Fixstars (TSE: 3687), Global Leader in Acceleration Software Services Enabling AI, Autonomous Driving, IoT, Medical Imaging – H.E.R.O. Innovators Insights from CEO Satoshi Miki | H.E.R.O. HeartWare | 7 January

Speed in processing ever greater data saves lives.

“In medical image diagnosis, as the resolution increases, the rate of disease detection increases, and processing that took one hour is completed immediately, which leads to reduction of burden on the medical site, improvement of efficiency and in turn could save life. Even in drug discovery, accelerating the simulation results of active ingredients may accelerate the development of innovative new drugs. In automated driving of cars, the probability of preventing accidents will increase if the brakes are taken earlier even if by 1 millisecond after the danger is detected.”

This insight was shared by Satoshi Miki, founder and CEO of Fixstars (TSE: 3687), the global leader in acceleration software services enabling all of the above mission-critical applications and more in this era where the amount of data used from artificial intelligence (AI), IoT (Internet of Things) to autonomous driving is increasing explosively and the demand for high-speed data processing is expanding exponentially.

This brought about the “high-performance hardware era” when multiple processor cores are combined on a chip to multiply the amount of data that could be handled to power our “quad-core” smartphones and various high-end devices. Yet, the dirty secret that chip manufacturers do not want us to know is that it’s not about how many cores you are running; it’s increasingly about the software you are running on them. Processing speed performance is not optimized in mission-critical applications such as AI even if the high-end multi-core hardware is changed to the latest NVIDIA GPU (graphics processing unit) or FPGA (field-programmable gate array) technology. Software programs have to be specifically developed to take advantage of multiple processors. Amidst the noisy hustle and bustle, we are quietly making the transformational shift to the “high-performance software era”.

This week, we highlight the under-the-radar listed Asian exponential innovator Fixstars who is the global pioneer solving this high-value problem in the high-performance software era. Fixstars is also the critical business partner of NVIDIA who listed on its website that Fixstars’ software “is perhaps the only computational engine that’s optimized for massive parallelization with accelerated NVIDIA GPU technology [which] gives incredible speed and the ability to process truly enormous datasets”, as well as the business partner to Toyota Tsusho Group’s NEXTY Electronics in speeding-up autonomous driving. Fixstars generates high profitability with EBIT margin of 20.9% (4Q Sept/2018 margin 22.8%), positive free cashflow margin of 10.5%, ROE (= EBIT/ Equity) of 37.1% and ROA of 30.5% with a healthy balance with zero debt and net cash of 1.676bn yen (US$15.2m). Around 70% of the companies that are part of the Tokyo Stock Exchange (TSE) 1st Section are Fixstars’ customers, as well as Boeing, Lockheed Martin, United States Air Force, Army & Navy, and Fixstars has direct customer relationship without the use of distributors and enjoys high customer satisfaction, resulting in a very high repeat rate. Fixstars is also one of the six global partners to Microsoft Azure’s Big Compute HPC solution, one of which was acquired by Microsoft in Aug 2017 and another was acquired by Equinix (NASDAQ: EQIX), the world’s largest data center company, and has also attained the Microsoft Gold Cloud Platform Competency. We think Fixstars is also a potential takeover candidate by giants like NVIDIA and Microsoft.

In Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone, Microsoft chief Satya Nadella identifies the three big areas that will disrupt the status quo and push technology to continue to innovate, impacting our lives, communities and economies: AI, MR/AR (mixed reality/augmented reality), and quantum computing. The current bits in computers store information in binary form as either 1 or 0, thus limiting the potential to make sense when faced with gigantic volumes of data. Quantum computing uses quantum bits, or qubits, which can have properties of 0 and 1 simultaneously to unlock vast amounts of data. In just hours or days, a quantum computer can potentially solve complex problems that would otherwise take billions of years for today’s computers to solve. This has massive implications for research in healthcare, energy, environmental systems, smart materials, and more.

Fixstars is also one of the rare few listed company in the world that is engaged in quantum computing in a collaboration since Jun 2017 with D-Wave Systems of Canada, which is backed by Amazon’s Jeff Bezos and the investment arm of CIA, and is the world’s first company to sell commercial quantum computers. In Dec 2017, Fixstars’ partner NEXTY and Toyota’s affiliate DENSO Corporation (TSE: 6902), who is the second largest auto parts supplier in the world, announced the conduct of the world’s first test using cloud-based quantum computer developed by D-Wave to process vehicle location and travel data in real-time from a traffic IoT platform from about 130,000 taxis and trucks in Thailand. Findings will help guide application development to make transportation more efficient, from traffic decongestion to route optimization for emergency vehicles. In Nov 2018, DENSO reveals that they have improved the factory automation routing of their AGV (Automated Guided Vehicle) by 15% using D-Wave quantum computing system. In March 2018, Nomura applies D-Wave quantum computing in financial portfolio optimization.

Starting 2 January 2019, we are now located at 182 Cecil Street, Level 17 of the Frasers Tower building where Microsoft is one of the anchor tenants. Frasers Tower is located between the Bangkok Bank building and the Telok Ayer Chinese Methodist Church and is near the Amoy Street hawker food center. We welcome you to visit us over a warm cup of afternoon coffee at our new office on any day.

Our emotional labor of love over the past months in sharing openly our research ideas (to battle-test our ideas by critiques and avoid blindspots in investing) and setting up the proper regulated UCITS fund structure to protect investors’ interests has deepened our conviction for the positive change that we will make together with H.E.R.O. – and we are getting closer to giving birth in end January/February 2019 to H.E.R.O., the only Asia SMID-cap tech-focused fund in the industry and guarding investors’ interests in the regulated UCITS fund structure with daily NAV & daily liquidity and no exit fees.

