking "Ok, there are people coming in. So we actually have real customers" but can we make sure that the product is working well enough?"

So, we purposely cap the number of people that were allowed to join in the beginning, just to make sure that we do not overlook the system. So when we hit the first 100 customers, we actually turned off the delivery of purchase and you joined the waiting list. It actually helps us to refine the products and I think the first two weeks are critical to making sure that the customers want classes and the whole process is smooth for consumers.

Also for the studios, because this is our third time dealing with a third party in this nature, we need to make sure that they are comfortable with the whole process. So we spend about 2-3 weeks just on refining the processes and after that we got comfortable and we started opening up the doors to the rest of our customers.

Marcus: So, before we go into the first few customers, what do you do to get them on board? Do you email blast them? And on Facebook?

Jeffrey: I think for the first set of customers, a lot of them were through a network. Can be your friends or your networks people in this industry.

Marcus: How much are you charging?

Jeffrey: We are only offering it at $79 dollars at that time. But that was like a beta version.

Marcus: So, you called all your friends, telling them that you were ready to open and sign up right now and then you started looking at the back-end scene. Was it promising?

Jeffrey: Yeah, it was actually quite promising that's why we had to turn it off.

Marcus: How many customers did you get like the first day?

Jeffrey: I'm going to say initially like about 30s, but we had a hiccup with our email where somehow it wasn't delivered properly. So, we didn't even hit most of our databases. At that point, we realize we shouldn't send to everybody in our database because what if all of them join? So, every day we are just going to email to 1-2000 people and see what is the conversion rate. Within the first week, we are able to get our first 100 customers.

Marcus: Tell me when you have your first few customers. You make sure they walk through the entire process; they had their bookings and etc. Did you physically go down to attend all your fitness staff just to feel the entire experience.

Jeffrey: In some cases, we did. But a lot of cases, we are so busy dealing with everything else. We were actually stalking our customers in term with their behavior. Just to know what is going on so whenever they booked a class it will show up on our screens that this customer is ready to take a class. A lot of times, when we saw the booking, we actually went to the studio and tell them to treat them well.

And in the very beginning, it was very hands on and I actually wrote thank you cards and went to every single customer and give cards manually. In the beginning, it's very important to be hands-on.

Marcus: Looks like everything was smooth sailing and it's good to hear that, but were there any big challenges that you face that really felt you were at the bottom of the rock?

Jeffrey: Yeah, I think there were moments when we tried different strategies. There was a campaign for example that we ran in Bangkok that we thought for sure it was going to be a big winner for us.

So in the beginning, we secure a couple of influencers and we thought that, "Hey, we have the keys to this massive community with lots of followers and engage users. All we need to do is give them free a membership trial to their followers so we will have an explosion of customers" and we did. We had a huge uptake.

But I think the learning lesson was, it was a wrong type of customers because we didn't spend enough time thinking about whether if these influencers really have the right fit for our users. What we thought is a lot of clouds. So, we give away a lot of free memberships that cost quite a bit of money so that was a learning lesson.

People sign up because it's free and I think the perverse effect of the free trial is while you get customers to do the door, it's a lot of times basically, you are attracting almost like a bargain type of customers.

Marcus: What was the dropout rate like in terms of numbers?

Jeffrey: It was actually very high that's why I am quite disappointing for us. Because I think we lost like 80%, which completely not we saw in other markets. The highlight is you don't want to put all your eggs in one basket and assumed that it will always work and what you should do is take baby steps to make sure it is working.

Marcus: So you talked about Bangkok and today GuavaPass is in eight different markets, Singapore, Bangkok, Hong Kong, Dubai, Shanghai, Manila, Jakarta and Taipei.

So, when it comes to expanding to so many different markets and I think typical business entrepreneur will have lots of reservations about entering into new markets. Because most of the time you find a local partner there to run the show. What was your story like when you open to new markets? What was the first one that you open?

Jeffrey: Our philosophy has always been not doing this kind of joint ventures because, in my past experiences, it's always hard to get both partners equally aligned because there are a lot of challenges.

So, our first thought process is always when we entered the market it has to be someone from our team opening that market and it has someone that we really believe in the job done.

I think we've been very fortunate in surrounding ourselves with a certain great people in each market. Our team structure is quite decentralized in a sense that we have GM that runs each city.

