Bertrand Théaud 0:09
Hello, so welcome to this new episode of Grown in Asia. Our guest today is Jeffrey Chen. So Jeffrey is, I mean, he has multiple activities. He was involved in investment, he is also active in the co-working space business. So my first question for you, Jeffrey, is do you fly with your own private jet?
Jeffrey Cheng 0:35
Of course…not. I wish…
Bertrand Théaud 0:39
So for those who will be listening to this podcast in a week or months or years, that’s a reference to WeWork and that’s something that we will discuss maybe later. So Jeffrey, thank you for joining us today.
Jeffrey Cheng 0:51
Thanks for having me.
Bertrand Théaud 0:53
Can you please introduce yourself?
Jeffrey Cheng 0:54
Cool. I’m Jeffrey. I was born and raised in Hong Kong, I lived in Canada for seven years, and I was back in Hong Kong after graduating from university. Then, right now I have two businesses going on. Just as Bertrand mentioned, I have one business in the VC area, and the other, it’s a co-working space business.
Bertrand Théaud 1:22
Okay, so that keeps you active, right?
Jeffrey Cheng 1:24
Yeah. Very busy.
Bertrand Théaud 1:26
So you said you were born and grown in Hong Kong? At what age did you leave Hong Kong for Canada?
Jeffrey Cheng 1:35
Right. Actually, it was separated into two different phases. I was in Vancouver in my fourth grade, and then I stayed there till sixth grade and then I moved back to Hong Kong for high school.
Bertrand Théaud 1:51
For high school?
Jeffrey Cheng 1:51
For high school. So I spent all my high school years in Hong Kong. Then I left and went to Toronto for university. And so four years of that, and then I came back.
Bertrand Théaud 2:02
Jeffrey Cheng 2:03
After university. Yeah.
Bertrand Théaud 2:04
So you didn’t try to work? A lot of people are trying to do that. Right?
Jeffrey Cheng 2:08
Bertrand Théaud 2:10
Now, you studied in Toronto?
Jeffrey Cheng 2:11
In Toronto, yeah. And, obviously Toronto…I mean, it’s better now. I heard. I haven’t, you know, been back for over 10 years. So but I still have friends over there. I heard that the economy is getting better. Google is moving in. So a lot of new things are happening, exciting things. I think right now, it’s better than 10 years ago.
Bertrand Théaud 2:30
So the reason you came back to Hong Kong is that you had no good opportunity in, you know, in Toronto, or you were missing Hong Kong?
Jeffrey Cheng 2:36
I wasn’t missing Hong Kong too much. But I do think there are more opportunities in Hong Kong for me. But for me, you know, I can’t say for everyone.
Bertrand Théaud 2:45
Yeah, you’re right. There are more opportunities today in Hong Kong and in Asia than there are in some more…
Jeffrey Cheng 2:50
Yeah, yeah. Yeah, I think so too. Yeah.
Bertrand Théaud 2:52
Okay. And what did you What did you study?
Jeffrey Cheng 2:55
I studied economics
Bertrand Théaud 2:56
Jeffrey Cheng 2:57
Bertrand Théaud 2:58
Jeffrey Cheng 2:59
Bertrand Théaud 2:59
Jeffrey Cheng 3:00
Yeah, stuff like that, you know, macro microeconomics, corporate finance, stuff like that. But honestly, I mean, I wasn’t the best student. You know, from day one…
Bertrand Théaud 3:10
Jeffrey Cheng 3:11
I’ve never been the best student. My major outtake from my uni life was definitely not academics. I was more, you know, more on making friends, more on learning some other soft skills, social skills, stuff like that than really learning from, you know, my actual study.
Bertrand Théaud 3:31
Did you eventually learn something that, you know, was helpful? I would say academically, was there something academically that was helpful when you started your professional life?
Jeffrey Cheng 3:43
Yeah, of course, of course, honestly, I would know more how, you know, an economy runs, what are the aspects, different angles to look at it. What are the parameters, you know, both in a macro and micro sense, it does give me a pretty good fundamental feel and knowledge of how things run. At least I would know a bit more about accounting. I know a bit about financing, which is good, you know, as, as you know, an intro to running a business.
Bertrand Théaud 4:11
Yeah. So you learnt about the fundamentals…
Jeffrey Cheng 4:14
The fundamentals exactly.
Bertrand Théaud 4:15
…For your business.
Jeffrey Cheng 4:16
Bertrand Théaud 4:17
So you went to the University at the age of 18, I guess
Jeffrey Cheng 4:20
Bertrand Théaud 4:20
Around 18. Any reason why you decided to study management, finance, economics…Because you had in mind that one day you will run your own business or it just was a choice by default? And…
Jeffrey Cheng 4:34
You’re right, I did have that in mind. Although it’s not really…I didn’t really have a career goal before, but I did have a feeling that I will be running my own business at some point. I will give it a try at least. So and I honestly have more interest in this field than any other. I mean, I’m not too interested in, you know, things like political science or designs or arts. So I was thinking business-related things would fit me more.
Bertrand Théaud 5:05
Okay. And I mean, you’re not a lady so I can actually, I can ask for your age. How old are you now?
Jeffrey Cheng 5:09
I’m 34 now.
Bertrand Théaud 5:10
34. So we’re speaking about, you know, things that you had in mind…When was it? You know, it’s 18. So that’s 16 years ago?
Jeffrey Cheng 5:17
Bertrand Théaud 5:18
Because 16 years ago, it was not that popular, trendy, fun, cool – I don’t know how you want to name it or qualify it – to become an entrepreneur? Today, there is this trend, but…
Jeffrey Cheng 5:29
Not so much. The term start-up hadn’t even been mentioned yet.
Bertrand Théaud 5:32
So you still have, I mean, at that time, that was already something that you had in your mind.
Jeffrey Cheng 5:36
Yeah, I think it comes from my family background. I mean, my parents, they run their own business.
Bertrand Théaud 5:43
Jeffrey Cheng 5:43
So I was brought, I was brought up and raised by, you know, in an entrepreneurial family, where my dad would usually go, you know, price comparing everywhere, bargaining everywhere. Always, you know, comment on, you know, the economic news, and, you know, just so much information and theories and you know, comments flooded into my mind when I was young. So…
Bertrand Théaud 6:14
Okay, so when you arrive at the university, you knew everything already.
Jeffrey Cheng 6:16
I don’t know everything, but I know that it seems interesting. It seems interesting. But, you know, obviously when I really started my own stuff it’s different. And obviously different from what I thought when I was 18.
Bertrand Théaud 6:30
Yeah, surprise, yeah. You will tell us more about this. And so, okay, so you moved to Toronto for your studies. You stay there for three years? Yes?
Jeffrey Cheng 6:41
Bertrand Théaud 6:42
Four? Four years.
Jeffrey Cheng 6:43
Bertrand Théaud 6:44
When you got your diploma out of the university, did you try to join a big corporate? Because that’s a discussion that I have from time to time on this podcast. Is it better to immediately after your study even if you know that you want to become your own boss and, and be an entrepreneur, is it better still to have a first experience with a big corporate because you will learn something? Or…I mean, I’m speaking too much, I’ll let you answer.
Jeffrey Cheng 7:16
No problem. So when I graduated, it’s different from what I think of it right now, obviously, when I graduated, of course, just like anybody else, I would want to go into a big corporate, you know. Immediately I would think “oh, it would be nice if I can work in an investment bank.” I mean, it sounds cool. I mean, sounds prestigious, and makes you somewhat different.
Bertrand Théaud 7:40
A lot of people just say, okay, after my studies, investment banking, big audit firm, VC funds…
Jeffrey Cheng 7:45
Yeah, exactly. Exactly. So, but it was all a thought, because obviously, I wasn’t quite qualified for it. Because, you know, again, my academics weren’t just good enough. I wasn’t spending too much time on studying so obviously, I wasn’t not ready for it. I asked around and they were quite, you know, some of my uncles, they were quite honest with me that I might not be eligible obviously to apply. So don’t waste your time. Don’t waste your time. But then I came to know that there’s another in the industry that is very interesting, which is advertising, and I actually headed to an advertising agency after I graduated.
Bertrand Théaud 8:26
In Hong Kong?
Jeffrey Cheng 8:26
In Hong Kong.
Bertrand Théaud 8:27
Okay, what did you do there?
First. How did you find this first position? You apply? It was, you know, through friends and family friends? Was it difficult to get your first job?
Jeffrey Cheng 8:38
Again. I’ll be honest, it was through a family friend.
Bertrand Théaud 8:40
Jeffrey Cheng 8:40
Yeah. Yeah, I’ll be very honest…
Bertrand Théaud 8:43
So family friends.
Jeffrey Cheng 8:44
Yeah. I mean, I took an easy way by making use of my family’s network. And I managed to enter an advertising agency. They had clients like MTR, Intel, etc. And that’s really the first, you know, first time I got in touch with, you know, tech related stuff.
Bertrand Théaud 9:04
Yeah, because that was the beginning, the very, very beginning of digital marketing
Jeffrey Cheng 9:07
Exactly, the very beginning.
