XA Podcast 029 | The Entrepreneur Gene | Roger Egan, Co-Founder, Nurture And RedMart

When everyone is saying No, how do you eventually get to a Yes? Sheer persistence. Roger Egan, Co-founder of and former CEO of RedMart joins Reza Behnam to discuss his journey of founding RedMart, overcoming many naysayers on the path to acquisition and what he’s working on now.

Discussion Topics: The Entrepreneur Gene | Roger Egan, Co-Founder, Nurture and RedMart

• Co-founding a startup with his father
• INSEAD and the birth of RedMart
• Early challenges
• RedMart operations
• Exiting to Alibaba
• Lessons from RedMart
• Recruiting and retaining talent
• About Nurture

Transcript: The Entrepreneur Gene | Roger Egan, Co-Founder, Nurture and RedMart

Reza Behnam: It’s great to be talking to you, Roger, we’ve known each other for a while. And the two of us and probably a few others on this call are early entrepreneurs in the Southeast Asia tech ecosystem, a very lonely space at the time and a small community. I feel the word community is a bit of an exaggeration. So I feel like I’m hosting and talking to a friend and someone who’s been through a similar experience during the early days of the startup ecosystem in Southeast Asia. And the goal today is really to learn about your personal journey and about key lessons and insights you’ve picked up along the way, both for our XA members, both founders as well as the podcast listeners.

Roger Egan: Thank you for having me, I see a lot of familiar faces on the call, I miss all of you.

Reza Behnam: Thanks, Roger. For the purposes of this call, and the audience, I think it makes sense to structure your journey in three chapters, one before founding RedMart, which you spent time primarily in the US. And then chapter two perhaps is your experience founding and operating and exiting RedMart. So along with doing all those with RedMart, you also did your MBA in Singapore. So that’s the second chapter. And the third, which is your journey after RedMart, which has primarily been in your new location in Barcelona. So let’s start with Roger, pre INSEAD, and pre-RedMart in Singapore, tell us about where you grew up, your main influences and perhaps some of the drivers in your formative years.

Roger Egan: So I’m American, I was born in New Jersey, and I grew up getting into entrepreneurship pretty early. I started a snow shovelling business when I was about, I think eight or nine years old and I was struggling walkways whenever it snowed. And really, I’ve always had that entrepreneurial spirit from the beginning. I went to University of Pennsylvania in Philadelphia, I think there were two choices back then consulting and investment banking. So I chose investment banking. And I didn’t really enjoy it that much. I really just want to get into entrepreneurship early. I quit my job within my second year. And the first venture I ever had was throwing a New Year’s Eve party in New York City for the friends that had scattered across the US. I wanted to get them all together. The problem I was solving was very expensive in New York City that got too crowded and made more money in one night than my investment banking salary and bonus combined. So I was like, wow, entrepreneurship is pretty easy. But then I learned from many other ventures that it’s not where I failed a few times and learned a lot. So then after trying a few ventures, some moderately successful and some failures, I decided to go back to my only other real job and that was in Madrid, Spain, I worked for a company called Omega Capital. It was a family office and one of the wealthiest families in Spain, a couple of rich family and I helped manage their alternative assets portfolios, and it was a great learning experience. But I’ve got the entrepreneurial itch again, and I wanted to start something.

My father was a very senior person at the time president of Marshall McLennan, insurance brokerage firm, and we wanted to start a new insurance company in the US for property casualty management risks. So we raised 320 million in 2005. That was the largest VC deal in the US. And we built a 12 offices across the US, Canada and Europe to service fortune 1000 companies just to say that we had a strategic disagreement with our co-founders and board where they instead we’re supposed to use the 320 million to buy two companies as a platform, which we had already been talking to they decided they wanted to not do that and just build organically. We disagreed, and we ended up resigning both my father and I, because of that, and one of the lessons just really quickly is that when you have 320 million for a startup, it’s way too much money, you just burns a hole in your pocket, and you just spend it too fast and you’re not as disciplined as you would be and constraints, breed creativity and cost consciousness that we didn’t have. And that was a big lesson for me going forward. And also picking your partners and making sure you’re absolutely aligned was the other lesson there. So then I chose the perfect timing to resign in October 2008, I had an idea of starting an E-commerce company in the US, there was no funding for anything as many of you can remember. So I said, Okay, I’m gonna leave the US and get over to Asia, where there’s growth and opportunity still and wait it out a bit in an MBA. Honestly, I considered MBA as an entrepreneur who studied business and undergrad before that. And that’s what brought me to INSEAD, and in Singapore.

