Episode 14: Victor Lang- Scaling Gini to 60 Countries with 3,000 Banks in 4 years
About Victor Lang:
My next guest on The One Percent Project is the co-founder and COO of Gini, Victor Lang. This interview is especially insightful and interesting for young startups because Victor shares how within 4 years of Gini’s existence they have been able to build a network of 3000 banks in 60 countries with a small team based in HK through afflictions and partnerships and consumer adoption through word of mouth marketing.Victor also shares his insights on businesses he built previously and how he managed a successful exit after going insolvent 3 times.
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In this conversation, he talks about:
His career.
How they have built their network of banks in 60 countries?
How they moved from spending money on Social Media marketing to Word of Mouth marketing?
What is product market fit and how do gauge it?
How can young start-ups build and scale in such a competitive environment where Tech Giants and Incumbents are playing in the same field?
How his previous biotech business went insolvent three times before being acquired?
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Transcript:
*The transcripts are not 100% accurate.
Victor: When you find product market fit, people are calling you to buy this thing. You don't need to send salespeople around. They're just grabbing it out of your hands. It's like a magnet this the product just be flying off the shelves.
Pritish: Hi, Victor. Welcome to the One Percent Project.
Victor: Hi, thank you very much for having me.
Pritish: Tell us about yourself.
Victor: My name is Victor Lang. I'm an entrepreneur from Hong Kong. I have always been an entrepreneur and I come from an entrepreneurial family. My mother is a business person. I have never really one to two work in a large company. Maybe because I never had the opportunity to invest in I never felt the need to but actually ever since I was in a graduate of university, I had been starting and building businesses. One of my first startups when I was in the US was in the real estate business. I graduated University during the financial crisis and I did have like a short foray at a hedge fund. I was working a little bit in property management as well. But there was an interesting opportunity where a number of these Hong Kong investors will see, friends of my parents, they were really interested in buying some cheap houses in America. They didn't know anyone in America. Vincent’s son is in America, let's give him a call. What I knew that these guys wanted to buy some real estate, they didn't know how I went and got my broker's license within two weeks, start to help them purchase the properties source them, I ended up managing them and one apartment building turned into, two turns into four and eventually I became a property management company for a portfolio of properties. Eventually, this portfolio of properties that was owned by other people became like a sort of an investment company like a fund to speak but not really fund. And over the last, I guess, it's almost 13 years we've amassed over 100 properties, and we've sold many over the last few years. But it was really the Wild West back then where I was really learning the ropes while the world and the economy was changing. We were doing things like particularly focused on buying distressed property. We were buying portfolios of distressed notes, I was going to auctions I had a crowbar and a vault cutter in my car. We're going into like these rough neighbourhoods, or squatters and properties, we had to deal with operational aspects of cleaning all those outs. And that was a really fascinating, interesting challenge. Because real estate was really all about people. I started a biotech company called Restore Flow Allograft, it was a vascular tissue thing, where we took veins from cadavers, clean them and process them and sold them to doctors for bypass surgeries. Actually that company we started that around 2012 and we sold to a NASDAQ listed company in 2016. That was very, very interesting business because there was great change of the time because of the regulations regarding health care in the United States with Obamacare and everything like that. It was actually quite a tough business.
But through these two businesses, I really learned a lot about not just how to run a business without people and about how to manage C level people have managed, like, kind of operational level people. When that business sold, I was actually thinking about taking a six month break, taking a holiday. I was going to travel the world on a sailing trip. But my cousin Ray, who was a Senior Banker at Citibank, called me and he said, “hey, I'm thinking about quitting my job and want to start this business, maybe you want to come and help me out for a month” and he had the vision of creating a financial product that could help anyone be really good at managing their finances. But in the finance world, from his perspective, he saw lot of the aspects of the trading floor being automated. And he thought to himself, “hey, I don't want to spend my 30s just counting the days before my chart gets automated, I want to be the guy that's going to go out there and create the technologies create the products that's going to change the world.”
