A-List Couple

Meet the couple every Hong Kong fashionistas want to be friends with

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Shopping is a national sport of Hong Kong. So is lining up. If you merge the two together, you will get a recipe for success — at least according Diego Dultzin Lacoste and Delphine Lefay.

The French couple, who moved to the SAR three years ago, founded a flash sale business, On The List, a little more than a year ago, and have carved out a niche in a city which provides a staggering array of shopping options.

A recent event that Dultzin Lacoste and Lefay organized for British fashion label Ted Baker attracted 1,100 people in just two hours. Bargain hunters started to queue up as early as 6.30 am, waiting for an hour and a half to enter.

“The first time we did Ted Baker was during typhoon signal No 8. We really thought it would be a disaster,” Lefay recalled. “But we received phone calls throughout the day asking when we would open. The queue stretched two blocks.”

“We didn’t expect people would come out and shop but we discovered that Hong Kong people are really shopaholics,” added Dultzin Lacoste.

On The List operates on a business model different from traditional flash sale organizers. It does not have online retail but employs a bricks-and-mortar concept similar to outlet operators.

And rather than opening a store in the outskirts, they eyed prime shopping locations.

Two months ago, they set up a two- story shop on Duddell Street in Central, after a trial run of pop-up events. They plan to have other locations in central Kowloon and the mainland next year.

Another key concept is that On The List serves only registered customers. It currently has a membership base of 50,000 and has worked with many fashion and lifestyle labels – including Armani, Calvin Klein, Ferragamo, and Ports 1961.

Members have access to discounted past-season clothing, fashion accessories, electronics, and wines every week. The markdown averages about 75 percent.

“Each flash sale lasts three to four days. The time period protects the brand’s image. And from the brands’ point of view, they are able to sell all the inventory that they have in the warehouse,” Dultzin Lacoste explained.

The store can move a large volume of goods in days. They once helped Brazilian label Havaianas sell 13,000 pairs of flip flops in four days. “Some companies have stopped organizing flash sales themselves because we can sell a lot more,” Lefay said. “We are not competing with their outlets because we have items that can’t be found there.”

The business model that bridges luxury and mass market retail is not new. Dultzin Lacoste and Lefay got their idea from the success cases in France and the United States. But implementing the idea in a foreign market can be tricky.

It took Dultzin Lacoste and Lefay time to find the right strategy. The pair don’t always agree with one another.

In fact, when Dultzin Lacoste first met Lefay, they had a philosophical debate about rational and impulse purchase. Coming from a background in luxury retail, he valued sensibility over sense while she was in the mass marketing industry and preferred rationality.

“Delphine said her industry had much more figures to work with,” Dultzin Lacoste recalled the night they met. “I told her my industry made people dream. It was not only about the products, but the whole package and storytelling. So we had a big argument.”

Said Lefay: “I was not attracted by luxury brands because I could not afford them. I was 23 when we met, freshly out of university. Now, I can see why people are attracted to luxury products – with a good price. Diego has convinced me.”

Even so, the response from Hongkongers was a surprise. Brands have consigned expensive items, such as jewelry and watches. The most costly was a Frederique Constant watch priced at HK$450,000 before discount.

“The biggest order came from a woman who spent HK$92,000,” Dultzin Lacoste said. “She bought five items: a jacket and some jewelry. If she had bought them at the store, she would have paid a lot more for any one of those items.”

The married couple still fight over their own area of expertise. Said Dultzin Lacoste: “We argue about everything, which is good. But it’s more like we are brainstorming.”

Lefay agreed. “When we want to implement a new process, it always starts with an argument. When I want to insist on my idea, I sometimes don’t listen to Diego. But we are complementary.”

The article first appeared in the Standard on May 5, 2017.

 

Geek God

An attempt to decode a tech start-up genius

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Looking dapper in crisp blue shirt and expertly cut khaki trousers, Alvin Hung Yiu-kei looks too well groomed to be your average neighborhood geek. But as the proverb goes: you cannot teach a crab to walk straight so don’t be fooled.

“I became addicted to video games in primary school – so much so that I would take apart the computer codes to modify the characters I was playing to make them become invulnerable, and have unlimited attack points and money,” said the Hong Kong native.

Cashing in on his inner geek, Hung founded GoAnimate, a California- headquartered animated video creation company in 2007. The firm has produced 22 million animations via a cloud-based platform over the last decade.

Hung’s company also has offices in Hong Kong and Taiwan. And in his Sheung Wan office, a team of 40 local employees are serving 8.5 million registered users around the world, including the US government and universities in the Golden State.

