Case Study: How this young entrepreneur thought of his brilliant business idea

Peerex Case Study Business Idea

Meet Kai, the founder and CEO of Peerex. When searching for inspiring entrepreneurs to interview for these case studies, I came across Peerex from Betalist, a place to discover new startups. At first glance, I thought his idea was fascinating because my friend had also thought of a similar idea a while before. Nothing was pursued so it was awesome to see someone else on the other side of the world (Singapore) create this business.


 Kai’s story about how he got to where he is today, the inspirations that led to this awesome business idea, and the roadblocks faced all have key takeaways that we will dive into. These insights will help any aspiring entrepreneur think of better and new business ideas in the future.



Kai’s First Taste of Entrepreneurship

Empty Kitchen with one chef

First, let’s dive into Kai’s background and first experiences in entrepreneurship so we can better understand how Kai thought of his newest business idea. Overall, Kai has started and winded-down two business in his life while taking various jobs in between ventures. His first company was an ice-dessert cafe that he and a few friends started. They signed a small lease in a mall nearby and ended up hopping on the trend at the right time. Sales were great, and the business was running very well until something drastic happened. The company they were buying their supplies from had a proprietary mix that they were going to sell directly to consumers, instead of having ice-dessert cafe shops where consumers would go. The customers quickly dried up after this launch and they had to close up shop. A somewhat startling experience for an entrepreneur. Kai, however, learned a lot from this experience and walked away with a positive mindset.


The second venture that Kai started was an online ticketing platform. Singapore only has one company that sells tickets online for events and they take advantage of their monopoly status. The ticketing platform also only disperses the ticket sale funds a month after the event and takes a large commission charge. With these problems in mind, Kai and his friend saw this as a perfect opportunity to pursue. They quickly gained interest from their target market and ended up partnering with someone who wanted to use their ticketing platform. However, in final minutes, the deal fell through and the concert was canceled last minute. Kai ended up having to wind-down the company over the course of a year and deal with refunding several customers from the canceled event.  The major lessons that Kai learned was that you shouldn’t start a business strictly for money. The crushing blow of having their initial customer back out, and having to deal with the refunds was enough of a setback that they shut down. Neither Kai or his friend had the energy to continue because they initially started the business with a profit mindset.


From both these experiences, Kai was able to learn a lot, and although the two businesses did not last till this day, it allowed him to exercise his entrepreneurial skills to the point where he is ready to develop a cool app as a business now. Kai specifically stated that his past experiences have played a significant role in the ventures he has started.


“Never start a business because you are in it for the money. You need to be passionate about the idea to get you through the hard times.”  - Kai


The Business Idea

Peerex is an app that allows you to pick up local currency from a nearby Peerex merchant and charges the transaction to a credit card. It solves the problem of having to find a bank and pay the high exchange rates to change small amounts of cash. Since credit cards are an international payment method there is no more need to rely on street vendors that have unfair exchange rates. The rates that are charged by the merchants that provide the necessary cash are fairer to encourage use. Lastly, the percentage fee instead of a flat commission rate allows for a better value when transferring low amounts of cash.


The Inspiration

Kai had his first inspirations for this business idea when on his way from the hotel to the airport in Korea. When it was time for Kai to pay for the bus and head to the airport, he made his way to board the bus. The driver notified him that it would cost a few dollars in Korean currency. As Kai checked his wallet, he became deeply saddened when he saw only Singapore dollars and no Korean currency. Frantically, Kai looked around for what to do. An ATM was spotted, but he quickly realized that it would cost him $5 to take out $ frustrating! So Kai made his way to the closest bank to exchange what he had in his wallet for some money to pay the hotel. After waiting in line for a long time Kai finally reached a teller. She quickly notified him that the minimum exchange amount was $50. Applaud but feeling helpless, he exchanged his Singapore dollars for $50 worth of Korean currency. Now with a significant amount of Korean cash, Kai headed for the airport back to Singapore.


man smoking with money

Having realized all his frustrations and barriers, he consistently asked himself why there is not an easier solution. “Why can you hit a button on your phone and get a ride? But you can't push a button and get cash.”, Kai thought to himself. There must be a way with online money transfers. He also realized that all the necessary infrastructure was available to make this happen. The initial question that brewed in his head began:

“How can I get cash from a local and pay them back using an online payment method?”


The Focus Groups

Upon some initial market research, Kai interviewed about 20 other travelers and they reminisced in the same pain that he had felt.These focus groups were able to validate some of the initial thoughts about the business idea. Kai discovered that travelers are quite concerned about the amount of cash they bring on their travels. They don’t want to bring too much and create danger because they are carrying around so much money, but they also do not want to run out on in the middle of their trip. It can be especially inconvenient if they are in a place that does not have banks or ATMs. Due to this worry, it was quite common for people to end up with $3-$20 in leftover currencies from their travels in various countries. After a while, it adds up and there's not much incentive to exchange it due to the high fees that banks charge. You almost end up paying about 10% of your money in fees!


The Business Idea Validations

One major concern that Kai heard from his focus groups was the vulnerability and security of the people exchanging the money. They were concerned about having to possibly meet someone in a sketchy alley or meet with a sketchy person. Another concern was also if they received fake currency. Then they would be out of luck with their currency exchange completely!


