Jay:  So I’m sitting here with Clarence Ling, who is the co-founder and chief development officer of Ztore, Hong Kong’s first online grocery specialist. Clarence has a very broad entrepreneurial and investing background. Apart from managing one of the largest private property development companies in Hong Kong, he’s also helped dozens of overseas companies on their Asia expansion, and he’s also an active investor in more than 20 startups globally, including Lalamove, which is either at or very close to becoming a unicorn.

So, Clarence, thank you for inviting me to your office, and I always like to do these things in person, and it’s rare that I get a chance to do so. So it’s a good thing that timing actually didn’t work out last time, and so we’re able to do it in person.

Clarence:  Nice meeting you.

Jay:  Yeah, absolutely. Maybe you can give a little bit of background of yourself to our audience first.

Clarence:  Ever since I graduated from college in the US in 2005, I came back to Hong Kong not knowing what I wanted to do because I got rejected by all the banking jobs I applied to — 22 to be exact.

Jay:  Wow.

Clarence:  So I started off working for Deloitte Forensic Accounting and then went on to Bloomberg as a Sales Trainee and then went to Savills to do property valuation. After that, I joined my family business. And then, over time, I had an urge to learn more about stuff rather than just real estate, so in 2010, I started expanding my network, especially in London. And then one day, I got a call from one of the former foreign ministers of the UK government asking me if I wanted to work on a deal with him.

So he was the largest yacht maker in the UK, which was Sunseeker. Since then, I started cold emailing, cold calling all the companies in mainland China and Asia. Since then…

Jay:  What exactly was that deal?

Clarence:  To find a buyer.

Jay:  Oh, okay. Got it.

Clarence:  So I worked on a deal, and then in 2013, I completed a deal and helped them find Wondergroup to acquire the company. It was a 320-million € transaction, and I made my first bucket of gold through that deal.

Throughout that, I started also helping other companies fundraise in mainland China and also facilitating the formation of China joint ventures, connecting them with the mainland Chinese companies. So I was also representing a few both private and state-owned enterprises in China.

In 2014, I started to think about what’s the meaning of doing this as a broker. I didn’t think I was adding much value rather than completing the transactions or being able to fundraise for them. And then there was one experience, I was with my partner then. We were in London meeting with a startup, an indoor theme park startup. The two co-founders presented to us, and then I loved the idea. And then basically, my partner said, “Clarence, didn’t waste time on small deals because you spend the same amount of time and effort on small deals and big deals, but you make a lot more in bigger deals.” And I didn’t really agree to that. I set up another meeting to meet with the two co-founders of that startup afterwards, and then we met for two hours, and then I told them, “I am very interested in investing in you guys,” because then I already had money from the Sunseeker deal.

So I wanted to invest in them and then help them basically figure out the Asia expansion strategy and also fundraising strategies. Since then, I started investing in startups.

Jay:  That was your foray into the startup world. It’s pretty interesting because you obviously have a real estate background. Your family is in real estate, a pretty prominent real estate company here in Hong Kong. Was there some tension when you weren’t diving head first all into the family business versus you wanting to go out and maybe make some money on your own via these deals or maybe in startup investing? Did you experience any sort of pressure within your family, or was it encouraged? And this is… A lot of traditional Asian parents, they have an idea of what they want their children to do, and they’re very opinionated about that. My dad wanted me to be a doctor, and I ended up being a banker, so it was like the complete opposite of what he wanted. But over time, he was okay with it. So I’m curious, coming from a family like yours, was there any sort of pressure, or were they very supportive of your decisions?

Clarence:  First of all, my family has been very open-minded about it. Obviously, there are times that they complain that I don’t spend enough time in the family business. But at the same time, I still remember when I first joined my family business, my dad told me, “Never only rely on the family business.” In 2009, 2010, I started to realize our family business is a very conservative and stable business. Me, back then, 20-something year old, I never thought… Working for my family business for a few years, after working with them for a few years, I just felt I had already learned quite a lot, in terms of real estate. Because we’re very highly focused on real estate, specifically Hong Kong, I felt the urge of learning more about businesses. Hence, I started working on deals as a broker.

