EP 321 – Understanding SME Pain Points: Strategizing Digital Transformation Across Asian Markets – Christopher Yu – President & CFO at KPay Group

by | May 8, 2024

"I think Hong Kong is a very special city. I think the spirit of the people, it's been a very entrepreneurial city over whatever, 100 plus years...Hong Kong, at the end day also has a good capital markets environment, for fundraising, especially for companies that have good traction and whatnot, I think it's a great place to track capital." - ⁠Christopher Yu⁠ The Asia Tech Podcast hosted Christopher Yu, the President and CFO at ⁠KPay Group⁠. Chris shared his journey from investment banking to the entrepreneurial sector, highlighting his transition from a generalist in the corporate realm to embracing more entrepreneurial challenges. It was a really cool conversation.

Some of the topics that Chris highlighted in detail included::

  • The strength found in a longstanding partnership among KPay‘s founders, who have been together for over 15 years, proving that a cohesive team can significantly impact a business’s resilience and adaptability.
  • The importance of timing and self-awareness in corporate to entrepreneurial transitions, advocating for the entrepreneurial path as a platform for continued learning and growth.
  • The necessity for building a deep understanding of the pain points faced by SMEs, emphasizing the importance of starting with a real, tangible problem and expanding solutions organically.
  • Understanding local nuances while addressing universal pain points is crucial for successful market penetration and customer satisfaction.
  • How KPay envisions a platform that is as seamless as upgrading from one smartphone model to another, emphasizing the importance of a synchronized, user-friendly experience that allows SMEs to focus on their core business.
Read the best-effort transcript

Read the best-effort transcript below (This technology is still not as good as they say it is…):

Michael Waitze 0:03
Okay, we are on. Hi, this is Michael Waitze. And welcome back to the Asia Tech Podcast. We are joined today by Christopher Yu, the President and the CFO of KPay Merchant Service. I said the whole name is that okay?

Chris Yu 0:17
That’s good. Yeah. Good. KPay Group.

Michael Waitze 0:20
KPay Group either way you want, it doesn’t matter to me, Chris, thank you so much for coming on the show. Before we jump into kind of the main part of this conversation, let’s give our listeners a little bit of your background. And maybe if you want to sprinkle in the founders background as well, that would be great. Sure.

Chris Yu 0:36
So I’m a third culture kid, I grew up both in the east and the west. So Asia, as well as in North America. I loved storytelling and history growing up. And so I ended up in a liberal arts college, graduate from Brown. And then throughout most of my career, I was pretty much a generalist. So you know, I had a lot of opportunities to cover a lot of different sectors, when I started in investment banking, and then also just just a lot of really interesting stuff. So it was a massive learning experience, the first eight to nine years of corporate. And then a second half of my career, which is, you know, the past 10 or 12 years, that’s been slightly more entrepreneurial. So working in different startups, whether it’s in the asset management space, I was doing some investing myself with the search fund that I set up. And then now here I am with K pay. So K pay, just in a nutshell, and also I’ll share a bit of founder background. So he is founded by a group of guys that have known each other for over 15 years. Oh, well, yeah. So they’re, you know, multi founders, and they’ve kind of done this a few times around. So this is the third business that they’ve started together. And I find that quite rare in Asia, in particular, where, you know, people can stick with each other for so long, when marriages in general are so short. But um, yeah, they’ve kind of seen the best and worse of each other. So I think that’s quite rare. To be honest, if you look at it from Asia tech landscape perspective, yeah. And they’ve done different things. So similar to me, they’ve, you know, they started their careers in the tech space and system integration. So kind of building apps for people, primarily starting in China. And then the second business they built, which is a pan Asia business of the largest, I would say, power bank sharing business, called charge spot. Cool. It’s now listed on the Tokyo Stock Exchange. So again, that was like IOT plus software play. So again, very, very different from I guess, the first business, but it’s, it’s a lot of like, accumulated knowledge, right? And then the third business Cape a, yeah, so in the K pain. Now, of course, we’re more payments focused, you know, we’re focused on the payment flows for SMEs. And I can share a bit more into detail why we’re doing it and whatnot. But at a high level, look, we’ve all kind of gone through life, you know, 1520 years before a bunch of us all got together to work on KP.

Michael Waitze 2:57
Where did you intersect with these guys? Right? Like, did you work at Goldman with them? Where did you intersect with them? Because you said they founded three companies? And I’m always curious, too, about what drives someone to leave the corporate world like I did, and then start their own company, particularly so early on in your career. I mean, at your age, it probably feels like wow, that was a long time. But in reality, it’s not right. So maybe you address those two things. First, where did you intersect? And what made you leave your corporate job?

