Cao Shuyang (M10) teamed up with Yin Huixin, Wang Yuexiang and Dr. Liu Zhe to launch Malu Innovation, a leading company in warehousing robotics in China. He tells us more about his success story.
ESSEC Alumni: How did you meet with your business partners?
Cao Shuyang: The four of us got back together in Shenzhen after a long separation since high school: Zhe just came back from France with a PhD degree of Ponts et Chaussées and was working as an algorithm engineer in DJI, the world’s biggest drone company; Shuyang was a seasoned investor at Cathay Capital, a private equity firm focusing on supply chain related opportunities; Yuexiang was working for Vinci Group; while Huixin was helping manage her family business spread in various industries including retail and manufacturing.
EA: How did you come up with the idea of Malu Innovation?
C. Shuyang: In 2015, China was witnessing the booming of e-commerce led by Alibaba and JD while 99% of the warehouses were purely human operated. A big gap was emerging between the demand and the need: we saw a very good opportunity for creating a new business in warehousing robotics, with world-class, edge-cutting algorithm and robot technologies. And the four of us had the perfect mix of industry knowledge and network for such a venture, thanks to our respective background and expertise.
EA: What technology did you develop at Malu Innovation?
C. Shuyang: We created both a complete scheduling algorithm and AGVs (Automated Guided Vehicle) in order to build up a software/hardware integrated goods-to-men AGV system that can reduce human labor by 70% to 80% and increase surface utilization rates by 25% to 30% in e-commerce warehouses.
EA: How did you get to such results?
C. Shuyang: We registered our company in 2015 in Shenzhen, which is the “Capital of Electronics” with a lot of small suppliers who provide very high performance/price ratio products with relevant services. We started from a 2-bedroom flat in the suburb to build our first AGV prototype and write the AGV scheduling algorithm as well as AGV management system and WMS (Warehouse Management System). Then, in the summer of 2016, after we successfully built 5 prototypes and a first small demo warehouse, we moved our company back to Shanghai.
EA: Why did you move from Shenzhen to Shanghai?
C. Shuyang: It was time for us to find our first clients: the pure R&D phase was about to end. We also needed to raise investments to support further development. Shanghai is the headquarters for many logistic companies, e-commerce companies and FMCG brands, which are our potential customers. And Shanghai is also home for many well-known venture capitals…
EA: What was your first breakthrough?
C. Shuyang: We were lucky enough to find our first “seed customer” quite quickly: a big e-shop owner who had a large-scale, self-owned warehouse. He was willing to open a new warehouse in Canton but wanted it to be highly automated. We implemented a small warehouse of 1000 sq. m. within 1 month (for free…) so as to demonstrate that our AGV system could really solve his problems. We used 8 AGV and improved the order treatment efficiency by 5 times… Our prospect was so impressed that he decided to invest 6mn RMB as angel investor and ordered a 100 AGVs system!
EA: That must have been quite a challenge…
C. Shuyang: A 100-AGV system is technically very difficult mainly because of the high demand on hardware stability and on algorithm efficiency. Furthermore, at that time we only had 15 people in our company… We put all our resources into this project in the following 8 months. And we succeeded. By August, the warehouse ran very smoothly. This was the biggest commercialized AGV project in China. Technically, one might say we became leader in AGV industry in China at this point – or even in the world as China is the leading country in this field.
EA: The process of zero to one was done. How did you go further?
C. Shuyang: We started to look for bigger investors with strategic resources in the e-commerce field in China. There appeared to be only two obvious leads: Alibaba and JD. Alibaba rather is an e-commerce platform, whereas JD’s strategy in logistics is much heavier: by 2017 JD totalled 8mn sq. m. warehouses in China, tripling that of Alibaba. JD is also very interested in investing in logistic tech companies that could help improve their warehouse efficiency. We believed it could be a very good fit. Thus, we approached JD’s investment and tech teams. They soon decided to lead our A-round investment and put 60mn RMB on the table to get 20% shares.
EA: How did your venture with JD impact your business?
C. Shuyang: Tremendously. We got to go much bigger – recruitment, more expenses in R&D of new products, more expenses in sales & marketing, etc. JD also put us into their strategic supplier list for all their warehouses, and helped building up our image and reputation on the B2B market.
EA: Where does Malu Innovation stand now?
C. Shuyang: We now have about 100 people in the company, with more than 60mn RMB revenue. We have more and more down-streaming markets – not only e-commerce, but also off-line retail, package sorting, manufacturing (especially automobile), pharmaceuticals, etc. For example, we signed a deal worth more than 20mn RMB with Land Rover’s China plant in 2018 to implement the biggest ever AGV project in automobile industry in China, or maybe in the world.
EA: What do you forecast for Malu Innovation in the coming years?
C. Shuyang: We are very optimistic about 2019: we have many projects in the pipeline, and we are ready to launch several new star products. Besides, we get a lot of demands and interests from overseas market, especially South-East Asia and Europe. We are very keen on going global.
EA: Malu Innovation is growing fast. How do you manage that with your team?
C. Shuyang: We have been sticking to our corporate culture and values since the very beginning of our history: soundness, no bureaucracy, and happiness. None of we four founders have independent offices: we are always with our team. We work together, fight together, drink together, and play together. We are rather “leaders” than “bosses”.
Interview by Louis Armengaud Wurmser (E10), Content Manager at ESSEC Alumni
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