How a Stanford couple from Taiwan created the island’s first AI unicorn after eight failed attempts


By Josh Ye

Softbank-backed Appier went public in Tokyo in March, marking a historic win for the Japanese bourse which has few foreign listings. Appier represents a new breed of tech firm from Taiwan, which is dominated by chip and hardware giants like TSMC and Foxconn. — SCMP

When computer science major Chih-Han Yu met bio-immunology major Winnie Lee at Stanford University in 2003, they had little inkling they would go on to build Taiwan’s best-known artificial intelligence (AI) company.

Fast forward nearly two decades and Appier, which develops AI-based solutions for precision marketing, has listed on the Tokyo Stock Exchange after becoming Taiwan’s first digital unicorn in 2020.

These days, Yu and Lee are often lauded as the No 1 power couple in the self-ruled island’s AI scene.

However, the road to success for Appier, backed by venture giants SoftBank Group Corp and Sequoia Capital, has not been without twists and turns.

The start-up, a result of Yu’s last-minute realisation that he did not want to be an academic, switched industries eight times – including trying video games – before striking gold in the niche of marketing technology.

Its decision to list in Tokyo in March this year also made the company a poster child for Japan’s revived ambitions to attract Asian initial public offerings (IPOs).

Appier’s journey to public company from a small start-up, founded by Yu, his wife and his then roommate in 2012, has been unscripted, Yu told the South China Morning Post last week.

“Even before I had to defend my thesis, I was pretty much set on becoming a faculty member,” Yu said. “But my roommate Joe [Su] pitched me and said we should do something together, and through AI systems we could really change how people do things.”

While Taiwan is famous as the home base for tech hardware giants such as Taiwan Semiconductor Manufacturing Co and Hon Hai Precision Industry, also known as Foxconn Technology Group, it has struggled to incubate tech upstarts that can contend with the digital juggernauts in mainland China.

Companies such as Appier, which currently has a valuation of about 162bil yen (RM6.01bil), represent a new breed of Taiwanese tech firm. In 2020, Taiwan’s National Development Fund recognised the firm as one of two Taiwan-based unicorns in addition to electric scooter maker Gogoro.

Winnie Lee (left) and Chih-Han Yu celebrate Appier’s Tokyo listing in March. Photo: Handout

According to the company’s third quarter report, it took in revenue of 3.2bil yen (RM118.80mil) for the period. Yu said its main clients include e-commerce companies, on-demand services companies as well as so-called online-to-offline services companies.

Yu and former roommate Su, who is now Appier’s chief technology officer, wrote their first AI algorithm in 2010 after working as researchers in the field for nearly a decade. The first application area for the software was video games, so it followed that Yu, with a fresh PhD in computer science from Harvard, would found a games company which he named Plaxie.

“Our first application was game engines, basically using AI to lead the characters in a game engine,” Yu said. “We learned how players controlled their avatars so once the player goes offline, the AI still can autonomously control the avatar.”

While Plaxie completed some successful projects, Yu and his team were trying to pivot towards other industries in search of revenue. It was not until a Hong Kong client commissioned the company to develop an app recommendation engine that Yu realised the precision marketing niche could be more lucrative.

“We thought we could build these personalisation services for every company, so we started building software solutions that our other customers could use. That’s how we started focusing on [marketing tech],” Yu explained.

In 2012, when Appier was formally founded, Yu invited his partner Winnie Lee to join the operation along with Su, but admits that the founding trio had no experience running a fast-growing tech company and had to learn from scratch.

A chance meeting with a representative from Sequoia Capital the following year would change everything, but at the time Yu only had a name card and did not even know what Sequoia did. “We actually googled it,” Yu said. “Sequoia Capital later became our Series A investor.”

Since then, Appier has grown to become one of Taiwan’s best-known start-ups, attracting funding from Japanese giant Softbank and South Korean powerhouses Naver and its Tokyo-based subsidiary Line.

Appier’s Tokyo listing marked the first time a Taiwanese company has listed in Japan since cybersecurity software firm Trend Micro’s IPO in 1998.

Advocates for the capital market in Japan have long hoped that rising tech companies from Asia would consider IPOs in the country, but there are only a handful of foreign stocks traded on the Tokyo Stock Exchange, a reflection of Japan’s declining economic prowess. By comparison, more than 200 companies from China alone are listed in the US.

Appier wanted to list in the US but opted for Japan because of its familiarity with the market. Tokyo hosts Appier’s second biggest operation outside Taipei and the company has many Japanese clients, including Rakuten, Toyota and Shiseido, according to Yu.

Hong Kong was also considered due to its prowess as a capital market, Yu added, but was ultimately ruled out.

“It seems that in Hong Kong – at least between 2015 and 2020 – a lot of the listings are around the theme of the China growth story, but we didn’t have an operation in China,” he said.

However, since Appier’s initial preparations for an IPO were undertaken in 2019, the company has established a small team in China. With the tech sector becoming more regulated in mainland China, more companies are looking to expand overseas, providing opportunities for Appier, according to Yu.

“The new generation of entrepreneurs [like ByteDance] are doing global expansion,” he said. “We mainly serve the international marketing needs of Chinese Internet companies to help them grow overseas.” – South China Morning Post

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