Abel Zhao the co-founder and CEO of freeD Group Limited, an Award-winning AI Digital and Big Data Solutions company. It utilizes proprietary Travel and Lifestyle – specific B2B2C strategies and solutions to empower Fortune 500 companies like China Mobile, Samsung, SITA, and Lotte Group to create incremental revenue streams and improve customer engagement.
Abel has over 16 years of experience in Travel IT and Consulting industries in strategic planning, turn-around management, and Sales & Marketing. Previously he was the regional head with the largest Travel IT giants – Travelport and Amadeus responsible for commercial and strategic initiatives and local market expansion strategy. He also spent 5 years with Air Canada in Toronto as Corporate Analyst, Global Sales, and Strategy responsible for revenue optimization and global strategic expansion and 2 years with Hyatt Corporation in Chicago.
Abel holds Dual – Masters degrees from Columbia University and London Business School and undergraduate in Hospitality Management in Switzerland.
Kenneth Lee is also the co-founder and CPO of freeD Group Limited, an Award-winning AI Chatbot and Big Data Solutions company. It utilizes proprietary Travel and Lifestyle – specific B2B2C strategies and solutions to work with Fortune 500 companies like China Mobile, Samsung, SITA, and Lotte Group to create incremental revenue streams and improve customer engagement.
Kenneth has over 9 years of experience in Data warehousing, Big Data, and AI-driven digital solutions for IT, Finance, and Travel Industries. Previously he revamped applied newest governance to data warehousing solutions for Manulife Financial, and pension plan companies in North America.
Kenneth holds Bachelor of Applied Science, Honours computer Engineering degrees from the University of Waterloo in Canada.
In an exclusive interview with AsiaTechDaily, Abel Zhao says:
From my own startup experience from the past few years, I’ve learned that the most critical asset of a company, particularly for startups, is people and teams. Having the right team members fighting the world with you is crucial.
I don’t know what will happen to our company in the future, and of course, both myself and Kenneth will give it 120% to run it. But as an old phrase says, “Failure teaches success.” Every time we failed or made a wrong decision, we learn from it. Running own company is a learning process, the more we are willing to learn, the better we will be at it. So, shouldn’t worry about failure as long as we learn something from it every time and not going to make the same ones again. If I could go back to 10 years ago, we would try to set up a startup.
Read on to know more about Abel and his journey.
Please tell me about your personal background, and what are you working on currently?
Abel Zhao: My name is Abel Zhao. I am Canadian – Chinese. Along with my partner, Kenneth Lee, who happens to be a Canadian – Korean, we cofounded freed Group (TravelFlan) back in 2016. To cope with market demand, we launched the ARA service platform in the Korean market in 2019. We both from Toronto, I think that’s probably where we first established our common sense and foundation of principles and values in life. It is also one of the critical reasons what has pulled us through the most challenging times of our startup journey.
I studied at Columbia University and London Business School dual – MBA, an undergrad from Centre International de Glion, Switzerland, in Hospitality Management. Kenneth graduated from the University of Waterloo in Computer Engineering. Our background and expertise are quite different, yet makes us a perfect match to cofound a Travel AI Tech company together. My passion is always in the consumer sector, particularly in Travel and Lifestyle, and Kenneth is crazy about high techs, like AI and Machine Learning.
Our company offers end-2-end AI Digital Solutions, and traditional AI companies pretty much focus on the customer service component. We believe that the power of AI can do so much more. So we customized our system backend, data processing, and algorithm to create proprietary TravelFlan and ARA AI solutions, which have the ability to empower our partners to generate incremental revenue, improve customer engagement, more importantly, to understand customers behaviors.
What motivated you to get started with your company?
Abel Zhao: Technology has been a critical driver for growth for many industries, but its potential has not yet been fully utilized for the travel sector. Look at AI solutions overall, the majority of the providers are pretty much focused on customer service (CS) component, which put a limit on what the AI system can achieve. Therefore, Ken and I decided to try something beyond just CS functions. That’s how we came up with the idea of TravelFlan (travel sector) and ARA (lifestyle sector), end-2-end AI Digital Solutions combining and exploiting local products, content, eCommerce, consumer data into one robust database.
What is your current main product, and (If there is any) can you share any product pivot story from founding to the current product?
