From investment banking to helping startups break into the Asian market, with Henek Lo, Co-founder & CEO of Hype Asia, a venture building company

Episode summary

Henek Lo shares how he left investment banking to bring Airbnb and WeWork into Asia, and how a venture builder can help startups crack new markets.

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Episode transcript

Philipp: Welcome to another episode of In Your Best Interest, your personal finance podcast. I'm your host Philipp Muedder, and today we will be learning about venture building and entrepreneurship. We already heard from many different entrepreneurs, as well as venture capitalists, on the prior podcasts.

So today's topic will fit right in, as venture building is often misunderstood or not yet much talked about. Yet, it can help startups grow their business significantly. For that, I have invited to the show, Henek Lo. Henek is the co-founder and CEO of the venture builder called Hype. Henek was previously part of the first landing team to expand WeWork into the APAC region in 2016 as a general manager for Asia ex-China, launching 5 locations in Australia, Hong Kong and South Korea. Previous to WeWork, Henek was a GM for Greater China at Airbnb and part of its 2012 landing team that started Airbnb operations in Asia through setting up the Singapore hub. In his various roles with Airbnb, Henek helped grow Airbnb's presence in the region and oversaw the hyper-growth of the company.

At the start of his career, Henek worked at Bear Stearns, JP Morgan and Macquarie. Departing as VP in sales trading, [02:00] where he serviced large institutions and funds that traded in APAC. He holds a Bachelor’s degree in civil engineering from Carnegie Mellon University in the United States. Thank you so much for taking the time to join me today, Henek.

Henek: Yes, thank you, Philipp. Thanks for having me.

Philipp: It's really great to have you; there's a lot of common interests. And also, people that I know at Airbnb that have talked very highly of you when I was doing my research for this broadcast today. So very excited to have you on today.

And as I mentioned to you before offline, what we really try to do is get to know our podcast guest a little bit more detail. So if I may, I know I kind of like gave a lot of background already. But we can dive a lot deeper, right? I think. What was it like for Henek growing up before all this?

Henek: Yes. I guess before my career even started, I'm actually born and raised in Hong Kong. And I've lived here and studied here all the way until I was in high school. And I left for the US when I was quite young, around 14.

That's why I sound American, I guess; I spent about 9 years there in the US and then I came back to Asia and Hong Kong around 2007, early 2007. I had actually just graduated from university, and then that was right around when the financial crisis hit, and I was on my way back trying to look for a job, but that was a really tough time.

So even for, I took, I guess the corporate route after my school, and I went into banking and all that. But it wasn't really an easy journey even during that time, because if you guys remembered, Lehman and Bear Stearns, [04:00] which was one of my first banks by the way, that had gone down spectacularly at that time, and it was like a lot to digest.

And I think that kind of set me off like a route of my career, but more importantly, also helped me, I guess at the end of my corporate route, think about why I want to go into entrepreneurship, but we can go into that a little bit more later.

Philipp: No, it's super interesting. Okay, so you're at Bear Stearns; it's the 2008 financial crisis. You worked through it, kept your job, I assume?

Henek: Yes, fortunately.

Philipp: And what was happening?

Henek: At the time, I think most of my career, I was never really prepared for things that I was meant to do. So I was a civil engineer, as you had mentioned just now, and I used to like to build things in college, obviously civil engineering, I liked to build cars. And then I came back to Hong Kong, and I realised that all those things that I wanted to do didn't really exist as a career out in Asia, right? Hong Kong, Singapore, very similar, all right, it's a small financial centre, it's very densely populated.

And I realised that if I really wanted to be an engineer, I'd be this age now before I got all my licenses and everything. So I thought that I would go from engineering to building skyscrapers, but that's a very long process to get there. So I was at Bear Stearns and finally getting into my finance job, and I think I knew very little about trading, so I was in equity trading.

I was always on the trading desk. And if any of you guys have seen any of the Wall Street movies, the trading floor is a very vibrant and very exciting place. People yelling, things are being thrown around. There are a lot of TVs, and screens, and action; I think that was really what attracted me to that. But lo and behold, unfortunately, after just 9 months of Bear Stearns, [06:00] getting into Bear Stearns was like getting into the Ivy League school.

It's one of those top investment banks that you, I'm finally here, right? And then, 9 months later, I remember it was Monday morning at 5:00 am. I used to go to work at 5:30 am because we covered Australia. And I got my call from my boss. They said hey, you need to drop everything you're doing and come in now.

And I was an analyst on the desk, and they needed my help. So I ran in, and halfway in the taxi, I was checking my Blackberry, and I realised that one of the headlines was Bear Stearns sold to JP Morgan for two dollars.