Chris Yu 3:24
Sure. I met them in 2017, when they were starting their second business. So back then they were fundraising for charge spot. And so obviously, they were running around town meet different meeting different people and whatnot, at that, at that point in time, as mentioned, I was still in a role where I was investing actively. So at the time when I met them, look, I think, ultimately, the business and business model itself of, you know, sharing economy sharing power bank, I just didn’t really get it or didn’t really buy it. I guess lost or, I mean, I don’t know about you, but like, I guess I was quick to judge, I would say yeah, but one thing I learned at least kind of over the past few years is a lot of people have different business models, but ultimately comes down to execution, right? You know, 80 90% of is execution. So for me, I guess I had the benefit of meeting them in 2017, and then reconnecting with them in 2021. And so with that four year sort of history of seeing how they built their second business, I was like, Well, how did these guys do it? Because it’s quite hard to actually change user behavior. If you think about it, right? Whether it’s a b2b business, or b2c business, or like to change somebody’s user behavior is very difficult. And I think power bank sharing, in my opinion, is a very good example of that, where, you know, it was proven business model in China, where people were willing to pay, you know, you know, a few dollars to rent a power bank to charge your cell phone for a few hours, right. But the question is, how do you convince that and convince people to do that do that in places like Japan and Hong Kong and Taiwan, and so yeah, they were able to do it. And so you know, I was very, very impressed. And so Anyways, long story short Like 2021, when they were looking to further expand the team, I kind of jumped at the opportunity. Ah, so

Michael Waitze 5:05
you joined charge spot at some point in time?

Chris Yu 5:07
Oh, no, I joined KPay. Because they were already pretty much at the tail end of experience.

Michael Waitze 5:14
Can I ask you this? What do you learn? Or what do you think you learn? Because you said before, like you were quick to judge, right? I think that’s the normal way. Most people are like, Yeah, this looks great. But it can’t be as good as it seems. Right. And that’s kind of the way we’re raised. But once you join the entrepreneurial world, you kind of have to be an anti skeptic. And so at some level, don’t you think? Because if you’re not trying to, like you said, change people’s behaviors and build new businesses from scratch, it’s hard to get in the right mindset, if you’re not willing to say maybe all the things I believe, or I think, I believe, maybe could be wrong. Does that make sense?

Chris Yu 5:48
Yeah, and, you know, for me, it was a personal learning experience, too, right? Yeah. I think about, I guess, similar to you, right, like, first 10 years of your career, you’re kind of molded in a way in a very institutional sense, right. Yeah. And especially as an investor, you’re thinking about what’s my downside risk? Right? Always what can go wrong, this and that, which is, which is great. Right. But sometimes, I mean, living too much on the two extremes is not good. Right? Like if you’re too optimistic, too pessimistic. Right. So I think, I think it’s for me, I think it’s important for people to be able to take a step back and figure out, hey, like, where am I in that spectrum? Right. And so at least for me, like, Yeah, I think if anything, the first part of my career, you’re very much kind of molded in a more skeptical way of looking at things, right. But then once you kind of experienced, personally more of the entrepreneurial journey, or you’re doing it yourself, or you’re working with great people that come from that DNA, I think that’s sort of, you know, that that’s sort of influential to you, right, in the way you think about things. Yeah,

Michael Waitze 6:49
I think so. I think so too. I wonder if you’ve had this same feeling as well, like I loved working at Goldman Sachs, I really did. I felt like of all the places that I worked. That was the one that matched me the best, my personality the best. And I worked at Morgan as well, right? So I didn’t hate it there. But Goldman, for me was the place where I feel like my personality and the businesses we were running kind of came together. And I won’t say we didn’t have a ton of fun. But I’m curious if you think working at smaller companies, like get K pay is just way more fun, but in a different way. Do you know what I mean? Like if you’re working at a big bank, at least for me, I was part of a really great team. But I feel like I had to do these things. And that like, all this money they were making was because everybody else was sitting in the spot and doing a specific task. And I feel like now if you’re running your own business, or you’re part of a business that’s again, being built from scratch, you’re kind of doing everything, but not hating it, if that makes sense.