If you are not moving forward in this exponential world, you are going backwards. If you want to join us at the leading edge of opportunity, if you identify yourself in the values and bigger sense of purpose in H.E.R.O., or you wish to tell from your heart to your most important person, son, daughter, wife, husband, or best friend that you are a farsighted and thoughtful explorer in the H.E.R.O.’s Journey participating in the long-term exponential growth of a selected group of outstanding entrepreneurs, standing up for the embracement of the human spirit, please contact us via email or WhatsApp at +65 9695 1860. Thank you very much for your patience and support and we look forward to growing exponentially with you as we explore the H.E.R.O.’s Journey together.

“Since its founding in 2002, Fixstars specializes in advanced software development service that draws on the performance of hardware and has promoted business with the flag: ‘Speed up your business’. By using hardware-aware software programming technology including parallel processing technology in multi-core environments, optimum use of various hardware architectures, we have been supporting client product development that requires faster processing speed. For example, in the medical field, in the case of image diagnosis, as the resolution increases, the rate of disease detection increases, and processing that took one hour is completed immediately, which leads to reduction of burden on the medical site, improvement of efficiency and in turn could save life. Even in drug discovery, accelerating the simulation results of active ingredients may accelerate the development of innovative new drugs. In automated driving of cars, the probability of preventing accidents will increase if the brakes are taken earlier even if by 1 millisecond after the danger is detected. Trust from our customers is thick as we can offer value that other companies cannot realize. We will improve the quality of life for people, protect our health and our lives. We can do useful programming for human beings and we are proud of our highly rewarding work in terms of social contribution. We are a group of super engineers who contribute to human society by making use of ‘high speed’ technology,” said Fixstars founder and CEO Satoshi Miki thoughtfully.

CEO Miki added: “Today, along with the dramatic evolution of artificial intelligence (AI) technology, it is said that computer intelligence will surpass human intelligence in the near future. IoT / AI technology that analyzes and utilizes a large amount of data will be adapted to many fields such as automatic driving, robot technology, medical diagnosis, factory automation, genome analysis, finance, marketing analysis, and will accelerate the growth of mankind. With the arrival of the IoT / AI era, there is an increasing problem of how to efficiently handle and process a rapidly growing amount of data and how to realize advanced analysis algorithms with limited computer resources and time. Therefore, the demand for high capacity storage technology and high speed processing technology cultivated by Fixstars has increased and plays an increasingly big role in the market. Fixstars will play a major role in solving the problem by utilizing the high-speed technology cultivated so far. For the next ten years, mankind will make substantial progress with the development of computer technology centered on AI. In order to contribute to this great progress by Fixstars’ software technology, we will continue to aim for further technological advances while working hard every day.”

“We have a dream of developing our proprietary software platform M³ required for the future multi-core era and using it in various applications in the world in the fields of medical equipment, inspection equipment, cars and security. Research on automatic parallelization is progressing, but it is actually far from the practical stage. We believe that an era will come in code optimize for various multi-core processors that is tuned by Fixstars engineers is used by application programmers all over the world for medical equipment, autonomous driving, embedded-software equipment, industrial equipment, financial system, computer graphics, etc. Fixstars is riding on the back of dramatic technological innovation in areas indispensable to society. Do you not think it sounds like fun?”

Fixstars Corporation (TSE: 3687) is the global leader in acceleration software services enabling AI, autonomous driving, quantum computing, IoT (Internet of Things), medical image processing, etc. Fixstars serves largely large enterprise customers requiring high-speed calculation and large-capacity data processing in mission-critical applications that include speeding-up medical equipment to better process ever greater imaging data; genome analysis for life science companies; software & algorithm development for autonomous driving & ADAS (Advanced Driving Assistance Systems) in a 66.6% majority-owned JV formed on 15 Jan 2018 with Toyota Tsusho Group’s NEXTY Electronics helping smart cars to process vast data real-time while suppressing power consumption; speeding-up industrial equipment and smart factory; grid framework in risk measurement and derivatives calculations for major financial institutions; quantum computing in collaboration with Jeff Bezos-backed D-Wave Systems of Canada since Jun 2017 etc. Around 70% of the companies that are part of the Tokyo Stock Exchange (TSE) 1st Section are Fixstars’ customers, as well as Boeing, Lockheed Martin, United States Air Force, Army & Navy, and Fixstars has direct customer relationship without the use of distributors and enjoys high customer satisfaction, resulting in a very high repeat rate.

The exponential growth in multi-core processors, GPUs and FPGA used to process ever greater data at higher speed in a wide variety of applications from smartphones equipped with quad-core processors to AI, IoT and autonomous driving has resulted in the high-value problem of lagging development in the software architecture and program to optimize the multi-core hardware performance. Fixstars’ software services business contributes 74.9% of sales and 90.8% of operating profit, while its hardware infrastructure business accounts for 25.1% of sales and 9.1% of operating profit. Fixstars’ software services in software development include (1) its proprietary M³, an easy-to-use software platform with user-friendly interface that enables developers to build multi-core, multi-node, and multi-architecture applications, as well as provides solution for building data analysis, image processing, financial modeling, and computer vision applications on a cross-architecture foundation; (2) its computational geometry engine that play a pivotal role in advanced graphical information systems, electronic design automation (EDA), computer vision, and motion planning solution, and is “the only computational geometry engine that’s optimized for massive accelerated NVIDIA GPU technology” according to fabless IC designer giant NVIDIA; (3) Yellow Dog Appliance Server, which offers functionality for big data analysis, solutions in industrial applications, scientific technology simulations, and open source infrastructure services. Fixstars is also building its own AI software testing SaaS business Helmi in partnership with SHIFT Inc (TSE: 3697).

With the compellingness exponential edge in solving high-value problems for its customers guided by its mission “Speed up your business”, Fixstars achieved a 80% and 143% absolute increase in sales and operating profit in the recent five years and generates high profitability with EBIT margin of 20.9% (4Q09/2019 margin 22.8%), positive free cashflow margin of 10.5%, ROE (= EBIT/ Equity) of 37.1% and ROA of 30.5%, propelling a 209% increase in market value since its listing in April 2014 to US$296m. On 7 Nov 2018, Fixstars announced its FY Sept/2018 results (Oct 2017 – Sep 2018) in which sales increased 18.5% to 5.275bn yen and operating profit rose 31.7% to 1.1bn yen, and plans to increase dividend per share from 6.5 yen to 7 yen. Balance sheet is healthy with zero debt and net cash of 1.676bn yen (US$15.2m), or 5% of market value. Fixstars was co-founded by CEO Satoshi Miki, Tomohiko Hasegawa and Yukinori Hara in Aug 2002 who own a combined 28.6% stake (CEO Miko 11.654%). Toshiba Memory Corp is a strategic shareholder with a 1.506% stake and accounts for 34.2% of group sales.