Obviously being a broker was no glamorous job. You take a lot of poop from your clients and everything. And then my family would feel “It’s not like you’re lacking money. Why are you doing this?” But to me, the satisfaction comes from being able to make things happen and, especially back then, I was one of the first batch of people doing cross-border transactions on my own. And one of my motives was to prove those banks that turned me down back then…

Jay:  Sure. Absolutely.

Clarence:  My satisfaction comes from connecting the dots in this world and how I can leverage the network that I built on my own, and my satisfaction comes from being able to have these great businesses, to be able to be seen by visionary investors.

Jay:  I’ll say this before we move on to the startup investing side of your story, I’ll say this… You talk about broking these deals and how it’s not that glamorous, but I will say that it’s extremely difficult to do. A lot of people have — even myself — I’ve come across these deals, and they seem very easy to execute. “All you have to do is just find some rich Chinese buyer, and they’ll take this deal, and you can make a nice cut.” To be very honest with you, Clarence, you’re one of the few people that I actually know in person… You always hear about people closing these deals, but you never actually meet them. And so you’re one of the few that I actually have met in person that has actually successfully executed this type of deal.

When I was working in banking, I had this desire to do this sort of thing because the money is good if you find the other side, and you can match, and you get a good, nice commission, and a lot of people get lured into trying to “All we need is a couple deals, a couple of rich Chinese guys, and we’re going to be golden.” But it’s actually very, very, very difficult. So it’s commendable what you did, and you did it on your own.

Let’s move on to your startup investing side. You kind of dove in head-first into startup investing. Like many of us do, I got enamored with startup investing right around the time when… I think it was 2010. It was right before Facebook and Twitter went public, but they were very frothy. I think Tesla went public in 2010, and that was very, very interesting for me. It was a couple years after the financial crisis, so I had some time to digest, and I was very burnt out and tired with finance, so I was like “I want to look into early-stage investing.”

You’ve actually been very successful on paper till now with your investments. Maybe you could spend a little bit of time just talking about what you’re diligence process is — investment philosophy and processes and how you find these types of investments that you go into.

Clarence:  At first, in terms of investing in startups, I never knew what to do at first. I just knew, as I said earlier, I really admired the passion and the vision that the two co-founders of the indoor theme park company, how much passion they had and what their plan was, even though it was just a PowerPoint presentation. I think I’ve been pretty good at evaluating people rather than the business model. And since then, obviously every startup investor had to pay tuition, going through that process. I wouldn’t say I’ve been a very successful startup investor.

Obviously, a few bets that I made were not that good, but I think the key for me, my investing theory is that I like to support visionary startup founders rather than how much I get out of it. I think, obviously, investing my personal money instead of investing on behalf of LPs, in my point of view, is a lot easier because I can make an investment decision based on, I would say, my emotions, my passion for the business, or even… Every startup that I invest, I have a specific agenda behind it — be it I want to build a closer relationship with the founder or… I never really focus on the business model.

For example, Lalamove, when I invested in 2014, I could have easily just invested in GoGoVan because then GoGoVan was much bigger.

Jay:  Sure.

Clarence:  So basically, I searched for Shing on LinkedIn. I requested to connect, and he accepted, and after that, I messaged him, and I said, “Would you like to grab a coffee.” Then I think the next day or two days later, we met up for coffee for about two hours. Basically, I just said, “Just let me know how much allocation you have. I would really want to be involved.” So it’s more like… I don’t really put on the typical investor hat when I meet with the entrepreneurs. And I only invest in companies that I think I could add value to. If there’s something through my network, how I would be able to connect them with useful people or useful companies…or basically, I see that maybe it’s not this company, this venture, or down the road, his next venture, or the one I want to build a much closer relationship with the entrepreneur… That’s my theory in terms of picking the right people that I want to support rather than focusing too much on the potential returns.

