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CNBC Transcript: Arthur Huang, Founder and CEO, Miniwiz

Below is the transcript of an interview with Miniwiz Founder and CEO, Arthur Huang. The interview will play out in CNBC's latest episode of Managing Asia on 12 July 2019, 5.30PM SG/HK (in APAC) and 11.00PM BST time (in EMEA). If you choose to use anything, please attribute to CNBC and Christine Tan.

Christine Tan: Arthur, it has been 14 years since you founded the company, did you ever think you would be building a multi-million dollar business just out of trash?

Arthur Huang: I never thought about it like that. We just like what we do and feel the urgency of what needs to be done. So, now the urgency is to bring the machine and the technology straight to where the trash source is.

Christine: Let's rewind to the beginning. When did it all start for you?

Arthur: It started in 2004 when I was still teaching as a university professor. Then, people got kind of frustrated with me because I was this young professor with no actual working experience. So, we decided, how about this, we'll go prove to people how green energy can be in people's hands, how recycled materials and lower carbon lifestyle can be part of people's lives. So, we designed this portable energy charger with wind and solar made from recycled paper to make the product. From there, the wind and solar charges, back then, cellphones like the iPod, StarTAC and V3.

Christine: Right from the beginning, your goal was to simply accelerate the shift to a closed or circular economy. Were you totally convinced from the start that upcycling, more than recycling, was the way to go?

Arthur: Yes. It started in Rome, when I was studying archeology and history, because all the buildings there, the most beautiful buildings there, the classic buildings are made from trash. So, if you cut open a building, it is all "trash" inside. All the trash material is actually creating this beautiful masterpiece of architecture. And my eureka moment was, why can't we do that today? Of course, how do you do that with modern trash, that's the problem. So, I try to turn pollution into some sort of solution for the sake of our future.

Christine: Turning trash into something valuable that people will buy -- was it hard to change consumer mindsets in the beginning? Was that tough? And, how do you get people to be open to the idea of buying a product made from recycled trash?

Arthur: It was really hard in the beginning. On the pure theoretical basis, yes, it makes sense. We have to do this, we have to do this. But, we cannot convince people using ethical dilemma. It really just doesn't work. So you have to trick their senses.

Christine: What do you mean by "trick"?

Arthur: No, it's not really tricking. They have to be willing to actually engage with you and actually pay good money for certain products. So, it's about tricking their senses. Their eyes from far away, the smell… just imagine if the recycled product doesn't smell good, if it doesn't look good, if it doesn't feel good, you won't actually even touch the product. That's not a product.

Christine: Two years after you founded the company, you actually launched your first product, the HyMini, made from recycled plastic, paper and electronics. (Arthur: Yes) Do you remember the response you got? What was it like?

Arthur: The response was crazy because it was at the peak of its growth during that time, and then they had the financial crash afterwards. But during that time, we were on New York Times, Time Magazine, so we had a great response.

Christine: Did you ever imagine you would be such a big hit?

Arthur: No, no, no. We never thought it would be such a big hit. We just thought it's interesting for us. But then, that first product actually set us up for the first batch of investment for ourselves, and of course the financial crisis hit. We had to adapt and switch business model as quickly as we could. So, we decided to take all of the stuff we made in the beginning and turn it all into material development. So, when we started, okay, why was no one buying our product? We needed to bridge the scale gap between recycled material and the final product. The only way to bridge that gap was through building material. Because when you build six meter walls, three meter high, it's already like five tons. So, if I can go grab or fight for construction contracts, if I can have just one wall made from trash, I can already start my own production line. I can rent out the production line. I can take the over-production line to make my own material. So, that's what we decided to invest in and we were very lucky that we had a couple of museums as a result of this method of making. And we were lucky that we got the museum projects, and that kind of put us on a different track, on a bigger scale.

Christine: So, getting into architecture, getting into building materials was your lucky break?

Arthur: It was a lucky break but I think that also made our business model completely different because it literally turned us into a project-based company. All of a sudden, I'm a contractor, I'm also an architect, I'm also an engineer, I'm also responsible for safety and certification. And so, a whole can of worms just opened as we expand.

