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Bernard Hor: SME Digitization, Selling Before Building & Holiday Serendipity

· Start-up,Founder,Malaysia,Southeast Asia,Podcast Episodes

One thing that I learned was really logistics and supply chain are the backbone of the economy. Of course you see the whole behavior change of how people were buying online, the increasing consumer demands. So when we look at it, the more we understand the market, we actually saw an opportunity there.- Bernard Hor

An avid triathlete, Bernard is the co-founder of Hatio Group - a technology business based in South Korea specialising in digital warehousing & network distribution. Since 2012, Hatio has a proven track record of envisioning and delivering major transformational change, cost reduction and operational improvement programs in a KRX top 5 blue chip organization.

As the group COO, Bernard plays an instrumental role in expanding the Hatio brand across Southeast Asia with a mission to help local SMEs digitise. With an excellent understanding of supply chain best practice, Bernard and his team helped clients make change happen sustainably and have delivered significant operational improvements. He currently leads a strong team of software engineers, project managers, designers on large scale digital transformation projects in the telecommunications, healthcare, supply chain & logistics industry.

Jeremy Au: (00:30)

Hi, Bernard, excited to have you on the show!

Bernard Hor: (00:32)

Hey, Jeremy, thanks for having me.

Jeremy Au: (00:34)

Yeah. What’s interesting is that you’re a Malaysian founder in the supply-chain space. You also have a link to South Korea. There’s some interesting stories that I want to dig into and I’m excited to have you on the show.

Bernard Hor: (00:50)

Thanks, Jeremy. It was good to see you as well. How’s things over there in Singapore?

Jeremy Au: (00:55)

Singapore is nice and groovy. It’s a nice bubble in the world. Very safe and sound to be here. Bernard, this video is about you. For those who don’t know you yet, Who are you?

Bernard Hor: (01:10)

My name is Bernard. I’m a father of two. I come from this little island called Penang island up north. I’m a father of two boys. I like to swim, bike and run altogether. So that makes me a triathlete. And I love Korean dramas, especially the doctor dramas, I’m on a Hospital Playlist right now. I’m also a co-founder of Hatio. Hatio is basically a South Korean based company. We’re a technology company in the supply chain and logistics space and currently we run a cloud supply chain platform called Operado. What it basically does is that it helps local SMEs in Southeast Asia, basically manage their inventory, optimizes their warehouse operations, manage orders from B2B and B2C and also the marketplaces as well. So yeah, our mandate in Southeast Asia is very, very simple - basically to help local SME’s in Southeast Asia digitize. So yeah. That’s a little bit about me on both sides.

Jeremy Au: (02:13)

How did you first become an entrepreneur?

Bernard Hor: (02:20)

I would say that my entrepreneurial story begins when I was in the university, so my university story is a life experience for me. I did very well in university in the first year. One of the bright students academically, the turning point really was when I got my results and then, on the second year, I’ve got active in university. I was in a very new university. I was like the second batch of students as a second batch of student in this new university. There’s nothing. There’s no club, not many societies. So we were like creating every single thing that was there, music Club, Sports Club, Orchestra, the student newspaper and everything else. That is basically the start of where I was founding a lot of things. So I was a founder of all these things and then it was in a second year university as well. They say it’s the people that you mix with. So I’ve got these two very good friends. We came together and we weren’t from rich families. So of course we were always looking for the extra buck. That’s where we first started our business. I remember we went to the company registrar without much money. We registered our first sole proprietorship. We printed the namecards the same day in the same building because they have their whole suite of service there. So we printed out the same day, same business cards and our business cards read “managing director” of a sole proprietorship company, it was the silliest thing ever when I look back right now. We got ourselves busy and doing all kinds of things, we were even teaching streaming. Yeah. We were giving swimming lessons as part of the business, but we got really serious in events management and that was the start of it. So it all started then. And academically, I was affected. I was supposed to graduate in year three. I only did so in year four. Not because I failed but because when you don’t have enough classes, you don’t have enough credits to sit for the exam and then they ask you, like, do it again. So yeah, it started all then and eventually from one business we learn from all the events management. Then we moved on to youth marketing. Oh yeah, that’s where I met Graham Brown. We started Youth Folks Asia and until today until today. Yeah. And it never stops, never stops. It was uncertain all the way, but it’s kind of cool to be in an uncertain mood all the time.

