Entrepreneurship Gone Crazy
China's Ambitious Generation
This may not be the best of times, but it is the best time for realizing ambitions. In his day, Mao Zedong stressed political fanaticism. Today, the Xi Jinping regime is dedicated to helping people get wealthy. How will it make its mark on history?
China's Ambitious GenerationBy Yi-Shan Chen, Kuo-chen Lu
From CommonWealth Magazine (vol. 573 )
Jennifer Zhang, general manager of Huadan Angel Investment in Hangzhou, stands out in a crowd. Not particularly tall, she carries a light blue handbag and dons a wide-brimmed hat, a black top, and a dark blue knee-length skirt adorned with peonies that catch the eye.
Well known throughout Hangzhou entrepreneurial circles as Sister Flair, she and her husband, Fang Yi, were the force behind Beijing-based push notification service provider Getui, providing Internet companies other than Tencent, Baidu and Alibaba third-party push marketing services – a market projected to be worth nearly US$1 billion.
Fang Yi and Sister Flair often return to their alma mater, Hangzhou University, to share their experiences. Late last year Jennifer Zhang became an angel investor, starting with her own funds and then subsequently raising 16 million RMB (around NT$79 million) that was fully invested within just four months. She is presently working on raising 50 million RMB for a new fund.
"The startup craze really began just last year," she says, firing out her words like a fusillade. Having seen her husband found one venture after another since completing graduate school, Zhang knew very well how difficult it was to raise capital in China up until 2013. However, Alibaba's IPO made some of Hangzhou's engineers very wealthy, and with the advocacy of Premier Li Keqiang, the investment environment made an abrupt about-face. The generation of youths born since 1990 joined the entrepreneurship craze, with Hangzhou one of China's top startup hotspots.
CEO Jobs vs. Chairman Mao
"These '90s folks (those born in 1990 or later) are no different from Americans. They have never found themselves hungry, they have no fear, they are confident in themselves, and they also think about changing the world," observes Zhang.
Zhang is at Fudi Startups Park, where a giant mural of the late Steve Jobs wearing earbuds and listening to an iPod dominates a wall. Such a massive mural is rare in China, where idols are not lightly worshipped, apart from those that featured Mao Zedong during times of political fervor.
"Steve Jobs is the hero of both hackers and entrepreneurs," relates Chen Feng, chairman of the Fudi Startup Park, China's largest privately-run entrepreneurial park outside of Hangzhou University and Alibaba's startup incubator. The entrance of the park is adorned with these words: This is not the best of times, but is the best time for realizing ambitions.
Mao Zedong harnessed China's youth to spawn political fanaticism. Today, Xi Jinping economics is directing the passion, ambitions, and energy of the nearly 8 million annual university graduates into Internet and Internet of Things startup dreams. It is also channeling the ambitions of over 100 million farmers and workers who are returning to their homes to open online shops.
From slogans to reality, Xi Jinping economics has generously rained cash in offering institutional incentives. The startup incubation center at Shanghai's Jiaotong University exhorts students to seize business opportunities, even encouraging them to take time off from school to concentrate on starting businesses.
"Right now as long as you give 'starting a business' as your justification for taking a leave of absence from school, the school will approve it without hesitation, with no need for further discussion with one's parents," Zhang relates.
Premier Li Keqiang called a State Council meeting on April 21 to discuss how to promote employment and encourage entrepreneurship. The conclusions included: encouraging local authorities to survey underutilized spaces for use as low-cost start-up spaces; offering startups loans of up to NT$500,000; subsidizing the 3 percent interest rate on the loans; and supporting farmers in setting up online businesses. Also, university or research institute professors or researchers can take leaves of absence of up to three years to work on startup ventures.
Funding for these Chinese startup ambitions not only comes from the Chinese government but also from the United States and private Chinese sources as well. MyTreat CEO Eric Hsueh, from Taiwan, has jumped on the bandwagon.
Taiwanese in Zhongguancun
myTreat is building an online-offline gift-giving platform. Using the site, a boyfriend in Taipei can pay for a café in Beijing to deliver a fresh cup of steaming hot coffee to his girlfriend there. Hsueh works alone in Beijing at the 3Wcoffee startup incubator, while his technical team works from Taipei.
myTreat co-founder, Chris Lu, relates that since Erich Hsueh relocated to Beijing last November, his pet phrase has become "faster." The Beijing 3W incubator's next steps are to get product online within three months, secure angel funding, and proceed to first-round investment. Then, within two months of getting that money, initiate the second round of investment.
"Chinese entrepreneurs get money from a strategic angle, to prepare for battle, and use money to maximize the number of users. In Taiwan, they try to squeeze the most out of their own funds before looking for investors," observes Hsueh.
Survivors Standing on High Ground
"Taiwanese don't have enough 'wolf' in them, but they are still well suited as co-partners in new ventures," says Dan Dan, founder of 3Wcoffee.com.
3W, which started as a café five years ago, now claims seven 3W Coffee outlets, the personnel recruitment platform lagou.com, Internet content provider 3W Marketing, a headhunter company, an incubator management company, and a venture capital fund under its umbrella.
The day CommonWealth Magazine met with Dan Dan, he had just returned from visits with investors in Shenzhen. He has a desk, but the baby-faced Dan Dan (whose full Chinese name is Xu Dandan), 33, prefers to work standing at the computer. Working without a secretary, he wipes dust off the table with a cloth himself.
Prior to starting his own business ventures, Dan Dan was an Internet industry analyst at an investment company that opened his own coffee shop out of the desire to have a cozy place for gatherings in Zhongguancun. Sorely underestimating the difficulty of running a coffee shop, the four co-partners naively took on 170 individual shareholders who had contributed small investments. But with too many notable Internet mavens involved, they were ashamed to shut down, and so the four co-founders ended up working full-time, sticking it out for a year before finally finding their direction and positioning.
First, Dan Dan engaged the expertise of a coffee master, and positioned 3W as a knowledge and information exchange for Internet groups, holding 400 events a year. Their business card read, "3W, the Internet Crowd." And the crowd had certain needs, which spawned such spin-off ventures as human resources and headhunter agencies.
They began working on an incubator in 2013. On the strength of a number of Internet celebrities as shareholders, and the idea that entrepreneurs know best how to start businesses, they secured investment from Qinghua Holding Co. and jd.com (Jingdong Mall).
"We got a two-year head start on the rest of the field," Xu Dandan notes. For incubators, cost control management, including the entrepreneur guidance system and physical space, is critical. Dan Da told Commonwealth that even extra thought was given to the design of the incubator's air conditioning and light switches in the effort to save electricity.
"Now the entrepreneurial craze has bubbled," he notes candidly, predicting that the Internet bubble will burst as soon as early next year and no later than 2017. Xu reveals that while the 3W Group is valued at two billion Renminbi, he is aggressively expanding and raising funds to build reserves so that "when the tide recedes, we must be survivors standing on high ground."
"At least 95 percent will fail!" Xu predicts. "But so what. That would be a good thing for this generation," because "it is a time when those without any background, with smarts, guts, and resilience can make their mark!" says Dan Dan, the man from the Anhui countryside, himself embodying the story of this generation.
Translated from the Chinese by David Toman