On 14 Nov 2018, Fixstars announced a stock buyback program of 200,000 shares, or 0.6% of total outstanding shares, at the max value of 300m yen (US$2.73m), or 1,500 yen per share, from 15 Nov 2018 to 31 Mar 2019. On 4 Dec 2018, Fixstars updated that it had bought back 165,000 shares at 222.75m yen, or 1,350 yen per share. On 25 Sep 2018, Fixstars announced the expansion of its Employee Stock Owners’ Association program from 20% to 100%, where all employees get monthly contributions of 1,000 yen per unit with 50 units (50,000 yen) as the contribution limit, with the objective to align the employee’s motivation and incentives with the corporate value creation goal of the company.

When asked about the importance of acceleration software services in this high-performance software era, CEO Miki elaborated at length patiently: “We are now in the world of software acceleration that makes the impossible possible. Let’s look at software acceleration from the viewpoint of hardware development and software development. First, software acceleration from the viewpoint of hardware development. Until the early 2000s, software performance was driven mainly by the increased performance of hardware in areas such as microprocessor clock frequency and memory speed. These hardware improvements automatically increased the performance of software with no extra programming effort. Driving these hardware advances was a law called ‘Dennard Scaling’, also known as MOSFET scaling, that long supported the performance improvement of semiconductors. Dennard Scaling means that if elements such as transistors constituting a microprocessor are miniaturized, then the operating voltage can be lowered and power consumption can be maintained even if operating speed and element quantity are improved. It was a very attractive law for semiconductor manufacturers.”

“In keeping with this rule, semiconductor makers continued to miniaturize elements until the early 2000s, creating faster and more densely packed processors. However, around 2000, Dennard Scaling lost its hold for simple miniaturization. By continuing to improve the clock frequency by miniaturization, the problem of heat generation arose. As a result, semiconductor manufacturers were forced to devise ‘how to use the elements themselves’ via miniaturization rather than improving the speed of the devices. In other words, increases in processor speed (clock frequency, etc.) became increasingly difficult to achieve while focus shifted towards constraining size.”

“The second half of the 2000 marks the transformational shift from the end of the high-performance hardware era to the high-performance software era with the amount of data to be processed increasing exponentially which demands faster processing speed. Would a quad core processor be twice as fast as a dual core processor? Double the cores Is not double the speed. The secret that chip manufacturers don’t want you to know is that it’s not about how many cores you are running; it’s about which software you are running on them. Increasing cores does not address the software problem of scaling. Software programs have to be specifically developed to take advantage of multiple processors. Software created to operate with one core did not increase the processing speed even if the CPU hardware was changed to the latest one such as GPU. In order to derive the performance of the latest processor, it becomes necessary to parallelize the operation so that the target software can use multiple processor units (cores). In order to obtain the performance improvement of multi-core processors, it is necessary for engineers to write programs that distribute the processing to each core. Therefore, unless an engineer writes software explicitly for multi-core processors, the performance gains will not be realized. This has become a big wall for software developers. This is because it is necessary to write a parallel program code completely different from conventional sequential processing in order to construct software utilizing the performance of multi-core.”

“In addition, the biggest problem for software developers is that parallelization greatly differs depending on various layers of hardware and the parallel programming model at each layer is totally different. The code became complicated, and the number of test items increased exponentially. In the future, if the next-generation machine adopts a hardware architecture different from the current product, existing software in the current product must be rewritten from scratch. This is a major problem leading to longer time-to-market of products, increasing costs, and ultimately lowering the competitiveness of products.”

“In order to solve these problems, our M³ is a proprietary high-speed technology which provides an easy-to-use interface by hiding complex parallel programming environments. As a result, software developers can drastically reduce the number of parallel processing and hardware optimization processes, and can concentrate more on confirming the legitimacy of logic and developing new algorithms. In addition, M³ provides libraries of image processing, arithmetic operations, utility functions, etc. optimized for each architecture along with a parallel programming framework. By using these libraries, developers can efficiently execute the same user application on different architectures. Thus, business opportunities were born from the development of multi-core processors but a delayed development of software that makes use of multi-core.”

“Improvements to the size and miniaturization of hardware is further evolved by Moore’s Law. Hardware, such as multi-core processor, GPU, FPGA, etc., has increasingly shrunk to practical size and the range of its application has expanded. While software engineers have acquired better environments with such new hardware, we face a situation where even higher software performance is required. In addition, the incremental increases of Moore’s law are expected to end in the long term. In the post-Moore era, the size improvement of processors will also reach the limit. If you want more speed, you will develop a processor dedicated to a specific process, not a general-purpose processor, or a computer completely different from the previous processors. This is represented by hardware for AI deep learning which developed rapidly in recent years, including hardware such as quantum computers. In these recent circumstances, the future of software development may be to master dedicated hardware environments.”

“Second, software acceleration from the viewpoint of software. While the era of high-performance software has arrived, the product development cycle in recent years has been shortened due to the shorter product life cycle. As a result, the development cycle of the software installed or embedded in the product is also shorter. Furthermore, software development is becoming more complicated, coupled with the advancement of algorithms by the rise of AI / machine learning in recent years, and the diversification of the above-mentioned hardware. Under these circumstances, it has become difficult in terms of development period and resources for corporate researchers and software engineers to learn new hardware and algorithms. As a result, the development period increases, personnel expenses and educational expenses increase and loss of sales opportunities etc. occurs.”

