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Revolutionising warehousing: An in-depth conversation with XSQUARE Technologies

The global Warehouse Automation market is currently in a state of rapid growth, with an impressive forecast for the coming years. Valued at US$16,759.54 million in 2021, the market is set to expand at a remarkable CAGR of 13.58 per cent, reaching an estimated US$35,986.64 million by 2027.

In the Asia Pacific region, the Warehouse Automation Market is poised for substantial growth, expected to reach US$10.76 billion in 2023 and soaring at a CAGR of 17.30 per cent to reach an impressive US$23.89 billion by 2028.

Amid this flourishing market, XSQUARE Technologies, a Singapore-based startup, stands as a leading provider of intelligent warehouse solutions in the Asia Pacific. I had the privilege of speaking with Jens Bohnwagner, the CEO of XSQUARE Technologies, to delve into the company’s journey, innovations, and vision for the future.

Redefining leadership and the need for R&D

Bohnwagner shared his insights into how leadership has played a transformative role at XSQUARE Technologies. He emphasised, “In the world of startups, innovation is our lifeblood. We constantly need to develop new products and business models to ensure rapid growth in revenue and market share. Leadership is about establishing a clear vision that motivates the team and serves as an anchor of stability in a dynamic startup environment.”

Bohnwagner spoke about XSQUARE’s mission, stating, “We aim to empower businesses through warehouse transformation and bring intelligence into every warehouse so that goods can flow harmoniously. We inspire our employees to find new ways to orchestrate and optimise warehouse processes with our AI-powered technology. It’s about aligning everyone on our goals and working together to achieve them.”

Also Read: Boardrooms to warehouses: How SEA leaders can build cyber resiliency from top-down

Bohnwagner highlighted the crucial role of research and development at XSQUARE, stating, “Our R&D team is the driving force behind our success. They innovate and develop new products to solve real-world problems. Today, we can empower our customers to achieve seamless interoperability within their warehouses, a problem many companies find hard to resolve. This wouldn’t have been possible without our extensive market studies and R&D efforts.”

Standing out in a crowded market

The journey of XSQUARE Technologies is a remarkable one, as Bohnwagner explained, “We started with a focus on driverless forklifts as a solution to address labour shortages in the warehousing industry. However, extensive market research revealed a recurring issue – the lack of interoperability among automation solutions. This led us to expand our offerings to include Xymphony, an intelligent warehouse orchestrator that seamlessly integrates all equipment and subsystems.”

Bohnwagner summed it up by saying, “XSQUARE Technologies has evolved from a driverless forklift developer to an end-to-end intelligent warehousing solution architect.”

XSQUARE Technologies is making significant strides in industries like pharmaceuticals, manufacturing, and food & beverage within the Asia Pacific and beyond. Bohnwagner emphasised their unique approach of not offering one-size-fits-all solutions, stating, “We understand the diverse requirements of different markets and offer brownfield-friendly solutions, ensuring that businesses do not need to halt their operations during the transition to automation.”

Bohnwagner further noted, “Our proactive approach in introducing new features and products ensures we remain leaders in the field.”

The role of technology in supply management and its scope

Bohnwagner highlighted the role of technology in the future of supply chain management, stating, “Technology is set to play a pivotal role in shaping the future of supply chain management. XSQUARE Technologies is well-prepared for this future with our solutions that leverage AI, machine learning, IoT, and automation.”

Also Read: #dltledgers unveils 2023 trends in supply chain digitisation

Talent acquisition and retention can be challenging for startups, but XSQUARE Technologies has found success in this area. Bohnwagner explained, “We look for individuals passionate about bringing change to our industry and engage in critical thinking. This ensures a deep sense of job satisfaction, pushing our team to break boundaries and challenge industry norms.”

Bohnwagner discussed XSQUARE Technologies’ expansion into emerging markets, stating, “We seek to deepen our engagement, build strong relationships, and execute tailored solutions in each market. This aligns with our broader strategy of strengthening our presence across Asia.”

