Friday 21 Jun 2024
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This article first appeared in Digital Edge, The Edge Malaysia Weekly on October 9, 2023 - October 15, 2023

In the 2010s, the hedge fund and investment industry was pretty much male-dominated. When Juliet Zhu entered the fray after graduating in 2011, she was well aware that the odds were stacked against her. Still, she persevered, as it was a “practical career choice” and what she studied at university.

As she learnt the fascinating aspects of the companies the hedge fund invested in, Zhu — who is now Carsome Group president and chief financial officer (CFO) — developed a passion for helping deserving companies get the funding they needed.

From a global macro analyst, she climbed up the ladder to become a portfolio manager. Zhu says her job gave her an insight into what was happening in the rest of the world, showing her how to connect global events with financial consequences while improving her knowledge on the financial industry.

“I spent three years in Amaaya Capital Pte Ltd and eventually, I realised I wasn’t getting enough personal growth. I was sitting in front of Bloomberg terminals 24/7 and there was no need for me to interact with another human being. I was making very individualistic analysis and decisions, and that wasn’t enough for me,” Zhu tells Digital Edge.

She wanted to understand the nuances of running a business. The urge to connect with real entrepreneurs grew stronger and in 2015, she joined a Southeast Asia-focused venture capital (VC) firm, Cento Ventures.

The VC industry was still nascent then, with only a handful of such firms in the region. Zhu spent about six years in the sector, learning about many companies at different stages of investment. But after all that time, she still felt like she was not close enough to the businesses.

“I felt like, if I have never run a business before, who am I to judge whether a company is running well or not? Who am I, as an investor, to make investment decisions and give really critical advice on a board level to entrepreneurs?” she recalls.

“I wanted to get [into the] operational [side of a business]. I wanted to actually see how a real business is run and be involved in not just judging a company from the outside, but also operating and building one.

“I had a lot of introspective questions about the added value that I bring to the table and eventually, I decided that the next phase of my career would be to build a company from the inside.”

By this time, Zhu had befriended Carsome CEO Eric Cheng and was familiar with the company he set up in 2016. From the sidelines, she saw the car e-commerce platform grow, starting with selling 30 cars a month in  2016 and having a negative gross margin, to selling 300 cars a month, with a small gross margin, in 2017.

Zhu tried to convince the VC she worked for to invest in Carsome. As it was still early days, there was a lack of understanding about the sector’s potential for capital generation and this created some hesitation.

“However, sales continued [to grow] and the next time I checked, the company was selling 1,200 units a month. I was very convinced that Eric and his team were adding value to the market and I had no doubt his team could execute growth because every time I checked in, another zero was added to their volume.

In 2019, Zhu took a leap of faith and joined Carsome as its CFO. “[At that time], the company was selling 3,000 cars a month. In 2022, we sold more than 150,000 cars, achieving a revenue of US$1.5 billion (RM7.1 billion), further extending our market leadership in the region. This year, we’re aiming to surpass that and it has been quite the journey.”

Zhu’s decision to transition from investing in companies to being part of Carsome was a career-defining moment. There was a clear gap between companies with true potential and those that were in it for short-term gains. As someone who believed in long-term value creation, Zhu wanted to bridge that gap.

“I was disappointed and that led me to be closer to real businesses, instead of the public market that was inflated by excessive liquidity [as a result of easing measures by the US Federal Reserve]. I believe in the fundamentals and that good companies should be rewarded with higher asset prices, and companies that make wrong decisions should see their share price go down.”

After four years as Carsome’s CFO, not only has she learnt how to scale a business from the inside out, but she has also grown as a person, manager and leader, says Zhu.

“I’ve grown in terms of maturity and comprehension of other people’s situations. I never really had the chance to learn these things behind the scenes but nevertheless, the journey has been challenging and I am a better person because of it. It’s very satisfying and rewarding.”

She has experienced a lot of firsts in this role, even more than she did when she switched from analyst to venture capitalist. She became a first-time manager, and that too for a company that was 4,000 strong.

But the biggest challenge, Zhu says, is that she does not have anyone to get answers from. She has to figure it out herself and make peace with the consequences of her decisions.

