Zenrin (TSE: 9474), Japan’s dominant #1 map data solution provider and #1 in India via MapmyIndia – H.E.R.O. Innovators Insights from CEO Zenshi Takayama | H.E.R.O. HeartWare | 17 September

“Go home after filling up the gas tank,” she muttered. “There is a Beethoven Moonlight Sonata performance tomorrow evening 7pm at The Theater, a 15 minutes drive from the office. You might like it. Would you like to go?” Yes, she exclaimed.

This is a real conversation that is happening in the car between the driver and her AI voice-agent automotive infotainment service with “MicroAITalk dialogue system” on the roads in Japan. The company enabling the innovation is Zenrin Co (TSE: 9474), Japan’s #1 map maker and data solutions provider with an unassailable market share leadership of over 90% in residential maps and over 70% in map software for in-car navigation systems with Google, Yahoo, Microsoft, NTT DoCoMo and Toyota, Nissan and Honda as sticky customers to generate stable recurring income and cashflow. The underlying map data navigation technology is experiencing exponential growth with the rise in demand for innovative new services that include integrating “MicroAITalk”, the high-performance language comprehension system implemented by Zenrin Always Navi service in Oct 2017 that is developed by Honda Research Institute to interpret the meaning of each sentence or phrase uttered by the user with its own logic, so as to make it easier to set the destination; the AI Infotainment Service jointly developed by Zenrin and NTT DoCoMo in April 2017 that utilizes “behavior prefetching technology” in automatically analyzing the driver’s behavior patterns and schedules, such as drivers’ frequented places, frequently used routes, arrival and departure times, to estimate destinations and provide comfortable driving by notifying various kinds of contents such as traffic congestion avoidance, parking information, event information to the driver at an appropriate timing. Zenrin’s largest business in automotive data and ITS (intelligent transport system) which contributes 32% of sales (FY2015: 21.5%) is growing at a double-digit pace with relentless demand for innovation and high-precision 3D data for autonomous driving/ ADAS (Advanced Driver-Assistance Systems), including collaborating with NVIDIA to develop a cloud-to-car HD map solution for self-driving cars by combining NVIDIA’s AI technologies and the company’s big data to provide wider coverage of HD maps for automotive manufacturers with a dramatically shorter lead time.
Digital maps are now indispensable to our lives and Zenrin could possibly be the “most important” company that dominates the automobile industry in the race towards autonomous driving in Japan. “When you open Google Maps and look closely at the bottom right, you will find credit ‘ZENRIN’. Yes, it is our company that provides information to Google Maps. Zenrin offers many of the digital maps used online and on mobile devices, including major portals such as Google and Yahoo!, and directions displayed on car navigation systems. The address system in Japan where the street, address, number, letter at the various municipalities is much more complicated than in the Europe and the United States. Japanese maps are not easy to make,” commented Zenshi Takayama, CEO of Zenrin. CEO Takayama added, “Autonomous driving is often thought to run while sensing the surroundings with a sensor, but the next generation map data is indispensable for the route to the destination. Zenrin holds the key to realizing autonomous driving.”

With its accumulated digital map database asset and technological know-how, Zenrin is able to create new revenue streams that are growing at double-digit in the IoT (Internet-of-Things) Business (23.6% of sales) in services for smartphones, digital map & location-based services, and in the Marketing Solution Business (15.3% of sales) that utilizes map info for promotion and ad targeting using segments generated by lifestyle classification data by building type and commercial area analysis, adoption of marketing content for social media such as Facebook, digital signages, map graphics in AR/MMORPG games (e.g. PlayStation) etc. Zenrin’s map data is also applied in public solutions that include firefighting, disaster prevention/rescue with 497 municipalities (7.1% of sales). Zenrin’s original business in general map publishing of residential maps accounts for 7.1% of sales and has become part of the Product Business (22.1% in sales) which include monthly subscription-based GIS software package for corporate customers such as residential/construction firms. Zenrin is also expanding into 3D aerial space map for drones and strengthening private-public partnership through the “drone highway initiative”. Zenrin also has a valuable 17% stake in the profitable MapmyIndia, India’s dominant #1 B2B map company with a 95% market share in the built-in dashboard GPS navigation system market and an 80% market share by revenue in India’s location intelligence industry, which was acquired at US$30m in 2011, now valued at over US$110m based on Flipkart’s US$220m investment in Dec 2015 for a 34% stake, but carried at cost in Zenrin’s balance sheet.