Abel Zhao: The company was initially founded to be a simple online marketplace for travel products. But it didn’t take long to realize that:
- It’s highly competitive in this area
- Very high customer acquisition costs
- It’s not really solving customers’ pain points during travel – lack of local knowledge, language barriers, no personalized supports when unexpected incidents happen.
In 2016, we launched our very first AI Chatbot Concierge service on Facebook, helping customers with all kinds of questions they possibly had. We went above, and beyond to search for information like “where to buy the biggest strawberry in Seoul” to “which casino in Macao has the best luck so that I can win more money.” Back then, we did not have sufficient data and backend algorithm to support the AI Chatbot, it’s like we only had a “skeleton” of an AI system, but without “meat” on it, it can’t be very pretty and purposeful. To learn how to build a more effectual AI system, Kenneth and some of the IT teams moved to Silicon Valley for the whole year to ascertain the knowledge and skills that we need. Luckily with our seed round investor, 500startups’ help, Kenneth came back with tons of tech treasures, including an ex-FBI AI Scientist.
After that, we started strengthening backend big data processing and analytics capabilities, content enrichment, POI and Product Management, and AI Data Management tools. Consequently, we patented several tech developments with sufficient data points and industry-specific algorithms as the fundamental elements of an adequate AI system. As of Dec 2019, our backend system was supported by over 30 million weekly data points and over 5 million MAU from all around the region. To achieve this within a short period, we have our S2B2C business model and many partnered companies to thank. Currently, we work closely with companies like Samsung, China Mobile, Travelport, several airlines, OTAs, and hotels in the region.
Our solutions empower our business partners’ service scope and revenue streams by simply connecting to one source of content, TravelFlan. Through one platform, customers have access to local content and products, travel information and itinerary planning, even eCommerce products and coupon. While serving their customers, our backend system can also capture consumer behavior, market trend, and overall Big Data analytics gizmo so that our partners can understand their products and customers better.
- Exhibit A: ARA on Samsung RCS Platform
- Exhibit B: TravelFlan AI Digital Solutions on China Mobile JegoTrip
How much money (funding) have you raised in total so far? When was the recent funding round?
Abel Zhao: We have raised $11M USD in 3 rounds. The latest funding round completed end of 2019
How have you attracted users and grown your company from the start? And Which were your marketing strategies to grow your business?
Abel Zhao: Due to the nature of our business model, we serve 2 groups of “customers.”
- Business partners
- C-end users
Initiating a business discussion with potential partners, especially the “big guys” are quite challenging. In the beginning, it took us more than a year to seal the first contract. After that, the selling cycle has been improving rapidly. At this point, from initial engagement until signing the contract takes typically about 2-8 weeks. We aim to work with business partners with a large customer base so that the results can be more palpable. As people always say, “number is the best selling tool.” In 2019, we achieved over $2m monthly revenue on one single partner platform. After we reached our first successful case, words spread. Right now, more than 30% of our B-end customers are preemptive. Any incremental revenue we generate from our partners’ channels, we do revenue share with them, ranged from 1% – 10% depends on the product types. From the operation side, very minimum tech support required from our partners, so the ROI of collaborating with us is quite high.
Regarding C-end users, since we partner with top business, naturally, we have a large customer base already. To further engage C-end users, we design different creative promotions and marketing activities to increase market awareness. At the same time, improve customer experience in our Chatbot interface,
- Enrich content and product
- Improve front-end interface design
- Competitive pricing
- Creative product bundle and design
Which is the best marketing tool for the growth of your startup, and why?
Abel Zhao: We created our own AI Marketing Tool by combining our award-winning AI solution and Big Data engine. We utilize this tool not just for us, but for our partners as well. By conducting data analytics activities before each marketing campaign, we aim to ensure each campaign can reach a maximum result, both on B2C or B2B2C format.
The below examples show the results of how we market our solutions and products.
- Exhibit C: Ranked the highest reached audience Facebook posting in Hong Kong (4 weeks posting reached 1.75m Facebook users)
- Exhibit D: AI Marketing Campaigns on business partner’s Mobile App
What do most startups get wrong about marketing in general?
Abel Zhao: I can only talk for our case; what we’ve learned from previous mistakes is that spending big bucks doesn’t guarantee significant returns. Spending the right penny on the right channel with the proper method is the key. You need to do thorough homework before deciding where to spend your hard-funded money.