Privacy and security at the forefront

As concerns about data privacy and consumer protection continue to rise, Bohnwagner assured, “XSQUARE Technologies remains committed to safeguarding user data. We ensure all our platforms are brand-safe and fully compliant with privacy and data guidelines.”

In an era of dynamic growth in the global Warehouse Automation market, XSQUARE Technologies is redefining the intelligent warehousing landscape in Singapore and the Asia Pacific region. Their journey from a driverless forklift developer to a holistic warehousing solution architect is a testament to their vision, leadership, and commitment to innovation.

As the warehouse automation market continues its dynamic ascent, propelled by advancements in technology and a commitment to addressing industry challenges, the broader APAC region stands at the forefront with local and regional players, paving the way for a smarter and more efficient future in warehousing.

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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Beyond desk spaces: A fresh approach to revolutionising Malaysia’s coworking landscape

With the adoption of a mobile lifestyle and the need to stay connected at all times, traditional office spaces are no longer regarded as the most practical solution. Instead, coworking spaces have increased in popularity worldwide, transforming the way people work and offering flexible alternatives to traditional office environments.

Malaysia, like many other countries, has witnessed a surge in coworking spaces in recent years. According to recent statistics, there are over 400 coworking spaces in the country as of September 2023. 

Despite the growth of the coworking industry in Malaysia, coworking spaces are struggling to meet the increasing demand for flexible workspaces, as they have difficulty providing specialised amenities and tailored services that cater to diverse industries.

This has led to a gap between the expectations of professionals and the offerings of these spaces, prompting a need for innovation and adaptation in order to remain competitive in the market. 

The current landscape of office spaces in Malaysia 

It is essential to understand the current state of the office market industry in Malaysia before delving into the dynamic coworking industry. The Klang Valley region, a bustling economic hub in Malaysia, has observed a significant shift in its office market industry in recent years.

According to a study, this region has over 33 million square feet of vacant office space. The main cause of this office space surplus and overhang has been attributed to a sharp rise in supply without a corresponding rise in demand, which led to a declining occupancy rate.

The office space market is saturated, leading to landlords exploring coworking spaces as alternative solutions. The rise in both demand and supply within the coworking space industry has inadvertently led to the commodification of these spaces.

This phenomenon, while expanding options for users, has sparked a price war, resulting in a diminished value proposition for users. In essence, this trend primarily benefits users by reducing their office footprint from larger spaces to more compact environments without significant added value beyond that aspect.

But what can we do if trends are constantly changing? Post-pandemic work dynamics have forced companies to rethink office space solutions, regardless of size or number of employees. A recent survey by Knight Frank indicates a trend towards reduced office space over the next three years, offering cost-saving advantages.

Also Read: How to choose a coworking space for your startup

This shift in trends is driven by the changing nature of work, with more companies adopting remote work policies and flexible schedules. In light of these developments, it is imperative for the industry to shift its focus towards delivering more meaningful and value-driven coworking experiences that cater to the evolving needs of today’s professionals.

The need for a paradigm shift in the coworking industry

As office rental costs continue to climb, many companies are checking out more budget-friendly options like coworking spaces. With over 400 of these spots scattered across the country, being part of this industry right now is undoubtedly exciting. But remember, coworking spaces can’t just be about real estate projects.

According to the Selangor Information Technology & Digital Economy Corporation (SIDEC), they must provide a comprehensive package of ecosystem and community support to entice companies and startups. However, most coworking spaces in Malaysia focus solely on expansion without considering the shift in coworking trends and the rapidly changing needs of businesses.

In light of these challenges, there is a pressing need for a paradigm shift in the Malaysian coworking industry. The traditional model of providing desk space and a few amenities is no longer sufficient to attract and retain members.

Coworking spaces must evolve to cater to the changing needs of professionals and entrepreneurs. They can be enhanced by offering a wider range of services, benefits, and technology-driven solutions, such as smart office features, networking events, mentorship programs, and flexible membership options.

Coworking spaces should redefine the coworking experience by setting themselves apart through several key differentiators. A strong emphasis is placed on creating innovative and productive workspaces that contribute to a conducive working environment. 

