INDIA’S RICHEST GET MUCH RICHER ƫĂĀāĈƫđƫċċ GOING FOR THE GREEN SI WOO KIM’S CHARGE SIGNALS ASIAN FUTURE FOR PGA; LADIES’ ERA IS ALREADY HERE AUSTRALIA...............A $12.00 CHINA....................RMB 85.00 HONG KONG................HK $80 INDIA............................RS 375 INDONESIA............RP 77,000 JAPAN.................¥1238 + TAX KOREA........................W 9,500 MALAYSIA...............RM 24.00 NEW ZEALAND.......NZ $13.00 PAKISTAN....................RS 600 PHILIPPINES..................P 260 SINGAPORE..............S $12.50 TAIWAN......................NT $275 THAILAND......................B 260 UNITED STATES........US $10.00 Decades of experience, focused on active, high-conviction investing Explore pinebridge.com Exceptional opportunities are those rare occasions when one sees value where others don’t. At PineBridge Investments, we are in the business of finding them – before the market realizes their worth. Our high conviction, active approach combined with a mind for evaluating risk bridges boundless potential with enduring investing values. With a sole focus on asset management, our evergreen purpose is simple – exceeding client expectations, at every level, every day. MULTI-ASSET | FIXED INCOME | EQUITIES | ALTERNATIVES Investment involves risks. This material is for information purpose only. It does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed on offer to sell or a solicitation of an offer to buy any security. For important information on PineBridge, please visit https://www.pinebridge.com/global-disclosure. CONTENTS — OCTOBER 2017 VOLUME 13 NUMBER 10 S PAGE 68 “I REMEMBER WATCHING THE 2009 PGA CHAMPIONSHIP WHEN Y.E. YANG BEAT TIGER.” 10 | FACT & COMMENT // STEVE FORBES Why is the key to prosperity ignored? COVER STORY 68 | BIG HITTER Si Woo Kim and his Korean colleagues lead the way as golf ﬂourishes in Asia. BY MONTE BURKE —SI WOO KIM, 22-year-old star South Korean golfer COMPANIES, PEOPLE 12 | BEYOND THE I.T. ADVERSITY Cognizant CEO Francisco D’Souza sees bluer skies for India’s troubled tech sector. BY HARICHANDAN ARAKALI (FORBES INDIA) 16 | NEXT TYCOONS: “BANKING IS EXCITING” A family of entrepreneurs has turned KBZ into a ﬁnance powerhouse in Myanmar. BY RON GLUCKMAN 19 | LAWRENCE HO’S WAGER The Macau mogul is betting that a huge wager in Japan will pay off. BY PAUL ARMSTRONG 20 | SECOND ACT After building and selling a top New Zealand wine label, Kim and Erica Crawford started over. BY JENNIFER SCHULTZ WELLS 23 | HEME ON RYE A veggie burger could be the solution to Asia’s food-security dilemma. BY PAMELA AMBLER 24 | BRICKS AND CLICKS Entrepreneur Yael Aﬂalo turned a visit to China into a fashion philosophy. BY KATHLEEN CHAYKOWSKI COVER PHOTOGRAPH BY MATTHEW MAHON FOR FORBES 2 | FORBES ASIA OCTOBER 2017 UNLESS OTHERWISE SPECIFIED, ALL TOTALS AND PRICES EXPRESSED IN OUR STORIES ARE IN U.S. DOLLARS. CONTENTS — OCTOBER 2017 VOLUME 13 NUMBER 10 28 | THE POINT OF ALL RETURNS Optoro builds its business on America’s mountain of rejected merchandise. BY SUSAN ADAMS 31 | Q&A WITH STANLEY MCCHRYSTAL The ex-U.S.-general on arguing with your team and eating one meal a day. BY RICH KARLGAARD 34 | A CUT ABOVE It’s always been quality over quantity at U.S. beef provider Greater Omaha. BY CHLOE SORVINO 40 | THE WAY WE WORK Thanks to some help from Masayoshi Son, WeWork is a $20 billion startup. BY STEVEN BERTONI 45 | AND THE WAY OTHERS WORK Naked Hub and others take on WeWork in Asia. BY PAMELA AMBLER 46 | THE RIGHT CHEMISTRY Incyte’s secret: embracing an older age of pharma. BY MATTHEW HERPER INDIA’S 100 RICHEST 50 | THE LIST No. 1 Mukesh Ambani added a staggering $15.3 billion to his net worth. BY NAAZNEEN KARMALI 54 | STEPPING UP AND STEPPING OUT Some next-gen scions join the family business, while ﬁve heiresses go their own way. BY ANURADHA RAGHUNATHAN S PAGE 74 “I LOVE TO SELL.” —ZANG TOI, couturier to the stars 62 | WAITING IN THE WINGS Ten interesting billionaires who are not wealthy enough to make our list. Maybe next year. FORBES LIFE 74 | A FLAIR FOR FASHION Zang Toi came to New York from Malaysia and has dressed glamorous women for 20 years. BY CHEN MAY YEE 78 | THE CARTIER TANK From the wrist of General John Pershing to Kim Kardashian. BY MICHAEL SOLOMON 79 | GADGETMAN // BEN SIN Stay away from potholes when riding Ancheer’s teeny bike. 80 | THOUGHTS On work. X PAGE 20 “WE KNEW EXACTLY WHERE WE WERE GOING.” —New Zealand winemakers KIM & ERICA CRAWFORD 4 | FORBES ASIA OCTOBER 2017 FORBES ASIA SIDELINES Editor Tim W. Ferguson Editorial Bureaus Beijing Yue Wang Shanghai Russell Flannery (Senior Ed.); Maggie Chen India Editor Naazneen Karmali Contributing Editors Bangkok Suzanne Nam Chennai Anuradha Raghunathan Hong Kong Shu-Ching Jean Chen Jakarta Justin Doebele Melbourne Lucinda Schmidt Perth Tim Treadgold Singapore Jane A. Peterson Taipei Joyce Huang Vietnam Lan Anh Nguyen Columnists Jean-Pierre Lehmann, Ben Sin Production Manager Michelle Ciulla EDITOR-IN-CHIEF Steve Forbes CHIEF PRODUCT OFFICER Lewis D’Vorkin FORBES MAGAZINE EDITOR Randall Lane EXECUTIVE EDITOR Michael Noer ART & DESIGN DIRECTOR Robert Mansfield FORBES DIGITAL VP, INVESTING EDITOR Matt Schifrin VP, DIGITAL CONTENT STRATEGY Coates Bateman VP, PRODUCT DEVELOPMENT Salah Zalatimo VP, WOMEN’S DIGITAL NETWORK Christina Vuleta ASSISTANT MANAGING EDITORS Frederick E. Allen – Leadership Loren Feldman – Entrepreneurs Janet Novack WASHINGTON Michael K. Ozanian SPORTSMONEY Problematic Pakistan T wo fateful Islamist uprisings shook the world in the late 1970s. The more recognized one was led by Ayatollah Khomeini in Iran. The other was General Zia-ulHaq’s coup d’état in Pakistan, which turned the long creep away from the country’s secular origins into a gallop. During Zia’s reign, Pakistan’s nuclearPM Abbasi emerged from latest political scrum. bomb aims were realized, and the world has been an edgier place since. Today it’s as hard as ever to gauge Pakistani progress toward being a modern, peaceable state. The timeless animosity with Hindu India shows little abeyance, aggravated as always by the handling of Kashmir and no doubt fueled by the rise of fundamentalists in Indian politics. Superpower relations continue their historical influence: The U.S., weary of Islamabad’s perceived duplicities (exemplified by the quartering of Osama bin Laden), has snubbed its role in Afghanistan while China—a friend for decades, as a foe of India—is pouring billions into Belt & Road investments. Pakistan’s long-underwhelming economy has shown renewed zest (a record five domestic companies appeared on our Best Under A Billion list this year), but that masks imbalances: A surplus of imports threatens the rupee and may trigger another IMF bailout. Behind the long-term lag in Pakistan’s GDP lies the intrusion of the military into internal affairs, regional rivalries (Sindh versus Punjab), the waste of human development in Zia-fostered Wahhabi madrassas and the never-ending strife among the nation’s political clans. Lately this last factor has brought the removal of prime minister Nawaz Sharif in favor of his party’s Shahid Khaqan Abbasi—all the while trolled by opponent Imran Khan, a verbal flamethrower against the Americans. Abbasi made the rounds at September’s UN meetings in New York, advancing the familiar Pakistani line that everything, including security of the nuclear arms, is just fine, Jack. A long, lamentable record of instability, punctuated by the part that Pakistan and China played in North Korean proliferation, does not attest to the PM’s pat assurances. Results will speak louder. DEPARTMENT HEADS Mark Decker, John Dobosz, Clay Thurmond Avik Roy OPINIONS Jessica Bohrer VP, EDITORIAL COUNSEL FOUNDED IN 1917 B.C. Forbes, Editor-in-Chief (1917-54) Malcolm S. Forbes, Editor-in-Chief (1954-90) James W. Michaels, Editor (1961-99) William Baldwin, Editor (1999-2010) 6 | FORBES ASIA OCTOBER 2017 Tim Ferguson Editor, forbes asia firstname.lastname@example.org MUHAMMAD REZA/ANADOLU AGENCY/GETTY IMAGES Editorial Director Karl Shmavonian Art Director Charles Brucaliere Senior Editor John Koppisch Wealth Lists Editors Luisa Kroll, Kerry A. Dolan Photo Editor Michele Hadlow Statistics Editor Andrea Murphy Research Director Sue Radlauer Online Editor Jasmine Smith Reporter Grace Chung Intern Yinan Che FORBES ASIA READERS SAY CEO/ASIA, FORBES MEDIA PRESIDENT & PUBLISHER, FORBES ASIA William Adamopoulos SENIOR VICE PRESIDENTS Tina Wee, Serene Lee EXECUTIVE DIRECTOR Eugene Wong SENIOR DIRECTOR, REGIONAL SALES Lawrence Jang SENIOR DIRECTOR, MARKETING & AD SERVICES Aarin Chan DIRECTOR, CIRCULATION Eunice Soo DIRECTOR, EVENTS & COMMUNICATIONS Janelle Kuah DEPUTY DIRECTOR, EVENTS & COMMUNICATIONS Audra Ruyters DEPUTY DIRECTOR, CONFERENCES Jolynn Chua DEPUTY DIRECTOR, CIRCULATION Pavan Kumar SENIOR MANAGER, CONFERENCES Quek Xue Wei SENIOR MANAGER, MARKETING & RESEARCH Joan Low OFFICE MANAGER/ASSISTANT TO THE CEO/ASIA Jennifer Chung AD SERVICES MANAGER Fiona Carvalho AD SERVICES MANAGER-DIGITAL Keiko Wong MANAGER, EVENTS & COMMUNICATIONS Melissa Ng CONFERENCE MANAGERS Clarabelle Chaw, Cherie Wong ASSISTANT MANAGER, CONFERENCES Isabel Wong ADVERTISING EXECUTIVES Angelia Ang, Sharon Joseph, Sabrina Cheung MARKETING EXECUTIVE Gwynneth Chan CIRCULATION SERVICES Taynmoli Karuppiah, Jennifer Yim FORBES MEDIA CEO & EXECUTIVE CHAIRMAN Michael S. Perlis PRESIDENT & COO Michael Federle CHIEF REVENUE OFFICER Mark Howard EDITOR-AT-LARGE/GLOBAL FUTURIST Rich Karlgaard GENERAL COUNSEL MariaRosa Cartolano PRESIDENT, FORBESWOMAN Moira Forbes SENIOR VP, CORPORATE COMMUNICATIONS Mia Carbonell 0+!.ƫĂĀāĈƫđƫ+(1)!ƫāăƫđƫ1)!.ƫāĀ CONVERSATION OUR STORY about Fab 50 pharma company Yunnan Baiyao (“The Picture of Health,” September, p. 23) prompted “Melanie” to post: “I am happy to hear that YNBY Corp is doing well. I believe that Yunnan Baiyao powder is extremely effective, has many applications and should be readily available in the U.S. Unfortunately, the FDA sees differently. I’d love to see someone do a story on all traditional Chinese medicines that actually work yet have to be labeled as a ‘dietary supplement’ in the U.S.” In its Web posting headlined “Innovators, Rebels and Rogues,” Esquire Philippines had a mildly dark tone when analyzing the young members of our Philippines 50 list (p. 74), who owed their wealth to “hard work, some smarts, luck—and a little bit of cunning.” THE INTEREST GRAPH Our lists from last issue grabbed the most eyeballs: Fab 50: Asia’s Best Big Public Companies 2017 10,128 page views Philippines’ 50 Richest 2017: A Lucky Few Have Rodrigo Duterte to Thank FORBES ASIA (ISSN 1793 2181) is published monthly with additional special issues in September and November. FORBES ASIA is printed at Times Printers in Singapore. Singapore MCI (P) 086/12/2016. Malaysia KDN PPS 1411/01/2013 (022902). All rights reserved. Title is protected through a trademark registered with the U.S. Patent & Trademark Office. Forbes Asia is a trademark of Forbes Asia. Copyright © 2013 FORBES ASIA. 7,169 China’s New Ivy League Incubators—A Victory for Humanities Majors? SUBSCRIBER SERVICE: To subscribe or order a back issue, change address or inquire about other customer services, please contact: 6,873 FORBES ASIA: 501 Orchard Road, #08-02 Wheelock Place, Singapore 238880. Web: www.forbesasiasubscription.com. E-mail: email@example.com. Fax: +65 6836 3405. Phone: +65 6836 1652; +65 6836 9476 China Rises, While U.S. Declines: Interesting Times of the 21st Century 6,788 PRICES (one year): US$90.00 for Asia; US$150.00 for all other countries. Where necessary, permission is granted by the copyright owner for those registered with the Copyright Clearance Center (222 Rosewood Dr., Danvers, Massachusetts 01923, USA) to photocopy articles owned by FORBES ASIA for a ﬂat fee of US$2.25 per copy per article. Send payment to the CCC stating the ISSN (1793-2181), volume, ﬁrst and last page number of each article copied. 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Reprints reproduced by others are not authorized. 8 | FORBES ASIA OCTOBER 2017 Taiwan Is Slowly Getting Help From Around Asia to Resist China Economically 5,519 Villas Complete With Nuclear Bomb Shelters in Chiang Mai, Thailand 3,862 “Boutique services are helping to change not only how students approach the application process but also what they study when they get to college.” “The new Southbound Policy will likely provide some support to Taiwan’s competitiveness.” FACT & COMMENT “With all thy getting, get understanding” WHY IS THE KEY TO PROSPERITY IGNORED? BY STEVE FORBES, EDITOR-IN-CHIEF HERE’S A BOOK for the ages. With Gold: The Final Standard (CreateSpace Publishing, $14.99)—and his two previous volumes1— Nathan Lewis has established himself as one of history’s most formidable and correctthinking economic writers, joining the ranks of Friedrich von Hayek, Ludwig von Mises, Henry Hazlitt and a handful of others. Lewis understands the subject of money better than almost any other observer today, demolishing one harmful myth after another that plagues economic policy and has shackled the U.S. and most of the rest of the world with subpar growth. The key to unlocking a great boom (along with a low-tax regime) is stable currencies. Without sound money we will be hurt by more dangerous and unnecessary crises à la 2008–2009 and subsequent limp recoveries, which are slowly eating away at the legitimacy of our liberal democracies. Why is correct monetary policy so fundamentally important? As Lewis writes, a modern economy is ultimately “a vast network of cooperation . . . in which hardly anything is created without combining goods, services, labor and capital from all over the world. . . . The network of cooperation is organized through the use of money, with information transmitted via prices, interest rates, profit and loss. These seemingly simple bits of information direct all economic activity.” Unstable currencies are like viruses in your computer—they corrupt those “bits” of information. Destructive bubbles result, such as the housing frenzy preceding the 2008–2009 crisis. In 2001, a barrel of oil cost little more than $20. Then the U.S. Treasury Department and the Federal Reserve deliberately began weakening the dollar in the mistaken belief that this would stimulate more exports and economic growth. Petroleum rocketed to more than $100 a barrel. Other commodities behaved in similar fashion. These surges didn’t come about because of natural demand but because of a declining dollar. Nevertheless, most people took to heart the message that the rising prices seemed to convey: All these things were becoming dearer. The misinformation conveyed by prices resulted in hundreds of billions of dollars being misinvested, particularly 10 | FORBES ASIA OCTOBER 2017 in the building of houses. Everyone understands the basic need for fixed weights and measures in daily life: the amount of liquid in a gallon, the number of ounces in a pound, the number of minutes in an hour. None of these amounts fluctuate; they are unchanging. Just as we use a scale to measure something’s weight, we use money to measure the value of products and services. If the measuring rod itself becomes unstable, the smooth functioning of an economy is disrupted, just as our lives would be if the number of minutes in an hour constantly fluctuated. What’s the best way to achieve a stable currency? By linking the currency to gold. Obviously, with gold we’re not going to get a precise measurement, but as Lewis demonstrates in his concise and deeply learned history, gold has maintained its intrinsic monetary value better than anything else for 5,000 years. Silver did the same until the mid-1800s, but for several reasons it then drifted decisively away from paralleling the value of gold, which is why most of the major countries of the world moved solely to a gold standard. The fluctuating price of gold today doesn’t reflect the real value of the yellow metal but, rather, the fluctuating value of various currencies. Lewis strips away all the mumbo jumbo about an effective monetary policy and the mountainous misunderstandings about a gold standard. You tie your currency to gold at a fixed weight. (For decades the U.S. dollar was fixed at 1/35th or $35 an ounce.) The mission of monetary policy is to keep the currency at that ratio. Period. (A central bank might engage as a “lender of last resort” to sound banks during a panic, but the loans would be quickly repaid.) Lewis chronicles how from time immemorial there has been a contest between advocates of stable money and those who, for a variety of reasons, want to toy with it. For centuries there have been writers advocating the virtues of juggling with currency values as a means of promoting more prosperity and power for the state. Adam Smith and others blew up this nonsensical notion (as well as other self-destructive ideas, such as restricting trade across borders). The belief that a currency should have a fixed gold value (the pound/ gold ratio remained, £3.89 per ounce, for more than two centuries) became widely accepted, thanks to the roaring economic success of Britain, starting in the 1700s, and then of the U.S. after Alexander Hamilton’s sound-money reforms under George Washington. By the time of World War I, just about every self-respecting country was on the gold standard—or knew it should be. Thanks largely to money being a stable and thereby nondisruptive tool, the world economy expanded on a scale that had never before happened. It seemed all those funny-money ideas had been thoroughly discredited, the latest instance being the several defeats of Democratic candidate William Jennings Bryan, who ran for the U.S. presidency on a proinflation, anti-gold platform. Then came the Great War and the gargantuan growth of government to wage what countries felt were life-and-death struggles. But as Lewis shrewdly notes, even before that conflict, people—including the Brits—were beginning to lose sight of what made the gold standard work. The seeds of confusion were being sown. After the war, the gold standard eventually reemerged (which Lewis, in a brilliant bout of research, demonstrates was remarkably similar to the prewar version) but was then blown away by the Great Depression. In laying out what really happened during these controversial years, Lewis disproves a number of misconceptions, among them that the gold standard was a cause of the terrible global downturn, when in fact it was a victim of it, and that the Federal Reserve brought on or deepened the crisis. The causes of the Depression were basic: The U.S. instigated a calamitous global trade war with the Smoot-Hawley Tariff Act, which imposed massive taxes on countless imports that triggered similarly destructive retaliations from other nations. Incredibly, governments responded to the resulting contraction with major tax increases (the U.S. even imposed a tax on writing checks) that deepened the slump. Then, led by Britain, countries engaged in competitive devaluations that ended up retarding recovery and poisoning international relations. Lewis gives searing insight into the massive blinders that hobble economists to this day. They see the world through the lenses of PIM—prices, interest rates and money. Astonishingly, when analyzing the causes of economic events such other critical factors as taxes, regulations and culture escape their attention. This blindness to reality is why so many governments to this day rely on central banks to rev up their economies. The Depression gave new life in modern garb (mainly useless, mind-numbing but impressive-looking mathematical formulas) to the ancient idea of governments changing currency values to artificially boost growth. John Maynard Keynes added the additional tools of controlling interest rates, government spending, taxes, tariffs and capital controls to keep economies on track. At a conference held by Allied nations in 1944 at Bretton Woods, New Hampshire, to design a postwar monetary and trade system, despite Keynes’ initial opposition members opted at the behest of the U.S. to go with a new gold standard once hostilities ended. All currencies would be tied to the dollar at fixed rates, and the dollar would be tied to gold at $35 an ounce. Lewis perceptively pinpoints a fatal contradiction in play that would eventually destroy the Bretton Woods gold standard and then burden the world with subpar economic growth. After the horrors and chaos of the Depression years, countries yearned for currencies with fixed values, which is what Bretton Woods was designed to provide. But most governments also wanted to engage in Keynesian currency and economic (mis)management. This usually meant a “loose” monetary policy to create extra money in the belief that it would boost economic growth, especially before an election. Of course, easy money meant the country’s currency would wobble against the dollar and gold. Nations employed all sorts of nostrums, such as restricting the amount of money one could take out of the country, to preserve a currency’s official value and then would capitulate with a devaluation. Amazingly, policymakers didn’t grasp—and still don’t—that a stable currency meant focusing monetary policy to do just that and nothing else. Until the 1970s, the U.S. wanted to keep the dollar fixed to gold but never realized this was easy to do if you conducted monetary policy correctly: If the dollar weakened against gold, you reduced the basic money supply, and vice versa if the greenback went up against gold. Instead we resorted to capital controls, browbeating the Germans to pay more for the upkeep of U.S. troops stationed there and taking other actions to “shore up” our balance of payments. The U.S. needlessly and heedlessly blew up the gold standard in the early 1970s without really intending to do so. This despite the fact that during the Bretton Woods era the growth in American industrial production was just about the best in U.S. history. The result was a decade of rampant inflation, economic stagnation and political strife. In the 1980s, Ronald Reagan allowed the Federal Reserve to end the terrible inflation, but his desire to restore a gold standard was blocked by Milton Friedman and other eminences. The 1980s and most of the 1990s saw the U.S. pursuing a semi-sensible monetary policy. This, combined with Reagan’s tax cuts and his Cold War-winning policies, allowed the U.S. and the world to enjoy an economic boom. Alas, with economists and government officials woefully ignorant of the necessity of a sound dollar, the U.S. gave in to the siren song of a cheap dollar in the early 2000s. Post 2008–2009 the Fed compounded this felony with all sorts of destructively distorting actions that have given us a decade of punk economic performance. Policymakers everywhere still adhere to the fallacy that central banks can give us lasting prosperity. A read of this book would cure them of that fakery forever. 1Gold: The Once and Future Money (Wiley); Gold: the Monetary Polaris (CreateSpace Publishing). F OCTOBER 2017 FORBES ASIA | 11 FORBES ASIA COGNIZANT BEYOND THE I.T. ADVERSITY Cognizant’s U.S.-anchored chief sees bluer skies amid the cloud for India’s troubled tech sector. BY HARICHANDAN ARAKALI T he accelerating shift to cloudbased IT, greater adoption of automation and the Trump administration’s stance on immigration have combined to make the future of IT outsourcing providers in India uncertain. Companies such as Tata Consultancy Services, Infosys and Wipro are attempting to rapidly enhance their high-level business-consulting repertoire, build AI-based tech solutions and add thousands of local recruits in America, their biggest market. This is an unprecedented cultural shift as well, for all these companies. At their U.S.