William Heinecke, the founder and Chairman of Minor International, a Bangkok-based multinational company operating in hospitality, restaurants and lifestyle brands distribution, shares his journey as an American-born Thai businessman and serial entrepreneur.
What sparked your decision to become an entrepreneur?
I had a fairly sheltered but independent upbringing growing up in Thailand. In any event, I didn’t depend on my parents for allowances. I worked with a local newspaper where I sold advertising spaces, and had earned enough to buy a car.
I wanted a job in advertising, but the employers I approached said I was too young for it—I had just completed high school. So I said, “Fine, I’ll just do my own thing.” I had a little apartment that was also my office, a secretary and a messenger. We started with different concepts—a cleaning company and then an advertising agency. I took my first loan for US$1,200 to register the company, which I paid back in three months. I hired a lawyer and an accountant. By the age of 18, I owned my own little business.
How did you get into franchising?
During my youth, I spent a month in the U.S. every year and I would binge on television and fast food, which I thoroughly enjoyed. So pretty soon, I got into the ice cream business with Foremost, followed by a franchise for Mister Donut. In 1980, I got the opportunity to take on the Pizza Hut franchise, for a royal sum of US$5,000.
We were one of the first companies to get into the fast food business in Thailand, and it was a sharp learning curve. As an American, I loved pizza, but how would I get the Thais to appreciate it? I then realised that there was a growing group of young Thais who were returning from western universities, and that was where I started. But the uptake was slow. We had to import the cheese for the pizza, an ingredient almost alien to the Thais. By the time we got up to five restaurants, we decided to build our own cheese factory. Soon after, we launched Swensen’s ice cream. By 1993, we had a cheese and ice cream factory. Then we got into Dairy Queen’s soft-serve ice cream.
I was a great believer that some of these businesses just couldn’t fail. But what’s really important are the people operating them. If you don’t have the right people, even though you may have a good idea and a good brand, it is not necessarily going to work. Today, we currently have more than 1,000 franchised restaurants in over 20 countries across the region.
Tell us about your innovation in delivery.
In the 1980s, Pizza Hut was a sit-down restaurant and one didn’t think of delivery. In Bangkok, nobody had cars but everybody had a motorcycle. Keeping in mind the city’s traffic, we chose to deliver within a seven-minute drive time. It took 10 minutes to bake the pizza in the oven and it took another three minutes to sauce it. So we aimed to deliver within 30 minutes!
In those days, traffic was so bad in Bangkok that even an ambulance couldn’t get to your house in half an hour. So the fact that we could deliver food in 30 minutes caught the attention of consumers. Our first ‘call centre’ was in the back office of our restaurant, but business grew rapidly and soon we had a call centre with 150 operators housed in a room. That’s how the first call centre came to Thailand.
What happened in China?
I was a big believer in China’s long-term growth potential. We brought a couple of our successful brands in Thailand to China again in 2005. Our small operation in China was still making losses but we believed we had to be in the market to understand what was going on for the sake of long-term success. Eventually, our small footprint in China allowed us to spot an opportunity that led to a turnaround in our China operation. In 2012, we acquired a distinctive local concept, Beijing Riverside & Courtyard, catering to local tastes with a well connected management team.
Our operation in China has turned profitable since then and we finally have a successful restaurant platform in the largest dining market in the world. China continues to grow and we have plans to expand the number of outlets in China from 84 currently to more than 400 outlets over the next five years.
A serial entrepreneur is bound to have a few failures. How did you face failures?
You have to learn how to face failure because no one wants to admit failure. There was no plan B, so you have to succeed with plan A. The 1997 Asian crisis was a sobering time for us because we had to dramatically cut costs and let go of people, even someone who may have been with the company for 10 or 15 years. At that time, we were just trying to survive; we never thought about management refocus. That’s when we realised that we had to figure out how to keep growing, and we can only grow if we retain great people.
After recovering from the crisis, we continued to retain existing, and attract new talent to our organisation. Since then, our financial performance has become stronger and stronger and our year-end results continuously reflect this.