Jay:  That’s right. It’s definitely… You’re fortunate in that, when you institutionalize this investing game too much… Right now, I feel like in early-stage investing, there’s too much money out there that needs to be deployed. VCs are having a hard time finding companies, and you see these rounds are getting bigger and bigger and bigger. You hear about SoftBank raising these ridiculous funds, and it’s a problem because VC, as you’re doing it yourself personally, is what, I think, originally, what venture capital was meant to be. Now it’s become so institutionalized. It’s all about metrics and that return to ROI. Not only does it take the fun out of it, it kind of warps to entire innovation, I think, of the industry.

I’m actually quite worried about this exact topic. We could talk about it a lot, but I don’t want to stay on this point for too long. But thank you for sharing that. I tend to agree with your theory or your investing guidelines or philosophy. When I look at investing into companies, we invest in entrepreneurs, the founder, the entrepreneur. Your example of Shing — Shing was on our podcast. He was one of the early guys on our podcast, and he has a phenomenal story, and he’s obviously a very, very smart, bright guy. You can tell within 30 minutes of talking to him, the type of entrepreneur he is. He’s definitely the type you want to place your bet on.

Finally, let’s move on to you jumping into a startup itself. I find this fascinating because when you look at ways to create wealth — and I’m talking about real wealth — they say there’s only three ways that you can get that. You can inherit it; you can invest — you compound or you earn carry off of savvy investing — or you can build a company. So you’ve basically decided to do all three. I can tell you I’ve been part of startups before that have all failed or pivoted and stuff like that. It’s much easier to be an investor than it is to be an entrepreneur and build a successful company.

Clarence:  I think most investors would not agree with you on that.

Jay:  But most investors haven’t actually been on the other side and gotten dirty. I’m interested to hear what your thoughts are. What made you want to basically be like “I’m going to roll up the sleeves. I want to build my own company.” Maybe you can talk to us a little bit about what led you down this path, and you can explain what Ztore is.

Clarence:  Basically, I co-founded Ztore with my two co-founders, Danny, who is the CEO, and Jack, who is the COO of the company. I met Danny back in 2010, and we just clicked. We met going on a delegation to Yunnan back in 2010, and then we shared the same room. It came from an arrangement. Basically, we just clicked, and ever since then, we would brainstorm about ideas and all that.

So Danny used to run his own software company. He started a company even before he graduated from college, and he’s been doing projects for banks, for different government entities, and all that — big projects. And I saw something very different in him. To my understanding, Hong Kong’s IT sector, most people are still stuck in the year of outsourcing, SI projects. And looking at him, knowing him, he’s very different.

But the problem is I think it’s a typical Hong Kong problem. Most A-grade students would never choose computer science if they go to college in Hong Kong, just negating the ones that study in the states or the UK or Australia. That’s why the ecosystem has been not there in terms of the tech sector in Hong Kong. All the A-grade students would go into banking, real estate, even insurance, actuary — all those majors.

I think that’s why Hong Kong people, in general, in my point of view, are still stuck in the era of our most glorious days — back in the ’80s, ’90s, even 2000s. And most successful people are from real estate and finance in Hong Kong. There’s one phrase that I still remember. I forgot who made that comment. It was that right now everywhere in the world, including mainland China, the younger kids, teenagers, they have someone new to look up to — be in Pony Ma, Jack Ma from China or Jeff Bezos, Elon Musk… In Hong Kong, we’re still talking about Li Ka-shing. It hurts me. I’m not saying… He’s probably one of the most visionary or most influential people in the world, in the world’s standards. But I just think Hong Kong needs a lot of this new energy. And Hong Kong being a market which is very well developed, be it in terms of retail, real estate, everything — few conglomerates dominate the market.

When you talk about startups, startups are meant to solve a specific problem. But Hong Kong is already very… In my point of view, there aren’t that many problems to solve.

Jay:  It’s a pretty efficient society here that we live in.

Clarence:  I mean, people talk about… In mainland China, the people talk about mobile payments being very mature and going very fast. In Hong Kong, we’re still stuck using Octopus card. But I don’t see that as a bad factor. Why mobile payments are not still developing and still not out there, people tend to want to blame, “Hong Kong people are very old-fashioned,” and, “We’re so outdated.” “We’re so far behind.” But the fact is Octopus card is very strong and influential.

Jay:  We were a pioneer, a frontrunner.