Bertrand Théaud 9:08
It was very interesting at the time.
Jeffrey Cheng 9:10
It was even before the transformation from traditional to digital. It was a little bit before. Online banners weren’t even that popular back then. So I was working mostly on, you know, traditional above the line below the line campaigns, where you handle, you know, TV commercials, you handle print ads, very traditional stuff. That time it was in a small agency. So I learned quite a lot. You always have your hands full of work, you know, overtime every single week. And you have to manage a lot of stuff. The whole structure is messy. So you just have to, you know, work on everything yourself in order to get things done. So but then, right after one year working in a small firm, I moved to one of the largest firm in Hong Kong.
Bertrand Théaud 10:01
In this first firm, you say everything was messy. Meaning what? Meaning that you were in charge of doing everything? Finding the clients?
Jeffrey Cheng 10:08
Bertrand Théaud 10:09
Delivering the work?
Jeffrey Cheng 10:10
Yeah, almost everything. Packaging…
Bertrand Théaud 10:12
Chasing for the invoice.
Jeffrey Cheng 10:13
Exactly. Chasing for invoice, handling contracts, getting samples for the clients…You name it!
Bertrand Théaud 10:22
That’s a good school.
Jeffrey Cheng 10:23
It’s a good thing. It’s a good thing. It is what makes me being able to enter a larger company, honestly. Because I moved to a larger agency. I don’t know if you’ve heard of Leo Burnett?
Bertrand Théaud 10:34
Jeffrey Cheng 10:35
Yeah, Leo Burnett.
Bertrand Théaud 10:36
So you didn’t want to stay longer in this small agency?
Jeffrey Cheng 10:38
No, I didn’t.
Bertrand Théaud 10:39
Why? You thought that you reached a point where you learned what you had to learn or…
Jeffrey Cheng 10:43
I feel like…
Bertrand Théaud 10:44
Or it was a better opportunity to move to the other one?
Jeffrey Cheng 10:46
I think I just wanted to step up in terms of going a bit more global.
Bertrand Théaud 10:51
Jeffrey Cheng 10:51
In terms of, you know, it was quite narrow the scope of work. I just want to step up a bit and see how the road runs. It’s actually a great experience, learning how business runs with my first job. But when I stepped up when I moved to the internet, it was quite different, you know, things you you get in touch with is different. People you work with is different. It gave me quite a sense of how large companies work like corporate work, because I deal with large corporates.
Bertrand Théaud 11:18
So you eventually had your experience in a large company,
Jeffrey Cheng 11:20
Yeah, it taught me a lot, you know about who are the stakeholders, who make the decisions and what do they make decisions based on? And, and why does the CEO have to, you know, meet higher management every now and then. A lot of reasons behind and I didn’t know much back then. But I have all these memories, all these happenings in my mind. Like right now when I think of it again, and there’s been a lot more on why it happened. And I just wanted my views like just one of my whole you know, my, you know, horizon, honestly.
Bertrand Théaud 11:54
Yeah. And with this larger agency, what were you in charge of?
Jeffrey Cheng 11:59
I was account servicing. So I had to deal with clients. Basically it’s like a project management kind of account manager. Yeah, yeah, account manager kind of role. I think it’s a tough job. It’s a tought job. I mean, you have to, you know, we have creatives in the back…
Bertrand Théaud 12:01
So okay, so you are the point of…I mean, you are the intermediary between the clients and the creatives in the back.
Jeffrey Cheng 12:24
Exactly. I had to take all the pressure, and all the scolding and yelling.
Bertrand Théaud 12:27
What is it? What is very difficult to work with the creatives? I don’t know to what extent that’s true?
Jeffrey Cheng 12:35
It is very true. I mean, but after all, I mean…
Bertrand Théaud 12:39
Because you rely on them, they have to deliver the product.
Jeffrey Cheng 12:43
Exactly. They’re like if you…
Bertrand Théaud 12:45
You want to drive them, right? Because the clients have some expectations.
Jeffrey Cheng 12:47
Bertrand Théaud 12:48
So how do you manage that?
Jeffrey Cheng 12:50
It’s tough. It’s tough. I mean, you have to have people skills. That’s the one thing that I get in return from that job. It’s to realise how important people skills is. People skills is not widely mentioned, I don’t think a lot of people have heard of people who are calling it people skills. But I think everyone has a feel of it. It’s about how you deal with people, how you observe, how you communicate, and how you manage expectations.
I think..And, you know, you handle your own emotions as well. It’s very interesting how a lot of people working in advertising agencies, they have excellent people skills. People who do not have people skills, they can barely survive the job. So even as creatives, if they want to thrive in the industry, they need people skills as well. Because after all, they’re not artists, they are designers.
Bertrand Théaud 13:44
Jeffrey Cheng 13:44
Right. They’re not artists.
Bertrand Théaud 13:46
But then you said that when you were doing your study, your focus was not so much on the academics but meeting people, developing social skills.
Jeffrey Cheng 13:55
Bertrand Théaud 13:55
So at the end, you close the loops, right?
Jeffrey Cheng 13:59
Bertrand Théaud 13:59
This is what actually helped you…
Jeffrey Cheng 14:01
Bertrand Théaud 14:02
this experience was…
Jeffrey Cheng 14:03
It did. It did. It helped a lot. It helped a lot. Yeah.
Bertrand Théaud 14:06
Okay, so that’s, you know, that’s a good takeaway for people listening to us. Focus on your social skills during your studies.
Jeffrey Cheng 14:14
I think especially nowadays, I mean, it’s very important to be able to work with people, communicate clearly, understand your temperament, you know, because everybody’s different, right? If you want to get one thing done, you can’t just go by the books, you have to be creative. You have to think of ways to make things happen, right? You can’t just sit there and say “It’s not my fault” because, you know, he’s not doing it or she’s not doing it. But you still have to get your job done, right? You just can’t sit and wait for help.
Bertrand Théaud 14:42
Yeah, sure. So…And because it’s a much larger agency, so I guess during your time there, you must have worked with people of all kind of, you know, different cultural background. Not only people from Hong Kong?
Jeffrey Cheng 14:56
Bertrand Théaud 14:58
Did you learn a lot and was it helpful for you to have, you know, to have grown in Hong Kong and studied in Toronto. Was that mix helpful in that job?
Jeffrey Cheng 15:08
It was. It helped me a lot. I mean, because honestly people from different backgrounds of course they will have different views and different practices. And being you know, living..Like I spent some time in Canada does help me, you know, to understand the difference between foreigners and local Hong Kong people.
You know, because back in the days most of the management of the people are the foreigners, which makes sense because Leo Burnett is from the States. And then, but for me, I usually spend most of my time working with local Hong Kong employees. And it’s interesting how my company, their hiring policy…I mean, they do have a preference for people who study abroad. It’s somewhat that…You know, it’s quite…
Bertrand Théaud 16:01
Why? Why that?
Jeffrey Cheng 16:01
It’s quite nosy. It sounds bad right? It sounds bad, it’s picky. You guys have preference over people studying abroad. But when you look at it, you know, in detail you can see there is a difference. It’s because you know, you know a bit more about how the world is doing, you have a better understanding of the things happening in the world, a better sense on designs. You have better sense of creativity, you respect creatives a bit more. And well, last but not least, you have better communication skills. I mean, honestly, you can speak a bit of English. When you go out and present, at least you can deliver some messages across instead of being very shy and not speaking up. So I understand it sounds nosy. I mean for people from Hong Kong working in an advertising agency, I think they will know the reputation of Leo Burnett. They are quite…They do have this reputation of being you know, a bit nosy.
Bertrand Théaud 16:07
But it still exists or they’ve been absorbed by another company?
Jeffrey Cheng 17:11
You know, the past 10 years has seen a lot of crazy consolidation. Yeah, Leo Burnett still exists in Hong Kong but they are one third of the size when I was there. Yeah, a lot of my colleagues back then left. They even left the industry. But it’s a changing industry, the whole digital marketing coming up, a lot of social media disrupting the whole industry. I still find it very interesting how the industry is developing. And I still keep a close eye on what’s happening around the world. It actually created a lot of opportunities, new opportunities for people who are interested in the field. A lot of my previous colleagues came out and start their own agency. But definitely not…
Bertrand Théaud 18:04
Yeah, there was a good momentum. I think, for people who were willing to learn and see how the things were changing. And yeah, jump on the bandwagon.
Jeffrey Cheng 18:14
Yeah, lot a lot. And especially on the client side, corporates, they don’t even want to engage large agencies anymore. That’s the key.
The world is changing too fast.
Bertrand Théaud 18:26
Very interesting what you’re saying. I think there was this, I’m older than you, so there was this trend in the 90s where all companies engaging services, whether it is advertising, can be legal, accounting and so on. There was this trend where there was global companies serving the clients in every market. And I think this business model has failed.
