In his ground-breaking book, “Zero to One,” Peter Thiel starts by saying “The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. If you are copying these guys, you aren’t learning from them.”
When Jeffrey Liu and Robert Pachter, both fitness enthusiasts, moved to Singapore in 2014, they realised that a centralised list of the city’s fitness studios was not available. That set them thinking and they decided to launch GuavaPass, a facility that allows members access to a wide range of studio classes for a fixed monthly fee.
Today, the company’s subscriber base is in six figures and its footprint includes Bangkok, Hong Kong, Dubai, Shanghai, Manila, Jakarta, and Taipei in addition to Singapore.
How did this duo build up a business that spans eight cities in such a short span of time? Their journey can serve as a lesson to aspiring entrepreneurs and even to those who have established ventures and want to take them to the next level.
Relentless focus on the Customer
Every commercial enterprise says that the customer is at the centre of their efforts. But how many go to the extent that the GuavaPass team did?
When the company launched its website, it received an overwhelming response. But as soon as the first 100 customers came on board, new membership was suspended. Why did the GuavaPass management do this? What was the reason to turn away paying customers and put them on a waiting list?
Jeffrey Liu explains that they needed the time to ensure that their processes and systems were capable of giving each of their new customers the best possible experience.
They also had to coordinate closely with the fitness studios so that when GuavaPass members went to one of the company’s studio partners’ their bookings were honoured.
In fact, in the initial stages, the promoters actually visited studios on a regular basis to see if their customers were being treated well.
Execution is key
Mike Tyson, former world heavyweight boxing champion says, “Everybody has a plan until they get punched in the face … Then, like a rat, they stop in fear and freeze.”
How is this relevant to the business world? A company should be able to take corrective action as it encounters a problem. If it gets stuck and is unable to change direction, the repercussions could be serious.
When GuavaPass ran a free trial campaign in Bangkok, it expected large numbers of clients to convert to a paid membership. That had been its earlier experience. But the outcome in Bangkok was totally different. The conversion rate was less than 20%.
The company learned that each market is unique and requires an approach that is specifically tailored to its needs. It is to GuavaPass’s credit that today the Bangkok operations are doing very well.
Another reason that the company was quick to attract customers in every location that it launched in, was its first-rate technology. The booking system had to match customers with studios in a fail-safe manner. Great efforts were taken to make a website that has a simple interface, which users can navigate intuitively to find the studios of their choice.
Importance of the team
Jeffrey Liu points out that each employee is sourced through an extensive network of friends and business contacts and job postings are never used. Interestingly, most of them are fitness enthusiasts who share a common zeal for physical activity and the benefits that it brings.
GuavaPass’s general manager in Manila is a former Nike ambassador. Other team members across the eight cities include rock-climbing enthusiasts, yoga practitioners, and running fanatics.
Keeping the culture of a startup alive over the years can be a challenge. Often, the founders and the first few employees share a common vision. But it is not an easy task to communicate this to the people who join later.
In many instances, newer employees feel left out, not part of the inner circle. This can have disastrous consequences for the organisation.
But GuavaPass has taken great care to ensure that its culture has not got diluted as it has expanded into cities across the region. It has done this by having a team member in charge of every new market that it goes into. It does not take on local partners as it fears that its brand and its way of thinking could get compromised.
Why do some startups succeed and others fail?
Bill Gross, CEO of Idealab, a highly successful business incubator, has studied the working of a large number of startups to understand what separates the best companies from the also-rans and those that do not make it at all.
He found that one of the most critical factors was timing. When Airbnb was conceptualised, the smart money said that nobody would rent out space in their homes to a stranger.
But the recession was at its peak and people needed the extra cash. This proved to be the most important reason for Airbnb’s popularity – they launched their service at the right point in time.
Fortunately for GuavaPass, their company was started at a juncture when Singaporeans were becoming increasingly fitness-conscious. But it was very difficult for them to find a reliable and convenient way to get details about the various studios in their vicinity. Jeffrey Liu’s and Rob Pachter’s venture was born at the right time to capture this market.