Clarence:  That’s why there’s no space or room for mobile payments to flourish because… Hong Kong is a very densely populated city. I’m not sure if I’m correct, but I heard from someone that, for such a highly dense city, when you go to a 7-Eleven, it’s actually much quicker to use Octopus card than—

Jay:  Swiping your—

Clarence:  Yeah. NFC, sometimes the connection is bad because multiple people and multiple shops are connecting at the same time. Then there are problems. But Octopus cards, they don’t have such problems.

Jay:  Yeah, I agree. You know, it would be interesting, Clarence, if we could figure out what the Octopus card penetration in Hong Kong is… I imagine it’s extremely high. But you’re right. Even Wifi pay, there’s a lag. You have to wait and then the — beep — but Octopus card is instant. You never have an issue.

Clarence:  Back to Danny. I was starting to invest in startups in 2014. At the end of 2014, through those four years that we knew each other, we would always meet at my place, and we would bring some different ideas. But back then, because it was such a burden for him because he had to, at the same time, maintain his software company. So every idea that we talked about, it would only be a part-time thing, trial, for him. As you know, being an entrepreneur, just testing different ideas, at the same time managing such a heavy operational business is very hard. So we never had any success.

At the end of 2014 one night he was at my home, and we were chatting, and suddenly he said, “Clarence, I’m actually going to give up my software company.” It came to me as a shock. He said, “I’ve never taken any days off, any holidays. So I’m just going to give up this company and take two months off to clear my mind and think about what I should do.” And he said he thought Hong Kong was at a tipping point in terms of B2C business, and he would hate himself for not trying.

So after two months, he came to me and said, “Have you ever heard of this company called RedMart?”

I was like “Yeah.”

So back then, RedMart was still going strong and raising a lot of funding and everything. Singapore is similar to Hong Kong, and Hong Kong is a bigger market, comparing to Singapore. And rental in Hong Kong is very, very expensive, compared to Singapore. He saw that there’s room to do such a thing because no one is doing e-commerce. I mean, PARKnSHOP is and has been doing for 20 years, but it…yeah.

Jay:  Their website is horrible, by the way. I’ve tried to order stuff off there. It’s so bad.

Clarence:  I didn’t say that.

Jay:  I said it. If you’re listening, PARKnSHOP, you need to upgrade your website.

Clarence:  So originally, he had the idea, and then the more research he did, the more he thought, as an IT guy, there was no way he could start an FMCG business. A lot of investors actually were quite shocked that we chose an online supermarket as an entry point rather than doing electronics or fashion — these with much higher margins.

But we thought if we wanted to change the customer behavior, we had to pick something that affects Hong Kong people’s daily lives.

Jay:  It’s true.

Clarence:  If we had started with electronics first, yes, we might be making money, we might be profitable by now, but then the repeat purchase is at least five, six months. So in terms of the sales funnel, probably a lot of drop-offs or whatever.

And then originally… He knew he had to find a partner with FMCG experience. So he identified Jack, who is the COO. So Jack and Danny went to secondary school together, and Jack worked at PARKnSHOP, and then he set up B&Q in Hong Kong and then went to San Miguel and Carlsberg. So he was a high flyer. Back in Carlsberg, he was already on management level.

Jack, to be honest, working a corporate job was very relaxing for him. He was able to spend a lot of time with his wife and kid and earning quite a decent salary. And one day… So he started doing research with Danny, and then one day… Like Danny never dared to ask him to quit his job and then come out because a typical Hong Kong person would never give up such a great job and come out and start their own stuff knowing it’s going to be tough as hell.

Jay:  Yeah, startup life.

Clarence:  Especially Hong Kong people. General perception. And then one day, without Danny asking, Jack said, “If you’re serious, I’m going to quit my job and do this with you.”

Jay:  That’s a sign.

Clarence:  Then the two of them came to me again. In the first place, they wanted me to be involved just as an investor. So they wanted me to invest in them. But then I felt, back in 2015, the startup ecosystem was still not there. There were not as many accelerators, investors, and all that. I felt it would be quite tough. Especially most Hong Kong people think there’s no startups that can go up against the conglomerates in Hong Kong. It’s not that we want to go up against them. I felt, just the general perception of Hong Kong people with money… If you’re just going to them to ask for money with a PowerPoint, there’s no way that anyone would invest.