-headquartered but largely India-based competitor, Cognizant Technology Solutions, CEO Francisco D’Souza, 49, is pushing the Nasdaq-listed Teaneck, New Jersey, company headlong into change, including the $2.7 billion acquisition of TriZetto Corp., made two years ago. That has helped Cognizant’s health care unit impact 160 million Americans, D’Souza says in an interview. The overarching plan is to 12 | FORBES ASIA OCTOBER 2017 become a strong intellectual-property business advisor and tech provider rolled into one. And for that, he expects to accelerate the pace of acquisitions at Cognizant, he tells Forbes India. Edited excerpts: Q: This year you entered your second decade as CEO of Cognizant. What strikes you about the current phase of change in technology? D’Souza: The overriding thought that comes to mind is just how much innovation we’ve seen. About 24 years ago, when we started Cognizant, technology was largely a back-office function. It’s gone from there to becoming the very basis of competitive advantage for many of the businesses we serve; and because of this evolution, the best days are still ahead of us. If you think of the great digital buildout that’s happening, I think Cognizant, and the [tech] industry in general, is still in the early innings. The next years will see digital technology being deployed more broadly in all industries and in many more companies. And digital isn’t just one thing, it’s many different technologies—social, cloud, mobile, analytics, block chain, AI, IoT and so on. What has changed more recently, and how are you preparing to remain a relevant vendor to your clients? Until a few years ago, there was a sense among our clients that digital technologies would be fundamental to their future. But the patterns of how, why and where were less clear. So we saw a lot of small pilots, testing and iterating. In the last couple of years, we’ve seen that change—the patterns are becoming clear, digital technologies are becoming more mainstream, and we see clients adopting it at scale. To do digital at scale, our clients are having to change their business, operations and technology models simultaneously. That is at the core of today’s change. One of the most foundational changes that we’ve made at Cognizant over the last two years is to realign our delivery capa- bilities across all of our business segments along three areas—digital business, digital operations, and digital systems and technologies. Each is focused on transformation in that area. discovering market opportunities, course correcting, prototyping and so on. To facilitate that we have built what we call “collaboratories” around the world, which are co-innovation spaces for clients and Cognizant teams. ANJUNATH KIRAN/AFP/GETTY IMAGES What did this entail? Even before the [acceleration of] digital, Cognizant had a diverse set of people. In addition to engineers and M.B.A.s, we’ve got doctors, nurses and chartered accountants. It became clear that there were some new capabilities that we needed. The main ones—and we built significant capabilities around the world—were design, data science and a small group of very-high-impact sociologists and anthropologists, who look at human factors. Business-model transformation is an iterative process and one that takes in people with a broad set of skills and talents—technologists, consultants, data scientists, designers, industry experts—who have to be collocated with the client. They then go through the iterative process of How is the work and the composition of your staff changing? I don’t think the global distribution of our workforce has changed or will change substantially in terms of where people are. There haven’t been any big shifts, and I don’t forecast any, either. India is far and away our largest location, and it continues to be our largest recruiting base. In the digital world, design, data science and human factors become more important and our specialists need to be close to the clients, and we’ve built them close to the clients. Some of these specialists are in India as well to serve clients here and in Asia, but I would say the bulk of them are close to the clients. The overall mix of work and the distribution across cen- ters, however, is not meaningfully different from earlier. And you will accelerate acquisitions? We had said earlier this year that we intend to accelerate the pace of acquisitions, and you’ll see us do that. It’s important right now as we continue to make the shift to digital. With the exception of our 2015 acquisition of TriZetto Corp., most have been tuck-in acquisitions, and that will continue to be the primary approach. TriZetto established us strongly in the health care space with a strong set of intellectual property (IP) and software. We will continue to build our platforms and software, both in-house and via purchases. How can we illustrate the rise of digital services? Take health care. A lot of the work is underpinned by TriZetto’s IP. In other industries like insurance, retail and CPG [consumer packaged goods], we also have OCTOBER 2017 FORBES ASIA | 13 FORBES ASIA COGNIZANT It gives clients flexibility, and for us the pricing is not based on people but based on some output or delivery. Much of our new kinds of work is on some kind of BPaaS model. As you evolve, what concerns you? In the past, there were periods of rapid advances followed by longer stretches during which new technologies were widely deployed. With digital, technology is evolving on multiple fronts and at a much faster pace. The ability of a company to sense and respond quickly at this pace is new. It’s particularly important now, and one that we can’t miss. Part of the challenge right now is that just as there are technologies that we can see today that are clearly important, there are emerging technologies on the horizon that may or may not become important. That sense-and-respond mechanism is critical at this point in time. I spend a lot of time making sure that we keep one foot in the present and one foot in the future, ensuring that we don’t miss an important trend. “Cognizant, and the tech industry in general, is in the early innings” : CEO Francisco D’Souza our own IP that is starting to contribute to overall revenue. If, broadly, digital is seen as [new] software plus services, over 25% of Cognizant’s revenues come from it as of the quarter ended June 30, 2017. Apart from that, we have platforms from TriZetto and others. How are the new services different in terms of traditional billing for employees assigned to a project? In the platform work, we are focusing a 14 | FORBES ASIA OCTOBER 2017 lot on what we call Business Process as a Service (BPaaS). It combines cloud-based infrastructure, software and people as a stack on a per-transaction billing. For instance, a health insurer who signs up with us for the BPaaS model will pay us on a per-member-per-month basis. And there is a menu of services. Take claims processing, for instance. They get the software, the underlying cloud infrastructure and the people who will actually do the claims processing—a kind of IT-in-a-box. As the world becomes more tech-intensive, as tech becomes more complex and the ecosystem and range of available tech broadens, the need for companies like ours in advising our clients on the right technology will only become more critical. Our businesses will evolve—they will continue to be large services businesses, but with strong tech and IP underpinnings. On AI [artificial intelligence], we are still in the very early stages from a largescale-deployment perspective. We think about AI for our clients. We are already seeing that much of the work that we do will have some AI components—it will give us the opportunity to automate the work done today manually by humans. It will serve to amplify, make people more productive and more efficient. I’ve heard of predictions and fears that AI will substantially reduce employment in the services industry. I don’t think that will be the case. F Adapted from Forbes India, a licensee of Forbes Media. MADHU KAPPARATH FOR FORBES INDIA Three to ﬁve years from now, what kind of a Cognizant will we see? We are an integrated agency with PR, Digital & Content at our core. We help clients build corporate reputation, thought leadership & executive visibility by creating, maintaining & growing relevance. Find out how we Go All In at golin.com. FORBES ASIA ALL IN THE FAMILY A GENER ATION E ME R GE S ‘Banking Is Exciting’ A family of entrepreneurs has built KBZ into a finance powerhouse in Myanmar. Mom and Dad are in charge, but keep an eye on their twentysomething daughters. BY RON GLUCKMAN W 16 | FORBES ASIA OCTOBER 2017 annual rate of 43% since 2012. Last year it became the first Myanmar bank to open offices in Thailand, Malaysia and Singapore, neighboring markets that are not only important for doing crossborder business but also for collecting remittances from millions of overseas workers. In March, KBZ announced a landmark deal with Sumitomo Mitsui Banking Corp. to expedite fund transfers in the U.S. A deal like that would have been unimaginable a few years ago, when strict U.S. sanctions against Myanmar were still in effect. A majority-owned unit also controls roughly a third of the country’s insurance market, and the annual growth in the premiums it collects tops 40%. It’s the local front-runner in other financial services, too, such as credit cards. Across the empire, analysts praise KBZ’s planning, management and smart investments. “They are definitely one of the most important companies in Myanmar,” says a consultant in Yangon. “They are ahead of the curve on everything: human resources, recruiting, transparency and business practices. Others talk, but KBZ is really working to be the best.” The bank employs almost 20,000 people and notes that it’s the country’s biggest taxpayer: It paid nearly $25 million last year. Even so, the bank represents less than a fourth of KBZ’s 80,000 workers. Privately held, the company doesn’t disclose figures for revenue and profits. ADAM DEAN FOR FORBES hen a husband-and-wife team took over KBZ Bank in remote northern Myanmar in 1996, it had all the trappings of a mom-and-pop operation. She was a local schoolteacher. He also had been a teacher, then he switched to tutoring before going into trading and mining. Today two of their daughters help run things, and it’s still entirely owned by the family. But looks can be deceiving. Aung Ko Win and wife Nan Than Htwe have built KBZ into by far the biggest bank and one of the largest companies in the country. KBZ Group boasts two airlines, Air KBZ and Myanmar Airways International, and holds stakes in the agriculture, real estate and tourism industries. The two sent the daughters overseas for management degrees and this year brought in a professional chief executive. They may raise money in a stock market listing to invest in new businesses at home and abroad. Myanmar aspires to be Asia’s next tiger economy, and to get there it’s counting on companies such as KBZ to upgrade its skills and become internationally competitive. “We don’t want to be the best bank in Myanmar,” says second daughter Marlene Nang Kham Noung. “We want to be among the best in the world.” KBZ claims 40% of the country’s bank deposits, and its deposits have exploded since the country opened up, growing at an average In the spotlight: sisters Nang Lang Kham and Marlene Nang Kham Noung. FORBES ASIA ALL IN THE FAMILY corporate social responsibility. Its Brighter Future Myanmar Foundation has financed water projects in the parents’ home Shan State, independent advocacy films and the Yangon Photo Festival, controversial for highlighting uncensored photojournalism. In 2014, KBZ was ranked No. 1 for transparency by the Myanmar Centre for Responsible Business. One of KBZ’s first businesses was mining for rubies in Shan State. Mining in Myanmar is a murky industry marked by smuggling and payoffs to generals, and a report by London-based Global Witness in 2015 outlined the corruption. The group says KBZ was one of the only companies to cooperate with research for the exposé. The mine is still operational, according to a KBZ spokeswoman, but the focus is now on reforestation and modernization. “We are “They genuinely care about investing in the country”: Aung Ko Win and wife Nan Than committed to responsible mining,” she says. The KBZ Htwe; their third daughter, Tracy Nang Mo Hom (second from left), is studying medicine. website notes: “We are committed to meeting interLong groomed for the spotlight, Marlene, 26, and sister Nang national norms and standards in all our business operations. We Lang Kham, 29, are both executive directors of KBZ Group and have zero-tolerance policies for bribery or facilitation payments.” deputy CEOs of KBZ Bank. They’re regarded as two of the brightSome of Nan’s fellow teachers formed Kanbawza Bank in 1994 as est lights in a wave of young Myanmar business leaders. Nang is in a sort of credit union in the Shan State capital of Taunggyi. (KBZ is demand as a conference speaker, with foreign executives keen for short for Kanbawza, a Pali word for the Shan region.) Aung’s trading insights into the country’s business reboot. Marlene seems to be the and mining business prospered, and two years later, he bought the deep thinker; she originally planned a career in the foreign service. banking operation. Aung (now 55) moved KBZ and his family to The pair exudes a bubbly, infectious energy. The upbeat impresYangon in the late 1990s, when there were only 4 branches. Now sion is heightened by a tour of a KBZ office. With an incubator lab there are 485, and KBZ expects to reach 500 by the end of the year. and walls sporting signs with bright, inspirational messages, it could The family lived in the headquarters building—customers be the home of a tech startup. The sisters buzz about investments bustled in the branch at street level with offices above, while home in high-speed internet to connect the bank’s branches and about was the top floor. “Nang always wanted to work in the bank,” says creative digital-advertising campaigns targeting customers on Marlene. “But now we both are really involved.” Adds Nang: “Bankmobile phones. They mention a tie-in with Viber, a popular voiceing is exciting, really one of the last frontiers here. We grew up in the and-messaging service that uses the internet. The conversations bank. Even as kids, we were always there, greeting customers. We seem ordinary, except that this is a country where cellphones and always felt a part of it.” the internet were outlawed until not long ago. Like many children of the elite in Myanmar, Nang and Marlene In May, KBZ won praise for hiring an American banker, Mike were sent to school overseas. Nang studied business administraDeNoma, as chief executive. He has extensive experience around tion and management at the National University of Singapore, Asia, including serving as CEO of Taiwan’s Chinatrust Commercial then earned a master’s degree in management at the University of Bank and expanding it to ten countries. “This is an amazing time Sydney. Marlene spent four years at Georgetown University’s School for Myanmar,” he says. “Where else in the world can you find a of Foreign Service in Qatar before getting a master’s degree in innocountry where 30% of the people have electricity, 20% have a bank vation, entrepreneurship and management from Imperial College account, but 90% have smartphones?” He says KBZ will continue Business School in London. (The youngest sister, Tracy Nang Mo to modernize. “Within six months, you’ll see a lot, like anywhereHom, 21, is training to be a doctor.) anytime banking.” The sisters praise their parents’ acumen in building the business. KBZ has managed to avoid being tainted by the corruption Their mother, 60, the vice chairman, is described as the ultimate that’s plagued Myanmar for decades (and by the current Rohingya bean counter and has the final say on all financing. “Dad is very refugee crisis). International organizations put the bank through progressive,” notes Nang. “He knows more about Facebook than us, meticulous vetting before signing on as a partner on various projand he’s not on Facebook!” Instead, she says, he spends lots of time ects, and these groups heap praise on KBZ. “In terms of business in Myanmar’s original information highway—tea shops. “He goes operations they grade very high,” says a senior official with a large and listens to everyone.” international financier. “They can be aggressive, but they don’t just The first candidate for a listing among the company’s many chase wealth. They genuinely care about investing in the country, businesses might be insurance, the sisters acknowledge. But the and its future, by supporting its upcoming entrepreneurs.” options are numerous, and KBZ holds many cards. “Our dad is the KBZ has focused on its human-resources department, working strategist,” says Nang. “In any business you have to have a plan. Even to make sure it treats employees well. It’s also spending money on when we were very young, they had a plan.” F 18 | FORBES ASIA OCTOBER 2017 FORBES ASIA GAMBLING Lawrence Ho’s Wager Macau mogul is convinced that a huge Japanese bet will pay off. BY PAUL ARMSTRONG BILLY H.C. KWOK/BLOOMBERG B illionaire Macau casino magnate Lawrence Ho declares Japan’s nascent gaming industry to be “the most exciting market,” as the world’s biggest operators prepare to table their bids for a lucrative license. This follows his pledge in Tokyo earlier this year “to spend what it takes” to win a stake in a sector that was provisionally legalized only last year and stands to give the country a take rivaling that of Las Vegas. Speaking to Forbes Asia on the sidelines of this year’s Forbes Global CEO Conference in Hong Kong, Ho—the CEO and chairman of Melco Resorts & Entertainment—said his company’s philosophy “is always to deliver the coolest, the most innovative, the highest-quality resorts. I think that blends very well with the philosophy that the Japanese market has.” While the law to legalize casino gambling has been passed, it still awaits further legislation outlining precisely how the industry will be regulated—and the locations of the casinos. But the casinos will be part of “integrated resorts” that include other attractions and facilities in a bid to enhance tourism. Ho said the company favored locating close to Japan’s biggest cities—such as Yokohama and Osaka. “Everywhere we build integrated resorts, our mantra is always to build the coolest thing. And Japan will easily be the coolest; we’ll experiment with the latest in technology, latest in building methods, latest in engineering. But in order to do that, we really have to pick a location that is top-tier—near major cities with a huge population and also high potential for tourists.” He appeared to rule out the capital as a possible destination, however. “We don’t think Tokyo is going to happen. It’s such a fantastic city, but it’s a city for government, for financial. It’s less casual when you go “Our mantra is always to build the coolest thing. And Japan will easily be the coolest.” to Tokyo. I think the government is thinking of using the integrated resorts as urban revitalization, so I think they’re looking at Yokohama.” While Japan is very much a gamble on the future, Ho spoke glowingly about the performance of one destination: Macau. Asia’s preeminent gaming hub—and the only Chinese territory where gambling is legal—experienced a slump in gaming revenue in recent years amid a well-publicized anticorruption drive by the Chinese government that, among other things, reduced the amount of time mainland Chinese visitors could spend in Macau. But now the picture looks brighter ahead of “Golden Week,” a weeklong holiday that China implemented in 2000 to boost tourism. “So far, this year has surprised us—very pleasantly—in terms of how strong the market has come back,” Ho said. “Macau went through two very tough years. We made use of those two years to focus on efficiency and lean downs, as part of our continuousimprovement philosophy. Now I think this Golden Week is going to be phenomenal. So far, year to date, the market is up 19% and really across all segments [of the casino industry], so the high-end segment, the massmarket segment … and the average stay is also increasing.” However, one thriving gaming destination in Asia that may cause concern for operators like Melco is the Philippines, after a presidential order to sell government casinos owned by the Philippine Amusement and Gaming Corporation (PAGCOR) as soon as next year. Asked whether he was concerned about the casino business being cannibalized there, Ho was unmoved. “I think the Philippines has been the star within our business for the past two years. I always like to compliment my team down there, where we have the fastest-growing property in the fastest-growing market in the world. It’s working out extremely well.” He pointed out that more international tourists are visiting the country, as perceptions about it change. “I think in the next few years, there will be more and more tourists going in, so that will be the next phase or catalyst in terms of the business.” F OCTOBER 2017 FORBES ASIA | 19 FORBES ASIA LOVEBLOCK WINES Second Act After building and then selling a top New Zealand wine label, Kim and Erica Crawford started over. This time it didn’t get any easier. BY JENNIFER SCHULTZ WELLS 20 | FORBES ASIA OCTOBER 2017 JIM TANNOCK FOR FORBES W hile cleaning out their house in New Zealand to move two years ago, Kim and Erica Crawford came across a desk pad from the early days of their former wine label. On it they had mapped out their future: Grow the brand, sell it within nine years and then buy land. They had done just that—building a bestselling sauvignon blanc label that they sold for a small fortune, which allowed them to develop sizeable vineyards, land that they love. “We were very focused, between the two of us. We knew exactly where we were going,” says Erica. The Crawfords are now almost a decade into their second act, running Loveblock Wines, their organics-driven estate amid the windswept hills of Marlborough in the northeastern tip of the South Island. It’s been challenging, even with their experience and capital. Building a vineyard from scratch is expensive and time-consuming, farming is all about managing risk, and organics are not generally known as a moneymaker. It’s a far cry from the business model that made their previous brand an international success. Back in 1996, when Kim and Erica started Kim Crawford Wines, they had plenty of vision but no money, so they built a “virtual winery” out of the back room of their Auckland home. It was an innovative approach at the time, with Kim—a well-known local winemaker—buying grapes from contract growers and making wine in leased facilities, allowing them to avoid huge outlays for land, vines and equipment. The label under Erica’s management grew quickly and profitably. Sauvignon blanc, unlike other varietals that need to be aged in barrels, can be sold within a year of production. “It’s a high-value product,” says Kim, 57, with an almost “instantaneous return.” Within seven years, Kim Crawford Wines was the country’s tenth-largest winery in global sales. In 2003, Veterans of the grape: “We now have infrastructure and know what to plant,” says Erica Crawford, with husband Kim at their Marlborough estate. FORBES ASIA LOVEBLOCK WINES the Crawfords sold the label—but not its physical assets, which ings, and they’ve had to decommission a number of hectares by this point included a 45-hectare block—to Canada’s Vinon top of the hill that weren’t producing. Yield is king in the cor International, which itself was acquired three years later by wine business, both in terms of growing the grapes and the volglobal drinks giant Constellation Brands. ume of wine produced, and so any yield loss because of an orBetween the sale price and a performance-based earn-out ganic strategy is really challenging, notes Jordan. that saw Kim staying on at Constellation until 2007 and Erica “I don’t think we understood how difficult the farm was going until 2009, the Crawfords netted roughly $50 million. It gave to be,” says Erica. “But we now have infrastructure and know them the means to “live their values,” says Erica, 56, who today what to plant.” So far the Crawfords have put around $8 million drives the Loveblock philosophy and business as the compainto Loveblock, and despite the slow return on investment, the ny’s managing principal. She became interested in organics after label has grown enough to reach a tipping point. a car accident in her early 30s led her to take stock of her health. Their estate produces close to 27,000 cases of Loveblock Kim, who has been married to Erica for 27 years, tagged along, wine annually—the company expects to post $3.7 million in up for the challenge of using old-world methods to grow grapes revenue in the year ending in June—and is on track to douand make wine. “Kim and Erica took a novel path, but it enabled ble that within the next five years, with most of the producthem to fund their dream, and that’s to have all the elements, the tion for export. They see a larger organics business developing personality of the brand and control over the way the raw prodfrom the farm, including sales of grass-fed beef from their herd uct, the grapes, are grown. That embodies a much stronger and of Angus cattle. “It’s good to break even and to be a base for compelling story [than their the brand,” says Erica. While original label],” says viticulture Kim and Erica use only their MEANWHILE, consultant David Jordan. own grapes to make Loveblock A ten-year noncompete wine, they also sell their grapes AT KIM CRAWFORD clause with Constellation preto others, and Kim runs a sepSince taking over Kim Crawford Wines in 2006, New Yorkcluded the Crawfords from arate bulk-wine business called making or selling any wine, but based Constellation Brands has built the label into a power- Zorro Wines. With more than house, especially in the U.S. The label posted $229 million not from growing grapes. They 90 hectares of their land holdin retail sales in the U.S. last year, making it the top-selling went shopping after their sale, ings planted, the Crawfords New Zealand wine brand there, according to U.S. marketupping their holdings to about now number among the top research ﬁrm Impact Databank, and the top-selling sau215 hectares, which included 10% of the country’s largest vignon blanc. Last year Kim Crawford became the ﬁrst 160 hectares of undeveloped vineyard owners. New Zealand brand to break the 1-million-case mark in the hillside and adjoining land in They say they weren’t ever U.S., growing 20% from a year earlier to 1.2 million cases. Marlborough’s Awatere Valley tempted to return to virtual That represents 25% of the New Zealand wine category. that is now home to the Lovewinemaking with Loveblock; Kim Crawford is part of a stable of New Zealand labels that block brand. “We couldn’t afblending grapes from a variety Constellation—the largest exporter of New Zealand wines— of suppliers is now commonford to buy a developed vineowns and exports to 75 countries. —J.S.W. yard,” says Erica, with Kim, place among brands. “That adding, “It wasn’t realistic. You model is incredibly profitable,” might want to buy a vineyard, but it’s very difficult.” says Erica, “but what will your point of difference be? PeoProperty values in Marlborough have surged in recent ple are looking for provenance in brands. They want to know years, with wine companies and investors hustling to nail where it’s grown, how it’s grown, what has gone into it. And down grape supplies to meet demand. Sauvignon blanc wines it’s those under 30 who are particularly interested in that.” make up more than 85% of New Zealand’s total wine exExpanding the estate is all about the kids. “For me this is ports, which hit a record $1.2 billion in June. Its biggest overgenerational,” says Kim, who grew up on a farm in rural New seas market is the U.S., which has developed a particular likZealand and studied oenology at university. He met Erica, a ing for the crisp, clean taste of Marlborough sauvignons. With medical scientist, in her native South Africa at a wine festival. fewer vineyards hitting the market and a dwindling supply of Their 23-year-old son, Rory, is an aspiring winemaker who, land suitable for development, vineyard