Reza Behnam: So what do you think could cause you to want to do entrepreneurship so early in your career? Did you grow up in a family of entrepreneurs? Or was this something innate in you? Or how would you describe that?

Roger Egan: My grandfather was an entrepreneur who started a retail business, like a kind of department store, so that had some influence. I saw him grow the store, and my parents, my mom started a social impact charity. So that, I guess, is considered entrepreneurship in a way, and my father was just a businessman that worked for a company called Marsh McLennan for 30 years. That’s my family. Yeah, I think that I just started to get a taste of it and with struggling walkways, and seeing I really enjoyed just figuring out how to make money and creating value early on. And once you try entrepreneurship, it’s above that, that you can’t get rid of.

Reza Behnam: And tell us a little bit more around the sort of conditions around the startup that you did, sounds like with your dad, tell us a little bit about how that came about? And how did you go into business with your dad as an entrepreneur?

Roger Egan: Yeah, there was a guy named Eliot Spitzer. And he was attorney general of New York. And he attacked the insurance brokerage industry and accused them of things on his path to try to become governor and beyond. He cut Marshes market cap in half. And basically, it’s a very kind of long story. So I won’t go into it all. But the accusation was around something called contingent conditions where brokers work with insurance companies to figure out how to insure, what would otherwise be uninsurable risks, like helicopters in Iraq, or something like that. It proved to, out of the company of 40,000 people, only five people were accused of anything, all of them were found not guilty. And now they’re able to collect contingent commissions. And it’s all legal. So it was really unfortunate, but it created an opportunity for a new insurance broker unencumbered by these regulations at the time to start. And so that’s where we saw the opportunity. And so we raised because it was such an amazing team, we were able to raise the money really fast and get started.

Reza Behnam: And in that case, were you and your dad, both sort of co-founders, if you will, or how did that work out?

Roger Egan: Yes, and we had two or three other co-founders that were senior people from the insurance industry.

Reza Behnam: And are there any lessons there about working with family as co-founders that you care to share with the team?

Roger Egan: Yeah, everyone thinks that that would be hard. It was actually really fun working with my dad, I respect him a lot. I learned a lot from him. I’m very grateful for that experience. It showed me how to build and scale companies that would really help me later on that RedMart and my other ventures, I saw how he was an amazing leader. He taught me about leadership, how to conduct meetings every day, it was a great learning experience and a lot of fun. And I’d say we also have complementary skill sets, because I’m probably more of the entrepreneurial type. And he’s more of a big corporation leader. So it was a good complementary skill relationship.

Reza Behnam: That’s a good segue into the next question. You mentioned INSEAD was almost incidental. But what was the draw to INSEAD specifically, and what was your experience like at INSEAD?

Roger Egan: So why INSEAD, first of all, it’s a one-year program, it’s International and extremely diverse. So I think there’s no more than 10% from any one country. So you get a lot of diverse perspectives. And while it’s not as well known a brand for entrepreneurship, like Stanford or Harvard or Cal or whatever, I’d say if you look at the list of unicorns and successful startups out of INSEAD, there’s quite a few and so that they have a strong entrepreneurial program. So those were the reasons why INSEAD. And you can go to Fontainebleau or Singapore. I chose Singapore because I wanted to get to Asia, like I mentioned, in the West, it was still doom and gloom and no funding for anything.

Reza Behnam: And then let’s fast forward to you starting to think about graduation and choosing a career post INSEAD. Tell us about that. And then eventually what landed you on the decision to found a RedMart?

