Transcript Of the interview
Bay, Brinc.io isn't your first enterprise. Everywhere you go, you find a way to leave your imprint. For our listeners, if you look up Bay on YouTube, the first video you find is basically his last day at Apple where he spent six years as a business manager, partnering up with range of top VCs and startups. The video is literally three minutes of an entire Apple store clapping you out. That's pretty impressive stuff.
Can you talk us through your background and why Brinc.io was the next place where you saw an opportunity to leave your mark?
Bay - I started up in the East Coast and definitely don't have a tech background. That's kind of the funny part. Not a technician by any stretch. Had to teach myself. Was on the business side, but had a passion for working with innovation period. Ended up finding myself on a couch in Silicon Valley, no job necessarily.
The story goes, you have to start somewhere. I just moved to the West Coast one way. And found my way through it. Started with a couple of startups, one definitely went terribly, one we sold and then I started my own and then I realized I didn't know what I was doing at 24. Went back to Apple a second time. I had a chance to work for them in college for a couple of years, which was great. I just really realized that I had to be doing something creative and new.
On the East Coast, no offense, back then for me wasn't the right place. Went into tech full board, dove right in and ended up figuring out that during the focus of Web 2.0, which was this huge explosion. Think Yelp, Twitter, Square, Dropbox. This explosion, which was really exciting to be a part of. I got to learn a lot fast.
For me, one of the things I learned about myself that was the most important was that I really have a deep passion for helping other people bring their ideas to life. I do enjoy being part of a lot of project and companies. But I don't necessarily feel like it has to be my idea.
Brinc kind of came out of that after about a decade of working in other people's businesses, supporting investors, founders, both at Apple and my own. I just realized there needed to be something bigger than myself. So I was looking to start a fund.
I was using my mentors from True Ventures and 500 Startups and I was trying to learn how to do this. My wife and I had this thought: "Is this it? We're about 30ish, what do we do? Is it time for Tesla, kids, and [Marin Valley]. Is that what we do now?" The standard VC model, right?
No offense to all my friends out there, I love it. We had this itch, thinking there was another chapter to be made. So we decided to blow it up and start over. We moved out [to Asia]. One-way ticket, second time. Never been here a day in my life. Figured it out when I got here. Set out to figure out how to help. We decided to get involved.
I was at Apple long enough to fall in love with physical. I just had this passion and this unbelievable respect for physical objects in our lives. IoT had just started going. I knew the founders of Tile and we knew from Apple days IoT and Tony [Fadell from Nest] left, right? But that was still really hard.
Being here, it seemed obvious I needed to learn about manufacturing. So Brinc.io was this kind of multi-person dream of myself and my cofounder. [Manav Gupta] was dreaming up something of his own in China. I was dreaming up something on my own in San Francisco, I happened to move here and we happened to meet in Beijing and then voila.
Wai Hoi - Your passion is helping people, start-ups, companies realize their ideas. How do you transform something that is frankly pretty undefined into something that actually guides you in your career and the next step for yourself?
Bay: I always asked myself and I had some great mentors growing up so I really asked myself if I do more of the things that I really like and say no to the things that I don't really enjoy, then it seems logical for you to eventually find your way.
And that's really what it was. When I left Apple, my second time at Apple, I was in San Fransisco and didn't know what to do. So I just started saying, yes to things that sounded exciting and no to opportunities that didn't. Oddly enough, it sort of gave me these two years where I was trying lots of different things. One of them was moving to Asia. That's the same concept here.
I really want to try to learn physical. So I started going to factories. I started going with my friends who happened to do physical products design, going to China, trying to figure things out.
Same process, what I like do: help founders, help people build cool things. Great, do more of that. Wow, now you're in a factory. Wow, now I've got a cofounder. Wow, now you've got a company. Wow, now you've made two investments. Now you have an office.
And that's sort of how this went. We kept following our heart and deciding, this is mentally stimulating, we love helping people transform the world, transform their lives. This is sort of become the result of all that.
