Becoming a Unicorn of Impact for Vietnam

This is an excerpt from GGV's podcast Evolving for the Next Billion, where we interview local champions and global giants in the fastest-growing markets in the world. You can listen to the full episode or read the transcript for the episode. 

Founded in 2018, Telio is Vietnam’s largest B2B eCommerce platform. It connects small traditional retailers with brands and wholesalers on a centralized platform using technology and data. Jixun Foo led GGV’s recent investment into Telio’s $ 25 million Series A round.

In our conversation with Sy Phong and My Linh, the founder and head of strategy of Telio, they shared with us how SyPhong got his idea from Jack Ma during a fellowship program in Alibaba, the lessons he learned from 2 previous failed startup he founded, the challenges facing mom and pop shops in Vietnam and how the tech ecosystem in the market has evolved in the market.

Tell us the story behind how you come up with the idea for Telio during the Alibaba Leadership Program.

Sy Phong: Before running Telio, I built two other companies, one for online car rental and another one for cashless payment. During the previous company for cashless payment, I was selected as one of the eFounders for Alibaba’s eFounders program and we were in Hangzhou on Alibaba campus for 10 days. The objective of those 10 days is to understand e-commerce logistic, payment and then also travel industry and how the golden triangle of e-commerce, logistics and payment help Alibaba to grow. We learned from Alibaba the importance of being inclusive in your business. Inclusive meaning that everybody can use your product and your product can help other people’s businesses to grow.

It’s a very fundamental idea, and we heard that straight from Jack. It touched me very deeply. And I think about how we can help the household businesses in the country. And indeed, after our research again and again about the daily lives of small business owners, we found out that they have a lot of pain points. And from there, we decided to create Telio.

During that week, we also learned how he sees small businesses as the backbone of the economy for every country. According to Jack, helping these businesses will have a big impact on society. This is something different from the two businesses that I have built before Telio. The first idea came from us looking at the big sector of the economy (transportation), where we do online car rental from individual to individual. The second one is cashless payment. We wanted to build a big company and then lay other services on top of that, but we have been doing businesses from our own perspective. After the trip to Hangzhou and meeting with Jack and seeing the ecosystem, it changed our mindset. 

I went back to Vietnam and told my team, “Hey guys, we need to do the business that our customer wanted us to do.” So that is how we decided to work closely with the household businesses or small retailers across the country. 

We would love to become a unicorn of impact first, which means every single action we deliver can make our customers happy. We want to deliver billions of billions of impact to our customer, creating jobs for unemployed people, especially for the middle class and lower-class people.

Can you tell us what kind of problems do these small mom and pop shops in Vietnam face? How many are there , and why are they so important to the local communities in Vietnam?

My Linh: For the previous payment startup, we have a lot of mom and pop stores as our acceptance points. We found out that cashless payment isn’t one of the main pain points of the mom and pop stores. However, we find out that fulfilling their stores is a pain point where we can help.  

A mom and pop store has an average size of 20 to 30 square meters and sells about 500 to 600 SKU. With that, they have to contact around 50 to 80 contact points to fulfill their store suppliers. The reason is a typical supplier in Vietnam doesn't sell multiple brands or multiple verticals.

The second problem is that the pricing is not very transparent in the FMCG wholesale market. It’s often difficult for a store to find which is the best supplier in town for a particular type of goods, who have the best price as well as other supporting policies. These stores often only find out the price after they have received the goods. It's very hard to ask for the price with typical suppliers. They tend to only give pricing for the first few items and get reluctant to give more.

The next pain point is delivery. Suppliers tend to have free delivery only if retailers meet a certain MOQ (minimum order quantity). Anything below that, they won't give free delivery at all. It gets worse for smaller mom and pop stores. Sometimes they get delivery but it's not on time, or it's scheduled delivery within a certain day in a week. That means without predicting their stock really well, they will have some out of stock timeframe for their stores. That’s how we come up with Telio, where they can easily find sources for their goods all in one place with flexible delivery and transparent pricing. So instead of managing multiple contact points, multiple deliveries within a day, or different days in a week, they can now order from Telio and have delivery in one shot.

Sy Phong: We started with a specific set of retailers who sell fast moving consumer goods, FMCG. 

There are more than 300,000 of small retailers across the country, and then they are selling 85% of the whole country’s FMCG volume. This channel is responsible for about 17 billion USD FMCG sales every year. 

Our vision is to expand to retailers selling other types of goods as well. And there are more than two million small retailers across the country. This is a very big population that we would love to empower them to do better business every day.

Hans: Right. At GGV, we have spent a lot of time looking at this category. We invested in companies as powering and enabling mom and pop stores in Latin America, Indonesia, India and now Vietnam.

Could you talk about the tech ecosystem in Vietnam? How has that changed in the last few years?

Sy Phong: Okay, so that is a big question. I'll try to address that. I have the luck to start my first company back in 2014, the early days of the startup in Vietnam. Five years back, we are at a very initial state.

I would say a good startup scene is made of good founders, good talent and good resources for building the company like IT talent and access to capital. You also need good mentors and support from the government. Back in 2014, we were at a very initial stage. Today we are in a more advanced stage where the government is supportive and open for investments. I was lucky to be working on the cashless payments, so I have the opportunity to deal with regulators. I know that they are more open-minded right now.

As for the talent, we not only have a lot of talent in the country but also oversea talent coming back to the country in this new era of development. We are in a good place on that. The world is also paying more attention to developing countries like ours. We are not a big country, but still have good traction with close to 100 million people population. Our GDP has been growing 6% to 7% year on year for more than 10 years. And then we are expecting to hit around 9% this year. We have an open economy with export and import, which creates a good landscape for investment to flow in. I would say that we are in a much better state right now. We still have a lot of things to do compared to a country like Indonesia or Singapore.

Another key factor for startup investors is the quality of the founding team. Everybody has the market data in order to know whether there are opportunities for investment. But the second question is whether the team is capable of doing so. This is another key thing that Vietnam needs to develop in the next few years in order to gain more traction for investment.

What has been the most surprising thing about your entrepreneurial journey so far?

Sy Phong: The most surprising thing is that I didn’t expect it to be this hard. I came from a corporate environment. I first started in Paris and worked to serve telecom companies in Europe and then worked in the financial sector for a long while before doing my own startup.

For us who had a good career path in corporate life, we didn’t know how hard startups can be. I keep calling “we” because it's one of my friends from a reputable consulting firm. We co-founded the first company. We thought it would be easy and we're going to build a very successful and big company. But things turned out very south for us. We failed and had to close the company after 8 months. Another very tough experience was that the second company that I grew from only myself to close to 160 people. Then we cannot take it off and have to swallow the pain of letting people go. It's very difficult. 

The lesson is to seriously consider the product-market fit and putting customers instead of ourselves in the first place. 

This is a very surprising experience. But I think a good experience as it trains myself and then also the core team a lot on how to be, how to assess the business opportunity and how to run a business properly.

Evolving for the Next Billion (new Season 2) is an English-language podcast about tech and entrepreneurship in the fastest-growing markets in the world, hosted by GGV Capital. In Season 1, called 996, we focused on the movers and shakers of China's tech industry, as well as tech leaders with US-China cross-border perspectives. In the new season, we interview local champions and global giants who are reshaping the lives of the next billion internet users. From Beijing to Bangalore, Sao Paulo to Singapore, you will hear stories about ambition, passion, ingenuity, and resilience.