Maxime Chaury: Rocket Internet GM, Flash Coffee Indonesia Learnings & Courage as a Muscle - E405

· Podcast Episodes English,Fintech,Founder,Indonesia,Malaysia


“By pushing your boundaries, you're becoming a better person. It’s like when you're in the gym and you cannot carry a certain weight, and then the next time, it becomes easier. Courage is a muscle and it needs to be practiced every day. Essentially, you have to go out there and confront yourself with pain and discomfort. Everything that you need to achieve will be there along the way as a needed step.” - Maxime Chaury 

“Something very interesting to me that I discovered, especially when you're not looking at really technical roles, is that attitude really eats previous knowledge for breakfast. So if you hire very smart people who are driven and who want to learn grow and build a business, they will perform very quickly. They will perform much better with someone with X years of experience in the industry because they have much more drive to learn fast.” - Maxime Chaury

“There are cultural differences in managing a team and how people work and collaborate. Jakarta is called Kota Kolaborasi, or the city of collaboration. Indonesians, compared to other markets are very collaborative people who are open to helping each other, and supporting each other even if there’s a certain degree of competitiveness in business with great ambitious people. From what we experienced in Flash Coffee, healthy competition and a really good collaboration between people enable very good communication lines and virtuous support versus having work that’s more rigid. In some cultures, some people are even more rigid when it comes to the job description. They try to fit into that and if it's slightly out, they won’t move from that. So in this sense, I found Indonesia a very startup and entrepreneurship-friendly nation.” - Maxime Chaury

Maxime Chaury, Cofounder of Upworth, and Jeremy Au talked about three main themes:

1. Rocket Internet GM: Maxime shared his transition from working in management consulting to embracing the dynamic startup environment in Southeast Asia, notably with Rocket Internet and later ZEN Rooms in Malaysia. He discussed the strategic considerations behind opting for leasing rooms, franchising, or adopting a white label approach in the hospitality industry, especially in the context of the COVID-19 pandemic. He emphasized the general manager role's complexity, involving strategic planning, team leadership, and quick industry adaptation, reflecting his shift from a strategic consultant to a hands-on leadership role in startups.

2. Flash Coffee Indonesia Learnings: Maxime recounted his role in transforming Flash Coffee's performance in Indonesia from the least to the most profitable market segment. He highlighted the importance of understanding market-specific consumer behavior, noting significant differences across Indonesia, Singapore, Thailand, and Hong Kong. He discussed the tailored strategies for each market, underlining the local autonomy within a global brand strategy, and the challenges and implications of venture capital liquidity and investment decisions, which are crucial for startups navigating rapid growth and scalability.

3. Courage as a Muscle: Maxime reflected on courage as a foundational virtue in leadership and entrepreneurship. He argued that courage facilitates the practice and effectiveness of other virtues, essential for personal growth and professional decision-making. His narrative of choosing to become a general manager, navigating roles in Malaysia and Indonesia, and eventually founding his own startup underscored courage's role in stepping into unknown territories and embracing growth opportunities.

Jeremy and Maxime also talked about the strategic pivot of ZEN Rooms towards technology solutions, the nuances of market-specific strategies and consumer behavior in the coffee retail industry, and the implications of global venture capital trends on startup scalability and market focus.

Supported by Grain

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(01:37) Jeremy Au:

Hey Maxim, really excited to have you on the show. You have quite a set of experience across Southeast Asia on so many name brand, kind of like tech companies that are real startups. And you are off to build your own. So really exciting story to have here. Could you share a little bit about yourself?

(01:52) Max Chaury:

Thanks for having me, Jeremy. So yeah, I'm Max. I'm French, but I've worked mostly around the world, especially in Southeast Asia and APAC for the last few years. I'm currently based in Australia by building Upworth, a fintech startup I co-founded, but before that after some, you know MBA and working in private equity and strategy consulting I joined the startup world with different Rocket Internet Ventures. I was at the early times of Junior Food. So the Grab Food or UberEats of Africa that was listed on the NASDAQ in 2015. That's how I started my career in startups and then I moved to Southeast Asia after strategic consulting as MD of ZEN Rooms in Kuala Lumpur for the Malaysian market. And then I was in Jakarta for Flash Coffee as MD for Indonesia and grown for the last two years before moving to Upworth, the company in Indonesia.

(02:37) Jeremy Au:

Amazing. So could you share a little bit about how you rotated into Southeast Asia tech?