Philipp: That must have been an interesting feeling and day, right? When you get that message.

Henek: Yes. Well, the thing is like, I didn't really know how to interpret that. I mean, it was very early in my career, I didn't really know what was going on, so I was just a bit confused. And anyway, I just went in, and at 5:30am, the whole floor was already mad. There were so many people there ringing phones, people calling, clients shouting, and that was when I knew this was not a normality; it was actually the beginning of a meltdown.

So after a couple of weeks from that day, I finally had a chat with my MD at the time, he told me that hey, it seems like this whole operation is going to wind down, and we're going to face our new owner, which is JP Morgan. So from there, I guess a bit of luck, a bit of meeting the right people.

But there was, I believe, close to 500 people in the very same Hong Kong office at the time, and only 30 of us made it over to JP Morgan. And I was one of them actually, and I always kind of joke around my ex-colleagues to see now I was young, I was cheap, and I was available. So people took me on, but jokes aside, I was very lucky it went to JP Morgan, and I went to my second job, [08:00] which is the algorithmic trading desk.

At the time, basically, it means that programs and algorithms are trading the market on behalf of the clients. It was a very, I guess, a slightly newer product at the time in 2008 or 2009, and actually fast forward 11 years from that, now it's a very popular product.

Because our algorithm trading is applied to equities over the counter, even cryptocurrency, right? It's using a lot of algorithmic training. So that was my second job back to JP Morgan.

Philipp: Oh, super interesting, yes. So it's good to hear your experience of this because we had some people on before talking about their experience of the 2008 financial crisis. So it's good to hear different points of view. It was an interesting time; I remember I was at State Street in Munich.

Henek: Got it.

Philipp: We were doing structured products, right? So that entire team is actually not there anymore. So yes, it was definitely an interesting time. But also an incredible amount of learnings coming out of this, if you were in it, right? If you were really in it, you have a very different perspective on how that all shaped out to be.

So investment banking, how do you make the switch then into a startup scene by joining Airbnb as their first employee in Asia? That seems like a big, a lot of networking, because how do you even make them? Airbnb already in the US because I think what time was that? What year was this?

Henek: This was late 2011, early 2012.

Philipp: Yes, I was in the US actually at that point in time. And they were already getting quite the notoriety over there. So how are you able to make that switch? Because I think there's a lot of people who obviously are intrigued by [10:00] technology and startups, but getting that switch done seems always a very difficult task, right?

Henek: Yes, absolutely. And just now, what I had mentioned about the financial crisis in 2008, left a lasting impact on me. And actually, if I thought about what my career was going, I was going quite fast. I was getting promoted quite quickly, and I was a VP by the time I was 27, in Macquarie, 28.

And the reason for that was because there was so much movement in the industry, not necessarily, I don't think, because I did super well, but there were just a lot of movements meaning that people were getting dropped or getting sacked at the time. So a lot of younger folks had to step up to take on more, so I really appreciated that opportunity no matter what all the people that I met during those days.

I still keep in touch with a lot of them. But I think that has always left a lasting impact; where I was at Bear Stearns, I remember in your first job, you're supposed to oh, everything is rosy, it's going, you're supposed to learn and do stuff. But then I saw people leaving the offices with boxes, carrying their personal belongings. And I think I was like, okay, this is kind of what a corporate job means.

Like it's very macro-driven, right? If things are good going well, all these corporations kind of flourish; you flourish with it. But if it's not going so well, then you might be mid-40s and late 40s, and you have to look for another job. So I almost didn't want that to happen to myself, I think. And when I was at, in my second year at Macquarie, and you asked me how I made the switch, I think the first step was I actually quit my job. 

I didn't have Airbnb or anything like that; I just quit. It was one day I remember; I think shortly after Facebook IPO-ed in 2010, if I'm correct.

So shortly after that, [12:00] and because that was a very lasting impact to me, because I was in the generation that Facebook used to be only for schools. You used to be able to see Facebook in your school. Like if you're in high school, you said you belong to this school, and you have Facebook.

And then suddenly it became across schools, and then suddenly it became the whole world, and then everybody's on Facebook, right?

Philipp: Yes. And then I think it's actually pretty amazing, and looking back at this now, because I remember being in school in the Netherlands.

Henek: Absolutely.

Philipp: That was the first time we had, university was the first time that we got introduced to it.