What were the internal decision processes in determining when to begin fundraising, and what were the logistics for this? And how many investors have you met so far, and how did you meet these investors and which channels worked best for you?
Abel Zhao: I believe that as the CEO of a startup, fundraising is a full-time job itself. I find myself doing some sort of fundraising activities at all times – searching for investors, investors being referred to us, pitching events, roadshows, competitions, accelerators, investor due diligence meetings, preparing documents for investors. For the past 3 years, we haven’t stopped talking to investors, period, even after a target fundraising round completed. To be frank, I don’t think a CEO or founder of a startup should ever stop engaging with existing and potential investors. It’s always good to be prepared. If I have put a number to how many investors I have met, I would say at least 200 + overall. Among all these, I find referred investors have the best engagement.
In terms of the internal decision process, it’s quite straight forward. Cause it’s difficult to predict how long it will take to close a new round of financing, so we go by milestones. Once the company hits a milestone, then it’s a good time to go out there to meet investors. Of course, the tricky part is that if it’s taking too long to reach the milestone, then you better calculate how many months of burn rate you have in your bank account, then plan your fundraising schedule wisely. Again, from our own previous experience, our Pre-A round took less than 6 months to close, but Series A took so much longer than that, so Ken and I were literally in a panic mood for 2019. I do not recommend that to any fellow entrepreneurs.
What are the biggest challenges you’ve faced and obstacles in the process of fundraising? If you had to start over, what would you do differently? (Your insight or advice on this would be very helpful for startups)
Abel Zhao: As I mentioned in the last question, it’s impossible to predict how long the fundraising will take for each round. That’s the most challenging part for me. As a startup ourselves, we can prepare as much as possible. First of all, running into an investor sees the value of your company as you are a “gift from heaven” already, hence, you don’t know when that investment will appear in your life; second of all, no matter how well you prepare, it’s bound to run into questions from investors that you are not prepared to answer. So throughout this whole process, always prepare for the worse and hope for the best. If I had to start over, I would always start the process with myself and the company first, hence, focus on how to make your company’s values to be as visible as possible, not just focus on what investors might like because it’s impossible to satisfy all the investors.
What are your milestones for the next round? And what are your goals for the future?
Abel Zhao: We completed Series A round end of 2019 and went through the SOSV Chinaccelerator’s program in 2019 too. We are trying to achieve Series A+ right now. Our monthly revenue has increased by over 300% MoM in Jan 2020. After finishing this round, the next milestones will be onboarding more B2B projects to expand our customer base and market share. Hence, grow revenue.
How do you plan to expand globally?
Abel Zhao: So far, we mainly operate in Asia. We are a small company, to expand to more regions, we need to utilize our strategic partners’ network and resources. Till now, we’ve established strong strategic partnerships with some leading originations, so that they will help us to create more opportunities overseas.
What are the most common mistakes founders make when they start a company? (or What should all first-time startup founders know before they start their business?)
Abel Zhao: From my own startup experience from the past few years, I’ve learned that the most critical asset of a company, particularly for startups, is people and teams. Having the right team members fighting the world with you is crucial.
What’s the best advice you’ve ever received? And What advice do you have for someone who is interested in doing similar things like yours or in a similar direction?
Abel Zhao: The best advice I’ve ever received was, “always watch your company’s bank account.” After a few years of doing running my own startup, I can’t agree more. Once you realize that cash flow is running low or less than 6 months of burn rate, then it’s time to do something quickly; otherwise, it will be too late.
If anyone interested in doing similar things like ours, or the same direction, I would say be prepared for a long road ahead. Due to the nature of our business model and technological requirements, in the first couple of years, we did not do anything but building foundations. It’s rewarding when we reach a particular milestone, but the journey to get there is quite challenging.
What are the one or two things that you would do differently to improve your life (or what kind of personal habits would you improved?) if you could go back to 10 years ago?
Abel Zhao: I would probably start trying a startup early. I don’t know what will happen to our company in the future, and of course, both myself and Kenneth will give it 120% to run it. But as an old phrase says, “Failure teaches success.” Every time we failed or made a wrong decision, we learn from it. Running own company is a learning process, the more we are willing to learn, the better we will be at it. So, shouldn’t worry about failure as long as we learn something from it every time and not going to make the same ones again. If I could go back to 10 years ago, we would try to set up a startup.
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