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Be Exponential with Commitment & Community: How H.E.R.O. Innovators Syuppin, Itokuro and Bandai Namco Build A Community of Enthusiasts to Power Growth – H.E.R.O. HeartWare: Weekly Asia Tech News – 18 June (Issue 6)

H.E.R.O. HeartWare: Weekly Asia Tech News – 18 June (Issue 6)

“Everything is a commodity unless it contains ‘commitment’. It will be the same for any business, but if you like that product and do not have deep knowledge, you will not be able to go beyond that, but I will beat the limit and barrier if I do it in detail. I realize that commitment and dedication are important properties of entrepreneurs. Commitment brings sticking connection with people.”

This insight was shared by Kei Suzuki, founder and Chairman of Syuppin (TSE: 3179, market cap US$344m), who forged a unique business model with operating profit jumping 4-fold over the past 5 years in building a community of over 360,000 enthusiasts buying and selling used products with long-lasting value in mid-to-higher-end cameras, watches, writing instruments, and sports bicycles. Innovations to foster an environment of integrity, authenticity, safety, trust, sense of curiosity, knowledge-discovery-and-sharing for the Syuppin members include the camera industry’s first unique after-sales service “forever safe warranty” in equipment inspection/cleaning; the ability for customers to view photos taken from the specific camera on the product page; a photo-sharing app for camera enthusiasts to connect users to the world and discover high-quality photos and photo-shooting spots in which maps and photos are linked, building strong relationships with the customers through multi-faceted information dissemination.

The capacity to develop and sustain a vibrant community of users and customers is the secret sauce that powers the success and non-linear exponential growth of a selected group of unique enterprises whom we call the H.E.R.O., the Honorable, Exponential, Resilient Organization. Commitment and dedication towards the shared purpose and the service are crucial ingredients to forge an emotional connection and foster a sense of belonging with the community of users.

Mitsuaki Taguchi, CEO of Bandai Namco (TSE: 7832, market cap US$9,173m), also shared the secret to why Gundam is still loved by its community of fans after nearly 40 years, and how Bandai Namco creates the capacity and capability to keep innovating, “There is a fan base and existing users who come back because they know goodness.” Manabu Yamaki, founder and CEO of Itokuro (TSE: 6049, market cap US$637m), also shared how the No. 1 dominant internet media services for private cram school navigation with its “Jyuku Navi” “word-of-mouth” portal site commands over 80% share of the users.

This week in H.E.R.O. HeartWare: Weekly Asia Tech News with brief highlights of the inspiring entrepreneurial stories of tech leaders in Asia whom we have been monitoring over the past decade in our broader watchlist of around 200 listed Asian tech companies and our focused portfolio of 40 HERO Innovators who reveal their problems and successes behind building the company, we have:

(1) Manabu Yamaki 山木学, founder and CEO of Itokuro イトクロ (TSE: 6049, market cap US$637m), the No. 1 dominant internet media services for private cram school navigation with its “Jyuku Navi” “word-of-mouth” portal site which commands over 80% share of the users according to Rakuten research;

(2) Kei Suzuki 小野尚彦, founder and Chairman & Naohiko Ono 鈴木慶, CEO of Syuppin シュッピ (TSE: 3179, market cap US$344m), which operates an integrated business model of e-commerce websites and retail stores for buying and selling used products in Japan, focusing on used digital cameras, lenses, and accessories (MapCamera.com); new and used watches (gmt-j.com); writing instruments (kingdomnote.com); and bicycles comprising road bikes and other sport bicycles (crowngears.com);

(3) Mitsuaki Taguchi 田口三昭, CEO of Bandai Namco バンダイナムコ (TSE: 7832, market cap US$9,173m). the entertainment brand platform proactively enabling innovative characters from Gundam, Dragon Ball, Kamen Rider, One Piece, Naruto, Super Sentai (Power Rangers), Ultraman to Anpanman, Ben10, Sailor Moon, Pretty Cure, iDOLM@STER, Love Live!, etc;

(4) John Guscic, Managing Director of Webjet (ASX: WEB, market cap US$1,180m), which provides online travel booking services in Australia, New Zealand, and internationally. It operates through Business to Consumer (B2C) and Business to Business (B2B) Travel segments.