“At Fixstars, we have software engineers with knowledge of advanced hardware and algorithms capable of solving these problems. We understand our customers’ situations, propose various software development and high-speed solutions corresponding to customers’ needs, and implement the solution. As a result, customers themselves do not have to pay learning costs for the latest hardware and many algorithms, and achieving high-performance software development in a short period becomes possible. In short, we help our customers achieve higher performance software development in a short time at lower costs. As a result, early product launch will be possible and customers can spend time on essential parts of product development.”

When asked to comment on the partnership with NVIDIA, CEO Miki shared: “You can find on Nvidia’s website ( on GPU-accelerated libraries for computing that ‘Fixstars’ Geometric Performance Primitives (GPP) library is perhaps the only computational geometry engine that’s optimized for massive parallelization with accelerated NVIDIA GPU technology. This gives GPP incredible speed and the ability to process truly enormous datasets.’ NVIDIA GPU-accelerated libraries provide highly-optimized functions that perform 2x-10x faster than CPU-only alternatives. Using drop-in interfaces, you can replace CPU-only libraries such as MKL, IPP and FFTW with GPU-accelerated versions with almost no code changes. The libraries can optimally scale your application across multiple GPUs. Computational geometry engines play a pivotal role in advanced Graphical Information Systems (GIS), integrated circuit electronic design automation (EDA), computer vision, and motion planning solutions. Visualization and analysis of ever increasing amounts of data requires a computational foundation that can meet the challenge with flexible algorithms that are optimized for high performance GPU processing.”

“Many current EDA solutions rely on deployments that can only operate in narrow processor configurations. Faster turn around times, high-precision designs, tests and verification require ever more computational power. Parallelism and flexible hardware targeting, along with support for Boolean operations, line intersections, and polygon relations, makes GPP an ideal solution for design-rule checking. Common GIS software is characterized by sequential processing, size-limited datasets, and CPU-bound computation. GPP on the other hand, provides access to GPU acceleration, unrestricted input layer size, and spatial databases while providing support for user-requested features, such as map overlays and snap rounding. In tests with common GIS dataset layers, GPP runs 18 times faster than conventional algorithms, leveraging the computational power of GPUs, and seven times faster through multi-core parallelization on standard CPUs. In addition, GPP uses roughly half the memory required by competing algorithms. Fixstars is also one of the 20+ authorized Nvidia CUDA training partners worldwide and one of the two from Asia ( CUDA is a parallel computing platform and application programming interface (API) model created by Nvidia which allows software developers and software engineers to use a CUDA-enabled GPU for general purpose processing.”

“Fixstars announces on 13 Nov 2018 the release of Expansion Microscopy Studio (ExM Studio) including the world’s fastest deconvolution software to support life science researchers to explore the inside of cells and all other of life’s building blocks. In optics and imaging, the term deconvolution is specifically used to refer to the process of reversing the optical distortion that takes place in an imaging instrument, thus creating clearer images. It is usually done in the digital domain by a software algorithm. Deconvolution is also practical to sharpen images that suffer from fast motion or jiggles during capturing. Fixstars accelerated the deconvolution process by utilizing NVIDIA GPUs and was able to achieve a speed of 54 times faster than other well-known commercial software Huygens that is widely used by companies such as Roper Technologies’ (NYSE: ROP) Media Cybernetics which produces image processing software for industrial, scientific, medical, and biotechnology applications.”

When asked about how he came about to start Fixstars, the challenges he faced and overcame and the breakthroughs during his early entrepreneurial period, CEO Miki shared reflectively his inspiring story which also traced the development of the pioneering multi-core Cell by the Sony-Toshiba-IBM alliance: “I was born and brought up in Nagano Prefecture and I am 47 years old this year. When I was an elementary school student, I joined Little League baseball and continued on in junior high school. However, the baseball club in high school departed in three months. I still remember the bitterness of those days. I got frustrated. I encouraged myself. After graduating from high school, I entered Waseda University School of Commerce. I enjoyed student life such as badminton circle activities and mahjong. I also studied abroad in the USA for one year. Around that time, the consciousness ‘to look to the world and to do business’ has taken root. I wanted to make something and I did not want to join the large trading companies ‘sogo shosha’ and other large companies.”

“After graduation in 1995, I got a job at a small and medium-sized financial company and was in charge of sales. However, I left after half a year. I felt something strange about the company’s policy of selling products that are hard to lead to the customer’s interests. I noticed my own intention to ‘serve people.’ Even now, I tell employees that ‘Do not make proposals that do not benefit customers.’ After that, I was 25 years old and I happened to see a job magazine and encountered the work of a programmer. I noticed it was one of the cheapest-paying jobs then. I was fascinated by the world of programming all at once and I restarted as a beginner as a software engineer at LAC (TSE: 3857). I was immersed in acquiring knowledge and skills and I studied the most among my life and proceeded to the doctoral program at the graduate school of Tsukuba University, Department of Systems and Information Engineering and engaged in the research on Cell / BE software development. I also met our co-founders Tomohiko Hasegawa who had a consulting company and venture capital funding from Mitsubishi Research Institute, and Yukinori Hara.”

“In August 2002, we founded Fixstars in an apartment with the feeling of ‘creating a company that is world-class with software technology’. Nonetheless, it has not been a smooth-sailing journey from the beginning. There were twists and turns, but supported by many customers and shareholders, we were able to come so far. Every day then, we advance our business caught in immediate interests. I realized that we could not make any identity and thought of turning back to the starting point. A major turning point took place in 2004 when we started software development utilizing the ‘Cell Broadband Engine’ (BE) multi-core microprocessor whose first major commercial application was in Sony’s PlayStation 3 game console. Cell was jointly developed by Sony, Toshiba and IBM over a four-year period beginning March 2001. We became the pioneer in the software development field for multi-core technology research and development results. Cell is an epoch-making product that overturned the conventional concept that pioneered the multi-core era, and after the release of Cell, ground-breaking hardware that incorporates multi-core are developed and released one after the other. Interestingly, in November 2010, the Air Force Research Laboratory created a powerful supercomputer, nicknamed the ‘Condor Cluster’, by connecting together 1,760 Sony PS3s which would be used to analyse high definition satellite imagery.”