Almost like a CEO for the market. We give them quite a bit of leeway and freedom to really build the market from scratch. Most of our GM that runs the market are actually a perfect fit for the opportunity because they are very influential and they come from very strong business backgrounds and everyone in my team is fitter than I am.

For example, our general manager in Manila, she was a Nike ambassador for many years and basically very influential in the Manila market. She is almost like a celebrity, but she is also a business entrepreneur as well and very influential in their community. So, basically we have this general in each market and we have 100% confidence in what they do.

Marcus: And from the time you started since May 2015, which was the first overseas market?

Jeffrey: We actually launched two markets simultaneously. So we did Bangkok and Hong Kong in June. It was actually an AB test for us because we want to pick two markets that were quite different.

We knew that Hong Kong has similar characteristics as Singapore so we kind of knew what to expect there, but we also want to test what was it like to be in a completely different market like Bangkok that has a very

different demographic and different social economic profile and sees how things work out. We use that as basically our laboratory for all the future problems and subsequent product to other marketers. It kinds of gives us a perspective on what to look out for in future.

Marcus: Tell me a little bit about your hiring model.

Jeffrey: The fun fact is we've never had jobs posting for the company. So every employee has basically been sourced through a network. And the crazy thing, is I don't think I've ever anticipated the team that we have today because it was the most amazing team.

Marcus: Who was the first person you hired and what role is that?

Jeffrey: The first person we hired was this lady base in Bangkok. She is actually our General Manager for Bangkok today and also has a second role where's she a DP of our brand strategy. She was actually our first employee and she joined even before we launched in Singapore.

And the crazy thing when I think about it is the first set of employee that joined on our team were all very passionate about what we are doing.

Marcus: It must have taken a lot of charm either from yourself or from your partner Rob because to get someone capable and competent is always difficult.

Jeffrey: Yes, I like to think that you basically want to maximize your company success by finding the right people and partnerships. It is about selling a story to the employee because we know that they are the most critical people on the team because they are the ones that move mountains from the very beginning.

Marcus: What was the job previously before she joins you as GM in Bangkok?

Jeffrey: She worked at very start-ups in the US, and was dealing with a lot of marketing customer acquisition, PR, and marketing strategy. She's actually very good at networking.

I actually met her through my partner Rob. I think they met each other when he was on a business off-site years ago and still keep in touch. She is also a certified yoga instructor which is perfect for the role who knows the business.

Marcus: So you went to Emma and said, ‘we are building this business Guavapasss and there's a lot of things weren't so ready then if she would like to join?'.

Jeffrey: Basically, we were very frank and it's completely a believe by faith because you have to believe in the story that we are building and the vision that we have.

I think the great thing is we all have found our employees who are very big believers in the community that we are trying to blend into. You have to get people that really believe in your product otherwise it will fail.

Marcus: So I think hiring play a huge role in your case. And the last thing I would love to find out from you Jeffrey is, what's next for you? You grow GuavaPass to quite a number of bookings like100 thousands of bookings which is equivalent to 11 years. In terms of that, that makes you the largest gyms in Singapore. What was next for you? Like opening more markets and so on?

Jeffrey: We are actually currently the only Pan-Asian multi-city fitness pass that offers fitness programs. So with our pass, you can access studios not just in Singapore but when you travel to Hong Kong, Bangkok, Shanghai you can immediately take classes there through our network which is really cool because we curate all the classes.

What's next for us is we are now looking to really build the community in each market that we are offering in. So for example, in Singapore, we are organizing the third event promotion road in partnership with Mandarin Gallery. It is inspired by what's going on in the US for example where there's a lot of these fitness meet-ups.

There's a lot of these people in Singapore that is generally interested in fitness, but there is no central gathering at this point. So, we want to be the to go destinations for a lot if these people where they come and hang out,

have fun while they are working out and we are looking to scale that out in the markets. We do have quite a number of cities that we want to launch in East Asia as well in other markets so we are still building up the infrastructure at this point.

So we have already raised our angels on seed rounds of funding. We are closing our seed rounds within 2-3 months here. And making great traction progress and hitting our milestones in growing our business quite substantially. Currently, we are still pretty optimistic about our next round and we definitely have pretty strong candidates.

Marcus: Thank you very much for doing this interview Jeffrey and I think it's very insightful for our listeners. If they want to find out more information about you, the website is www.GuavaPass.com. Any final words?

Jeffrey: Ah, no. Thanks for having me and it's a pleasure talking to you Cheers!