(02:42) Max Chaury:

Yeah. So look, I mean, after my first experience in Rocket Internet in Africa, so was in Algeria, North Africa, I really loved the environment, mostly like the people with whom I was working, super dynamic, young, motivated, smart, and we are really having crazy growth taking over the market in a few months. There was really a lot of adrenaline and a lot of learnings in such a short amount of time. I was like, okay, this is the type thing I like to do. This is I want to do more of that I want to learn more and I want to grow businesses from scratch to you know, as to become like successful and have big impact on people's life. So when I checked that what was the profile of the what were the profiles of the people that are leading these Rocket Internet Ventures in Africa on this was mostly private equity and strategic consulting.

So I was like, okay, you know when you want to go somewhere look uh, how are the people that come back from there or that are already there? So yeah when during my MBA, I worked for a private equity mid-cap fund in Africa called Adenia Partners and then upon graduation, I joined Roland Berger and strategy and two strategy consulting firms as well in west Africa Actually in CasablancA, which is basically the hub for Francophone, Africa and always be, you know, I've been exposed to emerging markets that way.

And there are many similarities with Southeast Asia also with many fast growing emerging markets as well. So I was, while doing strategy consulting, I was always on the look for the next step, which was basically getting into a Rocket Internet or a fast growing startup in an emerging market. I had the chance before to have been exposed to Southeast Asia through during my degree when I was working for one year in Vietnam actually, six months in Hanoi, six months in Ho Chi Minh City in 2014 before graduation and so I was keen to, I was following closely the startup ecosystem in Southeast Asia. And so, when there was I saw an opportunity in ZEN Rooms and yeah, actually ZEN Rooms was a company that I really had noticed earlier so when you really love a company, just go out there speak to the people so during my MBA, for the small story, I actually did my mini-thesis of MBA on a business analysis on ZEN Rooms.

So this was actually two years before joining ZEN Rooms. So I had already spoken with some management of ZEN Rooms. I had done my thesis on it. I had spoken with some of the players, but they were actually, at this point, they were pre-Series A, so they didn't have enough funds to welcome new management-level people in the business. So I was like, fine, let's keep in touch. I went into consulting and then when I saw they was they were recruiting a new MD for Malaysia late 2018, I reached out right and I managed to get the job partially because of my relevant experience in Rocket Internet, strategic consulting, private equity with the MBA and I guess the fact that I had showed my interest already in the venture two years earlier.

(05:17) Jeremy Au:

So talk about ZEN Rooms. What was that experience like? Because at that time, Airbnb was hard, but could you share more about that?

(05:23) Max Chaury:

Yeah, look, I mean, it was really a fascinating look, I've seen both sides of the picture here because I joined a late 2018 until basically for two years until late 2020. So I saw the crazy growth and I saw the crazy, I don't know if degrowth is even the term. I think basically uh, earthquake period of COVID for the hospitality sector, general and hospitality tech in particular. So I mean, ZEN Rooms was really a really cool business in and trying to indeed, you know, basically working to build solutions for small independent hotels across Southeast Asia, and different types of solutions with different degrees of integrations. So there was actually like a franchise chain like let's say the Ibis Hotel, let's say from Accor, but you build it in Southeast Asia with existing independent small-scale hotels, right? So it was across several markets in in Southeast Asia, was in charge of Malaysia. So that was the first piece, but there was obviously, a view beyond that. So we are we're having different models as I said from like almost from full integration to very light touch. So what is full integration is we're actually managing a few hotels ourselves, like we were taking the lease and managing the entire operation, the entire team, the entire system doing the sales. So doing basically everything So we had a few hotels like that in Malaysia, and we had also a few Airbnb, so you know, KL is a very hot spot for Airbnb traveling, so we are taking like 10, 20 units in condos and running them ourselves like a hotel, basically.

And yeah, it was working super well in Malaysia and other markets in Southeast Asia, but that's the maximum integration, but of course you cannot scale that, it's not that scalable because it's high, it's capital intensive, right? And it's not also where you can bring the most value at scale with tech as a tech business. Then we had a franchise model in which we are actually like providing the management softwares for independent hotels that were you know used to work pretty manually with or without a brand layer so either as a white label for them to just you know run the operation from a tech perspective from the system perspective or on top of that we could add basically the branding.