The 2004 tsunami in Phuket was also a big setback for our business. We had made a lot of big investments in Phuket which were wiped out. What was one of the most popular tourist destinations in Thailand became barren overnight. We owned a JW Marriott, one of the biggest and best hotels in Phuket, which survived, but our share price tanked by 75 percent. That year was our lowest point, but having survived it, we began to rebuild people’s confidence in Thailand and Phuket.
Today, our portfolio in Phuket comprises three hotels, the Anantara Vacation Club timeshare inventory and two high-end luxury residential projects.
After the tsunami, we began to grow abroad in a big way because we realised the need for diversification in terms of business and also geography. Spread yourself out so you’re not going to be hit by one thing that can be as devastating as a tsunami or a 1997 Asian financial crisis. So we moved into the Maldives, one of our first international operations, and started making investments in Sri Lanka, Tanzania and Kenya. We invested more in Vietnam, Australia and Singapore, and those markets began to really grow. Today we have very diversified businesses across a broad geography. We run the gamut of real estate investments from three-star hotels all the way up to six-star properties.
Where do you see growth in the next 5-10 years?
I’m very, very bullish overall and especially about ASEAN. You can’t get away from the European Union, America, China, Brexit and other trade complexities. Africa is the only region where I still feel we are pioneering. Russia also has potential, and while it has had its ups and downs, it is still another major superpower.
I see ASEAN as a major player and I think it’s going to get even more so in the future. When you look around, I think Thailand is by far the strongest member of ASEAN and it’s going to play a pivotal role in the development of this region. I am as optimistic today about Thailand as I was in the 1960s because the country continues to maintain strong global relationships. That said, I do not underestimate the growth potential of other ASEAN countries, especially the CLMV (Cambodia/Laos/Myanmar/Vietnam). They have large populations, strong demographics and huge foreign direct investment, particularly in factories.
Any advice for young entrepreneurs?
Entrepreneurship teaches you resilience, so learn from it. It isn’t over till you say it’s over. But know when to call it quits. One of the mistakes we often make is that we think we can make things right.
Sometimes you have to recognise what made you—and one of the things that made us successful was this willingness to shut something down quickly when it wasn’t working. And when you get big, there’s an attitude that we will make it work. But learn to recognise a loser quickly and cut your losses.
Are today’s entrepreneurs different in their expectations?
It used to be that entrepreneurs were entrepreneurs and they became serial entrepreneurs. They started a business and then they started another business and another business. What I’m seeing now is that more of the young people sell the business and then they become investors, they don’t want to go through the start-up process again. They become more passive investors. One of my partners said, “There’re only two ways to get rich. Either work damn hard, sacrifice your family life and personal life, kids, free time—or you find someone who’ll do that for you.”
But I belong to the older generation. Minor is my entrepreneurial vehicle and we continue to go into new fields, new geographies, and we make new acquisitions. In 2018, we made our biggest investment yet through the acquisition of one of the most prominent hotel chains in Europe, NH Hotel Group, for €2.3 billion, tripling the size of our hotel group. These next couple of years are going to be transformational for us, as we become a global player competing on the world stage. And so, as much as I would like to be an investor today, I can’t get out of being in the driver’s seat and wanting to be a part of the action, not leaving it to someone else or being dependent on someone else to create the success.
The years go by so quickly. You blink your eyes and suddenly find that you’ve been in business for 50 years. Any regrets? No, none whatsoever. There have been times that I have thought that I picked the wrong road, but in the end, I think all roads have been learning opportunities.
Advanced Certificate in Entrepreneurship (F&B)
Mr Heinecke’s story shows that while the road to entrepreneurial success is not an easy one, the rewards awaiting those willing to make the journey are achievable with perseverance and adaptability.
To support aspiring entrepreneurs in F&B in achieving the level of success Mr Heinecke had in the industry, SMU Academy has developed its Advanced Certificate in Entrepreneurship (F&B) course.
Participants have the opportunity to learn from industry experts who have achieved considerable successes of their own, such as Daniel Ong, Makansutra founder KF Seetoh, and Programme Director Michel Lu, Founder and Executive Chairman of Revolver Asia.
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Originally published by SMU Asian Management Insights, 22 May 2019 by William Heinecke. Access the case in full here.