“Software development of Cell has strong craftsmanship elements and is accompanied by difficulties. It is a special hardware that only certain software engineers can handle. The Cell architecture includes a memory coherence architecture that emphasizes power efficiency, prioritizes bandwidth over low latency, and favors peak computational throughput over simplicity of program code. For these reasons, Cell is widely regarded as a challenging environment for software development. I felt it’s an opportunity and thought to apply it to medical equipment and financial systems that are useful for society. As a result, we focused on full-scale software acceleration service, advanced technology such as parallel processing technology making use of multi-core processor and NAND flash memory-related technology to realize the speeding up of software from both calculation and I/O (data input/ output), and various solutions which do not allow others to follow. I think that Cell is inherently amazing and if you look it up and search for it by yourself, you will arrive naturally to Fixstars. Excellent engineers with a high will gathered and our company’s strength as a super engineer group was formed.”

“Not sticking to the Cell, we expanded the objective of ‘speeding up’ to various multi-core processors by utilizing the structure of each semiconductor architecture, including Nvidia’s GPU and CUDA parallel computing platform and application programming interface model, and developing new customers. During the early part of 2010, Fixstars developed a strong relationship with Nvidia and focused our Linux distribution for GPU computing. Our Yellow Dog Enterprise Linux for CUDA is the first enterprise Linux OS optimized for GPU computing. It offers end users, developers and integrators a faster, more reliable, and less complex GPU computing experience.”

What are the core technology of Fixstars and focus application areas? CEO Miki commented: “Our core technology include (1) Multi-core / multi-node optimization technology that we have cultivated since the dawn of multi-core in 2004; (2) Memory I/O acceleration technology accumulated by the development of NAND flash memory controller; (3) Multi-architecture development technology that started from Cell and expanded into GPU & FPGA. With these three core technology as the center, the realization of high-speed processing of data that has explosively increased amid the practical use of IoT & artificial intelligence.”

“Our focus application areas serving largely large enterprise customers requiring high-speed calculation and large-capacity data processing in applications include:
(1) Medical equipment in which we provide real-time image processing solutions for high-definition images utilizing multi-core processors and high-speed storage for various medical imaging diagnostic apparatuses ranging from high-end machines to terminal equipment;
(2) high-speed system for genome analysis for Life Science companies;
(3) Autonomous driving & ADAS (Advanced Driving Assistance Systems) as the business partner to Toyota Group’s Nexty Electronics in helping autonomous smart cars’ in-vehicle equipment/system to process vast data while suppressing power consumption in sign recognition and pedestrian detection alarm to support safe driving of cars and to develop speeding-up algorithms to support autonomous driving;
(4) Financial system in derivatives, risk management, high-frequency trading (HFT), such as how we built a grid system for derivative calculations for Mizuho Securities and many financial institutions since 2008;
(5) Industrial equipment in acceleration software for inspection equipment with advanced computer vision technology and automation control equipment used in the manufacturing process and providing development support and hardware centering on smart factory;
(6) Mobile embedded devices in which we are developing firmware and device drivers for optimum control of next generation flash storage installed in smartphones, image sensors, etc;
(7) Computer graphics (CG) and image-video multimedia high-speed processing at a higher rate than ever

When asked how did it develop its proprietary M³ software platform for developers to build multi-core applications, CEO Miki explained: “Software development for multi-core was a pull-style sales style based on inquiries from customers. Because the merit of multi-core conversion differs depending on the characteristics of the original source code of the customer’s software, it is necessary to select hardware suitable for the purpose of use, estimate performance improvement by multi-coreization, identify bottleneck against multi-core, as well as consulting service. Our proprietary M³ easy-to-use software platform was developed to enable developers to build multi-core, multi-node, multi-architecture applications more effectively with increased performance and reduced costs. Our hardware infrastructure business selects and provides multi-core processors and arithmetic boards optimum for customers’ products and business.”

“Composed of a set of core libraries, the M³ platform provides an ideal solution for building data analysis, image processing, financial modeling, and computer vision applications on a cross-architecture foundation that maximizes parallel processing resources, code re-use, and ease of development. The M³ platform resides between application logic and hardware architecture. What is behind the birth of M³? M³ was developed in response to the rapid growth of multi-core processing. In today’s high-tech world, multi-core processors are ubiquitous and used in a wide variety of applications. Even mobile devices like smartphones and tablets come equipped with dual-core or quad-core processors. In terms of software, the evolution to the multi-core processor has brought on new issues as well. Not only must the software be required to ‘perform the required logic’, but optimally, the software application should also operate efficiently in a complex hardware environment. M³ is designed to provide an efficient solution to developing software for computationally intensive tasks, while streamlining the complexities of optimizing for multi-core environments and deploying across multiple architectures. M³ offers customizable solutions for key industries where data analysis, simulations, and image processing functions place enormous demands computational resources. Software developers can drastically reduce the time and costs associated with developing for parallel processing and hardware optimization, and essentially focus on writing good code and creating new applications.”

CEO Miki also elaborated on Fixstars’ solution in the various application fields:

(1) Autonomous Driving:
“Fixstars and the Toyota Tsusho Group’s NEXTY Electronics are working towards creating a society with automated driving in the joint venture partnership Fixstars Autonomous Technologies (Fixstars 66.6%, NEXTY 33.4%). NEXTY Electronics specializes in embedded software development in automotive systems and is one of the executive committee members on JASPAR (Japan Automotive Software Platform and Architecture) along with Toyota’s DENSO to standardize the software and networks for advanced and complicated automotive electronic control systems. Fixstars Autonomous Technology is developing comprehensive technologies for actualizing automated driving and ADAS (Advanced Driver Assistance System), from algorithm development to software acceleration, targeting mass-produced vehicles based on software optimization technology that makes maximum use of hardware resources with limited power consumption along with AI technology in machine learning, such as deep learning and computer vision technology.”