Jeffrey Cheng 18:51
Yeah, I think it’s been disrupted by the internet. It did. The internet changed a lot of things, changed a lot of industries. I don’t know about others, but I’m more familiar with advertising and marketing agency industry. So from what I can see large agencies just couldn’t adapt to the changes that the Internet has brought to them. And especially, how Internet has affected the whole consumer market. How consumers are behaving differently than before. And the larger agencies just couldn’t catch up, because it’s changing too fast. And their clients, they don’t have the patience for the larger agencies to catch up to the market. So they just decided to, you know, let go of them.
Bertrand Théaud 19:38
Are there agencies that still have, you know, global clients? So it’s a client that you have in the US and they would work with the same agency.
Jeffrey Cheng 19:46
They will still, that still exists. And that’s what…
Bertrand Théaud 19:50
That’s kind of the exception?
Jeffrey Cheng 19:51
Exactly. And that is what is keeping these larger agencies alive. Yeah, they are still in Hong Kong. They still have an office, I think 30 to 50 staff, because they still have regional accounts, with cosmetic brands with iconics brands. More like a global / regional deal, but they don’t have much local clients anymore.
Especially those that requires, you know, that requires a lot of creativity kind of work, that requires a lot of digital work. Large agencies are not that good in that sense. They’re still good in a way, they are good with planning. They’re good in above the line productions and creativity is making TVCs, making very aspirational campaigns, it’s still their strengths. But you know, right now, in our society, we don’t even watch TV much anymore, right? You watch your phone, you watch social media. And all the productions you see on your social media, they don’t even require that much, you know, thoughts into it. It’s very straightforward because you don’t have like five seconds or 10 seconds of their attention span. So why spend millions of dollar into a five to 10 seconds, you know, clip. So that’s the whole rationale that happened. What happened in the previous five years. And it’s interesting to see this change. And hence I see a lot of startups are trying to move into the marketing scene, to advertising scene.
Bertrand Théaud 21:25
Coming back. How long did you stay? I mean, how long did you work with Leo Burnett?
Jeffrey Cheng 21:30
It was around two to three years.
Bertrand Théaud 21:32
Two to three years.
Jeffrey Cheng 21:33
Bertrand Théaud 21:33
And so you, obviously you were there at the right time to see the change in the industry. And you were speaking about your friends starting their own agency, were you tempted to do the same thing at the time?
Jeffrey Cheng 21:47
At the time? No, no, I wasn’t ready. I mean, starting a business is always about “Do you have your clients? Do you know who are your clients?” At that time, the disruption hadn’t fully, you know, appeared, I was still under the radar somewhat fermenting. I didn’t see any opportunities out there for me to run my own business honestly.
But I did see at that moment, I knew…I decided to leave because I kind of wanted to start my own thing. But not in the advertising field.
Bertrand Théaud 22:27
In another industry?
Jeffrey Cheng 22:28
In another industry. I sort of had enough of the long hours, all the long hours, late nights and all the pressure that is, you know, involved and…
Bertrand Théaud 22:43
That was the trigger? I mean…
Jeffrey Cheng 22:44
That was the trigger. Honestly, that was a trigger. And I had that feeling of, I had the feeling of, you know, being a little, you know, a little screw in a huge machine. I get the point of learning to be a screw but at some point you just want to see more.
Bertrand Théaud 23:00
At some point, you don’t contribute that much.
Jeffrey Cheng 23:02
Exactly, I just want to see more, learn more from others stuff, other jobs, and other businesses. So I decided to leave.
Bertrand Théaud 23:09
And what was this industry?
Jeffrey Cheng 23:11
I started an education center, like a tutoring center in Hong Kong.
Bertrand Théaud 23:17
Okay, so any reason for that you have your first kid by then?
Jeffrey Cheng 23:21
I did that for the, you know, worse reason. It’s simply to ride on, you know, a hype that people have been saying running education centers will make great money in Hong Kong. Because of how our society, you know, how we treat education.
Bertrand Théaud 23:42
Jeffrey Cheng 23:42
Yeah, the tiger moms. How we believe scores are everything. Grades are everything. And…
Bertrand Théaud 23:49
Did you know anything about this industry?
Jeffrey Cheng 23:51
Ah, very interesting. I knew nothing about this industry.
Bertrand Théaud 23:53
You had a partner with you?
Jeffrey Cheng 23:55
Jesus, I did have a partner. We had a great idea. I mean, I still think the idea works, but at the end of the day, we had no ability to execute anything. Our idea was simple. I mean, even up to now, I think it’s still legit. It’s that we were thinking of, we actually did buy a business, an existing business, an existing tutoring center, that is very traditional: teachers, you know, look after the students homework, nothing else. And I was planning, we were planning to buy that and then develop our own courses, especially in…
Bertrand Théaud 24:31
Those courses are for students of which grade?
Jeffrey Cheng 24:34
For students of grade five, six and above.
Bertrand Théaud 24:38
Jeffrey Cheng 24:38
And high school. Yeah. And it was right to the point where the Hong Kong education system was trying to introduce…How do you call that? Suddenly I lost my word for that.
Bertrand Théaud 24:51
Say it in Cantonese
Jeffrey Cheng 24:53
[Chinese words] So it’s like a general studies. It inspires you to think about what are the reasons behind everything. Social affairs, history, stuff like that. I just lost that word. I’m sorry. But it’s a new subject at the time, and people were afraid. They were panicking on how you can get a good grade out of it.
Bertrand Théaud 25:13
Because there was no past paper.
Jeffrey Cheng 25:15
Yeah. And honestly, even up to now, there isn’t much past papers, because it’s all about critical thinking. You grade students by their critical thinking capabilities.
Bertrand Théaud 25:24
I can imagine it created a big panic, you know, among the…
Jeffrey Cheng 25:27
Yeah. It was great. I mean…
Bertrand Théaud 25:29
The panic brought you the right users.
Jeffrey Cheng 25:30
Yeah, exactly. And so we were trying to design something that would help students to develop a critical thinking mindset. Idea, I still think it’s great. I still think, you know, people will buy it, but then the problem is, we were not from this industry. We do not know much about it. We weren’t even studying in traditional high school in Hong Kong.
Bertrand Théaud 25:42
But how did you build this business? So you bought an existing business with the idea to basically transform it and make it grow?
Jeffrey Cheng 26:00
Bertrand Théaud 26:01
But were you trying all that time already to digitalize the business? Or you know, you wanted to do it the traditional way?
Jeffrey Cheng 26:09
Bertrand Théaud 26:10
Jeffrey Cheng 26:11
Bertrand Théaud 26:11
Okay. Anyway, maybe I think it was too early.
Jeffrey Cheng 26:14
It was too early. I don’t have any concept of, you know, bringing things to digital.
And the worst part is that we relied on someone else to teach. We relied on someone else to design a course. We relied on someone to, you know, keep the previous business running – the homework business running. And turned out, we relied on someone else for everything, we outsourced everything to our staff, we don’t do much. We just plan. We just think. We just sit there.
Bertrand Théaud 26:46
But you knew about the product that you wanted you to deliver.
You knew about the product, you knew about the client. Yeah, so the difficulty was for people to…
Jeffrey Cheng 26:55
The difficulty was…
Bertrand Théaud 26:56
To create the right product or to sell the product?
Jeffrey Cheng 26:59
To sell the product is the key. And we, we knew the product would have demand, but we didn’t know how to sell it. We did not know how to sell it. We tried a lot of different ways, but they are all conventional ways.
Bertrand Théaud 27:16
But what do you mean? The channel? The right channel to…I mean…
Jeffrey Cheng 27:21
We had no flyers…
Bertrand Théaud 27:21
Trying to find the to find a customer.
Jeffrey Cheng 27:23
Yeah, we had no flyers. So when you know, talking to parents asking for referrals, we did some traditional stuff offline, everything offline honestly. Well, everything was offline because we started this Education Center was a Tai Po. So it’s in our New Territories, kind of…
Bertrand Théaud 27:41
In which year was that?
Jeffrey Cheng 27:42
I think it was around 2012. Around 2012, 2011-12. Um, so it was…Again, I don’t have that mindset of digital marketing. So hence it was all off myself. It was about us being too naive, I think. Naive about how a business, you know, how to make money. I don’t even talk about business management.
It was simply about how to make money. We were too naive that people would be very sticky. We were too naive that if people see something and think it makes sense, they will pay you for it. But it’s a bit more, a lot more than that. There’s a lot of trust issues, especially when it comes to education, right?
And we weren’t aware of that we weren’t able to build that. So we even lost our existing clients. So a lot of parents left because they see us not paying attention to what we were doing, not being able to achieve what we said…
Bertrand Théaud 28:45
Trust is key I guess. I think parents are ready to pay as long as they trust.
Jeffrey Cheng 28:49
Yeah, and we even offloaded, you know, the communication with parents. This field of work, we even offloaded it to the tutors. We didn’t even talk to the parents ourselves.
Bertrand Théaud 29:00
You were not a parent at that time?
Jeffrey Cheng 29:02
Bertrand Théaud 29:03
You were not a father or parent at that time, right?
Jeffrey Cheng 29:06
Bertrand Théaud 29:08
Maybe it made it even more complicated to understand the parents state of mind.
Jeffrey Cheng 29:11
Exactly. So I learned it after we failed.
