Kinh tế khởi nghiệp: Những cạm bẫy của Blitzscaling, Chiến lược thị trường & Tài trợ so với Thực hiện - E548

“Remember all those bicycles piling up? Chinese VC-funded startups were flooding the market, expanding aggressively because they saw themselves as the Uber of bike-sharing. They believed they had figured out the unit economics in China and decided to blitzscale into Singapore. The irony is that the founder who ultimately succeeded was a Burmese Singaporean. As a university senior, he decided to launch his own bike-sharing company—without any VC funding. No investors believed he could pull it off, yet he did.” - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast

“That’s the stupidest thing I’ve heard!”—and then the argument erupts, with the finance team, the banker, and the VC all weighing in. I’ve seen this debate play out every month for the past seven years—whether I’m meeting a founder, investing in a startup, or discussing strategy, the same questions come up: Should we scale more aggressively? Is it too early? Are we premature? Do we understand the unit economics? What will the competitor do? Just two days ago, a founder told me, “Jeremy, we need to blitzscale. The AI wave is here, and if we don’t move fast, our competitors will crush us.” By morning, he had already opened the round, saying, “I’m raising a million dollars today to scale quickly before our next round—probably a $20 million raise.” - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast

“We analyzed unit economics using a real-life example of a company with a $100,000 lifetime value per customer. This company charges $1,000 per month, operates with an 80% profit margin due to its digital SaaS model, and retains customers for about ten years. Over time, it can increase prices or sell additional modules, making it fundamentally different from selling consumer goods. For instance, selling a $1 packet of peanuts yields only a $0.20 margin. Since it's a one-off purchase with low repeat frequency, the total profit per customer remains minimal, unlike the high-margin, recurring revenue model of SaaS.” - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast

Jeremy Au breaks down the fundamentals of unit economics, customer acquisition, and blitzscaling in startups. Using real-world examples, he explains how different business models—like SaaS versus consumer goods—affect profitability and marketing strategies. The conversation explores the challenges of scaling aggressively, the importance of timing in venture capital, and how execution often matters more than funding. This discussion offers a clear look at how startups grow, succeed, or fail based on financial discipline and strategic decisions.

1. Unit economics drive business strategy – Startups need to understand their customer lifetime value (LTV) and cost structures to determine if they can scale profitably. A SaaS business with an LTV of $100,000 operates very differently from a low-margin consumer product.

2. Marketing depends on customer value – High-LTV products like Rolex watches justify brand marketing at events like F1, while low-margin goods rely on last-minute impulse purchases at checkout.

3.Blitzscaling can be a gamble – Uber scaled by putting $1 in to get $5 back, while Gojek spent $200 million in Vietnam but had to exit. Scaling fast can create market dominance or lead to massive losses.

4. Execution beats funding – Anywheel, a Singaporean bike-sharing startup, outperformed VC-backed competitors by staying lean and efficient, proving that strategy often matters more than capital.

5. Timing is everything in venture capital – A 21-year-old AI founder secured funding within hours by moving fast. Jeremy hesitated for eight hours and lost the opportunity, highlighting the importance of quick decision-making in competitive markets.

(00:58) We've been looking at the Lean Canvas. Some have been focusing on the right customer, but not really being very clear what the problems are. Some are not really thoughtful about what a customer persona is. We looked at the unit economics. So we give a real life example of a company that has about 100,000 of lifetime value per customer they bring in. The reason why is that they charge each company about $1,000 per month. The company has about 80% profit margin because of digital SaaS. And the lifetime of this company is about 10 years. And then every year, they are able to raise the prices or sell more modules. So, this is very different from selling.

(01:34) So, if you sell a peanut for $1 per packet, then the margin of that is maybe closer to $0.20, because it's a consumer good. So you're only making $0.20 on that bag of peanuts. Then, frequency of purchase, or the loyalty of that, is a one off purchase is $0.20, or you buy it twice more, so you buy it, make $0.60. Then, you're never going to charge more for peanuts over time. So therefore, the maximum amount of dollar you're going to get is about dollars of profit from a 

(02:00) person who buys your peanuts. So you have to be thoughtful because that changes the dynamics for how you think about marketing as well. If you know that the end customer is only worth, at the end of the day, only one dollar of total profit, then you better put your peanuts somewhere, you're not doing a lot of marketing, you don't see TV ads, you don't see Facebook ads chasing you to sell you a pack of peanuts. They're just going to put a peanuts next to the checkout counter for you to buy last minute. Whereas, if we know that you are worth 100,000 , then we're willing to do a lot of work to cultivate you. So, Tiffany's or jewelry bands will do a lot of work because as a luxury provider, if we're able to make sure that you believe that your dream watch is a Rolex watch. And so I was at F1, and then you look at the F1, they had a Rolex. Why? They felt like it's worth it because they feel like the type of people who watch F1, they will eventually grow up to buy a Rolex. And so they're willing to spend that kind of marketing even though there's no measurable benefit.