Henek: And that was fascinating to me because it IPO-ed at $100 billion, right? I mean, 100 billion now seems relatively normal. Like you have huge unicorns and those points, but back then, there was huge, like really big news, especially on the equity floors. And I just slowly started reading all the research about Facebook, and like seeing the power of their advertising, seeing kind of where they're going.

And that really kind of set off like a new trajectory for myself in terms of, okay, this is what tech is all about. And I need to kind of get a sense of how to get into this industry per se, right? And then so I left, and then I went to San Francisco; I met some friends. And actually, Airbnb, as you mentioned and pointed out, was a friend, a really good friend of mine referred these folks called Airbnb to me.

They're like, hey, I think you should go meet these guys; they're just starting. And back then, there was not a lot of startup news; I remember I was reading through everything on TechCrunch. So long story short, I met them, and finally, actually, I had to interview for 15 rounds to get into Airbnb.

And here's a funny thing, right? I remember going to San Francisco; I was about to meet the founders for my final interview. Airbnb is like a very [14:00] culture-driven company, right? So even at that point where there were 200-plus people, the founders insisted on meeting most of the leaders of different regions, right? I was going in at the time to lead Asia.

So I flew over for a day and a half. I walked in; I was already blown away by the office, right? Going from a corporate office to like a startup office, I was like, wow. I remember this very clearly.

Philipp: I've been to the one in Singapore many times.

Henek: Oh, that's amazing. And that was like already; I would say, a slightly nicer office, right? But even back in the day it was a little bit more raw, where there was like a little piece of a plane in there, it was like a half a plane in there. It was like 8 ping-pong tables. It was a Sunday, and people were working and listening to music. I think I just really liked the energy.

And so after talking to, even though it was a very long interview process, every conversation I've had with the European leaders, all the different parts of America, some of the other parts of Asia and Australia which they've hired somebody already. I just realised that everybody had a very keen sense of solving this problem, right? They were very mission-driven, and everybody was saying the same thing.

That was very refreshing because you are in finance. I remember like when 5pm hits, everybody was at the bar just kind of complaining about the day, right? It was a lot of things happening, but that was a bit of the culture. And it was really refreshing when I'm talking to a bunch of young, very driven individuals that all had a vision of how to make Airbnb become true.

And look at where it's been 8 years later. And so again, I think a majority of luck that I got into Airbnb, but I also took a huge leap of faith for myself. In my career standpoint, I took almost a 65% pay cut [16:00] to go there.

Philipp: And that's very interesting for listeners as well, right? That it's not just; sometimes you need to take that leap of faith, right?

Henek: Yes, correct.

Philipp: And long term, it hopefully pays off, right? In your case, I assume there were probably some stock options that are now becoming something because stock price is doing quite well after the IPO this year. But that's kind of what you're banking on, right? So you're hoping that venture will turn out to be the one to pay for the differences and pay along the way.

But let me take one step back; you just mentioned leap of faith, right? And what I wanted to ask you is what's your family situation like at the time? And if yes, if you had family, what did your wife or a partner or spouse think? Or if you didn't yet, what was it like especially coming from a family, you did engineering; you had a really good job in finance, what was the support like?

Henek: Oh, this is hitting close to home, so I hope my wife doesn't listen to this. But it was really interesting; I think during the end of my banking career, I think my parents saw that I wanted more. And just to be very frank as well, I grew up in a middle-class kind of family in Hong Kong.

My dad was an entrepreneur for himself, and had very little education. But then he did like a lot of grit and hard work and just got his electronics business off the ground. But actually, when I was 16, he had a bit of a health issue and also ran into some issues with his business. So he wrapped it up when I was 16.

And I'm kind of glad that you asked this question because I never really had a chance to reflect on this. But when that happens, when I was younger, you see all the [18:00] changes that happen in the family, right? When my dad was wrapping up his business and all the different relationships he had at work and the people, there's a lot of change in the family, right?

We suddenly went from, I guess, a slightly more comfortable way of living to uncomfortable living. And I think that leaves a lasting impact on me, and that's why everybody, and later before I started Hype, I can also tell you why this is important. Because yes, everybody says that, “Oh entrepreneurship is so cool, you go, and you run, and you do great things.”

But very little people talk about all the blow-ups and the failures, right? And I think when you see and witness that with your family, that kind of leaves some different motivations like how I pursued my career. So I guess for my family when they heard about Airbnb, definitely dubious, to say the least.

Philipp: US business wanting to come to Asia, right?

Henek: I mean, the worst was I then told them what it was about. Oh yes, we're going to help strangers stay in other people's homes, and I just remember this look on my mum's face, just like she was blank like she didn't know what to really say about that. She's like, “Are you sure this is going to work?” I said, “Well, I think so.”