So the ZEN Rooms you know, logos, pillows, and all the basically part of the customer experience from a B2C perspective for the hotels, right? So the consistency you know, hotel chain, basically the consistency of the experience for the end users. And we're also building an OTA actually for Southeast Asia. So the equivalent of com, let's say, but for Southeast Asia, and we're actually the first OTA in the Philippines. So yeah, so it was also pretty successful and then yeah, finally we are doing basically on top of the franchise both with the branding or without the branding, we are helping hotels to sell online. So we had our own algorithm and teams to do the yield management, just you know, you do it for airlines. So you've management for hotels. So it was something that hotels were not doing in the past and that we basically introduced to the small independent hotels in Southeast Asia, one, two, three stars, and then, you know, mostly from five to one hundred rooms so yeah, so that's what we're doing, was growing very fast. Yeah, it was doing well. Obviously the world, travel in Southeast Asia was growing as a, you know, globally as one of the most exciting region to travel, discover new cultures, have access to great food and locations but yeah, COVID happened, right?

Actually from beginning of 2020 with heavy dependence, especially in Malaysia on the Chinese market. So the heat started at the beginning of 2020, right? And then obviously with COVID, the lockdowns in March and the rest of the story was super, super hard for the hospital industry and for us. So we actually had to obviously close a lot of I mean, you know fire a lot of people, close a lot of operations Stop operating our hotels not immediately, but over a period of time because at the beginning we're obviously trying to leverage the things for you know health workers and things like that, but you know, it has a limited, timeline and also yeah, you cannot keep potentially you cannot keep your entire portfolio for that. It's more limited in terms of size of the market, right?

So yeah, so we basically almost fully pivoted. We fully pivoted within a few months to all these kind of types of integration to just a pure like SaaS, property management software as like a few solutions within the property management software umbrella, to just help hotel with the software solutions and after what happened, so after I left, the company is still, continued and was acquired by Yanolja, which is the number one OTA and travel unicorn in Korea. Back then, they had 80% of the OTA market in Korea, so pretty solid. And yeah, and they're basically integrated ZEN Rooms. So ZEN Rooms as a brand don't exist anymore, but now it's part of Yanolja Cloud that has HQ in Singapore, and that is distributing software, property management softwares across across Southeast Asia and beyond.

(09:39) Jeremy Au:

Amazing. What was your key learning about the ZEN Rooms and hospitality experience? What are some things that people don't really understand about that approach?

(09:47) Max Chaury:

Well, I think that there are a lot of learnings. I think, like there are different questions maybe around the management on the industry in particular. I think the first thing is, and that's the beauty of strategic consulting. The most important is driving the right approach, the right mindset and the right methodology to solve problems, to identify problems and solve them. So when I came, I had no background in the hospitality industry, but I was still able very quickly, to help and provide value to the team, grow the team, build the business because you can use the tools that you learn in strategic consulting to different industries, including hospitality, and it is proved to be the case.

And actually, something very interesting to me that I discovered is that, especially when you're not looking at super technical roles, which obviously, either, you know, or you don't know the python sub language for this web application, attitude really eats previous knowledge for breakfast. So if you have like very, if you hire very smart people that are driven and that want to learn and grow and build a business they will perform very quickly. They will perform much better with someone with , okay, X years of experience in the industry because they have much more drive to learn fast.

And also, they have seen other things and actually when you're trying to, when you're in startups and you're trying to solve problems in innovative manners, many times you just cannot do it the way the main incumbents are doing. So when you recruit people from existing hotel chains that are used to all the process and system from big companies, usually it doesn't work because they expect the level of support that they don't get. They are not used to having a high level of autonomy and being empowered in decision making. And they don't really think outside of the box because they're like, oh, that's the way it should be. And that's it. Whereas, if you hire someone from other industry that have different things to, to compare it with and that are really focusing on the problem solving rather than just rolling out a solution that they have seen as worked in another environment. Yeah, that's really powerful. So yeah, so that's some learnings that they had, but I mean, I'm sure we'll speak about others throughout this discussion.

(11:35) Jeremy Au:

And interesting because you had a Managing Director, which is,I think the equivalent of a General Manager role as well. Can you share a little bit more about what it was like? Because previously you were a strategy consultant at Roland Berger slash strategy and then, we had various companies, but I'm just kind of curious, what does the GM role, for you, have to handle?

