Dare to Be an Entrepreneur?

One of the reasons I came to this country is because “America is a land of opportunity and a country of freedom.” It sounded so romantic. At the time, all I wanted was to be in this great country!

It must be true, in some sense, to make America a great country as it is today. One can easily think of so many examples: Condoleezza Rice, although born amid racism in the South, recalled her mother once told her: “you can be anything you want to be.” And she did – chasing excellence to the White House. Our governor used to be a body-builder and movie actor (you can’t find this in other countries).

While all these stories are inspiring, I am often troubled by the questions that implicitly or explicitly came across to new entrepreneurs: “Have you done this before?” “You have never been a CEO before ....” “What P&L responsibilities did you have in the past?” One person even told me openly (with good intention) that I should be prepared to be replaced six months after I raise the funds for my own company.

For a first-time entrepreneur, these questions can be very intimidating; and if you were not strong enough, you could even begin to doubt yourself. The most dangerous thing is that, after enough people think that way, it can be taken as a truth. I see some founders, before they even tried, were looking for “a CEO who can lead the company to the next level.”

While it’s important to examine many facets of an entrepreneur’s background – especially if he or she is raising institutional funds, the very notion that founders cannot lead their companies to success is totally fallacious. If a body-builder and movie actor can be a governor, why can't you and I be an entrepreneur?!

I would encourage all the first-time entrepreneurs to challenge themselves to learn fast, fail fast, and grow fast – in real time with their new ventures. Condoleezza’s mother is right. There is no limitation of our true potentials, except the limitation of our own imagination!

entrepreneurship, success, leadership, start up, entrepreneur

Google Base Live

After “Google Base,” a beta testing site, was quickly launched and taken off last month, there are many speculations about Google’s intention to get into online classified advertising business.

Today, Google Base is officially live! This marks another step of Google’s ambition to organize the world's information on the web. It seems to me that Google has much bigger goals than just venturing into online classified ads area. According to today’s Mercury News, Google intends to source the information on Google Base to its various services. For example, product listings might appear on the Froogle shopping service, while restaurant listings might end up at Google Local.

This is particularly good news for the social venture I am leading – to empower un-served micro-entrepreneurs by providing access to online markets through mobile phones. Google Base can be a perfect partner for us.

I hope Google Base, coupled with “Google Automat” – a patent recently filed by Google that lets people create simple ads with complementary page of full information, will benefit not only the people who have computers and Internet access but also the millions who are left behind by the“digital divide.”

Google, classifieds, Google Base

Taobao vs. eBay China

Most people in this country have never heard of Taobao - an online aution site owned by Alibaba in China (See my previous post).

On the other side of the globe, the situation is very different. Sitting in the hotels in Beijing and Shanghai, I noticed the ads about Taobao popping up on TVs almost every 15 minutes. Since its name “淘宝” means "digging for treasures" in Chinese, it gets a lot of attention very cleverly.

Fierce competition between eBay EachNet (eBay China) and Alibaba / Taobao is apparent (see this). Morgan Stanley analysts estimated Taobao's market share increased from 9% to 40% in 2004. For the first quarter of 2005, eBay EachNet reported 100 million in gross merchandising value while Taobao reported 120 million.

I believe that understanding the customers' preferences and tastes gives the local players an upper hand against their global counterparts. Taking Taobao and eBay EachNet as an example:

1. With most users not sophisticated for auction, auction accounts only 10% of Taobao's listings, while eBay EachNet has about 40% of its listings for auction.
2. Taobao offers free listings. As a result, its listings reached 10 million in September of 2005, almost 10 times more than eBay EachNet's.
3. Taobao also offers longer listing periods (14 days) and let customers extend for one more period automatically. eBay EachNet does not have this flexibility.
4. Taobao's listings appear to be more customer-centric while eBay EachNet's listings more product-centric. For example, Taobao's listings are organized into several categories, such as "Men," "Women," etc., while eBay EachNet sticks to its "global platform" grouping users into "Buyers" and "Sellers."
5. Taobao has higher customer satisfaction than eBay EachNet. According iResearch, the user satisfaction level was 77% for Taobao versus 62% for eBay EachNet.

I have to say I am impressed with Taobao's performance. I remember only about a year ago, I was having a conversation with a senior executive of Alibaba at its headquarter in Hangzhou, I couldn't help asking:"Aren't you afraid that eBay will buy you out?" To my surprise, the answer was:"No, we will buy eBay."

China business, competition, online auction

A Man with High Aspiration

"My goal, and my team's goal, is to build Alibaba into the greatest Chinese-founded company in the world," Said the fragile-looking man Jack Ma, CEO of Alibaba, at a press conference in Beijing.

I don't know Jack Ma personally, even though he is from my hometown Hangzhou (for those who don't know where Hangzhou is, it is a main city of Zhejiang province on the coast, only a couples of hours from Shanghai). I didn't pay much attention to him even though he is running an empire of B2B online trading company - Alibaba.