Chris Yu 7:40
Sure, yeah. No, I love it. I mean, it’s a it’s a great experience, I highly encourage people with big, big corporate experience to hopefully experience that themselves, whether it’s their own working with people, or even within a corporate kind of carving out a niche for yourself, right, where you’re really creating a business and a business entity. I think it’s a very rewarding experience. I would say, there’s no perfect timing for people do. Some people do earlier in the careers, some people do it later in their careers, at least for me, like, I was at a point where I realized, hey, look, like I needed to understand tech better. Alright. You know, I was I was doing what I was doing for almost close to 20 years at that point in time. And I realized, if it wasn’t, now, you weren’t going to be given that opportunity. Like when you’re in your 50s, or, you know, to join a growing tech company. And so, yeah, it’s just kind of picking the right time. And I think it’s really having that ability to self reflect and say, Hey, like, now’s the right time. Plus, you know, just being able to Humble yourselves in a sense as well, where you say, hey, look, I’m happy to take maybe one step backwards when move five steps forward, right? Because, you know, you know, with working in a big organization at a certain level, you obviously have have certain stuff that comes with it, right. And so I think it’s, it takes takes a bit of self reflection, I would say.

Michael Waitze 8:56
Did you ever get an MBA?

Chris Yu 8:59
I did not.

Michael Waitze 9:06
I sat next to John Mack one day when I was really young, you I don’t know if you know who John Mack is, at one point he was, he was the CEO of Morgan Stanley, but I sat next to him one day at breakfast when he was just gonna say just but not just like the head of the fixed income department, right. And it was part of a meeting that was set up by my boss, it was like, 10 of us in the room with him. And I asked him, I said, Should I get an MBA? And he was like, Why would you waste your time? These are his words, right? By taking two years off from work are some of the guys just going to come and sit in your seat? And by the time you get back, that dude’s already been here for two years. So it’s just funny you say this, right? Because like you do have to make this decision of if I leave, what am I giving up? And what am I hoping to get in return for it? Right? It’s different if you go from corporate to startup, but anytime you take a break, like going back just makes it really hard. I don’t know. It just reminded me that.

Chris Yu 9:55
Yeah, no, I agree. I mean, it works for some people. Divorce doesn’t work for others. or at least, I guess we were fortunate to work at really well, you know, established investment banks. Right. And so that that pedigree in itself is yeah, very well run. The networks are great. Yeah, I think that that’s, um, that’s sometimes what we take for given. Yeah. Yeah. So I think in that sense, it’s different. But you know, some people, some people don’t come from that. Right. And so that MBA experience is very helpful.

Michael Waitze 10:23
Yeah, it’s funny, I don’t talk about it a lot, because because most of the people I know, never worked at Coleman. But it’s like, once you were there, and you were there for a long period of time, like, you just can’t take it away from you. It’s almost like better than having an MBA at some level, right, particularly from a networking perspective. Anyway, absolutely. Talk to me. I love this idea of the founders all knowing each other for 15 years. And you’re right, it’s hard to do. I mean, being married, you know, is super hard. A lot of marriages end in divorce. But having like a bunch of guys work together for that long and build a couple of companies together, it can get really stressful, super high, super low. It’s like it’s just hard work. Right? Absolutely. What led them, but at some, at some level of they must have started feeling comfortable. Like, I think we can just keep doing this right. And you’re right. In Asia, it’s not that often, but it should happen more, I think it’s great to see, what was the revelation that these guys had for the founding of K pay? Right? The charts, one thing I completely understand, but in what part of their lives they think we have to build basically a financial services company for because not just payments, yeah, for SMEs, micro SMEs and stuff like that, like, what was the genesis of that?

Chris Yu 11:31
I think ultimately, it came down to a few things. One is like, as mentioned, like, their work experiences ultimately led them to understanding what SME pain points were. Because if you think about the first generation of how charge spot was built, it was really just selling the business and product to SMEs, right small restaurants and other places. Yeah. And so I think through that interaction, like they really came to understand, hey, look, everyone talks about digital transformation. Everyone talks about the underserved SMEs, whether it’s in mature markets in Asia, right, like the ones that we’re in right now, or less matured and developing parts of Asia. Right, but who’s actually doing it right on the ground? And who’s actually doing it? Well, right. I think that was sort of like the first question they asked. And the second question was like, okay, like, if we are to do it, like, where do we start? Do we start with payments? Do we start with lending? Do we start? I mean, there’s many, many different starting points you can start with, right? But then I guess for them, ultimately, they said, hey, look, let’s start with a business where we think we can execute well on which is, you know, selling a MVP product, right? And then once you build that size, and scale, you can build products on top of that. Yeah, so I think that was sort of like, the high level thought process in terms of like, the roadmap of, okay, let’s build K pay. And this is the pain point that we’re addressing. And so I think it was a combination of, you know, market intelligence, right, what they saw with their day to day, and even for them and their background look, a lot of their a lot of their peers growing up, they didn’t go to the big banks, like you and I did, right. Right, they ended up with starting small businesses, right. And so like, you know, just their kind of social touchpoints was, was kind of giving them the confidence that, hey, look, we truly think and know that SMEs are underserved. And let’s do something about it.