We now live in an exponential world, and as the Baupost chief and super value investor Seth Klarman warns, disruption is accelerating “exponentially” and value investing has evolved. The paradigm shift to avoid the cheap-gets-cheaper “value traps” investment mistakes, to keep staying curious & humble, and to keep learning and adapting, has never been more critical for value investors. We believe tech-focused innovators with non-linear exponential growth potential are the most relevant multi-year investment trend and opportunity. Yet we do not want to chase the highly popular megacap tech stocks, or fall for the “Next-Big-Thing” trap by chasing to invest in fads, me-too imitators, cash-burning start-up tech companies. We see a distinct opportunity in underappreciated Asian SMID-cap tech stocks with unique scalable business models run by high-integrity entrepreneurs with a higher purpose in solving high-value problems.

H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners at the ARCHEA Asia H.E.R.O. Innovators Fund, the only Asian SMID-cap tech-focused fund in the industry. The H.E.R.O. HeartWare Weekly highlights interesting tech news and listed Asian emerging tech innovators with unique and scalable wide-moat business models to keep yourself well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy in Asia as part of our thought leadership for our ARCHEA Asia HERO Innovators Fund to add value to our clients and the community.

Some of the HERO Innovators in the focused portfolio include the largest online-to-offline pet insurance company in Japan with over 60% domestic share of the growing pet insurance market with over 636,000 policies in force generating over 98% sticky recurring revenue income & cashflow (Japanese households own 20m pets and only 1.3m or 6.3% were insured vs 22% of the 15m pets were insured in UK), and is a tech innovator with services that include allowing insurance claims to be made via LINE in just three minutes, an industry first, enabled by its powerful database & analytical prowess of more than 10 million insurance claims tied to illnesses and accident that allow the company to propose preventive measures by examining how animals become sick and how accidents occur. This highly profitable online pet insurance with a healthy net-cash balance sheet founded by an inspiring and down-to-earth entrepreneur with an agricultural economics background who started his career at a top insurance company is an archetypal H.E.R.O. Innovator.

Hope you find the weekly report to be useful and insightful. Please give us your candid feedback and harshest criticisms so that we can improve further to serve you better. Besides the BATTSS (Baidu, Alibaba, Tencent, TSMC, Softbank, Samsung), do also tell us which Asian tech entrepreneurs & CEOs whom you admire and respect and why – we will endeavor to do up profiles of them for sharing with the community. Please email kb@heroinnovator.com on your thoughts, thank you very much. Have a beautiful week ahead.

Warm regards,

KB

The ARCHEA Asia H.E.R.O. Innovators Fund (www.heroinnovator.com) is the only Asian SMID-cap tech-focused fund in the industry. H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners. The investment objective seeks to capture long-term investment returns created by disruptive forces and innovation by focusing on high-quality and liquid listed equities in the Asia-Pacific region that ride on and benefit from them. Through our cross-sector and in-depth fundamental research process, the Fund aim to provide access to companies whom we believe are run by high-integrity, honorable and far-sighted owner-operators with a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to create, expand and service their total addressable market, including the resiliency and balance sheet strength to maintain or grow profitability, pricing power and market positions through up/downturns in the economy.

The ARCHEA H.E.R.O. Innovators Tech Fund is a UCITS V fund domiciled in Luxembourg, and is available to both retail and accredited investors in Europe (including Switzerland, Germany, France, Denmark, Belgium, Luxembourg) and qualified offshore investors worldwide. The ARCHEA Asia HERO Innovators Fund is now in the pre-launch stage, subject to regulatory approval. We will also be registering the funds under MAS CISNET for distribution in Singapore. Our target fund launch date for the Founders’ Series is in September 2018.

We have secured capital commitments from several institutional and high net-worth investors. Once we have gotten our ticker code and approval from the regulator for our UCITS fund, interested long-term partners can simply buy or sell units in the fund, just like the buying or selling of listed shares, by approaching any bank of your choice with the ticker code and wire the funds into an independent custodian bank. As a strictly regulated UCITS fund that is also audited by PwC, there is daily liquidity to buy or sell, and we have zero exit fees. If you are interested to participate in the exponential growth journey of the H.E.R.O. Innovators who are solving real-world high-value problems and have helped create what the world around you looks like today and tomorrow, please contact KB by email kb@heroinnovator.com or whatsapp +65 9695 1860.

How to Know If We are Right for Each Other?

You are an intelligent and thoughtful high net-worth investor, business owner, family office, institutional investor, allocator, or financial advisor who want to:

  • You want to learn and be well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy, and feel more confident in your knowledge in how these innovators are indispensable in the well-being of your daily life.
  • Yet, you do not wish to follow the crowd like everyone else to herd in the highly popular mega-cap tech stocks.
  • And you definitely do not want to fall for the Next-Big-Thing trap by investing in fads, me-too imitators, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model, and you want to know how to distinguish between the true innovators and the swarming imitators.
  • You want to be proud of the entrepreneurs and owner-operators running the companies whom you invest in to generate sustainable returns, that they are honorable, high-integrity, far-sighted, and have a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to grow profitably through up/downturns in the economy.