Roger Egan: Yeah, so I came into INSEAD with the intention of starting a business, I thought this is a good way to use that time value and make use of that time in a productive way. I wanted to meet a co-founder and launch a business and Business school is great for that, because you have a lot of smart people who have a lot of time on their hands. So my wife actually met my co-founder, Vikram Rabbani, who’s still in Singapore, his wife, and they introduced us, we got on really well, we both wanted to start something. And we had been recognized for very complementary skill sets. So we met like in the second sort of started in January in the second month, February, and we started working on the idea. And the idea was just we both lived in New York City, we’re used to buying our groceries online at Fresh Direct, and we were like, could not believe as busy students, we wanted someone to deliver our groceries and couldn’t believe that the service didn’t exist in Singapore. And we’re like, wow, why is this a wealthy country, people value convenience, but it’s 15 years behind the US and ecommerce, we said, okay, like this is a big opportunity, solving a personal need, let’s go after it. So we spent the rest of the MBA, basically working on the business plan and using every class to develop it. So I feel like I got a lot more out of the MBA with this idea in mind, because marketing really came to life as I couldn’t picture how we would use what I was learning towards our marketing for RedMart. And same with operations and all the other courses. So we graduated with three INSEAD professors investing and our life savings into it. And we started to get to work on RedMart right after we graduated.

Reza Behnam: And tell us a little bit about on tech when you started in terms of both the ecosystem competitive landscape and what were the immediate challenges?

Roger Egan: Yeah, first of all, everyone told us that we were crazy and said you’re starting off in a market that Singapore is so convenient, right? There’s grocery stores everywhere. A lot of people have helpers. Why is anyone going to need this service? And by the way, you’re going up again, to multi billion dollar companies, fair price and dairy farm, cold storage. One is the government cooperative, and the government is pretty strong in Singapore, and how do you think you can beat those guys. So I didn’t buy any of it. I didn’t get it. Like I said, Okay, Singapore is not that convenient. I’m from New York City. There’s a grocery store on every corner, or Bodega, but still people buy groceries from Fresh Direct and the $600 million business. Convenience is relative, right? Something’s only convenient until there’s something more convenient. And then that’s not convenient anymore. So I just didn’t buy that. And many of our early customers, I used to deliberate myself. So I know this. They said, when I asked why you use this, you have a helper, they said if it’s as easy as clicking around for 10 minutes, I can control what I’m spending, I can take advantage of promotions, try new products, I’d rather just do it myself. It’s just easier. And even though there’s a lot of grocery stores and you don’t want to lug heavy groceries home from the grocery store if you don’t have to. It just saves you time and money. So anyway, we didn’t buy that argument. And then when people said how are you going to be multi billion dollar companies, that’s just the story of any startup but I said the customer is the one who chooses where they shop. It’s not a fair price that decides where the customer shops so if I give him a better choice, they’re gonna choose us so I didn’t buy that anyway. But yeah, it was really swimming upstream to and everyone thinking that there’s just no way that this is going to work and then everyone told me it’s a small market. I said it’s a $10 billion market I know Singapore is small but you could build a multibillion dollar business and by the time RedMart now I can’t disclose the number but in the high hundreds of millions and profitable and still growing quite significantly it shows you that you can build it in a small market. So anyway, all those things why it was hard to get investment and why everyone told us you’re not.

Reza Behnam: And I guess tell us a little bit about that ethos that you instilled within RedMart. And given that it was a tough business in terms of logistics and you having to run both operations from a logistics perspective, but operations also from a company and corporate perspective. Tell us a little bit about the ethos and about the culture that you decided to instil.