“It’s very stressful. It never stops being stressful. But it’s [like building a] muscle, you build and get better at it, and you get stronger, both from an intellectual aspect as well as emotional aspect, as a person. More importantly, it’s been a really exciting journey.”

Thrown into the deep end

A few months after Zhu joined Carsome, the first Covid-19 lockdown was implemented and at that time, no one knew what to do. It was a sink or swim situation and she had to think on her feet.

The first order of business was to get every bill sent to her so she could get a detailed analysis of where the money was going. “We had a month of zero revenue in April 2020. That was super scary, although we had plenty of cash on the balance sheet.”

Instead of shutting down the business, Zhu says they decided to repurpose their resources to more productive uses, which then lead to the inception of its training centre, Carsome Academy, which has since expanded to three countries.

“That came from a single moment of asking the right questions. While the rest of the world was shutting down, it felt counterintuitive to do the same and we got a lot of support from our shareholders along the way.

“I learnt how to communicate with shareholders and manage the board and the company, really seeing it transform from a post Series-B to pre-IPO (initial public offering) stage. And hopefully, to an IPO one day.”

It was a journey filled with trial and error but she is glad that she made the right calls along the way.

While Zhu had what she thought were ambitious visions for Carsome, the company has grown way beyond her aspirations. She has since learnt that visions need to constantly evolve and she is always looking ahead, chasing the next goal.

“When I first started, I wanted to grow the business to be operationally rigorous, with a 5% margin profit. Today, we are in five countries, operationally profitable and making close to a 10% margin with a 4,000-strong team.

“We also raised funds from three sovereign funds, have an ecosystem that goes beyond just sales transactions and we’re even expanding into auto financing, insurance and after-sales. The entire ownership services provide lifetime value for our customers. We never imagined this and it’s beyond my initial vision, which gives me a lot of confidence as to where the company could go from here.

“Going through Covid-19 was a very significant milestone in my entire professional career. I always go back to this point and think about the decisions we made and luckily, we turned out alright,” she reflects.

Love of writing

Zhu, who describes herself as an “introvert that is a trained extrovert”, has a knack for writing, specifically theatre script-writing.

“There’s no money to be made here, I assure you,” she laughs, “but writing is really an extension of myself and an important aspect of being human.”

Zhu says she finds it hard to trust people, especially leaders, who choose to show only their professional side and not their quirks outside of the professional sphere.

“I value authenticity because authenticity is consistent. And on top of that, I get to see that whole person for who they are, instead of just the things written in their CV. The more senior [the leader], the more impactful the leader is, the more humanity we should be able to see from them.”

Zhu’s love for writing started in primary school. She moved to Singapore from Hong Kong as a child and during this period, she had many questions about her identity and purpose.

She kept herself grounded by watching performances at the local theatre. “I read a lot and started to write my scripts and began experimenting with different forms of expression.

“I was lucky enough to have clubs and people in the industry who actually put my shows on stage and I felt it was quite prestigious to see my work turned into a live performance, not just once but multiple times. It was very validating and encouraging, and I drew my energy from that and over the years, I continued to do so.”

Asked if she still has time to pursue this passion, Zhu says she makes time for it as it helps her re-energise after a long work day.

“Writing helps me restore my energy levels, when I’m by myself and introspective and putting my thoughts into words. It helps me do better with my professional work and I think, a true passionate hobby gives you rest and peace and theoretically, should give you the capabilities to perform your work tasks better.

“If the hobby is draining your energy instead, then it’s probably time to review your priorities and probably [have] a change of hobby.”

From one boys’ club to another

Having been in the investing and hedge fund industry, and now the automotive sector, Zhu has grown accustomed to being the only female in a room. Being part of these boys’ clubs is not easy, however.

Female leaders were scarce when she started her career, but she was fortunate to have a female boss and mentor who supported her throughout her journey. “I grew my confidence by watching how she conducted herself. But as I progressed along the years, I realised I didn’t have allies or friends in the same industry, where I could form a small support community.

“In retrospect, that would have been very helpful for me to find peace and confidence, and struggle a little bit less by not going through it by myself. Today I do have a community of women and I try to help them where I can, just to make it slightly easier.”