Tailored environments and hyperlocal solutions for businesses

The landscape of coworking spaces is undergoing a dynamic evolution as it adapts to the unique needs of individuals and communities. Today, these spaces are finely tuned to align with the working styles, cultural nuances, and consumer preferences of their clientele.

Local management plays a pivotal role in this transformation, as it offers an intimate understanding of the community context, leading to the creation of hyperlocal solutions that draw inspiration from diverse backgrounds. 

These coworking environments are crafted from the ground up, often through collaborative user-driven initiatives, placing a strong emphasis on intricate details, and a design philosophy centred around the user. Local knowledge and management are key in building solutions that seamlessly integrate with the local context.

The emergence of hyperlocal communities brings forth solutions, resources, and environments that are deeply influenced by various cultures, lifestyles, and diverse backgrounds. These spaces aren’t simply imported, but rather, they are organically grown from the ground up.

Also Read: There is an opportunity in every winter: Stephanie Ping of WorQ

The ground-up approach is characterised by spaces that are both built and managed by users, for users. Here, the saying ‘the devil is in the details’ rings true, with an acute understanding of the market and an unwavering focus on user experience, coworking spaces should utilise this approach and empower users to shape the environments they work in, consistently creating value not just for themselves but for all stakeholders involved.

2023: Shaping the future of Malaysian coworking landscape

Many coworking spaces have achieved remarkable success, but not without undergoing various challenges along the way. The coworking industry is dynamic and subject to changes in market demand and work trends. Staying adaptable and resilient in the face of these changes is a constant challenge.

As the industry evolves, it is crucial to meticulously analyse what is necessary to stay afloat and remain competitive.  This analysis should involve a deep understanding of market trends, customer preferences, and emerging technologies. By proactively adapting to these changes, businesses can not only survive but also thrive in the ever-evolving industry landscape. 

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Turn Capital: Navigating turnarounds and sustainable growth

Turn Capital General Partners Shang Koo CFA (L) and Kheng Lian Ho (C), with Managing Partner Joseph Phua

In an era of dynamic market shifts and strategic investments, Singapore-based Turn Capital stands out for its unique approach. Its strategy involves identifying undervalued consumer and technology companies in Asian markets and turning them around.

Turn Capital Opportunities Fund, launched by 17LIVE’s co-founder and non-executive chairman Joseph Phua and two other Partners, Shang Koo and Ho Kheng Lian, recently acquired the Thai unit of the struggling tech-enabled coffee chain Flash Coffee for an undisclosed sum. The fund plans to expand Flash Coffee’s presence across Thailand and open more than 100 new stores in the next two years.

In an interview, Turn Capital’s General Partner, Kheng Lian, reveals the investment firm’s strategic approach to acquiring and turning around businesses, shedding light on its recent acquisition of Flash Coffee in Thailand and outlining plans for sustainable growth and expansion in Southeast Asia.

Edited excerpts:

Can you provide insights into Turn Capital’s overall strategy with respect to acquiring or investing in businesses, especially in the context of the recent acquisition of Flash Coffee in Thailand?

Turn Capital’s overall strategy is to invest in undervalued consumer and technology companies in Asian markets. We focus on proven business models with revenue and cash flow, which Flash Coffee Thailand has achieved.

Also Read: ‘Companies shut down not because of crises but only when founders give up’: Joseph Phua of M17

We only invest in companies we are confident we can turn profitable using our deep operational expertise. We are founders who have built startups from scratch to IPO to stabilise the company, make a profit first, and then scale. We believe Flash Coffee Thailand is well placed and within our wheelhouse to do so.

Given the recent closure of Flash Coffee’s stores in Singapore, how does Turn Capital plan to address and overcome challenges to ensure the success and sustainability of its investments?

We have a playbook where we always focus on our strengths.

First, we work on fundamentals, building a solid foundation for the company by creating scalable and leverageable cost structures and optimal unit economics with the founders, which results in companies turning profitable in the first year of our investment. Here, we achieve core sustainability.