Born into a family of industrialists, Hung chose a different path from his uncle Peter Hung Hak-hip and elder brother Marvin Hung Ming-kei, who still manage the family’s cooking oil and restaurant empire.

Hung’s late grandfather was founder of the Hong Kong-listed Hop Hing Group Holdings, which currently operates the Japanese “beef and rice bowl” fast-food chain Yoshinoya, and American ice-cream and restaurant chain Dairy Queen in northern China.

His family also owns the privately- held Harvest Trinity Development, which produces Lion & Globe and Camel cooking oils.

“I am not interested in my family business, and I don’t want to say too much about it,” he said. “It’s not fair to my company and my team if I am always mentioning what my family does. My company is successful today because my team built it from the ground up piece by piece.”

Although Hung is now boss of a thriving tech company, he has not given up his game addiction. When he hires new employees, he expects them to boast about their prowess in World of Warcraft. He also finds time during lunch to play online card games with his staff.

“You can learn a lot from playing video games,” he said. “For example, StarCraft taught me resource allocation, and through Overwatch, I understood the importance of sympathy.”

Hung got the idea of starting his own tech company, thanks to his father’s complaints about his addiction. Hung’s father left an issue of Fortune magazine in his room one Sunday when he was in primary four. In it was a story about Bill Gates.

Since then, the Microsoft founder has become an idol for Hung. Hung majored in computer science at Columbia University in New York. After graduation, he founded two tech companies, Net Strategy and Ascent Technology, which he later sold.

“At university, my classmates were struggling with their programming homework,” he recalled. “Not me. I was having so much fun that even if I lost sleep to finish a project, I enjoyed it. It was as enjoyable as playing video games overnight.”

GoAnimate is Hung’s third start-up. It started as a personal project after he quarreled with his wife. Hung had wanted to make a short animated film to cheer her up, but did not succeed after trying for hours.

“I was very irritated,” he recalled. “All those drawing and animation software were so hard to use. Even someone like me who have read computer science couldn’t manage them.”

That experience prompted him to start a do-it-yourself platform on which users can make their own animated films using pre-produced clip arts. Users can publish their videos after dubbing them with their own audio recordings.

Initially, Hung raised funds in Silicon Valley to finance his third company. In 2011, YouTube invited GoAnimate to join a suite of chosen apps available to individual content creators. GoAnimate broke even a year later.

“Short films have become a sought- after marketing tool. Traditionally, it takes tens of thousands of dollars and at least three months to produce a short film. What we offer can save time and money,” he said.

“Our growth in North America and Europe has been strong over the last 10 years. We kept hiring but still couldn’t catch up with the demand there. That’s why we are less visible in Hong Kong. We didn’t have enough manpower and time to take care of Asia.”

The article first appeared in the Standard on February 24, 2017.

 

Flying High

Chinese drone maker DJI to enter brick and mortar retail in Asia

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Shenzhen-based civilian drone maker DJI is making a major foray into physical retail as it opened its first brick-and-mortar shop in Hong Kong on Saturday. The three-story flagship store in Causeway Bay is the third location in Asia to have opened in recent months.

The 10,000-square-foot shop came on the heels of two similar flagships – in Shenzhen and Seoul – which opened in December and in March respectively.

A company’s spokesperson said that the stores fulfill a purpose more than selling. They are also a technical support center, and a rally point for technology enthusiasts to experience flying a drone.

“Each location was strategically planned,” said Kevin On Chin-hang, DJI’s associate director of communication in Asia Pacific, adding that global market expansion is part of the company’s strategic development plan.

“If you look at Asia, excluding China, which is a big region on its own, the three key markets: Japan, Hong Kong and [South] Korea are definitely on the top of our list. That’s why we are making investments in infrastructures.”

The company will open more physical retail locations, but nothing plan can be confirmed at this stage.

DJI primarily relies on online sales and third-party retailers to reach customers worldwide.

In Hong Kong, phone maker Apple and electronics shops, such as Broadway and Fortress, are some examples of DJI’s local retail partners.

The new shop in Hong Kong carries a full range of products, from gimbals to consumer and industrial drones. The latest products are Osmo Mobile (HK$2,299), a smartphone gimbal released earlier this month, and Phantom 4 (HK$9,299), a drone released in March.

Osmo Mobile is paired with an Android or iOS phone to shoot high quality video footage. The device uses a bluetooth connection, instead of wi-fi, so it frees up bandwidth for live streaming.

Phantom 4 is billed as an “intelligent flying camera.” The quadcopter can shoot 4K video footage, and uses a location tracking algorithm that fuses data provided by object recognition and GPS positioning.

