JULY 2, 2020 | Reach Further
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Daniel Huang, founder and CEO of Immotor, one of the largest battery exchange networks for two-wheel electric scooters in China
On the roads of China’s big cities, you can’t miss the distinctive yellow or blue helmets and vests of the so-called “ferrymen”—couriers zipping around in electric two-wheelers, delivering goods and meals for China’s largest food delivery platforms Ele.me and Meituan, or package delivery companies like SF Express or JD.com.
Especially during COVID-19, these delivery workers are risking their health to keep the country running, as people rely on deliveries of meals, online groceries, medicines or merchandise to get their daily necessities. Hundreds of thousands of these ferrymen zigzag through city streets and work for as long as 12 hours a day.
China is currently home to 300 million e-bike and e-scooter users, among whom are 7 million food delivery riders and 3 million package delivery riders. It is estimated that there are over 100 million battery charges for scooters daily. This untapped market has attracted investors and prompted tech players to attempt to meet the surging demands of scooter riders for fast and efficient electric charging services.
Based in Shenzhen, Immotor currently runs one of the largest battery exchange networks for two-wheel electric scooters in China. Its core technology is an intelligent battery exchange network; tens of thousands of Immotor battery swapping cabinets are deployed in cities, and couriers use an app to track the nearest cabinet and swap their depleted battery to a fully charged one. The network can also track deliverymen's courses, battery status and nearby charging station status, and can analyze data in real time for maximum efficiency.
The founder and CEO, Daniel Huang, was recently interviewed by Calvin Cheng, managing director of tech and growth banking at East West Bank China, through a virtual event to talk about his entrepreneurial experiences in both the U.S. and China, the market opportunities and business models for electric scooter charging services, and his secret sauce as a successful entrepreneur.
I moved to the U.S. in 1996 to help a Chinese audio electronic manufacturer set up its U.S. subsidiary. This is an internal startup venture—if we could not make profit in the first year, then we had to pack our stuff and leave. With only limited resources, we not only made a profit in the first year, our U.S. sales grew 30 times in 10 years. After the company went public in 2006, I decided to start my own company, Mophie. We design, manufacture and sell smart phone accessories, such as portable power banks for smartphone brands like Apple and Samsung. We did really well. iPhone fans raved about our signature product: protective juice pack battery cases. As Mophie’s growth peaked out in 2015, I sold the company to the consumer electronics retailer ZAGG.
At that time, I thought that our team can do more. We’ve built up significant experience and expertise in the battery sector. So, we turned our eyes to the less-cultivated scooter battery charging market. China dominated the market for electric two-wheelers, and it was growing at a fast pace due to the surge of food and package delivery services. However, the scooter riders only relied on ad hoc charging stations that aren’t [uniformly governed]. That made me start Immotor in Shenzhen.
Immotor’s battery exchange for e-scooters
In the past, riders had to wait for hours to charge their e-scooters. Now with our network, riders download our app, use location services to find the nearest battery changing cabinet, and exchange their depleted batteries for fully charged lithium ones. In three seconds, they are ready to go. It helps delivery riders improve efficiency and thus increase their daily income.
Our battery exchange network now covers 54 cities with close to 7,000 battery changing cabinets installed, charging more than 400,000 batteries per day.
I started both companies from “Zero to One,” so I have a lot to say in this respect. First, the American market honors the spirit of the contract. What can be done, what is not allowed, are explicitly stated by regulatory agencies, government, or, in general, the business world. In China, on the contrary, there are gray areas, and you must explore and test the boundaries. Second, for startup companies, the human capital investment in the U.S. is a lot higher than in China. Sometimes the founding members in China are willing to take a lower compensation and share the startup risk just because they believe in your vision. Also, the cost of professional services like CPAs [and] legal services comprised a large portion of the initial cost for startup companies in the U.S. And in China, these costs are lower than the U.S.
It’s interesting when you compare entrepreneurs in the U.S. and China. American entrepreneurs started from innovating and developing a single product or technology, kept fine-tuning it and made it one of the best in the niche market, before thinking big to expand the business. Leveraging the massive domestic market, Chinese entrepreneurs are good at inventing new business models to disrupt conventional industries or tap into new markets with an exponential rate of growth. For us, I think the innovation of both business model and product features is equally important and is what sets us apart from our competitors.
U.S. investors tended to look at the long-term. They are more patient and pay much attention on the technology, product and expertise. Investors in China are mainly looking at business model, revenue and gross margins, and their expectations are to make quick and high returns.
Starting your own business is a big undertaking. In my last company, Mophie, during the second or the third year, there was a tough time when we had several million dollars in loss and were running out of cash. I met the NBA player Carmelo Anthony at an event, and he showed interest in making an investment in our company. With his angel investment, we made a shift to our product development and became a major player in the smartphone battery cases field.
At Immotor, we also made mistakes. Our first product was actually an electronic scooter. We did not realize that other than innovating a new scooter, large efforts need to be spent on customer service. Then we re-focused our efforts on battery exchange networks. Our nature of business involves R&D, product development, as well as operation and services. Our customers are scooter riders who work really long hours and value time and efficiency, so we need to service and solve their problems 24/7.
We put our customers’ wellbeing as our top priority. During the outbreak, we disinfected all of our batteries and battery cabinets on a frequent basis. We’ve seen our volume of business skyrocket. From January to February, the number of our daily average battery exchange grew 140 percent year over year. It put pressure on our service and maintenance team. To make sure that we were not interfering with customers’ battery exchange activities during daytime, our technical team usually started working after dinner and worked until 5 a.m. This demonstrated our social responsibility to the society during tough times. I am very proud of our team.
We visited India, Vietnam, Thailand and other Southeast Asia countries and have laid out an initial plan. We will bundle up our technology, products and business model, and partner with overseas local players for implementation. We believe it is the most feasible and efficient way, as we can rely on our local partners for government relations, implementation, maintenance and operations—areas that are barriers to foreign companies in a new market.
Leaders in early stage companies need to be hands-on, from R&D, product design, business development to marketing, leading by example to your team. As the company grows, the founder needs to learn how to delegate. Otherwise, the team will lose motivation, which would put the company at risk. So, you need to develop a strong workforce of middle management. In the later stage, you need to establish reasonable corporate governance and a growth model.
Personally, I am very open-minded. I delegate to my team. I think my biggest role is to put together the resources, build up a stage, set the direction of the company so that all my team members can find their roles on the stage and play an important part on this platform. I am willing to help them grow personally and professionally with the company and share the company’s growth and profit with them.
I am a huge fan of Elon Musk. I remember that when I started Immotor, I bought his biography and gifted it to all of our founding members. Elon Musk is a crazy guy, and I think that if you are not crazy you cannot become an entrepreneur. My most recent read is a book about Kuaishou, the short video sharing app and a rival of TikTok. It made me ponder the power of social networks and product refinement. It is a must-read for entrepreneurs in China.
Every startup company has its unique model, and their financial needs are different. We talked to some other banks but feel that East West Bank is nimble and practical. The team has many years of experience working with venture capital-backed technology companies, and they listened and understood our needs and provided customized financial services to us. We are very appreciative of East West Bank’s support and look forward to working with the East West team for many years to come.