values in Marlborthey insisted, must ply his trade outside the family business ough have risen sharply over the past year, fetching between until he is 30; daughter Pia, 22, recently graduated from uni$88,000 and $220,000 per planted hectare depending on loca- versity with a science degree. tion, according to Tim Gifford at Colliers International. Land Kim says the traditional taste of the Marlborough sauin smaller and cooler Awatere Valley is cheaper. vignon blanc is different when it has an organics platform. Converting the hillside property into vineyard land hasn’t “The way I explain it is that we’ve developed from our teenbeen easy. The rocky soil and the bronze beetle pest made the age years and we’re now middle-aged, so we’re so much Crawfords pull back from their plan of completely organic more. We’re not throwing our hormones and testosterone management at the property. Instead they adopted a “low inter- out there anymore. We’re quite restrained but hopefully a bit vention” chemical approach affecting two thirds of their plantmore complex.” F 22 | FORBES ASIA OCTOBER 2017 FORBES ASIA FAUX MEAT Heme on Rye? A veggie burger could be the solution to Asia’s food-security dilemma. BY PAMELA AMBLER REUTERS/BECK DIEFENBACH S eventy-five million dollars for mouths to feed but only 7% of the world’s veggie burgers? That’s what Sinarable land. President Xi Jinping has said gaporean sovereign wealth fund that food security is an eternal challenge Temasek invested in Impossible for the country. Adding to the pressure is Foods, a virtually unknown Calithe growing demand for a “rich-country fornia company that is trying to change the diet,” which means more animal protein paradigm of the global food system. and dairy. Rabobank estimates China’s imEven though its burger product is plantports of beef, pork and poultry will increase based, it smells, cooks, tastes and even bleeds steadily in the coming years. like the real deal. On social media the hashtag China spent $43 billion earlier this year #impossibleburger has been trending. Last to purchase Swiss seed company Syngenta. year celebrity chef David Chang was the first The acquisition by state-owned ChemChina to introduce the product to his Momofumarks the largest acquisition ever of a forku Nishi menu. Today the faux ground beef eign business. The deal will ensure the na(made from something called “heme”) can tion doesn’t run out of rice and noodles to be found in 44 restaurants across the U.S. feed its people, but more importantly it enand is expected to be in hundreds in a few sures there’s plenty of grain to raise the animonths. “We believe we created a consumer mals needed to meet the demand. movement that we need to fulfill,” said David Impossible Foods offers Singapore, Lee, COO and CFO of Impossible Foods. China—and the world at large—a green (See p. 34 for a taste of real beef.) way to feed people. Cattle farming puts treTemasek is not the first Asian compamendous strain on the environment. In ny to express interest in the meat substicontrast, production of Impossible burger tute. Li Ka-shing was also an early investor patties requires 95% less land and a quarter in Impossible Foods. Series D funding came of the water, while yielding only an eighth of from UBS Wealth Management in Asia as the greenhouse gases compared with those well. So why are such savvy investors betcreated by beef patties, according to the ting on a product not even available in the company. “They’re strategically seeing the region? “We look for opportunities to supopportunity that serving sustainable food port growth across our portfolio,” says Paul Ewing-Chow, associate director of public affairs at Temasek. “This includes technology pioneers and disruptors, and in the case of Impossible Foods—food security.” Singapore has limited arable land. Less than 1% of the island nation’s GDP comes from domestic food production. It devotes its resources to growing produce, with little livestock farming. Consequently, the population’s diet is almost entirely dependent on imports. Neighboring China faces a simAsian dishes, such as dumplings, are next on the menu. ilar dilemma. It has 1.3 billion creates,” said Lee about Temasek’s investment. The former Del Monte Foods executive adds: “The market we’re addressing is very relevant for the emerging middle class and growing economies of Asia.” What is Impossible Foods’ secret? The company uses heme, a biochemical compound that is abundant in meat but is also present in greens, seeds and grains. A component in hemoglobin, it’s a flavor catalyst and the ingredient that gives meat its red color. Deodorized coconut oil is used to mimic the natural fats so that the patties sizzle and caramelize to form a crust when cooked. “We chose to be radically transparent [with our ingredients] because that’s just the way we roll,” Lee said. Impossible Foods does have a timeline for Asia, but it hasn’t been disclosed. Right now its operation out of Rutgers Food Innovation Center in New Jersey produces 8,000 pounds of plant-based “meat” each month, not nearly enough to meet domestic demand in the U.S. The company has been working to launch a facility in Oakland, California, set to open in the fall, which will increase supply by 250 times. Just like the real stuff, the ground beef substitute can be used in a variety of ways: for Bolognese sauce, meat loaf, tacos and even raw tartare. New interpretations have already made it into Asian dishes such as spicy mapo tofu, crispy lettuce cups and Moroccan “cigars” (similar to Chinese spring rolls). While still in the works, Lee points out that Impossible Foods also has the platform to create pork, chicken, fish and dairy alternatives. They’re just simply not available to consumers yet. His latest taste test? “I tried our product as ground pork in dumplings.” The idea is to suit local tastes. “For Asian consumers, we’ll serve it the way they want it,” Lee says. F OCTOBER 2017 FORBES ASIA | 23 FORBES ASIA SUSTAINABLE STYLE Bricks and Clicks Model turned entrepreneur Yael Aflalo is betting physical “tech stores” and data can turn her eco-friendly It-girl brand Reformation into a fast-fashion empire. BY KATHLEEN CHAYKOWSKI O n an early-September morning, Yael Aflalo, 40, glides through the tech-heavy West Hollywood store of Reformation, her eco-friendly fashion brand. Wearing frayed cigarette jeans, a dark Reformation tee reading, “I went to Mars and all I got was this stupid T-shirt” and Chanel flats, the founder and CEO mimics the path of a shopper. She holds up a Reformation bestseller, a flowing flowered dress, then walks over to one of a handful of touchscreens along the wall to browse everything from blazers to crop tops. With a few taps, Aflalo can choose what she wants to try on, then go grab a coffee or flip through the racks, while behind the scenes store employees assemble her selections, deliver them to a dressing room and, when all is ready, notify her by text. In the dressing room, she can charge her phone, play her favorite music and choose from a set of mood-lighting options like “sexy time” and “golden,” which are perhaps more pleasing for trying on a swimsuit or an evening dress. From the dressing-room screen, she can ping “wizards” in the back to call in new items. “This is how people shop now, standing next to each other at a screen in a store,” Aflalo says. Flattering silhouettes, quality and that trendy trait—sustainability—have made Reformation wildly popular among Millennial women of certain means, who are willing to drop anywhere from $60 to $250 per item. It doesn’t hurt that the label is regularly seen on celebrities like Taylor Swift, Rihanna and model Karlie Kloss. With a growing number of “tech stores” like the one in West Hollywood, Aflalo is building on that success and putting Reformation on a path to $140 million in sales next year, up from just $25 million in 2015. The hustle and bustle at the company’s four tech-infused stores suggests Aflalo has cracked the code on a “bricks and clicks” strategy, a seamless meshing of offline tangibility and online convenience that seems essential to success in the age of Amazon. While e-commerce makes up 80% of Reformation’s revenue, the stores help attract customers and boost sales. Reformation’s stores are doing so well—customers are twice as valuable to the label when they discover it through brick and mortar—that the company, which also has a handful of more traditional outlets, plans to add between five and eight tech stores next year in the U.S. at a time when many retailers are retrenching. Paris, London and Scandinavia are in Aflalo’s sights for the following year. “Although retail ecommerce is growing by leaps and bounds, the store experience is becoming more important,” says Ananda Chakravarty, an analyst at the research firm Forrester. “Companies that capture the customer’s heart and mind are going to win.” Reformation’s stores don’t just remove pain points for shop- 24 | FORBES ASIA OCTOBER 2017 pers—they also collect data that traditional retailers lack, everything from how long customers spend trying on particular items to which pieces convert best from dressing rooms to cash registers and which pieces shoppers browsed. Reformation merges customers’ online and in-store activity to improve recommendations. Most retailers know how many people walked in and how many bought something, but not much else. “We created a store where all the interactions are tracked,” says Aflalo, who is also Reformation’s product mastermind. (Her husband, Ludvig Frössén, is creative director.) Aflalo started Reformation in 2009 as a side gig and took no outside funding. By 2013, she turned her attention to it full-time. The company has since become profitable and grown to nearly 550 employees. In 2015, it raised $12 million from venture investors led by Stripes Group and 14W, at an estimated valuation of $87 million. Aflalo says surveys show product design is the main driver of Reformation’s sales, with the promise of sustainability a close second. Like the fast-fashion giants H&M and Forever 21, Reformation operates on a rapid design-to-rack cycle of 42 days. But unlike cheaper fast fashion, Reformation spares its customers the notorious lines, piles of sizes and uncomfortable dressing rooms. The turnaround time limits the number of units of each style and color and creates a sense of exclusivity without designer prices. While Aflalo started with Millennial women, her vision is to bring her collections to the masses, adding product lines that span gender and age brackets. She is betting that a focus on quality and rising environmental awareness will help Reformation take on not only standard fast fashion but also higher-end Goliaths like Urban Outfitter’s Anthropologie and Free People brands. “Yael has created that opportunity to be a next-generation Zara,” says Ken Fox, the founder of Stripes Group and a Reformation board member. “She merges a merchant’s view with state-of-theart data technology to serve the customer.” For all its early success and potential, Reformation has a long way to go before it can stake a claim as a real competitor among the fast-fashion giants: Zara had revenue of $18.3 billion last year, and H&M Group, the parent company of H&M, had $27.7 billion. Meanwhile, fashion consumers are notoriously fickle. What’s hot today may not be around tomorrow. Witness Nasty Gal, a once-trendy online fashion brand that did nearly $100 million in revenue in 2014 only to file for bankruptcy two years later, or Gilt Groupe, an early e-commerce unicorn that sold last year for a quarter of its peak valuation. To move fast and ensure it can live up to its green promises, Reformation manufactures 60% of its clothing in its Los Angeles factory, where employees cut, sew and press dresses and attach zippers. ETHAN PINES FOR FORBES CEO Yael Aﬂalo, at her Los Angeles factory, discovered the wastefulness and pollution caused by fashion manufacturing after a trip to China in 2010. There’s an on-site masseuse, and employees have health benefits and access to classes in career counseling, English and citizenship, which are popular with the company’s heavily Latino workforce. The factory is also the hub for photo shoots, fittings, shipments and returns, and engineering. Most remaining items are made in other local factories, with a few imports rounding out the collections. To back up the sustainability claims, Reformation says it compensates for 100% of its waste, carbon dioxide emissions and water use by purchasing “offsets” that help pay for clean water, planting forests, capturing landfill gas emissions and wind power. It uses eco-friendly and recycled fabrics, and it screens suppliers to protect against unsafe or unfair labor practices. Its labels include a “RefScale,” which shows customers the environmental benefit of each piece through a breakdown of how much CO2, waste and water they helped to save. Small changes add up: The making of a pair of Reformation “seamed” jeans, for example, consumes 196 gallons of water, compared with an industry average of 1,656 gallons, and emits 5 pounds of CO2, far less than the average of 36 pounds. While Aflalo drives a Tesla and geeks out over sustainability, ecofriendliness wasn’t always part of her mission. The Beverly Hills native started her first fashion company, Ya-Ya, as a 21-year-old model turned entrepreneur, after growing up watching her parents run a clothing shop. She briefly enrolled at the University of California, Berkeley, and then at the Fashion Institute of Design & Merchandising in Los Angeles, sold her first designs to Fred Segal and dropped out. “Every time I took the clothes I had designed to a store, they bought it,” Aflalo says. “I was like, ‘This feels right.’ ” She spent the next decade working on Ya-Ya but didn’t get serious until her late 20s. “I was just partying, being 27,” Aflalo says. In 2005, revenue peaked at $20 million. When the Great Recession hit, excess inventory bankrupted the company, leaving Aflalo with millions in debt. She took a year off, then made clothes for Urban Outfitters to pay the bills. On the side she bought and freshened vintage dresses, selling them in a Los Angeles storefront in 2009 called Reformation. The dresses made money, so she opened a second store in New York. It sold out on its first day. A 2010 business trip to China changed her trajectory. Aflalo witnessed firsthand the wastefulness and pollution caused by manufacturing and learned that fashion is among the world’s most polluting industries. She was appalled that it took 200 to 500 gallons of water to make one basic cotton T-shirt and hundreds of years for synthetic fabrics such as polyester to biodegrade. She left China with a mission: to create sustainable clothing at an attainable price without sacrificing style. She paid off her debts and began to focus solely on Reformation. Eco-fashion was still seen as shapeless and “granola,” but watching industries like automotive go green without sacrificing product quality convinced Aflalo that fashion was primed to change. She was right. “Yael challenged the misconception in the fashion industry that anything tied to being sustainable means that it can’t be cool,” says Miroslava Duma, a Russian fashion entrepreneur who has invested in Reformation. “It’s the perfect example of where the industry should be moving. Reformation is for a new generation of customers who want to consume with purpose.” F OCTOBER 2017 FORBES ASIA | 25 PROMOTION CHINA CONSTRUCTION BANK: STAYING THE COURSE The development and transformation of China Construction Bank is rooted in the real economy and managed by rigorous risk control. Head oﬃce in Beijing China Construction Bank (CCB) continues to evolve its business and deliver a solid ﬁnancial performance. Its recent results demonstrate the bank’s commitment to serve its customers, work for China’s real economy, adapt to technological changes, strengthen compliance operations, reduce risk and accelerate its transformation both domestically and overseas. As of the end of June, CCB’s total assets amounted to RMB21.69 trillion (US$3.31 trillion), an increase of 3.5% since the end of 1 2016, and its net proﬁt for the ﬁrst six months of the year was RMB139 billion (US$21.2 billion), up 3.8% year-on-year. Annualized return on average assets was 1.3% and annualized return on average equity stood at 17%; the bank’s total capital ratio and common equity tier-1 ratio were 15% and 13%, respectively. CCB responded to the liberalization of domestic interest rates by expanding its customer base and strengthening product innovation, thereby increasing its net fee and commission income by nearly RMB900 million (US$137.3 million) year-on-year. Meanwhile, gross loans and advances to customers increased by 6.4% and deposits rose by 5.7% since the end of 2016. Improvements to cost management and its expense structure meant that the bank maintained a stable cost-to-income ratio of 22%. The bank continued to turn information technology and product innovation into drivers of development. In the first half of 2017, it set up the Inclusive Finance Division PROMOTION Going forward, CCB will continue its commitment to serve the real economy. to enhance the application of big data and internet technologies in targeted customer service areas and to reinforce risk control. It promoted its “Long Card” cross-border payment system, improved its mobile ﬁnance products and accelerated its channel transformation. About 99% of all its outlets are now integrated, and the number of online, mobile and WeChat banking users topped 250 million, 240 million and 62 million, respectively. CCB also maintained its core competitiveness in housing ﬁnance with a 9.5% increase in its residential mortgage book in the ﬁrst half of the year. It also grew its consumerfinance business, with 102 million credit cards issued by the end of June. The bank introduced several measures to better identify, assess and mitigate risks. The initiatives have already born fruit; the bank’s nonperforming loan ratio stood at 1.5% at the end of June and provision coverage ratio at 160%. In addition, CCB remains committed to serving the real economy and has given its full support to national strategies such as the “Belt and Road Initiative” as well as to the coordinated development of the Beijing-Tianjin-Hebei region, the Yangtze River Economic Belt and the construction of the Xiong’an New Area. The bank leveraged its strengths in infrastructure construction, its engineering cost advisory service and its comprehensive licenses. Moreover, it continued to optimize its credit structure by strictly implementing “name list management” to control loans across the ﬁve industries with heavy overcapacity. At the same time, CCB has steadily extended its overseas footprint, inaugurating CCB Indonesia and CCB Malaysia and opening branches in Warsaw, Poland, and Perth, Australia, to bring the total number of overseas branches to 251 in 29 countries and regions. In the second half of the year, CCB will remain focused on strengthening its value as one of the largest state-owned commercial banks, encouraging economic growth and fostering the healthy development of the ﬁnancial markets. The bank announced a 3.8% increase in net proﬁt in the ﬁrst half of the year. 2 FORBES ASIA SALVAGE MAN 28 | FORBES ASIA OCTOBER 2017 DAVID YELLEN FOR FORBES Optoro CEO Tobin Moore reroutes unwanted merchandise. The Point of All Returns How Optoro is building a billion-dollar business helping companies cope with America’s mountain of rejected merchandise. BY SUSAN ADAMS I n Optoro’s 300,000-square-foot warehouse outside Nashville on a stiflingly hot afternoon in late August, Susan Cohan scans the bar code on a cardboard box holding 97 pink crocheted bikinis. The tops were priced at $27.99 and the bottoms at $19.99 at one of America’s bestknown big-box retailers. But the suits had failed to sell. Optoro’s software tells Cohan to route the box to Bulq.com, a website run by Optoro that sells in bulk to mom-and-pop dollar outlets and online discount stores. The bikinis will fetch 20% of retail, says Tobin Moore, Optoro’s 35-year-old cofounder and CEO. “People aren’t going to be buying bikinis in September,” he notes. Those bathing suits and the 50,000 other boxes of returned and rejected stuff sitting in Optoro’s warehouse represent a pounding headache for retailers and manufacturers. Of the $3.3 trillion Americans spent on merchandise in 2015, they returned 8%, or $260 billion worth, according to the National Retail Federation’s most recent figures. That doesn’t count items, like the pink bikinis, that never leave store shelves. As e-commerce sites like Amazon and Zappos force competitors to match their free returns and full refunds even for damaged goods, retailers are desperate to find a way to salvage value from the stock that comes flooding back. Estimates of e-commerce returns vary from 25% of all goods bought online to upwards of 50% for apparel. According to Moore, Optoro offers the best solution. The algorithms powering its cloud-based software suck up data about prices set by other online vendors selling the same or similar returned or overstocked items, and its scanners instruct warehouse workers to route each item or group of items to the channel that will recover the most cash. The preferred option is sending returns back to store shelves, but that’s only possible for less than 10% of the merchandise Optoro processes. Retailers have already sifted out most of the 20% of returns that they can restock (including unopened goods in pristine condition that are still part of the season’s offerings). The next best choice: either return items to manufacturers or sell them directly to consumers on Optoro’s discount-goods site, Blinq.com, or through online stores Optoro runs on Amazon and eBay, which Moore says can bring in 70 cents on the retail dollar. One example in the Tennessee warehouse: a wireless, rechargeable Solar Stone garden audio speaker in the shape of a big gray rock that retailed for $129.99. It’s destined for sale on Blinq.com for $88.49. Optoro’s software also routes goods to other channels, including recyclers and charities. Before he launched Optoro seven years ago, Moore says, most big retailers relied on a hodgepodge of inefficient channels that funneled goods to a series of middlemen who in turn sent them to discounters like Big Lots or Ollie’s Bargain Outlet as well as to flea markets and pawn shops. Through the old system, retailers sometimes recouped as little as 5 cents on the dollar of retail sales. Often, they simply chucked returns in dumpsters and paid to have them carted away. Moore, tall and lanky in a white oxford-cloth shirt, navydyed jeans and brown lace-up dress shoes, started Optoro’s precursor out of his Brown University dorm room in early 2004. Ebay wasn’t yet a decade old, and he saw opportunity in helping sellers list used goods on the site. For a 30% cut of the sale price, he’d stand in as the vendor, taking care of everything from product photos and descriptions to pricing and shipping. He roped in Justin Lesher, a friend from his days at the Washington, D.C., all-boys prep school St. Albans, who operated out of his dorm room at Penn. After graduating that spring, the two moved in with their parents in D.C. and went without paychecks for two years. They ran the business out of an attic above the garage at Moore’s house before opening a 1,200-square-foot storefront in OCTOBER 2017 FORBES ASIA | 29 FORBES ASIA SALVAGE MAN Georgetown. The following summer Moore persuaded another St. Albans friend who had just graduated from Brown, Adam Vitarello, to back out of the job he’d accepted at AIG and help run the business, which they’d named eSpot. (Vitarello is now Optoro’s president; Lesher left the company in 2011.) For funding, they borrowed $350,000 on 37 zero-interest credit cards. They got lucky with local press coverage and scored some big sales, including a 1965 Mustang and a $100,000 Rolex. Neighborhood retailers started using eSpot to sell returns and excess inventory. That led to a lightbulb moment. “We realized big-box retailers had the same problem those small retailers had,” Moore says. “We saw a massive problem that had no one focusing on it and no good solutions.” But Moore’s timing was terrible. In 2008, the financial crisis had hit and banks had hiked the rates on eSpot’s zero-interest cards to 30%. Facing bankruptcy, Moore worked up an elevator pitch and started trying to raise money. He struck out at more than 100 investor meetings in the D.C. area before he landed his first angel, Nigel Morris, the cofounder of Capital One Financial Services, who pledged $1 million through his investment firm, QED, in Alexandria, Virginia. “Nigel liked houses in the eastern U.S. The BJ’s contract helped Moore’s second push to raise money. In late 2012, he persuaded Grotech, a D.C. venture firm, to lead a $7.5 million investment, and seven months later, Revolution Growth, the VC firm headed by billionaire AOL cofounder Steve Case, led a $23.5 million round. “This market is so big and will continue to grow,” says Revolution partner and Optoro board member Ted Leonsis. “It won’t be a zero-sum game.” A total of $129 million in investment capital has poured into Optoro, including participation by Generation Investment Management, the London-based venture group cofounded by Al Gore, whose managers liked Optoro’s pledge to keep merchandise out of landfills, and a $46.5 million round in December 2016 that included UPS, which plans to pitch Optoro’s business, where appropriate, to its thousands of retail customers, says Ken Rankin, the company’s director of corporate strategy. Moore concedes that some companies, in particular Amazon and its subsidiary Zappos, have effective internal systems for processing returns. Amazon, however, has used Genco (now called FedEx Supply Chain). Amazon also uses liquidators to clear bulk merchandise from its warehouses. And Amazon offers used and so-called open-box goods directly on its site. There is plenty of other reverse-logistics