Red Rhino comes to the rescue

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How a little red fire engine helped Peter Ho’s HOPE Technik turn its fortunes around.

The Red Rhino mini fire engine is currently an important part of the armoury of the Singapore Civil Defence Force (SCDF). Known as the Light Fire Attack Vehicle, it is designed to respond quickly to emergencies in the HDB heartlands. The vehicle is converted from a regular pickup truck and can manoeuvre itself around tight corners in housing estates to help fight fires with its water mist gun or free trapped victims in car accidents with its hydraulic-powered cutting tools. More importantly, it was the Red Rhino that came to the rescue of HOPE Technik, the engineering company that designed and built the vehicle, and Peter Ho, its co-founder and CEO.

When Ho started HOPE with varsity friends in 2006, they thought they could wow the world with their innovative ideas and engineering solutions. But trouble greeted them at every corner. There was no business or customer. From the start, the team had to work without pay and Ho racked up credit card debts of $40,000 just to keep the business going. He claims his average salary for the first five years was $1,500 a month.

In 2009, the company’s fortunes began to turn around after it received a commission from the SCDF to design an earlier version of the Red Rhino. That project won much recognition for its design. Soon, other companies began approaching Ho and his team for engineering solutions.

A year later, Ho and his team felt a little more confident and began taking on bigger contracts. But that business was not easy either, as the company did not have enough funds to see large projects through to completion. Soon, HOPE was running at a loss and Ho was staring at bankruptcy.

“We had two choices: We could walk away or see the projects through. We decided to stick with them. We had to borrow from the banks and the founders underwrote every loan to show we believed in the business direction we were heading in,” Ho says.

So far, HOPE has delivered 380 contracts ranging from medical devices to mighty machines weighing up to 18 tonnes. It has also delivered drones to the Civil Aviation Authority of Singapore as well as oil and gas companies. In 2011, HOPE even made enough to acquire its current factory in Penjuru Close for $4.3 million.

In 2012, the company landed a multi-million- dollar deal to build a prototype of a plane that can take travellers 100,000m above earth. The test flights were concluded successfully in 2014.

Last year, HOPE received much-needed funding from SingTel Innov8, Heliconia Capital Management and Great Noble Investment. Although it did not reveal the quantum of the investments, funding from Innov8 typically involves the sum of between US$3 million ($4.1 million) and US$5 million.

“Money can be a solution to many things, but not everything. If we are not careful, rapid growth at the wrong stage basically means you are going to amplify your mistakes. But we have taken our time to get our fundamentals right — by staying lean and mean,” says Ho.

This year, HOPE is targeting sales of $23 million. It also aims to sell 200 Red Rhinos to five other countries over the next three years. In the long term, Ho’s goal is to transform HOPE into an MNC with yearly sales of above $100 million.

“HOPE is a small company that acts big. What it means is we must be nimble and flexible as a small company, but we can deliver gold standards that are the hallmarks of the big boys,” he says.

Flagging off an engineering career
Ho got his first taste of life at an engineering company as an intern at TVR, a UK manufacturer of sports cars, while studying for his degree in mechanical engineering at the National University of Singapore (NUS).

His love for the world of motorsport eventually led him to join Team Petronas’ Touring Cars after graduation. “It was competitive engineering in multiple domains and you spent every waking moment on it,” he says. “If you didn’t do well in this race, you’d probably have only another two to three weeks to figure out how to outwit your competitors, while they are also finding ways to beat you.” The competitive environment was intoxicating for Ho, who went from the lowest-ranking mechanic to chief engineer within a year.

Two years later, he returned to Singapore, but could not land a job. “Nobody wanted rapid engineering and innovation, which is what motorsport is all about. They wanted me to ‘toe the line’, but I didn’t want to do that.”

So, with $10,000 in capital, Ho, the son of the founder of a pest control company, decided he would start his own company to provide innovative engineering solutions and prototypes with his varsity friends, who were fellow motorheads — Michael Leong, Jeff Tang and Ng Kiang Loong.

