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In this episode of The Venture, we share a conversation with Lai Chang Wen, CEO and cofounder of Ninja Van, a Singapore-based express-delivery company with operations in Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. Chang Wen discusses with McKinsey’s Andrew Roth his unlikely journey into logistics, the importance of establishing dominance in your core business before branching out, and the need to constantly reexamine your key differentiator. At the close of the interview, McKinsey’s Simon Wintels offers his insights.

Andrew Roth: From Leap by McKinsey, our business-building practice, I’m Andrew Roth, and welcome to The Venture, a series featuring conversations with legendary venture builders in Asia about how to design, launch, and scale new businesses. In each episode, we cut through the noise to bring practical advice on how leaders can build successful businesses from scratch.

Today I’m excited to share with you a conversation I had recently with Lai Chang Wen, CEO and cofounder of Ninja Van. Chang Wen is an inspiring leader, and the thing that I found most fascinating about Chang Wen’s business-building journey was hearing about his passion for continuous innovation. Let’s be honest—business building comes with a lot of unexpected challenges, and all new businesses deal with pain points. To succeed, the best leaders move quickly and adapt. You’ll hear Chang Wen tell us how he believes it’s critically important to establish a dominant core business before branching out into new ventures, and then we dive deep into the importance of reexamining the key differentiators of your business. At the end of our conversation, Simon Wintels and I discuss the key elements in Chang Wen’s growth story, which you can apply to your business-building activities.

Andrew Roth: Chang Wen, welcome. Great to have you on the show. Ninja Van has been in the market for some time now, but you started in the fashion business. Can you tell us how you started Ninja Van, the original segment you were attacking, and how you expanded from there?

Lai Chang Wen: To be honest, we were quite lucky, because we were running a fashion omnichannel with online and retail stores. And the pain point we faced throughout that journey was a shipping experience that just didn’t live up to the online promise. I’d spent some time in the United States, and it became evident to me that our parcel journey, especially in logistics, was a problem. So that’s what inspired me to get into logistics and shipping.

Andrew Roth: Tell us, from a start-up perspective, what you think about the addressable market and what you need to do to define one that’s realistic?

Lai Chang Wen: The reality is that we identified the addressable market on day one, and it’s still the addressable market we are looking at today. Thankfully, this addressable market is huge, with massive tailwinds from e-commerce growth, and the entire business segment we chose has just been growing tremendously. This is probably not something every start-up is fortunate enough to face. And after some time, they may realize that their market segments are a bit too small.

A frequent challenge I’ve seen with start-ups and pitch decks is that people are not realistic about the size of the target addressable market, which could be much smaller than they realize. But they take a leap of faith, project what the next layer of the business and adjacent businesses could look like, and build up a huge addressable market on the back of that.

But reality needs to be based on what you have to do today, or even the next few years, focusing on a particular area first. And to always depend on adjacencies and the future could be a pipe dream that could get quite dangerous.

So it’s important to be realistic about your target market. Be clear about where it starts and ends, about its potential and its growth rates. And be more optimistic about your ability to succeed in a more realistic segment.

Andrew Roth: As you mentioned, you’re fortunate that you started with small and medium-size enterprises (SMEs), and you’re sticking with them. Why is that?

Lai Chang Wen: We target e-commerce, not just SMEs. So, within the e-commerce space, there are large marketplaces like Lazada, Shopee, and Amazon, and large brands like Uniqlo, Nike, and Zara, as well as smaller SMEs with more homegrown brands. So, our focus wasn’t an SME play; it was express logistics for an e-commerce play, and this cuts across all different sizes of shippers.

I think the key to thinking about differentiation is that nothing holds true with the passage of time. It’s a constant evolution, a constant sharpening to remain best-in-class in the market over time. So I don’t think we necessarily offer anything that differentiates us. What I mean by that is when we started in 2014, we thought the key differentiator was to have real-time traceability. Back then, you would get a notification three days after your parcel was delivered. If it was late, there was no way to reach out to customer service to try to expedite it, because there was no real-time visibility.

At that point, our differentiator was simply real-time tracking, but the market soon caught up. So the question again became, what’s the differentiator? How do we stay ahead of the pack? We came to believe being better meant being more hassle-free, not necessarily faster. So we examined our entire user experience to identify shipping pain points. For example, if customers couldn’t be home for a pickup, we wanted to give them the option to drop off parcels at a nearby convenience store, or in the shoe cabinet outside their door.

Andrew Roth: Are you starting to see an increase in competition because of the rise of e-commerce among the larger marketplaces?

Lai Chang Wen: I think the competition’s stiffened up from what it was three years ago, when the e-commerce market was growing exponentially and new players were coming in, starting express logistics businesses. At that time, the market was well served, and there was no capacity shortage or huge barriers to people shopping online.

But a lot of these new competitors were unable to find a clear differentiator, so they differentiated on price. And they obviously sustained losses, because this is a business where you need enough scale to drive the cost down, which allows you to price competitively.

But these new players priced themselves below the cost structures of even the large players, which led to an unsustainable, vicious cycle where players fought over price. But then a consolidation took place, and as the smaller players were squeezed out, the larger players got even larger.

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