Jay:  Yeah, of course.

Clarence:  So there would never be a start. I knew a lot of Hong Kong entrepreneurs actually lack someone like me. I’m not saying I’m better than a lot of people. I’m just saying with the kind of background and network that I possess, which a lot of people in finance in Hong Kong also possess that, it’s just it’s too much opportunity cost for these people to come out and really basically join these startups to help them, to assist them.

So it actually took me two months to convince Jack and Danny that they needed me. We agreed, and basically we started fundraising, and we were able to raise 1.3 million USD before we formed the company. So a great start.

Jay:  So that was like a friends and family round.

Clarence:  Yeah, without my family, actually. We never wanted to involve our family, my family. First of all, it’s risky, and I never really wanted to affect my co-founders’ judgment in terms of growing this business, knowing that emotionally, it would affect the judgment having a family involved. But my family invested in our Series A, but by then, it was already proof of concept and everything, and we were growing pretty rapidly. My family followed with Series B as well, having a different lead. That’s different. But from the start, I never wanted to.

Jay:  Yeah, I think that was smart of you to do it that way because there’s a lot of things that… Those early days are very crucial, especially when a founding team come together like that. And like you said, emotionally, everyone needs to be on the same level, even, and not disadvantaged because then you can actually all put in the same amount of effort and work to grow this from the ground up. I’ve seen it happen… Look, every business partnership that has failed that I’ve been involved in, it’s always a case of one business partner always thinking the other one is not pulling their weight and vice versa. And that comes in many different ways. Some people think that they can just write a check, and they think, “Okay, I’ve contributed.” It’s good that you did that. I think that’s smart.

Why don’t you walk us through just the basics of what the company is and what’s the user experience like. Why is it potentially disrupting this space in Hong Kong or just creating this space?

Clarence:  We’re not trying to disrupt anything.

Jay:  Creating because it’s really non-existent.

Clarence:  But in the process, we saw there would be disruption. We never intended to disrupt anyone, any companies. From the start, we started off as an online supermarket but with an angle because, especially Jack, when he was in the FMCG industry, their business, he saw a lot of great quality products that didn’t get enough exposure to the market, and it was very hard for these branded products to list on any major supermarket chains.

So in the first place, right from the start, we knew we wanted to create a platform, obviously, with mass products, big brands, and also smaller brands. And basically we started off with only 300 SKUs mainly supporting Hong Kong local, traditional brands. When you ask people now, people think we’re doing such a great thing supporting, trying to revive these traditional brands and helping them launch. But the fact is, in the beginning, they never wanted to work with us. It actually took a lot of passion, time… Some brands took us a year to convince them “You should try e-commerce.” And especially before we started, people didn’t know anything much about e-commerce. They just thought, “Online shops — I don’t want you to damage my brand.” So it was a tough journey in the beginning.

And also, the big brands, we couldn’t even get products from them because everybody was scared because of the big guys. So in the beginning, the can-do mentality had to be there. We had to think of creative ways — even stocking up by buying from PARKnSHOP. We had to start there. One of the rice brands, they were scared. And they actually said, “Why don’t you go buy at PARKnSHOP?” We actually did that.

Jay:  Wow. That’s incredible.

Clarence:  Basically, we were selling at the same price that we brought it from PARKnSHOP. So we were actually burning a lot of money in the beginning, per order, home delivery, not including the warehouse operation costs. Just the delivery costs to home was 100 HK$ per order. If you think about it, we didn’t have the volume. We had to start somewhere. And we were lucky enough to find someone that was willing to do that because most people would turn us down.

Jay:  Yeah, of course.

Clarence:  So we were burning a lot of money in the beginning. And then after a few months, we thought to ourselves — we were chatting amongst ourselves — we were like “Shoot. Should we still do this business?” We always have doubts over the past three years.

Jay:  Of course. That’s part of being an entrepreneur.