On 30 July 2018, Zenrin announced strong 1Q results (April to June) which drove its latest 12-month sales to 62.9bn yen (US$561m) and operating profit of 6bn yen (US$54m), EBITDA of 12bn yen and operating cashflow of 11bn yen to all hit an all-time high since its listing in 1994, propelling a 214% increase in market value over the past three years to US$1.59bn. The mainstay map database business grew with the strong sales of domestic in-car navigation data. Overall, Automotive & ITS Business 1Q sales increased +18.9% yoy, IoT Business sales grew +11.7% yoy, Marketing Solution Business jumped +26.3% yoy, Product and Map Design Business for corporate customers rose +2% yoy, and Public Solution Business for government increased +5.5% yoy. On 18 Jun 2018, Zenrin announced a share buyback program with the upper limit set at 600,000 shares (1.12% of the number of shares issued) or 1.5 billion yen, and the acquisition period is from June 19th to September 30th, as part of its “efforts to implement flexible capital policies” to “improve capital efficiency and strengthen shareholder returns.”

Zenrin was founded in 1948 by Masatomi Osako (1921-1980) with the mission to provide convenience through maps to support people’s lives. Second generation leader Shinobu Osako (1945-2005) was responsible with the foresight to digitize maps ahead of everyone in the industry, including developing the world’s first GPS car navigation software in 1990. Shinobu Osako was also responsible for the unconventional succession plan of selecting the CEO from amongst the employees. Zenrin was listed on Fukuoka stock exchange in 1994 and on TSE 1st section in 2006. CEO Takayama is the first non-family professional CEO to lead Zenrin since 2008. Toyota Motor is a strategic shareholder with a 8.1% stake. As the dominant player in Japan, Zenrin faces a different and favorable competitive landscape to forge collaboration with global players in the ecosystem to co-create value, in contrast to the situation in China where there are 14 licensed map companies that include Tencent-backed NavInfo (SZSE: 002405) and Alibaba-owned AutoNavi. Noteworthy is the US$1.6bn valuation that Alibaba paid to acquire the loss-making AutoNavi in Feb 2014. AutoNavi’s YE March 2014 sales had declined 18% to US$130.5m from US$159.7m in FY2012 and registered increasing losses with operating losses at US$88.8m. NavInfo, which generates US$349.4m in sales and US$37.1m in operating profit, had a market value of US$3.5bn, more than twice the value of Zenrin despite lower sales and profitability and negative free cashflow. We are also cautious of the accounting treatment of the capital expenditure of Chinese mapping companies who could possibly capitalized the operating expenses in the surveying investments in the maintenance of its map data to keep them updated, while resulted in poor or negative free cashflow generation, as opposed to the healthy positive free cashflow generation (over US$50m) for Zenrin.

Zenrin’s entrepreneurial founder and his visionary son has forged its higher-purpose DNA since its origin. CEO Takayama, who joined Zenrin in 1986 and took over as the fourth president in April 2008 as the first CEO outside the founding family, shared: “The beginning of Zenrin is a small publishing company launched in 1948 by the founder Masatomi Osako that makes sightseeing information in Beppu, shortly after World War II. The book which introduced the origin and effect of hot springs and information on tourist spots was said to have been useful and the number of travelers to Beppu increased. The map became more popular than the book itself and was attached as an appendix. From hot spring inns to communal baths, fine roads are recorded without any exceptions, and the map had built up a big reputation for travelers. Osako is convinced of the possibility of the map and aim to transform into a map making company. Osako believe maps have high public value and reflect the situation where people live and leave the history of the area and he wants to contribute to society by keeping steady surveys and updating maps. At that time, Osako drew curves of the road using drafting tools and it was a skill to put it in such a clean way. When a residential map was born in this way, the demand for ‘I want you to make it in my town’ also rushed, and gradually spread to neighboring municipalities. Osako set the goal ‘I would like to bring convenience to Japan through a residential map to support people’s lives and deliver a useful map across Japan’ and gradually expanded the coverage area. Zenrin’s turning point was a construction rush due to high growth. Buildings are built in the city and new towns are built in the suburbs one after the other, the appearance of the town changes rapidly. Zenrin’s way of relying on manual labor has made it impossible for map creation to keep up with changing speed.”