And, but honestly, you know, the whole experience was very valuable. Was very valuable, it made me understand myself.
Bertrand Théaud 29:24
And how long, you know…First, first question here, how quickly did you realize that, you know, you will not make it with this business?
Jeffrey Cheng 29:31
I have realized that after six months.
Bertrand Théaud 29:34
Six months? Pretty quickly
Jeffrey Cheng 29:35
Yeah, after six months. And because I sort of went part time after six months, my partner took over as full time. And then after 12 months, he couldn’t, you know, he just couldn’t stand it anymore. So we decided to resell it again.
Bertrand Théaud 29:52
So, yeah, no, that’s fine. That’s why you had an exit.
Jeffrey Cheng 29:55
Yeah, we had an exit…
Bertrand Théaud 29:56
But you lost everything.
Jeffrey Cheng 29:57
Well, it did not lost everything, but we lost quite a lot.
Bertrand Théaud 30:00
Jeffrey Cheng 30:00
Yeah, so it’s, you know, I think around HKD300,000. Well depends on how you say it and how you see it. It was quite a lot at the time for me.
Bertrand Théaud 30:10
Yeah, when you are young, it’s like…
Jeffrey Cheng 30:11
I was young and it’s like three years of working experience. Come on.
So it was, it was tough, but then again, learned a lot, honestly.
Bertrand Théaud 30:19
But at least you were good at realizing pretty quickly that this business was not for you. Because, you know, the typical mistake that a lot of entrepreneurs will do is they start a business and because they put so much time and money into that business, they don’t want to see the harsh reality that, you know, it’s going nowhere. And then you keep on going and going and going and then, you know, at the end you lost even more.
Jeffrey Cheng 30:42
Yeah, you’re right. I mean, I think it’s in my blood somewhat, somehow, that I always, you know, reevaluate. And I’ve always told myself to be observant of what’s happening around. Probably because of my dad’s business background, something like that. But this kind of quality in me actually helped me a lot, even up to this day. And made me not to be such a stubborn person. Yeah, and sometimes you just have to step back and think, even when you fail, of what you did wrong. But of course, sometimes that gets me in a very tough position where I think I overthink a lot. I would easily overthink a lot but then on the bright side, you know, it helped me learn from my own mistakes. So I guess why not?
Bertrand Théaud 31:29
Because yeah, on the other side, when you are an entrepreneur, you have to believe in your project.
Jeffrey Cheng 31:32
Bertrand Théaud 31:33
If you don’t believe in it and you don’t give it a try. You will never know if it could have worked. So yoou have to find the right balance.
Jeffrey Cheng 31:38
Exactly. That’s the toughest point, I think, being an entrepreneur. A lot of things you just can’t take things to the extreme. You just can’t. You really have to always find the right balance for itself, depending on what the incident is, what the situation is. So…But yeah, that’s been tough. I’m still learning of course, I’m still learning…
Bertrand Théaud 31:58
Today, will you start another business where you don’t know anything? Or you’re thinking “Okay, I’m done. I’ve done it. I’ve tried once and never again!”?
Jeffrey Cheng 32:06
I think I’m done. I’m done trying something entirely new without any relevant network and the relevant knowledge. I think I’m done. I have to, at some point, have a bit of knowledge or network on that particular thing that I might go for. But if I know nothing about it, I probably won’t go for it.
Bertrand Théaud 32:24
If it’s totally new, it’s not for you.
Jeffrey Cheng 32:25
I don’t think so. Yeah, I think it’s just a mistake. I mean, it was just a mistake. It’s great that I learned a lot from it. But it’s still a mistake.
Bertrand Théaud 32:37
We all make mistakes. Thank you for sharing that.
Jeffrey Cheng 32:40
Yeah, no problem.
Bertrand Théaud 32:42
And so. First experience in the advertising business. Second experience in the education business.
Jeffrey Cheng 32:49
Bertrand Théaud 32:50
And after 12 months, then you move to something else. So I guess there was a business you knew something about?
Jeffrey Cheng 32:57
Yeah, I knew something about it. And I went back my family business. It was…
Bertrand Théaud 33:02
Which was about?
Jeffrey Cheng 33:04
It’s a manufacturing firm. We were actually running a yarn business, a yarn trading and spinning business. So yarn I think everybody know what yarn is but we are more like a semi-product. So we don’t sell to retail clients. We sell to the sweater making factories, and then they will produce sweaters out of our yarns and sell it to the market. It was based in Hong Kong with a factory in China just like any other you know, traditional business. And just like any other traditional business, it was about to go downhill, down the slope because China, you know, they are, you know, they’re doing great. I mean in terms of the quality of the people, in terms of how they’ve been dealing with trading businesses, and their technical capabilities. The moment I went in was quite tough already. I saw us being, you know, a Hong Kong-based yarn trading firm/manufacturing firm only. We didn’t really have that advantage over the Chinese ones anymore.
It was just diminishing. And the only advantage we had was that we were capable of dealing directly with the fashion brands. This is something that back then the Chinese players weren’t capable of doing yet.
Bertrand Théaud 34:35
They didn’t know the international markets.
Jeffrey Cheng 34:38
Bertrand Théaud 34:39
And they relied on you.
Jeffrey Cheng 34:40
Yeah, it wasn’t just about the language barrier. It was more about the practices. You know, in China, the practices were so different back then. I mean, now it’s improved a lot already, but back then it was pretty bad. So that was our advantage. So I went back and work there for 5 to 6 years.
Bertrand Théaud 35:01
But were you based in China at that time? Or you manage the business out of Hong Kong?
Jeffrey Cheng 35:06
I manage the business out of Hong Kong because I was mainly responsible for sales.
Bertrand Théaud 35:11
Jeffrey Cheng 35:12
So most of the buying offices are in Hong Kong. And so I had to be stationned here rather than in China. But of course, I had to go back at times for, you know, sometimes for quality checks, sometimes for, you know, taking my clients for tour, and sometimes even for learning new things, you know, after all I have to know what I’m selling, right?
Bertrand Théaud 35:33
And this company was doing manufacturing and trading? Or outsourcing manufacturing?
Jeffrey Cheng 35:37
Bertrand Théaud 35:37
Or were you also involved in design and, you know, proposing some kind of design to your clients.
Jeffrey Cheng 35:44
Yeah, we weren’t involved in that, not in the sweater design, at least. But at some point we did give input on the composition of the yards. Because I mean, nobody realized that. I mean for me I have a professional problem right now when I go into shops to buy a spider. The first thing I would, you know, look for is the tag of composition. My wife, you know, just don’t want to go shopping with me nowadays. Because I always tell her don’t go to Zara, don’t go to H&M, stuff like that. And, yeah, we got to make decisions or give suggestions to the clients on what composition is better. What would give you a better pricing, what would give you a better, you know, a feel of the sweater. A hand feel. Stuff like that, but not on the design of the sweater.
Now, we weren’t in…
Bertrand Théaud 36:36
Okay, and most of these clients you were serving they were based in the US? In Europe?
Jeffrey Cheng 36:44
Both Europe and US. Our clients were Gap, J-crew…What else? We used to have Esprit but they kind of, you know, went down
Bertrand Théaud 36:58
Jeffrey Cheng 36:59
Yeah, we used to work with LL Bean. We used to work with…
Bertrand Théaud 37:04
So it was large volume?
Jeffrey Cheng 37:06
Large volume, we do prefer larger volume. But again, when the tide changed, when the Chinese local suppliers became more sophisticated, the large volume orders obviously went down. So, essentially, before I left my family office, my family business it was obvious that they [the fashion brands] would rather deal directly with the Chinese suppliers.
Bertrand Théaud 37:36
It’s been the trend for many years.
Jeffrey Cheng 37:38
Yeah, for many years. So it just happened and I was quite happy that I managed to make an exit honestly. Yeah, before that really comes to an end.
Bertrand Théaud 37:48
Okay, and then this business, I mean, you. So, same thing, looks like it’s really one of your strong point. So you realized, same thing, pretty quickly that this business was heading into a difficult time.
Jeffrey Cheng 38:04
I did not look at it in such a, you know, high level spectrum, honestly. Now right now looking back, I would say it was the right decision. Back then there was this one thing that really triggered my decision of leaving. It was the fact that I found out “the larger you go with that business, the more inappropriate things you have to do”. By inappropriate, I mean…
Bertrand Théaud 38:16
What do you mean there?
Jeffrey Cheng 38:34
I mean under table stuff.
Bertrand Théaud 38:39
Jeffrey Cheng 38:39
Yeah, a lot of, you know, sketchy stuff. You know, growing up in Canada and going to international school during my high school years. I mean, the Western culture taught me this was not something you would do nor should do. And for me, it was kind of hard to accept that.
Bertrand Théaud 38:56
So it was very difficult anyway to build a business
Jeffrey Cheng 39:00
Exactly. Because when, you know, my sales order, some of my clients were believing in us more and more. So we were getting larger orders. But it seemed like the larger order we had, the more I had to do these kind of under the table stuff. So I mean, I was not comfortable with that. And I was telling my family that. I mean, first of all, if I had built my career on this business, I could see that we wouldn’t really have much of a position anymore after 10 years.