Michael Waitze 13:18
So this is one of the great things I love about being an entrepreneur, is that you kind of have to be in business, any business. And even if that business itself is not making a ton of money, just to kind of know what other businesses you can build. If that makes sense. I still haven’t come up with a great way to say this. I’m working on it. But I’ve been thinking about this for a while, right? Because even if I think about my own business, the thing that I started and the way that I expected to make money, it didn’t happen. But it showed me how I could make money. And that’s why I think it’s so cool that they can go from charred spot, which isn’t about necessarily doing financial services at all for SMEs, but it connected them to hundreds of SMEs or maybe 1000s of them. And all of them said to them, we don’t know how to pay for this thing in a way that’s efficient for us. And they’re like, that’s an idea. We’re selling this thing, I’m guessing, right. But maybe you can address what those pain points were. But I love the fact that this business was built out of this idea of we know this is true, because everybody we work with is telling us this.

Chris Yu 14:14
Yeah, absolutely. So um, as mentioned, so we started with payments you’re paying,

Michael Waitze 14:19
but what was what were what were the SMEs telling you that they couldn’t do?

Chris Yu 14:24
They were I mean, look, if you look at the landscape, it was either banks or non banks servicing them. So if you understand banks, a lot of them aren’t fully set up to serve SMEs, right? Whether it’s from a banking service perspective or even pay in as a product is you could consider as non core

Michael Waitze 14:43
Yeah, because the unit economics don’t work. Correct. Go ahead.

Chris Yu 14:46
Yeah. And and so there’s of course, like non bank, competitors in the market. And, at least in our opinion, a lot of the non bank competitors weren’t really seeing things and understanding things from an SME perspective, right? I’m so for example for us, like, in any new business or product or market that we go into, we would spend doing market surveys, product surveys, we would spend upwards of like half a year to a year, really understanding a merchant, right? To the point of even like, acting as a merchant to go through that journey that they have to go through whether it’s opening up a bank account, setting up a payment terminal to reconciliation on a day to day basis, right? Like all of these things, we actually think and look at it from SMEs perspective. And so to answer your question, at least we feel like we spend that time and money to really think from their perspective to truly build a simple, smart and secure product for them, especially on the payment payment flow side.

Michael Waitze 15:41
Right? Can I ask you this, though? This is one of the things again, that I learned, kind of after I left Goldman, because when you’re there, and we talked about this a little bit before we started recording, you’re in this bubble, right? And you kind of take it for granted that all companies are run with the right level of resources that make the right decisions and have access to capital to expand when they need to. Right. Absolutely. And when you leave a big business like that, and go join a small business, you’re like, How come nobody has a new computer here? There’s not enough money to do this thing. And then you start realizing all these minimal pain points. So you know, when I moved with Goldman Sachs, from arc hills to ripple hills, the move itself cost $115 million. Oh, wow. Yeah, I’m not kidding. And nobody even blinked and they’re like, Yeah, fine, we sign that check. But the point is that when we wanted to rebuild a data center, any kind of sort of digital transformation that we wanted to go through, we could just go through easily. But that can’t be true for SMEs, can it like, how does it work for them? And are they keeping up with this digital transformation? And if not, how do you guys help?

Chris Yu 16:47
Yeah, oh, we feel like the pain point is absolutely still there. So you know, as mentioned, we started with payments as a payment flow product. Our view is to build a horizontally integrated experience for them. So the switching costs for anything that they use becomes very seamless. So usually, I like to use the analogy of say, you’re an iPhone user, right? If you’re switching from an iPhone 12 to 14, that hardware switching costs is seamless, because everything’s synced to your cloud. And so in today’s world, especially some of the legacy, SME operators, they’re still stuck in this world where like, that doesn’t happen for them that switching costs is super high. That’s anything from SMA all the ways like you said to enterprise, right? And so like, what we’re trying to recreate is really that seamless experience, data synchronized experience, right? Whether it’s payment flow synchronized or operational flow, synchronize, we’re trying to give that experience for the SMEs so that they can just focus on what they’re good at, which is, you know, building their products selling their product to their local community, or whoever that they address to.