So there's these investors called the Sequoia and DST, I didn't know anything about the capital at the time, but obviously, they're giants in the industry. And I did my research; they seemed very dependable. But anyway, I'm going to go for it. And then so, actually there's a great story here, because even though after I went for it, 4 months after I joined Airbnb, we had to relocate to Singapore, which is now the office that you see there, right?

I was actually originally working in Hong Kong. So I had very little time. First of all, I changed my job; I took a 65% pay cut. I had just started dating my girlfriend, who's my wife now at the time. And then suddenly I had to move to Singapore, and then they're like, “Wait, this is way too many [20:00] changes to your career, are you sure this is okay?”

And then I think at some point, I was in Singapore, and actually, the fun story here is a few of the guys that moved with us from Hong Kong to Singapore, we actually lived in the office for like 2 months, because we didn't have our EPs fast enough yet in Singapore to rent housing, so we ended up sleeping in the conference room.

But that is like the best experience. Now I look back; it was the best experience. Where, yes, Airbnb was very successful in the US, but in Asia, it was just starting. And the founders really instilled a bit of a scrappiness in us; it's like, hey, if we can make things work by as little resource as possible, do it. 

And I literally experienced that, right? Just from in a slightly very well paid banking job, to sleeping in a conference room in Singapore, in one of our first shophouse offices was definitely a shocking experience.

Philipp: Yes, absolutely.

Henek: But I guess that's how good things happen, you kind of have to go through the bad first, and then you see the good. And not to mention even COVID last year, and all the ways Airbnb IPO at the end of the year is also a roller coaster, to say the least.

Philipp: It is a roller coaster, but it's kind of like life, right? Like a startup or a business in general, it's kind of like life, right? You go through the ups and downs, and you hope that there are more ups than downs, and you come through them, and I think that's the key.

Well, thank you so much for sharing this about your family, so I think it's very interesting and very relatable, probably to a lot of listeners. But yes, so a lot of hard work and grittiness, I think like you said, is really important. So you're at Airbnb now, and this is part of venture building almost, right? And we still have a little bit to get there, but I think this is probably [22:00] where your first experience with this is as well, right?

So there's a company from the US, has no idea what to do in Asia, asking people to help us do it. Yes, what was that process like? And like how did you guys do over the years? Obviously, I guess now, looking back, I guess good, but.

Henek: Yes. I mean, the funny thing is I look back; I don't think the efforts or the things that we did were all that glamorous, right? It was very kind of grassroots. At the time, we had the sales team I was heading up; that was how I got into it.

And it's kind of weird when you think about sales in Airbnb, like what are you actually selling? But we're actually pushing the platform and introducing the platform to people who are doing property management. Or people who are interested in opening their own homes.

And Asia is a little bit different because the things that we have to be conscious of is that in the US, you can have a house, and in some cases, people have guest houses, right? It's like a whole different house that's within their property. And any or like if you have an apartment or two as an investment, people open those and actually start renting those.

In Asia, not a lot of people enjoyed that amount of space, and we live in very dense areas, dense kinds of cities. I think Japan and Hong Kong are probably even more dense than somewhere like Singapore. Which is crazy to think about it, because these are small places, right? In terms of cities. So we really have to think about what made it work for Airbnb specifically.

So I think at the very beginning, the usual suspects were expats who travelled a lot. And I think the reason why we picked Hong Kong, Singapore and other major countries to kind of expand into in the early days is because it was [24:00] much easier to convince these people who are travelling a lot, or they may have one or two investment properties around the region, to kind of opening up to let people rent.

So really, it was just educating people of the platform. Second, I think the most interesting thing is like before Airbnb, the closest thing was probably Craigslist, before that, right? I don't think people actually list; I'm not sure I remember this or back home in the Netherlands for you if people looked for roommates on Craigslist. When I was in college, people looked for roommates on Craigslist

Philipp: That's a very American thing, yes. But when I was living in America, everyone used it in the early 2000s, right? It's a very normal thing. I mean, I think the only other thing that comes close to Airbnb at the time maybe, or maybe it was later even.

Henek: Couchsurfing.

Philipp: Couchsurfing, right exactly, that's what I was going to say.

Henek: Yes, sure. And so you look at these 2 different platforms, well, not really platforms, but like Couchsurfing is like more of a place to meet people and then you can go sleep on the couch. Craigslist is just basically online for broad board, that people are just trading comments.

So they both are good, but then didn't offer a lot of protection, right? So at the time when we came to Asia, we also had to think about the trust and credibility angle. So one of the first things that we did back in 2012 was bringing the host insurance from the US to Asia. That was a huge thing, right? To actually be able to cover all the countries in Asia under one platform.