“In the automotive electronics market centered on automated driving, embedded software quality is of utmost importance. Embedded software is also called firmware, a dedicated real-time operating software for realizing specific function. According to data generated by NEDO (New Energy and Industrial Technology Development Organization), the global market size of embedded software is 1,135.2 billion yen (US$10.4bn) and is expected to expand to 1.9 trillion yen (US$175bn) in the next 30 years. The field of automobiles occupy about 30% of embedded software. In recent years, ADAS features such as collision damage mitigation brakes, lane keeping systems, inter-vehicle distance control systems, parking support systems have been put to practical use, and the embedded software does not operate independently. In order to make optimum choices according to driving situations, more complicated processing capability is required, such as operating in cooperation with other devices, and sophistication of embedded software is required.”

“While the actualization of automated driving is becoming more and more realistic thanks to the development of AI technology, many challenges remain. Utilizing parallelization and optimization technology cultivated over many years at Fixstars, we are able to achieve maximum performance even in hardware environments with small size, low latency, low power consumption and restrictions. In order to improve the systems involved with automated driving, we must first improve the computational abilities of the software, improve accuracy reading the large amount of data being used, and improve immediate responses to real-time stimuli. In order to achieve these goals, we have to consider adding new hardware and software to the in-vehicle system, strengthening the communication environment between the vehicle and the outside equipment. However, by strengthening these components, the amount of computation and data processing on the system will increase, leading to an increase power consumption. Power consumption is alleviated to some extent by virtue of hardware evolution and software algorithm improvements, but it is very difficult apply these improvements to the harsh vehicle environment.”

“In order to achieve high-speed software execution while suppressing power consumption, optimization technology is key. It needs to be adapted to the architecture of the hardware and also to utilize parallel programming technology. In addition to Fixstars’ core competence, parallel programming technology, we have engineers familiar with the characteristics of various hardware, so we can deal with software development and performance improvement on new hardware architecture. Fixstars Autonomous Technologies creates optimal programs and algorithms for processors with years of optimization know-how to utilize real-time processing and to combine high recognition accuracy with real-time performance by machine learning including deep learning in an automotive environment. Some of these algorithm development include object detection by machine learning, camera calibration, self-position estimation and environmental map creation. Even in the harsh automotive environment, we are committed to cutting even 1 millisecond of time, which increase the probability of preventing accidents if the brakes are taken earlier after the danger is detected, and to helping contribute to the eventual goal of automated driving.”

(2) Healthcare & Life Science:
“We speed up your medical care. In addition to advancement and refinement of diagnosis and treatment, such as identifying diseases by early diagnosis and tailor-made medicine, more advanced medical practices such as pre-onset prevention and complete recovery of affected functions are now required. To respond to these needs, various medical devices have been researched and developed. Among them, diagnostic devices such as image diagnostic devices have been rapidly evolving with advances in computer technology. Along with the improvement of medical image processing technology used in CT, MRI, ultrasound diagnostic equipment, etc., it has become possible to use higher speed, wider area, and higher definition data while advancing the downsizing of equipment. Technologies called bioinformatics are also evolving greatly. A project to analyze the whole nucleotide sequence of the human genome, which is called the human genome project in the past, succeeded after the passage of 13 years. However, with the advancement of DNA sequencer devices, the same work as the human genome project can be done in a few days now. Based on data such as genes obtained by analyzing, it is expected that prevention, diagnosis and treatment according to each case will be carried out.”

“Fixstars’ solution for healthcare:
(1) Acceleration of medical image processing. Diagnostic imaging equipment is required to be smaller, higher definition, and more sophisticated. Fixstars realizes high speed processing through improvement of algorithms, optimization for the hardware, and provision of hardware itself.
(2) Advancement of research equipment. With the evolution of both hardware and software, the role of information engineering in the development of research equipment is increasing. Fixstars contributes to advancements of research equipment and improvement of operation by using software technology centering on image processing.
(3) Acceleration of bioinformatics. Bioinformatics is also called the fusion area of life science and information science. In addition to experiences of mathematical analysis, statistics and software acceleration, Fixstars realizes high-speed processing of vast amounts of data of life with full use of bioinformatics knowledge.”

(3) Industrial Equipment, IoT, and Smart Factory:
“We speed up your production chain. FA stands for Factory Automation, which refers to a system that automatically controls motors and robots in factories, such as control of manufacturing equipment using PLC (Programmable Logic Controller) and automatic inspection improved using machine vision and image recognition technology. Since FA plays an important role in the factory, such as production efficiency and quality, and the safety of workers working in the factory, the software installed requires high reliability and real time. Representative characteristics required for software for FA equipment are real-time properties. In order for multiple robots and motors to cooperate to assemble products, it is necessary to operate with high precision in timing. In addition, we need control such as emergency stop to avoid accidents such as robots collide with people working at the factory.”

“In addition to advances on hardware such as sensors and processors, advances in software technologies to control them have enabled high-speed processing of large amounts of data. The movement to analyze all data in real time, also called ‘Smart Factory’, is being realized to optimize all value chains. Movements towards ‘Smart Factory’ can be seen all over the world. Fundamental changes such as replacing legacy equipment, lead time shortening and shifting to a solution-oriented model with sophisticated after-sales service is being realized. It can be seen as a paradigm shift in the manufacturing industry.”

“IoT (Internet of Things) is where all sensors and things are connected to the Internet. Development of embedded devices compatible with this IoT has quite a lot of restrictions such as power consumption and physical size, so coordination with the cloud is indispensable for storing large amounts of data and performing advanced data analysis. On the other hand, the cloud requires usage and time restrictions, as well as a good internet connection environment. Therefore, rather than sending all the data to the cloud, a mechanism called ‘edge computing’ is finding wider adoption. The edge computing saves storage and reduces the amount of data sent to the cloud for processing by narrowing down only the necessary data on the equipment side.”