Michael Waitze 17:52
So they’ve existed this way for a while. Right. And I think that’s true. I think it’s universal, globally, right. In other words, if you’re running an SME in Boston are in Kentucky, it’s not much different, just fundamentally from running it in Hong Kong or in Japan, right. Sure. But there’s also a generational change taking place. Right? You know, if your grandfather started it, your father ran it, your sister, your, your sister is now running it? Is there a generational change that then makes that digital transformational change easier? Have you experienced that too? And where are you guys operating? Overall?

Chris Yu 18:26
So right now, we are operating in Singapore? Okay, in Hong Kong, as well as in Japan? Obviously, we have, you know, yeah. So we have views and plans to further expand across Asia? To answer your question, look, I think the merchant persona there’s, there’s, you know, it’s quite wide and varied, like you said, there’s, you know, the more digitally savvy, you know, people that are, you know, in their 20s 30s, or whatnot, and then there’s maybe the older generation, but I think ultimately, if you take a step back, in our opinion, at least, we’re doing b2b As a business. And I think b2b as a whole is a product that needs to be sold. It’s not a product effectively, that needs can be bought, as well. Right. And so I think if we’re kind of on the same page for that, like we focus on being able to journey with the SME, whether it’s a very digitally savvy person, or a not so savvy, you know, SME owner to really help him or her choose the best choices for the payment flow over time, operational flow, financing solutions, etc. We’re journeying with them over time, but that b2b Selling I think, is the key part, right? Yeah. Which is like we focus on selling the best solution for them, right, rather than hoping that they will find us through a online customer acquisition journey.

Michael Waitze 19:47
Right. So that’s what I mean, what is what is that sales process like and that’s why I kind of set that up, right? Because you could have two different generations you could have, like you said, digitally savvy and not so savvy, but it’s at some point, you’re gonna literally have to knock on the door and just go If you’re having this problem, we think we can help you. How long is that process as well? And how hard is it to convince people? Because you’re right, this definitely has to get sold. And I’m sitting there looking around for it, because they don’t even think it exists, right?

Chris Yu 20:10
Absolutely. Um, so for us, like, our, our approach is like, we think direct sales works, right? I think especially it works when you’re able to onboard at large scale, so that your so called fixed salary cost becomes a variable cost. So I think, um, direct sales works also, because that personal touch is very important, again, for a b2b business and business product. Yeah. And so of course, that’s sort of the phase one, Facebook playbook four, for us, at least right. And, of course, over time, as you layer on top more products and different channels to onboard new merchants, like there’s not just one way to do it. But at least for us, like, we feel like in the markets that we’re in, this works, and it’s proven to work, you know, we’re serving over 35,000 merchants across these three markets in a short amount of three years. So yeah, so we feel like, you know, this is a replicable model, right.

Michael Waitze 21:04
35,000, you just gave me another idea. Which we can talk about in a bit. 35,000. Wow, have you found it? And maybe just talking about the nuanced differences, right, because Japan and Hong Kong are just like night and day markets, right. And then Singapore may be somewhere in the middle, or maybe closely related to to Hong Kong. But I feel like the economy and the way it’s grown in Singapore is different than it is the Hong Kong as well, even the family businesses that are there. Do you notice nuanced differences from market to market?

Chris Yu 21:37
There’s definitely nuance differences. For sure. Right. Every market is, you know, the approach and cultural sensitivity. Absolutely. Is there. Yeah. I would say of course, the similarity between Singapore in Hong Kong is is is much closer, I would say. Of course, Japan is very different culturally as well. And so I think for us, it’s about localizing a playbook, which I think a lot of people have talked about for their businesses as well. But especially for us when it’s a high personal touch business model, like are sorry. I think that’s also very, very important. But I think in general, like taking a step back, even though culturally, there are differences across the different markets, the pain points are the same. Yeah, right. So many pain points are the same. And so ultimately, it’s about understanding that that’s the commonality. But then finding that one nuance where you can execute better than what’s already available in the market. And that’s where that’s, that’s how you’re able to kind of find that penetration point for us. Yeah, that’s

Michael Waitze 22:35
the part that’s always fun. For me, I love to ask people that are operating in multiple markets, like what the differences are that they’ve seen, first of all, because I get to learn something, but second of all, because it makes me rethink the way I think about how to determine what those little nuances are in every market, right? Like, if you take your business from Singapore and Indonesia, it’s not the pain points are the same. You’re right. But the way you address them, and the way you execute the solutions to those problems, could be very different. And that is very interesting to me.

