KKBox Founder Chris Lin
What are the secrets of Taiwan's new-generation entrepreneurs? Management professor Ji-Ren Lee launches a dialogue with online music provider Chris Lin, to unravel the enigma of startup success.
Entrepreneurship DecodedBy Jimmy Hsiung
From CommonWealth Magazine (vol. 525 )
Upon first encountering Kwan Chiun (Chris) Lin, it was hard to reconcile the image of this baby-faced man as the founder of KKBox, the largest digital music provider aimed at the world's Chinese population, despite his small stature and the wispy moustache on his upper lip.
The paragon of today's new breed of entrepreneurs, Lin has just turned 40. The company he singlehandedly founded will celebrate a milestone of its own next year when KKBox turns 10 – enjoying the distinction as one of Taiwan's few longstanding on-line companies and even fewer such operations to make a mark internationally.
40 Percent Annual Growth
Currently boasting 10 million members and a catalogue of 10 million songs, KKBox has extended its sphere of operation from Taiwan to Hong Kong, Macau, Singapore, Malaysia, and Japan. Alex Wang, the company's Asia-Pacific managing director, relates that KKBox has seen 40 percent growth in revenues in each of the last three years.
Although Lin cited shareholder restrictions for not revealing the company's sales figures, given its one million current paying subscribers and standard monthly fee of NT$149, plus additional ad revenue, KKBox is now an approximately NT$2 billion company, comparable to Taiwan's largest job bank, 104, managing to shatter the notion that Taiwanese Internet startups cannot make it off the island.
Although the Japanese telecom giant KDDI Corporation purchased a 67 percent share in KKBox in late 2010, company operation has remained in the hands of the Taiwan-based executive team headed by CEO Chris Lin and chairman Lambert Chien, grandson of the late Formosa Plastics founder, Wang Yung-ching.
The Taiwan-born Chris Lin was sent to the United States by his parents for schooling at the age of 14. A self-described risk-taker by nature, he got his first taste of entrepreneurship during his senior year at Boston University.
Lin recalls that at the time, around 1994, movie hotline services were gaining popularity in the US, whereby consumers could place toll calls to a telephone hotline, learn movie schedules and book tickets. In a stroke of inspiration, he and his roommate thought to apply the model to restaurants, so that consumers could look up restaurants and make reservations via a telephone hotline they set up. To get things going, they went straight to New York City to negotiate with all the major restaurants.
The baby-faced young Asian man encountered setbacks everywhere he went, despite trying to pull off wearing a suit and tie as he approached restaurateurs. With a chuckle, he recalls, "Almost everyone treated it as a prank."
Undeterred, the experience ignited in him a stronger passion for entrepreneurship. After completing his degree in Manufacturing Engineering from Boston University, Lin headed straight to graduate school at Stanford, in the startup hotbed of Silicon Valley. After completing a master's degree in operations research in 1996, he returned to Taiwan in search of startup opportunities.
KKman an Overnight Sensation
Starting out with an excess of passion and a dearth of ideas, upon seeing the popularity of BBS culture around Taiwan's university campuses he recruited a number of computer science students, and after eight months of work they developed the code for the KKman browser that simultaneously supported Web browsing and BBS bulletin board functions.
Lin's browser took off in popularity to grab a 22 percent market share. Back in the days of dial-up Internet, Lin allied with telecom companies intent on taking a piece out of Chunghwa Telecom's land line market. Lin's telecom partners charged KKman subscribers per-minute fees for dial-up access, and split the profits with Lin . This earned him his first large haul of cash with which to support new ventures.
However, with the advent of the age of broadband ADSL, this particular venture soon ran its course. In response, Lin and his partners started to transition. According to Lin, prior to launching KKBox, they developed some mobile telecommunications software and licensed Japanese graphics and ringtones, managing to "scrape by."
"We'd had enough. It felt like we never had enough to eat but would never starve, making us question whether we wanted to keep on going that way," Lin recalls. "That wasn't what I had in mind when I started my business. I had to make a change."