He quit his job. He wrote me in for a month. And I helped him out with very different perspectives on how businesses run. But after the two months, I was ready to go back to Chicago. And he said, “Victor, you're not allowed to leave, you have to stay.” And now I've been back in Hong Kong for four years. And I think it's one of the best decisions I had ever made at the company that Ray and I have started. It's called Gini. And that's what we're doing today. It's a personal finance management app. And we've progressed beyond that into really looking at how we can use financial data to develop insights, how do we help banks, how do we help individuals understand their data. It's been quite a journey but the one thing about all these businesses that I have done is that, they're always taking something that someone couldn't use or didn't want, whether it's distressed property or vascular tissue for someone who was recently deceased, or data. How do you use all these things in order to create something new, and that's kind of been the consistent corollary between all the things that I've done.
Pritish: I use the Gini app, have had a great experience. Within four years, you have been able to go to 60 markets with 3000 banks. How did you get to these milestones in the last four years?
Victor: Yes, it's very interesting, what I learned a lot about technology in the last few years is that there's many tools and libraries and little things that you can kind of apply for your business that actually takes advantage of the heavy lifting someone else has done and that's probably one of the most interesting things about technology is how much can be reused, how much can be shared. All the different kinds of different products are actually there to help others build more products. For us, we had always focused on the Hong Kong market. And it became very clear to us that launching a personal finance app in Hong Kong was not enough. We need to go global. What we were able to do is we were able to leverage off the experiences and the technology of some of the other FinTech players around the world to really access these 3000 banks in 60 countries. We use many different aggregator companies out there there's a lot of them, you have this Yodlee, eWise, Salt Edge and whatnot. And what we've done over the years is really experimented with a number of use different third party aggregators to make sure that we have the best ones that we can have in the best is not just in terms of quality and access and service, but in scope. Yodlee, Salt Edge a lot of these aggregation companies are very well established. They have integrations all around the world. They're all actively pursuing open banking strategies. In Europe, for example, being able to leverage off of the heavy lifting someone else's done over the years has been really advantageous to us. We can focus on the things that we felt that were more important things like customer experience, UI, UX, things like really figuring out what makes a product help people in their normal day to day life, what helps them manage their personal finance better. The stuff that we want to focus our attention on being able to outsource the aggregation, for example, has given us the opportunity.
Pritish: And that is the most fascinating thing for me in terms of Gini that you are such a small team sitting in such a small market. And within four years you have been able to leverage and collaborate with other players in the market and grow yourself outside Hong Kong into 60 countries and working with 3000 banks. You have understood that what is your strength in terms of collaboration and what you want to work on in terms of the user experience. I think that strategy in itself has helped you. What about the consumers, how do they find you in other markets?
Victor: There's a lot of very traditional ways of user acquisition and digital marketing, ad spend. Those are the kinds of things that are very common. But at the end of the day, what we found is most beneficial was word of mouth. We have been launching in different countries, we've been doing some PR, we've been trying to communicate with people through communities. We've spent a lot of money on ads over the years, I'll be honest with you, and it's very frustrating thing to buy Facebook ads, because it's almost like a black box. You tell them who you're targeting, and they send you users, you don't really know who they are, and they send you a bill. In fact, they just bill your credit card every week. Every time you hit 1000 US, boom hits a credit card. It's very frustrating and we spent a lot of time thinking about how can we stop spending money on ads. What we found is that ASO has been the most beneficial thing for us the App Store Optimization, making sure you get found on the app stores. We spent a lot of time studying and researching and coming up with a strategy. And now we're at the point where we are basically spending no money on ads. We're still getting about 40 users a day using the gene like signing on to the GDN from all around the world. And it has to do I think, with ASO because we're not really going out and talking about the app that much since our focus is now a lot of B2B which we can talk a little bit more about. But we have really focused on making sure that we are efficient with our use of funds. That is a big problem that we felt it with the consumer spaces that the keywords were crowded, if you want to buy ads, especially in the banking related market in Hong Kong, you're competing for the same key words as the likes of HSBC and Standard Charter, the cost was really like controllable at some point, and we made a decision that, “hey, no more ad buying”, there's no reason to keep spending this kind of money if our customers if the cost of acquisition keeps going up, and we decided let's focus on things that are sustainable organic growth, App Store Optimization, those things are sustainable. I'm happy to say that now we're growing at quite a good pace. And we haven't really spent much money on marketing or advertising the last nine months.