(11:52) Max Chaury:

Yeah. So first of all, the common point with strategic consulting is that, and especially at the beginning when you're starting a new mission with a new client, right? It's you really need to deep dive and learn as much as you can on the industry and the company looking at all the documents you can put your hands on and then just learn. And so that's very similar in a way from the strategic consulting. The difference of strategic consulting is that once you've done all your analysis, your research and your analysis, you just hand it over to someone else to take care of it. In this case, once you've done all the analysis, you also implement it yourself, which is like super really empowering and exciting, to be honest.

I mean the layer that you have on top is really people management. And so that I had the chance and that's also one of the reasons why they trusted me to take over these responsibilities and grow the team from around 10 people to almost 40 people during my tenure in ZEN before we actually downsized. But I had, I was an officer in the French army. I've done the equivalent of West Point or Sandhurst in France. And so managing as a lieutenant, managing like teams also of 20 to 30 people on the field for different types of military operations, and also being captain of my basketball team when I was in Sciences Po. So actually that's basically the strategy piece and the kind of people management skills that they had developed in the army and in sport I think bringing the two together was like basically the MD role, right? And also I think there is a personality aspect, right? Some people, they will be super good at focusing on one thing and just diving down on it for ever and being the world expert on it and that's not my personality and I think that's not really the personality of good managing directors because you need to have the curiosity and the mental flexibility to constantly jump between different people, different tasks, different problems, different departments from marketing, operation sales, account management, doing analysis of your PNL calling a client that, that's unhappy. And so you have to have this adaptability and this flexibility on top of the people management skill. Obviously, people management skills also include this aspect of flexibility, but it's more like really, and that's something you did. You have less in consulting, especially as a junior consultant, but like really going to understand what are the motivation and the needs of the people that you work with whether it's your employees whether it's the people you're going to recruit your investors your bosses, right and the clients as well the hotel partners basically mostly working with like owners or managers of independent hotels. So really trying to understand what are their needs and how that can fit with what you have as capabilities for your company.

(14:04) Jeremy Au:

And then after that, you chose to work at Flash Coffee, which was very popular as both from a consumer perspective, which has a coffee, but also popular in terms of things like the startup economic buzz, right? So Flash Coffee and Kopi Kenangan and Pick Up Coffee now. Could you share a little bit more about your, why you decided to join Flash Coffee?

(14:21) Max Chaury:

Yeah. First, a disclaimer, I think it got popular after I came in and not only me, of course, a lot of very talented people joined the company, but I think when I joined, which was in April 2021, it was not that popular. It just had its series A and it was not doing that well. I mean there were good stores doing well like in Singapore actually, in Thailand, Indonesia, was actually the worst market and doing very poorly actually and quite concerning so the from the day one the approach was like, okay, you know you take over. The founders were moving to Singapore because it's the headquarters from investors perspective for growing the business for generally.

As was the plan, but so, you just take over Indonesia and you need to turn it around pretty quickly because it's not doing well. So that was basically the mission. And yeah, I was up for the challenge. And look, we turn Indonesia indeed like in, I think as a matter of fact, in the powerhouse of Flash Coffee globally from the worst performing in terms of both revenue and profit to the best performing, the biggest part of the business and yeah, both in revenue and in and in profits within two years. So we are up to 100 stores almost, many, the three main agglomerations of Jabodetabek, Bandung and Surabaya. And yeah, so look, I think it's, it was in different markets, but indeed and we had the same brand that was really helpful, as you said, from creating really a Southeast Asian or even Asian phenomenon around Flash Coffee.

But there was a lot of local autonomy in each market because the type of clients that you have, the types of expectations, the type of consumption is very different market to market and happy to share more about that. But yeah, it's you really needed and what made like the good successes of flash across different locations. It's really this mix of having certain negotiating power, certain systems that you can implement regionally, but also being really open to give autonomy to the markets to achieve at the local country level.

(16:09) Jeremy Au:

Could you share what were the differences that you saw in the market within Flash Coffee?

(16:13) Max Chaury:

Yeah. Yeah. I mean differences on many things first of all, maybe and maybe most importantly, differences in terms of customers and customers customer behavior. So typically for instance, you're in the coffee business, so the type of drinks and food that people want and that people like is very different. So for instance, yes, you can have the key classic elements across market. Okay? You've got everywhere. You've got to have the Americano and the cappuccino and these kind of things, but apart from that, it can be a totally different portfolio of products in each market in terms of market share, right? So, in Indonesia, for instance very high, most of the vast majority of the sale are in iced product. So, between 80 and 90 percent of the sales on iced coffee. In some markets, it's actually majority hot, so this is a small example, but it has a lot of implications in terms of logistics, in terms of delivery, in terms of storage in the stores so, every small thing has a lot of implication.

