In March, Pai Somsak Booknam watched in horror as the revenue for his eco-tourism travel company Local Alike dropped to zero.
For 10 years, the company introduced thousands of travelers from across the world to Thailand’s rural communities. Offering bike rides through rice fields and sleepovers with elephants, the company paid local residents to give tours and host visitors. Having grown up poor in the Thai countryside, Booknam was proud of what he built.
And then, as a novel coronavirus threatened the world, it seemed it could all go away.
“I couldn’t imagine how I’d manage to survive,” he said.
The startup began with only four employees in 2012, but now Booknam was responsible for 40 people’s jobs. As a national ban on recreational travel and a domestic lockdown wiped out all of his income, Booknam knew he needed a plan. He called an emergency brainstorm session.
‘Nobody Would Get Laid Off’
Every employee joined the call, and Booknam asked for their help. He had three goals: Nobody in the company would get COVID-19; Nobody would get laid off; The company would come up with at least two new business models.
Within two hours, he says, the group had figured it out. Two weeks after his company lost all of its business, Booknam had two new verticals up and running: a chef’s table delivery service called Local Aroi and an e-commerce service that sells locally produced goods called Local Alot.
“The dynamic of the team is very good, very agile, especially for a small company like us.” Booknam said. “They were really willing to change their mindset.”
Now in September, Local Alike has replaced all the revenue it lost, and no employees were laid off. Booknam still considers the company to be “surviving” rather than doing well, but amid a glum forecast for Thailand’s overall economy, his survival is an outlier.
Many travel companies in Thailand lost all their revenue when the pandemic hit and many didn’t recover like Booknam did, says Pun Jaruthassanakul, a senior investment manager at 500 Tuktuks, a $10 million East Asian venture capital microfund. The fund, has invested in 70 companies in the Asian Pacific region, is part of the 500 Startups fund family. The Silicon Valley venture capital network has funded over 2,000 companies globally.
In the last decade, there’s been a concerted effort in Thailand to grow the startup economy. The country is now home to hundreds of startups, though only a few of them have been able to compete on the international stage. None have reached an IPO. Now, as tourism and trade stall because of the pandemic and Thailand barrels toward a recession, hope that the country’s startup ecosystem will match the success of neighboring countries like Vietnam and Singapore is dwindling.
Yet Local Alike’s success points to a more hopeful future for Thai entrepreneurs. The company’s resiliency and ingenuity in a time of crisis could make it a North Star for other startups to follow.
How Local Alike Was Born
Where Booknam grew up, in the Isan village of Roie, there weren’t many options for work. In the poor rural village, you could either be a laborer for some larger company, or work in agriculture, he said.
But he managed to leave the village, go to school, and eventually get a job as an engineer in Bangkok. He found himself unsatisfied, wishing he was doing something to help the communities he grew up in, Booknam said. He decided to quit his job and spend all of his savings on an MBA program at Presidio Graduate School in San Francisco.
After graduating, Booknam returned to Thailand and interned for a foundation helping hill tribe villagers develop businesses in Chiang Rai, Northern Thailand. Chiang Rai sees a lot of tourism, and Booknam saw first hand how little the people who lived there benefited.
“I saw Thailand’s tourism as one of the very big chunks of money that we, as local communities, can tap into. But we weren’t doing it,” Booknam said.
With colleague Noon Suratchana Pakavaleetorn, he started a company supporting community-based tourism.
“It was a combination of my personal pain and also the opportunity for local communities that I saw,” Booknam said.
The idea was to seek out leaders in small communities to connect with local businesses, factories, lodges, nature reserves, and then negotiate with these community members to provide an authentic Thailand experience for Local Alike’s clients.
Local Alike Beat Airbnb To The Market
Travelers interested in a more off-the-beaten-path vacation can pay anywhere from $25 to $230 to visit tea plantations, stay in a camp with elephants or take a Thai cooking class with a local chef. The concept is almost identical to a feature Airbnb added in 2019, Airbnb Adventures, except Local Alike lets the villages and communities decide what services they want to offer and how many tourists they can support.