“Shinobu Osako, the second generation, addressed this problem by digitizing the map, which no one else was doing in Japan. At an exhibition, Shinobu saw a prototype of a ‘drawing system’ by computer in which if you enter the necessary numerical values, you can create a design drawing with a computer. Osako said then, ‘If you create a map with this, you can reduce time and effort dramatically’. However, this was in the days when computers are not yet popular and the cost reaches 10 billion yen, which exceeds annual sales. When consulting the Board of Directors, voices of opposition rose all at once. However, Shinobu said, ‘To make Japan more convenient on the map, this is the only thing’ and he pushed against the opposite and decided to introduce map drawing using the computer. After trial and error, in 1984, Zenrin succeeded in digitizing the first residential map in Japan, which was the dawning era of computers. It contained evolutional display with more than 100 layers such as administrative division, land shapes, roads and facilities. This development expanded the range of usage and improved integration of information and location into contents. In 1990s, ZENRIN developed the world’s first GPS car navigation map. This system provided smoother mobility to unknown places by precise guidance to destinations and contributed to realize such society as using more accurate map information. Thanks to the digitization of the map realized ahead of the industry as a result of the decision of Shinobu more than 30 years, Zenrin precedes other companies in the field of Internet maps and car navigation systems for various manufacturers as an indispensable item in support of safe driving which is now supporting the backbone of Zenrin and pushing Zenrin to top share.”

“Since then, ZENRIN has contributed to people’s lives by offering a variety of products and services, including residential maps and map data used in car navigation systems and are active behind the scenes such as in firefighting, policing and disaster prevention, rescue & recovery. Under our unique business model, we conduct regular maintenance on our large volume of information collected every day, manage it in a database, and provide it in forms optimized for all manner of devices. The usage style of our map varies due to technical innovation and external environmental changes such as sophistication of ITS technology, safety drive support and stronger consciousness for disasters. The origin of Zenrin’s company name is based on the meaning ‘good neighbor’. This includes the feeling of founder Masatomi Osako that we ‘cannot create a map unless the place is peaceful’. We aim to progress, firmly maintaining our spirit of “Fraternity, Service and Creation” and provide valuable information to our customers applying to their respective needs promptly.”

On its capacity and capabilities to continuously launch innovative new services, CEO Takayama shared more about the various business divisions of Zenrin from IoT (23.6% of sales) and the Marketing Solution Business (15.3% of sales) to the Public Solution Business (7.1%) and Product Business (22.1% of sales).

On Zenrin’s IoT business, CEO Takayama said, “Our ‘Always NAVI’ service operated by Zenrin Datacom is a map site that can search maps and addresses all over Japan. On the site, you can search for a facility and a route, plus a wealth of information categorized in gourmet and tourism, reservation parking lot, etc. In Aug 2018, we revamped our location-based salon reservation app service Tredina which is a matching between a staff who works at a beauty salon and a user who wants to use a beauty salon. With the renewal includes the function of ‘find your own salon staff’ who provides a menu that meets the desired conditions. Provided categories are wide such as hair, nail, eye, aesthetics, etc.. include reviews with snapshot photos, reservation and schedule management. Enhanced service is provided for beauty workers working in the salon and publication fee is performance-based, applicable only when the reservation visitor visited.”

