Go big or go home, as the saying goes. Sixteen months after making the decision to open an office in Hong Kong, it’s clear which option APrivacy CEO Cédric Jeannot has opted for. Jeannot’s advice for companies here in Waterloo Region? Do the same. Go to Asia. Go big. And then visit home.
“We’ve found the Asian market to be awesome,” says Jeannot, sipping a Tim’s coffee in the Communitech lobby in the midst of a recent visit to his company’s Waterloo office. “It’s mind-boggling. It’s simply on a different scale.”
Scale is a word that’s top of mind at APrivacy these days. The company, which specializes in developing secure, invisible platforms capable of safeguarding documents, email and text communication for banks and insurance firms, is experiencing rapid growth, all of it the result of planting a flag on the other side of the planet.
“When we moved to Hong Kong a year ago we were eight or nine people. We are 16, 17 as of today, and in this coming year will hire 40 people – if we can find them.”
APrivacy, which began as I Think Security, first dipped its corporate toe into the Asian market in 2014, when it applied to attend Hong Kong’s FinTech Innovation Lab. The application was made after Jeannot noticed that enquiries from Asian-based companies were beginning to pile up – and they were piling up despite APrivacy’s deliberately low profile.
The company, which until then had concentrated on selling to financial firms in New York, was accepted to the lab for three months. With a financial boost from the Canadian Digital Media Network's Soft Landing Program, which helps new companies gain exposure in foreign markets, APrivacy rolled up its sleeves and set to it. The result?
“After three months [in Hong Kong] we had done roughly a year’s worth of the work we’d have done in New York.
“It seemed like the value proposition in Asia was 10 times better than New York.”
Those eye-opening early results sparked a year’s worth of monthly shuttles to Hong Kong from the firm’s Waterloo office, after which it became clear to Jeannot he had to have a full-time presence overseas. That was in September of 2015. APrivacy now services clients in Hong Kong, Singapore and Australia.
Jeannot says his firm’s growth is the result of landing in Hong Kong equipped with the right products for the right market at the right time.
The fit, he says, stems from fact that the financial sector in places like Hong Kong and Singapore is far more heavily regulated than that in the U.S.
“Financial institutions are required to push disclosure documents to their customers,” he says.
The problem companies face, however, is their customers aren’t willing to log in to web portals for the information, meaning that a given bank or insurance company is then legally required mail them documents and notices. With customer bases that in some cases number in the hundreds of millions, enormous sums are spent on printing and mailing.
That’s where APrivacy comes in. The firm’s software layers on top of email, messaging and document platforms like Dropbox in seamless, invisible fashion, offering both encryption and total control — messages, emails and documents can be recalled by the sender. Banks then are free to push out notices to their clients in a secure environment, saving them from the perils and costs of snail mail.
“In a way,” he says, “we’re not selling security. We’re selling a digital user experience and cost saving.”
There’s a secondary benefit for APrivacy’s clients. Many financial firms are squeamish about communicating with customers on platforms owned by tech firms based in the U.S. – think Google’s Gmail, for instance – because the servers are based in the U.S. and therefore subject to the U.S. Patriot Act, meaning documentation and IP addresses can be subpoenaed. Their customers, however, don’t want to give up their Gmail and the like.
APrivacy’s encryption operates in the background, allowing the firm to communicate with a Gmail customer while rendering the message unreadable from prying eyes.
While Jeannot has based all of APrivacy’s financial, marketing and sales functions in Hong Kong, the Waterloo office remains the place where software development takes place. Jeannot acknowledges that there are hurdles to overcome in maintaining offices on both sides of the world. Lack of sleep is one.
“The challenge is obviously the logistics,” he says. “We have a 12-13-hour time difference [with Kitchener-Waterloo]. When you wake up, [North America] goes to sleep. Which means a lot of night phone calls.
“And not being in the [Waterloo] office, physically, for culture is hard. You almost have to overdo it in order to make sure the culture stays intact.
“But in the end, we’ve got the best of both worlds. The tech talent we have [in Waterloo Region] – we couldn’t find that anywhere else.
“What I like about Waterloo are the clever people, and really good, hardcore technology. And the sense of community. It’s like family here. Asia doesn’t have those two things to the same level.
“But Asia does have the clients and the demand. That’s why I think there’s a lot of opportunity. If you have something good [to sell], for the same amount of effort you can make 10 times more money.”
Another hurdle APrivacy has faced is a slow sales cycle. When the firm first set up in Hong Kong it went “whale hunting” for Tier I banks, “which can take 18-24 months to make a decision.
“Revenue isn’t the problem,” he says. “Cash flow is the problem.” As a result, he expects the firm will need to raise investment this year.
Jeannot has also had to learn how to navigate a business culture vastly different from that of North America. Trusted partners, he says, are key.
“Asia is very much to a large extent who you know,” says Jeannot. “You can’t do business [in Asia] unless you’re physically present. Face-to-face meetings are very big. An introduction carries a lot of weight.
“You do need to know who is for real and who isn’t – who is going to talk a lot about doing, and who is going to actually do something. Filtering, cutting through the BS, is important. If you have this, if you get to the right person quickly, you can do business and have a lot of fun.”
He hopes the trail his firm has blazed will help other tech companies in Waterloo Region if they decide to make the same move.
“We still need a proper, out-of-the-box framework [to help companies establish in Asia],” he says. “My job is to be successful so it paves the way for others to say, ‘Yes, it makes sense for us to look at it as a market.’ ”
APrivacy has so far resisted any attempt to do business in mainland China as opposed to Hong Kong, which remains a largely autonomous city despite being handed back to China from Great Britain in 1997.
“China is a different beast. It’s such a big market. You have to have the right partner there because the scale there is mind-boggling.”
So, bottom line: Should companies here be thinking about a move overseas if they have the right product? The answer, he says, is a resounding yes, particularly if a firm is eyeing selling to the U.S.
“Yes, it’s farther than the U.S., and it’s not the same culture, but at same time, winning in the U.S. is not necessarily easy.
“You’ve got to ask yourself: ‘Do you want to be big or do you want to be small?’,” says Jeannot.
A classic case, it appears, of going big. Or staying home.