“The communities keep their traditional culture, but we just bring our clients into that community,” said Local Alike marketing executive Itthiphat “Gunn” Luiam.
Luiam said the company has attracted more than 32,000 travelers to Thailand since its founding, and had expanded its travel destinations to other countries like Indonesia, The Philippines and Vietnam.
Then it all stopped. Thailand was the second country to confirm a COVID-19 case in January. But the government responded swiftly, gaining praise from the World Health Organization for its rigorous policies to prevent the spread of the virus, which included a full-stop lockdown and a travel ban beginning in mid-March.
“We were scared because there were no tourists. International and domestic, everything was shut down,” Luiam said.
But Booknam launched his new verticals quickly. Fortunately, Local Aroi (“aroi” means delicious in Thai) was already in the early stages of development before the pandemic hit. Booknam had the idea several years ago to enlist chefs from rural villages in Thailand to travel to people’s homes in Bangkok and cook for them. The service costs 2,200 Thai baht, about $70. When the pandemic hit, and the cooks were no longer welcomed into strangers’ homes, Booknam’s team had the idea to start a chef-to-table delivery service. They bought local ingredients and developed their own recipes, individually packaged the materials and placed them into woven baskets to be delivered — similar to Blue Apron.
“Our tour guides had to turn themselves into chefs,” Booknam said. “We kind of asked them voluntarily like, ‘Who loves to cook?’ There were some people who raised their hand saying, ‘Ok I’m willing to learn’.”
Former tour guides also worked as delivery drivers, transporting the baskets to customers in Bangkok within 48 hours. Booknam said he had looked into partnering with prominent Asian delivery services like Grab, but they were too expensive and he felt he could pay drivers more directly.
Up At 3 a.m.
The goal was to make 10,000 Thai baht per week from Local Aroi, to begin making back the revenue Local Alike had lost. The first few weeks, facing competition from other delivery services in the region, Booknam’s team only made about half. So he and several employees got up at 3 a.m. to make 100 to 200 boxes of breakfast bowls. They sold them outside government buildings, because government employees still had to go into the office. The staff lost some sleep, but they earned the additional 5,000 baht they needed, Booknam said.
““I will say, I’m very happy with my team’s spirit.”
Local Alot, an Instagram platform that repackages and sells the goods of local Thai vendors, was an easier success. Booknam said he made $3 million Thai baht within 45 days through selling goods on the new platform.
He said it was easy to build a customer base for Local Alot products, because so many people in Bangkok already followed Local Alike on Facebook. He also asked his vendors in the community to make products that were in high demand, like masks.
“I was so surprised how willing they were to work with us. They never said no to us,” Booknam said. “We’ve worked with them for 10 years now and it’s paid off.”
Bookman is still worried about what the future will hold. Despite great success in managing coronavirus, Thailand’s drop in tourism sparked financial turmoil. The economy shrunk 12.2% in its second quarter, the worst decline in 22 years. And 8.3 million Thai workers are projected to lose their jobs, according to a World Bank report.
The government has incentivized domestic tourism by designating a series of long weekends, encouraging corporate employees to take a vacation, and even subsidizing the cost of individual family’s hotels and travel costs. This has benefited Local Alike, Booknam said. The company has already booked 400 packages for corporate groups and families to vacation in the deep south of Thailand.
But if the economy continues down this trend, it’s likely that Thai people will lose a chunk of their recreational spending money, which would make it hard to survive.
Right now though, Bookman says Local Alike will turn a profit by the end of the year. This is a feat for any travel company in Thailand during the pandemic, says Steve Cheah, managing director of the Global Entrepreneurship Network (GEN) Thailand.
“For Local Alike to come to where it has now, a large part of it, I’m talking about 80- 90%, is all the work he (Boonkam) has put into building the network and the content, and the marketing he has done,” Cheah said. “It’s hard work.”