Author: Yolanda Wang, Translator: Kevin Wang, Editor: Yunchieh Tsou
Picture this scenario in Japan: A middle-aged man walks into a ramen restaurant, where orders are normally placed through a vending machine. The machine automatically recommends a pork broth ramen with a hearty helping of garlic, with draft beer and fried chicken to go along. A trendy young office worker follows, and the machine instead recommends to her a chicken ramen in a light vegetable-based broth, with sweet-and-sour honey-vinegar tomatoes and a collagen juice drink to match, and the young woman enjoys a low-calorie meal without worrying about smelling like garlic.
AI machine learning helps MoBagel predict consumer habits for marketing and services
Says MoBagel co-founder and CEO Chung Che-min, “We offer suggestions not only according to gender and age, but also take into account the weather, temperature, humidity, time of day, and even housing prices in the surrounding area. By analyzing all this data, we tell our customers the best strategy for promotional campaigns: when to offer what at what percent off will attract the most customers.”
“Even as other companies were stuck with using empirical data to draw conclusions, we were already analyzing big data and using AI machine learning to help our customers predict future trends, and stay one step ahead of the pack.”
After integrating MoBagel’s analytical services, more than a thousand unstaffed chain stores in Japan saw a surge in their revenues, bringing in an additional 800 million yen a year.
According to IDC predictions, more than 22 billion devices will be internet-connected by 2018, and both Sony and Cisco predict that number to increase to 50 billion by 2020. MoBagel, with its intelligent IoT services targeting consumer trends, has now become an investors’’ darling.
Heavy losses with first missteps as app developer
Back in 2009, when Chung was still a doctoral student in computer science at National Taiwan University, he was Taiwan’s first instructor teaching app design at the college level. Co-founding MoBagel with a group of friends, the company first centered on SaaS app design for other businesses, producing more than two thousand apps within two years. In 2012, they brought five mobile games topping more than one million downloads each to the Tokyo Game Show, and were featured by more than 30 media outlets from around the world.
But this period of prosperity proved to be short-lived: as the trend in mobile apps attracted ever more investment by large companies, MoBagel’s small size couldn’t withstand such a huge impact. Moreover, since Chung and his friends had no expertise in marketing, they burned through their financial reserves, forcing Chung to work at an office job in a telecommunications company. As he saved up for future projects with his team, Chung pondered how to shift their focus.
Attracting investment through app design competition at Silicon Valley
Seeing the potential in the Internet of Things, in 2013 Chung refocused their app technology efforts into the Meeti IoT cloud service, using AI analysis in conjunction with IoT to improve quality control and services for businesses, and allowing product sales to transform from a passive role of being selected by consumers, to active suggestions for consumers.
Yet for any startup, securing funding is inevitably the first hurdle.
Chung was frustrated by the lack of funding opportunities in Taiwan, where the dot-com bubble burst at the turn of the millennium still cast a long shadow. Aside from telecommunications companies, internet and software startups had immense trouble attracting Taiwanese investment, and Chung thus decided to move his entire team to the US to start from scratch, while also seeking funding from abroad.
In late 2014, MoBagel took part in the Salesforce Million Dollar Hackathon, the world’s largest software competition, and finished at sixth place. This gained them attention from US angel investors.
In March 2015, MoBagel beat out more than a thousand competing startups to be selected as one of the 30 accelerator startups by the 500 Startups, and in March 2016 the company was handpicked by SoftBank founder Masayoshi Son, long renowned for his keen eye in investment, as the first Taiwanese startup to receive investment from SoftBank. In addition, SoftBank entered into a strategic relationship with MoBagel to assist the company in entering the Japanese market.
SoftBank assistance brings MoBagel to top of Japan’s exclusive market
According to Chung, Japan’s market presents a unique case: “The Japanese are very conservative, and place a heavy emphasis on relations and trust. We spent a year forging a good rapport with our Japanese clients, who also showed a strong interest in our platform after testing it out for themselves, but we simply couldn’t negotiate a contract with them. Later on, we found out that if we wanted to do business with Japanese company, it would be much easier if we had a trusted Japanese partner who could vouch for us.”
After receiving SoftBank’s support, SoftBank arranged direct meetings between Chung and Japanese business leaders, allowing MoBagel to finalize contracts with clients whom Chung had negotiated for the better part of a year. Within a short period, MoBagel became Japan’s leading IoT analysis platform.
Chung: To attract funding, take part in international competitions
Chung suggests the following for startup entrepreneurs to attract funding from investors:
- Have a clear-cut goal, solid ideals, and a strong vision, and package these into an appealing story.
- Take part in competitions to increase visibility with potential investors.
- Let investors clearly know what solutions your products or services can bring to them.
- Explain to investors why they have to pick your team.
According to Chung, Japanese startups used to look to Silicon Valley to gauge trends, but since most Japanese startup founders already come from the corporate sector, investors look mostly for startups that fit in with their own companies’ orientation, and prefer more established startups in their later stages after founding. By contrast, many startups in the US have beginnings completely from scratch, and the environment is much more friendly toward small startups, so those who need exposure may well benefit from a visit to Silicon Valley.