But yeah, so that's an example of the type of drinks that are most popular, what type of ingredients, what type of importance of, let's say, the milk component in the mix, right? And also when you speak of, so that's the product side of the customers, but also in customer journey in each market. So if you look at Indonesia, it's a lot of, okay, we have relatively cheap delivery, very solid delivery players that are also pretty aggressive in growing in the Indonesian market. So we had during COVID and even after a vast majority of our sales online, so which means it's really about how you optimize for delivery in Indonesia, in Hong Kong, for instance, totally different customer journey, right? People are actually walking a lot, are taking all these massive, there is very high density of population, all these massive metro stations and commuting where people are walking around. So what they want is really to pick up, to order on the app, and then when they pass by the station before reaching their office, they just pick up their coffee.

This is a very small piece in indonesia because people will just want to order it and just receive it at their office or at their home. So this has a lot of implication in terms of how you build your business, how you strategize on your real estate approach on how you build your end-to-end basically customer servicing, so that the first difference is across customers when in terms of products when it comes to customer journey that is this is quite key.

And then I think we also beyond the customers, pretty much anything has difference between countries when it comes to managing a team like cultural aspects of like how people work. What are the way people work, the way people collaborate in different markets? For instance, what I found really, and that's also the team that we wanted to build Indonesia, but it's also, I think there is an Indonesian factor here, and Jakarta is called Kota Kolaborasi, the city of collaboration and that's true, actually, like Indonesians, I find, and especially compared to many other markets, even more maybe outside of Asia, but even within Asia, a very collaborative people open to help each other, to support each other where there is always a certain degree of competitiveness in business with great ambitious people. But I think it's really what, from what we experienced Flash Coffee, really healthy competition and really good collaboration between people, which means you enable you know very good communication lines and very virtuous support versus work being more rigid. In some cultures, at some location, maybe people are even more rigid when it comes to, okay, what's my job description? I'm gonna fit my job description. If it's slightly out, I'm not gonna move from that. So in this sense, I found Indonesia a very startup and entrepreneurship friendly nation and people that have the right type of mindset for problem solving in the sense that it's a country very diverse, with a lot of different languages, and origins, and six official religions, and all that. So I've not seen like an Indonesian tell me there is only one way to do something. It's okay, they are aware that there are 10 ways to do something, and if the first one doesn't work, they would go for the second one, and etc. And in some other, maybe countries that it's a little more of a one way, mono culture and mono kind of risk when you're managing teams from a cultural perspective.

(19:52) Jeremy Au: Yeah. And what's interesting is that you have experience in both Indonesia and Malaysia, right? So could you compare and contrast? Because for a lot of folks, if they feel like it would be very similar because they both speak some form of Malay. That's one version of it, but how would you contrast the difference or similarities between both countries?

(20:06) Max Chaury:

I mean, you've really got a point. There are definitely a lot of similarities. So a lot of the reasons why I like Indonesia, Malaysia, was similar for both, in terms of being very diverse culturally, religiously, very positive, energetic, friendly people in both cases. There are also differences. I mean, for instance I think Malaysia is much more Anglo, there is a much higher, let's say, over average proficiency in English and much more westernized in terms of a little bit, maybe more like, Singapore in terms of exposure to Anglo Saxon culture and language, which Indonesia is more of a, local influence. I almost didn't practice my Malay in KL because the Malay, they would rather speak English, whereas, I mean, obviously in Indonesia, like most of people in startup, all that they speak good English, definitely, but there is much more keenness and much more practice of the actual, underlying local language of Bahasa Indonesia.

So yeah, that's one. And look, I think in terms of market wise, it's very different cities and density of population. So in terms of business, you have to have a different approach. I mean, Malaysia, basically the entire population of Malaysia across Western Peninsula, Eastern Malaysia it's less, it's around 30 million, so which is basically the agglomeration Jabodetabek. So Jakarta agglomeration is basically the entire population of Malaysia. So you have different dynamics in terms of density of population and hence possibilities of really growing a business to a really solid scale even staying in like one city for instance, right? So that's one of the interesting differences.

(21:30) Jeremy Au:

I think what's also interesting is that Malaysia's GDP per capita is about twice that of Indonesia. So, Malaysia is about 12,000 for last year, Indonesia is about 5,000. So how does that show up from your perspective?