On Zenrin’s GIS (Geographic Information System) Marketing and Business Support Navi, CEO Takayama said, “Where are the best customers for your company? If you know where your new customers are located, it will be a great hint to expand sales. By applying Zenrin’s ‘GIS marketing’ method of conducting market area analysis using maps, various statistical data, commercial area analysis and lifestyle data, you can grasp different characteristics depending on area, and you can realize sales and promotion tailored to potential customers. We contribute to the planning of sales strategies, examination of measures to increase sales by each store, and planning of opening new stores. We introduce solutions that maximize the effect of sales activities by customer-based map management. By expressing information on maps that we did not understand with customer list information as before, we can see efficient sales routes and regional characteristics that we have not noticed before.”

CEO Takayama also shared that Zenrin also created a unique tech infrastructure to support position information game for game developers with a revenue-sharing business model: “In the game development which handles the map such as the position information game, the initial cost is overwhelming. Zenrin Datacom’s ‘Game Map SDK’ which supports the development of location information games is easy to introduce while keeping costs down for game developers. We have revenue sharing according to the sales of our customers’ applications and services to respond flexibly to our customers’ business model. In Feb 2018, we introduce our first case where our ‘Game Map SDK’ was adopted by Toy Logic’s smartphone game ‘Yaoru Ozu Quest”. The city where players live and commuting / school roads become the stage of adventure. It is a game with its own algorithm using location information and map information, and you can play anywhere in Japan if you have ‘road’. The background map data is updated to the latest map information just like the reality. It is a RPG game that provides a new sense to play while walking and to enjoy authentic RPG with advancing quests, collecting friends, fighting enemies. In Jul 2018, Zenrin tied up with Granzella to provide 3D city model data that is being used as a reference for the fictional urban areas that will appear in their PlayStation game Disaster Report 4 Plus. It is a survival and action adventure game of survival using wisdom, courage and compassion in the extreme state due to urban disasters. The hero in the game is a student who encounters an unprecedented huge earthquake and learns to collaborate with people, catch up with information, gather information, and escape from the collapsed city.”

CEO Takayama expressed a deep sense of gratitude when talking about Zenrin’s Public Solution Business that support the saving of lives: “The map of Zenrin is also used to save lives, for example, at the fire center’s command center. Detailed map information including name of resident, road width, and building shape, is used for activities to protect the safety of residents, for example, in the case of an accident, from site confirmation to support movement of emergency vehicles. For instance, when Kawasaki Municipal Fire Department Command Center received a fire notification, the fire mark indicating the fire site was displayed on the monitor map. And the mark of ‘P’ represents the pump car on site which are shown in real time on the map. Important insights can be acted upon, such as ‘You can go through here if you’re a ladder car’ or ‘I am going to be here because it is small if it is an ambulance’. The location of the fire hydrant was displayed on the map of the fire engine vehicle. Thanks to this, firefighters are able to put out the fire as soon as possible. Zenrin maps are indispensable for life saving. Meteorological disaster prediction support system was created together with Asakura city of Fukuoka prefecture that suffered major damage in the northern Kyushu heavy rain in 2018. For example, if there is a danger of flooding in a river, the map area is red and the predicted flooded area is shown. This is linked with residential maps. Because the house of the person who needs assistance such as the elderly is displayed in red, evacuation can be induced quickly. The situation of rivers flowing through the city with live camera images is displayed in real time, and each water level is also understood. Zenrin is trying to extend this system nationwide in order to lead to a quick rescue operation.”

With this higher purpose to support people’s lives by pursuing convenience on the map, CEO Takayama shared about their expansion into the new business in aerial maps for drones: “The DNA that pursues convenience on the map to support people’s lives is still being continued. In Chichibu city Saitama prefecture, there was an experiment in June 2018 involving Zenrin, Rakuten and TEPCO which resulted in the world’s first successful demonstration of drone logistics delivery utilizing the ‘Drone Highway’ to support the drone’s safe flight. The mayor commented that transporting goods to residents in Chichibu is a big task because the mountains are complicated. Because there is a lake in this area, it takes time when transported by car. Delivery by drones work as a trump card for solving transport problems. Zenrin realized the world’s first ‘sky map’. Mountains, buildings, towers and other obstacles are mapped into three-dimensional data to make ’empty road’ for drones to fly safely and the transportation of goods to depopulated areas greatly improved. With the accumulated technologies, know-how and success with the collaboration in Chichibu with Rakuten and TEPCO, Zenrin and KDDI announced in Aug 2018 that we will begin the ‘Ina-shi drone logistics project’ public-private partnership for the Nagano prefecture, including working with local supermarkets and road stations and Ina Cable Television to create a mechanism for receiving and ordering goods via cable TV.”