And during that time, 10 years forward would have meant I’d be around 38 years old. Yeah around 37-38 years old. And the second reason was I was just very uncomfortable with these under the table stuff. If I did not, you know, give these away, and I would get into so much trouble because you know, because the role we’re in is that we deal with the brands, right? But we still have to rely on the sweater manufacturers to make the sweaters. With us supplying to the sweater manufacturers, it gave them, you know, all the rights to get us into deep sh*t.
You know, they can claim us for whatever reason, they can, you know, put us in very difficult positions. And what I meant by the under table stuff was not to the brand. Because after all, they are all, you know, international firms, they do have strict policies. I do believe there isn’t much going along with them. But between me and the sweater manufacturers, I do think a lot of the people in the industry have been doing like us. You know, a traditional practice in which I just can’t. I just can’t. And so that’s the second reason I told my family that I’m I’m just uncomfortable with it.
So, at the end of day, I just told them I just don’t want to have such a huge change in my career when I’m 38. Because I believed that when I’m 38 I have a family, I might have kids already. And if you asked me to go for a change in my career, the direction of my career, I think I would rather not. And then I just told them, I think it’s best for me to leave now. And you know, just explore something new and see if something works out as early as possible. So I actually left that. I left my family business around four years ago. So which was around right on my 30th.
Bertrand Théaud 41:38
You said you made an exit was this family business as well?
Jeffrey Cheng 41:41
It wasn’t really an exit. It wasn’t, you know, an exit in terms of money. I do believe our business is worth quite a bit of money. But dealing with that. I didn’t really get involved in wrapping up the business because after all, my father, my dad, he has all the connections, you know, to deal with this stuff. And dealing with things in China isn’t easy. It requires some special people with special expertise to handle it. Because we had a factory, we had a license, we had, you know, a property inside. So I didn’t get involved too much. But at the end of the day, I do know that we managed to sell the business for some money. Not a lot, honestly. But just to get our hands clear, we didn’t have to deal with the Chinese government, and everything was settled properly. So we didn’t have to go back often. We only had to go back for business, for wrapping it up. So that’s what happened at the end.
Bertrand Théaud 42:43
And you stayed with the family business for how long?
Jeffrey Cheng 42:46
Total of around five years. Around four to five years. Yeah. So it was quite interesting. I learned a lot more again on how businesses operated. I learned a lot about, you know, human nature.
Bertrand Théaud 43:03
Again, people skills…
Jeffrey Cheng 43:05
People skills, human nature. It all comes down to human nature, you have to understand that in order to work with people, right? If you want to get something out of their hands, you have to understand who they are. And that’s my major outtake, honestly. Because after all these, I can understand why people are so obsessed with these under table stuff, right? It’s obviously in our nature, right? Greed. A lot of things are generated by greed. So, but it’s about how you tackle greed. I think from that point on I understood, it was not about pricing. Sometimes it’s really not about what’s in front of you. It’s about, you know, behind the scene, what are the relationships, what do they really want out of their career. Sometimes it’s about money. Sometimes it’s not. It can be about other stuff. But having understood that really helped a lot. It helped me understand that when running a business, you just can’t go by the textbook.
Like, there is no textbook for that. Because every single person is different, right? If you have to deal with a lot of people you have to be observing, you have to really dig deeper to understand every one of them. And everyone, every single corporation, the big ones, the small ones, you have to know who are the decision makers. It’s not like you only have to, you know, pay special attention to decision makers only, you still have to understand what are the roles of every single person you meet. If he or she is just an executive, like a junior executive, you still have to be good to them. You just can’t ignore them and give them bad attitude. I mean, after all, they are the ones delivering the messages right?
Bertrand Théaud 44:54
Yeah. You have to understand who you speak to.
Jeffrey Cheng 44:57
Exactly. Yeah, that had a big impact on me.
Bertrand Théaud 45:01
And because you have all these different experience that brought you to find out more about people skills. So, today, when you deal with people, what are these people skills that you especially pay attention to? What is the most important thing? Like do you say: “Okay, I want this and I don’t want that”?
Jeffrey Cheng 45:24
First thing that comes to my mind is to be a genuine person, no matter what, just be genuine. There’s no point of giving people a hard time. And at the same time, always try your best to engage in conversation at all times. This is the only way you can understand a bit more about each other. Personally, I’m not afraid of sharing with people what I know, what I have in possessions. Because I always believe that it’s better to exchange, always believe in a win-win situation. I don’t believe people will give you things for no reason. I do not believe that.
Bertrand Théaud 46:04
Because a lot of people think that whoever has the information has power.
Jeffrey Cheng 46:08
Bertrand Théaud 46:09
That you have a leverage.
Jeffrey Cheng 46:10
Exactly. But I don’t believe that I believe in a win-win situation. So everybody’s happy. When everybody’s happy, you know, down the road, you will win everything together, right? But if you take advantage of a person at this moment, at this very moment, yes, you might win something. But at the end of the day, you don’t know what will happen, because…
Bertrand Théaud 46:29
How will you assess if this person has the same view?
Jeffrey Cheng 46:33
Of course, of course, I’ve been through. I’ve been through terrible cases that made me learn a lot, where that person did not reciprocate. And I learned a hard lesson. Well, honestly, it did not stop me for believing in what I believe but it did tell me how to be even more observant. How to really assess whether you know the person across is the same type of person as me.
I read a book that talks about givers and takers. So I mean, I’m more skewed towards being a giver. And I have to know how to identify a taker. That’s the underlying moral from my experience. So, being that type of person in Hong Kong is not quite popular. I think it’s because of our culture. The Chinese way of doing things, you know, reaching a win-win situation, being open about what you have, it’s somewhat more like a Western culture kind of thing.
Bertrand Théaud 47:43
Yeah, that’s for sure. That would be the purpose of another discussion.
Jeffrey Cheng 47:47
Yeah, I don’t know. But it seems like right now I’m happy because building my business on so tightly with the start-up scene, the tech start-up scene, actually matches with what I believe. Yeah. Because people in the start-up industry, they do share this belief of, you know, not holding up the things they know. Being open minded, being welcoming, being genuine, to build real values. Instead of, you know, very short term greedy values. So, I quite enjoy where I am right now.
Bertrand Théaud 48:30
So that’s a good transition. So, you move from this family business. There was this difficulty that you explained at that time to another experience, venture, I don’t know how you want to qualify that. So you set up some kind of investment fund with a proper structure or was it more like a club of investors at the beginning? What was the exact form it took?
Jeffrey Cheng 48:58
So after I left my family business, I actually started my co-working space first.
Bertrand Théaud 49:04
Jeffrey Cheng 49:05
Yeah, I was very intrigued by the whole start-up investment kind of thing. But I didn’t know how to approach that. I didn’t know how to tackle it. I didn’t even know what it’s like in Hong Kong just yet. I had no idea. So I started my co-working space first. But answering your question, the structure right now is not as sophisticated yet because we just had our first close half year ago. So it’s just our first investment vehicle. We took a very simple structure. We did not go for you know…Honestly, we treat it like more like a friends and family co-investing in assets.
Bertrand Théaud 49:48
So it’s more like a club of investors.
Jeffrey Cheng 49:50
Yeah, exactly. So it’s easier at the moment.
Bertrand Théaud 49:55
But then, so after the family business, you move to the co-working space.
Jeffrey Cheng 50:00
Yep, that’s right. Yep.
Bertrand Théaud 50:01
Okay. And you knew something about it? Coming back to the same question
Jeffrey Cheng 50:08
You know just like every Hong Kong businessman, we do know one or two things about real estate. Right. So co-working space is, I won’t deny that it’s a real estate business. I mean, come on. Don’t play me.
Bertrand Théaud 50:28
You won’t say that it’s a tech business as WeWork would say it.
Jeffrey Cheng 50:31
You can say it can be enabled by tech. But underlying, it’s a real estate business. So it’s a real estate gameplay, but with a whole new concept injected into it. I quite like it. I quite like the fact that you get to meet people. I position my co-working space as a space to help start-ups grow. So I quite like this proposition. I quite like the role that it plays. And, you know, being able to meet people in this field was actually the biggest asset I get out of it.
Bertrand Théaud 50:38
So you believe in the possibility to build a community around the working space?
Jeffrey Cheng 51:16
Yes, I do. So, yeah.
Bertrand Théaud 51:18
I think that’s true. I don’t remember if it’s WeWork or another brand that is in the co-working space business, I think they even developed their own app. So they have their own app. They want to develop their own social network with their members. I don’t know how successful it is.
Jeffrey Cheng 51:39
I don’t know. I don’t really have facts on that. I do know WeWork has an app. I do know a couple of Hong Kong co-working spaces have an app as well. Honestly, we do have an app as well. But I have be honest to myself, I do not expect it to become a very social network because after all the key to building a community in a co-working space is the physical presence. The physical connection you have by seeing each other, by being able to engage with each other during lunch time, coffee breaks, smoking time. That’s, that’s I think that’s the key to a co-working space community. You know, there are a lot of aspects you have to look at to make this happen. And a community cannot be built by simply making the space nicer, cannot be built by, you know, getting the right staff or offering the right freebies. It’s not just that.