(21:42) Max Chaury:

Yeah, I was also in different industries. So yeah hospitality versus, you know, so bigger tickets for end customers to buy a book a hotel versus book a coffee but yeah, definitely. I mean there is a higher price sensitivity in Indonesia on this side, right? So you are much more careful about price changes. You have different challenges as well, let's say on the logistics side. So more mature market, more developed market like Malaysia, right? The infrastructure are more predictable , and then maybe, overall, I mean, higher quality versus Jakarta, you have especially when it comes to logistics and for us delivering coffee across different parts of even the city and how do you maintain the cold chain, making sure that the delivery of products is always within the healthy and from a food safety perspective, always top notch And so yeah, for instance, this has been a little more work that we had to put into to ensure that. Yeah, so that's some of the differences. And I think related to and I think that's an interesting one as well like to some extent I think in less developed economies per capita, there is a higher entrepreneurship mindset because you really have to hustle to make it happen to to survive and versus more developed economy where you have much more people that are within this kind, I mean, whether like welfare state or even like private company, but where you have much more security in your employment and less incentives to innovate, to take risk because why should you test risk you already set of in your job? So I found that obviously like I had amazing teams that are very innovative entrepreneur in both countries but I would say, it's easier to find in Indonesia than in Malaysia in the sense that in Malaysia, there were still less people that were interested by working for a startup. I mean first, the pool of applicants is lesser because it's a smaller country so its talent pool is smaller, but also you had more people that you had to convince and actually even the great people that I had to convince them.

I had more work to convince them at the beginning to join a startup companies that is risky that is growing fast, that is new. People you need to do more pedagogy on that In do I think that they directly get it like the many of like I think a bigger pool of the applicants there, they're already excited by that. And you can see in their mindset that they have the kind of more entrepreneurial mindset in nature because maybe the size of the informal economy as well in less developed countries that you have to be an entrepreneur by default in these circumstances.

(23:53) Jeremy Au:

Amazing. And then obviously, you know, Flash Coffee has been interesting, right? So we've seen the rise of Pickup Coffee in the Philippines. We've seen Kopi Kenangan continue to grow. Unfortunately, Flash Coffee has run into some headwinds. So that was the wind down of the Flash Coffee Singapore operations. And then the sale of the Flash Coffee tie business unit to, you know, kind of like a turnaround private equity slash VC fund. Could you share a little bit more about what you think has happened?

(24:16) Max Chaury:

Yeah. So, I mean, like disclaimer, like when both of these events happen, I had already left the company, to launch Upworth, but yeah, I mean, I think what happened to Flash Coffee, in many ways, this is not, I think it's not unique. It's quite representative of what happened since end of 22 in the venture capital market. And with the specificity that the approach of Flash Coffee had been to fully manage the experience of the customers A to Z and to fully build the stores by themselves. Zero franchise, 100%. So it's not owning the place, but it's taking leases and really do all the construction, building the store and do everything in house.

So, which means it's quite capital intensive, right? When you take a lease, depending on the country, but you need to pay up front and for a few, you know, sometimes two years in advance or this kind of things, right? So basically high capital intensive VC business, and we actually were expecting very high amount of capital to come very quickly and we had actually term sheet signs by major investors globally for very high amounts of investment and unfortunately, several times the investors that had signed the term sheets went out not for things related to Flash, but more related to the overall market, which, again don't think it was a something unique like i'm sure other companies have experienced it, but what is the impact of that is that you have way less capital than what you need for a portfolio especially where you are in many markets right across Asia and Southeast Asia and I think that's one of the good things, like Kopi Kenongan or other players that were more focusing on only one market, probably have been less hit because they didn't have this more capital intensive structure.

And also you have to understand like, when you're building a chain, you have economies of scale which are at the group level, but mostly, to be honest, it's economies of scale at the country or city level, which means you really need to get to a certain threshold to make it profitable. I mean, efficient and profitable within the market. And so the smaller countries that were less, with less stores, basically they were expecting to reach a threshold based on the new, big amount of investment that didn't come. So, basically the founders had to decide to, how do I allocate the capital that I have, knowing that they have much less than what was planned. Okay. And then, it totally makes sense to decide which countries do I focus on that are bringing more revenue that are bringing more profit but also that have basically already reached the threshold of economies of scale that can enable them to really succeed with relatively low capital.

