Episode Summary: Most of our recent investor interviews have been Bay area investors, like Accenture and Canvas, and we don’t usually get to speak with investors overseas, particularly in Asia. This week, however, we interviewed Tak Lo, a partner with Zeroth.ai, an accelerator program and cohort investing firm based in Hong Kong and focused on startup artificial intelligence (AI) and machine learning (ML) companies. Lo speaks about when he saw AI take off in Hong Kong and the differences in that rise compared to the U.S. He also gives valuable insight on consumer differences in how the two populations interact with technology (a topic echoed in an earlier Emerj interview with Baidu’s Adam Coates), and how these differences in the Asian market drive different business opportunities in Hong Kong than in the U.S.
Expertise: Early-stage startups
Brief Recognition: Tak Lo specializes in early-stage team building, and has hired and led person teams from across industries, including military, startups, banking, and venture. Before joining Zeroth.ai as a partner and investor in July 2016, Lo was a member of the e-Residency Advisory Group for the government of Estonia and also an advisor for Valence Labs. He has earned a bachelor’s degree in economics from The University of Chicago and an MBA from the London Business School.
Current Affiliations: Partner with Zeroth.ai, Angel Investor, and Mentor
Big Ideas:
1 – Founding a successful company in America is not that dissimilar to founding one in Hong Kong.
1 – Founding a successful company in America is not that dissimilar to founding one in Hong Kong.In any capitalist-based economy — as long as you’re making money and know people’s incentives and motivations — you have the opportunity to do well.
2 – Cultural differences and people’s behavior in relation to technologies drive product development and company success from one country to the next.
Risks are always present when trying to raise venture funds, but they change depending on where you’re from and how you decide to build your company, your approach to the initial fundraising process, etc.
Interview Highlights:
The following is a condensed version of the full audio interview, which is available in the above links on Emerj’s SoundCloud and iTunes stations.
(2:30) When did the big wave hit out there (in Hong Kong) for the popularity of AI?
Tak Lo: The trends have been around for some time, in terms of academic learning and in terms of deep learning in AI, in Japan, and Korea, but i think the trends probably start to show when Alpha Go beat Blank…not everyone’s interested nor has everyone interacted with GO, but an AI beat a human player…second, it was a Korean player; this is a game that’s usually in the purview, most Asians master the game…I guess it got a little bit personal, I think at least that kickstarted everyone’s imagination, at least on this side of the world.
(4:31) What sort of companies did you start to see raise funds and build traction once the wave started to hit out there?
TL: I think there’s two parts to this, the caveat is in China, it’s more expensive as investors in China actually than to invest in Silicon Valley, so evaluations are a little bit higher, that’s the only caveat…but in terms of themes, they’re pretty prevalent, it runs the gamut—but I think for the last year and a half, autonomous driving is big…anything that’s computer vision or more accurate face recognition is pretty big…and I think overall then you you’ve got platforms—Sentient AI, actually the most well-funded company, started in Hong Kong and it was a bunch of finance guys…I think historically the talent went to the finance industry, so Hong Kong being a finance town, Tokyo being a finance town, I think a lot of that talent moved over to ML; and I think probably the last category I would say is robotics, but that’s kind of a Japanese-specific theme. A lot of it is healthcare, the aging population, so a desire for a kind of alternative population if you will, to be able to take care of the elderly…
(7:11) Has it mostly been healthcare where you’ve seen the focus there (robotics)?
TL: …the other one is consumer robots, overall there’s a trend, and in Japan one can argue it’s more of an anomaly, there’s more of a passion for robots…the more practical concern is the aging population…but a lot of people will buy personal robots just for fun…I do hear of a lot of robot companies, personal robot companies that go to Japan and try to raise because you have a more of a buyer’s market there…
(8:22) When I go to your site and look at what your investing in these days, I see a good deal of chat-bots and personal assistants…how long has that been sort of a trend picking up on your side?
TL: So chat bots, it started a little bit earlier than in the U.S., but they didn’t actually call it chat-bots; WeChat kind of the start of everything, people interact with applications differently than they do in the West. You guys are much more used to typing…for China, because it is more complex to write characters, a lot of people actually speak and have recorded messages…in Asia that’s taken advantage of, not as much in the west, so it’s a very different interface. I would say chat-bots can take off here, but people who try to solve chat-bots in Asia need to think differently…
(11:45) Sounds like WeChat has sort of really stepped up to sort of dominate mobile interactions…
TL: In China I think that’s correct, but every country kind of has its own put together niche; so Line in Japan, Kakao in Korea…Vietnam has its own thing…it’s largely true that WeChat dominates China, but actually WhatsApp is pretty popular as well, which explains Facebook’s acquisition…
…to your larger point, it’s much more concentrated…in some ways it’s more efficient because it’s all in one kind of app. Is innovation as quick?…I would argue that WeChat is a winner, but it’s not like they didn’t have any competition…and it’s not like they don’t have to innovate…
…the consumer mindset in China is shorter than in the U.S.; you have to build that fickleness into your products, you constantly have to change because people will just get tired and not want to do anything on your platform…it’s a very tough crowd…
(15:31) What are some of those other differences that you think Asian companies are taking into consideration considering their markets?
TL: I think building stuff is a little more challenging, coding stuff is a little more challenging in China, because—I wouldn’t say all sites are blocked—but some repositories and tools that you use in the West are not the same…so building is a little bit slower. I think cultural nuance is key…you still have to manage political risk, incumbent risk, and there’s certain ways to do it…
…you have to protect yourself against the political headwinds and ornamental headwinds…that’s one consideration…and I think WeWork did a very good job (of that); they raised from Chinese investors before they moved into China, and I think it was incredibly smart of them to do that.
To your point about other companies moving to the U.S….it could be called commuter risk…if you go into New York and say we’re a non-U.S. team, it’s hard for people to hire because it’s hard to get American culture right…you have to inherently become American, and that’s not an easy thing for people to do…it’s a very different type of risk…
…I tell a lot if companies to think about going to the U.S. or China or wherever—it’s almost easier to stay in your home country than try to go to, say SF, and try to raise (funds)…going to a new place is inherently difficult because you don’t have a community…you don’t have connections, it’s a very hard proposition, unless you raise through an investor, and through that investor they give you that community where you have a safe landing; it’s almost easier to raise from afar and pretend you’re in SF…
