3 college friends built a $1 billion business selling used cars

Aaron Tan is going places.

As the co-founder of a newly crowned unicorn and one of Asia Pacific’s fastest growing start-ups, the Carro CEO is now on the road to a public listing. 

And with investors including Softbank getting onboard, he has no plans to slow down. 

“The question is, now that we have reached $1 billion, how do we reach $10 billion? How do we reach $100 billion?” Tan told CNBC Make It.

Carro — a play on the words “car hero” — is a Southeast Asian online auto marketplace designed to simplify car deals using artificial intelligence technology.  

Founded in 2015 by Tan and his college friends Aditya Lesmana and Kelvin Chng, it achieved the coveted $1 billion unicorn status in June after securing $360 million in funding. The deal takes total money raised to over half a billion dollars and pits Carro alongside key competitors, such as Malaysia’s Carsome and Germany’s Carmudi, in an industry worth $50 billion and growing.

Yet, as Tan explained, it was some journey getting there.

The 36-year-old’s entrepreneurial story started when he was 13. As a teenager growing up in Singapore, the computer whizz would earn extra cash by building and selling websites.

But it was later, while working as a venture capitalist in the U.S., that he saw an opportunity to combine business prowess with his true passion: trading cars. 

“When I was in the U.S. as a VC for many years, I remember very clearly, I met all kinds of automotive companies — your Beepi, your Uber, your DriveShift. What this showed me was the momentum in the space,” said Tan.

While the auto resale market was flourishing in the U.S., the same couldn’t be said for Southeast Asia. It was famously opaque, with several middlemen making it difficult for buyers and sellers to get the best deals.

Tan wanted to change that. So, returning to Singapore in 2015, he teamed up with his classmates from Carnegie Mellon’s School of Computer Science to create an algorithm that would do just that.  

“I wouldn’t say that I tricked my co-founders into founding the company together, but I think I sold the opportunity that this could be much more interesting than whatever they were doing,” said Tan.

The trio was onto something. In a region with a vast and growing, digital-savvy middle class, price-sensitive consumers were increasingly opting for second hand models.  

“Expanding middle class combined with low car ownership rates in Southeast Asia were really the main factors that stimulated new car sales, and eventually this translated into a vibrant used car market as well,” Justinas Liuima, a senior research consultant at…