Pritish: You obviously get loads of consumer data across these markets. What kind of trends are you seeing in terms of consumer spending, and specifically if you have any inputs or insights on how the consumer spending has changed due to the COVID?
Victor: We have been doing some internal analytics with our users data. The insights are really interesting, but somewhat predictable. I mean, you see the travel spent just completely get decimated. The things like these travel apps like in Hong Kong, we have one called Pay Look or Cook. There's been has been decimated. It's like damn 90%. When you're looking at things like food delivery and eating out, food delivery has gone way up. It's really quite incredible how much money Hong Kong people are spending on delivery. I mean, myself included spend a lot of money on delivery now. But the eating out has really gone down a lot. But you'll see trends in shopping like groceries, grocery spending has gone up, and then kind of tapered down a little bit as things stabilized. But what was really, really interesting to me was the growth of a lot of these online shopping platforms specifically Taobao and HKT Mall here in Hong Kong. So what we have seen is that people during the Coronavirus time, especially the beginning, they're willing to try and experiment some of these online shopping platforms, when before they maybe were not willing to, or needed to. Because Hong Kong and you can just go downstairs and buy something, you don't really need to go that far. But now, once everyone felt the need to stay home more or didn't have the desire to leave the house out of safety, the sales of the Taobao Hong Kong TV mall started to really increase and what we've seen is that it's kind of tapered down a little bit, but it's still a lot higher than it was maybe a year ago. In my personal experience, I've followed that trend as well. I've used Taobao last year but not for my own personal life. I used it a lot for the office buying furniture, lights, things like that, this kind of construction related materials. But I didn't really use it to buy homewares or things from my own personal life until I couldn't leave the house.
Same with Hong Kong TV mall, which is sort of like an Amazon for groceries that I never even tried for the first time until Coronavirus. Actually for me, I have stopped using it because I have some objections with how much packaging they use. I start kind of stopped using it. But what we found from the data looking at the data is that people are following this trend as well that a lot of the online shopping really shot up at the beginning of the Coronavirus time and has now started to come down but the overall spend is very high. That is a very interesting thing that I've noticed. I really feel for the food and eating out industry in Hong Kong. I really hope that they're able to survive the next six months. But from looking at the data and from our own observation, I think a lot of stores are closing and I don't know how the landscape is going to be. But yes, we've seen a lot of people hoarding cash, people spending less people are in general trying to be more conservative with their spending. And we think it has to do with the fact that, to some extent people are not as willing to spend money because there's a lot more risk in the world. They don't know where they're going to be. People are unable to spend money. They don't know, they don't have anything to do with the travel industry, as I mentioned, which is a huge part of the Hong Kong society has really been decimated. I think that a lot of changes are going to it. I think a lot of these changes will not improve, if this Coronavirus situation is continues to be extended. If we can solve this problem the next few months. I think that a lot of these economies can presume. But unless it happens, I can see a lot of people just throwing in the Taobao.
Pritish: Gini is four years old, started 2016 with a few thoughts and ideas what he wanted to build. Now, whereas Gini heading to?