Chris Yu 23:03
Yeah, I think so. And it’s hard work. Look, it’s not easy, right? No, if you get it, and if you get it right, then it’s also a very defensible moat, in my opinion. Yeah,

Michael Waitze 23:11
absolutely. Because then you go from 35,000 margins to 350,000, which is probably where you’re on your way to, for sure. Refresh my memory again, what year was this started?

Chris Yu 23:22
We started in early 2021.

Michael Waitze 23:26
Okay, so not that long ago. Yeah. Different COVID? Didn’t we all? Why did you guys feel like that was the right time to start it? Like what was the what was the market telling you?

Chris Yu 23:37
Well, COVID just kicked off. For us in Hong Kong, and I think other markets as well. They were looking at ways to re kickstart the economy. So then one of the things that governments were doing, were giving digital vouchers to encourage spending. And so the way they did it wasn’t, you know, cash handouts, it was actually depositing them into digital forms. And so for us, like, we saw an opportunity to quickly scale a small merchant base for, you know, last month merchants who truly didn’t have a digital form payment to receive payment flows. So we started with that as an entry point and to convince them, hey, look, this, you know, government voucher scheme is coming up. Do you guys have a solution for that? If not, can we help you? And so that was sort of opportunistic, I would say, but that also helped us very, very quickly scale into a small merchant base and kind of snowball into where we are now.

Michael Waitze 24:34
But how did you build the tech for that that fast? You must have an insane tech team. No. Oh,

Chris Yu 24:39
we have very strong capabilities. That was you know, you know, as mentioned, like the the founders, their first business is a tech company, right? So they come from software background. Okay. And so I guess that’s one but you know, at the end day, I think payments is not just like a consumer tech product where you just build it and just launch it. So of course, there were some regulatory stuff. We had to figured out. But we figured it out. And, you know, ultimately, I think, for most entrepreneurs, if as long as you focus on first principles and figure out a way to solve a problem like you can learn it industry very, very quickly.

Michael Waitze 25:12
I love it. You talked about the government. This was in Hong Kong. Yeah, giving up digital vouchers. Right. So they weren’t taking money started. Yes, when you started, so they weren’t just want to understand it better. So they weren’t taking cash and putting it into your existing bank account they were putting into a digital wallet, is that right? Yeah,

Chris Yu 25:27
there were, I believe four or five different digital wallet options that they shortlisted, the government shortlisted. Right. And so of course, there’s a different registration process, etc. But, again, I think that was their, I guess, best means to distribute cash across the city. Right. And so which makes a lot of sense, right. And so I think there was a sort of like a push factor for smaller merchants that were like, Hey, we should try and capture this window. Does

Michael Waitze 25:54
it did it? Yeah. Did it increase the use of digital wallets? Like, I know that I’m even even back when I was at Goldman, in Hong Kong in 2003, and 2004, like I had an Octopus card. And I don’t think anybody would have called that a digital wallet. But at some point, it kind of turned into one, right. So it was kind of well used there. But do you think it encouraged people and maybe even smaller merchants to start saying, Wait, maybe we need to take digital payments? Now? Was that part of the reason why they did this? Or was that just one of the the general results of this?

Chris Yu 26:25
I think, if you compare maybe four or five years ago, before pandemic, four, actually, most markets actually like I think the digital penetration has increased year over year. Partially because of pandemic, partially because of these policy driven matters, like what I just shared. Right? And so I think, yeah, it was just I would say it’s like push factor, I suppose. Right? For the markets to have that last month digital acceptance by, you know, merchants that were still somewhat reluctant prior to that. Yeah. So

Michael Waitze 26:56
what are the other? And again, you and I talked about this offline, but I love these businesses that are horizontal platform businesses, I think they’re the most effective. And I think over time, if you build a platform that you can plug stuff into and unplugging things that aren’t working, or that used to work, but don’t work anymore. Now, you’re building a really robust business, right? I mean, this is why, I guess I learned this from Microsoft. If you own the operating system of a business, right of a platform, you can plug a whole bunch of stuff into it, you can even rewrite some stuff, as long as it looks the same. I just love these. So if Cape a group is meant to be a platform business, which it sounds like it, what are some of the other things that you’re planning to build in that you haven’t built in already? If that makes sense? And does insurance for SMEs and micro SMEs play a role here? Because if it doesn’t achieve it?