Second, we ensure success by educating and guiding founders to build scalable teams and internal processes for future planning, optimise cash flow, expand to new regions and new revenue lines and M&A to consolidate market share.

Third, we know how to create exits and liquidity events. Our team has deep capital market experience and relationships, having led three companies to IPO, and we understand a wide range of potential listing venues. For trade sales, our deep and wide network allows us to find the right strategic buyers and the process is simplified as we own a controlling stake in the companies.

Fourth, the beauty of value investing is that we invest at a low price, so the upside is easier to obtain, and we have great potential for a very high upside.

How do you plan to turn around Flash Coffee? Would you also partner with Flash’s other units in Southeast Asia? Why did you buy only the struggling Thai unit instead of the whole company?

We bought Flash Thailand instead of the whole company as it not only has a solid foundation with a good network of 40-plus locations across Bangkok, but the Thai unit has strong potential unit economics based on its low rent. This gives us a clear path to profitability that we know how to execute to get there.

Our turnaround involves cutting costs and improving sales. Flash has focused on scaling by building more stores in the past years. We will use this existing infrastructure to improve sales at existing locations. We do this by enhancing the visibility of our competitive prices and products to capture more customers, optimising cost structure, and investing in high-ROI digital marketing, one of our core strengths. We will expand with more store locations after we turn the existing stores profitable.

Also Read: Joseph Phua’s Turn Capital acquires Dapp Pocket to create SEA-focused retail crypto exchange

We will work with other SEA units to create greater brand value for Flash. Flash Indonesia is already doing well. With us taking charge of Thailand, Flash’s existing team can focus all their attention on Indonesia and strengthen the brand in that market. We should only expand to new markets when we are already champions in our home market, so the Thailand/Indonesia split allows everyone to focus on one market and turn that into the number one market leader.

Could you shed light on Opportunity Fund’s preferred sectors or industries for future acquisitions? Are you in discussions to acquire any other struggling companies in SEA?

We are focused on TMT (technology, media and telecommunications) and consumer sectors. With our more than ten years of B2C consumer-facing experience in the live streaming, live commerce, social entertainment, dating and consumer space, we will play to our strengths in the social, entertainment and media sectors where we have a sharp eye to evaluate what will or will not work and have the ability to accelerate their growth should we decide to invest in these companies.

We have a pipeline we are working on that includes online media, e-commerce, a social platform and influencer commerce.

What are Turn Capital’s plans for the expansion of acquired businesses? Are there specific regions or markets the family office currently targets for growth?

We will first stabilise the acquired businesses within their territories. Expansion to other markets will depend on each business’s suitability for other markets and potential for growth in these territories.

Our strength lies in developed Asia, such as Taiwan and Japan, where 17 Live is the market leader, and Southeast Asia, where Joseph Phua and Kheng Lian hail from and have been plying their trade. We will consider companies from the West with a presence in Asia or business models we are familiar with.

After an acquisition, how does Turn Capital approach integrating the newly acquired business into its portfolio? What steps are taken to ensure a smooth transition and maximise synergies?

Synergies are an additional plus for any of our new businesses. However, we don’t focus on the potential synergy as much as making the existing business profitable.

Every business needs to be profitable on a standalone basis. We provide significant assistance in terms of management support, technology, and digital business know-how and development capability to any business we acquire, so expect the businesses to grow their digital sales quickly.

In light of the growing emphasis on environmental, social, and governance (ESG) factors, how does Turn Capital incorporate ESG considerations into its investment decisions and the management of its portfolio?

Also Read: Corporate investment strategies have become more mature, aggressive over time: Joseph Phua

While we currently do not have a strong ESG focus for our fund, we realise our investors and partners have ESG requirements. We ensure that the business model does not actively create or encourage a negative ESG environment for any investment we make. We also realise that any business with a large enough scale will have some ESG risk. So, after we take over any business, we ensure processes and reviews are implemented to mitigate and reduce risk.

What is Turn Capital’s long-term vision for its investment portfolio? How does the family office balance short-term returns with sustainable, long-term value creation?