Jeremy Au: (04:40)

Yeah, makes sense. So, how did you end up getting linked to South Korea?

Bernard Hor: (04:46)

It was really a pivotal moment in life. Like I said, I’m a father of two boys. So it was that one fine morning. I was having breakfast with my wife. I think this was about five years back, but it was really the lowest I would say, maybe not the lowest point in life, but it was a low point in life. We were running our business. We were into digital innovation programs. We were managing corporate communications projects for public listed companies and it came to a point. You know, it’s like one more one morning you wake up and then you kind of ask each other like do you foresee yourself doing this the next seven years and you go like? Perhaps. Well, of course the market was changing. I think the economy starts to take a hit and then budgets were really reducing. So we say you know what, you know, we don’t, we don’t have a visibility. So at that point at that low point, we didn’t have visibility of what’s going to be revenue, what’s going to be income in the next six months or nine months and it was that point in time we say you know what? We’re having breakfast and we’re just scrolling through Facebook and then we saw that Malaysia Airlines had a crazy sale. So we just say, hey, look in there was a dream that we had, the dream was always to bring your family out for a month holiday. Just leave everything aside. Let’s just go over that breakfast over that one Facebook post that we saw with Malaysia Airlines. We click into that and then we check OK ticket for four to South Korea. And then it turns out is only like 2600 ringgit for four to and fro. So we didn’t really. It wasn’t a planned trip and one month. So we’re like, OK, let’s book and before we know it, the ticket was booked. We were in Korea, we went without expectation. Like I said, it was a low point. So what do you do with one month in Korea? In the second week I just started. I just like, hey, you know what? I think it’s just time to discover and see what’s out there. Long story short, that’s where I met my co-founders. I gate crashed into a startup event. I was hoping that they would speak English and not South Korean because I’m going to be dead if they speak Korean. The whole event was in English. I was glad and really that was where I met my Co founders currently and they were looking at Southeast Asia because at that time they were really looking at the South Korean government was really big in helping in really encouraging and pushing and driving and helping the South Korean businesses startups out of that market and expand to other regions. So Yep. Hatio was looking at the Southeast Asian region and I was a Southeast Asian guy there. That’s how it is. The Seoul love story, yeah.

Jeremy Au: (07:27)

That’s serendipitous for your paths to cross like that, but what exactly about this space of logistics and SMEs is interesting to you?

Bernard Hor: (07:43)