Bertrand Théaud 52:44
Yeah it’s not because you offer good coffee that you will get a nice co-working space.
Jeffrey Cheng 52:47
Exactly, it’s not about that.
Bertrand Théaud 52:48
But then how do you want to build it? Does it mean that you will be more picky on the tenant? And only accept tenant in a specific industry because they are in the same industry so they’re more likely to share experience and things that are proper to their business. Is that the key? Or?
Jeffrey Cheng 53:08
I think it is, I think it is. Well, I don’t think a lot of people have heard of our co-working space. But I mean, one of the better things about having a smaller co-working space is that we get to choose, you know, our members. We get to choose to keep a balance. Right now we have a 50-50 balance between new economy businesses and old economy businesses. So it keeps a healthy balance of having people who know the newer things and people who want to know more about the newer things to be in the same space. And it will create a lot of exchanges, a lot of interactions, and even business opportunities. And I am telling the truth that our co-working space is really matching people up for businesses. And it’s one of my most ultimate objectives of running a co-working space: to connect them, and between themselves having businesses running together or on a collaboration basis. I think this is…
Bertrand Théaud 54:12
So would you say that it’s a pure co-working space or it’s kind of a mix between a co-working space and an incubator?
Jeffrey Cheng 54:20
Yeah, that’s that. I do see it a bit more like an incubator, but I can’t say it is because I did not put that much of resources to incubate them. I am more like creating a platform. A platform with a healthy number mix, with the right people working around with you and offering different opportunities if you want to meet certain type of people, meat investors, lawyers or even digital marketers that we have vested. We have looked into them, we know that they are okay. I still think it’s more like a platform rather than an incubator. Because an incubator has somewhat a bit more of a responsibility I think of, you know, you know, keeping track of their performances.
Bertrand Théaud 55:19
Sometime, you know, buying some equity in the company.
Jeffrey Cheng 55:21
Yeah, exactly, exactly. I used to have this idea of building it like an incubator.
Bertrand Théaud 55:26
But yeah, having it as an incubator would have basically made your investment activity as some kind of a byproduct of your main activity being a co-working space.
Jeffrey Cheng 55:39
You’re right, you’re right. But the problem comes down to the business model. And if I go into an incubator business model, then obviously, it will not be a real estate project. If I go into incubator model, I will rely on capital gains, right? The problem is I could not go for that. Because in Hong Kong, if you get, you know, a decent property to run the co-working space, you don’t really have that liberty, you still have to pay rent. Yeah, you still have to chase for return.
Bertrand Théaud 56:16
Take care of your bottom line
Jeffrey Cheng 56:17
Exactly. Expecting capital gain might not be very feasible at this moment. I would like to have, at some point, to really start a co-working space that runs with an incubation model. But probably not for me just yet, not right now at this point, but I would want one. So, I still want to have a bit of that incubation kind of, you know, essence in my co-working space.
Bertrand Théaud 56:46
So you run your business, your co-working space business in a traditional way: having a look at your bottom line and make sure you generate a profit.
Jeffrey Cheng 56:56
I have to.
Bertrand Théaud 56:56
I understand that. So, so you are not in…We had a joke at the beginning of this conversation about WeWork, so you may not be in a “WeWork” mood with hypergrowth. Where you think, as long as we have new members and new members, then at some point we will find a way to become profitable. You don’t believe in that?
Jeffrey Cheng 57:16
I can’t say I don’t believe in that. I was more like…I can’t even say I was skeptical. Honestly.
Because I don’t know much. I always want to be a learner. I don’t want to judge too much. So for WeWork, I would say I have never been able to understand their play. But always wish them all the best. Because if they can really exit with an IPO, perhaps we will also indirectly benefit from it. Perhaps. So, you know, I won’t say I knew it wasn’t going to go well. I won’t say that. I did hope they can, you know, exit. But after all I did predict that if something goes wrong, for example, if the roadshow goes wrong, which just happened, it will become a snowball. It will just roll down the hill, and it will become a disaster. And apparently it did.
Bertrand Théaud 58:15
The thing is…Again, we are recording this podcast after WeWork failed to go for IPO. And there’s been a lot of surprising news, let’s put it this way, that their CEO went into some kind of trouble. So it’s become very popular now to criticize WeWork.
Jeffrey Cheng 58:38
Yeah, it is easy. It’s easy
Bertrand Théaud 58:39
It’s very easy, but still, I think they kind of made a revolution at how people can work. I mean, in terms of what kind of office we need. And that’s a given. I don’t think there will be a step back there.
Jeffrey Cheng 58:54
Bertrand Théaud 58:55
Maybe WeWork went too far into raising money and this idea of hypergrowth, you know, without paying attention to the bottom line whether it will be profitable or not. But they still invent, I think they are still inventing something. And that “something” will stay no matter what happens in the coming months or years with WeWork. Do you agree with that?
Jeffrey Cheng 59:17
Of course I agree. I mean, I will have to thank them. I started my co-working space before WeWork moved to Hong Kong. Before other major players like Campfire, theDesk started their business. But WeWork we started on the same year, but I was like half a year ahead. And I have witnessed the whole change of how the market knowledge, like how people know about co-working space. Once WeWork got here, there were a lot of PR, you know, and a lot of noise, making the market become sophisticated, they learn a lot more of a co-working spaces, and it helped us a lot. Because we weren’t in the role. We weren’t in the right position. We don’t have the capital to educate a market, honestly. For them being here, they did the job for us. And it helped us a lot. So after so much, you know, so much happened. I still think I need to thank them. I honestly did wish them well, it’s unfortunate that they didn’t. And, and then for some reason right now, I’m quite happy that I had not been too aggressive. You know. And so right now I’m not in that tougher position that the others are. But again, it’s sad to see you know, WeWork…I do believe that it will work. I do, I honestly do. And I honestly think it’s a new way of working, that benefits a lot of entrepreneurs. Might not be the same for us. But I think for all the entrepreneurs, it does give great values to them.
Bertrand Théaud 1:00:59
Yeah, because the day you start your business you don’t have to…I mean, otherwise, what is the other option? You have to find your own office? WiFi. Make sure you have a printer. It sounds like stupid things. But when you start your business, you want to be focused on your business and not the WiFi.
Jeffrey Cheng 1:01:17
Yeah, and you get to meet more people. I mean, after all, running a business is not just sitting at your desk and just type right? It’s been more than that. And I always think you need to meet more people to get inspired, get advice, comments, stuff like that. So yeah, that’s what co-working space can give you.
Bertrand Théaud 1:01:32
And so, today you have any plan to continue to grow in Hong Kong or maybe in other cities than Hong Kong?
Jeffrey Cheng 1:01:38
I mean, in terms of plan, I always have different plans, honestly, I mean, but really depends on the current economy, like the whole situation of the economy. Right now, at this very moment, a lot of co-working spaces are in deep s**t. Please pardon me.
Because of the, you know, the whole collapse of WeWork, I can feel that it might be a chance for different co-working spaces – like us – who are still doing okay. We might be able to take advantage of the current situation, we might be able to take over.
Bertrand Théaud 1:02:16
Yeah because maybe it’ll clear the market.
Jeffrey Cheng 1:02:18
Yeah, clear the market and we can even take over some spaces that are already renovated. So we don’t have to invest that much to start that up. I can see some opportunities in Hong Kong. But it really depends because the market in Hong Kong right now is quite crooked. Even co-working spaces that are running properly, not like the WeWork model, not a lot of them are really making money. A lot of them are still at a loss. Right now if the market is a bit more clear, like less competitors, perhaps we can adjust the supply and demand, we can reach a better equilibrium, where, you know, operators can manage to survive at least, not at a loss to bear or to breakeven at least. If we can reach that breakeven, then I think this market will be able to, you know, to grow a bit more, but if operators keep, you know, making a loss, I don’t think it’s healthy to grow. After all, you just can’t grow with a loss, right?
Bertrand Théaud 1:03:28
But do you think that too many people went into this business?
Jeffrey Cheng 1:03:31
I think so.
Bertrand Théaud 1:03:32
Is that something easy to manage…
Jeffrey Cheng 1:03:35
Bertrand Théaud 1:03:35
…and money. Or too much money to invest? I don’t know.
Jeffrey Cheng 1:03:40
I think it’s in the blood of Hong Kong people that they are very obsessed with real estates. That’s one of the biggest problem. You look at Kwun Tong. I don’t know if the audience is familiar with Hong Kong but Kwun Tong has so many co-working spaces invested by local businesses, local investors. I mean, they all thought that this would be a good business. For them it’s easy, right? Basically, you…
Bertrand Théaud 1:04:09
You have the space already.