Buy Sell Exchange outside

To further validate his idea, Kai performed competitor research to determine where Peerex would stand against the others. The first competitor is street exchanges. This is usually some guy who has the local currency and will charge you very high exchange rates unless you can bargain them down. In Kai’s focus groups, he discovered that millennials did not like using the street exchanges because they think it is unfair and unnecessary to have to barter for a decent rate.


Secondly was the ATMs. They had the power of being convenient, as in they can be everywhere. The main concern for Peerex with this competitor was that if the merchants were far away people would use ATMs purely because of the convenience. Additionally, the locations they were in were usually always safe, but the downside was that not all ATMs accept all international bank cards.


Lastly, was the banks. He knew that the banks had a strong and trustworthy relationship with millennials and the focus groups confirmed this assumption. People trusted the banks because of the standardized rates, its safety, and security it provided regarding real currency being exchanged.  


With these confirmations, the idea of Peerex was born!


First Steps with Peerex

The founder’s first step was to partner with hostels. These were ideal partners because they were located in safe places and had already established trust with the traveler, and could easily carry large amounts of cash in a safe manner. The person managing the front desk of the hostel could also provide services for the currency exchange side. This formed a perfect combination for Peerex. The fee charged to travelers will be small to incentivize user growth, but also enough to build strong relationships with hostels and other parties involved.


Roadblocks from Idea to Product

Peerex App Screen Images

Many times in the beginning when Kai was solidifying the idea behind the product/ service, he felt frustrated and confused. Currently, there is a lot of discussion about the world changing to a cashless society, and this became a huge concern for Kai. He didn’t want to spend a significant amount of his own resources if he knew others were going to be putting efforts towards a cashless society. Thinking to himself, “would it be worth the efforts to start a company that promotes physical money culture?”. Kai began to search for the answers. After talking to several people in the financial industry and doing his own secondary research online, he found that there was a time frame of about five to ten years before anything huge would happen with cash. Additionally, he noticed that many developing countries still have a significant dependence on physical currencies, and this dependence is growing day by day.


The second issue he faced was finding reliable merchants to carry cash. At first, Kai thought it could be a human-to-human transaction for anyone but quickly realized there are significant trust issues with security of the person and the money. Being a traveler himself he called the local hostels in Singapore to discuss potential partnership methods. Luckily for him, the owner has six other hostels in Singapore for Kai to partner with. This was a huge success in the first steps on his venture that help solidify the idea.


The third and largest issue that Kai has faced so far is establishing a reliable payment gateway for the service. Initially, they approached Stripe, a large payment processing company, but they were rejected because their use case was too risky and different from other lending cases that Stripe was used to dealing with. The tight monetary regulations made it difficult to navigate initially. Not only were they having issues with setting up the fundamental infrastructure, but once his CTO (Chief Technical Officer) quit, he was feeling quite lost with how to move forward.


Looking at the problem, he realized he had two options:

1. Go forward with the idea and approach a program that supports Fintech companies in Singapore. This would allow him to test his idea in a “Sandbox” environment. Meaning he is free to do what he wants, as long as the program believes his idea is safe. Regulators get to see the good you can bring to the economy as well.


2. The other option was to approach Transferwise and use their API and other developer tools to provide the transfers. Although not ideal due to cost and limited currency pair support, it could be a temporary solution.


(Currently at the time of writing this blog, September 2017, Kai is pursuing the “Sandbox” program)


Last Tips for Aspiring Entrepreneurs

Kai strongly recommends that you try and find evidence that you have a solid business idea. Don’t be afraid to ask people. Approaching and talking to strangers may sound intimidating in the beginning, however, if you can get over the fear and the “No’s” then you can find that people have wise insights about your business ideas.


He will constantly ask himself “Why is this idea not yet already an existing business?” or “Why don’t you see someone who is already wildly successful with this idea?”. Sometimes we think we may be the first to have the idea, but the reality is that we are usually not the first. The idea has usually been thought up before and possibly attempted to be executed on. Doing a basic Google search can go a long way, Kai says. If you can kill your idea as quickly as possible, you will be a much better entrepreneur. Learning how to kill your idea and move onto a better business idea will take you far.


Kai strongly believes that if you can begin to answer these questions, you can identify the real problem to solve for your business idea. A great example of this is Stripe. A payment processing company. Originally, they had a different business that had a heavy reliance on a strong payment gateway infrastructure. Disappointed with the limited and crappy options available, they decided to pivot the company and become the payment gateway they needed in the first place. Elon Musk did this too when he wanted to bring people to Mars and have civilizations on a different planet. He then realized that he needed to solve the problem about space travel being completely unreachable to millions of people due to the high costs. These focus groups were able to validate some of the initial thoughts about the business idea. Both of these companies have become enablers for other companies to realize dreams, and create new markets. It is much more disruptive to follow this path, and you can find great success.


The key takeaways from this case study are:

  • Don’t chase after a business idea just because you think it can make you a lot of money.

  • Try to kill your business ideas that you have as quickly as you can, so you can move on if needed.

  • Start a company that enables others to reach their dreams, and you will have a strong business.

  • Find problems in your life and go out and see if other people experience that problem. For Kai, this paid off well.