Communitech photo: Anthony ReinhartThe search within: MappedIn’s Hongwei Liu shares lessons and looks forward Anthony Reinhart June 16, 2016 Columns, Startups, View from the ‘Loo In an era of ubiquitous GPS and Google Maps, it takes effort to get lost, at least outdoors. Inner direction, alas, can be easier to lose. Hongwei Liu had an intuitive sense of this in 2011 when, at the tender age of 20, he co-founded a company called MappedIn, which set out to make the world’s indoor spaces – shopping malls, for starters – more navigable for their users. Five years and many lessons later, Liu is now poised to lead MappedIn’s 33-member team into a fresh period of growth, fuelled by a recent deal with one of North America’s largest retail-focused real estate investment trusts (REITs). Sure as Liu was of his direction back in 2010 – when the idea for MappedIn arose in a group session at the University of Waterloo’s Velocity dorm and quickly led him to drop out of his engineering studies – he admits to having to go searching within himself in the years since then, as he encountered the realities of life as a young startup CEO. He’s still just 25, but having now spent a fifth of his life building a company, Liu exudes the wisdom of a much older soul. “The grass is so much greener on the other side,” he told me when we caught up recently at MappedIn’s downtown Kitchener offices. I had just suggested he had done so much more with his life by age 25 than many people who are far older have done. “Every single one of my friends from high school are doctors, so they’re golfing every weekend, they’re going on vacations, they have an infinite line of credit to buy anything they want. They’re stressed on the job, but they’re completely stress-free off the job, which to me is magical,” Liu said. “But obviously they think, ‘Man, Hongwei, you’re killing it.’ And then we just hang out and don’t talk about work.” Killing it – in the literal, not-good way – is what rookie entrepreneurs can end up doing to their businesses if they focus on the wrong things. In Liu’s case, it was vanity metrics – specifically, investment dollars raised and a growing headcount – that took him briefly off course after MappedIn had raised some funding a couple of years ago. “It was easier to brag about the stuff that came easily – anyone can spend money – than it was to talk about the stuff that was really hard, like customer success, like revenue, like sales, like engineering,” said Liu, whose company has taken on more than $3 million from private investors thus far. “The biggest mistakes I’ve made – the biggest single one that hurts me – has stemmed from that, which is where we raised a big round and we didn’t do a good job of planning.” Humbled by the experience, MappedIn quickly rebounded, and last year notched 507 per cent growth in annual revenue, while Liu grew his team by a relatively modest 23 per cent. Annual recurring revenue is now north of $1 million, and Liu said tripling that figure this year appears “completely achievable.” That strength is attributable to MappedIn’s ever-sharpening focus on its core offering: indoor mapping software that property managers can populate with data their visitors want – anything from the location of a store within a mall, to where to find a specific product on its shelves, to that day’s sales promotions. The challenge with indoor spaces over outdoor ones – especially retail spaces such as malls – is keeping all that information current amid constant change. “Our core insight all along is that the indoors changes every day, while the outdoors might not change for five years,” Liu said. “What we’ve done all this time is build the best tools for those property managers to maintain that information.” MappedIn’s self-serve software templates offer a compelling alternative to property managers’ typical practice of hiring outside agencies and consultants – often at significant cost – to perform quarterly updates to their mall directories, websites and mobile apps. “They have armies of leasing guys or facility management people just to create site plans or leasing documents for ‘here’s what we’ll look like next season, when new stores are moving in or out,’ or ‘here’s what we would look like if H+M took this spot,’” Liu said. “And that function is repeated across the world. Every facility on Earth has a facilities team that basically keeps back the tide; they’re just pushing water uphill, over and over. “So, we equate the entire industry to having been paying people on typewriters for 40 years, and we showed up with a word processor and said ‘You can do this yourself.’” As retail tenants continually pump data into a mall’s MappedIn platform, it gets pushed to the mall’s website and mobile app, where shoppers can conduct searches and get up-to-date results. That search data, in turn, becomes valuable intelligence that MappedIn can provide back to retailers, and use to continually update the apps and websites shoppers land on. On Easter weekend, for example, MappedIn was able to observe that gift-buying was the predominant reason for shoppers’ visits to malls across Canada (Cadillac Fairview is a MappedIn client), and that Chapters Indigo and Shoppers Drug Mart were popular destinations. “Previously [retailers] would have had to pay for intercept surveys that trade you $25 and a gift card for half an hour of your time, and most people