Truth be told, is that when we got into this space, the back story is that we never came from the logistic space. We don’t even know how a warehouse is run and what really supply chain looks like. And then we got into it. We slowly learnt from the Southeast Asian perspective on the market. And one thing that really caught my attention was that. We took about four months, four months. My co-founder and I would, of course, travel to Malaysia, we’re in Singapore, Vietnam, Bangkok. I remember we spent a lot of time in Bangkok, a lot of fun as well. We were even in Manila. When we go to all these places or all these countries for these markets we realize. And one thing that I learned was really logistics and supply chain are really the backbone of the economy. So that's the number one thing that I've learned, logistics and supply chain, the backbone of economy. Of course you see the whole behavior change of how people were buying online, the increasing consumer demands. So when we look at it, the more we understand the market, we actually saw an opportunity there. So what we do in Korea was the business in Korea was a lot of warehouse controls and warehouse execution. The robotics, Internet of Things. Automation of warehouses. So we’re doing a lot of that. We didn’t even have a proper product in a sense. When we came here, we thought that, Jeremy, the whole idea really was to bring all these super cool, sexy robotics stuff that we have. Into this region in this regional market, but after that four months of intense traveling and talking to a lot of locals, we realized that the market wasn’t ready for it. It’s not about affordability. I remember four years ago when we first came in here and a lot of my friends, a lot of my contacts were telling me you’re wasting your time, you’re wasting your time trying to sell this robotics stuff to all these China man. I was like, OK, you wasting your time trying to sell technology to all these 30-40 years business in the market in Southeast Asian market. So I think there was a challenge to prove a hypothesis and we went out there. It wasn’t because they couldn’t afford, it was because the market wasn’t ready for it, and why wasn’t ready? Because there’s a there’s still a lot of manual, very legacy operations across. I remember my co-founder and I sat down at the table. I say, look, this whole robotic thing, IoT that we’re doing in South Korea, it’s not going to work. We can’t just bring this stuff and say we can automate your warehouse, no local SME’s is ready for their warehouse to be automated right now. So what do we do? At the same time? That’s where we saw the big opportunity of this huge addressable market in the local SME’s, which is to say, hey, let’s help these guys digitize, that means if you imagine a racing track, all these local SMEs are just sitting outside like. OK, look at it. Digitalization or digitization, whatever, of all these big companies and maybe you go first, you can spend first and let’s see what happens. So our motivation was saying, hey, you know what, let’s bring all these guys to the starting block whether they run or not that’s another story, they win or finish or not also another story. But let’s just bring all these guys to this, and that’s where we started. And hence the mandate you know, very simple, helping local SMEs digitize, that’s how the whole thing happened. And we saw because of the whole rising consumer demands because of the whole e-commerce trend, especially over the last two years, which maybe we can talk about that sometime later. That’s where we saw that there’s a mismatch because there’s a lot of these local SME’s, which is on the legacy whether their legacy systems are still on the manual basis. Right now, a lot of these local SME’s couldn’t scale their business into the trend of E commerce and all that. Very simply, more and more people over last two years, 14 million people in Southeast Asia went digital and were buying online. So that there is a huge demand, but in the logistics space, for example, a lot of these logistic players are not ready to do ecommerce fulfilment. So they’re basically losing out, if you look at markets in Malaysia, Singapore, Indonesia, you can see that there’s a lot of small little fulfilment centers set up by young people as hey, let’s take over this shop lot that’s just closed because of COVID. Put a system in there and connect the marketplace. And let’s fulfil for the shippers. So basically that’s where the older local SME’s are basically losing out in that in sense. I think that’s where we saw the opportunity.

Jeremy Au: (12:04)

What are some of the myths or misconceptions of this space of SME digitization, especially in Southeast Asia?

Bernard Hor: (12:13)

A couple of things that I’ve learned. I think I’d like to touch on two or three of this. Through my experience of selling a software to the local SME market is basically what I’ve learned over the last two, three years in this market. Is that a lot of these local SME’s are not well informed. They’re always driven by the fear of technology. Instead of going towards how technology could empower and scale my business, their thinking was always of the limiting factors, which is why what I learn is every time I walk into my sales pitch, or to share about Hatio, I will never bring out my laptop. These guys are ready to see a demo and I’ll never bring out my laptop. I'll just look for a white board and I say, hey, look, show me your flow, OK? This is your flow as is. Right. OK, cool. Where is your problem? And I chart all the problems. So we spend one whole hour in the meeting talking about their flow and their problem, you can see most of the time, in their eyes, this is the first time somebody plot out the whole flow on the board and plotting out everything where the problems and bottlenecks are, then you have to basically educate them and say, hey, look, there’s nothing to fear about technology and because now you’re informed of the as is situation, let me slowly bring you to B situation, what’s future the myth of this space of this local logistics and supply chain space is people think that technology is expensive. I couldn’t blame them because it has been that way and that’s where we learned about this. For example, warehouse management software and management system is half a million dollars. So how could the local SME…they need to make that kind of volume before they can actually invest because it’s all ROIs. So what we did was we said, OK, look, one of our key formulas in Hatio for the Southeast Asian region is to make it really, really, really affordable; to make warehouse logistics solutions affordable and bring it to the cloud. So of course, the way we architected, the way we’ve positioned it and then when we go to the market, one of the key things that we will always try to help them understand is - technology doesn’t have to be expensive. Technology can be affordable and scalable for you and you don’t have to fear making this decision because it’s all about change. We’ve always got questions like I like what you’re doing. I can see the potential of this software. But one question - will my guys understand it? because the guys working on a warehouse, they’re worried that because they’re not highly educated, I mean, in the Southeast Asian market, they’re not highly educated. Will they understand the mobile, what they see on the screen. What if they do wrong? All this stuff? Yeah. So, but I guess we’ve managed to help a lot of these guys crossover that point. And now they’re basically looking at it. And in fact, I’ve always been told not labelled them as a China man, but really a lot of these Chinaman are really now our biggest fans. They’re telling their other counterparts, don’t worry, Bernard and team will get you sorted out and not worry about whether this whole software thing. So it’s been a fun journey in that sense.