It has two tiny cameras on the front to detect colors, patterns and shapes. The two cameras make functions not available on older Phantom models possible, and ensure a higher degree of safety and ease of use.

“There are three key features that are probably a first in the consumer drone industry,” said On. “When the drone sees an obstacle, it will stop or fly over it. This is a key breakthrough in consumer technology.”

The TapFly feature allows users to direct the drone to fly in a particular direction, while the Active Track feature follows a person or an object based on the images captured by the two tiny cameras.

DJI was founded in 2006 by Frank Wang Tao, a graduate of the Hong Kong University of Science and Technology. The private company is the world’s biggest consumer drone maker by revenue. Market research firm Frost & Sullivan estimates that DJI has a 70 percent market share.

DJI has not disclosed its latest financials. But in an interview with Wang last year, Forbes reported that DJI sold about 400,000 drones in 2014, and was on track to reach a sales target of US$1 billion (HK$7.8 billion). The majority of the units sold were the company’s signature Phantom model.

In May 2015, the company raised a new round of investor funding worth US$75 million. That gave DJI a valuation of US$10 billion. Market analyst ABI Research forecasts shipments of consumer unmanned aerial vehicle to exceed 90 million units, and generate US$4.6 billion in revenue by 2025.

Despite its current leadership position, DJI is facing strong competition in an increasingly fragmented consumer market. Apart from rival French company Parrot, action camera maker GoPro also entered the fray, debuting its first drone in the United States last week.

The article first appeared in the Standard on September 26, 2016.

Pointing Way for Startups

Wearable IoT World to launch new tech startup accelerator in Hong Kong

IoTSan Francisco-based start-up accelerator Wearable IoT World has launched a new technology venture in Hong Kong that will act as a cross-national gravity center to attract entrepreneurs to come and build their companies.

The new venture, dubbed the US-Pan Asia IoT Superhighway accelerator, will also focus on grooming entrepreneurs in Asia who are dedicated to driving innovation in the Internet of Things, wearables and emerging technologies.

“This marked a long-awaited milestone in our continued quest to build the easiest pathway to product creation, market awareness, investment and distribution for related start-ups around the world,” said Redg Snodgrass, co-founder and chief executive of Wearable IoT World.

“What we are trying to do is to eliminate the anxiety and opacity that entrepreneurs face when they look at new markets and when they build their products, from dealing with manufacturers, designers to prototyping.”

Established in May 2013, Wearable IoT World provides young entrepreneurs with support on advisory services, publishing services and conference organization.

Since inception, the accelerator has mentored 80 companies in the United States, helping them raise a total of US$85 million (HK$663 million) from investors and US$5.5 million from crowdfunding projects. About 90 percent of its start-ups are able to raise outside capital, Snodgrass said.

Its portfolio, which has an aggregated value of US$500 million, includes TZOA, a manufacturer of wearable air-quality and ultraviolet sensors, Kontakt.io, a back-end solution provider for Beacons and iBeacons, and Grush, a gaming toothbrush for children.

Wearable IoT World said it will set up an executive office and innovation lab at Cyberport, and partner with the management company to organize accelerator events and executive programs.

It also announced that three investors from Hong Kong and the United States have injected HK$35 million into its operational fund.

The investment comes from Radiant Venture Capital, which is headed by local businessmen Duncan Chiu and Gordon Yen, Silicon Valley-based Tsinghua Entrepreneurs and Executive Club Angel Fund, and New York-based private equity W Capital Partners.

McKinsey Global Institute projected last June that the Internet of Things will have a total potential economic impact of US$3.9 trillion to US$11.1 trillion a year by 2025 – equivalent to about 11 percent of the world economy.

By 2020, there will be 30 billion devices connected together, the McKinsey report says.

Snodgrass said that China and the United States will be two of the world’s largest markets for IoT.

Many companies are interested in using the SAR as a launch pad into the mainland and Southeast Asia.

The proximity to Shenzhen and Guangdong, the manufacturing hub of China, is one of the reasons why foreign companies find the SAR attractive, said Chiu, managing director of Radiant Venture Capital.

“You also find in Hong Kong top- of-the-mind designers, world-class graphic innovators, experienced marketing people, and people who understand the East and West,” he added.

“You can protect your intellectual property with Hong Kong laws, which are recognized by many foreign countries. Also, we have excellent logistics to ship products to everywhere in the world.”

With the local start-up community continuing to mature, Chiu expects more young people who are still at university to come up with different products, devices and analytic software. They will need help to expand into the markets in the mainland, Southeast Asia and the United States.

