If the many infrastructure projects across Southeast Asia have a common denominator, it’s steel. And in just 12 years, Singapore-based Mlion has become the region’s largest supplier of steel material for the construction of roads, bridges, ports, waterways, and underground tunnels, with offices in Malaysia, the Philippines, Indonesia, Thailand, Taiwan, and China. In 2021, Mlion launched GoListid, an online B2B steel marketplace designed to solve an industry-wide problem by allowing contractors to buy and sell used steel, saving money by eliminating the need to scrap it prematurely and reducing carbon emissions by prolonging its life span. In this episode of The Venture, Mlion chairman and CEO Eric Leong sat down with McKinsey’s Tomas Laboutka to discuss the creation of GoListid, why he thought it made sense to disrupt his core business, the importance of culture and talent, and his plans to eventually spin it off.
Tomas Laboutka: Eric, great to have you on the show.
Eric Leong: Thank you, Tomas. Excited to be here.
Tomas Laboutka: You’ve led Mlion for more than ten years, disrupted an industry, gained traction, and done what many might consider impossible in a very well-established sector. And then, seemingly out of nowhere, you’ve started looking beyond the core business. What led you down this path? Why disrupt yourself?
Eric Leong: Mlion has been supplying steel to the waterfront and underground markets for the past 12 years. And during this time, we’ve become the leading supplier of steel material for ports, bridges, waterways, roads, and underground tunnels across Southeast Asia. The core business has actually grown very well—three times in the past three years—and we were grossing close to $200 million by the end of 2022. One of our core products is sheet piles used in retaining walls, and we’re the largest distributor across Southeast Asia. One of every three piles installed throughout the region passes through our hands.
So why did we want to venture into something completely different? Because of our vision, which is pioneering innovative solutions for tomorrow’s challenges. As the founder of the business, I’ve always felt it was very important to address challenges facing our industry. And one of the challenges we faced was reusing steel multiple times to prevent it from going to scrap. The layman may think steel used in the construction of a building is permanent, but steel can actually be used in a temporary manner as well.
Take, for example, the Apple store at Marina Bay in Singapore that’s floating on the waterfront. We supplied all the steel going into the construction of the foundation. But once the foundation was completed, a lot of that steel was removed. The problem starts when the contractor can’t find a buyer to get rid of this material, leaving their cash stuck in these assets without knowing when they’ll need it for their next project. Typically, these contractors find people like us who sold them the steel and ask us to find them a buyer. Despite calling our entire contact list, which requires an army of sales reps, it’s not very often we succeed. And if we can’t find a buyer immediately, this steel, which can have a life span of five to ten years, is prematurely scrapped.
You may think that melting down steel into scrap and re-creating it is a good idea. But the process of making steel is incredibly carbon-intensive and energy-intensive and emits approximately 1.8 tons of CO2 for every piece of new material produced. So we asked ourselves: How can we solve this problem? We looked at various industries, including preowned cars, and realized a digital solution may be the best way to go.
Going digital would be much faster, allow us to reach a large audience, and scale at a much faster pace. Instead of deploying more sales reps in more places, we could do it all with an online system. That’s why we decided to build GoListid, our B2B platform, which allows our customers to list items and give steel a second lease on life, reducing carbon emissions. The platform aggregates various suppliers of steel, and we remain the middleman to help both sides solve all the nagging problems of logistics, financing, operations, trust, and transparency.
Building something beyond our core took a lot of guts, to be honest, since it’s tech related and we had no tech background or tech team when we thought of it. It was somewhat of a risky move. But as an entrepreneur, to me the upside is greater than the downside. And sometimes we have to take these calculated risks and make these decisions. In a mature industry like steel, if not us, then who?
Tomas Laboutka: Eric, it sounds like 101 reasons to do this. There are a few I want to highlight. First, you’re pursuing a bigger vision than the one that led you to start a company that’s now a category leader. Because you’ve learned about pain points within the industry, you discovered an opportunity to pursue the problem of reused steel as part of the vision. And your deep industry insights gave you the foresight to adopt a digital solution. What gives you the right not just to play but to win? Why should GoListid be the undisputed winner, just as you’ve achieved with Mlion?
Eric Leong: I would be more than happy if a well-funded start-up wanted to come and compete with us, because that would bring huge attention to the industry. When we started this venture, we knew we had the right ingredients. We already had a solid base of B2B customers with Mlion, we had a trusted brand, and we were already the market leader. We also had a good balance sheet, the financial capabilities, and an existing distribution network.