Jeffrey Cheng 1:04:09
If you own the space already, you just throw, you know, HKD2 to 3 million or up to 5 million and…Tadaa! The space is up, you can keep the business running, you’ll get a rental return. Get a premium out of, you know, traditional rental. That’s the plan. But obviously the demand is not catching up. The demand is not catching up, not as quick as the supply is growing. So Kwun Tong is a major disaster district.
Bertrand Théaud 1:04:41
Maybe because also the location? Because as you correctly pointed, at the end it’s a real estate business. They didn’t realize that, you know, location is key.
Jeffrey Cheng 1:04:49
Yeah, I mean being in Kwun Tong, a lot of people were thinking it’s an up and coming business district because the rent in Central is way too high. Overall, on the Island side, you know, the rent is skyrocketing. So Kwun Tong is the next best thing. But the problem is people go to Kwun Tong because it’s cheaper, right? So are they willing to give a premium from, you know, traditional office spaces? I don’t believe co-working spaces are offering a cheaper office option. I do not believe in that. I mean…
Bertrand Théaud 1:05:23
It’s more convenient.
Jeffrey Cheng 1:05:25
Bertrand Théaud 1:05:25
It’s about convenience and community as you said
Jeffrey Cheng 1:05:27
Yeah, convenience and community and, you know, the flexibility as well. So it’s not about affordability. I’m not convinced on affordability. When you break down the costs, it might probably cost similar within, you know, plus or minus 10%. So, when it comes a second tier district like Kwung Tong, you are competing with a lot of cheaper options. But the thing is, you do have operating costs, right? You do have upfront costs by investing millions of dollars in renovations. So if you match the market price of traditional rental, you’ll be at a very great loss. And that is not sustainable.
So Kwun Tong is a disastrous area, you know, the occupancy rate is so low, it’s very low. Unless originally you’re WeWork where you bring in corporate clients. You set up the office for corporate clients, that makes a bit more sense, because you already have clients to fill up the space. But if you are still aiming for SMEs to move in to the co-working space, I don’t think the businesses feasible, is sustainable, at the moment. So back to your question, you asked me about growing or notn I think it really depends. I’m getting more and more picky. I’m having a more extensive list of criteria to be met if I want to open up a new space. My list is getting longer and longer. Because of all the things I’ve seen, there are so much more criteria such as location, condition of the building…
Bertrand Théaud 1:07:06
Because if you approach it as a real estate business, which at the end it is, there’s a new way to approach the real estate business. You may want to consider opening co-working space in cities where the real estate is less expensive. That’s the point with Hong Kong. Real estate is so expensive.
Jeffrey Cheng 1:07:26
Exactly. I went to Thailand, just nine months ago. I was out in Thailand. I was trying to see if Bangkok is the right place. And the outcome was exactly what you’ve mentioned. I mean, it only works if they have an issue, if they have a rental problem. If they have plenty of land, of spaces, I don’t think a co-working space is sustainable with this business model. So after all, I had my eyes on Tokyo. I had my eyes on London even, you know, Toronto. But of course, I still have to take some time to explore further. But at least, I think it makes more sense going for first tier international cities. They might have the right problem. That would make a bit more sense, I think.
Bertrand Théaud 1:08:12
Yes. And then discussing the other business. Fundraising. I understand there is a connection between the two. So were you…I mean, you have this investment.
Jeffrey Cheng 1:08:29
Yeah, yeah. Right.
Bertrand Théaud 1:08:31
So what kind of investment do you make? Is it early stage? B? What is it?
Jeffrey Cheng 1:08:38
Yep. So we invest in early stage start-ups that are in marketing tech and travel tech.
Bertrand Théaud 1:08:44
Okay. So you have a clear focus.
Jeffrey Cheng 1:08:46
Yep. Very clear focus. Simply for tourism…
Bertrand Théaud 1:08:50
In Hong Kong? Or it can be in a region?
Jeffrey Cheng 1:08:51
It can be in the region. We prefer start-ups that would go for the Southeast Asia market instead of Europe, U.S. or even China market. And we do prefer marketing tech and travel tech, because we are more familiar, me and my partner. We’re more familiar with these two industries, these two verticals you know investing in early stage tech start-ups is very risky, right? Everybody knows. You invest time, you might not even get one to raise the next round. So in order to manage the risk better, we just thought it would be best if we focus on something we know more. It will be best if we invest in the industries that at least we have a network in.
Bertrand Théaud 1:09:40
Because also a lot of start-ups today, there is so much money around that they are looking more for smart money, they’re not just looking at getting money sitting on their bank account. So if you can contribute to their business because of your network, because of your knowledge, then you may help to invest in the right startup at the very beginning, right?
Jeffrey Cheng 1:10:02
Exactly. So this position has been working very well for us. When people do believe that this is more of a bit less risky approach towards investing in tech start-ups. And another thing is we would focus on software startups instead of hardware start-ups. Again, it comes down to our knowledge and the risk. Usually a hardware startup has a lot more into this business, have to take care of productions, R&D. Productions can get quite complicated, you know, coming from my background in the manufacturing business. You’ll even have to take care of the logistics when it comes to hardware. So a lot of these aspects made us think perhaps we should focus on software. So right now we are doing pretty well. We have just, you know, I just took a count yesterday. We have sourced, we have met 142 teams over the last 6 months.
Bertrand Théaud 1:11:05
Wow, that’s a lot. How did you get this deal flow?
Jeffrey Cheng 1:11:09
Yep. It’s interesting…
Bertrand Théaud 1:11:11
Through you network or…?
Jeffrey Cheng 1:11:12
Network is one of the key channels. Another is through some other platforms like Gust. Another way of doing so is to simply attend events and pay attention to news. We went to Bangkok because we also want to build a deal flow in Bangkok. So we met some really interesting people, VCs, incubators, accelerators, and even government agencies. So these little things has been doing great for us, it helped us discover a lot of teams. And apparently because Bangkok is famous for its travelling business, right, the whole tourism business and even in terms of marketing, they are quite sophisticated in the road. Marketing production there is one of the best. So it’s actually quite a good fit for us for my VC business as well. So, yeah, these are the major channels I would say. Of course, out of the 142 half of them are not relevant. I’ll be honest. Only around 70-72 or more are relevant but I think it’s…
Bertrand Théaud 1:12:20
I mean if it’s not confidential, how many investment did you pursue?
Jeffrey Cheng 1:12:23
Right now in our whole business we have 1…2…3…4…We have four teams in our portfolio, four teams across marketing and travel. One of them just close their pre-A. I don’t think I can disclose just yet, but I think it’ll be on the news very soon. Their journey has been tough but it was quite inspiring for me, being an investor. Looking from day one until now, been through a lot and…
Yeah, and the other three are…Two of them are more early stage, they’re still at the earlier stage. They raise around of seed round, still trying to, you know, get the critical mass on board, trying very hard to build tractions. And another one, that is our latest investment, they are actually doing pretty well. They are the one with some kind of foreign exchange problem right now, because they have managed to expand their business very quickly. They’ve accelebrated to build businesses across Southeast Asia. They are – I can disclose this – they are a experiential travel, touring agency. So you book local experience tours with them. And they operate their own brand of tours. It’s nothing new. Honestly, it’s nothing new. There are a lot of start-ups doing this right now. But one of the key thing that we like about them, is that they know how to market their products and services. They did not spend thousands of thousands of dollars into SEO, SEM, all these digital marketing channels, they stopped doing that six months ago.
Bertrand Théaud 1:14:16
So I believe it was through word of mouth, one client is satisfied and will speak to another 10 potential clients. And so…
Jeffrey Cheng 1:14:25
One of the more effective ways is that, the other is through distribution. B2B channel.
Bertrand Théaud 1:14:29
Jeffrey Cheng 1:14:30
Because they see a great problem in the industry, where the larger OTAs have been trying to offer these kind of experiential tours. But the quality hasn’t been great. So these larger, you know, online travel agencies like Airbnb, they’re very happy to work with them.
Bertrand Théaud 1:14:49
Yeah I experienced that a couple of times.
Jeffrey Cheng 1:14:50
Yeah, right. Exactly. So I think they found the sweet spot for this business model. And that’s why we moved ahead and invested in them. They’re still doing great. I mean, I’m going to have lunch with them tomorrow, and they’re going to tell me more about their next round of fundraising. Now, hopefully we can participate again. See how it goes. So far, we are very lucky that we have four and two of them managed to raise the next round. And I think when we invest in more…
Bertrand Théaud 1:15:22
That’s a good ratio.
Jeffrey Cheng 1:15:23
That’s a good ratio for now because the pool is small. But I think down the road, it will become more like, you know, 11%
Bertrand Théaud 1:15:29
4 out of, let’s say, 70 pitches that you received.
Jeffrey Cheng 1:15:36
Bertrand Théaud 1:15:38
That’s, yeah, that’s what? 8 percent? Because you say…Anyway, we all know that when you in this business, you will receive so many pitches. Yeah, as you say, 50% of them don’t go anywhere.
Jeffrey Cheng 1:15:51
Bertrand Théaud 1:15:52
I mean, you go through the pitch, you immediately know that it’s going nowhere. Right?