Jeremy Au: (15:19)

How do you ensure that your systems get integrated and put into use versus something that they just buy and try then throw away?

Bernard Hor: (15:39)

Yeah, absolutely. You’ve got the keyword right. It’s trust and it’s the ability to develop and build that level of trust with these guys. And one key thing I learned is really that you can’t walk into that meeting room with these guys and talk all about your software. This line of thought is not going to build trust. You gotta go in there. You’ve got to really understand their operations. You got to understand their history and you gotta understand, like, hey, you know, you’ve been in this business for the last 40 years as a third party logistics. You’ve been doing this. How have you changed? You gotta understand the story. You gotta understand, like, how have they changed? Let me give an example. My first client, HA client 001, happens to be a neighbor of mine, so I stay in one corner. He stays in the other. So I walked down the street and say, hey, I just want to learn about your operations and all that. I've always loved this story he's always telling us. I’ve been using an accounting system to run my inventory. I said. OK, cool. The accounting system that I have was 22 years ago, OK, it’s called QuickBooks. He actually upgraded a newer version of QuickBooks. This is the generation that when they buy software, it comes in a box, a CD and a key code inside. I remember in that office he took out that box and he showed me. This is the box. He says I’ve never used this version. I said why? Because when I try to install it, it never worked. So I quickly uninstall it, keep the box away. And so today I’m still using 22 years ago version and. OK. But you see this, this is a part, this is the part where because I don’t position myself as a software seller to this guy, I position myself as, hey, I’m here listening your story here. This is a shoulder, come. Let's talk. Here's a glass of whiskey. Or here's the bowl of Bak Kut Teh, let’s talk. Tell me your history. And to be honest, when you are sincere and genuine about it. There’s so much you can learn from all these stories. There’s so much you can learn just by lending that ear, just by having that conversation and not pitch. So going with a conversation instead of pitch. So just by doing that, the trust naturally builds. And this first client and of course the second client as well. We did the same thing, our track record is we had our first two clients signing a contract with us. So two players about half a million dollars without us having a product. Yeah. We have this whole WMS thing. So we showed him some mockups and they say OK. How fast can you deploy? OK, now we don’t have a product, how fast can we deploy, right? So we put together, we went back to the engineering team and say OK, how fast because remember how we never had a WMS, we were doing all this warehouse controls and execution. So we took all the capabilities that we’re doing with the robots and this automation stuff and we put it together and say, hey, this is your WMS. So we delivered in four months. We didn’t know whether there was fast or slow anyway, but yeah, because the trust was there. So we delivered in four months we went live and this boom, you know overnight this guy who have been 22 years on QuickBooks running outside by the way, the old version and today. I remember what Uncle Tan this neighbor of mine, his name is Uncle Tan said. This is my dream come true. I’ve been dreaming about this software. In fact, I I’ve been writing the whole system in my mind, doing the coding in my mind about how a warehouse management system should work for the last 20 years, you made my dream come true. And I think that that is the very essence of engaging with the local SME in Southeast Asia and I like to say that Hatio as a team, that’s really I shared with you earlier, you know, since day one here in Southeast Asia, we have this tagline hashtag or mantra in our office in the team and says hashtag relationship matters. And then we said. You know what? Just keep focusing on that. Just keep going there and I tell you this, Jeremy. Every Monday morning, I walk into the office, we have our senior leadership team meet and we have a small mini town hall. Whoever is in office. And I would stress it to the team every Monday morning since the first time we started in Southeast Asia until today, I say, hey, look. I might not know what I want for Hatio or may not know what he is going to turn out to be, but there’s one thing I damn sure don’t want Hatio to be. I don’t want us to end up being a software seller. That’s been our guiding light all this while.