Victor: Yes, when we started building Gini, we really want to build a consumer app that helps people manage their personal finances. It was a very exciting and interesting journey. We learned so much about technology. We my background was in biotech and real estate is kind of a new thing, this software development for me. We learned a lot about the consumer landscape. But what was very interesting, actually was the changes in the regulatory environment in Hong Kong, where there were a lot of these new virtual banks that were opening up. What we started to notice is that a lot of these virtual banks were actually coming to visit us come talk to us to sort of ask us, how do you do this, how does this feature work. And we told them, “hey, you don't have to come over here and pretend to be our friend.” If you want something, just ask for it, we'll sell it to you or license it to you. We decided last year that this opportunity of these virtual bank entrance was massive that we should probably focus our business in a more B2B way, or to take advantage of this opportunity to help these virtual banks really develop their products in the similar way that we've developed ours or to leverage off our heavy lifting, they can focus on more higher level more important things that they would prefer to do. We have developed a number of products, namely in the data enrichment space, data enrichment, as we call it is taking raw legacy transaction data, the stuff that you see on your bank statement, all that text [unintelligible 00:16:49] and you turn it into real store names and logos and categories. But beyond that, we add things like tags, addresses, all kinds of data can be used to power advance analytics and machine learning as well. What we've noticed is that a lot of the traditional banks in Hong Kong-around the world have a huge problem of having bad data, that it's actually a goldmine. All their customer data that they've accumulated for decades is a potential source of oil that they have, but it's completely unrefined being able to enrich it, to use it to power personalization, to be able to do power forecasting, things of these nature can really give banks an opportunity to monetize their existing customer base without having to acquire new ones or to build really expensive or new innovative products are able to kind of take advantage of these opportunities and data that they have now.
That has been a very interesting space for us. We've been doing this B2B data enrichment business for about half a year now. We just launched a new partnership with AWS, where our solution is being sold and marketed by them. They installed as well. But that has been a real savior for us. Because for a company that just wants to develop software, I don't want to go around integrating software into other companies. I don't want to build custom things. We don't want to be a dev shop, we just want to build software solutions that we sell over and over again. It's been very helpful because all the resources, all the third parties that have access to banks that are integrating other systems were able to leverage off of that. So the future of Gini actually continued to be in this data space. Now that we've been working in the state enrichment. We're looking at a lot of files. What's the next step beyond that, how do we help marketing teams use the data that they have this after it's been written rich, how do we help people we're not data engineers manipulates and create these kinds of models without having to take a lot of engineering time. These are the focuses that were kind of like setting our sights on now, almost all in the data space. We became experts in financial data over the years. And that's really where we see the opportunity in this business and growth B2C app is great, but it's a, we built something phenomenal. I think we help people manage normal people manage their finances. But actually, when I think about it, being able to help banks with their data to help their customers is actually very meaningful as well. Because maybe I was able to impact the lives, you know, have 70,000 users that are using our app, but banks have millions of users if we can help them help their customers actually, we're making an even bigger impact in some way. So that's kind of the direction that we're headed.
Pritish: The three key players, one is the tech giants. Then the second one The Incumbent Financial Institutions, including the banks, and then the Startups, and Startups like yours, focus on niche challenges and opportunities within the financial world. The incumbents are trying to revitalize a consumer base, give them or upsell the new products and new services based on the consumption pattern. The third, in terms of the tech players, there are two kinds. One of the Amazons of the world, who potentially have expanded into almost everything possible non finance and now they are turning to the financial sector, making investments and themselves turning into money lenders and whatnot and potentially turning into super app as well. And then there are the PayPal, who started with competition with the banks for the SMEs, and now they've grown big that then market caps are potentially in the top 10 financial ecosystems in the world. There's a lot going on. There's a lot of competition, and there's a lot of collaboration.
How do you make sense of this, how does anybody get into this space as a newcomer and grow?
Victor: That's a great question. And I would think of it in the following way. The financial firms, the banks, they kind of represent the old world, when we're working with a lot of banks. Now, what we're noticing is that they're dealing with a lot of legacy problems, infrastructure, like a lot of the banks in Hong Kong, their first foray into technology was setting up ATM machines in the 70s in the 80s. Then in the 90s, they could build the first website, their own internet banking, and then in the 2000s, they built an app. But throughout this whole process, they're just putting pieces of technology on top of each other becomes a big mess to the point now where we're in 2020 they want to add a button. They have to go down the line and think how does my button affect the app and the website and the ATM, how does this all the systems integrate together, how does this all work. And it's a huge problem for them, because they have put in too much investment over the years, billions and billions. And for them to change it all now would be another few billion. They haven't been less cash and less resources that before.