Clarence:  Before we started, everyone was like, mission impossible, blah-blah-blah. And when we were doing fundraising for our first round, all our friends, they were like “How much would you want us to invest?” – each of them. So we actually had 20-something investors in the first round. And we were like “Just 50 to 100 thousand US would do…because we think it’s risky.” Some of them wanted to invest more. We were like, “No. Don’t.”

Jay:  Definitely.

Clarence:  So it was funny. And basically, quickly, I think because of our angle in the beginning, supporting Hong Kong local really helped us a lot. Within the first year, we already got more than 50 free media coverage because we support Hong Kong local businesses, helping them. Let’s be real. There’s a lot of traditional brands in Hong Kong. They have a lot of fans. A lot of people have heard of these brands, but they only have one shop, probably somewhere in New Territories or somewhere in Canton. And you know Hong Kong people, most people are very busy and, at the same time, lazy too. Like people in Hong Kong, they think it’s too far to travel to Kowloon. Right?

Jay:  That’s right, yeah.

Clarence:  So we feel that we actually have it both sides. On the one hand, because of that emotional effect, when we talk to these traditional brands, we never talk about money. We never talk about “How much money I’m going to help you make.” It’s all about us appreciating what they’re doing, and, because of that connection, they loved us. They still love us.

And in the beginning, a lot of these traditional brands, they actually helped us a lot. In the shops, they would hand out our flyers and they were telling all these people, “You don’t have to come to our shop, all the way from Hong Kong into Canton to buy stuff anymore. This platform, they do home delivery.” So that also helped us a lot, and media coverage also helped us a lot.

We were actually very surprised with our growth just in the first year. But we knew that the biggest thing we had to solve was warehouse operation and also deliveries, logistics, basically.

And then, at that time, I knew we had to find someone to help us with that. And we were lucky enough to be able to get in touch with SF Express. Originally, we were just talking about partnerships to help us with the home delivery and warehouse operations, and then they ended up investing in our second round.

Jay:  Wow. Fantastic.

Clarence:  And with SF Express, it helped us tremendously because of the name. Even the big brands, the suppliers, they knew we had some kind of connection of SF Express. They were much more—

Jay:  It’s like instant credibility.

Clarence:  —confident. And that helped us perpetuate the growth after the second round of fundraising.

And then basically, after that, fast-track to what we’re doing right now. People always ask us why we are focusing on the Hong Kong market instead of expanding to other markets geographically, to be much more attractive to investors. But the three of us… The stuff we’ve been building over the past three years, including the logistics, ecosystem, and warehouse operation, we’re confident that if we’re not able to be successful in a whole market, there’s no way we’re going to—

Jay:  Expand globally.

Clarence:  Yeah. It’s very different from, say, companies like Lalamove because they are very laser-beamed focused on a specific problem that they’re solving, and it’s very asset light. But I would say the biggest thing is we chose to do such an asset-heavy business model mainly because we saw the opportunity. Hong Kong, in terms of retail, most talent in retail — because traditional retail has been very strong, and we’ve been developing traditional, physical retail for the past 40, 45 years. So we were one of the first in the world. And everything is very mature. And because all the talent is going into retail, they’re trained. Their DNA… They’re trained to be traditional retail experts. And if you ask me, there’s no e-commerce, only retail experts in Hong Kong, and we’re one of the pioneers in Hong Kong, obviously, alongside HKTV Mall.

Jay:  Right. Sure.

Clarence:  And we figure who are we to go in, say, mainland China or Southeast Asia and say we’re going to beat the local competitors. Right? But in terms of Hong Kong, the same goes to other big players in the region. Hong Kong is a very unique market. Every district has a different culture. In a point of view, building a true ecosystem — we like to call it the super app of Hong Kong — online grocery is just our starting point, but we’ve been expanding to other verticals as well. We’re not a marketplace. We’re more like the JD model rather than Taobao. Actually, it even was more like Taobao.

Jay:  That’s right. Yes.

Clarence:  So we are able to control, basically, the culture. We take a more aggressive approach in terms of what we want to push, rather than just providing a platform for anyone to come on.

Jay:  For the audience listening in, the marketplace is, basically, individual vendors can set up their online shop and sell on your platform versus something like Ztore where you curate specifically what you want on the platform. You control everything.