And the trust and safety in Airbnb, I must say, is really good. Obviously, there are many unfortunate incidents that probably got Airbnb to wise up and think about how to tackle these things. But our job at the time in Asia was really to make sure that those things that people are aware of, that we have all these protections in place, that it's a safe community online to rent out their own listings and their own property.

And I think, lastly, it was just really kind of normalising the [26:00] efforts of home-sharing or like living in other people's homes. So a big part of what we did in Asia was actually pushed for people to travel on Airbnb, not necessarily to host on Airbnb first. And I think that's a very powerful network effect for Airbnb, the minute you travelled on it. And the first time I did it was when I went to go meet the founders in San Francisco back in early 2012, I believe. And I was in the middle of a mission, my first time in San Francisco.

And I went into the house and the host had a whole list of things that I could do. He's like, hey if you're hungry, there's a Burger King right around there. Quite like it's a handwritten note, right? I think it's a college student or like someone who's just started their careers or started working.

And that was really cool; I got to see the city in a whole different way. But the minute I left, then the thoughts came up saying, hey, I can do this too, right? This is how it works. So the point here is that the way to get Asian Airbnb users or hosts to actually be a little bit more comfortable with the platform is to get them to travel first.

So a big part of our efforts was really kind of getting the outbound travel done, and then obviously, there are a lot of great locations and destinations in Asia as well. Maybe like vacation rentals, like Phuket or Bali, people love those places; you can rent amazing villas there.

Philipp: It was all about being in a perfect right place, right time, right?

Henek: Correct. Finding the right behaviour and matching that to the region that we were in at the time, which is Asia.

Philipp: No, it's awesome. Great story. You're at Airbnb; everything is going really well; why did you leave?

Henek: Well, I was going to get married. I think that was the easiest way to think about it. Because I was heading up Greater China at the time, and I was travelling to Beijing frequently. I was there [28:00] almost for 2.5 years. Just travelling back and forth in Beijing, I was in the middle. Beijing actually, back in 2013, was one of the worst times of their air pollution. And I actually have a little bit of a sensitive airway. So, my wife would see me come back, oh well actually my girlfriend at time, will see me come back from China, and I'll be coughing, and I was like, I had no idea what it would do to me, by the way.

And actually the air was kind of so bad, that I had a bit of asthma in 2016 and so like it was bad, right? So anyway, it was very hard to convince my wife to move there. And I think, more importantly, she had a career in Hong Kong at the time. So actually, my wife and I met in the bank when I was still there.

So I went the adventurous route and did startups and all that; she stayed in banking, she's still there. So I think we both wanted to start a family and all that stuff, and we thought Hong Kong was still the best place for it. So I mean, obviously being one of the first guys in Asia for Airbnb, I knew the founders, I knew everybody very well.

I just told them straight up say hey, this is what I'm doing, and this is why I need to move back to Hong Kong. And unfortunately, Airbnb didn't have an office in Hong Kong, so I couldn't go back there. So even though it was really good, I was lucky because some common investors that I spoke to at the time then told me about WeWork.

Hey, there's this other company, and they're looking for someone just like you to help them land in Asia. And with your experience in Airbnb, you really should come and entertain it. Very I guess, similar kind of, right? Crazy one. They are going to be the first group in Asia; I met Newman back in 2016 in Hong Kong when he was out here to look at the market and all that stuff.

And long story short, I was like, okay, you guys are going to set up a regional headquarters in Hong Kong, I'm in. And then I'm in WeWork, [30:00] and I'm also back in Hong Kong. But I actually went there thinking that I would travel less because the headquarters is in Hong Kong; I actually ended up travelling way more.

Because the real estate business and Airbnb are just different, right? When you're opening a building that has ten floors over 100,000 square feet, we just had to be near the building every time before it opened, just to make sure everything was okay.

Philipp: Yes. For StashAway, we were actually, well, for 2 years, we were actually in WeWork offices in Singapore. So we were in the very first one in Singapore on Beach Road. But so we could kind of see how much time it takes to set these up, in terms of training and doing things right, and things going wrong at first.

But no, super interesting experience then, right? Going from Airbnb, you go to WeWork, and after that, we're in today's company called Hype, right?

Henek: Yes.

Philipp: And that's where I want to spend some time, because I think for most people that are not too much aware of this venture building business, what that is. Can you share a little bit about Hype itself? But then also yes, while doing that, what a venture builder actually is.