When she started her career, conversations about gender equality were rare and she often experienced the imposter syndrome (feelings of self-doubt and incompetence), although at that time, the phenomenon did not have a name.

“We didn’t know [that we needed to] watch out for instances of microaggressions and mansplaining. These things were deemed as mildly uncomfortable and I found a way to get around them. And it was something I had to deal with, not only as a woman but also as a fresh face in the industry.

“In hindsight, the passive aggressions were not the most constructive part of my career, but I think they trained me to be more resilient, to always be ready to prove myself and to find a way to be constructive in that situation.”

Consolidating used-car supply chain with tech

Technology has always been an enabler for Carsome and one area it is trying to address is the lack of data in the secondary car ownership market. Zhu says it has been working hard to gather data on car ownership, conditions and pricing, among other things, because historically, the entire value chain did not rely on data and this information was not transparently shared or readily available.

“It was really just pulling a number out of thin air and saying, ‘Just trust it’, and so over the past few years, we’ve set a model framework to see how pricing can benefit our customers, and everything is fair, square and transparent.

“It has also since become the foundation for used car financing and a critical part of the ownership experience, so that it’s more liquid and become an asset class that investors will take an interest in, because now they can see how the collateral depreciates over time and derive the right loan-to-value ratio, so that the asset class is more affordable and competitive.”

The hope, says Zhu, is for the rest of the ecosystem to promote and advocate the importance of data transparency, not just for the customers, but also for financial services players such as insurers, banks and related government agencies. This will lead to the existence of a comprehensive database, such as those in more developed markets.

“Claims history, repair history, accidents history, ownership history — all that can be shared across the community to build more trust and validity about the asset and the ownership. How can we have the ownership ledger digitised instead of it being manually captured offline somewhere? How can we speed up the ownership transfer process? How do we make it seamless when the person wants to upgrade a car and needs financing?

“We need policy reviews to put a bit of focus and take feedback from practitioners in the industry, so it can be a lot more automated, digital and seamless throughout the ownership experience. Policy support is quite important as the next step,” she stresses.

Zhu foresees the industry becoming more personalised and liquid. As Carsome does its utmost to move in that direction, it has established a standard of trust that has driven a change in perception of used car ownership and mobility in general.

MyGarage, which was recently launched by Carsome as an anchor feature of the Carsome app, offers a way for customers to build an ownership profile of the car they are interested in or a car they already own. Built upon the wealth of data and understanding of customers, it sets the foundation for the next level of personalisation that will elevate the car ownership experience.

“Customers can pull up the app every day and see the real-time pricing that we offer on their car, what the defects are, servicing timeline and personalised costs related to it. Even things like insurance renewal, financing repayment and the next replacement time frame for the tyres.

“This aids your consideration for the next car or even rental options, and all that should happen in a much more personalised manner because you have given enough data for us or for other companies to give you the direct, relevant recommendations.

“We know your lifestyle. We know the historical credit history. And it makes things a lot more intuitive and everything is at your fingertips.”

There will be greater liquidity in the market as well. Zhu says there was a time when people held on to their mobile phones for more than five years before upgrading but now, it happens every two years or so because the friction in upgrading has been reduced. The same scenario will be seen in the used car market too.

“It will become very intuitive for people to regularly review car ownership, making it more liquid compared to what it is today. The whole industry, including financiers and insurers, are on standby for this to happen.”

Zhu’s next goal, and focus for 2023, is to make Carsome profitable. The company is close to reaching this goal, she says — as at March, it became operationally profitable for the first time.

On top of that, Zhu says, internally, there is belief that they are building a business for the ages. “We are determined to get to that point where we will no longer be dependent on external capital.

“Our journey towards self-sufficiency continues to gain traction, and the plan to list and become a public company is one of the aspired routes because that means [we will have a lot of] trust from our customers, as compared to trust on the back of a private company. And it really helps to transform the operating rigour of the company today.

“We are also in the process of building up the rest of the ecosystem from the top of the funnel of information to discovery to delivery to after-sales. Completing that circle is definitely a milestone. Our goals will keep evolving as we hit old goals and create new goals.”

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