Founder Masatomi Osako believed that “The map is not just something that is supplementary, but they are the most important source of information.” The foundation of the various businesses and services is in the map surveying and data collection work, which CEO Takayama view their maniacal attention to detail as their competitive edge unique to their company: “Information gathering work is the basis for building a map database. We seem to have a lot of employees who are ‘map maniacs’ who do not understand the boundary between work and private. They go on trips with paper map and ask, ‘Is not this a river in the past?’ or ‘there is absolutely a difference in the level here’. The data for map production collected by about 1,000 surveyors every day on the ground walking and driving, whether on a rainy day, snowy day and hot summer day, is more detailed than the GPS. The amount of survey results received from business establishments nationwide must cover about 10,000 districts a day, 1,500 figures, and 360,000 research results annually, and the mileage logged annually is more than 50 laps around the earth. In NHK’s popular program ‘Project X Challengers’ broadcasted on Oct 2014, Zenrin was highlighted as ‘a residential map of 300,000 people obsessed with the archipelago’ and we strengthened our brand name recognition nationwide. As information to be posted on the map increases year by year, there are new investigation items added used for car navigation systems, including ‘arrival point information’ of the building. This is a maintenance that we started from 2008 for correct route search in car navigation system. For example, enter ‘Edo-Tokyo Museum’ in car navigation system. If it is an outdated car navigation system, navigation guidance ends with ‘destination is around’ when coming near the destination. However, the latest car navigation system by Zenrin guides you to the entrance of the building properly. Therefore, it is possible to search the ‘door-to-door’ route by registering the optimum point on the road as the goal point for the route search in association with the building for each building. Autonomous driving is often thought to run while sensing the surroundings with a sensor, but the next generation map data is indispensable for the route to the destination. Zenrin holds the key to realizing autonomous driving.”

Summing up, CEO Takayama said, “ZENRIN constructed ‘Integrated Geospatial Database’ which manages information with geospatial approach. It brings innovation to all scenes such as convenient notification service for ordered parcel, arrival vacancy in the neighboring parking lots, etc. and provides the basis for urban-related analysis such as countermeasure study by disaster simulation or status and forecasts for urban structure changes. Provide effective information to society, every time, in suitable data style – that’s our innovative direction. We are progressing research and development for ‘High precision spatial information’ utilizing all geospatial element already included. This activity supports vehicle sensing by supplying information regarding curvature, locations of stopping lines, road width, etc. as ‘maps read by vehicles’. This database is expected to play a role in ‘knowledge’ for safer driving. ZENRIN GROWTH PLAN 2020 is to map all Japanese maps to Zenrin base which aims not only to provide services that meet the needs but also to create new usage values and services of map information in the IoT era, such as the development of high precision map database in ADAS (advanced driving support system) for smart cars and development of three-dimensional sky map for drones. In the GIS business, we are working on the development of the ZENRIN GIS package specialized for enterprises to develop new markets, and we are building stable sales. For example, in addition to noticing markings such as traffic lights, it is also used for sales support and customer management work. There are also relatively inexpensive GIS products that can be offered at monthly subscription price, and we expect to see demand expansion for home delivery companies and others. We are also challenging the creation of a ‘sky map’ for drones to run automatically and provide new convenience in the upcoming ‘industrial revolution in the sky’.”

On Zenrin’s expansion outside of Japan and into India, CEO Takayama said, “In 2011, we entered into the Indian market with a business and capital tie-up with a US$30m investment for a 24% stake in C.E. Info Systems, the largest India map company behind MapmyIndia. In April 2013, we opened our Indian branch and strengthened our partnership with the company while expanding sales channels and offering products, such as marketing GIS and mobile management services using maps to help business strategies and market analysis in India, to Japanese companies entering India.”

