Enterprise

“The Birth of a Titan: A Shark’s Tale of Standing on the Shoulders of Giants”

"The glaring flaw in this business model is its lack of sustainability," remarked Shark Binh. Twelve years ago, he founded Ship Chung, operating by riding on the backs of giants. After 4–5 years of stellar performance, this startup was pushed down by the very giants it relied on.

Administrator

26 September, 2024

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Misunderstanding Revenue and GMV, the Startup Still Values Itself at $5 Million

Appearing on Vietnam’s Shark Tank recently, Ghephang.com sought to raise $250,000 in exchange for 5% equity, implying a post-money valuation of $5 million.

Officially launched in September 2023, Ghephang has two apps, “Xe Ghep Hang” and “Ghep Hang,” targeting drivers and shippers, respectively.

Do Sy Quang, the founder of Ghephang.com, stated that there are 600,000 trucks in the market, all facing a common challenge: one-way trips with cargo result in empty returns, leading to resource wastage and environmental impact.

“Ghep Hang is helping customers reduce costs by 30% while increasing revenue for transport companies by 30% on each order,” said Nguyen Anh Tuan, COO of Ghephang.com.

In the first half of 2024, Ghephang established 11 cargo pickup and drop-off points nationwide, partnering with 3,000 trucks and serving 1,500 regular shippers.

Regarding financial performance, Quang shared that Ghephang recorded 486 shipping orders per month, with an average value of $3.2 million per order, resulting in $4.76 billion in revenue. The average profit margin stood at 17.8%.

The company set an ambitious target, aiming to reach $30 billion in revenue by the end of 2024.

However, Shark Minh Beta questioned the feasibility of their projections. With 486 orders valued at approximately $3.2 million each, the total shipping value was around $1.5 billion per month. Given their 17.8% commission, their monthly revenue would be between $260 and $300 million. “How can we believe that you can achieve $30 billion in revenue in a year?” Shark Minh Beta inquired.

Shark Binh Narrates the “Pain” of Standing on the Shoulders of Giants

Shark Binh characterized Ghephang.com’s business model as OTT (Over the Top), acting as an intermediary without any resources of its own. The startup relies on the existing resources of other transport companies with vehicles and sells their services along specific routes.

“A significant characteristic of this business model is its lack of sustainability,” Shark Binh assessed, sharing his own experience with a similar venture called Ship Chung, which he founded in 2012.

“For the first 4-5 years, it worked well, also as an OTT with transport companies. But these intermediary economic models often face a challenge: after a while, the very transport companies, the original service providers whose shoulders you stand on, will push you off.”

“Eventually, shippers will be contacted by these companies, asking them to bypass your app and offering a 5% discount. I’ve been through this, and I advise you to reconsider your business model.”

Having experienced failure with this model, Shark Binh expressed his distrust in Ghephang’s future and declined to invest.

Shark Phi Van commented that the startup needed more financial knowledge and experience to steer their business and communicate their numbers accurately. “Up until now, startups have been talking about technology and IT, but ultimately, it’s all about business,” Shark Phi Van said, opting out of the deal.