“These young entrepreneurs will need people to help network and give them strategic advice on how to go to market. And, of course, they need investors,” said Chiu, adding that his firm will further invest in companies affiliated with Wearable IoT World if deemed suitable.

Wearable IoT World announced that it has started a new round of recruitment for promising start-ups in Hong Kong, Shenzhen, Singapore and the US. It is now taking applications and up to 15 start-ups from Hong Kong will be picked for an accelerator program that starts this May.

The 15-week program in Hong Kong will provid those selected with capital of up to US$25,000 in return for an equity stake of up to six percent.

It will also provide an extensive suite of services, from customized mentorship, education, office space, networking opportunities to a demo day in the United States to meet with investors and the media.

Snodgrass said that he will try to get these entrepreneurs to meet with influential US technophiles, such as technical evangelist Robert Scoble, former Amazon.com chief scientist Andreas Weigend and Andy Grignon, one of the original creators of iPhone.

There will be chances to connect with angel investors, including Randy Haykin, Rick Wagoner and Yobie Benjamin.

The article first appeared in the Standard on January 25, 2016.

Can Entrepreneurship be Taught?

MIT professor and entrepreneurship guru Bill Aulet says yes

Some say that the teaching of entrepreneurship is a paradox.

Take Elon Musk, Mark Zuckerberg and Steve Jobs – all college dropouts who learned how to be an entrepreneur by doing, rather than by attending classes.

But Bill Aulet disagrees: “They are good role models, but also outliers.”

Coming from an engineering background, Aulet is an entrepreneur-turned- academic who has a 25-year track record of success in business. His first company was founded in the 1980s, after he quit his assistant engineer job at IBM.

Aulet is now senior lecturer at the MIT Sloan School of Management, and managing director of the Martin Trust Center for MIT Entrepreneurship. His expertise is teaching entrepreneurship.

“My mentor, Edward Roberts, did a first series of research on entrepreneurship,” he said.

“He showed that the more times you are an entrepreneur, the more likely you are to succeed. That’s exactly what happened to me.

“My first time starting a company was not ‘economically’ successful and the company eventually died. The second time was much more successful but even then I still had things to learn and it was reasonably economically successful. By the third time, I had learned the process and that company was very successful. Over this time period, I didn’t get smarter. What happened was I learned how to be an entrepreneur, but you have to learn it intelligently.”

Aulet said that when the right curriculum is taught, schools are the perfect place to promulgate that insider intelligence and provide appropriate training to help students continue to learn once they venture off to the real world.

The business school in Massachusetts focuses on teaching innovation-driven entrepreneurship – different to traditional entrepreneurship teaching.

The curriculum does not teach how to create a new business unit for a company or start a small business.

It is built to nurture ambitious entrepreneurs who can create new types of companies that cut across cultures – the companies that sell innovative products to a regional or a global market.

“The innovation doesn’t have to be just technology,” Aulet said.

“It could be a business model, a process or positioning. The key indicators are what the market looks like for the product of the company and where entrepreneurs can create the most value for target customers with the limited assets at their disposal.

“A lot of my students in Boston are not only looking to selling their products to companies in Boston. They are selling to the entire United States market and beyond. Their goals are to transform the business landscape and create new types of jobs.”

Innovation-driven entrepreneurs are the future because they are doing things that governments and big corporations cannot do, Aulet said.

From experience in the United States, these types of entrepreneurs are creating high-growth businesses and the lion’s share of new jobs.

Aulet has written a book, Disciplined Entrepreneurship: 24 Steps to a Successful Startup, to explain how innovation-driven entrepreneurship can be taught in a disciplined fashion – from whether you should start with an idea, a product or the customers to executing various business strategies.

The Martin Trust Center for MIT Entrepreneurship also routinely hosts free supply-chain and entrepreneurship courses on the online learning platform edX. Students who do well in those classes can opt to take residential classes at MIT, which can lead to a master’s degree.

For educators who want to improve their own curriculum, Aulet recommends a free online platform that the center has built for teachers. The Entrepreneurship Educators Forum also contains teaching materials that Aulet wrote.

“I lay out what the curriculum is and make it available to people. They can discuss the elements in the curriculum in a webinar format,” Aulet said.

“But it’s not just MIT, we are building a community of thought leaders globally to contribute to the knowledge about how to teach rigorous innovation- driven entrepreneurship most effectively – by providing the best course materials regardless of where they come from, it’s truly a community effort to change entrepreneurship education.”

The article first appeared in the Standard on November 24, 2015.