MapmyIndia claims to have a 95% market share in the built-in dashboard GPS navigation system market, and as many as 14 car manufacturers, including Japanese automakers, BMW, Jaguar, use its navigation solutions in the country, and an 80% market share by revenue in India’s location intelligence industry with more than 2,000 customers such as Eicher Motors, Tata Motors on its SaaS platforms, which is used for fleet management, location analytics, etc. MapmyIndia also offer the back-end technology for ride-sharing apps, including Ola, Uber and Avis Car Rental. In Apr 2017, MapmyIndia announced several acquisitions and strategic partnerships, including an alliance with the Indian Space Research Organization, the country’s space agency, aimed at developing advanced products and solutions in the map and navigation segment to tap growth potential in the Indian market. As of 2018, it has 5,000+ Enterprises and 5mn+ consumers that use and benefit from its services. In Dec 2015, Flipkart invested US$220m (Rs 1,600 crore) for a 34% stake in MapmyIndia. Flipkart plans to deploy location intelligence capabilities from MapmyIndia across its logistics network to strengthen its first-mile pickup and last mile delivery operations. The etailer also plans to leverage MapmyIndia’s data for better address verification, real-time shipment tracking, facility mapping and theft minimization. Location is becoming increasingly important to understand consumer behavior and with MapmyIndia’s database across big metros and small towns could be an asset to etailers like Flipkart for hyperlocal distribution and warehouses. MapmyIndia generates over 200 crore (US$27.7m) in revenue with over 5,000 enterprise customers and is targeting to achieve a turnover of 1,000 crore (US$155m) with 30% profit after tax margin in the next five years.

MapmyIndia was founded by the husband-wife team Rakesh and Rashmi Verma. CEO Rakesh commented: “With demand for such solutions growing in India, around 80% of total revenue comes from the automotive sector with long-term contracts. We are focused on creating maps so advanced that they mirror the real world and are building powerful location technologies as we seek to provide advanced digital solutions to companies in sectors such as automotive, logistics and e-commerce.” CEO Rakesh added that, “MapmyIndia has also built a tool that could pose some difficulty for Google. Over the past few years, the company has begun to provide e-locations (eLoc) to digitally map physical property and addresses. That means, many properties in the country are given a six-digit code, and upon entering the eLoc, the map identifies the best route to that building. Unless somebody can physically map all this, it will be a big entry barrier. The addresses have already managed to create a database of over 2 crore such properties across some 7,000 towns and 6 lakh villages in rural India. So you can just put the eLoc in your cab and it will take you to that location.” MapmyIndia’s edge over its rivals also comes from its ability to map remote areas of the country, having ramped up its ground coverage, going lane by lane across cities and villages.

CEO Rakesh’s son Rohan is a Stanford engineering graduate and presently the CTO of MapmyIndia who built which became India’s first interactive mapping portal. CTO Rohan gives four major areas where it’s beating the global company: accuracy, availability, the amount of comprehensive information they provide and their target audience of businesses and enterprises. Google Maps is an app that allows users to visualize data, on the other hand, the data provided by MapmyIndia allows users to analyse the geo-demographic data. Furthermore, the latter also claims to offer customized and deliver bespoke solutions. For example, for someone looking to open a restaurant, MapmyIndia will tell them about the population density, the expected monetary capabilities of people residing in the nearby areas, a 3D visualization of roads, and parking spaces, among other things.