Wai Hoi - I've read your blog and there's something you call Living life in Beta. What does this mean? And how does it relate to how you tackled your career?
I was a musician for a long time. I've had two classical albums, you can find them on iTunes -- please don't -- It's interesting, nobody in this part of my life even knows that used to be a musician.
I really figured out by myself that I don't like to edit things. I just like to be the version I am now. I realize that most of us are very uncomfortable and try to refine how we are constantly. Gosh, Asia is probably the worst in all this, with all the walls and all the face and all these things. So, I started to realize that I need to be okay with being uncomfortable and being maybe wrong or not being good enough.
We're all faking it to some extent right? For me, I just realized that I had to let people know that was okay. Our first two investments, the joke is, they remember thinking, okay, well the guy seemed nice, but they definitely don't have any track record doing this in particular. But, better than us trying it by ourselves, let's see how this goes and we all just put our hearts in the same place. We trust each other, so let's work hard. And here we are now 13 investments later. And a year and a half in.
It's just about being comfortable where you are and not trying to perfect everything.
Pritish - Brilliant. Let's talk about Brinc.io. We got a good overview of what you are and how you see things. What do you guys do here? Two cool investments which are very popular, but what is the concept of Brinc?
Bay: It's really simple. IoT is going to unlock all data in the world and we think with that data we can improve fundamentally all aspects of our life. We just want to help IoT exist more easily for our founders, more consistently and ‘repeatably’ for the manufacturers and retailers and certainly be less of a black box and scary for the investors that really aren't sure how to invest in physical. They say it's too difficult so we want to make sure everything's transparent and repeatable and help bring these really amazing devices into the world. Because we believe that the data you give us, will actually change everything about our lives.
Pritish - Wow, so that brings me to another point. Almost everything on my phone tracks my steps, my heartbeat. How much of that is hype and how much of that is reality? And how can we make more of that?
I was just giving an open mic at TEDx the other day. I think that it's really understated. We started with pedometers, the Japanese gave them to us 20 years ago. And that's where this 10,000 steps thing comes from, which is completely arbitrary btw. It's just what they decided and nobody changed it. Like YCombinator's US$6,000, and now everybody just thinks that's what you pay start-ups for the Summer, right?
So I think it's about to get crazy. I think people truly don't get it, but that's okay, that's normal. In the future, we'll look back in time and ask ourselves, seriously, how did our doctors ever think they could magically or miraculously diagnose our complicated bodies. It seems impossible. In the future, it will look like: "Well, here's my amazing dataset, now here's where I think you should look, doctor, and now let's talk about that." I think the people who are in the quantified self movement, which I definitely think [I'm part of].
I did three genetic tests, one biometric test, I'm doing a biomarker and a bacteria test in San Francisco the next week and the bloodwork the week after. I'm in it, right?
It's not going to happen over night, but we are certainly going to be happy that we did track.
Pritish - Have you actually tried the swab?
Bay - yup, so I've done 23andme, I wished the FDA didn't really shut them down the way they did. It's really not that interesting anymore. Insidetracker, is a blood test that you do. It does 60 or 70 biomarkers, very exciting. Here Prenetics does another swabbing technique, that's for drug adherence, making sure you take the right drugs, the right amounts. uBiome does other parts of your body, behind your ears, behind your mouth, your armpits. They think microbacteria is actually going to be 10x the amount of cells you have and they think that's the key to your health.
So. I'm in it. If there's a test that I didn't mention and you know, tell me, because I'll try it.
Wai Hoi - How do you tell your guys to handle these regulatory challenges? This is the first time in history, where at this scale, as a startup you immediately have to think of the next step there already?
Bay: It's a little unfortunate. Based on the regulations, we sort of try to stay away from them. Which really isn't ideal for the world. But it's happening. Just yesterday, there was a huge landmark announcement by the U.S. for drone rules and regulations. So it is going to happen. It seems autonomous cars is going to happen. I think we're getting there.