(02:53) Nobody looks at an ad in front of the F1 race and says, "Wow, I need to buy my F1 Rolex watch now." Makes zero sense altogether. But Rolex is everywhere in there. So same thing for your luxury marketing, all of your brand marketing, your lifestyle ads. If you go to the airport, you see, Ana de Armas. She's busy advertising multiple perfumes or jewelry brands and so forth.

(03:15) So be thoughtful about that because you're at the airport, you're not there to buy a bag or jewelry straight away. So again, they're willing to spend all that money because they're willing to do marketing way in advance, one year, five years, ten years in advance of you actually making a decision to purchase it eventually. So there's marketing, sales, the onboarding costs, and the attrition that happens. 

(03:34) You'll be thinking to yourself, are we looking at organic marketing? Someone's referring you. Is it something that's paid marketing? We also talk about sales. If you look at the sales reps, for your Hermes or your Birkin bag or whatever it is, then you see that there's a sales process where technically they seem like customer support, but actually they're being paid on commission. They're there to sell you on that experience they have there as well. And we talk about onboarding, is that when you buy something that's there you have to get onboarded.

(04:01) There's a customer support dynamic. There's true cost of it. And of course, even if you do all that work, they may or may not actually follow through all the way, and they will not necessarily stay with you versus those that actually will stay with you. And so as a result, for this real life company, the pot of gold is 100,000 per customer, but what is key is that even though it's a pot of gold they are spending about $5,000 on marketing and then they spend about $1,000 on sales, then they spend about $1,000 to get that company onboarded, and then only 1 %will drop out, right?

(04:35) So, as a result, the total acquisition cost is roughly about $7,000 for this type of company. And the reason why it's important is that if you have a pot of gold that's about $100,000 , but you're only spending about $7,000 to acquire that, that means that you're making about 12 to 20x. So every 7,000 I spend, I get about $100,000 back, right? And you get a payback within 12 months because your cost is about 7,000, but within the first year, you're getting about (05:00) 10,000 to get paid back within 12 months. And the crux of that is that as a result, is that this company is basically putting in one dollar in every dollar they put into marketing or sales gets 15 back eventually.

(05:12) Now, it may not come back immediately, but the 15 will show up over the next 2,3, 4, 5, 6, 7, 8, 9, 10 years. So every dollar they put in gets $15 back. And this is actually kind of the magic of startups is that we then realize that if your company, for every dollar that you put in, gets 15 back, then we should go, right? If you go to the casino now, and if you're able to be better than everybody else for blackjack, because you cheat, you just cheat, you count cards, you cheat a little bit better, you know everybody else, and if you can make 52%, you can win 52 %of the stake, right?

(05:47) Then people will give you millions of dollars to go to the casino and keep playing over and over again, 51%, 52%, because they know that every time you play, you're going to get 1% more, and then that's why it happens, right? And therefore, if you count cards after you do too well at blackjack for a while, the casinos will kick you out because you're only supposed to win 49%, 48% even as the best player possible. So, if you know that if you get a dollar, you're going to get $15 back, then people are willing to give millions of dollars to anybody who can get 51% of Blackjack, then we should be able to put millions of dollars into a company where you put $1 in, you get $15 back.

(06:23) And so, blitzscaling is the phrase that we had. So Uber believed that they had that blitzscale, so they put $1 into what we saw, that Uber for every dollar you put in, they eventually got five dollars back. So they raised a certain amount of money, they got billions of dollars, and Uber is now a public company, but over the course of their fundraising history, every dollar you put in got five dollars out.

(06:43) And they, when they realized they had that cash machine, then what they were able to do was there's a blitzscale, so they expanded very aggressively, they wanted to copy and paste that to Southeast Asia, to China, to Russia, the Middle East. Eventually they lost because they didn't have the network effects. So they exited. Same thing for Gojek and Grab. (07:00) Gojek recently exited from Vietnam. So they spent 200 million dollars because they want to put money in, because they believe that if they put 200 million dollars in they'll eventually get 200 million dollars back, or a billion dollars. But because of the economics that didn't work out for them, maybe because some people argued they didn't put enough money, they should put more money in than Grab. So they should become number one, then they'll have gotten money out of the system. But some people say they were too conservative and other people say they were too aggressive and they should have exited early and not spend $200 million to get $0 out at the end of the day.

