“Let’s get out of here,” says Generation T lister Arthur Lam the moment we meet him at the offices of Synergy Group, the energy management firm he co-founded in 2008. “Sometimes it’s good to get out.”
After a quick tour, Lam, dressed in a sharp blue suit accented with pristine white Adidas trainers—“I change them for client meetings,” he says with a smile—is out the door.
It’s perhaps not a surprise the 33-year-old fancies a change of scenery. Synergy’s North Point office, located in a nondescript industrial building, isn’t quite the slick, glitzy headquarters we’d expected from a company of Synergy’s stature.
In its decade of operation, Synergy Group has seen huge levels of growth, becoming one of Asia’s leading energy management contract providers—an organisation that helps clients lower their energy bills through solutions such as efficiency improvements and introducing renewable energy sources.
In 2015, the group became the first-ever energy service company (ESCO) to be listed on the Hong Kong Stock Exchange, floating on the Growth Enterprise Market (GEM)—Hong Kong’s small-cap exchange for small tech companies often known for its "quirky" stocks. Rather than faltering and failing to raise the adequate funds—as is too often the case on the GEM—in under two years Synergy had graduated to the Main Board. Currently, the firm boasts a footprint in over 20 countries, with some of the company’s biggest ever projects set to take place this year in Indonesia, Malaysia and Africa respectively.
Given that the International Energy Agency recently predicted that the world’s renewable electricity capacity is set to rise by over 40 per cent in the next four years, it’s an upward trend that shows no signs of slowing down. Business is looking good.
Which is why we're surprised to find Lam in such a relatively understated office.
“I always tell my clients, ‘We are an engineering company; we don’t have a very lavish office. We don’t have a massive reception or trays of fruit because those are not necessary for us,’” says Lam once we’ve relocated to a nearby café. “What we do on a daily basis is very hands on and quite dirty, you know? It’s work!”
Lam wasn’t always so utilitarian. After studying mechanical engineering at the University of Notre Dame, he sought a career in finance back in his native Hong Kong, admittedly attracted by the glamour of the industry. “Everyone was dying to get into a bank… so eager to get that Blackberry in hand,” he says. “[At university] I was swearing to God that I wasn’t going to do anything related to engineering for the rest of my life. I hated it.”
A few months into Lam’s first internship at a hedge fund, Lehman Brothers collapsed. The 2008 financial crisis changed everything. “The company had a little money left in the bank, so my boss ended up firing everyone but me, because I was the cheapest person. I actually ended up doubling my salary because I had to do everyone else’s job. I was too cheap to be fired.”
“I was doing day-to-day operational things like bookkeeping. I was the mail boy, just sending out emails to potential investors. The entire market was stagnant. There were no trades. There was nothing.”
Then came Lam’s lightbulb moment. Usually that’s just an expression, but in Lam’s case inspiration literally came in the form of an energy-saving lightbulb. By chance he came across a new kind of bulb, created by a group of Hong Kong scientists, that used 50 per cent less power. He teamed up with co-founder Mansfield Wong—a former Wall Street banker with a background in electrical engineering—purchased the global patent, and Synergy Group was born.
In the early days, things were tough. “It was really bootstrap for a while,” says Lam. Ironically, operating on a shoe-string did help them be more energy efficient. “When we started we didn’t even have the budget to switch on the AC after 6pm, so we brought our t-shirts, shorts and flip flops, and when the building turned off the AC we changed clothes, switched on the fans and worked until one or two in the morning."
A new business model
Things quickly picked up, not least thanks to the group’s unconventional business model. Synergy covers all the upfront investment required to update the client’s infrastructure and install energy-saving devices, then takes a cut of the money the client saves on its energy bills. The client only starts paying once they’ve started saving money. “We were one of the first in Hong Kong to do this,” says Lam.
In the wake of the financial crisis, with every business in cost-cutting mode, this model propelled Synergy forward at an exponential rate.
“If we say, ‘I’m here to help you cut costs and contribute to a better society’, who would say no to that?”
“Before 2008, people weren’t focusing on environmental efficiencies or energy savings. They were focused on how to buy more land, build more buildings. After 2008, all they were thinking of was how to cut costs. So if we’d have asked companies to invest money to build infrastructure for something they weren’t 100 percent convinced of, they’d probably say no. They’d say, ‘We’re okay, we’ll just switch it off.’”
“So we came up with this thing called the saving-sharing model. Now there’s actually a specific term, an Energy Management Contract. In the US it’s called an Energy Performance Contract, because the contract is based on our performance. And that’s the beauty of it—the business provider’s interest is aligned with the end user,” says Lam. “Anything I can do to save you an extra ten bucks I’ll do it for you, because I’m going to get the extra benefit too.”
“To clients, we say: ‘We’re not going to cost you a single dime. We put in all the risk, we do all the work. You don’t pay us until you see the savings’… If we say, ‘I’m here to help you cut costs and contribute to a better society’, who would say no to that?”
It almost sounds too good to be true. Were some clients waiting for the catch? “Oh, all of them! When we started, every single one of them said, ‘Is this a scam?’”
Making an impact
After a few years of fast-paced growth, Lam and his team won their first landmark contract—a commission to replace the back-of-house lighting at Singapore’s Changi Airport. “We were like: whoa! A small startup from Hong Kong was actually doing this huge government project in Singapore,” says Lam. No doubt the client was happy with the project, too. “At that point, I think we saved them a couple of million US dollars annually.”
Since then, Synergy has expanded horizontally. The patent on the lightbulb was the minimum viable product, in the days before the widespread adoption of LED lighting technology. “Now we’re at the forefront of LED technology, and we’ve expanded into air conditioning, solar PV, battery storage and environmental remediation,” says Lam.
All of which adds up to a huge amount of energy saved over the last decade. Lam has an interesting way of measuring it: 990 Victoria Parks. “We calculated that we’ve saved about 148 to 150 gigawatt hours’ (GWh) worth of energy. In terms of number of trees [that would be required to offset the carbon produced to generate that energy], we’ve saved a little shy of 3.5 million trees. Victoria park has 3,500 trees, so the amount of energy we’ve saved is the equivalent of planting about 990 Victoria Parks’ worth of trees.”
“It’s pretty direct. I like to work with things that are more tangible. I’m not saying it’s bad to be in finance, but when I was in finance I was a little lost. It’s like, one button—poof—there’s a couple of million USD, but at the end of the day what did I really learn or contribute? It’s hard to quantify. For me, there’s a sense of ownership and satisfaction when I can say, ‘I designed and implemented a project that saved X amount of energy, which is equivalent to X amount of money and X amount of carbon emissions saved.' That for me is exciting.”
A new climate
“You have to be sustainable in the future. For me it’s a no-brainer. Every business leader, every country leader, needs to pledge to work towards a more sustainable future—or there is no future.”
This resolute belief in the importance of Synergy’s work clearly drives Lam and his team. “For a lot of business owners, the IPO is a great way to exit… But for me, the IPO was just a ticket to the coliseum. It’s only the first step in something that I think is very important. Once you’re listed you can use that financial power to execute more sustainable projects. That’s why it’s only an entry ticket. It’s a beginning.”
We now live in a different climate—literally. Even Saudi Arabia, the single biggest oil exporter, “announced that by 2030, at least 30 per cent of their energy is going to switch to renewables.”
It’s a brave new world, and Synergy is at the forefront of the industry driving it all. Surely Lam has no regrets about leaving banking behind? “If I’d stayed in the finance industry, I guess my office would be a little bit nicer, with a better view on a higher floor. But I’d still be working for someone else.” Spoken like a true entrepreneur.