Our strategy is unique with little competition as we created our own niche that is difficult to replicate without the on-the-ground experience and battle scars our partners have gained from their highs and lows building 17 Live from US$2 million revenue to US$400 million revenue to IPO. Turn Capital is here to build a distinguished financial institution with longevity as we generate healthy returns for investors and help founders build meaningful products that benefit millions.

The goal for our 5-year fund is to return at least 3-5x to our Limited Partners, with dividend payouts along the way, as our companies are cash flow businesses. As we are hands-on, we take a concentrated portfolio approach to invest in three to five companies in the first fund.

In the long term, we intend to raise larger funds to deploy into larger-sized deals while maintaining our concentrated portfolio strategy and potentially launching other strategies.

Image Credit: Turn Capital.

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Cracking the code: Decoding 4 myths in Indonesia’s startup realm

I had the privilege of being in the venture space since the dawn of Indonesia’s startup ecosystem. Helping founders succeed is something close to my heart. Nothing is more rewarding than seeing our portfolio startups grow from seed to exit stage.

At the recent event that Vertex Ventures Southeast Asia & India co-organised with Singapore Global Network (SGN), I had the privilege of chatting with Anggara Pranaspati, the CEO and Co-Founder of our portfolio, Mauva (formerly known as Tjetak), to share more about the current Indonesian investment landscape and tips on how to overcome obstacles along the way.

We highlighted four common misconceptions that founders might have that can either make or break a startup.

Myth one: When raising funds, startups should avoid talking about the challenges they face

Truth: Founders face hiccups in the business every day, be it in research and development or in operations. Most think that these hiccups, if severe, may pose a challenge when they wish to raise additional funds — presenting a dilemma.

Should they paint the company to prospective and existing investors in a realistic manner? Would they be drawing too much attention to the problems in the company? These questions can be difficult to answer, but lying is not the solution to this. When investors probe further, they may find out that the founder was not telling the truth, and this could destroy trust, making it harder to raise funds in the future.

Also Read: Myths vs reality: Remote and hybrid managers report high productivity and trust

Instead, what founders could do is understand what an investor might be looking for. And the answer is simple — whether the company has the potential to grow at a fast yet sustainable pace. By understanding this context behind investors’ questions, founders should give a bird’s eye view of their company’s progress and highlight the trajectory of a company and its potential to perform in the future.

Moreover, when investors ask more questions about the specifics, founders should not be afraid of sharing the finer details because even high-performing startups face hurdles on their path to growth. The key to a great investor-founder relationship is communicating openly and building trust.

Myth two: Dilution of stake is bad

Truth: From the investment perspective, I observed that certain founders focus too much on how much their equity will be diluted after the funding round. This may motivate founders to raise less capital than they actually need intentionally.

As a result, the company may not have enough liquidity to give them a runway till their next one and need to waste time and efforts to raise it shortly after.

The key is keeping the end in mind (building a successful company) and aiming to raise a healthy amount of capital that can give them enough runway to sustain their operations and optimise their cash flows (18 months or more).

After all, the best way for founders to maintain their cash is by prioritising capital efficiency. The lower the amount of money a startup needs to grow, the higher the amount of proceeds founders tend to get at the end of the day.

Myth three: Rejection is the end of the road

Truth: Founders will experience many rejections from different people, be it customers, suppliers or potential investors. When presenting to an investor, founders often share their story about why they started the company, their passion and their drive to stay on this journey.

This is why it can be discouraging when facing rejection from potential stakeholders. Founders may start questioning themselves, “Did I start the right thing? Did I dream the right dream?”

In the rollercoaster of entrepreneurship, having the right mental space can help founders get back their balance. For Pranaspati, he shares that whenever he feels low, he searches for positive energy somewhere else by spending time with his team. For him, he gets his stride back when he notices how hard his team is working.

Also Read: 5 fundraising tips for first-time founders

Seeing that his team is committed to making their company successful rejuvenates and motivates him to carry on. Having a positive mental space can help founders remain focused on their goals and mission, even in the face of rejection.

Myth four: The business model a company has right now is the best one

Truth: As a founder, validating one’s business model is an ongoing process, and the need to evolve one’s model may arise along the way. This was true for Manuva and their old business model, which was focused on producing custom-made packaging for their customers.