Jeremy Au: (20:43)

Speaking about that guiding light, I’m sure there were some tough times along the way. Could you tell us about a time when you’ve had to be BRAVE?

Bernard Hor: (20:54)

Tough times. Yep. A lot of it, but I think the time there was the first starting story, which is I was just having lunch with my brother-in-law 2 days ago and we were just talking about life. It somehow or other went back to the Korean trip that we had. I came back a lot of people thought that I must be doing well. Right. You guys must be doing be doing so well that you can just leave everything and go holiday for one month. It was not because you were doing so well, but it was because we were at the lowest point of life. I mean, OK, maybe not lowest, but it was really in one of the low points of waking up and saying and ask each other, do you foresee doing this the next seven years or where is our next income? How are we going to hit our next breakthrough when financially you are not that strong? And because my wife and I were in the same business, she’s like my best partner in crime, the both of us had to make that decision and say, you know what, let’s go somewhere. Let’s have a change of environment, a change of scenario. Let’s go without expectations. We didn’t plan anything. The only thing that we plan was the place we stayed and then also because we know of a friend.So that was the only thing we plan for the trip. Nothing else planned, and it was good. And I remember in the airport, my wife and I, I was telling myself, let’s go with an open heart, with an open mind, expect the unexpected. Maybe Malaysia Airlines came in at the right time. To just take off, I wouldn’t put it as it was solely my decision. I think it was really because I’m so blessed and lucky to have a partner in crime who shares the same mission and shares the same thinking process and say OK, maybe we can take these risks for once and do something crazy instead of trying to figure out what’s the next business, who’s our next client? Who should we pitch to? What should we sell? Let’s just go. Let’s leave and take off. So yeah, we came back with Hatio. I guess there was there was something really brave that we did, I mean looking back four or five years ago, it’s like lowest point in life. You’re supposed to be figuring out ways where your next income is going to be and there you go on holiday for a month.

Jeremy Au: (23:42)

Awesome story. Thank you so much for sharing. I’ll love to wrap things up by sharing the three big themes I heard. The first of course, thank you for sharing your perspective as an expert in SME digitization. I love the thought that you have around your background, why you care about it and the different ways to approach it. I also really like the second thing is that your approach to selling before building, quite a great story about building trust and selling to the person who’s closest to you. The fact that you were able to build the warehouse management software of his dreams is a nice way to make someone’s dreams come true. And lastly, of course, thank you so much for sharing about the serendipity of your holiday, about how it was at your low point and yet somehow helped birth the setup that you are now co-founder of and is amazing to hear how luck or blessing or whatever you wanna call it really play a part in making all of it happen.

Bernard Hor: (24:39)

Thanks for allowing me to share this. We closed our round in March this year, a small little round, just enough. So I was taught because see my co-founder is not the same age as me. It’s not the not late 30s, mid 30s or gung ho type. Mr Nam is 56 in Korea. So, we’re very grounded. You know how a father will ground you? And so we’ve been always taught to have enough money. There is just enough don’t raise money they don’t need and we just close a round in March this year, small little round. It was really the stories I remember. It was really these stories that it really affirms the conviction of really going out there and build real trust. Don’t just go out and sell it. Go out there, build real trust. Have real conversations with people, be human. Really it’s all about really being human, have good conversations out there, be real. Build those trusts, build those relationships and that’s how we landed our run as well. So we’re lucky again. Thanks for having me on the show, Jeremy. It was nice talking to you.

 

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