(Arthur shows Christine a polliber-brick)

Arthur: For example, these walls are made from polystyrene and one of our principals is that everything must have no glue. (Detaching wall fixture) So, everything is interlocking. Why is that important? When you interlock, you can actually reuse the material here. So, this is PC and this is polystyrene. This is the least recycled material out there with the rice husk fiber.

Christine: When you say least recycled material, you mean...?

Arthur: Polystyrene is non-recyclable. This is something that nobody recycles. Polystyrene is like all the foams, and all the coffee lids. Imagine, none of those, even though they have a recycle symbol on them, you don't recycle them. We don't try to change their chemical components. Then, it can become circular. So then, look. (Arthur detaches wall fixture) I disassemble this wall after the street show. This whole thing can be re-recycled into its basic building components.

Christine: How much money have you raised over the years, and who are your key investors?

Arthur: For the first 14 years of our career, we didn't really raise publicly. We just let people work internally within the company; we were putting in our own personal money. And so, internally we're still putting in close to $5 to 10 million dollars, just ourselves. We started with $20,000, then we slowly pooled in our resources and we also made money from our project to fund our own developments. So, that was how we started for the first 14 years. This year, as we look to expand to bigger markets, we took up institutional investors from Alibaba, Temasek-linked Pavilion and also Fubon Bank.

Christine: Over the years, you have taken on projects outside of Taiwan now. And along the way, you met Chinese actor Jackie Chan and with this invention, you actually invented the Trashpresso, which is a trash recycler that can travel from place to place. How exactly does it work and what sort of recycling capacity are we talking about?

Arthur: We are talking about community-based recycling. The whole idea was when Jackie was filming in the middle of desert or the forest. He had a thousand people, the whole film crew, the whole set-up teams. The waste they generated on a daily basis was completely crazy.

Christine: How crazy is "crazy"?

Arthur: Crazy, we are talking about like five to six tons of plastic every day. You know, this is kind of crazy, the amount of packaging, amount of beddings, fabrics coming in. So, imagine, you go to these pristine, natural places to film, and after two weeks, you're gone. You're left with this mess. So, this is one of Jackie's points -- whether we can develop something that can take this community-based waste and transform it into something useful right away. He said, "Can we compress that so we can take it away and turn it into something else later?" This would be the worst case scenario. So, we designed it to be solar powered. Also, we want to prove to people how little energy it takes, because a lot of people say, "Why do you recycle? Recycle costs more energy, and it costs more pollution." So, one of the missions for this whole project is to use almost zero energy. And the second thing is -- it has to have no water footprint and no air footprint. So, it has reverse osmosis as you clean the material and it has reverse osmosis within the system. It also has a solar system that takes only 10 kilowatts to power a whole recycling line for 1000 people. So, we're looking at a community that can generate around five to six tons of material within the week which we can process right away. So, just imagine if you have an ocean cleanup in the middle of nowhere, now, you can take this machine and park that machine and you can take five tons of trash and transform that into a school. And that was exactly what we did in Tibet.

Christine: So now you've invented the Trashpresso, what's next? What's the next big thing you're working on?

Arthur: We're working on a lot of software recognition – to identify the type of trash that's coming into the system. The shape and the production method of packaging materials are changing. So, data is morphing. If you imagine urban mining, the material that's coming into your input is changing, can you adapt to the change of new material? Can you adapt to the new generation of biodegradable material? How do you actually measure and recognize that using the least amount of footprint to do that? You want to use A.I., right? You want to use a camera to recognize the shape, you want to use the light to bounce the shadow. By the way, nobody has this type of data right now, so somebody has to put in the effort to actually recognize this waste.

Christine: The Trashpresso sounds like a breakthrough because you can basically transport the container-like machine anywhere in the world to recycle trash. In your mind, does it change the future of recycling?