“Fixstars’ smart factory solution to improve the competitiveness of the manufacturing industry through multi-architectural experience:
(1) Improvement of manufacturing site by image processing technology. Demands on cost reduction and quality improvement is continuously increasing. Image processing technology is also evolving quickly due to advances in sensors and algorithms. We support advancement of visual inspection by real time processing of high resolution images and the realization of detecting deviations from standard operations by learning the behavior pattern of people working at the factory.
(2) Implementation of edge computing environment. The move to utilize the data gathered from manufacturing equipment to increase production efficiency is becoming fully-fledged. On the other hand, in order to analyze all the data, the current processing capacity is insufficient, and when processing in the cloud, problems of traffic volume and latency become obvious. We support the implementation of new mechanisms to process large amounts of data at high speed on the edge side (equipment side).
(3) Smart factory. For fog computing, which collects, analyzes and processes data at factories where numerous IoT devices and sensors exist, the server is required to meet strict requirements of small size, large capacity and low power consumption. Olive@Factory is an unprecedented server that meets the above strict requirements by packing a TB-class large capacity SSD and standard easy-to-use Linux into a small chassis of 2.5 inch form factor. Olive@Factory solves the problem of analog data analysis with edge computing and realizes predictive maintenance of production sites by utilizing machine learning, observing signs of equipment malfunction and abnormality, predicting failure and breakdown. By detecting abnormality at an early stage, costly downtime can be avoided, maintenance cost can be reduced, and equipment availability can be improved. According to the estimation by the Ministry of Internal Affairs and Communications, about 30 billion items will be connected to the Internet by 2020 in the world, and demand for predictive maintenance services will be expected to further increase in the future.”

“Fixstars’ R&D is also adopted for NEDO (New Energy and Industrial Technology Development) Edge Vision AI project to implement an AI chip and next generation computing that enables high-speed processing. NEDO is Japan’s largest public management organization promoting research and development as well as deployment of industrial, energy and environmental technologies. We aim at ultra-light and faster inference processing for Deep Neural Network (DNN), the core technology of Edge Vision AI. In order to widely disseminate Edge Vision AI, it is necessary to have an environment for implementing and optimizing a lightweight network on various hardware in a short period of time. We also do R&D based on our proprietary optimization compiler infrastructure to realize this.”

(5) Finance:
“Financial markets, in which incredible amounts of various financial assets are trading every day, are dramatically changing in accordance with the evolution of technology. For derivative transactions such as futures and options, structured bonds, competitors are struggling to calculate the fair worth of them based on the underlying assets ahead of other competitors. Also, HFT (High Frequency Trading) is also adapting to hardware performance improvement and algorithm evolution. In addition, the movement called Fintech embodied by blockchain is spreading rapidly, and the development of innovative and distributive new products and solutions using technology is accelerating. In this way, the field of finance continues to evolve with technology, those who can adopt leading-edge technology and can achieve high speeds in nanoseconds can gain competitiveness and profit beyond their competitors.”
“Fixstars’ solution for finance includes the development and improvement of the risk and derivatives evaluation system with our grid computing solution which has a high track record at financial institutions. In financial applications such as derivative splicing tools which requires high computing power and risk management systems, it becomes possible to scale out the conventional server and shorten the calculation time. Our M3 for Windows HPC cluster has been adopted by Japanese bank’s financial grid system and is in operation. Fixstars offers distributed processing platforms and development environments that are easy to scale out in order to respond to the increasing trading data.”

(6) AI Machine Learning & AI Software Testing SaaS Business Helmi:
“Machine learning is a technique that aims to realize a learning function similar to a human being on a computer, and it is advanced by finding out the regularity and knowledge hiding behind large amounts of data and generalizing it. Along with the drastic improvement in hardware performance, environments that can process “big data” used for learning quickly, in large quantities and at low cost, began to be developed, and the use is expanding rapidly for various fields such as natural language processing. Deep learning is a kind of machine learning method with multiple layers of weighting coefficients that simulate a ‘neural network’. Effectiveness became widely recognized by showing surprising results in benchmark tests such as image recognition. During these performance improvements, there has been an evolution of hardware that supports high-speed processing of large amounts of data, such as GPU and CPU. The amount of data used is increasing explosively and the demand for high-speed processing is expanding day by day. In addition, there are many cases where machine learning is under severe performance constraints such as in autonomous driving and Industry 4.0. It is an era in which it is essential to optimize the usage conditions. We accelerate machine learning to be smarter and smarter with larger data processing. We focus on image processing, a major area where deep learning first showed promising results. We provide algorithm development support. We research the latest articles and reports, and then propose and develop machine learning algorithms suitable for the applications requested by the customer, and implement them for the customer’s environment.”

CEO Miki also shared that Fixstars is leveraging its core technological know-how to build a new AI software testing SaaS (Software-as-a-Service) business called ‘Helmi’ in partnership with SHIFT Inc (TSE: 3697): “As software systems becomes larger and more complicated, development costs get larger. Through software testing and quality control, we estimate the defect location and improve the efficiency of the verification process based on the experience of skilled technicians. As the sophistication of software development systems grow, the number of companies that incorporate these automatic modification methods in their development environment is increasing. This is due to the evolution of hardware that enables large-scale data processing with machine learning techniques such as deep learning.”

“Fixstars’ ‘Helmi’ is a software platform that acquires huge amounts of information generated by daily software development and automatic defect estimation by machine learning. It periodically extracts feature from defect correction history, creates machine learning models, and uses it for failure prediction. By utilizing the estimated failure probability for software test and code review prioritization, defects can be repaired early and cost of testing can be reduced. Helmi is offered as a SaaS subscription at around 200,000 yen per month.”

“On 1 Oct 2018, Fixstars announced the acquisition of all the shares in our AI software verification joint venture with SHIFT Inc (TSE: 3697) which was first formed in Oct 2017. We have decided to further strengthen our service development and maintenance system without changing the relationship between Fixstars and SHIFT. Fixstars will continue the development work of Helmi to promote further advancement of product function and support system, and SHIFT will promote sales activities and introduction support.”

