How difficult is it to run a profitable technology company? |iAsk Top Leaders
"Whether it is the invention of the blue laser or the blue LED, it is historically impactful. Without these, the semiconductor lighting and display industry that we have today will 'no longer exist'."
— Shuji Nakamura
In 2016, Shuji Nakamura, a Nobel Prize winner in Physics, also widely recognized as the "Father of GaN Blue LED", visited China and made a special trip to Appotronics, a company based in Shenzhen. He exchanged insights with the firm and fully acknowledged the technology.
At that time, it was only briefly covered by the media and the firm was only known by industry professionals. Until the beginning of this year, Appotronics consecutively presented two large-scale laser projection shows at the Shenzhen sub-venue of the 2019 Spring Festival Gala and the "Lantern Festival Night" at the Forbidden City. Two stunning "painting" shows attracted wide attentions from the public all of a sudden.
With curiosity about the company, lack of knowledge about the technology and imagination of the future, in this issue of iAsk Top Leaders, we interviewed Appotronics CEO Lianming Bo and explored thoroughly.
iAsk: Is Google a mirror of Appotronics?
Among over a thousand founders iAsk has interviewed, most of them also serve as company CEOs. Appotronics is somewhat different. Dr. Yi Li, Founder of the company, has focused on the R&D of the technology wholeheartedly and entrusted Lianming Bo with the management of the company.
"I think the arrangement is quite unique. The founder is willing to hand over the CEO's position and responsibility for the overall operation and management of the firm to someone else. It shows his broad mind. Dr. Yi Li upholds a management model similar to Google's. The founders of Google are two young men, who are sharp at technology and entrepreneurship. However, with regard to management, it entails years of accumulated experience. Hence, they hired Eric Schmidt as CEO. Before I joined the company, Dr. Yi Li kept repeating the story."
In March 2018, Lianming Bo, who resigned as President of TCL Corporation, officially joined Appotronics. Founder Yi Li spent nearly two years persuading Lianming Bo to join the company. What Yi Li values in Lianming Bo is his professional background in management and successful experience of leading TCL through the ups and downs in the past 18 years.
On the leaderboard of the "Compensations of executives of the listed companies on the A-share market in China" released by Toutiao, Lianming Bo was nominated with an annual salary of RMB 7.1 million. In terms of leaving TCL and joining Appotronics, Lianming Bo expressed that what moved him was the admiration for Appotronics' founder and the founding R&D team, as well as his entrepreneurial motivation deep inside his heart. Since Lianming Bo and Yi Li have both been working in the display industry, they've known each other for years. Once Yi Li said to Lianming Bo, "Why don't you join us and start a business together?" The operational management model just like Google's and the entrepreneurial spirit eventually moved Lianming Bo.
Certainly, as for whether Appotronics is a good company, Lianming Bo has his own judgments:
"First of all, it depends on whether it is in a fast-growing sector. Take bike sharing as an example. Frankly speaking, I think the sector is too short-lived. The sector has declined before you can display your full strengths.
Secondly, in this fast-growing industry, you should be a leader or a pioneer of a technology. If you're merely a follower, it can't be promising.
Thirdly, the growth needs to be predictable. As for now, Appotronics is a typical example.
What touched Lianming Bo eventually was the sector Appotronics is in and the company's hardcore technological strengths.
Gloria Ai: Why did you choose to join Appotronics at this point in life?
Lianming Bo: This move has really surprised many professionals in the industry. They commented that I am already 55 years old and that I should work with TCL for 5 more years and retire at the age of 60. From other people's point of view, it's really unnecessary to challenge myself at this age. But for me personally, I feel uncomfortable when I stay in my comfort zone or when my career goes too smoothly as planned. It's not exciting for me. I enjoy challenges.
Gloria Ai: What is behind the challenge?
Lianming Bo: I still desire to constantly create my own new life curves. I often describe the development paths of enterprises as iterated S curves. I said no matter how many years a company can last, even if it's a century-old store, it's impossible to operate on a straight path. There must be several S curves constantly iterating in between.
iAsk: How difficult is it to run a profitable technology company?
Among the institutional shareholders of Appotronics, besides the largest shareholder Appotronics Corporation, one of the major shareholders with more than 5% of Appotronics's shares is SAIF HK, led by a well-known investor Yan Yan (Andrew Yan).
He told iAsk, "All greatness and success take time. We invested in Appotronics ten years ago and have endured for a decade." According to Yan Yan, the difficulty of investing in technology companies is that a firm with real technologies might not be able to make a profit in the first few years of establishment, even in the first five or six years after going public. Fortunately, Appotronics has begun to make money.
Based on the financial data, Appotronics achieved revenues of RMB 355 million, 806 million, and 1.386 billion respectively in 2016-2018, with net profits of RMB 13.9436 million, 105 million, and 177 million.
As for the rapid growth since 2017, Lianming Bo claimed that it benefited from the popularization of two products of Appotronics. The first one is the large-scale expansion of laser theaters across the country, and the other is the release of the world's first laser TV in the market at the price of less than RMB 10,000 yuan in the second half of 2017.
As the Ministry of Industry and Information Technology interpreted "Made in China 2025", among the four tiers of the global manufacturing industry, China is positioned in the third tier and there will hardly be any fundamental changes within a short period of time.
One of the reasons is that China lacks innovative and cutting-edge technologies.
For the laser display industry, due to the strict technical requirements for products, especially for core parts, some domestic and foreign manufacturers have difficulty mastering the manufacturing technology through independent R&D within a short period of time, which has affected the overall competitiveness of China's laser display industry for a long time.