Clarence:  We like to say we are an e-commerce company with character. We don’t intend to please everyone in the market, but people that like us or love us, the customers are very sticky. And we are aiming at creating this more asset-heavy, heavier business model to basically serve different Hong Kong customer’s needs.

So our vision is to serve Hong Kong customers but not only limited to when they’re in Hong Kong only. So we just launched a new business model called Neighbuy. Neighbuy is a community collective buy model. So it’s more like… I like to call it group buying 2.0. So we work with different local retailers, mom-and-pop. And basically, our aim is to help them, assist them, earn more money than what they’re doing right now. Basically driving traffic to these stores.

So in just three months, we already have more than 50 shops that are working with us all over Hong Kong. And this is just our first step to the new super app that we’re going to be doing.

Jay:  So the actual end consumers could be located anywhere in the world to be part of this group buy?

Clarence:  It’s just Hong Kong right now.

Jay:  Just Hong Kong right now.

Clarence:  Yeah, but it’s a much more asset-light model. We don’t know. We don’t know whether we will use this model to expand geographically to other markets, but right now in our roadmap in the next two or three years, we’re going to keep on focusing on enhancing whatever we’re doing and also providing more products and services for our customers in Hong Kong.

Jay:  I think it’s smart that you are doubling down, tripling down and focusing on nailing your home right, as opposed to just focusing on growth. It’s a fine line.

Clarence:  There’s pros and cons.

Jay:  Absolutely.

Clarence:  We don’t intend to attract the majority of the investors. Obviously, doing a much more asset-light model and expanding to other markets quickly to show growth and potential ceiling of the business gives investors a much bigger imagination. By default, we chose a smaller market, from an investor’s point of view, a small population. But we feel that, yes, we chose a much smaller market compared to mainland China or Southeast Asia. But mainland China…any country comparing to mainland China is small. And we feel that building a brand that is local Hong Kong gives us the credibility. Down the road, five to ten years, if we decide to move into mainland China or Southeast Asia, we feel that it’s meaningful. But at the same time, as a startup, we have to be focused and achieve different milestones in the process.

We feel that whatever we’re doing right now, focusing on Hong Kong gives us a very strong — what do you call that?

Jay:  Like a following, like a tribe? Is that what you’re trying to say?

Clarence:  That too. But also any players wanting to come into the Hong Kong market would have a hard time. Hong Kong is a unique market in the sense that when you look at JobsDB, when you look at OpenRice, when you look at all these different businesses, they’re not top-notch in terms of service level or UI or UX, whatever. But when you think about it, all these big guys from overseas coming into the market — like Monster, like Eatigo, Yelp coming in — they’re not great companies.

Jay:  Their tech is probably better. Their user experience is probably better. It’s just that Hong Kong people are very loyal to what they know.

Clarence:  Because the switching cost of Hong Kong customers is very high, and the loyalty is there. The strategies that the mainland Chinese companies that have been doing in the past five, seven years, in my point of view, would never be sustainable in Hong Kong because mainland Chinese… In the mainland, there’s 1.3 billion people. For a fact, you can laser beam focus on growth and don’t care about drop offs. But Hong Kong, we only have 7.8 million.

Jay:  So you’ve got to get it right from the start.

Clarence:  So it’s really a different DNA. It’s not about just giving deep discounts, undercutting your competitors. There’s a lot more to it in Hong Kong. You can’t afford to fail too many times because if a customer leaves you, it’s going to cost you a lot more to acquire that customer back.

Jay:  Higher user acquisition costs, a greater lifetime value. These are all very nuanced things about the Hong Kong market that a lot of people don’t know. And that’s why, like you said, a lot of startups come and fail.

Clarence, it’s been great. Thank you for your time and for sharing your experiences and telling us about your company. As we look to wrap up, I have a couple of final questions. First of all — and I didn’t get to this at the beginning, but the name, Ztore, please tell us how you came up with the name for your company.