(07:31) So, blitzscaling is a very complicated and many, in the future will eventually be debating this, because some will basically say, we make money now. We need to expand aggressively because now's the opportunity to do so before our competitors wake up. And we need to do so as aggressively as possible.

(07:46) And then, somebody in the room will be like, "That's really stupid. We need to be conservative. We shouldn't put so much money." And then you're going to be like, "You're such a wuss. I can't believe you don't want to double down. I'm going to fight you. I can't believe you're going to waste money. Our (08:00) competitor has people like you who are stupid, and they will also blitzscale."

(08:04) And suddenly there will be two Goliaths fighting each other for a not very profitable market. And then, we'll say, well, the trick is if the Goliath wants to fight us, we should raise even more money so that we can out-Goliath the Goliath. And then you will say, "that's the stupidest thing I've heard," and then all of you have a big fight and then your finance team, your banker, your VC, everybody's having this argument and I've seen this argument happen every month for the past seven years of my startup life. Like every month I'm meeting a founder or investing in a startup or we're debating a team. Every month we're making a decision. Should we scale more aggressively? Is it too early? Is it premature? Do we understand the unit economics? What is the competitor going to do? And literally, we just had this argument just two days ago, the founder came up to me and said, Jeremy, we need a blitzscale because this is an opportunity because of AI wave, and our competitors are going to kill us if we don't.

(08:56) And all of us sit down in the morning, he said, "I'm going to do this," and he's like, I opened up the round today, I want to raise a million dollars to quickly kind of scale faster before the next round, which is probably going to be a $20 million round. And so, in the morning, I was like, thought about it. By afternoon, I was like, evening, I did a call with the team. I said, we got to do this investment. We told him we want to do an investment. And then he messaged back and said, sorry, the round is oversubscribed. Or everybody agreed that I should scale aggressively at the age of 21 years old for my AI startup. And so now we're busy debating because, so my lesson to me was, I should, when he was proposing to me that he wants to blitzscale, I should have been more aggressive and I should have been straight away. It's like, that's a great idea, let's do it, put my allocation in, put my money in. But it turns out I'm too slow, you know, I can't wait eight hours to think about it and whatever it is.

(09:42) So, because all of his other VCs basically said, I agree with you, you also need to scale faster before the competitors come in, because he's 21 years old, he understands a certain demographic in this Gen Z dynamic. He also understands he's got a good idea. He's got the right relationships. So it'll be quite interesting to see how that happens. But there's good blitzscaling, but (10:00) also we have negative versions of blitzscaling as well. So, as a result, the core thesis is that from a VC perspective, is that if the startup is able to put $1 in and eventually get $15 back, then I should put in $10 million and I should get 150 million back, right?

(10:15) And I think that's the crux of the VC side. And I think that's why it's so exciting, and it's why I see a lot of people who are in finance eventually drift their way into VC, because they're like, you know, I don't care about the historicals. I care about the future. I'm here about making aggressive bets to be a cowboy on a play poker, and I want to make that bet. But I think, also, we know there are many companies that, where we put $10 million and we get 0 back. So, for example, we talked about in the past, but a lot of us remember the bike sharing wars. So remember all those bicycles that are piling up. So all these Chinese VC are funded, so there's VC funded startups that are putting bicycles everywhere. There were Chinese competitors that were also VC funded expanding because they were kind of like Uber. They were like, wait, we made the unit economics work in China for bike sharing, right? Those 

(11:00) bicycles they have. And so all of them, all docked out in Singapore. So we need to blitzscale. We need to expand to Singapore and get the market. And the funny thing is that the founder, he is a Burmese Singaporean, and he graduated, he was a senior and he graduated and he said, I'm going to launch this company. And he had no VC money because no VC believed in him that he would do it. And eventually, he kept growing his small fleet and he sought the bicycles, etc. And then eventually, VC offered him some money, but the VC said some stupid stuff that he didn't agree with in the strategy, so he said no to the VC. The key thing is that this guy raised zero VC money, and he beat everybody else in Singapore. So your Anywheel, which is the green coloured bicycle that you see anywhere, was founded by a university senior, a fourth year student. He said, I want to do this, and he out executed everybody, okay? So he out executed all the millions of dollars, the free bicycles, the Chinese guy. And now he's rich. He has good cars, got a nice house. You guys saw Zenith Education. He's already built a million dollar business. We saw Htay, who's also built a million dollar business. There's a lot of successful university 

(12:00) students who eventually go off to succeed and build these businesses. But I think we have to be thoughtful, but in this case, in Htay, he raised zero venture capital. His point of view was the other companies are being stupid. They have been suckered by too much money. And then we are going to operate in a more efficient way to outlast them. So, lots of competition about that way.

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