Henek: Yes. So I'll start with what the company does, and maybe I'll go into why I thought about starting this business in the first place. But a venture builder basically helps entrepreneurs, or we also help great startups to venture-build into the region by expansion, right?

We helped them, just very similar to the career I had in tech. Wework, Airbnb, all these different companies coming over, there's definitely a certain way to do it. And at the time, at this point, I'm still talking about everything pre-COVID, by the way. And so, at the time, [32:00] there were a lot of companies, venture capital was booming, a lot of companies wanted to get into Asia.

So this was a very natural switch to me. And actually, I worked with an investor in Airbnb that had done very similar ways of working with Airbnb to expand them. And that was where the idea was seated in my mind, and there was nobody in Asia to kind of fill that role or be that kind of expert in helping a lot of companies specialise in coming over.

So today, Hype, we work with a lot of companies that do that, both on just a consulting basis, and we also do what we call the ‘build, operate, and transfer’, what we call. Where we second ourselves, where we lend ourselves into the company, and basically lead the initiative, and so that was how I ended up being able to work with great companies, like Carousell, GOAT, Snapask, just to name a few in the region to help them expand.

And on the side, actually, together with that expansion business, we also then invest into these companies, have equity stakes in these companies, and create different new structures to work for them.

So, for example, if you want to go to China and you want to have a China JV, like a local structure to invest in China, for example, a lot of companies think about this because China has a very different market, requires a massive amount of capital. And those are the things that we set up for them, yes. So that's the what we do in Hype.

Philipp: Oh, it's super interesting. And just to get back to what I asked you at the beginning. So now, you go through investment banking, making good money, taking a pay cut to go to tech startups. To then going out on your own, and potentially not taking any kind of pay for a year or so. How was that?

Henek: It was; this was what I mentioned about a little bit of what [34:00] my family and my family background kind of does to me. I had responsibilities; I had to look after my own family, I had to take care of my parents.

Like I couldn't be as cowboy as I wanted to be, right? And then what I mean by cowboy is like just go, no pay, work on something, let's grind through it, and I had a kid coming, and my wife was pregnant at the time.

So when I thought about the why, it was really just looking at a couple of things: one, life. Two, whether or not I had the perfect idea to do like this is what I'm going to dedicate my life to. And three, just like how do these things kind of gel and balance together, right? With my life, as I said, baby coming, got to take care, got bills to pay, got people to take care of, I needed to do something that has a revenue stream, right?

That would be paid for what I did, right? Second, being in startups, just being in pure consulting or like just cash, wasn't really good enough for me. Because like equity was a big part of the venture cycle, right?

Philipp: And you never know when that pays out, though, right?

Henek: Exactly.

Philipp: So we're in 2021, and obviously, the Airbnb portion just got out into the public markets, right?

Henek: Yes, correct. And that was like 9 years; I joined in 2012, so that was a very long run. So even to this point, I'm willing to do another company that potentially would lead me to like an "Airbnb type of success". And if I was 25, yes. But now 11 years older, I wouldn't necessarily take that as my first choice.

So Hype was a perfect blend of that, where I could keep doing what I do best, which is help companies operate, build businesses and actually materialize in the new region. But at the same time, we charge fees, there's sweat equity, we invest into warrants and stuff like that for these types of companies.

It allowed me to remain relevant, [36:00] as well as the learning experiences in Hype was actually very good. Like in the last 3 years, we worked with almost 40 startups now. We've consulted for maybe 25, we built 10, and we advise for like maybe 5 of them, right? And what I mean by building 10 is like when Carousell, Singapore's darling as you guys know.

When they came to Hong Kong, it was a quick blitz of 6 to 9 months to help them realise their business, hire their team, get business metrics up. But on the flip side, where I don't talk about a lot, I learned so much more about that industry, right? So, oh, this is what online classifieds means. This is how you guys are kind of outpacing traditional competitors such as eBay or like other classified sites and stuff like that.

And like I learned a lot. So the second thing, which is if I didn't have the perfect idea to build, the next best thing was really absorbing and soaking as much as possible about how other people - great founders, great CEOs, great entrepreneurs - are starting their business. And actually, after 2020, COVID aside and all that stuff, I now am getting much closer to know exactly what I want to build within Hype as well.

And I think that was a process that helped me get there. So even fintech, 2018 ICOs, if you remember, we worked with so many of those companies. Crypto obviously exploded the last 2, much more in ‘18/’19, a little bit calmer in ‘20, and now just two days ago, Bitcoin is like a new story now.