Roger Egan: So there was an inventory ecosystem in 2010, or not much of one in Singapore and I think there’s two firms Walden and Vertex and both of them said no, so we were with a very capital intensive business and no money. So we had to start literally with the two guys in the band. And I remember, part of the business plan was to outsource delivery to a third party logistics company. We tried it for a couple of weeks, they just were always late and or didn’t show up at all. And all people care about an online grocery is did I get my stuff was in good quality and then did come on time. Sounds pretty easy. But actually, logistically doing that is difficult. So anyway, I knew we had to have our own trucks and control that which added even more to the costs. And we’re living check to check delivering, we would have a full work day meet with suppliers, do marketing and all the other business stuff, then my family and one warehouse worker would pick and pack packages, then we would go out for delivery around 6 and at 10, we would always have things missing because we didn’t have demand forecasting and all kinds of really good purchasing algorithms back then. So we had to go to 24 hours, Fair Price and cold storage, to buy things retail, lose the margin, and just make sure that every single customer order was perfect and didn’t get back till two in the morning. And we did that for six months. It was really gruelling and really tough. And I’d say you know, what kind of got us through that. And I’ll talk about how it changed with the investment of the Skype co-founder that just changed our trajectory. But we were growing, we just made sure that every customer got a perfect order and got a perfect service on time. But really, I think the key to RedMart success if I had to identify one thing would be persistence. We just never gave up. In fact that we talked about early influencers. I forgot to mention my father always instilled in me this quote from Winston Churchill; it’s never give up when he was galvanizing the Western Europe against Nazi Germany that’s on my LinkedIn page. It’s my ethos, it’s my motto. And it became a part of the company culture, it’s on the wall in the warehouse, it’s on every wall in the office. And we just push through and just day by day delivering the packages, just doing whatever it takes. And I wouldn’t attribute success to a brilliant strategy or amazing execution, it was just that we just never gave up. And finally it started to come. And we got a lucky break when the co-founder of Skype, one of my classmates was a founding team member of Skype, he actually is Taavet Hinrikus, he actually went on to co-found TransferWise or not Wise, he tweeted, hey, my buddy started this thing in Southeast Asia and the co-founder, Scott Toivo saw it, they go I want to meet those guys put us through hell and then finally invested. And interestingly, after the co-founder of Skype, invest then all the people who said no before are willing to take a meeting. And so then we just accelerated with Eduardo Saverin, and __ (18:28 inaudible) which is now SCA Soft banks, that just gave us much needed capital in such a capital intensive business.

Reza Behnam: So you mentioned in the beginning, you were actually buying groceries at retail, and delivering them yourselves just to kick-start it and seed the service. Were you applying any margin on top of retail prices at that point? Or were you just delivering it just to start your beta, essentially or your Alfa?

Roger Egan: Reza, you’ve been in Singapore long enough to know that it’s extremely price sensitive, there’s no adding extra cost on top of your margin. So yeah, we couldn’t get away with that. We just had to eat it in the beginning, of course, we became much better at purchasing and demand forecasting and things. So there is a lot less out of stock in the warehouse.

Reza Behnam: So people weren’t willing, essentially, to pay for the convenience. It was really the retail price was the retail price, essentially.

Roger Egan: Yeah, in other markets, they do that. And they are willing to pay for the convenience, not in Singapore and it also goes with unwillingness to pay a big delivery fee. So it’s extra tight margins for us. And they are profitable now, by the way.

Reza Behnam: I have a lot more questions, but we have a shortage of time. So I’m going to jump in to tell us a little bit about your exit. And what was that like? And how did it change the way you operate once you were acquired by a larger company?

Roger Egan: Actually, we weren’t really thinking about selling. I can’t tell you everything about the whole experience. But I just say that we’re raising Series C, we were talking to people like Amazon and Alibaba. And eventually during the process, we had some term sheets and Amazon decided to let the market know that they were going to start doing groceries in Singapore. And that is really tough for fundraising to go up against and then Alibaba people knew that the same was coming from them. So it’s tough to get funding against the two biggest ecommerce companies in the world. So we were lucky they were both interested Alibaba. I met Daniel Zhang during Series B. So I knew him for a good amount of time, and then met the guys at Lazada. And they just put a higher bid and my board accepted. And I think it was the best outcome for RedMart that we could have had. And they were very supportive investors. And so then that’s how the exit zeroed down.