But bear in mind, we were building a B2B platform that isn’t just a listing system. We’re not like an Sgcarmart for cars or a PropertyGuru for houses that just sells listings. We are effectively more of a Carro-like platform, dealing with both buyers and sellers. And we don’t allow each side to talk to the other, maintaining our position as the middleman.
Our position as market leader makes it all the more unique for us, since we have offices across the region and the logistics capabilities to move materials conveniently through our existing network. Every year, we transact about 200,000 metric tons of material, which gives us much better freight and shipping-line options. So we already have a trusted network of customers that gives us a solid base to build from.
When you talk about the right to play or the right to win, when we first started this venture, we toyed with the idea of adding more items into the mix. We started with steel, and then very quickly we started talking about adding heavy machinery, which is a complementary item and you’re talking to the same sellers and buyers. We thought it was a great option. But when we started to delve deeper into the heavy machinery sector, we quickly realized that we didn’t have the expertise that we did with steel.
When we look at a piece of steel, we know the quality, the grade, and if it’s suitable for reuse. But when I look at a crane, I can’t tell you whether the engine is good or not. We didn’t have the expertise in-house. And this kind of information doesn’t come overnight. It takes years of understanding the intricacies of an industry.
That kind of conviction takes time to build, and we just didn’t have that for heavy machinery. And I think it was a blessing in disguise that we took heavy machinery out of the system. We wanted to start with something we were comfortable with and had the branding for, and we had the existing warehouse staff and operational capabilities we could easily leverage to get us off the ground. That was our unique value proposition. So, like I said, if there is a well-funded start-up that wants to come and fight us, we more than welcome them, because I think we’ll fare well against them.
Tomas Laboutka: I love the confidence, which is underpinned with facts and foundation. You have customers, operations, logistics, warehouses, a brand, and a balance sheet. But importantly, you also have the insights and the expertise. And I think it’s very clear why you’re so keen on competition coming in, since you’re ready for battle. Despite your unique advantages, there must have been challenges when reaching product–market fit. What were some of the chicken-and-egg problems you had to crack?
Eric Leong: There were plenty. First off, getting people to change their behavior and use an app, because the steel industry is notoriously backward. We still have people in our industry who don’t even have a website and still survive. So getting people to use a mobile phone app or web application was a huge challenge. It took time and a lot of education to show both the buyers and sellers the benefits they could achieve by working with us and the platform.
Once they understood, they saw the difference in terms of customer service, speed, and efficiency and had no issues using the platform. In the past, they sometimes had trouble reaching us by phone if we were stuck in meetings. But now, we have an online customer service team that replies immediately. And sellers, who used to deal with 20 different buyers, now just pass their item to GoListid, which deals with everyone instead. That removes a lot of the pain points for them.
Of course, getting an ample supply of material was the great challenge at the start, and Mlion had to take an active role in sourcing a lot of this material, which, as you said, is a chicken-and-egg problem. If you have nothing to sell, no buyers will come on board, so we needed to kick-start it on our own.
Within the team, our North Star metric for the platform was receiving ten times more inquiries than we used to get. We also wanted to see five times more customers coming on board versus our core business. We chose not to look at making money at the very beginning. We said, “Let’s see how we can attract people to change their behavior, come on board, and trust that the system will work for them.”
Through the course of building the venture, we changed the concept a couple of times. We started off thinking we could simply sell listings for maybe $50 or $100. But when we spoke to customers, we learned that just selling listings wouldn’t work. They don’t care whether you earn $50 or $100. They need to sell their steel, so even if you take a 2 percent cut, that’s fine, as long as you find a buyer.
That’s when we realized we needed a platform to connect buyers and sellers effectively. Of course, every seller wants a high price, and every buyer wants a low price. So how do you bridge that gap? We decided to create a “cash-advance” model, unlocking the value of this steel by advancing 80 percent of the scrap value to the seller. Because if a seller has a bunch of steel and can’t find a buyer, they scrap the material right away, for a low price.
We help them give us more time to find a seller by advancing 80 percent of the scrap value. Instead of settling for 100 percent of that small scrap value, it increases the chances of us finding a buyer at an ideal price. It’s the best of both worlds. Sellers can start using the advance on their next project, while we buy the time we need to sell their material, which is something no one else in the industry is doing.
They can always redeem the item if, for example, two months down the road, they win a new contract and need the material back. It’s a whole new concept, and it was very well received by the industry, which realized this was something they really needed. But trust on both the buyer and seller side is very important.