So just learning about all these things equipped me with, okay, this is how different industries work, this is how fintech works, this is how health tech works, this is what these guys are doing. And that gave me a lot of ideas and inspiration to do what I want to do next.

Philipp: No, I think a couple of things for the listeners; [38:00] I think to listen out there what you just mentioned is definitely even while you work, right? You can use that job to get inspiration. You can do research, but having the hunger to look for new things and dive in deep into them, I think, is a very good way to start and understand what you really want to do. Is there a business model? And things like that.

I think that's a very great lesson that you shared here with everyone. You know, if you really have the hunger to do that, everyone can spend some time on that aside from work before really taking that plunge into the deep end to make a change.

Henek: Yes.

Philipp: So that's super interesting. So basically, if you say now, and you've been in the space for a while now. Where do you see markets for startups to expand right now into some of the best ones? Like if I'm a startup in Singapore, where should I look next? If I'm a startup in Indonesia, or in Europe even, right? Where do you see growth?

Obviously from my experience, I grew up in Europe, lived in the US for almost 11 to 12 years and now in Asia for the last almost 5.5 years. I feel like obviously the buzz and the positivity and towards the future is so much greater in Southeast Asia than it is currently I feel in Europe or in the US.

But what is your point of view? And where do you suggest companies that ask you for countries to expand to?

Henek: Yes. I mean, it is in my company's name, right? Hype Asia. And the reason for that is because I do think, well if we consider this short-term, but potentially 5 to 10 years for like markets to develop.

There's so many different countries just starting from the grassroots, there's a lot more greenfield out here, almost it seems. But I must say that [40:00] the reason why I also exist is because it's very fragmented, it's so complicated to get into Asia, right? If you have Facebook, Google, Instagram, and you're in the US, you can pretty much use English to go to most countries in Europe, just on a single platform, and you can kind of tap into growth.

 

In Asia, you can kind of get there too, but there's a lot of intricate details and all that stuff that you need to pay attention to before going. So one thing I'll usually caveat here is that I would have answered this question very differently pre-COVID, and now post-COVID, I think it's something that.

Philipp: We are in COVID, though, right? We have to deal with it.

Henek: Yes, correct. So what I mean by that is I think a lot, when venture capital was booming, a lot of companies were looking to set up teams in Asia left and right, just opening offices, making sure it blitzed into them. I think my first observation post-COVID is that capital, that kind of expansion efforts, have really slowed down quite a bit.

And ironically, a lot of great CEOs have been talking to us to expand by proxy. Meaning because we have a way to second ourselves or to second our great operators in our team into these new startups to help them build-out. So a lot of them actually talk to us, because even simple things like the CEO can't even fly over to like a new country in Asia just to check out the market, they have to look for people that they know have done this before, and do all that.

So we've been helping and talking to a lot of companies about doing that. But in terms of markets, as you said, I think the general things to pay attention to. Singapore and Hong Kong are always great hubs for different parts of Asia, right? Singapore, obviously, a great hub for Southeast Asia. Though a little expensive, I think the talent that you get is a lot more cross border.

They can go into different countries. A lot of them are of a Malaysian and Indonesian background [42:00], for example, right? Also, in Singapore. So by talentwise, you can tap into a lot of those markets from there. Hong Kong is the same thing, right? Greater China, Hong Kong, Taiwan, China.

And I would say slightly, the most difficult markets I guess in my view are still Japan and Korea, just because of the way that you do business there. So one fun fact I've been looking at a lot of research on. Like food delivery in Japan, the penetration is only 8%.

Philipp: It's low.

Henek: It's tiny. But if you look at every other country that has adopted Deliveroo, Foodpanda, Ubereats and all that stuff, it's just mind-boggling that a very developed and sort of international country, they're very international, but actually, it's very hard to do business there internationally.

So if you spoke English, it's very hard to do business in Japan, and things just move a certain pace there, right? So I would say, like the last part I'll answer here is China; I would say back in 2013 and 2014 when we were looking into it. We were right after Facebook and Google, right? In terms of foreign companies going to China.

And as everybody knows, Facebook and Google entering China was a bit of a boogeyman story because they didn't fare very well in those markets. And there was a lot of learning there. So the second kind of wave was ourselves, Airbnb and as well as Uber. We were also breaking into China at the same time.

So I would say that even compared to 2013, in 2021, this year, I think it's much easier as a foreign business to do business in China to get in. There's a lot of like, for example, we worked with GOAT, right? There's a lot of cross-border programs that Tencent, Alibaba all these guys facilitate in order for foreign companies to tap in.