Conventionally, HOPE makes prototypes and provides engineering solutions for customers. In 2013, the company decided to produce its own products and poured in more than $3 million into the new division. One of HOPE’s earliest inventions was the SESTO LF lifter, produced in collaboration with NUS. It consisted of two sets of motorised wheels that could be fastened onto both ends of a hospital bed. With SESTO, only one person — instead of two — is needed to move the bed around. The product was a hit in trade shows. So, Ho gleefully took the product to meet potential buyers overseas, but was instead greeted by trade unionists who were worried it could make workers redundant and lead to lay-offs. “The clients backed off,” he says.

HOPE eventually had to pull SESTO off its product line, but it also taught the company a precious lesson: Technology advances faster than what people are comfortable with, so adoption takes time.

After SESTO, HOPE built an automatic guided vehicle to move goods around in the warehouses of logistics and manufacturing companies.

“We are no longer telling our clients to change their processes for our product,” Ho says. “If they have a warehouse manpower system, we don’t tell them to change their processes. We make our product and system work with them.”

The product has been on sale since the third quarter of last year.

Start-up community
HOPE’s three-storey factory in Penjuru Close is a mashup of modern co-working space and a geek’s den for its 90-odd staff. Much like the offices of Facebook and Google, it is equipped with hammocks, stashes of food and showers, since it is normal for employees to work 18 hours a day. Gadgets and machineries line the edge of the walls, while a few antique car frames lie idly around. There is even a twostorey- high slide, just in case someone needs an adrenaline rush.

A wall in the company’s lobby also proclaims what HOPE believes in as a corporation. These range from “No 1: It is a passion and a career, not a job” to “No 10: We respect ourselves, our colleagues, our vendors and our clients”.

Ho explains: “Take the first rule. You can read it as the company wants me to love my job. Or it may mean the company will reject a certain project simply because team members look at it and say, ‘I’ve got no love for this project.’”

Over the years, as HOPE expands its range of engineering capabilities, it has come to a point at which it can provide the same engineering solutions as one or two of its bigger customers.

“This means, sometimes, but very seldom, your customer can become your competitor,” says Ho. “These days, we turn down a lot of clients, saying, ‘I’m sorry, but what you are asking us to do as part of your subsystem is something that we are doing on our side and, in two years, we are going to go head-to-head with you on this and you are going to get very upset with us.’ That’s rule No 10.”

M&A potential
A recent report by local venture capital firm Golden Gate Ventures says at least 250 Southeast Asian start-ups will be acquired each year starting from 2020 as institutional funds and global companies seek to expand.

“Yes, HOPE gets bought out and we get a good deal of cash. But what happens to our entire team? To some, HOPE was their first job after leaving school. We have to consider these things when a private-equity or buyout firm makes an offer for the company,” says Ho.

Meanwhile, HOPE continues to do what it does best — pushing the limits of engineering and design. Its latest project is a countermeasure for unmanned aerial vehicles or drones. The project is slated for completion at year-end, and HOPE plans to sell the new anti-drone device globally. Still, the company can expect plenty of competition in its way. UK-based startup OpenWorks Engineering has just launched an air-powered net launcher to fire anti-drone projectiles, whereas Dutch police are training eagles to attack and capture drones.

Ho says, “We know drones very well. If we can make them fly, we can take them down. If this is a no-fly zone and you aren’t allowed to fly a drone in the area, our system will detect the intruder, launch by itself, apprehend the drone in mid-air and bring it down to a safe place.” Currently, the unmanned systems application division makes up over 15% of total revenue.

“Whether in engineering or entrepreneurship, we have to keep pushing the envelope,” says Ho. “Don’t assume things are going to stay the way they are. Just keep pushing. Change is the only constant in this line.”

This article appeared in the Enterprise of Issue 719 (March 14) of The Edge Singapore.