There were other innovations we introduced, like a rust-grading system. Every seller will say that their steel material is in great condition, and every buyer will nitpick and say, “Look, it’s rusty here; it’s not in good condition.” That’s why we created a transparent, five-point rust-grading system, so if we appraise the material as rust grade 2, both parties know it’s rust grade 2.
We had to solve so many of these kinds of pain points, and every time we learn and stop, pivot, and change direction a little bit. These insights drove us to solve more pain points, ultimately meeting what the customer really wants. But I think it’s still a work in progress, and we foresee that when we move into other regions as we expand, similar and maybe even new issues will need to be solved.
Tomas Laboutka: Before we go to expansion, there’s a lot to unpack. The common thread I really like, which I tie back to the vision, is the North Star. You’re very clear on the behavior you want to see: ten times more sellers and five times more new customers. You’re clearly iterating and pivoting along the lines of all the problems you’re discovering, adding benefits to GoListid. Then you start cracking more difficult problems by introducing the cash-advance model, and it’s all geared toward the North Star. You have offices throughout Southeast Asia and are moving quite a lot of steel around the region. How do you allocate the resources for cross-border versus just building within a country?
Eric Leong: Cross-border is a very important play for us, because typically, most buyers and sellers know roughly what’s available in their own markets. We see the potential of GoListid in the cross-border play, because pricing, demand, and supply vary drastically once you cross borders. And that regional play is tailor-made for GoListid, because Southeast Asia is our home ground, and as the market leader with multiple offices, we’ve got the ability to import and export within all these countries.
We hope to become like an eBay for steel material, where you can type in the item you’re looking for and then get a whole list of how much it costs in, for example, Malaysia or Indonesia, plus shipping to your destination. We want to double down when it comes to the cross-border play, and that’s why our focus in the next few months will be to launch GoListid across all our offices in Southeast Asia.
We see a lot of potential, even in places like Vietnam, Cambodia, the Philippines, and Myanmar, where there’s a lot of demand for preowned steel material. But of course, we have to be good at home first. That’s why we soft-launched in Singapore and then started work in the Philippines. We are going to move across the entire region, and I think that’s going to be the model we can use to grow.
And Southeast Asia may not be the end-all. We are looking beyond this region, but not at Southeast Asia sending steel material to Europe. We think every region should work with its own region, due to the huge cost of logistics. For us, moving steel material around Southeast Asia is workable, and similarly within Europe or the US. That’s where we see the longer-term concept. But we want to start with Southeast Asia and double down on that strategy first.
Tomas Laboutka: That makes a lot of sense, Eric. You are following pain points of the customers. You see the lack of transparency with pricing between markets as a challenge but also an opportunity GoListid can offer as a benefit. You start iterating in a country with a clear vision that you’re going to expand regionally and pay attention to the cost of logistics so you can scale. Focusing on new-business building is top of mind for many CEOs, and those who do outperform the market by something like 67 percent. But eight out of ten CEOs tell us that finding the right resources and talent is a real challenge. You’re building digital solutions that were not core to your business before. How do you go about attracting and then incentivizing and leading new talent?
Eric Leong: It was a challenge at the start, definitely. In the first place, attracting talent to the steel industry is not an easy task, since people don’t find it very sexy. And over the past two years, while we were building GoListid, there was a tech boom during the pandemic, with tech companies offering high salaries. So we faced huge competition for talent, but at the same time, we realized we needed people from the outside to come in and help us. If I wanted my guys within the industry to build this for me, I think it would be a major challenge. We needed an outside perspective without the burden of knowing the steel industry. Because if I asked anyone in the industry, they would say, “You know what? Nobody’s going to use your app.”
I needed people who believed that a tech platform could work, and we started by hiring a vice president with a tech background. I think one of the reasons we managed to attract him was being able to prove this business model really works and isn’t something far-fetched or nonexistent. We were already the market leader in this business, and we were just trying to change people’s behavior. I think he could see where we were coming from, the idea we were trying to build, and, of course, the talent we already had in-house.
For example, we had operational capabilities to support him and people with know-how—people who could touch the steel and know what it was worth. We had to give him the confidence to know he would be able to build the platform and rely on our expertise. And once he started seeing a couple of deals being done, he started to believe in it.