business to be had, though retailers and manufacturers don’t want to talk about it. They’d rather consumers focus on acquiring new things and don’t want to draw investors’ attention to the money pit dug by returns and overstock in search of buyers. Of Optoro’s 30 clients, only a handful, including Home Depot, Best Buy, Target and Jet.com, permit Optoro to make their relationship public, and none would agree to an on-the-record interview for this story. Like his clients, Moore won’t share Optoro’s numbers, except to say that he expects next year’s revenue to double this year’s, which is on track to double last year’s, and that Optoro will process goods with a total retail value of $1 billion in the coming year. Optoro collects revenue several ways. Most customers who use the software pay monthly licensing fees. When it sells goods on Blinq and Bulq, Optoro takes between 15% and 50% of the amount it recovers for its clients, which ranges from 20 cents to 70 cents on the retail dollar. Forbes estimates Optoro’s 2017 revenue at more than $50 million. With a growing staff of 220 in its headquarters in central Washington, D.C., and its contract deal with the 100-plus workers in its rented Tennessee warehouse, overhead is substantial, and Optoro is spending its investment capital on growth. “We’re not in profitoptimization mode,” he says. Moore is aiming high. Off the record, he ticks off the names of major retailers whose business he believes he can capture and existing clients he thinks he can persuade to use more of Optoro’s services. “Our technology is highly valuable to people who work on a massive scale,” he says. “If they put us in place, overnight we can provide a ton of value.” F “OUR TECHNOLOGY IS HIGHLY VALUABLE TO PEOPLE WHO WORK ON A MASSIVE SCALE. IF THEY PUT US IN PLACE, OVERNIGHT WE CAN PROVIDE A TON OF VALUE.” that we were leveraging data and analytics to make changes in an old industry,” Moore says. They hired three developers, who spent nearly two years coming up with a scanner and software system, and in 2010 they launched the new business as Optoro. Moore likes to talk about Optoro as if it’s the only company to have mastered what’s known in business lingo as reverse logistics (“There’s no technology platform that does what we do”), but the Reverse Logistics Association, a trade group with more than 100 members, has been around since 2002. According to RLA executive director Tony Sciarrotta, retailers and manufacturers spread their business among numerous players, many with niche specialties. Like Texas-based HYLA Mobile, which takes returned mobile phones from manufacturers like Samsung and retailers like Best Buy and sells them for big discounts on the international market. In 2015, FedEx acquired a large Optoro competitor, Genco, for $1.4 billion. Confident to a fault, Moore regularly pitches Optoro at RLA’s annual conference in Las Vegas. In 2012, he signed his first big retail client, BJ’s Wholesale Club, a Costco rival that sells discount goods to members through its network of ware- 30 | FORBES ASIA OCTOBER 2017 FORBES ASIA Combat Consultant Ex-U.S. general Stanley McChrystal on the importance of flexible teams, disagreement and eating just one meal a day. a beautifully crafted bullet that would fly straight and true, and be lethal if aimed correctly and fired at the right time. But we weren’t responsible for those two parts of things—which is fine, as long as you’re going up against a somewhat predictable enemy. But in Iraq we got into a constantly changing environment, against a different kind of enemy, and, suddenly, we had to operate much faster and couldn’t take our time painting the Sistine Chapel. We had to paint faster and get the job done quickly. We stopped being able to be the bullet; we had to become the gun. The bullet still needed to be good, but elegance was less important than effectiveness. And we couldn’t do it just once; we had to literally change the organization on a daily basis. What kind of companies seek out your consulting ﬁrm, the McChrystal Group? DAVID YELLEN FOR FORBES It’s not a failing company, but they’ll say, “We are too slow making decisions. We are ineffective at implementing decisions.” organization that it’s in their interest. You incentivize them to be connected to the larger goals. How do you create what you call a sharedconsciousness culture? Tell people how to think about things and the broader mission. There’s a great line we used to use in Afghanistan: “If, when you get on the ground, the order that we gave you is wrong, execute the order that we should have given you.” Think about the responsibility you’re giving your subordinates when you issue that instruction. Can you create a ﬂexible group without lots of debate and argument? No. In all healthy organizations, argument happens face-to-face. You debate, argue and move on. By the way, there’s a pile of argument in the military. It just takes different forms. But when the landing-craft ramp drops and hits the beach, that’s not a time to argue the plan. Do you seek diversity or uniformity in teams? Diversity is better. The challenge is creating diversity that communicates well. If you take a SEAL or a Ranger organization, they Did you have to upend the classic look homogenous. But they have a range military hierarchy? of thinking styles. Good commanders Not formally. But it changed encourage diverse thinking and use that to who got what information, test their thinking in various directions. how it was controlled, where decisions were made. That was Switching subjects, how do you keep so ﬁt? against al Qaeda in Iraq. If I get up and run for at least an hour and then you think about ISIS now, ISIS is Uber. stretch. On alternate days, I will get up and I don’t think Uber would like the comparison. But like Uber, ISIS has little capital investment in what they’re doing. They’re creating franchises, and those franchises Your epiphany about speed and ﬂexibility came are very well suited to the conditions on the ground because they formed themselves, during your career in the military, ﬁghting al Qaeda in Iraq and as well as groups such as ISIS. and they constantly adapt. The upside for ISIS is that these groups are willing to call We had purposely built a counterterrorist themselves ISIS. If they succeed, that’s good, force, JSOC, and over 22 years we had but if they fail, ISIS has no investment. tweaked it until it was unparalleled in the world, in terms of competence and professionalism, as well as in its use of How do you encourage people to share power in existing technologies. We could do things an organization? It can seem like no one wants to. that were literally elegant: precision raids, It’s just not our nature. The trick is to hostage rescues and whatnot. We were convince people at different parts in the do about an hour of abs and core workouts in the house, and then I’ll go to the gym. Then you go to the gym? For another hour or 40 minutes of weights and pull-ups. I almost never take a day off. And somehow you eat just one meal a day. I’ve been doing it for about 40 years, just because I thought I was getting fat. Everybody told me how stupid I was, how it’s bad for my body. Now they’re starting to say it’s okay, even good. In a few years, they’ll say it’s bad again. I’m 63. If I change suddenly now, it might kill me. F GENERAL STANLEY MCCHRYSTAL SPOKE WITH RICH KARLGAARD, OUR EDITOR-AT-LARGE AND GLOBAL FUTURIST. THIS INTERVIEW HAS BEEN EDITED AND CONDENSED. FOR THE EXTENDED CONVERSATION, VISIT FORBES.COM/SITES/RICHKARLGAARD. OCTOBER 2017 FORBES ASIA | 31 FORBES ASIA FORBES@100 During our centennial year, we’re unearthing our favorite covers. The Postwar Dream: Nov. 15, 1947 AS AMERICANS RETURNED home from war, the suburbs were born. Published the same year the first 350 homes were sold in Levittown, New York, Forbes’ 30th anniversary issue spotlighted Lancaster, Ohio, a “progressive American” city of 24,000 people 30 miles southeast of the state capital. It had “all the advantages of a rural as well as an urban life.” Small-town commerce thrived at the intersection of Main and Broad Streets. ExG.I.’s such as the “conscientious, unassuming” Jack Fisher filled jobs at local manufacturers. Fisher, a brawny six-foot-three, had once excelled on the local high-school basketball team; now he tended machinery at Anchor Hocking, a glassware maker that was the biggest business in town, with annual sales of $64 million (some $700 million today). Just as the Lancaster of 1947 offered a snapshot of postwar success, the Lancaster of 2017 is a picture of the drastic change of fortune suffered by parts of industrial America ever since. More than 20% of Lancaster sits below the poverty line today, compared with 14% in Ohio overall. Anchor Hocking has recently been through bankruptcy and traded hands from one private-equity owner to another. And earlier this year, Lancaster’s local newspaper, the Lancaster Eagle-Gazette, published an investigation titled “Seven Days of Heroin: This Is What an Epidemic Looks Like.” It featured two numbers uglier than any from even the most indebted balance sheet: In just one week, in greater Cincinnati, 180 overdoses and 18 deaths. FAST-FORWARD Kings of Capitalism 1947: A package of stories on America’s “50 Foremost” business leaders listed such luminaries as Henry Ford II, David Sarnoff, Samuel Goldwyn, Thomas J. Watson and Nelson Rockefeller. 2017: Our recently published centennial issue featured a similar concept—essays from the “100 Greatest Living Business Minds”—but centered on a much different group of people: almost no heirs and very few hired hands, mostly investors and entrepreneurs like Warren Buffett, Bill Gates, Oprah Winfrey and Elon Musk. 32 | FORBES ASIA OCTOBER 2017 AMAZING ADS For the Long Haul By encouraging truck driving as a profession—you too could become a “Gentleman of the Highway”— International Harvester, a maker of truck parts, primed the pump for future generations of customers. CRYSTAL-BALL CALLS Forecast: Cloudy Some of Forbes’ predictions for the 30 years following 1947 were a little wide of the mark. Among our botched prophecies: widespread helicopter use, outright bans on monopolies and the ability to regulate the weather. LEFT TO RIGHT: AP; AFP/GETTY IMAGES; TODD WILLIAMSON/GETTY IMAGES; PLANET NEWS ARCHIVE/GETTY IMAGES BY ABRAM BROWN Live from Singapore, Asia Business Report brings you the latest regional business news and analysis at the start of your day. Weekday mornings at 0630, 0730, 0830 and 0930 hrs (HKT) Sponsored by Sharanjit Leyl, Presenter Rico Hizon, Presenter 34 | FORBES ASIA OCTOBER 2017 A Cut Henry Davis made a billion-dollar fortune by carefully growing his family’s smallscale slaughterhouse into one of the U.S.’ top suppliers of highquality beef. It’s always been quality over quantity, and Greater Omaha’s customers like it that way—even when they can’t get all the meat they want. Above JAMEL TOPPIN FOR FORBES BY CHLOE SORVINO OCTOBER 2017 FORBES ASIA | 35 FORBES ASIA GREATER OMAHA H enry Davis glides his knife through a 40-ounce tomahawk ribeye, its bone running from his fingertip down to his elbow. He cuts into the meat to check how the chef at Spencer’s steak house in downtown Omaha has cooked it. It’s a touch more than rare, and the cool, marbled center is exactly to his liking. Davis is more than a Spencer’s regular. He is the owner of Greater Omaha Packing, one of the top slaughterhouses in the country. The 3-inch-thick steaks he and his three guests are eating were hand-delivered to the kitchen, fresh off the line of his Greater Omaha plant a few miles south. On this hot summer night in June, Davis, a 66-year-old who wears thin-rimmed silver glasses, is in a celebratory mood. Just the day before, his 97-year-old company shipped its first box of beef to China since 2003, mere hours after the U.S. Department of Agriculture finalized a new trade deal that reopened the $2.5 billion market to American butchers. His plant was one of two slaughterhouses in the U.S. initially approved to ship to China, and his beef arrived first. He celebrated by taking 30 Chinese trade representatives to Spencer’s. (Donald Trump eventually took credit for this coup in July, claiming in a speech that Davis hugged him a lot of people, and Greater Omaha has been able to respond to the needs of the people. They want good steak,” says Bob Oros, an independent beef analyst. Greater Omaha is intentionally lean. The nation’s top four suppliers, JBS USA Holdings, Tyson, Cargill and National Beef Packing, account for about 75% of the U.S. market in terms of revenue; Greater Omaha, the next biggest, has 2%. It sells 700 million pounds of beef a year, a tiny slice of the 25 billion pounds processed in the U.S. annually. Despite being one of the oldest beef packers in the country, Greater Omaha has opted not to grow too big. It operates just one plant and chooses not to sell to big chains like Costco, WalMart and McDonald’s (JBS and Cargill are the fast food giant’s hamburger-meat suppliers). It also keeps daily production to 2,400 cattle. “We don’t want gigantic customers. The big chain stores? We don’t have enough beef. If they run a sale, it would be too large of a percentage of our product. I don’t want that,” Davis says. This approach allows Davis’ cattle buyers to be extremely choosy. Its buyers select each steer—either Angus or Hereford breeds—individually from independent ranches that feed cattle by hand. “The truth is we buy the fact that hand-fed cattle are better than machine-fed cattle,” says Angelo Fili, Greater Omaha’s 61-year-old, tobacco-chewing executive vice president. “A company that does 30,000 cattle a day, they’re already going to get some cattle that are prime, and they’re gonna get some animals that are raw. We’re after the higher-end stuff.” To that point, nearly all its cattle come from Nebraska and Iowa. Nebraska, in particular, has become a preferred spot for cattle raising, thanks to its climate and excellent grassland, which sits atop the largest aquifer in the country. Greater Omaha claims that helps ranchers raise cattle superior to those from drought-prone states like Texas and California. Greater Omaha also tailors cuts to a customer’s specifications, sending them pounds of just one cut, such as Porterhouse, or having an imam bless steer to meet halal standards. Its steaks are served at some of the U.S.’s top eateries, including Peter Luger, Minetta Tavern and Marea in New York City, French Laundry in Napa Valley, Ruth’s Chris Steak Houses and Wolfgang Puck restaurants. These prime cuts help fatten the company’s bottom line, giving it an operating margin estimated to be 6% (Davis won’t comment). That’s much higher than the industry average of 3% and better than that of JBS, Tyson and National Beef ’s meat businesses (privately held Cargill also won’t confirm). “The big packers have to compete with us. We are agile,” Davis says. DAVIS’ PLANT WAS ONE OF TWO SLAUGHTERHOUSES IN THE U.S. INITIALLY APPROVED TO SHIP TO CHINA, AND HIS BEEF ARRIVED FIRST. CHINA IS THE LATEST FRONTIER FOR GREATER OMAHA. for getting China approved. Davis, whose immigrant grandfather started Greater Omaha, says he did thank the president and shook his hand, though there was no embrace.) China is the latest frontier for Greater Omaha, which was the first to sell U.S. beef in Japan (2008) and Saudi Arabia (May 2017). Also the biggest American seller in the European Union, it now exports to 69 countries. Despite the huge potential of these markets, Davis sets limits and is wary of selling too much to any one customer—be it a local restaurant distributor, a small supermarket chain, a hotel group or even a country. Last year, exports accounted for just 16% of its $1.4 billion in sales. “I’m very careful how I do that,” Davis says. “We don’t get overdependent on any market or any raw material or any customer.” His thoughtful approach and decision to carefully carve out a high-end, more profitable niche has helped him grow the business tenfold since he took over in 1987. It’s been enough to turn Davis, who owns 100% of the company, into one of the country’s richest butchers, worth an estimated $1 billion. He has big plans ahead, but nothing that will compromise his high-quality beef. “We are a country of meat eaters. It’s a spiritual experience for 36 | FORBES ASIA OCTOBER 2017 GREATER OMAHA’S STORY starts with an immigrant in search of a better life. Davis’ grandfather, Herman Cohen, fled the Russian empire to America in 1905 at age 11 to escape discrimination and pogroms. Cohen served in the U.S. infantry in World War I and reentered civilian life with $100 in his pocket. In 1920, he moved to Omaha, keen on investing in beef. At the stockyards, Cohen would pick a single steer every day, butcher JAMEL TOPPIN FOR FORBES A U.S. Department of Agriculture grader examines Greater Omaha’s meat for color, marbling and texture. it himself and then sell the beef, while a partner sold the hides. The small operation grew slowly to a few animals a day. Cohen’s youngest daughter, Florence, married Davis’ father, Pennie, who joined his father-in-law’s business in 1945 and soon became president. They kept it simple, butchering the meat into hindquarters and forequarters sections only, which would be sold to a butcher who would cut the meat into ready-to-cook sizes. It was a good time to be in the business, as America doubled its beef consumption in the prosperous years following World War II. Families spent nearly one fourth of their food budget on meat in 1950, according to the American Meat Institute. Davis was born in 1951 and witnessed the glory years of Omaha’s beef industry. He grew up walking through the livestock auctions on the exchange floor and attending meetings with his father and other Omaha slaughterhouse managers. When he was 4 years old, Omaha beat out Chicago to become the nation’s top spot for beef processing. He later spent summers at the plant doing everything from buying cattle to butchering meat on the assembly line. By the 1970s, Omaha had lost its edge. Slaughterhouses hightailed it out of the city to be closer to rural feedlots. Davis joined the business full-time in 1973 after graduating from the University of Denver with a degree in business and a minor in computer science. At the time, Greater Omaha had 40 employees and pro- cessed 232 steer a day. “We were too small to have roles. Everybody did everything,” Davis recalls. As a young exec, Davis had big ideas. He purchased the company’s first computer, a Polymorphic System 8813, for $5,870 in 1980. There was no software available to help the slaughterhouse track receivables and project future sales, so he wrote it himself. “We had a good business model back then, and I wasn’t going to change my business to fit the software,” Davis says. As he started to write the code in a Unix shell script, which the company still uses today, Davis built software that would analyze data such as how many pounds of meat were shipped and what percentage of fat each animal had. For the first time, the company could predict the number of cattle needed for the next week, how much each truckload cost the company to process and how much it would make from a sale to a meat purveyor. Davis took over as president in 1987, when Greater Omaha was bringing in $130 million in sales a year from about 650 cattle a day. He soon revolutionized the company by jumping on a trend Iowa Beef Packers had started. IBP (acquired by Tyson for $3.2 billion in 2001) had invented boxed beef, in which one cut of beef, like loin or rib, was packed in vacuum-sealed packages and shipped in boxes that were more manageable for a grocer or a restaurant distributor. Previously, packers sold only larger hindquarters and forequarter cuts. More butchering meant higher OCTOBER 2017 FORBES ASIA | 37 FORBES ASIA GREATER OMAHA prices, and Davis launched a production line for boxed beef in 1992. “Most of the industry followed along. Those that didn’t are no longer in business,” Davis says. DEMONSTRATING HIS OWN agility, the lean, 5-foot-8 Davis whips his Mercedes Benz S550 Coupe onto L Street, just a few blocks from Omaha’s historic ten-story Livestock Exchange Building. Davis drives this car to work most days but also owns a 1965 Lotus and a 1966 Alfa Romeo. His most prized automobile is a 1966 Ford GT40, the first American race car to win at Le Mans, which is estimated to be worth millions. He raced the car the next year at Pebble Beach and won in his class. He says he’s stopped racing old cars after seeing too many crashes and now races a modern Porsche. Davis is taking me for a drive through Omaha’s beef history, pointing out streets that used to be filled with blocks of stockyards and thousands of cattle. He slows the Merc as he nears the former Livestock Exchange Building, now a brown-brick landmark sometimes used for weddings and events. “There used to be 36 packers here,” he says with a nod before turning into his own headquarters. Pointing to a redbrick building on his right, he adds, “That was one right over there.” Just four packers are left and slaughtered here. Then their carcasses are rigged to a machine that strips off hide in one fast pull. From there the meat is chilled for two days while a USDA official inspects the marbling and marks each with a grade—select, choice or prime. The meat then winds its way through conveyor belts and machines spread across several rooms, as the beef is separated into sections. At the very end of the line, butchers cut to order. In a new $12 million addition, the beef trimmings are ground into fresh (never frozen) hamburger meat. (The trimmings are also sold to distributors who resell to smaller chains like Five Napkin Burger and Five Guys.) Contrary to expectations, the plant is pristine, and there is no odor. The vast stainless-steel rooms have a lablike quality to them. Davis designed the huge space to be flexible, and he’s investing $40 million to erect a 65,000-square-foot eight-story coldstorage warehouse. Using artificial intelligence, robots will pull the boxed beef off shelves and fulfill orders. The new warehouse will open up space in the existing plant to allow Davis to come up with additional high-margin items. He’s already planning on doubling his ground-beef production to an estimated 70 million pounds annually by next year. Greater Omaha has also started selling to meal-delivery outfits like AmazonFresh and Hello Fresh as well as offering direct-to-consumer steaks, called TenderAge. (It couldn’t use the name Omaha Steaks, as it’s already taken by a rival.) The steaks it sells online are some of its most expensive and premium cuts: $320 for eight 14-ounce ribeyes or $180 for eight 6-ounce filets. Davis says he will never abandon his restaurant customers, a business that is still quite lucrative. Pat LaFrieda Meat Purveyors, for instance, which sells to thousands of restaurants around the U.S., has been ordering from Davis for decades. “Greater Omaha actually selects product specifically for us, and that means the world to us,” LaFrieda says. Lawry’s, which operates ten restaurants and buys more than 750,000 pounds of meat a year, concurs. Executive chef Ryan Wilson says he’s been transitioning all his locations to exclusively use Greater Omaha beef, despite the fact that the prices are a bit higher and that he can’t always get as much as he wants. “You oftentimes have to pay more of a premium up front,” Wilson says. “But I think it’s worth it,” Despite the demand, Davis says, he has no plans to open another plant. He’s toured two that were modeled after his but wasn’t interested. He also turned down buyout offers, including two since the trade deal with China. “I don’t open that door because the plant’s not for sale,” he says. Davis has no heir apparent and no succession plan. Divorced in 2006, he has two children in Chicago: a 26-year-old daughter who is a psychotherapist and a 23-year-old son who just started law school. Davis says neither has any interest in coming back to Omaha like he did. He’ll figure out what that means for the business when the time comes but doesn’t think that will be anytime soon: “I’ve never enjoyed this more in my life. I’m not giving this up. You’re not getting me out of here.” F DAVIS HAS NO HEIR APPARENT AND NO SUCCESSION PLAN. “I’VE NEVER ENJOYED THIS MORE IN MY LIFE. I’M NOT GIVING THIS UP. YOU’RE NOT GETTING ME OUT OF HERE.” in Omaha, and Davis’ plant, still in view of the exchange building, is the city’s largest. Davis’ office is 200 yards from the main packing floor, just past the sales department. Inside, his desk is crowded with three computer monitors. One shows the movements in the beef futures market, another is open to his email, and the third is used to access the internet and work on spreadsheets. There’s also a tablet and a smartphone for when Davis needs more bandwidth. “Every morning I get up, I can’t wait to go to work,” he says with a grin from behind his desk. Most days he dons his white smock and hairnet and steps into the freezing-cold 400,000-square-foot stainless-steel plant, which is open to visitors ranging from curious chefs to family ranchers. He and his executive team designed it themselves in the late 1990s. He didn’t hire an engineer because they “knew this better than anybody else.” The renovation was necessary in part because of the growing size of the steers. The average weight of cattle has nearly doubled in three decades as more are being fed corn rather than grass. “When cattle got bigger, all of a sudden they didn’t fit through the line,” Davis says. Each day 2,400 cattle are brought in from the outside pens 38 | FORBES ASIA OCTOBER 2017 At $20 billion, WeWork is the most valuable startup in America outside of Uber and Airbnb. The bet: Rather than just building co-working spaces, it’s going to change everyone’s office experience. BY STEVEN BERTONI 40 | FORBES ASIA OCTOBER 2017 JAMEL TOPPIN FOR FORBES The Way We Work FORBES ASIA FUTURE OF CITIES A Cubicle killers: WeWork cofounders Adam Neumann (left) and Miguel McKelvey have built an office-space powerhouse by combining communal vibes with capitalist drive. dam Neumann, the frenetic cofounder and CEO of WeWork, was pacing back and forth in his office in New York City’s Chelsea neighborhood, ignoring the heavy bag, the Peloton spin bike and the generously stocked bar in favor of something more urgent: the clock. Softbank boss Masayoshi Son, Japan’s wealthiest man and one of the world’s great investors, had promised the 38-year-old former Israeli naval officer two hours of his time for a full-blown tour of the coworking innovator’s headquarters. And he was an hour and a half late. “Masa arrives, looks at his watch and tells me, ‘I’m so sorry, but I only have 12 minutes,’ ” Neumann says in a raspy voice. And after precisely 12 minutes of walk-around, Son said he had to go. But he offered Neumann a chance to join him in his car. Neumann grabbed his pitch deck and climbed into what would become a $20 billion ride. Son told Neumann to put away his presentation, pulled out his iPad and started sketching the outlines of an investment. “I thought the valuation had been too high for a company its size and that someone could easily copy it,” Son tells Forbes. “But no one could. The idea was easy to talk about but hard to execute—Adam proved he can do what he says.” As the ride ended, Son signed his name on the iPad sketch, drew a line beside it and handed Neumann the pen. “Even today, I still get goose bumps thinking about it,” Neumann says, holding up his lanky forearm to show that the hairs are standing straight up. “Half an hour later, he emails me this.” Neumann retrieves on his iPhone a photo of the digital cocktailnapkin contract—a tangle of lines laying out a global partnership, with Neumann’s scrawled signature in blue ink beside Masa’s in red uppercase. The backseat term sheet emerged from the lawyers as a two-part deal: Softbank would invest $3 billion directly into WeWork ($1.3 billion via a tender offer of existing employee stock and $1.7 billion in new equity). A separate $1.4 billion was to be spread across three new entities to expand WeWork across Asia: WeWork Japan, WeWork Pacific, WeWork China. Neumann’s team would build and manage the offices, and Softbank would handle the local relationships. Valuation: $20 billion. WeWork, which straddles real estate, hospitality and technology, was now worth about the same as hotel operator Hilton Worldwide and more than commercial real estate giant Boston Properties and social media sensation Snap. At the deal closing in Tokyo in March 2017, Neumann was joined by his cofounder and fellow billionaire, Miguel McKelvey, a sinewy 43-year-old former University of Oregon basketball player. “Masa turns to me and asks, ‘In a fight, who wins—the smart guy or the crazy guy?’ ” Neumann says. “I say, ‘Crazy guy,’ and he looks at me and says, ‘You are correct, but you and Miguel are not crazy enough.’ ” “I told Adam not to be proud that WeWork was growing organically without a large sales force or spending big marketing dollars,” Son says. “Make it ten times bigger than your original plan. If you think in that manner, the valuation is cheap.” How cheap? “It can be worth a few hundred billion dollars.” THE CRAZIEST ONE OF all would seem to be Son, once you try to figure out exactly what he’s valuing at $20 billion— a figure exceeded only by Uber and Airbnb among U.S. startups (digital intelligence outfit Palantir has a valuation similar to that of WeWork). It’s an office company . . . that doesn’t own any offices. Like Uber and Airbnb, WeWork is essentially a middleman, renting space from others at wholesale and then upcharging for cool design, flexible leases and built-in services like internet, reception, mailroom and cleaning. (Free coffee and beer, too.) WeWork’s value-added is office culture—at massive scale. Starting with one New York City space in 2010, the company now has 163 locations—a figure that has tripled since OCTOBER 2017 FORBES ASIA | 41 FORBES ASIA FUTURE OF CITIES La Fayette, Paris the end of 2015—spread across 52 cities worldwide. Its 2,900-plus employees manage 10 million square feet for 150,000 members who pay anywhere from $220 a month for the use of a common area to $22,000 for a 50-person office. “No one is investing in a co-working company worth $20 billion. That doesn’t exist,” Neumann says. “Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.” That’s most certainly true—the company is on track to do an estimated $1.3 billion in revenue in 2017 (with operating margins around 30%), giving it a price-to-sales ratio higher than what a more conventional growth company might garner as a multiple of cash flow. But this “energy and spirituality” premium seems high no matter how you measure it. Son’s $20 billion valuation translates to $133,333 per member (even though the ability to walk away at any time is part of the model), each of whom generates $8,000 a year on average. It values each foot of space it rents at $2,000, compared with, say, $325 to buy Class A real estate in a tech hub like Austin. Even before Son came along, the likes of Benchmark, Fidelity, Goldman Sachs and JPMorgan had put $1.55 billion into WeWork 42 | FORBES ASIA OCTOBER 2017 Weihai Lu, Shanghai Fulton Center, New York based on the idea that traditional metrics don’t reflect its disruptive model. “They create a vibrant and fun environment and fill it with excited people to energize the work experience,” says Benchmark’s Bruce Dunlevie. Jamie Dimon, JPMorgan’s CEO, calls WeWork a way of life: “They’ve built a hybrid hospitality-and-tech company that’s entirely different from anything in real estate.” But servicing startups will get you only so far. Their bet—and especially Son’s—is that WeWork can change how pretty much everyone experiences an office. Over the past couple years, WeWork has signed up companies like GM, GE, Samsung, Salesforce, Bank of America and Bacardi. Earlier this year, WeWork allotted an entire building in Greenwich Village to IBM, and now big companies generate 30% of monthly sales. “It’s now a core real estate solution for our people,” says Matt Donovan, who runs marketing for Microsoft’s Office 365 brand and has put more than 300 employees into WeWork locales. “They get access to different locations, plus insight and feedback from other WeWork members who use our products.” For growing companies WeWork offers a way to enter new cities without the hassle of scouting locations, negotiating contracts, designing the space and hiring vendors. “There is no reason to WEWORK PHOTOS CLOCKWISE FROM BOTTOM LEFT: BENOIT FLORENCON; MECHI FAHS; SETH POWERS. Torre Bellini, Buenos Aires rent office space,” says Josh Kushner, the founder of the VC firm Thrive Capital and cofounder of Oscar Health, which launched its Los Angeles market from a WeWork site. “It’s a one-stop shop. Business is hard enough, and these guys take out all the friction.” KIYOSHI OTA/BLOOMBERG WITH ITS SPRAWLING MANSION, ancient stone walls, fish ponds and acres of tightly mowed fields, Eridge Estate, a one-hour train ride south of London, is straight out of Downton Abbey. But in mid-August, the tidy, aristocratic park—where Henry VIII led royal deer hunts—looks as if the freewheeling Burning Man tribe has invaded from across the Atlantic. More than 1,200 tents, trailers and tepees have sprouted in the meadow. There are food trucks and beer trucks and dozens of bars. On one edge of the field (near the roller disco, rock-climbing wall and a building façade that reads “Mac ’n’ Cheese”) amateur acrobats dangle from a full-size trapeze. On the other side is a strobing Coachella-worthy stage, where indie band Florence and the Machine will later play to a crowd of 5,000-plus. Packs of twentysomethings tour the scene in jeans, galoshes and tight T-shirts printed in half a dozen languages: English block letters, Japanese characters, Hebrew script. Branded on the back of each shirt is the word “We” enclosed in a white circle. Welcome to “WeWork Summer Camp.” Summer Camp started in 2012 as a gathering of 300 customers and employees in upstate New York. For this year’s gathering, WeWork flew in 2,000 employees from 15 countries to the English countryside for three days of dancing, crafts, company presentations and plenty of booze (some 3,000 WeWork members will join the party halfway through). Neumann, who has never met a microphone he doesn’t like, takes the stage a halfdozen times. Channeling Tony Robbins, he talks about finding your superpower, explains that if you have a higher purpose the money will follow and encourages everyone to carry the love and vibrations of camp back to the WeWork offices. For a cynic, it’s easy to dismiss Summer Masayoshi Son Camp as the cash-burning boondoggle of an overheated startup. To Neumann it’s a distillation of what WeWork does. “Culture is our intellectual property,” he says. “Summer Camp is a way of telling our employees they are extremely important, even though sometimes it doesn’t feel that way. And there’s a team around you here that believes in the mission.” Mixed in with executive presentations and workshops are paddleboarding and poetry, basketball and basket weaving, a class on wild foraging and another on how to infuse vodka with almost anything. There is finance team flip cup, real estate versus legal department kickball, an international soccer tournament (which the U.K. squad wins), a talent show, and a music set by TenaciousWe, an employee band. “Both Adam and Miguel come from community upbringings and understand the power of it,” says Michael Gross, the former Morgan’s Hotel CEO and current WeWork vice chairman. “It helped them survive.” NEUMANN AND MCKELVEY grew up on opposite ends of the world, but their childhoods, critically, were transient and communal. Neumann was born in Israel to a pair of doctors who divorced when he was young. He lived in 13 places during his first 22 years, including two years in Indianapolis and a stint on a kibbutz where his mother was the doctor. Severely dyslexic, Neumann couldn’t read or write until third grade but still won entrance into the Israeli Navy’s elite officer program. After serving, he moved to New York to live with his sister Adi, then a professional model and a former Miss Teen Israel. McKelvey, meanwhile, was raised in Eugene, Oregon, in a col- “MASA TURNS TO ME AND ASKS, ‘IN A FIGHT, WHO WINS—THE SMART GUY OR THE CRAZY GUY?’” NEUMANN SAYS. “I SAY, ‘CRAZY GUY,’ AND HE LOOKS AT ME AND SAYS, ‘YOU ARE CORRECT, BUT YOU AND MIGUEL ARE NOT CRAZY ENOUGH.’” OCTOBER 2017 FORBES ASIA | 43 FORBES ASIA FUTURE OF CITIES lective of activist single mothers who valued causes over cash. It was a childhood in which homes changed often and boxes of federally funded food arrived at the front door. In the family Volvo, McKelvey would drop rubber balls through the rusted-out holes in the floor so he could watch them bounce behind the car. He loved the annual trip to the King’s Table buffet. “It was a privilege to eat as much as you wanted rather than scrap for what you could get,” McKelvey says, surveying a headquarters overflowing with free coffee, beer and snacks. “I’d eat bowls of soft-serve ice cream until I felt sick.” A gifted student, the 6-foot-8 McKelvey played basketball at Colorado College before transferring to the University of Oregon, where he juggled big-time college sports and demanding architecture studies. The two met in New York through a mutual friend and bonded quickly over their backgrounds and competitive streaks. Neumann had started a baby-clothes company, Egg Baby (a big seller: pants with built-in kneepads called Krawlers), subletting part of his space to make rent. McKelvey was an architect (grinding out store designs for clients like American Apparel), and Neumann talked up a plan to rent cheap space that they could divide and upsell as offices. Neumann persuaded his landlord, Joshua Guttman, to rent him a floor in Brooklyn, and they launched Green Desk—an earth-friendly co-working space. It was a hit. Neumann and McKelvey looked to expand to Manhattan. Guttman instead want- viding enough amenities and perks so that no one hates flying coach. A single extra desk, over the span of a decade, can translate into about $80,000 in sales. But unlike, say, a Boeing 777, with its standardized space, each project has unique dimensions and demons. WeWork has opened in former customs houses, breweries, warehouses and, in Shanghai, an old opium factory. To make the most of every millimeter, WeWork uses 3-D scanners to measure space and builds virtual-reality models to help design each floor before turning a single screw. Heat-mapping technology tracks traffic and usage to find the right balance of shared space, desks and conference rooms. “Landlords just sell aluminum. We make iPhones,” says Dave Fano, the growth officer and resident mad scientist. Scale has created price advantages and provided WeWork with unique expertise. Since 2010, Neumann’s team has installed 9.6 million pounds of aluminum framing, hung 12 million square feet of glass walls, laid 8.8 million square feet of oak flooring and built 12,000 phone booths. WeWork does everything itself: location scouting, contracting, interior design. It even makes the thousands of braces that secure the miles of glass walls that WeWork installs. This year, increased tech efficiency and massive buying power have pushed the cost of adding a new desk down 45%, to $8,550. Solving the construction side looks easy compared with the human problems that arise when a company grows from 2 people to more than 2,000 in seven years. Neumann has recruited seasoned executives from real estate, hospitality, media and tech to manage the once scrappy startup, including CFO Artie Minson (Time Warner), president Rich Gomel (Starwood), COO Jennifer Berrent (WilmerHale), vice chairman Michael Gross (Morgan Hotels) and chief product officer Shiva Rajaraman (Spotify, YouTube). There have been growing pains: a public scuffle with a cleaners union in 2015; leaked documents showing lowered forecasts in 2016; layoffs that hit 7% of the staff that same year. Former employees have sued the company, claiming they were overworked and underpaid. Partly in response to these problems, McKelvey has recently taken the role of “culture officer”—a softsounding, ironic title at a company that claims culture as its core product. He oversees HR, training, compensation and benefits for thousands of employees deployed across countries, languages and customs. Neumann, for his part, has swapped a macho, military style for a more professional stance. “He’s realized that motivating with fear is not effective. He used to think fear was a positive thing,” McKelvey says. “Adam now understands that treating people with dignity and respect, and fueling them with positive energy, is a much better way, and he has an incredible ability to do it.” Asked about this shift, Neumann spends a moment contemplating the surface of his desk. “How many organizations are going to be comfortable with a cofounder saying that to a reporter? I’m good with it—it’s kind of the culture we talk about.” Neumann says he owes the change to his wife, Rebekah, who served as WeWork’s first brand officer and pointed out the flaw after a month watching her husband in the office. Neumann took “LANDLORDS JUST SELL ALUMINUM. WE MAKE IPHONES.” ed to fill vacant space in his Brooklyn buildings. They sold him their stake for $3 million and bet their winnings on a Manhattan co-working play based on the lessons learned from the kibbutz and the collective. Real estate meets culture. That was 2010; seven years later, their combined stake in WeWork is worth $4.3 billion. IN THE HEART OF WEWORK headquarters sits a 60-inch touchscreen monitor with the company’s 163 locations pinned on a Google Map. WeWork’s proprietary software turns the hippie-sounding special sauce into data. Finger taps reveal updates on construction, deliveries and maintenance. A swipe gives you data on potential new neighborhoods, listing public transportation, coffee shops, gyms and nearby retail brands that signal a ripe location (Equinox and Urban Outfitters are strong indicators). “They have to buy aluminum and glass, build desks and make sure the plumbing and the air-conditioning and the Wi-Fi all work,” Benchmark’s Dunlevie says. “It’s a grubby, execution-sensitive business.” WeWork has built a complex technology and logistics system to handle all that grubbiness, and in September, it opened ten new locations, more than it launched in a typical year until 2014. In some ways WeWork looks less like a property manager than like an airline—squeeze in the maximum number of seats while pro- 44 | FORBES ASIA OCTOBER 2017 the criticism to heart. “I met with my spiritual teacher and went to a therapist. I realized that if I came from a positive place, not only will everyone feel better and I will feel happier, but the company will work better.” DURING THE 12-MINUTE tour that confirmed enough for Son to eventually write a $4 billion check, Neumann had time to show off just one space: WeWork’s R&D center, which is part Apple Store, part Home Depot. Laptops, touchscreens and iPhones are wired to doors, lamps, fixtures and deadbolts. There’s a test desk that, like a driver’s seat, adjusts to saved height settings with the swipe of an ID. Next to it, a prototype phone booth matches lighting and temperature to the user’s preference. A keyless entry system, which costs about $3,000 off the rack, has been replaced by a $400 WeWork version powered by a cheap Raspberry Pi computer. WeWork plans to turn each office into one giant connected device that adapts to each user and sends constant feedback to WeWork’s mission control. For Softbank vice chairman Ron Fisher, who sits on WeWork’s board, this tech leap drove the investment, since it will allow WeWork to efficiently scale to hundreds of spaces and serve millions of members. “We did an enormous amount of financial modeling—how they can grow, the margins they can generate, the cash flows they can create,” he says. To Neumann this technology-driven efficiency will become a product all its own, something like a WeOS, which will make WeWork indispensable even to companies that don’t have an interest in co-working. Instead, WeWork will be able to design, build out and run their offices. Additional revenue can come via renting WeWork’s tech stack and staffing WeWork managers to foster community and keep the space running smoothly. For companies, it’s a way to inject the WeWork vibe into staid offices. For WeWork, the program takes the asset-light model a step further by deemphasizing its biggest cost and risk—longterm office leases. To pull off both WeOS and its continued global expansion, WeWork must solve what Neumann calls “the trillion-dollar question”—how to keep each WeWork feeling authentic and artisanal as it reaches McDonald’s-size scale. “We need to pay attention to the whole space—every room, chair and table—so it feels uplifting and inspiring,” McKelvey says. “We have to train our team members to run the space and promote community. If we do all that, we create this positive energy that inspires people.” For Neumann it all goes back to the kibbutz of his youth. He remembers that it was hard to make friends at first. However, his family had the only VCR, and Neumann finally got some kids to come to the house to watch movies. But the VCR was gone. His mom had taken it to the hospital for a 24-yearold cancer patient with little time left. “The other kids were extremely understanding, and we still ended up hanging out together,” Neumann says, tugging at his T-shirt, his face reddening and his eyes tearing up. “The funny thing is that everyone soon completely forgot about the VCR. And then one day, two months later, we came into my house and the VCR had returned. Nobody had to ask why.” F WEWORK AND NAKED HUB BATTLE IT OUT IN ASIA South African Grant Horsﬁeld, founder and chairman of Naked Hub, China’s largest co-working operator, reenacts an exchange he had with Christian Lee, managing director of WeWork Asia, in which Horsﬁeld did his best Winston Churchill impression: “Shanghai is our turf. We’ll ﬁght on the water, we’ll ﬁght to the sky, we’ll ﬁght on the land, we will not give up Shanghai!” As he utters each word, he pounds his ﬁsts on the coffee table. “We will take Hong Kong as well.” A Naked Hub work area on Hong Naked Hub, part of the Kong’s Bonham Strand. Naked hospitality group, started out offering luxury retreats in the mountains of Moganshan, a place long known as an escape for the Shanghai elite. It ventured into hip co-working environments in 2015, commands 14 locations in Shanghai (WeWork has 4 there) and is the market leader in Asia. In July, Naked Hub merged with Southeast Asia’s largest co-working operator, JustCo. Together the pair boasts 41 co-working offices in nine cities. With new locations being built in Jakarta, Bangkok and Kuala Lumpur, their Asian empire is growing. Not to be outdone, WeWork recently acquired Singapore’s co-working provider Spacemob in an effort to target Southeast Asia and Korea. Jonathan Wright, associate director of ﬂexible work space services at Colliers, on the ﬂurry of activity: “WeWork and Naked are actively negotiating a number of deals in the market right now to expand their footprint in tier-one cities,” he says. The demand has far exceeded his own research estimates. “Corporate occupiers are taking the sector more seriously in these centers.” In Hong Kong, a Naked Hub site opened last month in the trendy neighborhood of Sheung Wan while parts of the building are still under construction. Nonetheless, three ﬂoors of the building are already fully occupied. Neighboring Sai Ying Pun will be unveiled next month. Across Victoria Harbor, another site in Kowloon East is being developed. There are others competing for dominance in the region. Chinese co-working unicorn URWork is ﬂexing its muscles with 88 centers across 22 cities in mainland China, Hong Kong and Singapore. The two-year-old operator is backed by heavyweight investors including Sequoia Capital, Alibaba’s Ant Financial and Zhen Fund. Beyond Asia, URWork has lofty ambitions to open more locations in the U.S., and to challenge WeWork by looking at cities like London, Paris and Berlin. —Pamela Ambler OCTOBER 2017 FORBES ASIA | 45 FORBES ASIA STRATEGIES The Right Chemistry Incyte has one cancer blockbuster, and it’s got Wall Street banking on another. Its secret: embracing an older age of pharma. BY MATTHEW HERPER S usan Waite, 48, still remembers hearing her disease’s name, myelofibrosis, for the first time five years ago. “You Google,” she says. “I know you’re not supposed to, but everybody does. And at the time the average life expectancy was two and a half years.” This rare cancer was turning her bone marrow, which produces blood cells, into scar tissue, leaving her anemic. She had one child in high school and two more in college, and was so tired she’d gone from being a social butterfly to a person who goes to bed right after dinner. Her spleen was so enlarged with blood cells that it hurt and prevented her from eating. Then her doctor offered her a pill called Jakafi, manufactured by a Wilmington, Delaware, company called Incyte. She felt better in days. After dinner at a restaurant, she insisted her husband stay out with her to hear a band play. Her spleen shrank. “I was able to eat full meals again,” she says. “It was very exciting.” Now? She’s still a bit anemic, but she’s doing well. “I feel almost normal,” she says. Jakafi has transformed Incyte into one of Wall Street’s favorite stocks and a perennial subject of takeover speculation— in part because of Jakafi’s efficacy and in part because of its list price ($11,587 a month, indefinitely, usually covered by insurance). Last year Incyte had a net income of $104 million on sales of $1.1 billion, up 1,496% and 47% from the prior year. Its shares have sextupled over the past five years, and it has a $25 billion market capitalization. Incyte’s secret has been to stick to the traditional work of large pharmaceutical companies even as other firms have chased bright, shiny new technologies. Incyte’s 1,000 employees still work mostly in Delaware, a stick-in-the mud stance at a time when companies from drug giant Merck to biotech firm Alexion are setting up shop in Boston to be closer to the hot zones of biology research. But more than that, Incyte is focused on the basic chemistry of making drug molecules, a part of the drug-discovery process that many 46 | FORBES ASIA OCTOBER 2017 larger companies increasingly outsource. Incyte already has two follow-ups: an arthritis medicine being developed with Eli Lilly that is approved in Europe and will be filed by early 2018 with the U.S. Food & Drug Administration, and a second cancer drug, for which investor excitement is reaching a fever pitch. Hervé Hoppenot, the 57-year-old Big Pharma veteran who took over as Incyte’s chief executive in 2014, says he sees the company playing a role in a transformation of the way the health care system treats cancer. “If we are successful, the entire cost of treating cancer should be drugs,” Hoppenot says. “That is my hope, not from a business standpoint but from a medical standpoint. What you would like is being able to replace palliative treatment and hospital treatment for patients who are a few months from dying with medicines that are very effective against cancer.” Incyte was born out of one of the great names of American business: DuPont. In June 2001, the chemicals giant decided to sell its pharma division to Bristol-Myers Squibb for $7.8 billion. During the four months it took to close the deal, the division’s chief executive, Paul Friedman, started looking for another job. Friedman connected with Julian Baker, a well-known biotech hedge-fund investor. Baker had a stake in a company called Incyte, which sold genetic information to drug companies. At the turn of the century, there was a tulip bubble around gene data, allowing companies like Incyte, Celera Genomics and Millennium Pharmaceuticals to raise huge amounts of money. At the end of 2001, Incyte had $508 