Arthur: It does, I think it really does. So, this is where my passion lies now, I am full on trying to decentralize recycling because one of the two problems that I've hit upon as I try to understand why circular economy doesn't work at the moment, is because everyone talks about recycling as if I put it in the recycle can, it's already recycled. No, it's not. The reason being, when you put it there, all the different materials will be put in there and it's contaminated. Once it's contaminated, you have to ship to a central sorting facility. By the way, till this day, the sorting is still done by hand. It doesn't matter if it's in the U.K., in Germany, in Japan, or in China. It's still done by hand. People think there's some "magic machine" that can sort it. No, there's no such thing. So, the easiest way to make circular economy possible is to catch your waste while you consume, before it gets contaminated, before it gets mixed up with everything else and before you spend the carbon footprint transporting it to another place. You can see, recently, all these countries are banning trash from developed nations to ship into developing nations because of the illegal dumping, it is because the recycling actually doesn't work. For a long time, for 20 years, we thought recycling was working by dumping trash into third world countries. So, that's the whole idea. We decentralized recycling. When the consumer consumes, we catch the material on the spot. We turn the consumer into a recycler. And the key tenet for this is that you have to shrink the machine for it to be cheap enough, fast enough, and small enough. So in the next generation of Trashpresso that we designed -- we are showing in Singapore and we are also going to be demonstrating around Europe and scaling across China in different shopping malls -- we will show people that these small machines can directly take the waste and reward the consumer at the same time. It will turn them into a responsible recycler and turn that into something of value that they will actually want to keep.

Christine: So, the next question is scaling up the Trashpresso. What sort of fleet are we talking about and what do you have now in your arsenal? And, how many do you hope to have in the next two to five years?

Arthur: We want to have a set and a series of mini collectors around Trashpresso in every city and every major shopping mall. Right now, the system is designed to be 20 mini collection points and digital collection points with a centralized tiny Trashpresso transformation machine. So, there should be one in every city center. That's our goal. Why city center is important is because this is where a lot of people go for movies, for coffee, and shopping as entertainment. So then, recycling becomes part of a gamification and part of entertainment. This is the ambition we have to scale across major cities across Asia using this system.

Christine: Do you think you've hit a gold mine?

Arthur: I think so.

Christine: In recent months, the dumping of trash in developing countries has hit headlines. China has imposed a ban on import waste and we find that now, countries like the Philippines and Malaysia are sending back trash to developed countries. Do you think the problem has finally hit home?

Arthur: Oh, I have to say, this problem I've always known. If you go to the trash market in China in Kunshan, just have a look. It's all Western trash, it's not Chinese trash. So, this problem the Chinese has banned is just the beginning. And all these other countries like Malaysia, Philippines banning that, thank you! I'm thanking them for doing that on the government level, because this will actually stop this irresponsible dumping. It will force local authorities to actually deal with the situation properly.

Christine: What has taken them so long?

Arthur: Indirectly to me, local creativity has become the most important right now. I love that because that means local creativity has to disrupt existing waste management companies. Waste management companies now are suddenly going to be disrupted by a bunch of young kids. They're going to come up with new ways to figure out where their materials are going to and then, they're going to have to figure out how to turn that into something that's useful to them in the local community. I think this hyper locality is going to happen and it is empowered by all the data and knowledge we have today.

Christine: Do you think the current slowdown in the global economy is going to impede recycling efforts?

Arthur: The funny thing is, since I started in 2004, the economy went like this (Motioning the economic cycle). The green technology will always go like this and go down, go like this and go down, go like this and go down (Motioning up and down). But, if you look at the trajectory in reality, the green technology is still going up. Even though it goes down, it's still going up. So to me, would it impede? Yes, it will impede initially. If you want to look for funding now, it's almost impossible. I mean, for sure. But if you think about it, this is the perfect time for young entrepreneurs to invest in themselves, and come up with their own solutions. And when the time is right, the investment will come back in and they will scale up again. So I think this is a perfect time to come up with these ingenious solutions locally.

Christine: Within Miniwiz itself, you're actually working with big brand names like Coca-Cola, Starbucks, Nike and hotels like Marriott and Starwood to come up with trash solutions. Are you seeing real accountability on the part of companies when it comes to being responsible on the sort of trash they're creating?