Clarence:  We came up with the name in Chinese first, “Zee Tore”. So, Ztore actually is a very Hong Kong name, term, because Hong Kong, as you know, we were governed by the British for more than 100 years, and a lot of our terms are unique to Hong Kong people because they were directly derived from English. So Ztore was directly derived from “store.” So it’s basically representing mom-and-pop stores and all that. And we felt, right from the beginning, we wanted to focus on Hong Kong. So we decided to come up with a name that people in Hong Kong could relate to.

Jay:  So a little helpful tip for anyone listening in that wants to ever connect or do business with Clarence, do not call it “Z Store.” You will not get a response from him. That’s one of his pet peeves. It’s an easy mistake to make because the iPhone corrects it automatically. But, yes, please know that this is a very important point.

Just a final couple of questions, Clarence. The second-to-last question — and I like to ask most of my show guests this. You can answer it in many different ways because you come from a very diverse background. You’re an investor; you’re an entrepreneur. If you had a piece of advice for a Hong Kong entrepreneur… I have a soft spot for Hong Kong. I’m not actually originally from Hong Kong. I’ve just lived here for many, many years, and so I always like to see Hong Kong entrepreneurs do well. So if you had one piece of advice based on your experience the last few years working with your startup, what would that be?

Clarence:  I would say see more of the world, be it mainland China or Southeast Asia or even US, Europe. Get as much exposure as possible. And also, through that, try to connect with successful entrepreneurs outside of Hong Kong. In my point of view, in the new business or new economy era that we’re going through in Hong Kong, we are in a lack of mentorship in the local market. For example, us, we knew right from the beginning, we knew no Chinese VCs would be interested in investing in us. But over the past three years, we still travel to mainland China, Southeast Asia, Europe, US, to keep talking to these people and getting their advice and also successful entrepreneurs. Quite a few of our mentors, they were successful e-commerce entrepreneurs. We felt that, since the beginning, there was no one in Hong Kong that could advise us what to do when it comes to e-commerce. But also, as an investor, I would suggest not only focusing on Hong Kong. That’s very contradicting to what I said.

Jay:  I love it.

Clarence:  By default, we chose this business. That’s why we believe in focusing on Hong Kong would give us a much better outcome or result down the road. I would say we’re just lucky that we were able to find investors that believe in us, believe in what we’re trying to do, and believe in “we should just focus on Hong Kong.”

For other startups, I’m not sure what kind of industries they’re targeting, but just focusing on Hong Kong on a specific vertical would be too small. The reason we are focusing on Hong Kong is that we are expanding horizontally to other products and services, and the Hong Kong retail market is 50 billion USD a year, and that’s not a small market. And e-commerce, online sales, market share is only less than 4%, 3%, and we feel that there’s a lot more room for growth. If you look at neighboring markets like Taiwan, Singapore…Taiwan is almost 20%. And the Taiwan market, you could have more than two, three major players that are over a billion-dollar valuation market cap. So we believe we’re one of the pioneers in Hong Kong, but that’s just our business, the nature of our business. But for other startups, including SaaS model, including…

Jay:  So basically, don’t try to do what you did. Don’t try to go after the impossible.

Clarence:  Hong Kong is a great starting place. I’m not talking about the support from government or whatever. In my point of view, an entrepreneur should never purely rely on government support. We’ve never gotten any support from the government. We never asked for it. But it’s the urge of learning and basically the can-do mentality. If you have that — be it in Hong Kong, be in it Beijing or Singapore or whatever — you’ll do something great.

Jay:  Fantastic. Thank you for the advice. The last question is just where can people find you, follow you, or learn more about your company? Or maybe if they’re someone that wants to connect and potentially ask for an investment, how could they reach out to you?

Clarence:  That’s going to be rare, approaching us to invest in us. My LinkedIn, just search Clarence Ling — Facebook also. I’m pretty outspoken in terms of updating what’s going on with our business. I like meeting people. That’s kind of my forte.

Jay:  Absolutely. Thanks again, Clarence. I really enjoyed hearing your story, and thanks for sharing your journey. We’re looking forward to following Ztore and hearing about how you grow the business. I’m confident that you guys will be successful. So best of luck.

Clarence:  Thanks a lot.

Jay:  Take care.

Clarence:  Take care.