million in cash. The deal Baker and Friedman struck was this: Friedman would take over as Incyte’s CEO but would build his research lab not near Incyte’s Palo Alto, California, headquarters but in Wilmington, where DuPont was based. Friedman immediately began poaching DuPont’s best scientists. “People didn’t want to go to work at Bristol-Myers Squibb,” says Friedman, who is now chief executive of Madrigal Pharmaceuticals in West Conshohocken, Pennsylvania, JAMEL TOPPIN FOR FORBES Incyte CEO Hervé Hoppenot counts on bleeding-edge tech like this NMR spectrometer, used to see individual molecules, to help his company invent new medicines. OCTOBER 2017 FORBES ASIA | 47 FORBES ASIA STRATEGIES but still serves on Incyte’s board. “They wanted to find a new venue to work.” Swamy Yeleswaram, one of Incyte’s researchers, remembers getting the call. Friedman opened with: “So, Swamy, are you coming to Incyte?” Yeleswaram recalls that Friedman was annoyed that he didn’t immediately say yes. Much of Incyte’s core team, including current chief scientist Reid Huber and key inventors of all of Incyte’s drugs, were recruited from DuPont. Incyte’s gene database was supposed to help this team invent new drugs. It didn’t work out that way. But one gene patent (which later turned out to be invalid) did point them in the right direction, toward a protein involved in the immune system called Janus kinase 2 (JAK2). Initially they hoped a drug targeting it would be effective against the blood cancer multiple myeloma. In 2005, as Incyte was preparing the drug for clinical trials, three papers were published, in Nature, Blood and the New England Journal of Medicine, showing that mutations in the gene for JAK2 were a central cause in both myelofibrosis and a related disorder, polycythemia vera, which causes a thickening of the blood. Within a day, the team had changed The Two-Drug Club IN THE 41-YEAR HISTORY OF THE BIOTECH INDUSTRY, 41 COMPANIES HAVE GOTTEN MORE THAN ONE DRUG APPROVED. HERE ARE SOME SUCCESS STORIES. COMPANY NUMBER OF DRUGS APPROVED 2016 SALES ($BIL) MARKET CAP ($BIL) Celgene 5 $10.9 $111.1 Regeneron 3 4.9 45.6 Vertex 3 1.7 38.7 Alexion 3 3.0 32.7 BioMarin 5 1.1 16.1 Tesaro 2 0.04 6.3 United Therapeutics 2 1.6 5.2 SOURCES: INNOTHINK CENTER FOR RESEARCH IN BIOMEDICAL INNOVATION; FACTSET SYSTEMS. their plans, deciding to explore the efficacy of their new drug on these diseases. Then came another speed bump. There were issues with both the side-effect profile and the intellectual property surrounding Incyte’s original JAK2 inhibitor. Friedman gave his team a week to come up with an alternative, and they used another JAK2 drug they’d originally planned to develop as a topical cream. By 2007, the drug was in clinical trials. In 2010, results published in NEJM showed half the patients who took the drug saw their spleen volume reduced by 50%. The FDA demanded more data that proved patients felt better, too. The drug, now named Jakafi, was approved in November 2011. In its first full year it generated $136 million in sales. Friedman decided to step down when the drug hit the mar- 48 | FORBES ASIA OCTOBER 2017 ket. (Incyte’s main building in Delaware is now named after him.) Hoppenot, who grew up in Champagne, France, and rose through the ranks at French pharma Rhône-Poulenc Rorer, was selected to replace him. At the time, he was the head of oncology at the Swiss drug giant Novartis, which had snapped up the right to sell Jakafi outside the U.S. Hoppenot says he couldn’t resist the opportunity to build a company around this cancer drug. In 2016, Hoppenot purchased the European division of Ariad Pharmaceuticals of Cambridge, Massachusetts, including the rights to another blood cancer drug, to build out a European sales operation for Incyte’s future drugs. This past April, a rheumatoid arthritis drug Incyte had licensed to Eli Lilly was rejected by the FDA; in a surprise to investors, Lilly said in August it would be able to resubmit the drug by January 2018. Many of investors’ hopes for Incyte are riding on a new medicine, epacadostat, invented by Incyte’s in-house team. The medicine is the brainchild of biologist Peggy Scherle, another recruit from DuPont. She became fascinated by a chemical pathway used by the developing fetus to protect itself from its mother’s immune system. Tumors apparently hijack the pathway to protect themselves. Incyte’s chemists tested 10,000 potential drugs to find one that could hit Scherle’s proposed target. Even then, it didn’t shrink tumor cells in the lab; it merely kept them from growing. But epacadostat seems to amplify the potency of two drugs made by Bristol-Myers Squibb and Merck: Opdivo (2016 sales: $3.8 billion) and Keytruda (2016 sales: $1.4 billion), both of which reTOTAL lease the immune system to attack tumors. In RETURN (%, 5-YEAR) clinical studies of the advanced form of the dead273% ly skin cancer melanoma, patients seem to be more likely to see their tumors disappear with 190 a combination of epacadostat and one of these 165 drugs. A big Merck trial comparing the combina33 tion of Keytruda and epacadostat for melanoma 141 will be completed in the first half of 2018. Even Roger Perlmutter, Merck’s head of R&D, is a lit765 tle nervous. He thinks the trial will be successful 111 but notes that no study has compared the combination of Keytruda and epacadostat with Keytruda and a placebo. “All the arguments now are from single-arm data with historical reference,” he warns. “That could turn out to be very wrong.” Incyte’s executives note that the epacadostat results have been consistent across studies in melanoma and lung cancer. If it does work, it will make Incyte one of the lucky few companies selling multiple blockbuster cancer drugs (see table), which fetch a high price on the U.S. market. Hoppenot says that the U.S. system can be “illogical and cruel,” forcing huge co-payments on patients for the drugs most likely to save lives, but insists that his drugs will be good for the health care system. He compares the revolution in cancer to the one that happened with HIV two decades ago, saying that drugs like the ones he has worked on at Incyte and Novartis will cost a lot but will justify themselves by emptying hospital wards. That would be a wonderful thing. F Credit Suisse. Helping entrepreneurs and businesses succeed in $VLD3DFLƟF India’s 100 Richest BY NAAZNEEN KARMALI A Different Reality Fortunes soar despite economic hiccups. I Veteran investor Radhakishan Dandia’s turbocharged economy mani returned with a bang, boosted sputtered in the quarter ended in by the March listing of his supermarJune, growing at a three-year low ket chain D-Mart. of 5.7%, due to the aftershocks of The Indian billionaire factory last November’s demonetization churned out several new faces (see and uncertainties over the rollout of a p. 62), but only half a dozen of them nationwide goods and services tax. But appear in the top 100 as the minimum in a disconnect from current reality, net worth to make the cut rose to the stock market scaled new heights, $1.46 billion from $1.25 billion last boosting the fortunes of the nation’s year. The richest newcomer is cookies100 richest. Their combined wealth rose and-airline tycoon Nusli Wadia. more than a fourth to $479 billion. Other new entrants are Rana Kapoor, None gained more than oil and gas cofounder of Yes Bank, Dinesh Nandtycoon Mukesh Ambani, who cementwana of e-governance services firm ed his decade-long hold on the No. 1 Vakrangee, and digital India’s poster spot by adding a staggering $15.3 bilMukesh Ambani added a staggering $15.3 billion. boy, Vijay Shekhar Sharma, founder lion to his net worth. He’s now among of mobile wallet Paytm. Asia’s top 5 richest. Shares of Ambani’s Reliance Industries A dozen members are poorer than a year ago, half of them (owner of Forbes India’s publisher) were boosted by improved from the pharma sector, which is plagued by challenges (see refining margins and the “Jio effect”: his telecom unit Reliance box, p. 53). Pharma magnate Dilip Shanghvi took the biggest Jio’s thundering success in notching up 130 million subscribhit, with his net worth falling by $4.8 billion. Shares of generics ers since its 2016 launch, though it remains a cash guzzler. By maker Lupin, whose patriarch, Desh Bandhu Gupta, died in offering free domestic voice calls, dirt-cheap data services and June, also declined, shrinking the fortune of his heirs. Brothers virtually free smartphones, Jio sparked a wave of consolidation Shashi & Ravi Ruia suffered a drop as their Essar Steel faced in the market. Witness the recent merger between Vodafone bankruptcy proceedings under India’s stricter new law (see box, India and Idea Cellular, the latter owned by Kumar Birla (No. p. 65). 8), another big gainer this year. These rankings are based on stock prices and exchange rates More than four-fifths of those who kept their spot on the list as of September 15. Private companies were valued by using from last year saw their wealth rise, with 27 adding $1 billion comparisons with similar publicly traded companies. or more. Among them, acquisitive auto parts tycoon Vivek Additional reporting by Debojyoti Ghosh, Sean Kilachand and Chaand Sehgal, whose Motherson Sumi snatched Finnish Anuradha Raghunathan. truck-parts maker PKC Group for $620 million in March. THE LIST 1 MUKESH AMBANI $38 BILLION S RELIANCE INDUSTRIES AGE: 60 2 AZIM PREMJI $19 BILLION S WIPRO AGE: 72 3 HINDUJA BROTHERS $18.4 BILLION S ASHOK LEYLAND AGES: 81, 76, 71, 66 4 LAKSHMI MITTAL $16.5 BILLION S ARCELORMITTAL AGE: 67 5 PALLONJI MISTRY $16 BILLION S SHAPOORJI PALLONJI GROUP AGE: 88 6 GODREJ FAMILY $14.2 BILLION S GODREJ GROUP 7 SHIV NADAR $13.6 BILLION S HCL TECHNOLOGIES AGE: 72 8 KUMAR BIRLA $12.6 BILLION S ADITYA BIRLA GROUP AGE: 50 9 DILIP SHANGHVI $12.1 BILLION T SUN PHARMACEUTICAL INDUSTRIES AGE: 61 10 GAUTAM ADANI $11 BILLION S ADANI PORTS & SEZ AGE: 55 11 UDAY KOTAK $10.5 BILLION S KOTAK MAHINDRA BANK AGE: 58 ANURANG JAIN: TWIN SUCCESS ATUL LOKE FOR FORBES Motorcycle tycoon Rahul Bajaj’s nephew makes his debut after the October 2016 listing of his auto-parts maker, Endurance Technologies, which has seen its shares more than double since the IPO. Jain founded the company in Aurangabad in Maharashtra state in 1985 to supply aluminum castings to his uncle’s Bajaj Auto, but it now 12 gets two-thirds of its $867 million annual revenue from other customers. Endurance has made inroads into Europe, with 8 factories in Italy and Germany. Jain’s twin, Tarang, also a billionaire, runs his separate auto-parts ﬁrm, privately held Varroc Group, also out of Aurangabad. Their father, Naresh Jain, is chairman at both companies. RADHAKISHAN DAMANI $9.3 BILLION 3 AVENUE SUPERMARTS AGE: 62 SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE AZIM PREMJI: GIVING EDGE Despite giving away 39% of his shares in outsourcer Wipro in recent years, the tech mogul’s fortune continues to climb. This year he jumps 2 places to No. 2 after adding $4 billion to his wealth. The gain is partly due to increased revenue and profit at Wipro Enterprises, Premji’s privately held consumer-goods business, which makes everything from soaps to lightbulbs. His personal investment arm, PremjiInvest, with an estimated $3 billion portfolio, backs startups and firms owned by other billionaires. Recent deals: minority stakes in Kumar Birla’s Aditya Birla Capital and in retailer Kishore Biyani’s Future Lifestyle Fashion. MANJUNATH KIRAN/AFP/GETTY IMAGES India’s 100 Richest THE LIST 13 CYRUS POONAWALLA $8.9 BILLION SERUM INSTITUTE OF INDIA AGE: 76 14 SUNIL MITTAL $8.3 BILLION S BHARTI AIRTEL AGE: 60 15 BAJAJ FAMILY $8 BILLION S BAJAJ AUTO 16 SAVITRI JINDAL $7.5 BILLION S O.P. JINDAL GROUP AGE: 67 17 VIKRAM LAL $7.2 BILLION S EICHER MOTORS AGE: 75 DILIP SHANGHVI Bitter Medicine I KUNI TAKAHASHI/BLOOMBERG n 2014 Dilip Shanghvi, founder of Sun Pharmaceutical Industries, India’s most valuable drug company, became the country’s second-richest person, dislodging steel tycoon Lakshmi Mittal. After his $4 billion acquisition of scandal-tainted rival Ranbaxy Laboratories from Japan’s Daiichi Sankyo, Shanghvi was on a roll. So was India’s pharma sector, which was minting billionaires at a record pace. Today both are facing headwinds. The pharma magnate is the biggest dollar loser this year, poorer by $4.8 billion. Ending his threeyear run as India’s second-richest, he slipped to No. 9. In the quarter ended in June, Sun’s sales declined 23% from a year earlier, partly because of a generics pricing squeeze in the U.S., the company’s biggest market. It reported a loss for the quarter of $66 million, its first in four years, due largely to one-off legal costs. Sun’s woes are mirrored across the Indian generics sector, which has been struggling lately with quality issues and increased competition in export markets. In contrast to the broader stock market rally, the pharma index has fallen 17% since our previous list, knocking three pharma 18 tycoons from the ranks and denting the net worths of several of those who remain. Notable among the latter are the Reddy family (No. 97) of Dr. Reddy’s Laboratories and Murali Divi (No. 77) of Divi’s Laboratories. Shares in Dr. Reddy’s fell 6% on a single day in September on news that an audit of one of its factories by German regulators had uncovered manufacturing lapses. An import alert issued by the U.S. Food & Drug Administration for one of Divi’s Laboratories’ factories caused sales and net profits to plummet in the quarter ended June. “From being a defensive play, the pharma sector has turned into a wealth destroyer,” says Arun Kejriwal, founder of Kris, a Mumbai investment advisory firm. One privately held fortune that bucked the trend was that of Hasmukh Chudgar (No. 50), founder of Intas Pharmaceuticals, who ran up a 70% gain following a private equity deal that valued his company at $3.5 billion. Says Ranjit Shahani, vice chairman and managing director of Novartis India: “Given the huge health care needs of this country, India remains a sweet spot.” —N.K. BENU GOPAL BANGUR $6.6 BILLION S SHREE CEMENT AGE: 86 19 ACHARYA BALKRISHNA $6.55 BILLION S PATANJALI AYURVED AGE: 45 20 BURMAN FAMILY $6.5 BILLION S DABUR 21 SUBHASH CHANDRA $6 BILLION ESSEL GROUP AGE: 66 22 PANKAJ PATEL $5.9 BILLION S CADILA HEALTHCARE AGE: 64 23 VIVEK CHAAND SEHGAL $5.85 BILLION S MOTHERSON SUMI SYSTEMS AGE: 60 24 KUSHAL PAL SINGH $5.7 BILLION S DLF AGE: 86 25 NUSLI WADIA $5.6 BILLION Ì BRITANNIA INDUSTRIES AGE: 73 SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE India’s 100 Richest PARTH JINDAL, 27 MANAGING DIRECTOR, JSW CEMENT M.B.A., HARVARD BUSINESS SCHOOL Stepping Up Youngest of 3 siblings and the only son of steel and power tycoon Sajjan Jindal runs the family’s privately held cement maker. Parth wants to double cement capacity to more than 20 million tons a year and list the ﬁrm. A football fanatic, he also oversees the group’s football club, Bengaluru FC, which plays in the Indian Super League. S uccession lines are being drawn in several business groups with the next-gen, sporting foreign degrees, stepping up and assuming key positions in their families’ empires. Their dads, however, continue to play strategic roles. –A.R. SHASHWAT GOENKA, 27 Son of Sanjiv Goenka (No. 73), was given charge of loss-making hypermarket chain Spencer’s in 2013 at age 23. The scion has improved margins and revenues, though Spencer’s has yet to turn proﬁtable. He’s also helping his father with their newly launched packaged-snacks business, Too Yumm. SHARVIL PATEL, 38 NISABA GODREJ, 39 EXECUTIVE CHAIRMAN, GODREJ CONSUMER PRODUCTS M.B.A., HARVARD BUSINESS SCHOOL Adi Godrej’s youngest daughter succeeded him at the family’s consumer goods ﬂagship in May. Nisa has played a key role in expansion across Asia, Africa and Latin America. Younger brother Pirojsha, 36, took charge this year as executive chairman of real estate unit Godrej Properties. Older sister Tanya, 49, is the group’s chief brand officer and has board seats at group companies. MANAGING DIRECTOR, CADILA HEALTHCARE PH.D., UNIVERSITY OF SUNDERLAND Third-generation scion of pharma clan was named managing director of the $1.5 billion (revenue) generic drugs maker Cadila Healthcare in July. Appointment capped a 2-decade stint under dad Pankaj Patel’s (No. 22) tutelage. Sharvil plans to sharpen Cadila’s focus on India and emerging markets. GOENKA: SAIKAT PAUL/PACIFIC PRESS/LIGHTROCKET VIA GETTY IMAGES HEAD, SPENCER’S RETAIL B.A., WHARTON SCHOOL, UNIVERSITY OF PENNSYLVANIA THE LIST Stepping Out These 5 heiresses have minds of their own and are charting a different course from their families: SIMRAN LAL, 46 CEO, GOOD EARTH, AND COFOUNDER, NICOBAR Two-wheeler tycoon Vikram Lal’s (No. 17) daughter runs the $23 million (revenues) Good Earth, a chain of luxury home and apparel stores founded by her mother, Anita, in 1996. A graduate of New York’s Fashion Institute of Technology, last year Simran cofounded Nicobar, a clothing and accessories label, and it already has 6 stores. VASUDHA MUNJAL, 36 FOUNDER, CHOKO LA The eldest daughter of motorcycle magnate Pawan Munjal (No. 30) makes and sells premium chocolates under the brand name Choko La. It’s a Mayan term meaning “to drink chocolate together.” She started it in 2005 and sells through 8 boutiques in Delhi as well as duty-free stores at Indian airports ANANYA BIRLA, 23 FOUNDER, SVATANTRA MICROFINANCE AND CUROCARTE ANAND PIRAMAL, 32 Kumar Birla’s (No. 8) daughter started microﬁnance ﬁrm Svatantra (“freedom” in Sanskrit), which focuses on rural women entrepreneurs, when she was just 17. It has backed 300,000 women so far. Her latest venture is CuroCarte, an online retailer of handmade luxury products. An undergrad from Oxford University, Birla released her ﬁrst song, “Livin’ the Life,” in November. 27 M.A. YUSUFF ALI $5 BILLION S LULU GROUP AGE: 61 28 MADHUKAR PAREKH $4.75 BILLION S PIDILITE INDUSTRIES AGE: 71 29 KALANITHI MARAN $4.55 BILLION S SUN TV NETWORK AGE: 52 30 PAWAN MUNJAL $4.5 BILLION S HERO MOTOCORP AGE: 63 31 KAPIL & RAHUL BHATIA $4.4 BILLION S INTERGLOBE AVIATION AGES: 85, 57 32 MICKY JAGTIANI $4.3 BILLION LANDMARK GROUP AGE: 66 33 HARSH MARIWALA $4.2 BILLION S MARICO AGE: 66 34 B.R. SHETTY $3.9 BILLION S NMC HEALTH AGE: 75 FOUNDER, PIRAMAL REALTY M.B.A., HARVARD BUSINESS SCHOOL Secured a board seat at dad Ajay Piramal’s health care and ﬁnancial services ﬂagship, Piramal Enterprises, in May, joining his sister Nandini. He founded Piramal Realty in 2012 and raised $434 million in private equity investments in 2015 from Goldman Sachs and Warburg Pincus for his property arm. 26 AJAY PIRAMAL $5.2 BILLION S PIRAMAL ENTERPRISES AGE: 62 35 SHAFEENA & SHIFA YUSUFF ALI, 32, 29 FOUNDER AND CEO, TABLEZ FOOD CO.; FOUNDER, ORANGE WHEELS Daughters of Middle East retailer M.A. Yusuff Ali (No. 27) set up and run their own separate businesses. Shafeena has a food empire across the Middle East and India with franchises for Famous Dave’s, Peppermill, Sugar Factory, Coldstone Creamery and Galito’s. The London-educated ﬁnance major plans to invest $50 million over the next 5 years in India. Shifa, the younger sister, runs a children’s entertainment center, complete with climbing walls, an arts-and-crafts section, a hair salon and a cafe, at Abu Dhabi’s Al Wahda Mall. She has earmarked $18 million to open 6 more children’s centers across the UAE. —A.R. RAVI PILLAI $3.8 BILLION S RP GROUP AGE: 64 36 MANGAL PRABHAT LODHA $3.75 BILLION S LODHA GROUP AGE: 61 37 KULDEEP & GURBACHAN SINGH DHINGRA $3.7 BILLION BERGER PAINTS INDIA AGES: 70, 67 SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE VIJAY SHEKHAR SHARMA: MOBILE MONEY MAN Newcomer Sharma, the son of a schoolteacher from a small city in north India, is the youngest member of the top 100 at age 39. He founded fast-rising, Alibaba-backed mobile wallet Paytm, an acronym for “Pay Through Mobile,” in 2011. One of the biggest beneﬁciaries of the government’s decision to demonetize India’s rupees and move to a cashless economy, Paytm has notched up 250 million registered users and more than 7 million transactions daily. A recent sale of Paytm’s shares to Japan’s SoftBank values the company, in which Sharma owns 18%, at $7 billion. Sharma has also created Paytm Mall, an e-commerce business and the Paytm Payments Bank. ANINDITO MUKHERJEE/BLOOMBERG India’s 100 Richest THE LIST 38 KARSANBHAI PATEL $3.6 BILLION S NIRMA AGE: 73 39 ASHWIN DANI $3.5 BILLION ASIAN PAINTS AGE: 74 40 GUPTA FAMILY $3.45 BILLION T LUPIN 41 SHASHI & RAVI RUIA $3.4 BILLION T ESSAR GROUP AGES: 73, 68 ACHARYA BALKRISHNA: HERBAL ICON Surging sales of herbal-consumer-goods maker Patanjali Ayurved more than doubled Balkrishna’s wealth. He owns 98.6% of the privately held company, which he cofounded in 2006 with politically well-connected yoga guru Baba Ramdev (above, right, with Balkrishna). With annual revenue of $1.65 billion in the ﬁscal year to March 2017, up 115% from the previous year, Patanjali sells everything from herbal toothpastes and shampoos to noodles and jams. It is now preparing to launch a line of garments, including jeans. The pair are looking to buy assets of ailing infrastructure companies. 42 SUDHIR & SAMIR MEHTA $3.35 BILLION T TORRENT GROUP AGES: 63, 54. 43 SAMPRADA SINGH $3.3 BILLION S ALKEM LABORATORIES AGE: 91 44 ANIL AGARWAL $3.2 BILLION S VEDANTA RESOURCES AGE: 64 45 ANIL AMBANI $3.15 BILLION RELIANCE COMMUNICATIONS AGE: 58 KISHORE BIYANI: BAZAAR BOSS VIPIN KUMAR/HINDUSTAN TIMES/NEWSCOM (TOP) India’s retail king returns to the top 100 after a 6-year gap, fueled by a fourfold jump in shares of his Future Retail since its relisting in August 2016 as an asset-light, pure-play retailer. It’s known for its Big Bazaar hypermarket chain. Biyani, who started in 1987 with a trouser brand called Pantaloons, got into trouble after an expansion binge saddled him with debt. After shutting down stores, laying off 3,000 and selling Pantaloons to Kumar Birla (No. 8), the feisty retailer rebuilt his empire, focusing on food and fashion. Biyani has splurged on technology, with digital screens on the shelves at Big Bazaar that explain each product and its origin. His Future Group has latched onto e-commerce with 3 portals, selling fashion, home decor and electronic items. 46 P.V. RAMPRASAD REDDY $3.14 BILLION AUROBINDO PHARMA AGE: 59 47 BABA KALYANI $3.13 BILLION S BHARAT FORGE AGE: 68 48 VINOD & ANIL RAI GUPTA $3.11 BILLION S HAVELLS INDIA AGES: 72, 48 49 SAMEER GEHLAUT $3.1 BILLION S INDIABULLS GROUP AGE: 43 50 HASMUKH CHUDGAR $3.05 BILLION S INTAS PHARMACEUTICALS AGE: 84 SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE India’s 100 Richest N.R. NARAYANA MURTHY: WAR OF WORDS The retired chairman and cofounder of software bellwether Infosys was in the eye of a storm after the sudden resignation in August of the company’s CEO, Vishal Sikka, a former SAP executive Murthy appointed in 2014. In a startling turn, the Infosys board blamed Murthy for the CEO’s premature departure. Murthy said he was anguished by the allegations and would reply to them at an appropriate time. In recent months, Murthy’s concerns over alleged corporate-governance lapses at Infosys, which the company has denied, escalated into a war of words. This resulted in a board shakeup, which saw the return of retired cofounder Nandan Nilekani (No. 89) as the company’s nonexecutive chairman. Murthy recently said that one of his biggest regrets was stepping down from Infosys. RANA KAPOOR: POSITIVE BANKER The former Bank of America executive is now India’s second-richest self-made banker after Uday Kotak (No. 11) by virtue of his 11% stake in Yes Bank. Kapoor cofounded ﬁnance ﬁrm Rabo India Finance in a joint venture with the Netherland’s Rabobank in 1998 but sold his stake 5 years later. Along with 2 partners he snatched what was a rare banking license to set up Yes Bank in 2004. Today it is India’s ﬁfthlargest bank in the private sector with assets of $34 billion. The bank and its board have been embroiled in a legal battle with the family of Kapoor’s late partner, Ashok Kapur, who died in the terror attacks in Mumbai in 2008. THE LIST 51 JAIN FAMILY $3 BILLION BENNETT COLEMAN & CO. 52 ASHWIN CHOKSI $2.95 BILLION S ASIAN PAINTS AGE: 74 53 RAJAN RAHEJA $2.9 BILLION S EXIDE INDUSTRIES AGE: 63 54 RAKESH JHUNJHUNWALA $2.8 BILLION S RARE ENTERPRISES AGE: 57 55 KISHORE BIYANI $2.75 BILLION 3 FUTURE GROUP AGE: 56 56 ABHAY VAKIL $2.71 BILLION S ASIAN PAINTS AGE: 66 57 CHANDRU RAHEJA $2.7 BILLION S K. RAHEJA CORP. AGE: 77 58 M.G. GEORGE MUTHOOT $2.67 BILLION S MUTHOOT FINANCE AGE: 67 59 ABHAY FIRODIA $2.65 BILLION S FORCE MOTORS AGE: 72 60 YUSUF HAMIED $2.62 BILLION CIPLA AGE: 81 61 RAJESH MEHTA $2.6 BILLION S RAJESH EXPORTS AGE: 53 62 VIJAY CHAUHAN $2.5 BILLION T PARLE PRODUCTS AGE: 81 SAJJAN JINDAL: FAMILY JEWELS The biggest assets of matriarch Savitri Jindal’s (No. 16) O.P. Jindal Group are overseen by her Mumbai-based son, Sajjan Jindal. Shares of his JSW Steel were up 46% in the past year thanks to a recovery in steel prices. After losing out in June to fellow billionaire Lakshmi Mittal’s ArcelorMittal to 63 acquire struggling Italian steelmaker Ilva, Sajjan announced plans to invest in a venture to make electric cars. Another new business is to make paints. Younger sibling Naveen’s Jindal Power & Steel, once a highﬂier, is weighed down by $7.1 billion in debt. AMALGAMATIONS GROUP FAMILY $2.48 BILLION S TRACTORS & FARM EQUIPMENT SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE SIDDHARTHA LAL: REVVING UP Son of motorcycle magnate Vikram Lal and CEO of Eicher Motors, known for its retro Royal Enﬁeld motorbikes, is on a tear, with his company notching up 42% compound annual sales growth in the past 3 years. The $1.2 billion (revenue) company sold 666,493 bikes in the ﬁscal year ended March 2017 and is revving up to sell more; it opened its third factory in South India in August. Lal, who lives in London, is said to be readying to launch a higher-range twin-cylinder bike. He’s also closing in on superbike maker Ducati with a $1.8 billion bid. SANJEEV VERMA/HINDUSTAN TIMES VIA GETTY IMAGES India’s 100 Richest THE LIST 64 JAI HARI & YADU HARI DALMIA $2.45 BILLION S DALMIA BHARAT AGES: 73, 70 65 SUNNY VARKEY $2.4 BILLION S GEMS EDUCATION AGE: 60 66 MURUGAPPA FAMILY $2.38 BILLION S MURUGAPPA GROUP 67 RAJENDRA AGARWAL $2.3 BILLION S MACLEODS PHARMACEUTICALS AGE: 58 68 HARSH GOENKA $2.28 BILLION S RPG GROUP AGE: 59 69 SUNIL VASWANI $2.25 BILLION S STALLION GROUP AGE: 54 CYRUS MISTRY: EXIT PANGS 70 The shocking ouster of construction billionaire Pallonji Mistry’s younger son as chairman of the Tata conglomerate and from the boards of various Tata companies in 2016, over differences with retired patriarch Ratan Tata, made headlines and sparked a legal feud. The Tata Group went on to order that all business ties with Mistry’s 152-year-old Shapoorji Pallonji Group be terminated. The Mistry family, whose biggest asset is an 18.4% stake in holding outﬁt Tata Sons, also opposed the move by Tata Sons to convert itself into a private company after being public, arguing that it would be detrimental to minority shareholders. Cyrus meanwhile has returned to the family group, where his older sibling Shapoor runs the show. JITENDRA VIRWANI $2.2 BILLION S EMBASSY PROPERTY DEVELOPMENT AGE: 51 71 LEENA TEWARI $2.19 BILLION S USV INDIA AGE: 60 72 KIRAN MAZUMDAR-SHAW $2.16 BILLION S BIOCON AGE: 64 73 SANJIV GOENKA $2 BILLION S RP-SANJIV GOENKA GROUP AGE: 56 PRADEEP GAUR/MINT VIA GETTY IMAGES (TOP) ANIL AGARWAL: MINING MAVERICK Metals and mining tycoon, who controls London-listed Vedanta Resources, saw his wealth rise on a metal revival that sent the company’s shares surging in the past year. In March, he bought a 12% stake in London-listed miner Anglo-American for $2.4 billion through his family trust. Recently he announced plans to buy more shares worth $2 billion to increase his stake to 20% but said he had no intention of making a takeover offer for the company. 