Arthur: They definitely want to do that on the marketing front, because gaining customer loyalty, gaining new customers, and retaining old ones are becoming more important in these organizations. So, what's on top of people's minds? Ocean plastic. What's on top of people's minds? Trash issues, sustainability issues. These have become issues people care about. Of course, they need that accountability to retain customers. Ten years ago, it was merely a lip service. Now, it is going into the supply chain. So I see that as scaling in a more meaningful way.

Christine: You have a laboratory in Taipei where you have a team of engineers who are constantly experimenting with a wide array of materials, and you've actually invented some 1,200 types of new materials. What's the adoption rate like, and has it been easy getting engineers, architects or even manufacturers themselves to switch to these new materials?

Arthur: Not at all. Nobody wants to buy our materials, which is why we have to diversify how we actually do business. There is a scale difference. When it comes to switching materials for the last hundred years, almost no one has actually come up with a new material.

Christine: Do you think that would happen in the next generation?

Arthur: It would definitely happen, but with the current linear supply chain and the current way of how the responsibility shifts between each linear supplier, it's really difficult because everybody holds the responsibility of their material being shipped here to the next station. So, this is actually an issue. So when you actually come up with your recycled material, the first thing that they ask you is to guarantee quality for millions of tons. How can you guarantee that?

Christine: So what needs to happen then, in your opinion, to go from linear to a closed-loop circular manufacturing system?

Arthur: First of all, I think we need to, first of all, shorten the chain. You have to shorten the chain because right now, there are five to six different vendors before you get any final product. That's also a very complex supply chain. So, can you shrink the chain? This is the way we design products. You may have noticed - many of our products are designed with one or two suppliers, from one source directly to this. So, the first thing is how you design the products. Shrink the chain, and within that chain, how do you manage that? Because the chain is much smaller with the new data and the input of a machine, so you can actually optimize that level, and be responsible for the product from input to the end product. And then we have to be responsible for the end product, and put it back to the new input. That's why it has to be a service model, because you have to be responsible for that whole circle.

(Arthur shows Christine a white pair of sunglasses)

Arthur: This is from cigarette butts.

Christine: No way.

Arthur: Yes, this is literally 100 percent from post-consumer cigarette butts.

Christine: This is from cigarette butts?

Arthur: Yeah. So this is very precious, this is-

Christine: Which part of the cigarette is it?

Arthur: The air filters, and these are used ones. So, this pair of sunglasses is really precious. Actually, it's made from a lot of cigarette butts. This is the natural color from the cigarette butts after you compress them. This process makes really nice original material for sunglasses that are already made from cellulose acetate. The cellulose acetate of the cigarette butt filter is cellulose acetate.

Christine: So how many cigarettes did it take to make this?

Arthur: 2,000.

Christine: 2,000 cigarettes. Somebody had to smoke 2,000 cigarettes to give you this pair of sunglasses.

Arthur: Yeah, but the reason why we wanted to show this is because the biggest ocean plastic today is actually cigarette butts. It's not plastic bottles. So we want to show that this is what matters.

(Arthur shows Christine other products recycled from waste)

Arthur: This is a sample room for the materials we have. This is waste fiber punched into a carpet. These are all recycled PET for the sofa. This is what we work on with. (Arthur picks up pillow case) And, this is actually all from recycled polyester, which is plastic bottle, but it has a double-sided decor. And you can see from that waste material you can punch into lamp, you can press it into the ceiling lamps.

Christine: Feels like cardboard.

Arthur: It feels like cardboard but it's actually recycled polyester.

Christine: It's been 14 years, looking back at the business you've built, what were some of the hard lessons you've learnt along the way?

Arthur: Cockiness. You cannot be too cocky, especially when you make money. At one time, we were making pretty decent returns and once you start making decent returns, you really think you're invincible. This is typical. I never thought it would happen to me, but the fallacy really did happen, and I wasn't careful. Once you start making money, you start making investment, big investment move without thinking about the consequence. Before, we were always tight in resources. So when you're tight on resources, you're always striving for the most efficient way of doing something. Even in the worst case scenario, you're still at the highest efficiency. But once you start making money, that's when a lot of big businesses and companies fail. We are not immune to that and it already happened to us. So, I think that lesson will stay with me for a long time.