MapmyIndia has a complete API stack which aids developers who are looking to build interesting apps powered by a geo-locational element, for example, companies like OLX, Flipkart, Maps for blind and handicapped, smart parking systems. It offers navigation functionality, tracking and telematics, and location-based analytics. MapmyIndia also tied up with IBM’s The Weather Company (TWC) to jointly offer users across sectors such as agriculture, automotive and logistics hyper-local weather information that would help them plan activities better and insure against weather-related eventualities. In April 2017, MapmyIndia announced the acquisition of Bengaluru-based pioneer in VideoMaps, VIDTEQ, which allows a user to view a video clip of the complete route from any source to any destination within a city. VIDTEQ owns, a portal that lists new real estate projects. Other interesting services include: CBDT, which enables in the expansion of India’s taxpayer base by mapping out transactions on a digital map, and hence gives a more accurate assessment of income using the location component. The locational element here is linked to a PAN card, that helps identify where they (the taxpayers) are located. MapmyIndia is powering the SBI Finder App which helps locate ATMs, cash PoS, cash petrol pump, nearest branch etc. Furthermore, it also offers dependable people-tracking and vehicle tracking solutions. MapmyIndia Safemate is a small-sized IoT device with an extended battery life that can be used as a personal safety device for women and children. DriveMate is a universally compatible (across all brands of cars manufactured in the past 15 years), plug and play, GPS-based, vehicle-tracking IoT device. The product offers accurate real-time information on vehicles viz. location, speed, battery condition, engine (idling or killed), route violations etc.

Like Zenrin’s founder Masatomi Osako, the story of how the Vermas started MapmyIndia is also inspirational. In 1993, after being un-banned in India, Coca-Cola acquired the Indian cola company Thumbs Up and found itself with a problem unfamiliar to companies accustomed to developed markets: very few accurate maps existed at that point. Thumbs Up had a vast network of bottlers, each with an assigned distribution territory, but nothing depicted the overlapping of boundaries of the territories (descriptions such as “along the river” substituted for maps). Not surprisingly though, Coca-Cola wasn’t the only multinational facing such a cartographical dilemma in India: for example, a joint venture of Essar and Cellular One was struggling to figure out where to place cell phone towers. The Vermas begun licensing US mapping software with an aim to enhance India’s map-making capabilities. They were determined to make it their life’s work to build a first-of-its-kind digital map database of India – an asset for the country. It was a herculean task, because of India’s vast and varied geographical and topographical diversities. They approached Coca-Cola, Cellular One, and other companies and obtained contracts to create digital maps that contained information that could aid these respective companies with business (bottlers’ territories) or topographic features (high ground suitable for cell towers). They received advance payments from the companies, which enabled them to make high-quality maps that they could later modify and sell to other clients, including the Indian Defense Department. Over the last 25 years, MapmyIndia sent out 400+ surveyors to collect hundreds of attributes about every location. The collected attributes include building footprints, doorsteps, floor number, flat number, photographs, types of buildings etc, among other things. It is via this information, that the company has created a data repository, a digital map of the country of inter-connected information with all those geographical markers and coordinates. It has also entered into more than 100 strategic partnerships with tech and marketing companies, to facilitate the process of data collation faster.

On the type of values he prizes in people and in the organizational culture, CEO Takayama said: “We are seeking people whose curiosity is vigorous and can challenge new things. Human relationship exists in the base of all work. We must work ahead while building relationships such as trust with customers and cooperation within the company. Especially when you tackle an unprecedented task.” CEO Takayama also recommended the book “Leading Change” by John Kotter, reflecting his view on the importance of changes and innovating ahead of the curve: “I try to recommend books that others can read at once. One of them is John P. Kotter’s ‘Leading Change’. It is a fable that depicts a penguin living in a colony of Antarctica, which is very useful as a story of corporate transformation, and it is easy to read. The story is that one penguin notices that the iceberg with the colony is beginning to melt, persuades the elder and the parliament that will not move to embark on measures. If you replace it with a company, you will be reluctant to change if you do the same thing based on past experiences. In order to break down this status quo, we are explaining the importance of reforming ourselves with a sense of crisis leading to organizational change.”

Intrigued and want to read more? Download this week’s 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 over 200 listed Asian tech companies and our focused portfolio of 40 HERO Innovators who reveal their problems and successes behind building the company. Inspired by Brandon Stanton’s photo-journalistic project Humans of New York which collects and highlights the street portraits and moving stories of people on the streets around us who were doing things that changed lives and made a difference in the city but often went unnoticed, we have curated a collection of Hear the Heart of the H.E.R.O. stories on our website which we aim to update with refreshing and uplifting new stories weekly. Please check them out and give us your valuable feedback so that we can improve to make them better for you.