FDA, rightfully so, should be cautious and you hope they would be. In countries like Hong Kong, and even the Philippines, there is less regulation and it allows us to be a little experimental. We are working with university professors, PhDs, the hospitals, but we can actually try stuff here in the Philippines, which you can't test somewhere else.
Obviously we're not overpromising, but it allows you to be at least a little more flexible. I think it's the right time to be involved, but if you're a startup and you don't have real cash and real runway, you can't be going for FDA approvals.
FDA level 1, one of our devices, pays that, that's essentially a fee, that's easy. FDA2 is definitely more challenging, FDA 3 is essentially, good luck.
But, it's possible, it depends on the investment thesis and what you should do. I do think it will open up though, I think we see that in other big areas, transportation and autonomous vehicles for instance, is not a small, new wave of technology. Or drones flying overhead delivering things, those are big deals. I'm very confident we'll see it in health as well.
Pritish - What makes a good Brinc-worthy IoT startup?
Bay: the number one thing for us is that you look really long term. And you really care about the details. We are not about the hype. Don't care about the million dollar crowdfunding campaign. Don't care that you got two million dollars in financing. We don't care that you have the best industrial design, the sexiest videos. That's all part of the game, but we really look for founders that want to build long-tailed companies that are profitable.
And another thing, we don't look for the hockey stick unicorns, that's not our play. We really think that you overleverage yourself in the early days. It's different strategy for different folks, right and we love our partners and our investors that we work with in the Valley, it's just a different model.
If I have to capture a market, because someone's going in, that's a different game. So go for it. But if you can afford to wait and allow yourself the time to get strong, quietly. Then at a point, when you've had these great Series A investors, that would be the perfect time to make the decision of whether you'll go for the hockey stick or are you just looking to be a 50 - 100 million dollar business that makes money?
We really look at our founders and say, look, no matter what happens, this is life-changing for you. We met one of our founders, when he had `US$24 in his pocket and now he's placing orders for 50,000 pieces at a time and he's cutting checks at like US$350 - 400,000 at a time and he's making US$3 - 5,000 dollars a day off his web cart. It's not insignificant, right?
You raise a couple of million dollars and this is in 18 months. So you take someone who was at a completely different paradigm in his life to under two years to a profitable company that is solid. That's crazy.
Wai Hoi - So between these different factors based on which you could make your investment decision, is it like team-first, idea-first. What is the thing that sways you? You just mentioned these guys that were completely inexperienced a bit earlier. How do you get to that point of decision to take on this risk?
Bay: It's always team. I think the thing that, for whatever reason, IoT is new, people feel like the idea is novel. And it's just like software. Of course the idea is interesting, but how many social photo sharing apps have you heard of? So, for us, it's how many connected bike things have you heard of? How many bed-side table or connected home hubs have you heard of?
When people come to us now, we generally have this volume, where we've seen five to ten on every kind of pitch you've seen. There's few who are really novel. And if they are, it's great, but you almost need to have a better founder to pull off a novel idea. That's even more challenging. Founders, every investor will tell you, founder first.
The thing about IoT, that I always try to impress upon people when they think about building these companies is software, you can launch an app in the app store and either you take off or you get hidden among the 10,000 others in your category. You fail privately.
In IoT, when you launch and then you go through the production process and then you deliver and then you start retail, you don't know from that day when you apply to Brinc for at an earliest point, about two years. But for most actually, when you look at the numbers for most IoT investments, it's about the three year mark, when you realize whether you're at a velocity and trajectory where you can stay alive long enough to compete with the big guys or do you need to sell quickly and do you need to shut down.
For most founders, they think it's starting a company with the click of a finger and IoT is awesome, but you've got to be the type of person who's ok with not knowing for about two to three years if you made the right bet. That's a different personality type than a software personality type. Because you get instant gratification of knowing whether you can hack this together, whether your social hacking metrics are working or not, you don't get that gratification with IoT for a really long time.
Pritish - It's not instant gratification. That brings me to the notion of: is hardware hard?