Christine: But just to be clear, Miniwiz today, after 14 years, is profitable?

Arthur: Yeah, I would say this year. We were profitable, then, we became unprofitable. We were profitable and quite decently well; we actually made a million to two million net. And then, we became unprofitable.

Christine: It's been quite a journey for you.

Arthur: Yeah. So, we almost went bankrupt multiple times. I'm sure any entrepreneur who has actually been through 10, 15 years of hard work, they'd know what I'm talking about. I'm no different. Everybody has the same problem.

Christine: As the CEO and founder of Miniwiz, what sort of leadership style do you provide to drive innovation, that sense of resilience within the company, and also that sense of mission to do what you do?

Arthur: Everybody knows the problem of pollution. It is not rocket science. We are lucky that we are blessed with this universal problem that everybody feels like they want to contribute. So, we get very passionate people in our office naturally. I think the hardest part for us is how to manage passionate people. Another thing is, all the machines or the technology or the system that we built are smart or trying to be smart. So, the people who design them are super smart. But unfortunately, when you have a lot of smart people and a lot of motivated people, there is a lot of conflict internally.

So, I feel like I'm like a school counselor (Christine laughs), constantly breaking up fights. So, that's my leadership challenge – I have to be a non-partial counselor. I have to be a –

Christine: Sounds like you're managing a lot of egos all the time.

Arthur: Yes, correct. But, I'm sure this is also not a weird problem either, because I'm sure a lot of entrepreneurs have the same problem.

Christine: You're trying to make recycled, upcycled trash sound cool and really sexy. But there's really nothing glamorous when you have to take your people and your engineers to a smelly trash collection site to really sift out materials. Has it been hard finding the right people to work for you?

Arthur: No, no, no. Because we actually have these kind of grueling sessions that whenever people came with us for the first three months, they literally had to do some really nasty manual work (Christine laughs). Okay, and –

Christine: Like what?

Arthur: Like, for example, we took the bottles from MBS. They had to sort through all the bottles, and they had to open them. Some people had put cigarettes in them, some people put food in them which was already rotten. You had to sort them to know what types of material you're dealing with. Also, all the small projects we have, you have to build them with your own hands.

Christine: So you need to see the problem for yourself?

Arthur: Yes, yes, yes.

Christine: That's what you want your staff to do?

Arthur: Yes, exactly. So that's one of the problem - you have to see the raw material you're taking, especially for the young people who come in.

Christine: Do they ever complain?

Arthur: They do, yes. But I say, look, you've got to tough it out.

Christine: It builds resilience.

Arthur: Yes, yes, yes. Generation after generation of colleagues that went through that are like, "Nah, when I was there…" Everyone has war stories that are worse than the other ones. So, this actually builds competition. Another is the final product that you build, you always have to deliver it yourself, with your own hands. So, you cannot build a system without actually touching it. You cannot hire a contractor and try to just build it. You have to actually build yourself. Whether it's the Trashpresso or the final building architecture material, you have to actually put the brick - one brick at a time together.

Christine: And finally, you've received many awards like the Financial Times' Earth Award and the Technology Pioneer from the World Economic Forum. What message would you like to send out to others who also want to embark on the same journey as you?

Arthur: Recently, I do get a lot of these e-mails and they're always like, "Oh, we want to be just like you." I was like, "No, you should be just like yourself, actually." And then they ask, what type of information can you point me to? When I get this type of e-mail, I get really angry because no one pointed me to information. You have Google , everyone has a phone, just type. What do you want to know? Before, someone approached me to ask for a solution, I said, "No, you should figure out your solution."

Christine: So, do your own homework.

Arthur: Do your own homework. But most people don't like to do their homework. So, the suggestion is very simple: please, do your homework.

Christine: Arthur, thank you so much for talking to me.

Arthur: Thank you so much for having me, thank you.

END

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