So my point here is that I think this year, it's actually much easier for foreign companies to start thinking [44:00] about China on a just operation and execution basis. But in terms of strategy, I will definitely not recommend going to China if you don't have like a 5-year vision for that market and for that country.

It really is a long build, but then the rewards are also significant if you unlock that market as well.

Philipp: Yes, big rewards, big not necessarily risk, but yes, it's a very competitive market. I think I read the book of, what's his name? he started Google in China; I can't remember his name. I'll put the name in the show notes.

Henek: Kai Lee?

Philipp: Yes, exactly Kai Lee. He has a very good book, and he shares some great stories about how competitive the landscape is there. I'll put a link in the show notes.

Henek: Yes, he's an alumni from Carnegie Mellon which I went to, so he's one of the guys I really follow, super smart.

Philipp: Really smart and really interesting if you want to learn more about startups in China for sure. So with that being said, we have so much more to talk about. I know we also wanted to talk a little bit more about investments and investing and startups, so we'll do that in a follow-up podcast for the listeners.

But one other thing I wanted to ask you today is what are some of the trends that you're looking at that you're getting really excited about over the next 5 years? Like is there anything? Is it crypto or like something completely different? What are you looking at that really excites you, and say, oh, I really want to see how this develops?

Henek: Yes. You know I think two spaces. I think, one, crypto has always been very interesting to me because I used to be a trader. And actually understanding such as yourself, you’re in StashAway as well. And when I was looking at this instrument per se called cryptocurrency, I think the long-term normalisation of this currency is probably imminent. But I do think it's a little bit early.

So I can't expect to go spend the Bitcoin at a convenience store to pay for [46:00] something, right? I don't think that's. But I think on an investment basis, is definitely just like good traders or good investors do; you have to have an allocation for it, right? You should allocate a little bit of your portfolio to that because I think it's the new Gold.

It is the whole, it is the new kind of instrument to hold value per se, and the volume is significant institutional players are getting in. I'm still shocked at the price, don't get me wrong, but it definitely seems like it's happening. Second thing is probably a little bit less exciting than it might seem, but also I think it's a huge trend which is D2C, direct to consumer.

I think previously, pre-COVID, there was already a lot of these brands coming out, right? But I think a lot of entrepreneurs I meet now all understand and think about, okay, instead of starting my business on a platform, like go sell stuff on Amazon or go sell stuff on these different large kind of e-com platforms; they can reach the customers themselves.

And secondly, I do think a lot of customers now where you kind of really, really it, now is the time where millennials are starting to work; they're coming into the workforce. They don't necessarily go to Amazon to discover new products, right? There are so many different channels to do that.

And I think this is the prime time for a lot of those companies with a huge boost from COVID, by the way. I think year-on-year, e-com spend has grown at least 30+%. One of the biggest growth has experienced a long time, just because of behaviour people have to buy groceries now.

You can't go out to eat so much anymore. But there's a lot of colour in the market that says that this behaviour is going to stay. Retail stores are going to dwindle also because of COVID; a lot of people are closing down their retail and kind of shifting that experience to the majority online.

And I think like how good trends always go retro; this [48:00] is like one of the retro trends that we're going into like e-com 4.0 now. Where there's social e-com, the people in China are selling on groups, chat groups, Wechat groups. And now all the way to just simple products being very targeted to their value proposition, and being able to do very good in the market, yes.

Philipp: That's an interesting trend, and I think that's good for listeners if they want to do more research on those. We did have an episode with the, with someone from Crypto.com if you want to listen to that and learn a little bit about cryptocurrencies. And then I will have Henek on for sure again, there's a lot more that we wanted to talk about that we didn't cover today.

But Henek, to wrap it up, where can people find more about you, about Hype. If they want to reach out, maybe they have businesses that are interested of taking abroad?

Henek: Yes, I'm very active on LinkedIn. So add me, ping me on LinkedIn, and then we can have a chat. But other than that, our website is also a way to reach out to us. But either one works.

Philipp: Perfect. Thank you so much Henek, we'll put those links also in the show notes. For everyone else, I'm looking forward to another chat with Henek here soon, and thank you again for being here; thank you.

Henek: Thank you so much for having me.

Episode notes

In this episode, Henek Lo shares how he left investment banking to join the startup world, taking a 65% pay cut in a leap of faith that would lead him to bring Airbnb and WeWork to the Asian market and start his own venture-building company, Hype Asia.

Find out more about Henek and Hype Asia here.

For past guests, visit stashaway.com/podcast

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Episode contributors

  • Philipp Muedder (Head of Financial Planning at StashAway)
  • Henek Lo (CEO and co-founder of Hype Asia)