Jeffrey Cheng 1:15:56
Bertrand Théaud 1:15:57
I mean, if the relevant number is half of 140 down to 70
Jeffrey Cheng 1:16:02
Bertrand Théaud 1:16:03
And you invested in 4.
So it means 8%.
Jeffrey Cheng 1:16:05
Bertrand Théaud 1:16:07
That is about 8%.
Jeffrey Cheng 1:16:08
You’re right, you’re right.
Bertrand Théaud 1:16:09
That’s a good ratio.
Jeffrey Cheng 1:16:10
That’s a good ratio so far, but again, I guess when the pool you know, becomes bigger the numbers will decrease for sure.
Bertrand Théaud 1:16:17
But do you have clear policy in terms of, you know…What is the ticket that you invest? Or it’s more about, you know, you get the feeling? I mean, what you think about the project?
Jeffrey Cheng 1:16:28
We do, we do, we do, we do, we have indications, but it’s not absolute. We do have an indication of around you know, USD100 to 200,000. So, that’s enough for early stage. But usually at times when necessary we always open for a lottery ticket, but it really depends if it’s really that convincing.
Bertrand Théaud 1:16:52
And so today when you receive a deck, you have some interest in the project so you invite the team to pitch. Is that a lot about human skills again?
Jeffrey Cheng 1:17:10
Yeah, I think so, I think so, because after all being an entrepreneur I always believe in being a people person. But of course, we…
Bertrand Théaud 1:17:19
And you know the industry. So you can have good screening already whether what they claim they will do make sense. Then it comes back to human skills and whether or not you believe in the team.
Jeffrey Cheng 1:17:32
That is so true. That’s why we always kind of know whether that startup, you know, their idea makes sense or not. And so when we meet them, it’s more like assessing him or her on their personality, on their knowledge, on the interaction between us, more over than, you know, their technical capabilities or numbers because, you know, projections…Come on projections. Projections…Right?
Bertrand Théaud 1:18:08
So five-year business plan when you’re a start-up…
Jeffrey Cheng 1:18:11
Market size. Yeah, it’s a large market. I know. But, you know. And obviously early stage start-ups, they don’t have much traction for sure. They can provide but it’s just indicative, because it’s so early. So sometimes it’s more about the person. We do spend quite a bit of time talking like meeting them. Talk about different stuff, be a lot of fun, irrelevant to the business, just to see engage them and see who they are. Sometimes. It’s interesting, this is a very interesting process, you will meet all kinds of people like a lot of different people. It’s interesting how I can share one. In Thailand, we met quite a bit of entrepreneurs who are quite well educated. They are actually the second generation of wealthy families, like very wealthy families. I think it’s kind of because of the whole society shapes up. And that’s probably why Southeast Asia still have a lot of potential in the whole start-up flick for start-ups. Because you know, these people if they start a business, they will have so much advantage, like uncomparable advantage. Because of their network, knowledge base. So, it’s quite interesting when we head to Bangkok to meet people like this. We were quite intrigued honestly. Because after all, I mean, I do want to support people who are from the ground and want to build something up. But at the same time, when you see a fan it’s just like the…
Bertrand Théaud 1:19:53
And invest your money.
Jeffrey Cheng 1:19:54
Yeah, we invest our money and it is intriguing, you know, sometimes to really pay more attention to these more. I know it’s not fair, but I’m sorry. Professionally speaking, we just have to do that. Yeah.
Bertrand Théaud 1:20:09
And so with these two activities, I guess you have very busy days.
Jeffrey Cheng 1:20:15
Bertrand Théaud 1:20:17
Typical question I ask during this podcast. How do you arrange your day? And do you have some kind of a routine? You check your emails in the morning and then you do this and you do that? Or I mean, it depends on, you know, what’s going on on that day?
Jeffrey Cheng 1:20:30
Yeah, I do. I do. I am not too much of a very routine person, but I do have to keep a certain routine. I have to go back to…I have two locations of co-working spaces right now so I have to hop back to different location every week. I do have my plan, you know, schedule on which day go where and then beyond. After that. We do have a lot of weekly meetings and I have my own private time for you know, personal trainers to lift some weights, play some sports. And, you know, I tend to do my thinking, thinking related things in the afternoon, where my mind is more clear, and operational stuff more in the morning so that I can get myself awake.
So, but again, I don’t, I don’t have an hour by hour plan, honestly. But then I will try to keep some routine going so for people who work around me, to make it easier to adapt. If I just walk in, doing whatever I want sometimes people will, you know, they don’t really want to work with people like that. So I try to be a bit more organized in my schedule but not to the point where I have an hour to hour routine every single week or day.
Bertrand Théaud 1:21:52
Yeah, and difficult to stand by such a routine anyways.
Jeffrey Cheng 1:21:56
Yeah, honestly, I’m the type of person even if I said it I won’t be able to do it. So why say it?
Bertrand Théaud 1:22:02
Jeffrey Cheng 1:22:04
Exactly. So yeah.
Bertrand Théaud 1:22:06
Okay, and then any idea what would be the next step? So growing these two business looks like you’re pretty enthusiastic about these two businesses and what you want to do. Or you were thinking already about, you know, a possible move?
Jeffrey Cheng 1:22:22
I guess for now I’m, I’m quite happy with where I am, I’m trying to focus on what I’ve been doing. I do see potential in both businesses, both in co-working and VC business, even though the recent co-working market is not as optimistic as before, but I still think down the road, it has true value. When the moment is right, there will be times where you know, expansion would makes sense. So, I’ll be patient with that with the co-working space.
And on the VC side, I see that people…Actually, we have really good responses on how we take on our approach. And a lot of people in Hong Kong, they actually do have the wealth, the extra money for a bit of alternative investment. So it’s interesting how people are so intrigued by what we’re doing. And I think angel investing will become more popular in Hong Kong.
Bertrand Théaud 1:23:25
Really? Because traditionally people will invest in real estate?
Jeffrey Cheng 1:23:27
Exactly. And nowadays when real estate especially for the past five, three to five years real estate has slowed down. Ever since a lot of fiscal policies, the rate of return has decreased quite drastically. People are looking into other stuff lately. So I think now it’s a great chance to keep educating the market on these, you know, high net worth individuals. At some point, I do see them you know, giving it a try and if people would get a profit out of it, it doesn’t have to be a 10x or 20x, right? Honestly, but if they get a 2 to 5x kind of return, I think they’ll be happy. And I think this will be one of the first step for really building an angel environment in Hong Kong. So I guess on the VC side, I’m quite optimistic. And I do think that if I put keep on putting my time and effort in, there’ll be more interesting happening.
Bertrand Théaud 1:24:28
Jeffrey Cheng 1:24:29
Bertrand Théaud 1:24:30
Perfect. So thank you, Jeffrey. So if people want to follow you, your news, what you’re doing, Linkedin? Twitter? What is it?
Jeffrey Cheng 1:24:42
LinkedIn yeah, look for me.
Bertrand Théaud 1:24:45
And so and if you’re interested in Jeffrey’s business, because I think I’ve didn’t even mention the name. So you can see it’s really not for promotion, the co-working space is called Ooosh right?
Jeffrey Cheng 1:24:59
Bertrand Théaud 1:25:00
Where is it based exactly?
Jeffrey Cheng 1:25:02
So I was trying to be creative. Yeah, cause…I did some research and it’s usually nouns or even verbs, stuff like that. And I was like, Huh, can it be like just sound?
Bertrand Théaud 1:25:15
Ooosh is nice
Do you know what? I play badminton when I was young and when I heard this term “Ooosh” that made me think of the…
Jeffrey Cheng 1:25:16
Yeah. And I was like “What would you do if you want to encourage someone or if you want to self encourage yourself?” And then I was like, oh, when I play – and I play a lot badminton – and…
Really? Yeah? Exactly. So that’s how I was how I was inspired. And it was like, okay, Ooosh is quite interesting. Looks nice when you look at it, and it’s special. It’s memorable, then I went with it.
Bertrand Théaud 1:25:51
Yeah, that’s a cool name.
Jeffrey Cheng 1:25:53
Yeah, thank you.
Bertrand Théaud 1:25:53
And your investment fund, what is the name?
Jeffrey Cheng 1:25:59
Our VC is called Catalyst Venture.
Bertrand Théaud 1:26:01
Jeffrey Cheng 1:26:02
Bertrand Théaud 1:26:02
Okay. And people can find you on Google?
Jeffrey Cheng 1:26:05
On Google. Just Google.
Bertrand Théaud 1:26:06
Okay. Yeah. So if you have any project in marketing or…
Jeffrey Cheng 1:26:11
Definitely and travel
Bertrand Théaud 1:26:13
And travel tech, you may send your deck to Jeffrey.
Jeffrey Cheng 1:26:17
Yes, for sure.
Bertrand Théaud 1:26:18
So thank you, Jeffrey. Thank you for sharing all that with us. That was a passionate discussion and to people listening to us and I think if you’re still with us – it’s one hour 26 minutes – thank you. Looks like it means that you will find this discussion interesting. And until next time, bye bye.
Jeffrey Cheng 1:26:37
Thank you. Bye bye.