Yi Li, Founder of Appotronics, who was deeply aware of the dilemma of China's laser display industry, has been focusing on technological R&D since 2006. In 2007, he independently developed the groundbreaking ALPD® laser display technology.
ALPD®, i.e. Advanced Laser Phosphor Display, is made of laser-excited fluorescent materials and it mixes multi-color lasers for image display. To put it simply, it is composed of both laser and fluorescence, integrating the advantages while eliminating the shortcomings of both components.
During the thirteen years of dedicated technology development and continuous innovation, Appotronics has achieved bountiful breakthroughs:
The introduction of the ALPD® technological infrastructure has broken through the long-term experimental bottleneck of laser display development and has greatly promoted the industrialization of laser display's application in people's daily lives, catching up to the advanced display technology dominated by countries such as the United States, Europe, Japan and South Korea.
Based on the ALPD® technology, Appotronics has established a comprehensive intellectual property system and applied for patents worldwide. As of February 28, 2019, 766 patents had been granted, and the number of patent applications under review had exceeded 700. The number of patent applications by Appotronics ranked first in the laser phosphor display sector globally. The technology patent of the underlying infrastructure of Appotronics's fluorescent laser light has been cited over 390 times by the industry giants such as Philips, Texas Instruments, Epson Japan, NEC, Casio, Sony and so forth.
The ALPD® laser projector has been adopted by more than 14,000 theaters nationwide, breaking through the monopoly of foreign companies in the core projection technology.
"I admire Dr. Yi Li's founding team, who are very practical and devoted to developing the technology for over a decade." Lianming Bo said that he was particularly moved by the technology of Appotronics. "In China, it is quite rare to see companies develop innovative technologies and become a global leader."
Gloria Ai: If you were to use one word to describe Appotronics, which word would you use?
Lianming Bo: Perseverance. The firm belief, persistence, and unwaveringness for the technology itself are the most valuable characters of the team. The obstacles to build something from scratch are beyond imagination. Most startups fail because they didn't persevere in conquering the setbacks and gave up eventually.
Gloria Ai: From your observation, since Appotronics started to develop original and independent technology in 2006, what was the toughest obstacle to tackle?
Lianming Bo: The hardest part was to find a commercially applicable scenario. People need to see the effects for real. Your fancy speech is not the key. People wouldn't believe you until they see it in person.
Gloria Ai: Why did the team believe in this technology before they joined?
Lianming Bo: As a founder, he needs to uphold the belief with the team that they need to believe in it and visualize the technology. However, it's the opposite with the market. People will only believe you when they see it. Therefore, the demonstrations and the products you promote need to be impressive. Only by constantly rolling the snowballs bit by bit can you scale up exponentially.
iAsk: Is being listed on the Sci-Tech Innovation Board a milestone on the journey forward?
Make endeavors persistently and your efforts will eventually pay off.
After more than ten years of hard work quietly, Appotronics attracted public attentions in 2019. Besides the breathtaking laser projection shows at the Shenzhen sub-venue of the 2019 Spring Festival Gala and the "Lantern Festival Night" at the Palace Museum, on March 27 this year, Appotronics was listed among the second batch of enterprises on the Sci-Tech Innovation Board, ready to take on new challenges from the capital market.
Whether it is for China's capital market or for China's science and technology enterprises, the establishment of the Sci-Tech Innovation Board is regarded as a turning point. Huiman Yi, Chairman of the China Securities Regulatory Commission, expressed that "This is to test the water in preparation for the reform, which will facilitate a comprehensive and profound reform of the capital market."
For Appotronics, going public marks a milestone in the long journey.
"Being listed on the Sci-Tech Innovation Board is not an end goal for us. The funds raised will be further invested in our R&D projects, in order to continuously enhance the competency and R&D strengths of the company, because Appotronics is defined as a technology-driven company.", said Lianming Bo.
Gloria Ai: To foresee the future, what's your vision for Appotronics in ten years?
Lianming Bo: In ten years, not only do we yearn to scale up our business, but also strive to change people's lives with laser display. There're many ways to change the scenes in people's lives. Right now, we merely focus on presenting a particularly pleasant visual experience at theaters and on television. I believe that there will be more applicable scenarios in the future.
Gloria Ai: What will Lianming Bo do in ten years?
Lianming Bo: As for this question, it's very difficult to predict. It's hard for me to stereotype myself in a decade. I feel like we should keep learning during our lifetime. We need to seize the moment, keep learning, maintain creativity and march forward one step at a time.
iAsk Media offers in-depth coverage, distribution, and brand-building services for founders in both China inbound and outbound markets. Over the past five years, iAsk Media has published over 1300 pieces of founder-focused original text and audio content, and produced over 120 premium video dialogues with leading entrepreneurs and investors.
iAsk Capital further supports founders by complementing media, brand-building, and marketing solutions with a wide range of investment and advisory services, from growth capital and direct equity investment to fundraising, asset management, and M&A support. To date, iAsk Capital has completed investments in some of China’s fastest growing ventures, including Bytedance, Himalaya, Movietime, and Horizon Robotics.
Gloria Ai is the founder of iAsk Media and the founding manager of iAsk Capital, and a former venture partner at the Softbank Asia Infrastructure Fund. She serves as the international brand ambassador to her hometown of Huangshan, and was Forbes 30 Under 30 in the Media, Marketing & Advertising category. She is a graduate of Harvard Kennedy School and Peking University. Prior to founding iAsk, she served as a financial news correspondent for China Central Television in New York.