The tech giants, these are the new world. They're able to start from scratch without the hindrance and the burden of this legacy infrastructure. So I think a lot about Alipay and WeChat Wallet and Paytm and these kinds of companies they were able to, as startups grow fast and fulfill a need and then build infrastructure when they needed to do it without being burdened, that's the biggest barrier between these two kinds of companies is the speed. Now where the startups come in is that they fill in the holes in between. Tech giants themselves for startups at one point, they're able to kind of see where there's an opportunity, fulfill it in some way, and kind of continue to build infrastructure around that in a sustainable more organized way. I think where startups fit in today, where the established players like the banks and established players like these big technology companies can fit in is that, the big tech companies in some ways are now starting to slow down a lot. That's why I'm sort of starting to spin off certain entities Alibaba spin off and financial into their own thing that in some ways and doesn't have to have the burdens of Alibaba. Alibaba is not 20 years old. It's got quite a lot of legacy infrastructure there. How do you turn it into something new and to move quickly. The banks, I mean, they're still dealing with the challenge of those of Excel 7. How do you deal with their models are not even able to be used on like the newest computers that the tech or the IT teams probably want them to use for security reasons. Where the startups fit in and all this is that they can fill in the holes to help both parties kind of build things faster is sort of like what I was talking about when we were working with third party aggregators to take advantage of the efforts and the heavy lifting that they've done. What startups can do is they can create solutions that banks and large technology companies need at a much faster pace and integrate them to deliver greater impact than if you're just to be a standalone company just out in the market doing your own little thing. And I think that when it comes to niches and in your question is how does a startup competes against that.
I think startups have a better opportunity of fulfilling the needs of these niches than the tech giants and banks. When we're looking at speed, the real benefit of startups, the only benefit of startups, to be honest compared to large companies is speed. If our team decides to want to work on something else, we can do that in a few days. I can get all our people together and we say, “hey, new idea, let's start working on this away.” And we have a team of people it's kind of like a little a team of people from a cross section, they all come together to say, “okay, let's start building a business plan for this new ideas.” And then we might scrap it, at a bank just to get started might take six months to a year, let alone build, get approvals and then build it that might take five years. Actually, for startups, being able to move fast is the only advantage that we have. But the great thing about it is that if you can find product market fit which the goal of every early stage startup whether it's B2B or B2C, then someone who can get impactful value from your service will be able to help you take your business to the next level. This is the case we've seen a lot with banks buying or banks buying FinTech companies, a lot of banks are now instead of developing their own capacities, they're just straight up buying companies to add to their operational skill set. It's a lot less risky for banks, it can be a lot faster, and you're able to buy something that has already theoretically achieved product market fit without having to experiment with it yourself.
Banks have the benefit of scale. Technology companies have the benefit of scale into some extent, speed and money as well. But for startups, being able to service the needs in those niches can really turn into an explosive thing if you can excess needs across a number of different companies in a very big way. So I'm not sure if that made a lot of sense. But I think for me, I see startups as really nimble. You can identify problems that slower companies have and solve them, then you can either be a massive revenue generating opportunity or a massive opportunity to exit. Because someone can get more value out of what you made than if you were just distribute it yourself. And that's actually the beautiful thing about the startup ecosystem.
Just to follow up on that, one of the things that I've really noticed is that a lot of people, a lot of startup founders, they tried to scale too quickly before achieving product market fit. And it's hard to get product market fit, if you don't know what it is. If you don't feel it, then you don't have it. I felt product market fit when in our vascular tissue business, our biotech business when it took us three years to really crack the nut on it. And I won't bore you with the gruesome details of it. But when you find product market fit, people are calling you to buy this thing. You don't need to send sales people around. They're just grabbing out of your hands. It's like a magnet, this product just keeps flying off the shelves. Until that happens, marketing money is kind of just a waste. You're buying users, you're acquiring users, and they're just going to churn is going to try until you achieve product market fit, you should not spend money. But once you've gotten that then you have a lot of options.