Chris Yu 27:43
We Yeah, we have really ambitious plans, right? Like, I think like you said, we’re we were a buyer of horizontal integration. For Asia. I guess our thesis is, Asia for standalone vertical integration is not deep enough, right. And especially for multi market scaling, we feel like horizontal makes a lot more sense, for sure, quicker to localize etc. And so that’s at least our ambitions on day one. And hence, that’s why we built what we did. So I guess if you look at kind of product and product architecture, yeah, we’re focused on payments, payment flows, right. Of course, when you think about payments flows, there’s both in and out, right. And then wrapping around that, of course, is sort of the day to day operating tools that a lot of SME merchants may use, right. And so in every single market, we’re trying to work and onboard, third party software vendors and partners into our ecosystem interesting. And so. So, you know, through us, a lot of our merchants can again, have their data fully synchronized. So if they’re switching from software, vendor, A or A to B, for example, let’s say let’s use like HR software as an example, if that switching costs are super low. And so I think that’s democratizing and giving choice back to the SMEs, right. And again, like it becomes them having the full access to tools that a large enterprise may have. Right. And so I think that’s sort of the vision and goal. So to your question on other financial products, or if I kind of brought it out broadened out your question. Yeah, whether it’s insurance or lending or others, hey, look, we’re we’re working with a lot of different partners in those spaces as well, because we feel like, again, we’re we’re just an aggregator, and we’re just, you know, a platform and marketplace where parties can come in and provide a service to our merchants. And so we absolutely are looking at all the other areas that you’re mentioning right now. But at least for us, right now, our view is we won’t build it ourselves, we’d rather partner with for sure. Are

Michael Waitze 29:34
you finding that as you get these SMEs to start their digital transformation? That bit by bit, they’re starting to understand, oh, wait a second. There’s more so because what we said before, like this is not something that they bought something that you sell to them. And in that sense, it means that you know, they don’t know what’s out there per se. But once you introduce this to them, they’re like, I can do this easier. I can do that easier. I can see my business growing actually because payments are now seamless and frictionless. What else do I They need kind of thing. And do they come back to you and stuff like that, then you’re like, Yeah, you and all the other people on the platform. You didn’t we’re building that too. Do you see that happening as well?

Chris Yu 30:08
Yeah, I would say, we’re still in the early innings of that. Yep. So we’re still introducing all the other products and whatnot. So as we interact with merchants more Absolutely. Like we will get, obviously merchant feedback and also understand what their what they have and don’t have and what they want, right, and product features that they want. And so I think that’s an iterative process. And so we’re actually very excited for that journey. Because like you said, like, there might be something that we haven’t even thought about, right, or there’s something new and we want to be the front runners to help them think through and solve for these problems. Right. So I think, again, ideally, not, it’s not a one size fits all, but we’re at least an enabler that can help them find that best solution out there. Yeah,

Michael Waitze 30:51
I love it. Where are you based? Are you based in Hong Kong?

Chris Yu 30:55
I’m based I’m a regional nomad. traveling a lot, especially post COVID. So sort of split my time. In Singapore, Hong Kong and on the plane, and on the

Michael Waitze 31:09
it’s against, you know, against bad when the stewardesses know your name. Like, Chris, you’re in the same seat, because this used to when I was at Goldman, this used to happen to me, they’re like, Michael, welcome back to Hong Kong. I’m like, okay, way too much. Are the founders there? The reason why I’m asking is I’m really curious about the tech scene in Hong Kong, right? I can tell you what’s going on in Thailand, I can tell you what’s going on in Singapore, I live in them day to day, but I feel a little bit removed from what’s happening in Hong Kong. And I’m wondering if you can give me a little bit of insight into what’s going on there. Like, what is the startup scene there? And I’ll tell you why. Oh, I shouldn’t say this out loud. I feel like sometimes where I live, I don’t have other entrepreneurs to lean on. Do you know what I mean? Like you’re lucky, not lucky. You’re fortunate though, right? Because you’re part of a good team. But even so it doesn’t hurt to have a bunch of other teams around going, we just solve this with this solution, whatever you can learn from them. And if you’re in that kind of environment, that’s better. But maybe you can just address me like what it’s like there, if you know. Yeah,