Mini Workshop | 100X: Be Exponential, Be Exceptional Like a H.E.R.O.! Business Model Innovation & Investment Insights to Transform SMEs Into Exponential Enterprises from $10 Million to $1 Billion

We are planning mini-workshops in partnership with a quality audit & consultancy firm for their clientele base of SME business owners to share about H.E.R.O. – below is a brief synopsis. If there is available space, we will open up the workshop to interested qualified investors who are lifelong learners. More details on the dates and venue to be shared at a later date. If you are interested to find out more or reserve a seat, please contact KB, thank you.

Synopsis:

Disruptive innovation is accelerating exponentially across many industries, upending passive companies and benefiting selective innovators whom we call H.E.R.O., which stands for “Honorable. Exponential. Resilient. Organization.”

Always feel that the insights from the usual case studies of big giants from Apple to Alibaba may not be relevant and applicable to your SME? H.E.R.O. Innovators are not your usual SMEs – they are exceptional market leaders in their respective fields and are 10X exponential compounders in profits and market value. What does it take to be exponential and exceptional like a H.E.R.O. and scale a SME 10 times or even 100X from $10 million to $1 billion in market value?

What are the business model innovation and investment insights that business owners, CEOs, managers and investors can learn and discover from the real-world case studies of H.E.R.O. Innovators that can be transformed into growth and positive change for yourselves?

Are we willing to commit ourselves and our companies to a process of mobilization, learning and discovery that progressively unlocked more of the company’s and personal full potential?

Part 1: Be Exponential! 天时

  • Stay ahead of the curve and keep your head when all others are losing theirs in an exponential world by acquiring the ability to tap on the technological insights of H.E.R.O. Innovators as a source of endless innovation for you and your team.

Part 2: Be Exceptional! Business Model Innovation Insights 地利

  • Discover why Asian H.E.R.O. Innovators outperform to create value regardless of macroeconomic potholes and bumps and the innovations they introduce to make the bumps work for them – and how you can acquire the ability to adapt them to work for you and your team.
  • Learn why do two companies in similar industry with each earning the same absolute profit size differ vastly in their market value in the stock market.
  • Understand the surprising insight why sales, profit and tangible asset growth may not translate to market cap growth and the secrets to unlocking business valuation.

Part 3: Be a H.E.R.O.! CEO 2.0 人和

  • Master lessons in overcoming challenges, hardships and adversities from the leaders helming Asian H.E.R.O. Innovators who propelled some of today’s innovative next-generation companies to success. Avoid business mistakes of the decisions of H.E.R.O. Innovators.

Participants Profile:

JOIN US in this thriving community of serious entrepreneurs and value investors where we come together and profit from sharing ideas.

  • Business Owners, CEOsCFOs and company executives aspiring to scale new heights for their businesses and last the distance to lead a meaningful and successful life;
  • Finance professionalsaccountants, and non-financial professionals who are keen to enhance their understanding of business building and value investing principles for professional and personal use;
  • Scions of business owners who desire to sharpen their business and investment acumen, manage challenges in family business, wealth preservation and creation, and network with other entrepreneurs and senior managers.

About KB:

Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized investment management, investment advisory & research services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian equity fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Detecting Accounting Fraud in Asia as an official module at SMU. KB remains grateful to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community.

Selected media archives:

Scouring Accounting Footnotes to Prevent Tunneling Fraud, Business Times, 19 Aug 2015 (PDF)

Reforming Corporate Governance, Business Times, 25 Nov 2000 (PDF)

The Secret to Business Resilience: Be Like the Bamboo, Not the Oak, TODAY, 8 April 2013 (PDF)

Creating Bamboo Innovators in Singapore, Straits Times, 1 April 2013 (PDF)

管理狮城的狮子企业家 The Power of Vision, Business Times, 15 May 2000 & Lianhe Zaobao, 9 Aug 2010 (PDF)

Why ‘Democracy’ and ‘Drifter’ Firms Can Have Abnormal Returns: The Joint Importance of Corporate Governance and Accounting Quality in Separating Winners from Losers, Review of Social, Economic and Administrative Studies, Vol. 25 no. 1 (2011): 3-55. (PDF)

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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