Reza Behnam: And you spent some time at Alibaba, right? And how was that like, after the acquisition?

Roger Egan: We were acquired in November 2016. And for a while, they just give a lot of funding. I think Daniel Zhang sent to me something along those effects of sending Amazon back to the US. And hence, just give me a pat on the back and still get funding and I really didn’t have much more direction for a while. So it was just built back to building not having to fundraise. It was really fun. And we grew RedMart significantly. And then they asked me to expand while I was integrated into Lazada, in the Philippines and Thailand, so I spent the last year doing that. And that was a rewarding experience. But I guess after three years post acquisition, I felt I wanted to get back to my happy place, which is early stage building. And so I resigned in February 2020 on good terms, and still have great relationships there.

Reza Behnam: So if you had to look back and enumerate a few of the hard earned lessons and insights you came away with at RedMart, what are the top three or four that you would mention Roger?

Roger Egan: The key to success, persistence, I mentioned that I think, yeah, just it came back from my INTEGRO experience of when you had too much money, we never had any money at RedMart. So that was helpful. It really forced us to literally like four times being two weeks away from missing payroll and going bankrupt. I know everyone reads in the press that it looks like straight up like this and then acquired by Alibaba, but it was a roller coaster, very stressful. That’s where all the grey hair comes from. I’d like to be honest about that story because I think if more founders were honest, they didn’t know that’s not. You know, that’s more like the typical story and how it goes. So I think the lesson learned is that’s the roller coaster of entrepreneurship. And persistence is the way through. That would be my main takeaway.

Reza Behnam: And tell us, looking back, what are you most proud of after completing that journey and selling RedMart to Alibaba?

Roger Egan: I’d say the culture. And I forgot to mention this earlier, so as a CEO, I didn’t realise the importance of culture until too late. And then when I realised that it helps you attract and retain the best talent, which is the key to success then I started to really invest a lot in building the culture and maintaining an environment where the staff could do their best work as individuals and as a team. If you ask any Red Martian, what was the best part of RedMart? I think they would all say the other people at RedMart, and the culture, and Amazon never made a dent in our business at zero, even though they tried to offer our staff a big compensation to try to attack that way. We didn’t have anyone leave. And I think that’s a testament to the strong culture that we built and shows why it’s so important.

Reza Behnam: And you had some top talent at RedMart as well, you recruited really well. Do you want to tell us a few words about how you managed to do that being the sort of challenger?

Roger Egan: So, we had people like Colin Bryar, who was our CEO, he was technical adviser Jeff Bezos at Amazon, his right hand man helped to build Amazon from the early days. We had Patrick Taylor, who was Director of engineering at Facebook, he is a founding member of Shutterfly. He’s at Google now with Sammy, and he built Amazon music. We had Todd Curry, do marketing. He was Director of marketing at eBay. So, we got some really top notch high level executives that honestly as a founder who hadn’t scaled the business before I needed that because I hit the limits of my capabilities. And I started learning a lot from these people. And Rajesh, as a co-founder, I guess, in terms of recruiting, the best way I can say, what worked for me for selling the idea, especially when in the early days, you didn’t have anything to show right? There were no big investors. There’s this small, tiny warehouse, we were doing deliveries out of our van, and we’re gonna try to tell people this is going to be the next big thing when Unilever was making me pay for products to take pictures of them because they didn’t trust that I would bring them back in the early days. So that’s the type of like respect that you had. How do you sell someone so might for example, Rajesh, my co-founder and CTO is a brilliant technical mind, what I think you do is you find out what motivates the person. So Rajesh told me that what he really loves is the most complex technical problems out there. And so once you find that out, you know how to tailor your pitch. And I said, so, let me tell you about online grocery. It’s the most complex technical problem, you can imagine, we have many more products per order, the supply chain is ridiculously complex, fresh food as a whole another dimension of complexity. And with the storage of it, and the systems of warehouse management, we need to build all this from scratch. And that was like, resonated with him. So that would be my advice on how to sell top talent, understand what motivates them and tailor the pitch.