Bay: It's challenging of course. The way we kind of spin that is yeah, obviously, but there is a certain type of person that thrives off of challenges. There is a certain person that rather takes the hard road, they just like to work on more complicated, challenging problems. There are the type of people -- no offense, right - that should make a software company. There's a type of person that thinks they should be a founder, that should really be an employee and should never be a founder. Because being a founder is super, stressfull all the times because there's nobody to blame, right?
I think it's more about an understanding of what you're getting in to. For us, we really love people that have this emotional connectivity with a physical object, realizing that when you have a physical object or when you buy something physical, there is this instant visceral relationship. Now, people still chuck stuff, right? I have a whole box of consumer electronics.
But for those, that really hit it right, think about all the fond physical things you can think of in your life. There's dozens and dozens. And they have the chance of a connection long term that software apps in the folder on the third homescreen don't.
Again, the risk and reward ratio is just different. But it's definitely worth it, once you do it.
Pritish- What are the main challenges? Why is it hard?
Bay: Couple of easy ones, everyone hits the same things. First one is absolutely, I never manufactured something at scale before. There are makers and they are the lifeblood of this system. These makerspaces and arduinos, making people able to tinker, that's critical.
But, the leap from that to scale and manufacturing, which nine times out of ten is going to put you in the PRD, the Pearl River Delta. Some people say they're going to try it in Mexico and then you find them here. Or I'm going to try South Korea, that works sometimes. Or I'm going to try Montreal and then you find them here.
It's one of those things that you can't get away from. That's actually a big reason why we've chosen Hong Kong and why believe you can't get away from the PRD. It's a weird moment where -- what other vertical or type of business actually kind of requires you to be in one particular geographic region on the entire planet?
There are very few types of companies that require you to be in one place. As the world, we've consolidated our electronics and mass scale manufacturing into one place on earth. Fabrics are in other places, right? Vietnam or whatever.
I think that's an interesting opportunity and almost any founder that's made it will tell you, I should have come to China and Hong Kong earlier. That's sort of the constant response. It's faster and it's not as scary as they think it is. So they believe they should have gotten here faster.
Wai Hoi - So is that what they come to Brinc.io for? Is it for distribution and manufacturing?
Bay: I always tell people, I'm sort of like your best friend, but I'm also the hardest coach you've ever had. People come to us, it's going to be so great, we're going to get in the Brinc platform and we're going to speed up. The first thing I do, is add at least six months to their timeline. They never have an idea of actually how long it's going to take
Generally they come to us, any IoT accelerator or hardware group, they come because they want to make things. That's where their head gets stuck. And my question is, if you could snap your fingers and make your product at scale, would you ever come to China?
And they say, of course not, I would be in San Francisco, I would stay in London or New York, but the answer is, that's not where the value add is. We look at the entire business, because we build companies, not products. That's one of the first big tweaks, that we need to do to the founders brains when we first meet them.
Are you trying to build a product or do you want to build a business? We build businesses that need to make products. But the product development stuff, if you've been in China, is not that hard. It's just when you don't know it, is when it's hard.
Pritish - Just touching upon how Brinc is actually connecting the community here in Asia. You just mentioned a few places so how are you bringing that connectivity to Hong Kong?
Bay: we've tried a lot, we're small but we've done a pre-accelerator in Malaysia, we speak in Singapore, we speak in Shanghai, I mentor a Chinaccelerator in Shanghai, we're in Shenzhen and Guangzhou with office space, we have partners that we're now going to talk about in a few months in India. We have a place in Dubai. We are working really hard as best we can as a small team to try to connect and communicate and we offer anyone that wants to come to their first trip into China the opportunity to pop into Hong Kong and we'll find space. We'll cuddle up, we're busy in here, but we always want to make space for people that want to visit. And we're happy to make space for friendly face on the other side of the border, walk you through Shenzhen and happy to connect some dots because we really want people to get their first trip here out of the way. Because it's not hard.
Once you see it, you realize, okay, I could do this. Also, it's important that they realize that they might not want to be coming to China all the time. That's completely fine. Better to learn now, right?