So what went wrong with Honestbee?
Honestbee's business model seems to lack direction. The company was involved in too many initiatives, going into grocery delivery, food delivery, laundry delivery, parcel delivery, ticketing, retail, and food & beverage. In addition, Honestbee seemed unsure about allocating its resources and capital, resulting from an unclear direction of the company.
It had shifted away from its initial asset-light business model of grocery and laundry delivery), opening Habitat, a 60,000 square feet retail and dining experience. This transition requires a change in the mindset of the leadership team and a different way of running the business.
We can compare the two distinct asset-light and asset-heavy business models by looking at Honestbee's grocery, laundry and food delivery business which followed an asset-light model, and Habitat by Honestbee, which followed a heavy asset model.

As illustrated, we have highlighted the differences between the 3Ps and the funding requirements for both business models. Management must be clear on how to execute and break down the process to avoid confusion for the operational team, especially when the company is running both business units or migrating the business model.
Employees must be briefed on the differences between both business models, be aware that there will inevitably be opposing viewpoints, exercise caution, and ask for clarification. The inability to know what initiatives are a priority and the final agenda that the business is driving might not allow the company to move forward in one direction.
Ensure that the management clearly understands the business strategy and often meets up to tackle issues. Arrange a weekly meeting and track progress with the head of departments. Be more empathetic and understanding and actively listen to the team's feedback and insights.
Honestbee's vast expansion of the products and services and overseas market expansion also led to the inability to consolidate its operations. In addition, cutting across different verticals will require additional requirements, processes, and skillsets.
Entering into food delivery services meant that the service would become more time-sensitive with shorter turnaround times for the peak lunch and dinner periods, compared with laundry and grocery deliveries. Maximising the delivery fleet and allowing more turnover on the delivery is one leverage point Honestbee should have taken advantage of.
The scalability of the grocery delivery is much simpler than the rest of the offerings. Honestbee can focus on fostering partnerships or business deals with key supermarket partners such as NTUC Fairprice, U Stars in Singapore and Robinsons in the Philippines for grocery delivery. They can identify a few flagship stores to serve the shoppers' requests. However, food and laundry delivery offerings require the team to work with smaller players. The inability to consolidate the process for both upstream (internal team) and downstream (delivery fleet) have made the fight of resources between the offerings.
For example, the increase in the complexity of its operational execution would require the buy-in from Honestbee's fleet of freelance delivery drivers. While drivers used to pick up and drop off at designated points, expanding the delivery industry gave drivers additional responsibility for delivering products, such as ensuring that all items transported were handled properly.
With both an asset-light and asset-heavy business model, it's not easy to operate the retail and dining concepts without proper training and experience. Habitat would have required different operational systems. Unlike freelance shoppers and delivery staff, Habitat requires active sourcing and management of its employees, products, and ingredients. As a result, it needed a change in how its operations were set up. Furthermore, because the business units were diverse and required distinct procedures and skillsets, integrating the company's skill set to suit the needs of its multiple business units became increasingly difficult.
Honestbee diverse offerings cut across many verticals. However, a crucial question is how the company reviews its KPIs and its approach to growing its products. When businesses launch new products or services, it is important to set up Key Performance Indicators (KPIs) and have a system to review them periodically. In addition, entrepreneurs need to consider the company's assets and strength to leverage them to grow the product and make hard decisions to discontinue products or services if they are deemed unsustainable.
In Honestbee's case, it appeared to be pursuing a path of rapid expansion, growing its products and range of services while simultaneously expanding into different markets. This is evident in 2018, where there are five new markets entries and the launch of three new products. This increased the complexity of the business and the tracking of product KPIs, as various business units may not have had the time to stabilise their operations. Thus, despite its rapid growth, by the end of December 2018, Honestbee was making losses of USD 6.5 million.
Honestbee had issues in its spending, approach and priorities. Honestbee was great at starting new initiatives. However, it could not scale these initiatives into a sustainable business model. Instead, it seemed to prioritise resources based on the possibility of raising the next round of funds. As a result, despite having strong financial backing, Honestbee's funds began to drain as the company switched away from how it had successfully scaled up its business at the start and became less careful in its spending.
Shifting to the asset-heavy business model of retail and dining concept Habitat required more significant expenditure from Honestbee. According to the
Business Times, Honestbee suffered an unaudited net loss of USD 98.7 million for 2018. It achieved USD 73.9 million in revenue for 2018. Still, it spent USD 84.3 million on goods and logistics, resulting in a gross loss of about USD 10.4 million. It had also spent USD 37.6 million on salaries in 2018 and USD 20.5 million in H1 2019, with around 600 staff in Singapore and another 200 in other countries excluding its freelance personnel before its layoffs. In October 2019, an exit
email to staff by Joel Sng indicated that the company still had a spending rate of around USD 5 to 6 million per month, USD 3.5 million of which was to cover employee salaries.
Media reports also highlighted the three following transactions in a lawsuit against former CEO Joel Sng, which, according to the company, was believed to have contributed to Honestbee's financial difficulties. A House in Niseko, Japan which amounted to approximately SGD 1.5 million (USD 1.1 million), the rent & expenses of a unit above Honestbee Habitat, which amounted to SGD 612,000 (approximately USD 448,000), and the purchase and subscription of PayNow* shares for SGD 7.4 million (approximately USD 5.4 million).
*PayNow was a company incorporated by Joel Sng, which was developing an e-wallet solution and not linked to the digital fund’s transfer service provided by several banks in Singapore
We have noticed the constant changes in Isaac Tay position in the sequence of events. From 2015 – 2018, Isaac Tay updated his post yearly and was never appointed as a COO. Then, in 2018, Isaac Tay (VP of Special Projects) left the company.
The company's management was taken from Joel Sng in May 2019 by their investor Brian Koo from Formation8. You can find detailed information on Brian Koo's funding and his experience in the Funding Section.
Brian Koo replaced Joel Sng as interim CEO in May 2019. Within two months, Brian Koo has appointed Ong Lay Ann as CEO. According to Brian Koo, Ong Lay Ann was selected as an exceptional business leader with a track record of turning businesses around. Ong Lay Ann had leadership experience in IT, commodities, real estate, and infrastructure. For example, he had successfully turned Australian precast concrete manufacturer Perth Precast around to list on the Australian stock exchange. Shortly in September 2019, Brian Koo stepped down as Chairman of Honestbee.
By the end of July 2018, the last remaining founder Jonathan Low (CTO), resigned within the same month when Ong Lay Ann was appointed as CEO. Shortly after, Varian Lim was appointed as the Chief Operating Officer (COO). This is a position that no one in Honestbee previously held for four years.
Varian joined Honestbee in December 2015 as Vice President, Corporate Strategy. He co-led the project management and launch of Habitat by Honestbee, was Honestbee's Vice President, People from January 2017 to January 2018 and its Chief of Staff from May 2019 to October 2019.
The appointment of a COO earlier could have helped Honestbee consolidate its operations, keep track of its expenditure, set up processes, track critical data to review KPIs and targets, and inform decision-makers about the state of its funds. Besides playing an essential gatekeeping function, a COO could also align the reporting structure in the company, clarify the decision-making processes, establish financial controls, and provide the company and employees with direction in terms of who they should be reporting to and who should be making the key decisions. Therefore, a COO would have been crucial to Honestbee as its business operations grew.