(7) HPC (High Performance Computing) & Quantum Computing:
CEO Miki also commented on Fixstars’ solution in HPC (high performance computing) and in quantum computing: “High Performance Computing (HPC) utilizes supercomputers to perform large-scale computations such as computer simulation. As announced on 14 Nov 2018, we enabled the supercomputer Kyo to win the first place in the world for eight consecutive years, including having the highest evaluation level in graph analysis which is important in processing big data. Fixstars is also one of the six global partners to Microsoft Azure’s Big Compute HPC solution and has attained the Microsoft Gold Cloud Platform Competency. Fixstars has developed its high-speed technology over many years on cloud services including Amazon Web Services (AWS), Microsoft Azure, and OpenStack. Based on multi-core acceleration technology, Fixstars Cloud Solutions has proven to contribute to not only improved performance and reduced processing time, but has also provided a reduction in the amount of money spent on cloud services. In 2016, we moved our service one step further, and announced ‘Cloud Cost Saving Services’. In this service, we will evaluate and optimize a client’s application free of charge until we can demonstrate a cost reduction in their cloud services. If there are no cost savings, Fixstars will not charge any service fees. In a successful case, we optimized a cloud application in the life science industry and achieved a cost reduction of almost 90%.”

“In June 2017, we started a new initiative that is Japan’s first. We began providing introduction support for quantum computers in collaboration with D-Wave Systems of Canada, which is backed by Amazon’s Jeff Bezos and the investment arm of CIA, and is the world’s first company to sell commercial quantum computers which exploit quantum effects in their operation and it has also been introduced to Google, NASA, and others. Volkswagen has been working with D-Wave since 2017, using its systems to model traffic flows and develop more efficient batteries for electric cars. Unlike conventional computers, quantum computers perform calculations to find an enormous number of combinations simultaneously, and can analyze certain data more than 100 million times faster than conventional computers.”

“Fixstars has provided high-speed solution by parallel processing from the dawn of multi-core, and since that time GPU, FPGA, etc. started to be used as an accelerator, and we have been able to realize speed-up by utilizing the structure of each semiconductor architecture as soon as possible. We will provide software acceleration of the quantum annealing machine displaying overwhelming performance in specific areas which realize further acceleration of our customer’s business. Quantum computers are highly likely to change the future of human beings, and it is exciting to be able to work ahead of the introduction of state-of-the-art technology.“

“We have received many inquiries from domestic large enterprises to consider quantum computer. In Dec 2017, our business partner Toyota Tsusho’s NEXTY Electronics and DENSO Corporation announced the conduct of the world’s first test using cloud-based quantum computer developed by D-Wave to process vehicle location and travel data in real-time from a traffic IoT platform from about 130,000 taxis and trucks in Thailand. Findings will help guide application development to make transportation more efficient, from traffic decongestion to route optimization for emergency vehicles. In Nov 2018, DENSO reveals that they have improved the factory automation routing of their AGV (Automated Guided Vehicle) by 15% using D-Wave quantum computing system. In March 2018, Nomura applies D-Wave quantum computing in financial portfolio optimization. In April 2018, online recruitment giant Recruit Holdings (TSE: 6098) uses D-Wave to optimize web advertising.”

While Fixstars is clearly a world-class innovator with robust growth & profitability [EBIT margin of 20.9% (4Q09/2019 margin 22.8%), positive free cashflow margin of 10.5%, ROE (= EBIT/ Equity) of 37.1% and ROA of 30.5%], a healthy balance sheet [zero debt and net cash of 1.676bn yen (US$15.2m)], and a solid customer base with repeat orders, we are disappointed that it does not have a viable SaaS business model yet other than its new AI software testing business Helmi and scalability is constrained somewhat by its pool of skilled software engineers. CEO Miki commented: “We believe that our technology capabilities for multi-core processors and business strategies based on the fusion of software and service business and hardware infrastructure business will remain superior and will continue to grow over the medium to long term. However, despite abundant potential customer needs in various fields such as healthcare, video, mobile, financial, and industrial equipment, the software and services business responds to additional demand from many departments in existing customers and fields centering on repeat orders. We are in a situation where we are not satisfied and we are looking forward to expand our human resources and develop new customers in the future.”

CEO Miki summed up by emphasizing Fixstars’ management philosophy & entrepreneurial corporate culture and how the Fixstars team “feel Romance” in the work they do in serving their clients and the world: “Our mission is to be the innovator to facilitate easy software development in the multi-core era, including working on platform development. What is the charm that works with Fixstars? I think that the biggest property and No. 1 treasure asset of Fixstars is ‘human resource’ more than anything else. Fixstars believes in the infinite power of the programmer and will demonstrate the software widely produced by excellent programmers to the world. Therefore, we have a comfortable environment and a place of activity for our employees. Inside the company, you can enrol freely and work on the job freely in a workplace with a ‘graduate school research laboratory’ atmosphere where technical discussions are actively conducted in sharing information on the latest technology other than business. In addition, there are many opportunities to upgrade skills such as in-house study sessions and participation in programming contests, so that they can learn new technologies from other engineers while honing their expertise, and we also started in-house universities. We have established a system to support the growth of engineers such as the domestic study abroad system where full tuition and transportation expenses for MBA and PhD are supported, as well as publish papers.”

“Some of our engineers have assumed office as CEO of our subsidiary in the United States after obtaining his MBA and we are also planning to set up a subsidiary for those who want to start a business in the future. You will fully enjoy the virtuosity of the entrepreneurial corporate culture, which is also different from large companies. You can also challenge new projects more and more. We are a ‘super engineers group’ who have gathered over 100 top-level software engineers in Japan. 90% of our employees are software engineers, 14% are PhD holders and 42% have acquired a Masters degree. The company does not have a hierarchy that is commonly found in software firms in Japan. There is no concept that ‘consultant’ is higher than ‘programmer’. The pride of ‘creating a program’ is excellent. Engineers who can adapt the power of state-of-the-art technologies to society needs and create tremendous social added value have enrolled and there is a management foundation that can be realized. There are many colleagues who feel Romance in the place where they feel and can taste that the programming technology of each person ‘can serve the world.”

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 300 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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