Coming from a society where much attention is paid to scholarly achievement, someone with Harvard MBA will naturally catch my attention first. A former English teacher becomes a successful businessman? There are many reasons one can succeed in the business world, I told myself, for example, luck is one.

When Jack Ma launched Taobao - an online auction site in 2003 to compete directly with the global giant eBay, I started to look at him differently. After all, it takes some guts to do things like this. Just like nobody wants to compete with Microsoft (of course many did), it's almost pointless to fight against eBay. Of course, the deal was backed up by Softbank which successfully helped Yahoo! Japan to defeat eBay in Japanese battleground.

The recent deal that Jack Ma sold 40% of his company to Yahoo! for $1 billion and still maintained the leadership position made me feel completely in awe. It marks a supreme vote of confidence in Jack Ma. Interestingly enough, among the successful Chinese entrepreneurs, Jack Ma is the only one without western education. His business savvy and unusual personality can certainly put all the MBAs in shame.

As fragile as he looks physically, Jack Ma has high aspirations and sets his sights on the global stage.

China business, Jack Ma, leadership, competition,

Challenges of e-Commerce

There are several challenges of e-commerce in China.

The most quoted reason is the poor credit and payment systems. Credit cards are still new to most Chinese people. There are about 650 million bank cards in circulation, but the majority of them are debit cards.

My friend in Beijing asked me about the benefit of using credit cards. “why do you need to use a credit card to make the payment?” she said, “it’s not convenient.” It’s actually a bank card/debt card for her. She has to transfer the money to that “card” account before she can use it. People are used to use cash for payments.

However, this may change in the next a few years. Two mobile payment companies: SmartPay and 99Bill Corp, received venture fundings led by RRE Ventures of New York and DOC-Doll in August. The firms enable people to make payments from their bank accounts through mobile phones. My friends - the founders of YeePay told me that they are rolling out three new payment methods including SMS payment, fixed line phone payment and mobile prepayment.

Another reason is the insufficient logistics and distribution channel. The under-developed distribution channels make long distant shipping very difficult and unreliable. Again, this can be changed too as a result of China's modernization. In addition, DHL and UPS are all going to China.

I see there are two major social-economic reasons that inhibit e-commerce from taking-off, and these are not likely to change anytime soon:

1. Culture of Negotiating and Bargaining Chinese love to haggle; everyone wants a deal. This century-long practice of negotiating and bargaining deals is part of business culture. e-Commerce does not allow people to do that.
2. Low Levels of Trust I think trust is the biggest issue in e-commerce in China. My friends told me that they would never buy anything without seeing and touching it. There are no established brands. High levels of fraud and cheating make on-line shopping risky.

Like Meg Whitman, eBay’s CEO, said, “Whoever wins China wins the world,” I would say whoever solves these two problems solves the e-commerce problems in China.

emerging markets, e-commerce, China business, eBay China, mobile payment

Kleiner Perkins China ?

At one of the entrepreneurial seminars at Stanford early this year, John Doerr of Kleiner Perkins Caufield & Byers, a premier Silicon Valley VC firm, said very clearly that KPCB was not going to China any time soon, simply because they didn't quite understand the capital market there.

Today's blog post by Matt Marshall on SiliconBeat reveals that KPCB is finishing up its "KP China" plan. If this is true, KPCB's move to China can very well make Shanghai a "second major node of venture capital after Silicon Valley."

This is probably true. I remember of receiving an email back in August from a recruiter looking to add a "key member" for KPCB with the background in: "operating experience, conducted business in mainland China, speak fluent Mandarin and English, and possess a technical background in any of the following: semiconductors, materials science, or the development of alternative energies."

VC, China business, emerging_markets, KPCB

Abundance of Labor

I was having breakfast with a friend of mine at the The Great Wall Sheraton Hotel in Beijing, among many topics we were discussing, one thing attracted my attention. "The wages of college graduates have decreased since last year," my friend said,"There are too many people wanting two little jobs."

My friend is a partner of a Chinese consulting firm working on projects from China Mobile, Haier, Lenovo, the airlines, banks, and Beijing 2008 Olympics. This is one of the successful companies I have seen that run by returnees, competing with McKinsey and other big consulting firms.

Chinese college graduates in Beijing and Shanghai or else where, who are making about $200 a month, are facing serious unemployment problems. According to the Ministry of Personnel, the college graduates have increased 35% over the last year. In the first quarter of 2005, there are about 3 million job openings for 7 million job seekers.

For better or worse, China's abundant supply of labor is an equalizer that could close the gap between rich and poor countries. However, if there is a concern in America that Chinese low-cost labor will affect US high-salary jobs, Chinese themselves are the first ones to be affected.

[China business] [unemployment] [China labor]