Let's use the ones that are in different situations, so that's why I think I mean the closure of Singapore was based on the performance that the market was doing compared to obviously the other markets of Flash and so I think you know, even though it's obviously tough and sad for the team and employees and also for the clients in Singapore that were loyal to the brand, but yeah, they had to close that and yet either, having an external acquisition that enables the brand and the and the people to keep working and keep providing value to customers.

It's I think it's a good thing. And yeah up to now at least in indonesia, the business has still been running. There have been a few adjustments along the way but yeah, the brand is still around and doing well and yeah, let's see what's to come in the you know coming month and years. We'll be following.

(27:18) Jeremy Au: Yeah. And what's interesting is that you decided to become a founder yourself. Now, could you share a little bit more about why you decided to make that jump?

(27:23) Max Chaury:

Yeah, I think that was something that I've always made clear with my employers in the startup world in the last five years, so not a surprise in a sense. I mean the timing can always be a surprise especially as Indonesia was going well, so I remember when there were the articles about me launching Upworth and Flash Coffee that just little after Flash Coffee announced its Series B and all that, they were like, that's very shady. Why is this person living at this point?

You know, but actually it's it was really not that Flash Coffee Indonesia was not doing well but that was really that it was my personal agenda and career that I was pursuing my overall live goals. And so yeah, as I said, I have always wanted to be in the startup world. I've experienced senior roles in scale ups in Malaysia, Indonesia. And yeah, the natural next step for me was to experience as a founder, to launch a startup as a founder. That's something I've been thinking for, of course some time, but you know, you need to find the right people to work with, the right project in the right market. And so that takes time. And I think I didn't want to rush it because I loved my job of things and Flash, I learned a lot, but I was also always ready to jump whenever there would be the good opportunity, basically. And so yeah, that happened. A good friend of mine from university that we met, 13 years ago, my co-founder Alex, was basically, he was a McKinsey strategic consultant as well in Sydney, working for Quantum Black as well, the AI branch of McKinsey.

He had been the right hand of a CEO of a s scaleup in Mexico, as well as so seeing, all the scale up life as a very senior executive there as a company doing in the a hundred of million of dollars in, in, in LATAM. And so he was also at this point in time we realized when we had the catch up that we are both at the point where, okay, look, we have had experience both in consulting, both in startups at senior executive levels and that yeah the next step before us to really start our own journey and build something and build value for people together. So that's how we start speaking about the project, analyzing the Australian market where he is as an Australian citizen and so yeah, we basically identified Australia as an interesting market, mature market, very different from Indonesia or Malaysia, but on the plus side, which means it's also the right market to start for a solution like ours, where we are a little more about long-term wealth management and helping people navigate their life, their own personal financial life. And so we identified that they were like interesting players doing pretty well in other markets like US and Europe but that there was no player on this in Australia and we are both like personal finance afficionados, and we thought that was the right moment because also of the legislative changes that were happening in Australia in terms of financial advice and open banking.

And so we were basically on an on the market that was attractive for what we are planning to do Where there was a massive impact that we could bring to start with in this market and where it was the right moment because of the changes of legislation in different sectors in the financial space, and consequently we basically, I gave my resignation to Flash, and then he also gave his resignation, and we came together mid May last year to, in Sydney to build a company with actually a CTO who yeah, brings the tech tech expertise who is data engineer, software developer that has built massive system for startups and corporates like in the financial sector, like Moody's analytics. And so, yeah, who is helping us to build the product and the company.

(30:34) Jeremy Au:

Could you share briefly what Upworth is about?

(30:35) Max Chaury:

Upworth is the one stop shop for personal finance in Australia. So people there can track, plan, and grow their wealth all in one place. Typically, they can know their entire net worth, their entire assets and liabilities, their personal financial statements on Upworth, and they can follow it live because it's all connected through open banking and other solution that we have implemented. And once they have a view of their world, they can also get insights on what are the potential opportunities to to grow their wealth. And we also have them to act upon these insights within the platform, taking the right financial decision, whether it's like taking investing in a property and taking a home loan you know, reallocating their funds to increase their returns.

All of this is available within Upworth.

(31:15) Jeremy Au:

Awesome. On that note, could you share about time that you personally have been brave?

(31:18) Max Chaury:

Okay, that's a very good question. I think it's interesting, brave and courage like what is courage I think first I mean as a disclaimer, I think real courage, like the higher level you can get of courage maybe as a moral virtue is probably putting your life in danger to helping others and I don't think I can qualify for that at this point in time.