However, this model was brought into question when the company observed that the growth of its custom-made packaging line reached a plateau. As an innovator, Manuva tried to remedy this by launching a new line of ready-made packaging for their customers. After some time, they saw that their ready-made products were performing better than their Original Equipment Manufacturer (OEM) and custom-made products.

For an agile business like Manuva, this presented an opportunity to pivot towards ready-made products and see greater profitability. However, making this change would also mean that the founder has to reshape the whole organisation.

As Pranaspati shared, this transition can be painful but necessary. The sobering reality is that founders like Pranaspati have to go through that process to put the company first and do what it takes to truly add value to the customers who are willing and able to pay.

Pranaspati and my advice to founders who have to make such crucial changes is that they should empathise with their team and deliver the message that the change was taken for the betterment of the company with compassion at heart.

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Image credit: Vertex Ventures

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That time Sam Altman went to take a smoke break around the office building

Recently, we were jolted out of our sleepy weekend to the news of Sam Altman being ousted from his position as OpenAI CEO. But the most interesting part of the situation was his return to the company in less than a week since his firing.

It was so short that my friend and I joked, “Well, he basically took a 15-minute smoke break and a short walk in CBD before returning to the office.”

Since then, many opinion pieces have been published to analyse what happened and where we are going from here. For example, Alex Khrishner wrote for Slate that Altman “now has more power—and fewer constraints—than ever.”

“… More than any other single person, he’s been the face of the AI boom in the past year. He has come out of it with a pretty good reputation,” Khrishner wrote.

“With the board that tried to chasten him swapped out, Altman has a lot of leeway to make occasional principled stands while making zillions of dollars or not. His peers at public companies are more constrained.”

There is nothing new about the trope of a tech CEO/co-founder being ousted only to be called in again to continue on leading the company they started. Steve Jobs and Apple might be the first things to come to mind, but the difference is that there was a 12-year gap before he returned to the company.

(That was quite a smoke break, Steve.)

As discussion about the future of AI and implementation continues, we cannot help noticing how Altman’s reputation as a charismatic leader seemed to play a great role in how the situation progressed at Open AI last week. Particularly, it encourages us to ponder how charismatic leadership impacts innovation in addition to unity.

Especially as we saw OpenAI employees remain loyal to Altman and even threaten to leave with his departure.

Also Read: Captivating interview with OpenAI’s CEO and CTO: Insights and reflections

All about that one person

Every industry has its own charismatic leaders; one that can inspire people just by hearing their names. In the context of the tech industry, where storytelling plays a crucial role in driving new tech to the masses, charismatic leadership seems to play a bigger role.

“Charismatic leadership behaviour is a significant positive predictor for success in dynamic business environments of today,” writes Gulnar Joshi in a research paper called Charismatic Leaders & Innovation: Impact of charismatic leaders on the innovation practices in the companies they start and lead.

“For startups and their performance, leadership behaviour is as important as their context. Charismatic leaders are particularly suited to technology startups which are governed by a high degree of uncertainty in the initial phase. Charismatic leaders create a purpose, can stimulate motivation, are able to engage and influence a team to inspire performance and drive among team members.”

Even with this simple explanation, we can see how charismatic leaders can provide a sense of safety and security in times of crisis—or in a competitive, cut-throat environment such as the startup ecosystem. It gives team members a sense of having someone to look up to whose vision can help them get into that promised land.

But is this the only way to lead a startup? Is there any room for a more quiet form of leadership that focuses on getting the work in front of us done? One that is not showy, not getting much media attention?

As someone who has been in the tech startup ecosystem for years and has seen storytelling’s role in bringing innovation to the masses, I tend to be sceptical. I would even say that innovation does not happen in silence; it requires an audience. But on the other hand, there are different ways to build trust within a team.

Especially as startups are under pressure to grow more steadily as a business and put sustainability as their focus, the quite leadership may just be what we need in the industry.

You do you, founders.

Image Credit: RunwayML

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