74 LACHHMAN DAS MITTAL $1.98 BILLION S SONALIKA GROUP AGE: 86 75 MURLI DHAR & BIMAL GYANCHANDANI $1.96 BILLION 3 RSPL SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE India’s 100 Richest Waiting In the Wings W ith the stock market scaling new peaks, the pace at which India is churning out billion-dollar fortunes has picked up. As a result the price of entry into the top 100 keeps rising. This year, 40 fortunes worth $1 billion or more did not make it to the list. Here are ten of the newest and most interesting faces among them. W SRIDHAR VEMBU, 49 $1.45 Billion ZOHO Princeton engineer cofounded Zoho in 1996 with his 2 brothers and friends to provide cloud-based business software. The privately held company, of which Vembu, with family, owns close to 90%, competes with industry giant Salesforce. BAJRANG LAL TAPARIA, 83 $1.38 Billion SUPREME INDUSTRIES Taparia and family have close to a 50% stake in listed Supreme Industries, one of India’s biggest makers of plastic products, from molded furniture to packaging. Shares have risen in line with rising sales, which are now close to $700 million a year. PADAM CHAND GUPTA $1.3 Billion PC JEWELLER Starting with one jewelry shop in Delhi in 2005, Gupta and his brother Balram Garg built their ﬁrm into an 80-store nationwide chain with annual revenue of $1.3 billion. They own 60% of the ﬁrm, which listed in 2012. MADHU KAPUR YES BANK Kapur inherited shares in Yes Bank after her husband, Ashok Kapur, the bank’s cofounder, died in the terror attacks in Mumbai in 2008. In order to protect her interests, she took the bank, run by her billionaire brother-in-law Rana Kapoor (No. 100), and its board to court to secure her right to nominate board directors. BIJOY GHOSH/THE HINDU IMAGES $1.2 Billion THE LIST 76 K.M. MAMMEN, 67 MOFATRAJ MUNOT $1.95 BILLION KALPATARU AGE: 72. $1.16 Billion MRF Head of sprawling clan chairs $2.3 billion (revenue) MRF, one of India’s leading tire makers. The company was started by his father in 1946 as a manufacturer of toy balloons. Mammen’s son Rahul became managing director in May. 77 MURALI DIVI $1.94 BILLION T DIVI’S LABORATORIES AGE: 66 78 RAMESH JUNEJA $1.92 BILLION S MANKIND PHARMA AGE: 64 R.G. CHANDRAMOGAN, 68 $1.13 Billion HATSUN AGRO PRODUCT Chandramogan, who never went to college, started a tiny venture in 1970 to make ice cream, which initially was sold on pushcarts. Today his listed Hatsun Agro Product is India’s largest private dairy, procuring milk directly from 300,000 farmers daily. SANJAY LALBHAI, 63 $1.1 Billion ARVIND India’s denim king and the fourth generation of a storied textile clan in the city of Ahmedabad. His Arvind has launched several international brands in India, such as Arrow, Tommy Hilﬁger and Gap. ANIL KUMAR MITTAL, 65 $1.05 Billion KRBL With roots in cotton spinning and commodity trading, Mittal’s KRBL is the country’s largest rice miller and exporter of basmati rice, which it sells under the popular India Gate brand. TARANG JAIN, 55 $1 Billion VARROC ENGINEERING Nephew of 2-wheeler tycoon Rahul Bajaj (No. 15) started his auto parts business in 1990. His twin brother, Anurang (No. 79), runs his own listed outﬁt. Privately held Varroc was coined from the names of their wives. 79 ANURANG JAIN $1.91 BILLION Ì ENDURANCE TECHNOLOGIES AGE: 55 80 RANJAN PAI $1.9 BILLION S MANIPAL GROUP AGE: 44 81 VIKAS OBEROI $1.87 BILLION S OBEROI REALTY AGE: 47 82 RAVI JAIPURIA $1.84 BILLION S RJ CORP AGE: 62 83 SALIL SINGHAL $1.83 BILLION S PI INDUSTRIES AGE: 70 84 N.R. NARAYANA MURTHY $1.82 BILLION INFOSYS AGE: 71 85 NIRAV MODI $1.8 BILLION FIRESTAR DIAMOND AGE: 46 86 RAJJU SHROFF $1.77 BILLION S UPL AGE: 83 KOCHOUSEPH CHITTILAPPILLY, 66 $1.11 Billion V-GUARD INDUSTRIES, WONDERLA HOLIDAYS In 1977, Chittilappilly borrowed $1,500 from his father to set up a small unit to make voltage stabilizers in Kochi in South India. He built it over 4 decades into $335 million (revenue) V-Guard Industries. He expanded into amusement parks in 2000 with Wonderla Holidays. 87 SUNDER GENOMAL $1.75 BILLION S PAGE INDUSTRIES AGE: 63 SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE India’s 100 Richest KARAN ADANI: SAFE HARBOR The biggest asset of Gautam Adani’s conglomerate is Adani Ports & SEZ, run day-to-day by his 30-year-old son Karan (above). It is the country’s largest and fastest-growing private port developer and operator, with 10 ports along the Indian coastline. But shares of Adani’s companies rose on other news: Work on his long-delayed, $16 billion Australian coal mining project would commence in October, boosting his fortune by 75% from a year ago. No stranger to controversy, Adani the elder recently faced an allegation that he proﬁted from the government tweaking rules on special economic zones mainly to beneﬁt his group, which is also in energy. Adani, who denied the allegation, sent a defamation notice to the journal that reported the allegation. The journal pulled down the online version of the article, and its editor resigned. THE LIST SHASHI & RAVI RUIA Fallen Stars I MIKHAIL VOSKRESENSKIY/HOST PHOTO AGENCY/RIA NOVOSTI VIA GETTY IMAGES (TOP); SEBASTIAN D’SOUZA/BLOOMBERG NEWS wealth erode to $3.4 billion. n June, India’s central bank Several high-flying billionreleased a list of 12 compaaires, undone by their appetites nies that account for a fourth for debt, have disappeared from of all bad loans at Indian banks the ranks altogether. One notable and face being liquidated under figure is liquor and airline baron the new Insolvency & BankVijay Mallya, who fled the counruptcy Code. Prominent among try in 2016 after his Kingfisher them is Essar Steel, controlled Airlines reneged on loans of more by the Ruia brothers, with a than $1 billion. debt pile of nearly $7 billion, Another big defaulter in the more than $5 billion of which is central bank’s list is Bhushan labeled nonperforming. Steel, which produces steel sheets Essar Steel, a unit of the for the auto industry and owes brothers’ Essar Group, took the banks $6.9 billion. The company’s Reserve Bank of India to court, chairman, Brij Bhushan Singal, calling its move to refer it for dropped off in 2014. Singal’s esbankruptcy proceedings as “distranged older son, Sanjay Singal, criminatory and arbitrary.” Essar who runs his own steel business argued that the Reserve Bank and is weighed down by debt of had given 488 other companies The Ruias are ruing new rules. $5.7 billion, lost his spot in 2015. an additional six months to Other highly leveraged arrive at a resolution with drop-offs are hydropower pioneer Jaiprakash Gaur, their bankers. It had also overlooked the company’s founder of the Jaypee Group, and L. Madhusudhan improved financial position as of March 2017, Essar Rao of Lanco Infratech, who last featured among said. But the court dismissed the plea. the richest in 2011 and 2012. “Many companies The case is now before the National Company overinvested in the exuberant period preceding the Law Tribunal. A court-appointed executive has global financial crisis,” says Rakesh Arora, managing assumed oversight, and Essar Steel’s board has been partner of Go India Advisors, a Mumbai strategic suspended. A newly formed creditors committee advisory firm. “Banks were guilty of giving them has nine months to devise a plan to pay off lenders, loans even when their equity base was too low.” failing which Essar Steel will be liquidated. The court’s tough stance in the Essar case should In August, the Ruia brothers concluded a longdelayed $12.9 billion deal to sell the group’s oil assets curb both borrowers and lenders from going overto Russia’s Rosneft. The bulk of the proceeds will pay board. Education firm Educomp, founded by former lister Shantanu Prakash, who was worth $920 down part of Essar Group debt. The siblings (No. million in 2009, voluntarily applied to restructure its 41), who at their peak in 2010 were among the top $320 million debt under the new law. —A.R. five, with a net worth of $15 billion, have seen their FOR METHODOLOGY AND ALL BIOS, GO TO FORBES.COM/INDIA. 88 DINESH NANDWANA $1.72 BILLION Ì VAKRANGEE AGE: 54 89 NANDAN NILEKANI $1.71 BILLION INFOSYS AGE: 62 90 RADHE SHYAM AGARWAL $1.64 BILLION EMAMI AGE: 72 90 RADHE SHYAM GOENKA $1.64 BILLION EMAMI AGE: 71 92 SENAPATHY GOPALAKRISHNAN $1.61 BILLION INFOSYS AGE: 62 93 SATISH MEHTA $1.6 BILLION EMCURE PHARMACEUTICALS AGE: 66 94 SHAMSHEER VAYALIL $1.57 BILLION S VPS HEALTHCARE AGE: 40 95 SHYAM & HARI BHARTIA $1.56 BILLION S JUBILANT GROUP AGES: 64, 60 96 ANAND MAHINDRA $1.54 BILLION MAHINDRA & MAHINDRA AGE: 62 97 REDDY FAMILY $1.53 BILLION T DR. REDDY’S LABORATORIES 98 ARVIND PODDAR $1.48 BILLION Ì BALKRISHNA INDUSTRIES AGE: 59 99 VIJAY SHEKHAR SHARMA $1.47 BILLION Ì PAYTM AGE: 39 100 RANA KAPOOR $1.46 BILLION Ì YES BANK AGE: 60 SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE 160 years of entrepreneurial drive. 48 years of experience in the region. 20 locations DFURVV$VLD3DFLƟF 1 integrated bank to deliver expertise to help you achieve your needs. 2017 awards received • Best Bank – Wealth Management in Asia Euromoney Awards for Excellence • Best Bank – Financing in Asia Euromoney Awards for Excellence • Number 1 – All-Asia Sales Team Institutional Investor • Number 1 – All-Asia Trading Team Institutional Investor Find out how our award-winning services can help you: credit-suisse.com/apac FORBES ASIA LICENSEE COVERS Around Asia In Forbes: FORBES JAPAN NOVEMBER Takahisa Takahara fronts the magazine’s collection of top 100 Japanese CEOs. His Unicharm, the maker of diapers and personal-hygiene products—also a past selection for Forbes Asia’s Fab 50 companies list—boasts that it covers Japan’s youngest to oldest and “offers value to all our stakeholders.” (forbesjapan.com) FORBES CHINA SEPTEMBER–OCTOBER Film and TV star Yang Mi is No. 3 on the China Celebrity 100 list, which ranks entertainers—and swimmer Sun Yang, No. 69—based on popularity and earnings. (Another actress, Fan Bingbing, repeats as No. 1.) Yang runs her own production company and has 76 million followers on Weibo. (forbeschina.com) FORBES KOREA SEPTEMBER Billionaire CEO of CJ Group Lee JayHyun, out of prison for white-collar crimes, vows to triple the foodand-entertainment conglomerate’s revenues by 2020 and make it the world’s best company by 2030. (forbeskorea.com) FORBES INDIA SEPTEMBER 29 Rocketing startup Byju has metamorphosed from math tutoring into a leader of the new wave of Indian education corporates, attaining a near billion-dollar funding valuation. (forbesindia.com) OCTOBER 2017 FORBES ASIA | 67 FORBES ASIA ASIAN INVASION Big Hitter Si Woo Kim and his Korean colleagues lead the way as Asia’s presence in pro golf flourishes like never before. BY MONTE BURKE Driven: Kim joins Tiger Woods, Sergio Garcia and Jordan Spieth as the only modern-era PGA Tour players to win two tourneys before age 22. OCTOBER 2017 FORBES ASIA | 69 C. COX/GETTY IMAGES; INSET: STUART FRANKLIN/GETTY IMAGES S i Woo Kim sits in the players’ lounge at the TPC Boston golf course after finishing a practice round for the Dell Technologies Championship in early September, the second leg of the PGA Tour’s season-ending FedEx Cup playoffs. His sturdy 5-foot-11, 180-pound frame is in a slouch, making him appear a bit sleepy. The 22-year-old South Korean answers a few questions through Rambert Sim, his agent and—today, anyway—his translator. And then Kim, who is the 39th-ranked golfer in the world, is asked about the signature win of his young career, which came at the 2017 Players Championship, the PGA Tour’s hallmark event. But before Sim can even begin translating, Patton Kizzire, a fun-loving journeyman Tour player from Alabama, walks by and butts in. “I’ll tell you what it means,” he drawls. “It means I need to borrow some money from him.” Kim breaks into a huge smile that lights up his cherubic face. He didn’t need a Hideki Matsuyama: No. 3 in the translation for that. world and the golfer to beat in Asia. Three and a half months earlier, in May, at the beginning of the final round of the Players Championship, the leaderboard was stocked with familiar names. The long-hitting American, J.B. Holmes, was tied for the top spot. The South African winner of the 2010 Open, Louis Oosthuizen, was one stroke behind. Australia’s Adam Scott, the 2013 Masters winner, and Spain’s Sergio Garcia, fresh off his 2017 Masters victory, lurked within striking distance. No one paid much attention FORBES ASIA ASIAN INVASION to Kim, the little-known, then-21-year-old who was in fourth place, two strokes off the lead. That would change. During the windy and difficult final round, Kim remained unflustered. He carded the only bogey-free round of the day and ran away from the big names in the field. With his threestroke victory he became the youngest player ever—by two years—to win the Players and earned a check for $1.89 million. He also became only the fourth PGA Tour player in the modern era to claim two tournaments before the age of 22 (Kim won the Wyndham Championship in 2016), joining Tiger Woods, Jordan Spieth and Garcia. More important, though, was what Kim’s landmark win signified: that the long-anticipated Asian invasion of the PGA Tour may have finally begun in earnest. To be sure, there have been important wins for Asian men on American soil before. “I remember watching the 2009 PGA Championship when [Korean] Y.E. Yang beat Tiger,” says Kim. Another Korean, K.J. Choi—who happens to be Kim’s idol—won the Players, too, back in 2011. But those wins seemed more like outliers than trends. Growing middle classes—Japan and Korea have had large, stable ones for decades, while those of smaller nations, like Thailand and Vietnam, are burgeoning—set the stage for golf’s growth in the region. And in the world’s two most populous countries—China and India—the middle classes have grown by 330% and 150%, respectively, since 2000. “The industry of golf has always followed the growth of the middle class and middle-class consumerism,” says Giles Morgan, the global head of sponsorships and events for HSBC. “In the 19th century, it was Great Britain. In the 20th century, it was the U.S. This century will be about China and India and other parts of Asia.” The consumerism has already begun in earnest: According to the Brookings Institution, the Asia-Pacific middle class in 2015 spent double that of the North American middle class and is expected to spend nearly three times as much by 2020. The major professional golf tours, which are, in essence, vehicles for corporate spending, have simply followed the money. The European Tour was the first to seize opportunities in Asia, most notably with its creation of the Dubai Desert Classic in 1989. That was folllowed up three years later with the sanctioning of the Johnnie Walker Classic in Bangkok, the first significant international professional golf tournament in East Asia. In 2005, the European Tour made its biggest mark in the region with the launch of the HSBC Champions, which has been played all but one year in Shanghai. The inaugural event attracted Tiger Woods, then the No. 1 player in the world (he finished second). Big tournaments, though, are only part of the developmental story. In 2007, to complement its tournament sponsorship, HSBC created a junior golf program in conjunction with the China Golf Association, which catered to both experienced and beginning players. Thus far, 80,000 kids have participated. The PGA Tour, which has had corporate sponsors from Japan for some time now (Sony since 1999 and Bridgestone since 2006), soon followed the European Tour, spurred on by what might turn out to be the single biggest catalyst for the game of golf in Asia: The 2009 announcement that the sport would return to the Olympics in the 2016 Summer Games (after a 112-year absence). It was the PGA Tour, along with the Royal & Ancient (which oversees golf’s rules outside of the U.S. and Mexico) and other groups, that successfully lobbied for golf’s reentry into the Games. The Tour’s point man was Votaw. “When a sport becomes an official Olympic event, countries like China begin to invest in it, a model, whether the money comes from the government or the country’s Olympic committee, that’s very common throughout the rest of the world,” he says. “So we knew that if we got golf into the Games, those revenue sources would be increased and, in some cases, created, in many countries.” Votaw recalls traveling to China shortly after the October 9, 2009 announcement by the International Olympic Committee. He and a group of golf executives toured the Chinese training facilities. “We HE IS EMINENTLY LIKEABLE. AFTER HIS PLAYERS WIN, A PHOTO OF A SMILING KIM FLYING TO ATLANTA IN THE MIDDLE SEAT OF THE COACH CABIN WENT VIRAL. HE HAD PURCHASED THE TICKET BEFORE HE BANKED THE WINNER’S CHECK. There were 3 full-time Asian players on the PGA Tour when Choi joined in 2000. In 2010, there were 8. In the upcoming PGA Tour season, which begins later this month, there will be 13 full-time players from Asia. (The total number of players on the Tour has remained the same for decades.) South Korea is expected to field more players on the Tour than Australia, which has long been a golfing powerhouse. This season will see the debut of the first two golfers from China to ever qualify as members of the Tour. And lurking near the very top is Japan’s Hideki Matsuyama, No. 3 in the world (the highest ranking ever for an Asian male). The 25-year-old won three tournaments in the season just ended, including two World Golf Championships, and has amassed $20 million in career earnings to go along with his annual $8 million in endorsements. The recent infusion of Asian talent is no accident. In recent years, the PGA Tour has been especially aggressive in Asia, creating a new professional circuit in China, opening offices in Beijing and Tokyo and launching a new tournament in Korea. “It’s not a surprise to us,” says Ty Votaw, the PGA Tour’s executive vice president of global business affairs. 70 | FORBES ASIA OCTOBER 2017 MATTHEW MAHON FOR FORBES Says famed coach David Leadbetter of Kim: “He’s athletic, he works hard, and he’s very even-keeled.” OCTOBER 2017 FORBES ASIA | 71 FORBES ASIA ASIAN INVASION stopped at this state-of-the-art exercise area and the head of the CGA [China Golf Association] told us that on October 8, no Chinese golfer could work out in that room, but that after October 9, they could,” says Votaw. While no golf-specific figures are available, it is estimated that the Chinese government spent more than $1 billion on Olympic training infrastructure in 2013 alone. (The next Summer Games will take place in Japan in 2020.) Looking east makes good business sense for both the PGA and European tours. Growth in the game is stagnant in Europe, and the European Tour annually loses money, save for years in which the Ryder Cup is played (and TV ratings spike). Golf in the U.S. has been plagued by bad headlines: Nike recently shut down its golf division, Adidas is in the process of shedding its golf unit (TaylorMade) and retailer Golfsmith went bankrupt. Golf rounds in the U.S. are down 11% since 2000. According to research company Pellucid, 22 new courses in the U.S. opened in 2016 but 176 closed, the eleventh straight year that more courses closed than opened. And though the PGA Tour’s revenues continue to climb at a steady, if not spectacular rate (in the most recent available reports, the nonprofit Tour’s numbers are up from $1.1 billion in 2014 to dominant country in women’s golf (see box, opposite). The biggest lesson Votaw learned from his tenure at the LPGA? “The development of heroes from a particular country,” he says. “We saw how women’s golf grew in Korea. That’s instructive for us on the PGA Tour side. I don’t necessarily think we’ll have 50 players from Asia on our tour anytime soon, but I do think we are developing heroes from that part of the world.” That hero creation started in earnest in 2013, when the HSBC Champions tournament in Shanghai became, all at once, a World Golf Championship event and the first significant PGA Tour tournament in Asia. (Matsuyama won it last season.) “When we started the HSBC tournament and junior program, I said that it would be our wish in 20 years’ time to present the HSBC WGC trophy to a Chinese golfer,” says HSBC’s Morgan. “At the time, it sounded like sponsor p.r. But I don’t think anyone would bet against it now.” The next year, the PGA Tour, in conjunction with the CGA and the China Olympic Sports Industry, created the PGA Tour China Series, designed to be a pipeline to the American Tour. Xinjun Zhang and Zecheng Dou, the first Chinese players to ever earn PGA Tour playing cards, are graduates of that system. It hasn’t all been smooth sailing, though, at least from a public relations standpoint. In 2004, when China had a reported 200 courses, the Chinese government banned the building of new courses for what it claimed to be environmental reasons. And then in 2015, President Xi Jinping issued a ban on the game—which is viewed as capitalist and elite—this time to combat graft. But the crackdowns haven’t had much of an effect in China. Construction continued despite the ban, with the number of new courses reportedly tripling since 2004. And through broadcast partnerships with the PGA Tour, all tournaments are shown live on TV (as they are in South Korea, Japan, Malaysia, Indonesia, India, Thailand, Taiwan, Vietnam and a handful of other Asian countries). The PGA Tour opened an office in Beijing in 2013 and recently signed a deal with the Chinese digital giant iQIYI to live-stream all of its tournaments. “The crackdown is more of a media-driven negative than a negative in reality,” says Votaw, who notes that the Chinese national team practiced at the PGA Tour headquarters this past spring. Not all is well with the PGA Tour China Series, however, which has suspended operations for a year because of a dispute with its promotional partner. “We’re continuing conversations and hope to announce something about 2018 soon,” says Votaw. The Tour has placed an emphasis on South Korea, too. In 2015, the Presidents Cup, an event created by the PGA Tour that pits the best male players in the U.S. against the best international players outside of Europe, was held in Incheon. (Earlier this month in Jersey City, New Jersey, the U.S. team won the Cup, trouncing the International team, although Kim held his own.) “We wouldn’t have staged the event in Korea if the game hadn’t become a cultural imperative there,” says Votaw. (Korean Sangmoon Bae was one of the stars for the in- “THE INDUSTRY OF GOLF HAS ALWAYS FOLLOWED THE GROWTH OF THE MIDDLE CLASS AND MIDDLE-CLASS CONSUMERISM. IN THE 19TH CENTURY, IT WAS GREAT BRITAIN. IN THE 20TH CENTURY, IT WAS THE U.S. THIS CENTURY WILL BE ABOUT CHINA AND INDIA AND OTHER PARTS OF ASIA.” $1.2 billion in 2015), and its stars, like Spieth, Matsuyama, Dustin Johnson and Justin Thomas, are good and very young, its TV ratings have continued to slide since a high in 2008 (not coincidentally during the era of Tiger Woods’ dominance). Asia, on the other hand, is experiencing a growth spurt. Japan and South Korea are Nos. 2 and 3 in top world golf retail markets, according to research group Golf Datatech (the U.S. remains No. 1). South Korea is No. 1 in per capita spending in the $12.6 billion golf equipment and apparel market. And Asia has 109 planned courses and 67 under construction. By comparison, North America has 99 courses planned and 57 under construction. When it comes to capitalizing on Asia, Votaw may be the PGA Tour’s biggest asset. From 1999 until 2005 he was the head of the LPGA. Those happen to be the years when that tour experienced an explosion of Asian talent, which started in earnest with Korean Se-Ri Pak winning the U.S. Women’s Open and the Women’s PGA Championship in 1998. That year, Pak was one of three Koreans on the LPGA Tour. A decade later, there were 45, and they are now the 72 | FORBES ASIA OCTOBER 2017 PAK’S PACK Se-Ri Pak, winner of ﬁve LPGA majors and an inspiration to a generation of golfers. In 1998, a 20-year-old South Korean woman named Se-Ri Pak joined the LPGA Tour and effectively kicked off a revolution in international golf. That year, Pak won the U.S. Women’s Open and the LPGA Championship (now known as the