It started with rethinking a few questions. Question No. 1: Can the megacap tech elephants still dance? Or is this the better question: Is there an alternative and better way to capture long-term investment returns created by disruptive forces and innovation without chasing the highly popular megacap tech stocks, or falling for the “Next-Big-Thing” trap in overpaying for “growth”, or investing in the 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? How can we distinguish between the true innovators and the swarming imitators?

Question No. 2: What if the “non-disruptive” group of reasonably decent quality companies with seemingly “cheap” valuations, a fertile hunting ground of value investors, all need to have their longer-term profitability and balance sheet asset value to be “reset” by deducting a substantial amount of deferred innovation-related expenses and investments every year, given that they are persistently behind the innovation cycle against the disruptors, just to stay “relevant” to survive and compete? Let’s say this invisible expense and deferred liability in the balance sheet that need to be charged amount to 20 to 30% of the revenue (or likely more), its inexactitude is hidden; its wildness lurks and lies in wait. Would you still think that they are still “cheap” in valuation?

Consider the déjà vu case of Kmart vs Walmart in 2000s and now Walmart vs Amazon. It is easy to forget that Kmart spent US$2 billion in 2000/01 in IT and uses the same supplier as Walmart – IBM. The tangible assets and investments are there in the balance sheet and valuations are “cheap”. Yet Kmart failed to replicate to compound value the way it did for Walmart. Now Walmart is investing billions to “catch up” and stay relevant. Key word is “relevancy” to garner valuation.

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”, to keep staying curious & humble, and to keep learning & adapting, has never been more critical for value investors. We believe there is a structural break in data in the market’s multi-year appraisal (as opposed to “mean reversion” in valuation over a time period of 2-5 years) on the type of business models, the “exponential innovators”, that can survive, compete and thrive in this challenging exponential world we now live in. Tech-focused innovators with non-linear exponential growth potential are the most relevant multi-year investment trend and opportunity.  

During our value investing journey in the Asian capital jungles over the decade plus, we have observed that many entrepreneurs were successful at the beginning in growing their companies to a certain size, then growth seems to suddenly stall or even reverse, and they become misguided or even corrupted along the way in what they want out of their business and life, which led to a deteriorating tailspin, defeating the buy-and-hold strategy and giving currency to the practice of trading-in-and-out of stocks. On the other hand, there exists an exclusive, under-the-radar, group of innovators who are exceptional market leaders in their respective fields with unique scalable business models run by high-integrity, honorable and far-sighted entrepreneurs with a higher purpose in solving high-value problems for their customers and society whom we call H.E.R.O. – “Honorable. Exponential. Resilient. Organization.”, the inspiration behind the H.E.R.O Innovators Fund, (surprisingly) the only Asian SMID-cap tech-focused fund in the industry.

The H.E.R.O. are governed by a greater purpose in their pursuit to contribute to the welfare of people and guided by an inner compass in choosing and focusing on what they are willing to struggle for and what pains they are willing to endure, in continuing to do their quiet inner innovation work, persevering day in and day out. There’s a tendency for us to think that to be a disruptive innovator or to do anything grand, you have to have a special gift, be someone called for. We think ultimately what really matters is the resolve — to want to do it, bring the future forward by throwing yourself into it, to give your life to that which you consider important. We aim to penetrate into the deeper order that whispers beneath the surface of tech innovations and to stand on the firmer ground of experience hard won through hearing and distilling the essence of the stories of our H.E.R.O. in overcoming their struggles and in understanding the origin of their quiet life of purpose, who opened their hearts to us that resilience and innovation is an art that can be learned, which can embolden all of us with more emotional courage and wisdom to go about our own value investing journey and daily life.

As the only Asian SMID-cap tech-focused listed equities fund in the industry, we believe we are uniquely positioned as a distinctive and alternative investment strategy for both institutional and individual investors who seek to capture long-term investment returns created by disruptive forces and innovation without herding or crowding to invest in the highly popular megacap tech stocks, and also provide capital allocation benefit to investors in building optionality in their overall investment portfolio.

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. 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. Thank you very much and have a beautiful week ahead.

Warm regards,
KB | | WhatsApp +65 9695 1860


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 (, 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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