Pritish: You started your previous business in 2012, you exited in 2016 and you took three years to actually find a product market fit and within a year you were able to actually make successful exit. That in itself sums up what you have actually experienced and has actually worked in your favor.
Victor: Yes.
That business was tough. We went in solvent three times. We had to recapitalize three times. But the 4th time we recapitalize was not because we went insolvent per se, but is because we needed to get more inventory. We couldn't service the customer base. And at that point was just like, “they started to talk to investors, we started to talk to whoever.” At that point, they're just like, “I'll just buy you, you have something as flying off the shelves by you.” And then we're like, “well, give us an offer and we'll see how it goes.”
Pritish: Do you see within our lifetime and economic where governments will stop printing hard cash?
Victor: Yes, I definitely think so.
I think when you look at it, most people approach it from the perspective of technology. Because all of these payment options everything's going India's a front runner in the payment space, now it's really amazing what's going on there. China is a very developed cashless economy America's is getting there. But I think the real thing that is going to cause the world to have no more cash is really I think monetary policy, this inflationary pressures, the quantitative easing. If you look at the price of housing, the price of food, the prices of things, and you get to a point where you can't carry enough cash around in order to buy the things that you need. Like in China, the largest bill is 100RMB. That's like $15 US. If you want to go out to buy stuff, you got to take a giant wad of cash around, but eventually, it's going to be you have to take wheelbarrows of money around just to go grocery shopping. It's like a currency crisis, but it's a slow moving currency crisis, and it's going over decades. I think that that is going to be the main driver of cashless economy. The payment system, all that infrastructure is necessary part of it. But I think as the world continues down the path that we're on and it has been heightened, a lot by COVID-19, I think that we're going to have less and less of an ability to use cash only because it's going to become very valuable. But there's a lot of ideas now about the economy having downward deflationary pressure, which is why it's okay to print money and whatnot. But if you look at the multi decade trend, the value of the dollar has really gone down. You can buy with $1, 20 years ago, is you do not need to spend $2 to buy it. And over time is, we're not going to be able to have enough cash in order to just do the day to day things you're going to need to do. The payments thing will help that a lot of the young people in the West End in everyone almost in China, and then a lot of people in India and Southeast Asia they're going to be living and growing up in a world where there is no need for cash and which means that governments will maybe be able to have a lot more ability to print money, a lot more things they can do to stimulate the economy and this will have an overall effect on the ability for people to use cash.
Pritish: Quick, rapid fire three questions, one word or one sentence. The toughest thing about your job?
Victor: The toughest thing about my job is making sure the whole team is aligned on a common goal is the most important thing about our job. It's the thing that we spend the most time focusing on.
Interviewer: One book or a blog that has influenced you personally as well as professionally?
Victor: One book, I would say the most influential book that I've ever read was development as freedom by Amartya Sen, the economist. That really had a huge impact on me in university
Pritish: If not FinTeach, then what?
Victor: Not in FinTech.
I really love being a real estate developer. It's very similar to being a software developer. You're both building something out of nothing that people use and in habits, and they both take a lot of creativity. Real estate is a lot less abstract in some ways in software developments. I personally have always found very fascinating and interesting, if I'm not in the FinTech world, I'd probably go back into real estate.
Pritish: Who is your most favorite superhero?
Victor: My favorite superhero is Superman. He's super he has a lot of abilities a lot of power and everything like that but he's still a man with certain weaknesses like the kryptonite but he is a man that's with a deep heart. He still falls in love. He still wants to feel useful for society. He still cares for his family. I think for me what makes Superman special is not just that he has a lot of amazing powers, which are obviously usually beneficial to his life, but he's also just a person with needs and feelings as well. And that's the same with everyone. We all have abilities we all have needs. That's a common thing in life for everyone.
Pritish: Victor, it was a pleasure having you on the show. Thank you for your time.
Victor: Thank you very much. Thank you