Chris Yu 32:05
I think Hong Kong is a very special city. I think the spirit of the people, it’s been a very entrepreneurial city over whatever, 100 plus years. Yeah. If you look at the history of Hong Kong, you know, very fishing village to a very much industrial era, then trading, you know, trading as a big part of, you know, as a trading hub. And then now, there’s, you know, key industries that were focused on, but I think it’s the people itself, very entrepreneurial. And so I think, when you have people like that always feel like, you know, we can always go through thick and thin. And so I think that’s overall, I would say, the entrepreneurial scene, especially for us in our segment, which is FinTech, I think is thriving, there’s a lot of opportunities. I think the it’s a combination of private enterprises, as well as the government pushing for different things. For example, there’s a big government push right now for visa schemes to attract talent into the city. Okay, so you’re attracting talent from places like Southeast Asia, India, Australia, other parts of, of course, China and others, right. And so you’re seeing really, really interesting talent coming to the city. At the same time, I think now that the city is also matured, from a tech scene perspective, you’re also seeing multiple entrepreneurship, you’ve kind of built this as several times over and also kind of spin outs of different businesses. So I think that’s very healthy in itself. And so I think Hong Kong, at the end day also has a good capital markets environment, for fundraising, especially for companies that have good traction and whatnot, I think it’s a great place to track capital. And so at least for us, like we’re happy to be in this sort of ecosystem, where we’re sort of in the middle of seeing a lot of these different things moving around. And of course, we get compared a lot with other big cities like Singapore and others, right. And so I think everyone has their own strengths. But for us, especially because we’re, we’re building a dual headquarter between Hong Kong and Singapore. And so we feel like we’re able to get get and contribute back to the best resources in each of those cities. Yeah.

Michael Waitze 34:13
Is there an active VC market in Hong Kong?

Chris Yu 34:17
There is an active VC market. Um, I think, you know, similar to other big markets like Singapore, Japan and others, right, there’s a, there’s a VC market for every stage of a company. But of course, as compared to maybe like the US, it’s not as deep right. But I think the great part is, you know, there’s also different pockets of capital as well, right? There’s, you know, listed companies that sometimes do early stage investing, and there’s big family offices and others. And so I think, as long as you can kind of tap into those pockets, right, I think as a company, you have a lot of choice. Do

Michael Waitze 34:51
you want to talk about the Lion Rock spirit? What is this? I need to know what this is.

Chris Yu 35:02
we do we do have a conference room called the Lion Rock. Okay, that’s what we do. I think it’s, it’s just the can do spirit, I would say it’s a can do spirit. Ultimately, I think that’s something that, I guess if you’ve been in Hong Kong or lived in Hong Kong for a while, you kind of maybe understand what that ultimately means. But it’s about kind of having that spirit of going through thick and thin. And so I think that’s really important for entrepreneurs as a whole, right? Because, you know, there’s gonna be days that are good, and days that are bad, right. And so I think, working with a team that can just kind of push through, I think, is also very, very important. And so for us, look, I think Hong Kong has a city, the infrastructures, unlike other cities, where we everyone’s just, you know, fighting, fighting in this urban jungle. And so I think that that sort of permeates to whether it’s, you know, the, the way you live, or even in schooling and whatnot, and I think that’s, that’s important, you know, environment to kind of grew up in so that so that it kind of translates into when you’re in the working environment, whether you’re starting a business or whatnot, I think that can do spirit is wherever important.

Michael Waitze 36:12
It is, look, I loved living in Hong Kong, for like the five months that I was there. And one of the things I loved about it the most besides that, just the natural energy, right? And that your right like this can-do spirit, I didn’t know that there was actually a name for it. But this Lion Rock spirit, you could feel it when you’re there like just in the street. And it didn’t matter if you went into a drugstore, or you went into Goldman like the you could feel this spirit that was there. And the other thing that I liked about it, maybe you can tell me if I’m wrong here was that it never gave up. Like even almost spent a lot of time talking about this. But even during like the time that the British were there, it never gave up like steadfastly just did not give up its Chinese heritage. And so you guys can be here. You can run some stuff for a while. But this is like Chinese here. And I just thought that was super cool, actually. Because at the end of the day, it is what it is. And that spirit, I think is part of that thing. It’s like you can be here, we don’t care. But we’re going to do our stuff too. And I could feel it when I was there anyway. Just seemed kind of cool. No, great. Yeah. I loved it. Okay, Chris, I will let you go. Chris Yu, President and the CFO of KPay, Group KPay Merchant Service, KPay, let’s just call it KPay. This was awesome. You’re welcome to come back on the show anytime you want. This was great. Thank you.

Chris Yu 37:31
Thanks so much for having me. Speak soon.


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