Reza Behnam: Thanks, Roger. I feel like this podcast could easily be two hours. And we could delve into some of these questions in a deeper way, but in the few minutes that we have left would love to hear what are you up to now since you’ve left Alibaba, and a little bit around the nature and the drivers behind your new startup?

Roger Egan: Sure. Again, perfect timing I resigned in February 2020 had the idea of taking a sabbatical year after 11 year grind a bit of a break, more time with family, travelled the world, and reconnecting with friends. And then COVID came the week after I resigned and instead I was in a three-month lockdown in Singapore. And I view it as a blessing in disguise, because that’s what led me to the idea for Nurture my new startup while it was in lockdown. I have to say I have two boys, two sons, and they were six and two at the time. And I have to say, as a parent, I outsourced education to school and didn’t really think about as such a kind of schools handling that I don’t need to worry about it. Now with time on my hands, having resigned and also getting into remote learning in Singapore, I made it an important realisation that there are a lot of what I call life skills that my kids aren’t going to learn in school things like critical thinking, how to learn, you need to build to learn and adapt more quickly, especially with the technological advances accelerating. We all see what’s happening with AI, you need creativity, you need social emotional skills, but even practical skills like financial literacy, spend all of your life trying to make and manage money, but they don’t tell you anything about it in school. Health, fitness, nutrition, and all the uniquely human skills that are going to be super important in the future they just don’t really do it justice in school. And I said, okay, so whose job is it to teach him, it’s my job. And I’m like, I’ve realised, I’m not a very good teacher, not only have I not mastered all these things myself, I have no idea how to teach them. I look to the market for help and when I get into something, I go pretty deep. So it’s sort of a parenting coach. I bought every book I tried, every app, every activity, there’s some good stuff for academic skills, numeracy, literacy, but there’s nothing for these life skills on the market. And as a parent, all I wanted was I had this limited window to be present with my son. I want a fun bonding experience that has a learning outcome, and I couldn’t find it. So I decided to build it at Nurture. And without disclosing too much about the product, I wanted to leverage the power of animated storytelling because I see how engaged my kids are in their favourite TV shows. And storytelling is a great way of learning. I wanted to also make it interactive. So it’s not passive learning, I wanted to make it co-playing, not another app that you just give to your kids. And it’s like a babysitter where you take a break. I want it to be a co-learning experience and co-play experience with your parents and your kid. And I want to have physical activities. So that’s where the product started. And we’re building something we just raised part of a seed round. And we’re raising a bit more than that right now. And we aim to launch what we call the minimum lovable product in summer this year.

Reza Behnam: And I understand that just like you were a co-founder with your dad, you have your two sons, as co-founders with you on this endeavour. You want to tell us about that?

Roger Egan: Yeah, I just say that this time around my family and especially my wife, I said a lot to let me follow my entrepreneurial dream with RedMart. And I’m not a workaholic. I really am not but it just took what it took to do it and I’m really grateful that she allowed me to do that. But this time I wanted during my sabbatical reflection I knew I wanted what I’m doing next to really be integrated with my life purpose. And I identified one of my life purposes is just being the best dad I can be and helping my kids reach their potential. So this idea the whole family is co-founders and like I told my sons, their co-founders, they were building an Apple TV app to start we have a script with characters they give me feedback and insights in a very direct way that only four and eight-year-old can and then give it to you straight and actually they are extremely valued, but it’s a whole family endeavour. My wife is very much involved. And that’s what I wanted. I didn’t want it to be some separate thing that I go and do on my own. I want it to be integrated in my life and I’m grateful for that. The worst thing that can happen here is I’ll be a better dad from it.

Reza Behnam: Thank you so much for your time and for answering and sharing openly and sharing the lessons and the insights you gained and also sharing your personal journey as well.

Our Guest: Roger Egan

Roger Egan is a serial entrepreneur and the co-founder and CEO of Nurture, a startup reimagining early childhood learning and development. Prior to this, he co-founded RedMart, a Singapore-based grocery business that was eventually acquired by Alibaba.