say no, so they get 80 people a year,” Liu said. “We get thousands of people a day telling us what they want, and we’re able to capture that in such a rich way.” MappedIn’s approach to monetizing the usage data it collects is by providing it to its customers – mall owners, or airports – and helping them to make better use of it. It’s not an advertising play, Liu said. “One of the scary things that I think businesses have started to appreciate is that there are all these companies that come in and just want your information; they want to own it and make money off it and leverage it for ads,” Liu said. “We’re not that. When you pay MappedIn for our software and services, you understand where we’re going and you understand that, ultimately, we want to help you as the retailer, or as the airport or whoever.” While a single mall’s MappedIn usage data might not be of value to a third party – say, Gartner, the tech research firm – the data from multiple malls could be. In such an instance, MappedIn could sell the data to Gartner and share the proceeds with those malls. “One mall will never get a deal with Gartner, [but] we can, when the time comes,” Liu said. “It’s something we’ve thought about and have chatted about with our customers. Everyone wins in that situation.” With 10 million property managers around the world, the sky – or should we say, the ceiling – is the limit for expansion of MappedIn’s software and services beyond retail, though retail remains the focus for now. “We wanted to build search for the indoors everywhere, because I think people just expect search,” Liu said, “but, specifically in retail, brick-and-mortar retail has this huge user experience problem. The entire industry was designed in the 70s, when consumers had a lot of time and no choice . . . but now, consumers have all this choice and no time.” While e-commerce is undoubtedly killing some traditional brick-and-mortar businesses, more than 90 per cent of U.S. retail activity still happens inside physical stores, many of them plagued by antiquated user experience. “We want to help solve this UX problem, and the best way to improve the user experience of brick-and-mortar retail is search,” Liu said. “You’re not going to rebuild $10 billion worth of mall infrastructure to create a better search experience physically, but you can layer on a digital search experience that costs you $1 million, that is the best of both worlds.” It’s a big vision, but Liu sounds determined to see it through – and to see it through a clearer lens than his younger, less-experienced self might have. When I asked him to tell me about a time when a mentor’s advice really hit home, Liu told me about the time one of his investors, whom he declined to name, posed a question to him and his co-founder, Mitchell Butler. ‘Hey Hongwei and Mitch, how much better are you guys now than when I first met you 10 months ago?’ the mentor asked. ‘I think I’m three times better, because every single mistake I’ve made, including the really, really, really big fuck-ups, are killing me right now,’ Liu told him. The mentor replied, ‘Yeah, I agree. Now, there’s five more years of this. That’s six cycles of 10 months. Imagine how much better you’ll be then.’ Liu said the mentor’s observation “remains the nicest thing anyone’s ever said, and I think it’s true, because if I dial the clock back six cycles of 10 months to five years ago, we had no idea what we were doing.” To Liu and his friends at Velocity, MappedIn was initially nothing more than “a fun weekend project” they pursued with prodding from Velocity’s then-director, Jesse Rodgers, who told them “to build something that we thought was cool, and that would be cool to show off to other people. That’s what we did; that was the directive – build something cooler than the other guy.” Shortly thereafter, Tony Niederer, a then-Communitech executive, introduced Liu to Sandra Stone, manager of Waterloo’s Conestoga Mall, who quickly ordered a pair of MappedIn-powered kiosks after sitting through a demo. Delivering on the order would mean Liu spending everything he had – $18,000 at the time – to have the two kiosks built in California. When he hesitated, he got a nudge from Ted Livingston, co-founder of the now-billion-dollar mobile chat platform Kik, who had donated $1 million to Velocity. “So, at the 11th hour, Ted walks into Velocity one day and just says, ‘Stop being pussies’,” Liu recalled. Livingston continued: ‘How about this? If I see a MappedIn-branded directory in Conestoga Mall by this date next year, I will write you a cheque for $5,000.’ “And he did,” Liu said. “He actually wrote a cheque for $5,000.” Liu feels that the business lessons that have since followed – including one about the true meaning of “reality TV” after a Dragons’ Den appearance – are not ones he could have learned by any other process than experience. “Building a business – how to sell, how to hire, how to not hire, how to undo a hire, how to fundraise – every single thing, I think, you can’t really learn it, and we figured it out,” he said. “If I could do it again, I would spend half the time, with half the cash, and be where I am today. “So, I can’t wait to restart the clock.” Anthony Reinhart is Communitech’s Director of Editorial Strategy and senior staff writer. View from the ‘Loo looks at the issues, people and events that shape Waterloo Region’s technology sector.