Women’s PGA Championship). Pak was one of only three Koreans when she joined the LPGA. Ten years later, thanks mainly to her, there were 45. Now, ﬁve of the top ten women in the world are Korean, including Nos. 1 and 2 (So Yeon Ryu and Sung Hyun Park, respectively), and Koreans won three of the ﬁve women’s major tournaments in 2017. South Korean men—and Asian men, in general—are years behind their female counterparts. There are many theories for why this is. The ﬁrst, pertaining to Ty Votaw’s “hero creation” theory, is that Asian women had a hero in Pak. Inbee Park, the tenth-ranked woman in the world, is one of many Asian LPGA players who point to Pak’s 1998 year as an inspiration. Another possible reason: Though women golfers are extremely talented, there are fewer of them. As an example, 1,700 women attempted to qualify for this year’s U.S. Women’s Open. By contrast, nearly 10,000 men tried to qualify for the men’s event. Yet another reason: Korea’s mandatory 21-month military service for men between the ages of 18 and 35, which is smack dab in the middle of a golfer’s prime years. But less often cited as a catalyst for the success of Korean women on the LPGA is the robustness of the women’s professional game in their home country. Korea has its own tour—the LPGA of Korea—that offers a reported $19 million in total prize money, less than the LPGA but more than the men’s Korean Tour (a reported $12 million). The LPGA of Korea also has three different tiers, creating an important pipeline for players. And yet despite the success of Korean women in American professional golf, they lag dramatically in prize money when compared to the men. Pak had an incredible run on the LPGA Tour, winning 25 times (including 5 majors), but earned only $12.5 million in her career. By contrast, K.J. Choi won 8 career PGA Tour events (and no majors) and amassed earnings of $32 million. The disparity can most easily be explained in terms of eyeballs: The men have millions more than the women. The PGA Tour has broadcast deals with NBC and CBS—and more than a dozen international broadcasters—which pump an annual $400 million into its coffers, while the LPGA is primarily broadcast by the Golf Channel and makes somewhere under $20 million in TV money. Total prize money for the PGA Tour next season is more than $363 million. For the LPGA: $66 million. However, there are two tournaments where the money could be more equalized. The men’s and women’s U.S. Opens are run by the United States Golf Association, while the men’s and women’s PGA Championships are run by the PGA of America. Surely those organizations, ﬂush with money, could make the purses a bit more even, as the tennis major championships have done. After all, as David Leadbetter points out, Se-Ri Pak certainly had something to do with the rise of Asian men on the PGA Tour as well. —M.B. MIGUEL TOVAR/LATINCONTENT/GETTY IMAGES ternational side that year.) And just this month, the Tour will hold its first sanctioned tournament in South Korea, the CJ Cup, the newest addition to its tournament schedule, which will be played on Jeju Island. The tournament’s $9.25 million purse is bettered only by the four majors, the Players and the four World Golf Championship events. At the front of the line of Asian “heroes,” Matsuyama is an international star, the first from Japan. (Japanese men were long notorious for not traveling; Masashi “Jumbo” Ozaki won 114 tournaments in his career, but all but 2 of them were in Japan.) And then there’s Kim, who is off to a fast start in his PGA Tour career with his two wins, $6 million in career earnings and $1 million in endorsement fees, a figure that is likely to rise in 2018 (his sponsors: CJ, TravisMathew and TaylorMade). Kim qualified for the PGA Tour at the age of 17, but he couldn’t play for a year because of the Tour’s age restriction. He says he had “no fear” during the final round of the Players “because I knew I was playing well.” He helps his own cause by being eminently likeable: After his Players win, a photo of a smiling Kim flying to Atlanta in the middle seat of the coach cabin went viral. He had purchased the ticket before he banked the winner’s check, of course. There is one hazard that Kim might not be able to avoid: South Korea’s mandatory 21-month military service stint for males between the ages of 18 and 35 (Kim shrugs it off: “I am young and not worried about it now.”) Only an Olympic medal can get a golfer out of it, which makes qualifying for the 2020 Games an imperative for Kim. David Leadbetter, the famed golf coach who has three golf academies in China and one each in India, Bangladesh, Indonesia and Thailand, says Kim has the traits he sees in many young Asian players. “He’s athletic, he works hard, and he’s very even-keeled.” Leadbetter contends that an even bigger Asian wave of players is on the horizon. One of his Thai students, a 9-year-old, just won the World Junior Golf Tournament. He also points to the dozens of golf schools that line the practice facility at the Korean golf resort, Sky 72 Club, all instructing young kids. “And I have 8- and 9-year-olds in China who have great technique already and are purely focused on golf,” he says. “I don’t think we’ve even scratched the surface in Asia yet.” F OCTOBER 2017 FORBES ASIA | 73 Forbes Life ZANG TOI A Flair for Fashion Zang Toi came to New York from Malaysia and soon launched his own label. Today he often wears a kilt, dresses a lineup of famous women and supports Donald Trump. BY CHEN MAY YEE I n the midtown Manhattan studio of Malaysian designer Zang Toi, a room with a crystal chandelier, white orchids and evening gowns that start at $13,000, is a small black-and-white photograph in a silver frame. It is of a young Toi and his brother leaning out an upstairs window, wooden shutters flung open, holding strings of firecrackers above a grocery store. Toi’s parents owned the store in the village of Kuala Kerai, in the interior of peninsular Malaysia. Toi, the youngest of seven, grew up stocking shelves, ringing up the register, anything to help out. “That’s the reason I’ve always had the spirit of entrepreneurship,” he says. “I love to sell.” Selling brooms, onions and soy sauce may seem a far cry from selling high fashion, but Toi wears his contradictions well. After all, he is a 56-year-old Asian man whose signature outfit is a mini-kilt. He works in a famously liberal industry but counts himself as a supporter of Donald Trump. Toi burst on the scene back in 1990, when his orange, hot pink and purple jackets and skirts—inspired by the colors of Malay flowers and cakes—landed him in a Vogue article on the new faces of the decade. Since then, his roster of clients has included Sharon Stone, Elizabeth Taylor, Melinda Gates, Kirstie Alley, Patti LaBelle and Ivana Trump, as well as members of the Saudi royal family and a Hearst or two. After almost 30 years in the business, he’s not done. Last month, during New York Fashion Week, he opened the first stand-alone Zang Toi boutique, an 800-square-foot storefront on Lexington Avenue near 75th Street. Previously, Toi relied on high-end department stores to sell his creations. But department stores are struggling, and while his trunk shows for Saks Fifth Avenue remain a major income generator, he no longer sells at Neiman Marcus or Nordstrom. He also has side businesses: There’s a Zang Toi cafe in Kuala Lumpur, and he now designs Zang Toi-branded greeting cards for Papyrus, the North American statio- 74 | FORBES ASIA OCTOBER 2017 nery chain. He says his business is “small but very profitable,” with revenue of between $5 million and $7 million a year. Toi’s career in fashion was shaped by the women in his family. His mother was of a generation that wore the Chinese cheongsam every day. “Mom was not a shopper,” he says. She shopped once a year, before the Lunar New Year, and bought enough fabric each time to have 20 to 25 cheongsams tailored. Toi, whose full name is Toi See Zang, used to tag along and help her pick out the fabrics. The family saved enough to send two of Toi’s brothers to university in the U.K. But when his turn came, his father said he could afford to send him only to Canada. Toi flew to Toronto to complete the equivalent of high school, and mulled studying interior design. His sister, reminding him that he had a flair for clothes, suggested fashion school instead. Toi remembers buying his first copy of Vogue magazine and dutifully completing an entrance-application assignment to create a collage of tear-outs. He was accepted at both Parsons and the Fashion Institute of Technology in New York. His father said he had enough money to cover tuition but little else. Toi arrived at Parsons with $300 and soon began working part-time as an assistant for a knitwear designer in SoHo to pay for rent, food and art supplies. After he graduated in 1984, he continued to work for the designer, Mary Jane Marcasiano, for several years before starting his own label. He had been in business all of two months when he was spotted by an editor at Vogue. “I was,” he says, “at the right place at the right time.” One of Toi’s brothers, See Luon, who runs the Toibranded cafe and a Malaysian offshoot of the brand, Toi the Dressmaker, says their parents encouraged them to follow their dreams. Today, the family includes a chemist, an accountant, a tennis coach and an actuary. Toi’s mother, elegant at 89, still wears cheongsams, only now they’re all by Zang Toi. He recently made her a navy MATTHEW FURMAN FOR FORBES On the rack: “He is the most lovely, most unpretentious, easiest person to get along with. That’s why women keep coming back,” says model and actress Carol Alt. OCTOBER 2017 FORBES ASIA | 75 Forbes Life silk shantung cheongsam for a grandson’s wedding in Malaysia. Toi’s clients tend to be effusive about him as a designer as well as a friend. Singer Patti LaBelle, who’s been wearing Zang Toi for more than 15 years, says she met Toi at a party thrown by a New York socialite friend. Her first Zang Toi outfit was a short purple dress, with flowers embroidered on the skirt, and a purple mink shawl, which she wore to a Foundation for AIDS Research event. Three years ago, performing at the White House’s “Women of Soul” show before President Barack Obama and First Lady Michelle Obama, she wore a dramatic green, hand-beaded Zang Toi cape over black silk pants and a blouse. She recalls the president complimenting her on the outfit. Toi sends her flowers every year on her birthday, says LaBelle, adding: “He’s like my brother. He’s precious.” Carol Alt, the model and actress, met Toi at a party last year and has since been dressed by Zang Toi for red carpet events and bought eight or nine pieces—a dress, jacket, pants, a gray suit, a coat—for herself. “I’ve worn everybody,” she says, reeling off names—Versace, Armani, Ferragamo, Valentino, Zac Posen, Nicole Miller, Vivienne Tam, Marc Jacobs, Ralph Lauren. Of Zang she says: “The way he cuts things, it’s just so perfect for my body. He just has a way of making things that show off your best attributes.” What’s more, “he is the most lovely, most sweet, most unpretentious, easiest person to get along with,” she says. “That’s why women keep coming back.” Ivana Trump, The Donald’s first wife, says, “I am a regular client and keep coming back because Zang Toi takes great pride in making sure that his clients look and feel great in his many designs, including bustier dresses, suits, pantsuits, cashmere sweaters.” If his mother’s uniform is the cheongsam, Toi’s is a mini- version of the Scottish kilt. His first kilt was made by Kinloch Anderson, kilt maker to Britain’s Prince Charles. Toi flew to Edinburgh to be measured and told them to make the length just 13 inches, because “I am short.” He liked wearing it so much he soon started making his own and began wearing them everywhere, including to the Council of Fashion Designers of America Awards, where he was photographed by the legendary New York Times street photographer Bill Cunningham. “Everywhere you go,” he says, “you mark your arrival.” On a summer afternoon at his studio, he wore a short black kilt with a discreet “T” embroidered in black sequins across the crotch, the logo for House of Toi. Above was a white shirt and fitted black jacket. Below, tanned legs ending in black ankle socks and alligator-skin wingtip shoes. A bobby pin decorated with a single crystal kept his black hair out of his eyes. He showed a visitor his latest collection, which has a royal blue theme. There were fitted daytime jackets, lined in silk, for $10,000, to go with $3,000 pants. A thin cashmere-and-silk V-neck sweater with a built-in shirt collar was $3,800. Eve- LADIES’ MAN ZANG TOI’S CLIENTS HAVE INCLUDED ELIZABETH TAYLOR, PATTI LABELLE AND IVANA TRUMP, AS WELL AS THE STARS BELOW. MICHAEL TRAN/FILMMAGIC; JEFFREY MAYER/WIREIMAGE; ROBERT MARQUARDT/WIREIMAGE; MIKE COPPOLA/GETTY IMAGES FOR MERCEDES-BENZ FASHION WEEK; J.SCIULLI/WIREIMAGE FOR AUDI OF AMERICA, INC. Devon Aoki Eva Longoria 76 | FORBES ASIA OCTOBER 2017 Heather Graham Kirstie Alley Sharon Stone ZANG TOI MATTHEW FURMAN FOR FORBES Zang Toi at his recently opened boutique in Manhattan: “I’ve always had the spirit of entrepreneurship. I love to sell.” ning gowns started at $13,000, and the priciest item was a $38,000 silk-lined coat hand-embroidered with Swarovski crystals. He says his new Lexington Avenue boutique offers both special-order and ready-to-wear pieces, including some in the $1,800 to $2,300 range, “so more people can afford Zang Toi.” His operation is lean—his entire team consists of 17 people, including tailors, seamstresses, cutters, two assistants and an office manager—and is spread across 3,000 square feet on the 20th floor of a Manhattan high-rise. It’s a point of pride for him that he’s always handled his own publicity. These days, he considers himself an “elder statesman” in the industry. He’s pleased to see the emergence of prominent young Asian designers in America, from the Thai-born Thakoon Panichgul to Taiwan-born Jason Wu, who has dressed Michelle Obama. While he—and those who came after him—crossed oceans to make it in New York, he thinks the power centers of fashion are shifting and spreading across the globe. For example, he sees China, once regarded as only a low-cost manufacturing base, riding on its long history, rich culture and new wealth to become a fashion capital. It may take 10, 15 or 20 years, he says, but it will happen. Toi, who holds a U.S. green card, isn’t a citizen and can’t vote, but says he wrote a check to Trump’s campaign. “I’m a supporter. I think he’s good for business. I travel all around the country. I’m friends with the working class. I hear their worry. A lot of them just want a full-time job, education for their kids. I wasn’t surprised when Donald won.” Toi says his business has picked up since Trump was elected: “Women are shopping again.” F OCTOBER 2017 FORBES ASIA | 77 Forbes Life LUXURY LINEAGE The Cartier Tank at 100 BY MICHAEL SOLOMON LIKE ITS NAMESAKE, the Cartier Tank is unstoppable. The elegant unisex watch, which celebrates its centennial this fall, has been a favorite of movie stars (Clark Gable, Fred Astaire), First Ladies (Jackie Kennedy, Michelle Obama), even royalty (Princess Diana). Andy Warhol proudly owned one but not for its intended purpose. “I don’t wear a Tank to tell the time,” said the man who invented the concept of 15 minutes of fame. “In fact, I never wind it. I wear a Tank because it’s the watch to wear.” 1926 The watch made its movie debut when Rudolph Valentino insisted on wearing his Tank during his ﬁnal ﬁlm, The Son of the Sheik. Call it an anachronism—or proof of the Tank’s timelessness. 1919 The watch, with its Roman numerals, railroad-track minute markers and signature sapphire cabochon crown, was offered for sale in Paris. Six were sold in 1920, and it was given a name—the Tank Normale. 1976 More than a decade after the Cartier family sold the business, the new owners created a lower-priced line, Les Must de Cartier. In 1976, the Cartier Must de Tank, with colorful lacquered dials and no numbers, debuted. The gold-plated quartz watch, which retailed for about $150, tarnished the prestige of the brand, but sales were extraordinary, and they remain collectible, often selling for more than $1,000. 1963 First Lady Jackie Kennedy was given a 1962 Tank Ordinaire by her brother-in-law Prince Stanislaw “Stas” Radziwill. In June 2017, the watch broke the record for the most expensive Cartier Tank ever auctioned, selling for $379,500— to Kim Kardashian. 1996 Having released the Tank Américaine in 1989, a curved cousin of the Cintrée, Cartier introduced the sportier Tank Française, which had a chainlink bracelet. A postdivorce Princess Diana was often photographed with a gold version, and Michelle Obama wore a stainless-steel Tank Française in her official portrait as First Lady in 2009. 2012 Cartier put another country on the Tank map with the Tank Anglaise. A variation on the Française, the Anglaise came in three types of gold and housed the crown in the watch’s brancard, a reminder that a Tank should always protect. 78 | FORBES ASIA OCTOBER 2017 2017 For the watch’s centennial, Cartier has introduced a battalion of Tanks in some of its most iconic models, including a Tank Américaine that’s ﬁnally available in stainless steel (beginning at $5,750); a tribute to the man who got it all ticking, a Tank Louis Cartier (beginning at $9,750); and skeletonized versions of the Tank Cintrée, limited to editions of—what else?—100. THREE LIONS/GETTY IMAGES; THE ANDY WARHOL FOUNDATION FOR THE VISUAL ARTS, INC.; WORLD HISTORY ARCHIVE/ALAMY; TIM GRAHAM/GETTY IMAGES; JOYCE N. BOGHOSIAN/GETTY IMAGES; DAVID CAIRNS/EXPRESS/GETTY IMAGES 1917 According to company lore, the Tank was designed by Louis Cartier, the founder’s grandson, after being inspired by the tread of a Renault FT-17 light tank, a mechanical hero of the Great War. More likely, the design was an elegant update of the square Cartier Santos watch. But the military connection made for good marketing—the ﬁrst Cartier Tank was presented as a victory watch to American general John Pershing in 1918. 1921 Cartier threw the Tank a curve when it introduced the ﬁrst variation on the Normale—the Tank Cintrée, an elongated watch with a curved case that hugged the wrist. Because each new Cintrée has been produced in limited editions, it has remained one of the most collectible 20th-century watches, routinely selling for between $25,000 and $50,000, and as much as $250,000 for exceptional platinum versions. TECHNOLOGY BEN SIN // GADGETMAN THOMAS KUHLENBECK FOR FORBES (TOP) ANCHEER’S TINY BIKE TWO MONTHS AGO, during one of my biweekly visits to Shenzhen to check out the hardware scene’s latest developments, I met some people from a company called Ancheer who told me they were in the process of ﬁnalizing production of an “ultralight electric bicycle.” Having written about the growth of China’s smartbike scene—as well as being a longtime cycling enthusiast—I was eager to put the bike to a test. So imagine my disappointment when the company informed me that the product was ready for me to try in Shenzhen . . . days before I was set to ﬂy to Los Angeles for a friend’s wedding. I told them my visit would have to wait. “It’s okay,” they said, “we have units in the U.S. you can test for a couple of days.” It turns out Ancheer has long been a manufacturer of small electronic vehicles like scooters, and it’s been selling on Amazon to the West for years. Ancheer’s rep told me that because of Hong Kong’s import restrictions, it’s easier to ship the bike to L.A. Which is how I found myself riding a tiny e-bike to my friend’s wedding. (Fortunately, the venue was nearby— this thing isn’t meant to go long distances.) I’ll get the slightly bad news out of the way ﬁrst: Ancheer’s foldable ebike is so petite, so toylike, that a grown man riding it in the U.S. is destined to get teased, and that’s exactly what happened when my friends saw me rolling into the parking lot like Harry and Lloyd from Dumb and Dumber. But the good news is great: The product is exactly as advertised! The bike weighs only 23 pounds, which means it can easily be carried with one hand by most adults. The handlebars can be folded down, shrinking the bike’s height to just 2 feet. Such portability doesn’t bring much beneﬁt in L.A., land of vast spaces and giant houses. In New York, Tokyo or Paris though? Being able to lug this up the stairs to an apartment without breaking a sweat is going to be a godsend. This e-bike requires no pedaling—you simply rest your foot on a peg; the 350w motor that powers its 12-inch rear wheel is enough to push the thing to just over 10 mph for me. Ancheer claims the bike can reach 15 mph for most people, and I’m inclined to believe it, because at 190 pounds, I am considered heavy. If the rider weighs, say, 120 pounds, I can see the speed jumping 50%. The e-bike can go 12 miles on a single charge (the lithium-ion battery is made by LG). Again, L.A. isn’t the ideal place for this bike because the city is so spread out and everyone drives. But for cities in China, Japan or Europe, 12 miles is great for neighborhood commutes. During my testing, the bike performed perfectly well on the road. On sidewalks and unpaved dirt roads, the wheels struggled a bit with bumps and rocks, but there was nothing that would derail the commute—it just becomes a bumpy ride. The bike could take me up slight inclines, but steep ones might be a struggle. The left handlebar houses the bike’s on/off switch along with a brake lever (it uses a rear disc-brake, like a standard bicycle); the right side has a battery meter and the throttle. Simply pull back on the lever to accelerate (there’s a cruise-control button if you don’t want to be continually pulling back). Being a smartbike from China, it of course comes with a companion app, which works quite well. Connecting via Bluetooth is easy, and once synched, the app shows riding stats and a map with your location. The app can also lock the bike (you unlock it with a PIN or password), but all the lock does is disable the bike’s throttle. A thief can still pick the bike up and walk off with it, so it would probably be a good idea to use a standard bicycle chain lock. The Ancheer e-bike is selling on Amazon right now for $400. If you live in a cyclingfriendly city and have a walk-up apartment, this ultraportable e-bike is for you. F The perfect bike for short distances and walk-ups. BEN SIN IS A HONG KONG-BASED CONTRIBUTOR TO FORBES.COM WHO WRITES ABOUT CONSUMER TECH. OCTOBER 2017 FORBES ASIA | 79 THOUGHTS ON Work “ALL LABOR HAS DIGNITY.” —MARTIN LUTHER KING JR. “Anyone can do any amount of work, provided it isn’t the work he is supposed to be doing at the moment.” —ALAIN DE BOTTON “People don’t choose their careers—they are engulfed by them.” —JOHN DOS PASSOS “Every man’s work, whether it be literature or music or pictures or architecture or anything else, is always a portrait of himself.” —SAMUEL BUTLER “One never notices what has been done; one can only see what remains to be done.” —FRANK MOORE COLBY “THE THREE MOST HARMFUL ADDICTIONS ARE HEROIN, CARBOHYDRATES AND A MONTHLY SALARY.” “The price one pays for pursuing any profession or calling is an intimate knowledge of its ugly side.” —NASSIM NICHOLAS TALEB —JAMES BALDWIN —MIGUEL DE CERVANTES —BETTE DAVIS “I HAVE FOUND SOME OF THE BEST REASONS I EVER HAD FOR REMAINING AT THE BOTTOM SIMPLY BY LOOKING AT THE MEN AT THE TOP.” —MARIE CURIE “DILIGENCE IS THE MOTHER OF GOOD FORTUNE, AND THE GOAL OF A GOOD INTENTION WAS NEVER REACHED THROUGH ITS OPPOSITE, LAZINESS.” “THIS BECAME A CREDO OF MINE: ATTEMPT THE IMPOSSIBLE IN ORDER TO IMPROVE YOUR WORK.” —ROBERT BENCHLEY “HOW CAN I TAKE AN INTEREST IN MY WORK WHEN I DON’T LIKE IT?” —FRANCIS BACON FINAL THOUGHT “A SLUGGARD’S APPETITE IS NEVER FILLED, BUT THE DESIRES OF THE DILIGENT ARE FULLY SATISFIED.” “Fill today with work; fill tomorrow with hope.” —PROVERBS 13:4 —B.C. FORBES SOURCES: NOBODY KNOWS MY NAME, BY JAMES BALDWIN; THE ALGONQUIN WITS, BY ROBERT E. DRENNAN; THE TIMES BOOK OF QUOTATIONS; THE WAY OF ALL FLESH, BY SAMUEL BUTLER; DON QUIXOTE, BY MIGUEL DE CERVANTES; THE PLEASURES AND SORROWS OF WORK, BY ALAIN DE BOTTON; ESSAYS, BY FRANK MOORE COLBY; THE AUTOBIOGRAPHY OF MARTIN LUTHER KING JR. 80 | FORBES ASIA OCTOBER 2017 CLOCKWISE FROM TOP LEFT: MONDADORI PORTFOLIO/GETTY IMAGES; ULF ANDERSEN/GETTY IMAGES; CULTURE CLUB/GETTY IMAGES; HOWARD SOCHUREK/THE LIFE PICTURE COLLECTION/GETTY IMAGES; JOHN SPRINGER COLLECTION/CORBIS/CORBIS/GETTY IMAGES; DAVE PICKOFF/AP; ANN RONAN PICTURES/PRINT COLLECTOR/GETTY IMAGES; MOVIESTORE COLLECTION/ALAMY; PRISMA/UIG/GETTY IMAGES;WOLVERHAMPTON CITY COUNCIL/ARTS AND HERITAGE/ALAMY “Office life typically proceeds behind a mask of shallow cheerfulness, leaving workers grievously unprepared to handle the fury and sadness continually aroused by their colleagues.” 9:30am - 8:00pm October 12th, 2017 AsiaWorld-Expo, Hong Kong Level 2, 201C Network with institutional investors, venture capitalists, angels and many others... This October, China InvestMatch will convene the regions premier venture capitalists, angels, and business leaders to engage in thought-provoking discussions on startup investing trends, strategies and case studies. Organized by: Co-organized by: We will explore best practices in startup investing, lessons from Silicon Valley, and opportunities in startup investing during a full day of keynote presentations and panel discussions at AsiaWorld-Expo. We will also discuss what are the specific challenges and opportunities for Chinese startup investors – both for domestic investments as well as international ones. Supporting Organizations: Forum highlights: • Finding the next unicorn • Top trends in the coming year • Startup Launchpad pitching contest • Should you invest in people or products? • Startup investing in China Media Partner: Join our Startup Investors Forum to network, explore opportunities, and learn from the region’s premier startup investors. 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