Yeah, so first of all, it's brave, but within a certain spectrum that I think this is the highest level that you can find, but then what's the other levels, I guess, of courage, I think, and I like the approach of a French philosopher, André Consponville, who did an analysis, okay, what are the virtues, the key virtues of human life? And he mentioned he has 15 plus virtues that he's analyzing and courage is one of them, but it's more than one of them actually. And what he says is like courage or, being brave is the quality that enables any other quality because it's what makes them effective and real.

You can be kind, but if you don't implement this kindness and make the effort and be brave about go and help others or any other quality or you know, kind or supportive or smart, you can be the smartest person in the world. If you don't make the effort, take your courage with, in your own hands and use your intelligence for a certain goal in the real world, it's pretty much useless, right? So I do think that courage is the number one quality that you need in life and startup and the main differentiator. You have so many clever people out there, but very few that actually have enough courage and I think courage is a skill at the end. It's a process so I hope I will grow my courage in the years to come but I think courage is about pushing your boundaries basically, right? Trying to accept that you're gonna go in the zone and discomfort and know that if you want to grow if you want to build something, you need to go through pain and discomfort. That's the advice of jensen from nvidia as well to Stanford students. I wish you a certain dose of pain. So yeah pain and in comfort.

So example for me, it's a very I mean, not classic, but it's a very physical example, but I think it's a good one, in the sense that, when I was in Morocco, I did skydiving license. From the first jump, it's not like when you are attached to a guy and you just play and the guy behind you is doing everything, from the first jump, so I did the training on the ground, but from the first jump, I'm actually jumping alone from the plane at 4,000 meters. So at the beginning, there is someone that helps a little for the free dive part, where you're going at 200 kilometers per hour, so 55 meters per second down. But then the landing, the opening of the parachute, and all the trip from the moment the parachute is open, and including the landing from the first jump, you have to do it yourself. And so it's uncomfortable. Like when you're jumping, you're stressed. When you're falling you're also like, you're trying to catch your breath. And that's what interesting. Even though I was not scared consciously, I was actually unconsciously because the proof is that I was, I had issues actually to breathe the first jump, like having a panic attack in the jump, even though I was not expecting it. And so, your body reacts to kind of extreme environments like that. Still was able to manage and learn by myself from the first one. And then I realized this from the second jump totally disappeared.

So, by pushing your boundaries, you're really becoming a better person and next level person just like when you're in the gym and you cannot do this weight, and then the next time, it becomes easy, right? So yeah, my advice is that courage is a muscle and it needs to be practiced basically every day and what does it consists of, essentially, is going out there and accepting that you like, confronting yourself to pain and discomfort, obviously not in a sadomasochist way, but more in a productive way. But don't worry, for pretty much everything that you need to achieve, it will be there along the way as a needed step. So better learn to deal with it and to practice. The best way to learn is to practice.

(34:41) Jeremy Au:

On that note, I'd love to summarize the three big takeaways that go from this conversation. First of all, thank you for sharing about why you chose to work with Rocket Internet and ZEN Rooms in Malaysia. I thought it was a fascinating discussion about the hospitality, but also I think the strategy behind whether to, for example, lease out rooms versus franchise versus white label. And I think there's an interesting subset of also the overall pandemic, you know, apocalypse that happened right on the hospitality industry. But it was also a great insight into how you thought about the general manager role. And I think the transition from a strategic management consultant to the founder and general manager dynamic that hire a team and think about building and getting up to speed on industry.

Secondly, thanks so much for sharing about Flash Coffee, about what you learned about building up the Indonesia market. Again, a very good overview about the business model, but more importantly, I think the consumer behavior differences at a market level between Indonesia, Singapore, Thailand, and Hong Kong. I also found it fascinating to hear about, you know, your perspective on the economics of the business versus the global tech, as we saw liquidity availability for VCs. And I think what are the consequences for companies who are making that trade off on that.

Lastly, thanks so much for sharing about how courage is a muscle. I really enjoyed your point of view about how courage is a virtue that enables other virtues. And you shared about it in multiple ways. I think you shared about it in the context of your own experience learning to skydive, but also in your own experience choosing to be a general manager, choosing to work in Malaysia, choosing to work in Indonesia, and choosing to be a founder again after your two GM experiences because you felt like the time was right.

So, on that note, thank you so much, Maxim, for sharing.

(36:14) Max Chaury:

Thanks, Jeremy. It was a pleasure to chat.