On the commercial side, we had to show him this was a viable concept, and we were not afraid to let him speak to some of the customers. When he did, he could sense there was a need for some of the solutions we were providing. I think that resonated for him, and from there, he could build his team, as well as a customer service team, who could also understand where we were coming from.
Tomas Laboutka: The anchor hire for you was a vice president, and I see a common pattern. You were able to show him an existing business, let him speak to customers, and let him learn their pain points. You proved you have the expertise and can actually deliver and that you needed him to come in to build this business—but not from scratch. You have a unique platform you can build on your own, and the chances of success are dramatically derisked and very high.
Eric Leong: That was how we started on the commercial side of things, because we needed a dedicated team to keep building and pushing forward. If I took people from my core business, it would be very difficult to balance, because the core business is still growing fast. We needed a new team without that legacy, but with the support of the core team.
We also needed new people on the tech side of things to avoid reliance on external vendors, which can be extremely slow and difficult when you want to make changes. Without our own in-house tech team, we could not be agile. We needed our own team to build, support, and continue to grow this platform. We needed to start building further iterations and put more technology into the platform to keep it unique. There’s no reason any other steel company couldn’t attempt to do what we are doing, so we wanted a big head start.
Our new vice president of software engineering has built a lot of platforms for enterprise companies, some B2C and some B2B. He’s working with our tech team to give us better clarity and road mapping of where we want to go, as well as better control if we need to rely on any offshore or third-party vendors. We’re also looking at AI to advance the platform, putting more machine learning into the system.
But the tech team was difficult to find and retain, because people would come in, look at the salaries, and say, “Why do I want to join the steel industry?” But in the end, it always comes back to the vision, and they need to understand we are building this innovative venture to solve a problem in our industry. If they don’t see that vision, in this or any other job, they’ll never be sold.
Tomas Laboutka: I think the vision, and connecting it to how each team member can contribute, is critical. And I can see how that’s something you intertwined throughout the building of this new venture and tied it back to the customer’s needs. This is your brainchild, you saw the pain points, you had the vision, you wanted to disrupt yourself after building a successful business, and now you’re handing it over to a new vice president and team. How do you make sure the new guys will give it their all? Because you can’t be steering two ships at the same time.
Eric Leong: Good question, and it’s really close to my heart, because I’m a hands-on guy. When I first started the business, it was just two of us, and we actually touched every single piece of steel we sold. It takes a little bit of letting go to not get too heavily involved. I think that’s the same problem every entrepreneur faces. We like to actually touch things, and we like to get involved in things. We are hands-on people. I spend about 15 to 20 percent of my time on GoListid right now. We also have another venture called GoTagID, which I also spend the same amount of my time on, with the rest of my time spent on the mothership.
I think it’s about governance. We set the rules and certain parameters for the team to work within and have to trust they will be able to deliver. I think one of the things I learned over the past couple of years was that you have to trust your talent to do the work, because they know it better than you. I can’t code better or build a platform better than they can. So you give them the vision, you give them the direction, and you give them the North Star. But you have to check in with them constantly to make sure they’re on track.
The other point is that we also try to use technology to reduce human errors. For example, when we inspect our steel material to come up with a rust grading, our AI system will validate that a rust grade 3 is really a rust grade 3. But ultimately, we need the team to be independent so it can scale. Today it’s in Singapore. But we are busy launching in the Philippines, and if we end up in eight different countries, how am I going to be sitting in every single office checking what’s going on?
The only thing the mother company still has some say over is pricing, because it takes time to transfer that knowledge to the team. We expect to allow the team to make such decisions maybe within six to 12 months, so within a year they should be independent enough. Ultimately, we would like to spin GoListid off as a separate entity, and Mlion will provide support for it to make sure it’s well known in the market. But once it has established its credibility, it should be able to stand on its own two feet.
I think for any venture to grow and scale, you need to trust your people to do the work. Culture is also very important. When we hire talent, they need to learn to think the same way we do and share the spirit of what we’re trying to do. You can be a great worker, but if you can’t adopt the culture, it will always end in a big clash. New hires need to understand what we are trying to do, what we are trying to build. When they can think that way, there’s no problem letting them make decisions.
Tomas Laboutka: Eric, this has been a phenomenal conversation. I am grateful about all the ground we’ve covered, from the vision to the right to play and win, how you’re leveraging throughout the product–market fit, how you think about scaling, and, ultimately, how you’re building the team. There’s so much we can learn. Really appreciate the time and the transparency with which you shared these lessons.
Eric Leong: Thank you, Tomas. It’s been a pleasure.