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Tuesday, Apr 16, 2013

Business

Brothers remain humble after Groupon buys their start-up

Tuesday, Apr 16, 2013
Brothers remain humble after Groupon buys their start-up

They hit the jackpot when their start-up, Beeconomic, was bought by the mother of all coupon deal sites, Groupon.

But surprisingly, things are still subdued for the Chong brothers and they remain humble

It's one of the greatest joys of success for these young entrepreneurs - waking up on their own beds.

For three months, brothers Karl and Christopher Chong shared a queen-sized bed in a hostel in Little India.

Recalls younger brother Christopher, 23, with a mock groan: "I'd wake up next to Karl. Every day."

Says elder brother Karl, 31 with a shrug: "I'd left my investment banking job in New York, while Chris took time off his law degree in Sydney to move to Singapore and, well, we needed to make our savings stretch."

Back in 2010, the brothers were starting out with their deal hunter website, Beeconomic.

All they had was $50,000, which represented their entire life savings, and an idea to make their site work.

The idea? Singapore was a perfect place for a deals website.

The population density, Internet penetration rate and history of online blog shopping made it ideal.

The elder brother had tried pitching the idea to Groupon in the US, but his e-mail had not drawn a positive response.

"I e-mailed every address of theirs I could find online saying that I would love to bring this idea to Asia and expand the Groupon brand there," he recounts.

When there was no reply, the brothers decided - with blessings from their Malaysian-born parents living in Sydney - that they would go ahead with the dream, hence the hostel stay.

With limited savings, they were reduced to eating chicken rice for every meal.

The younger Mr Chong regales this reporter with how the brothers would head to a nearby food court the first thing in the morning - to scrounge up some free Internet access.

Soon enough, "the stall owners knew our names", say the duo with a grin.

The younger brother recounts: "We had team meetings in our hostel bedroom. Karl would be calling our developers in New York, while I'd be out all day trying to close merchants.

"Karl was definitely better at this since he had experience pitching at his old investment bank. It was a sharp learning curve for me since I'd never pitched anything in my life. I had to overcome a lot of rejections before I closed my first merchant. "But it was the most rewarding feeling ever."

Within three months, they had hired a team of eight people and were able to move out of the hostel to a colleague's home.

And like a fairy tale, Groupon US came calling just months later.

Says Karl: "Six months later (since starting Beeconomic), they replied to my original e-mail and they said, 'Hey, we've noticed that you started this business and we'd love to start a strategic partnership with you. We are also going to talk to your competitors, so get ready to give a pitch.'"

Beeconomic proved to Groupon it was better than the other deal sites in the market.

Then came the deal.

According to media reports, it was purportedly worth $24 million.

The brothers are reticent about confirming the numbers, but say it was "a dream come true".

Beeconomic became Groupon's arm in Singapore, with the Chong brothers at its helm.

The brothers can't talk much business as they await the company's financial earnings in a few weeks' time.

Today, Groupon is a global company which boasts 41 million active subscribers worldwide, in 48 countries and with US$1.52 billion (S$1.88 billion) in gross billings in the fourth-quarter of last year.

Nor will they talk about the company's direction since its founder Andrew Mason was dismissed as Groupon chief executive officer in February.

But they'll talk about life after the big deal.

"The best moment? I could sleep on my own bed," says Christopher with much relief.

So where are the cars, the Versace couches or fancy mansions?

Says Christopher: "We still take the bus to work."

Adds Karl, the more serious of the two: "As far as splurging is concerned, we spend on experiences like holidays, trying something we've never tried before, learning about new places.

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