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Karaoke-turned AI startup sweeps Asia markets, helps 700 business customers with digital transformation

Headquartered in Taiwan, iKala was founded 11 years ago and operates in Hong Kong, Japan, and most Southeast Asian countries

iKala co-founder and CEO Sega Cheng. (iKala photo)

iKala co-founder and CEO Sega Cheng. (iKala photo)

“In today’s global market, digital products and services need to be very localized,” said Sega Cheng (程世嘉), co-founder and CEO at iKala, an AI company headquartered in Taiwan.

The 11-year-old firm operates in Hong Kong, Japan, and most Southeast Asian countries. It acquired five well-known Japanese enterprise customers just six months after the expansion. The question is, how did the Taiwan startup reap such a harvest overseas?

No one would expect an online karaoke platform to abruptly turn itself into an AI company. But iKala, a Taiwan-based startup founded in 2011, has made the journey and emerged with a jaw-dropping success.

The massive transformation first kicked off in 2015, with iKala changing its business model from B2C to B2B. The startup, no longer a live-streaming platform, created its first AI product, iKala Cloud, to provide enterprises with digital transformation solutions. Later, in 2018, it further expanded the service to MarTech, helping brands and firms come up with data-driven marketing strategies with two main products — KOL Radar and Shoplus — for influencer marketing and social commerce, respectively.

The changes surprised many, especially since the original field iKala had been in was quite different from the current one. But iKala's Sega Cheng said: “Everyone thinks transformation is all about changing. But it actually includes two parts, things that should remain unchanged and things that need to be changed.”

Despite the seemingly dramatic transition on the outside, iKala’s core values and technique remained. “What will not change is the most important,” Cheng said, “iKala did not change its key R&D technology, which has always been cloud and AI data analysis.”

Karaoke-turned AI startup sweeps Asia markets, helps 700 business customers with digital transformation
Sega Cheng (left) leads iKala to turn itself from an online karaoke platform into an AI company. (iKala photo)

Now in 2022, about seven years later, the bold move has proved to be right.

Operating in Taiwan, Japan, and most Southeast Asian countries, iKala has become one of the leading AI companies in Asia. More than 700 business customers, including Fortune 500 companies, have used its solutions to improve operational efficiency and marketing performance.

Last year, iKala — a trusted business partner with Google, Facebook, and TikTok — continued to maintain a growth rate of 30-40%, driving the company’s overall revenue to hit around NT$1 billion.

From globalization to localization

The key factors that helped iKala succeed can be divided into two steps: globalization and global localization.

Since the launch of iKala Commerce (including KOL Radar and Shoplus) in 2018, the company has decided to target Southeast Asian markets with its influencer marketing and social commerce tools.

Karaoke-turned AI startup sweeps Asia markets, helps 700 business customers with digital transformation
iKala Commerce teamed up with FamilyMart last year. (iKala photo)

The reason was, as Cheng pointed out, that Southeast Asia has seen a significant surge in social commerce purchases. In 2021, while Malaysia reported a 186% increase in orders and a 207% jump in GMV (gross merchandise value), the Philippines saw orders and GMV rise by 129% and 74%.

However, when iKala began to set foot in Singapore, Philippines, Thailand, Vietnam, and Malaysia — members of ASEAN whose markets are relatively similar to Taiwan — challenges emerged. Although iKala’s products were competitive in the market, the biggest problem was a lack of local connections.

Take KOL Radar as an example; the product integrates real-time data analysis, a recommendation engine, and a full-scale service team to help brands find the right KOLs. But, as Cheng put it: “We have no idea, for instance, who the best known YouTuber is in Thailand and who the popular local influencers are in other countries.”

To tackle the problem, the Taiwanese firm started by serving international brands and enterprises such as Unilever, Thailand's well-known handmade bag brand NaRaYa, and PepsiCo Philippines. "By approaching these clients, we can gradually attain contacts in the local market," Cheng said.

Meanwhile, iKala tried to hire locals as product managers to serve the Southeast Asian market. At the Taipei headquarters, it employed talents who could speak or at least understand Thai.

“Digital products and services need to be very localized,” with a solid engineering and AI background, Cheng said: “There won’t be any one-size-fits-all product in today’s global market.”

So far, its social commerce platform, Shoplus, has served more than 170,000 enterprises, brands, and individual merchants in Southeast Asia. Each year, iKala completes around 4.5 million social commerce transactions and reaches over 10 million Southeast Asian shoppers. During the pandemic, the demand in Thailand increased by 500%, and the GMV rose to nearly NT$2 billion.

iKala spots demand in Japan's market

But the same strategy cannot be duplicated when it comes to Japan. “How we set foot in Japan’s market is a completely different story,” Cheng said, compared to the fast pace of Southeast Asian markets.

As the company established a new office in Tokyo last year, Cheng described the move as a long-term investment. “Time will be the key,” he said, “Japan is a market that requires time and effort to settle in.”

In other words, due to a strong emphasis on relationships with customers and suppliers, businesses in Japan tend to team up with other companies only when mutual trust is gradually built. But once you earn their trust, a stable and long-term collaboration is very likely guaranteed.

How could, then, an outsider win the trust of Japanese enterprises? Cheng replied, “Our strategy was to find out what is missing in Japan’s market and how to bring new things to it.”

Karaoke-turned AI startup sweeps Asia markets, helps 700 business customers with digital transformation
Cheng says iKala's strategy was to "find out what is missing in Japan’s market and how to bring new things to it.” (賀大新 photo)

According to an official Japan report, by 2030, the third-largest economy in the world will face a talent shortage of up to 790,000 IT professionals. It is no doubt a pressing crisis for many Japanese companies that are highly inclined to make breakthroughs based on data and scientific research. Amid the trend, Cheng discovered a buoyant demand for influencer marketing and CDP (customer data platform) in the Japanese market.

With a list of over 150,000 international influencers collected by KOL Radar, iKala can help Japanese brands export their products to Taiwan and other Southeast Asian countries. Based on Taiwan's reputation for having top high-tech talents, Cheng said that iKala's data analytics and AI technologies are in the top 10 among competitors in Europe, America, and Japan.

Apart from iKala’s well-developed technical capabilities, Cheng also brought up another key element of overseas success: customer-focus. "Our technical service talents, such as customer success managers (CSM) or customer engineers (CE), are rigorously assessed. They are one of a kind," he said.

To avoid language barriers, iKala demands that all employees serving customers on the front line must be Japanese. Also, when recruiting for technical services, the startup is looking for someone with a better understanding of customer service rather than just excellent technical ability.

With a human-centered mindset and strong technical skills, iKala — within six months — won orders from up to five well-known Japanese enterprises and brands, primarily in the beauty industry. “This means we are going more and more international,” said Cheng, referring to the achievements in Japan.

An IPO in two years

To continue putting "global localization" into action, iKala expects to expand its Japan team from two to 10 this year. In the foreseeable future, Japan will be the company's main focus with no further intention of expansion.

Preparing iKala for an IPO in the next two years, Cheng looks back on each decision he made to transform the firm and said the key to success is “always distinguishing hope from hype”.