Hungry for entrepreneurship, Chris Lin decided to get into on-line music. The year was 2004, at the height of pirated music, when anyone could download almost any song from Kuro to their own hard drive for listening at any time.
Lin's startup, KKBox, on the other hand, insisted on negotiating legal royalties with the major record labels right from the start. Subscribers would listen to streamed music on line rather than downloading files. Not only did outsiders look dismally upon the idea, but even company colleagues wondered if Lin had "lost it."
"Gutsy" is how Linda Ho, Greater China regional general manager for HIM Music, describes the recording industry's impressions of Chris Lin, going door to door to negotiate royalties. "He had a certain quality that made you want to back his ventures," she adds, noting a storytelling ability that had a way of reaching people across her industry.
Later his strategy proved sound. KKBox now stands tall in the ranks of for-profit on-line music service providers. "In the whole world, only we and Apple are making money," Lin can finally boast.
At the behest of CommonWealth Magazine, Lin sat down for an interview with Dr. Ji-Ren Lee, a professor of international business at National Taiwan University.
Following are highlights from their conversation.
Ji-Ren Lee: What drove you to want to start new businesses?
Chris Lin: I think I was born this way. Some people like taking risks, and others are more cautious. I'm a risk-taker by nature. Plus, I went to graduate school at Stanford, which had a strong entrepreneurial atmosphere when I was studying for a degree in operations research.
I started at Stanford in 1994, just when the Internet was really taking off. A lot of students sat around in the dorms talking about business plans. Everyone wanted to start a business. It was hard not to be influenced by that heady entrepreneurial atmosphere. In class the professors also encouraged us to start businesses, saying we should "try to create something else" after getting our degrees instead of working for some big corporations. So Stanford is not known as the cradle of the Silicon Valley for nothing.
Shattering the Myth of 'Music for Nothing'
Lee: What opportunities did you spot for an on-line music services site?
Lin: The opportunities we saw for music made a lot of sense. At the time in Taiwan it was 100 percent pirated music, but oddly there was a local company called Kuro offering pirated music that everyone was willing to join up and pay for.
When we saw that people were willing to pay for music, we thought it was a huge opportunity. However, we had no idea how hard it would actually be to pull it off.
After creating the company's product, we found that we would have to negotiate royalties with each record company individually. A lot of them demanded astronomical prices right out of the gate. We could have just given up right there and then, given the difficulty of the situation.
But then the way I see it, entrepreneurs are a rather romantic and optimistic lot, who twist obviously impossible situations into something good in their minds. I anticipated that the entry point, should I succeed in the endeavor, would be exceptionally high.
But I still wanted to try to win people over to my viewpoint, so I went tirelessly from door to door explaining to people why my business model would work.
Finally, not knowing if we could pull it off or not, the record companies asked us to put money up front. That initial outlay alone not only cost us all the money we had made over the previous few years, but put us on the hook for even more, before we had even opened for business.
Fortunately, with the support of some of our venture partners, we were able to get it off the ground.
Lee: Where did the guts to do that come from?
Lin: I'm not sure. Sometimes I just rely on my "beginner's mind," or what you might call my original purpose. That's the most important thing.
When you don't know anything, you think of everything as an opportunity. Conversely, the more you know, the less you think things will work out. I think that's what having a "beginner's mind" is all about.
I often feel that our whole team has this kind of beginner's mind. We were all ready and willing to start all over again. We were all sure that CDs were going to keep losing popularity and get scarcer, and that future devices would all be connected to the Internet.
We knew this was the trend, and stuck to our guns, not knowing how long we might have to wait. At first we thought it would take three years, but it took two years longer than that to reach the situation we had envisioned. Only after the iPhone came out in Taiwan in 2009 and 3G Web access became common did we start to explode.
So we feel like we accomplished something by reading and anticipating this trend accurately, and we had strong support from our shareholders. This helped us hold on long enough to wait for the wave to swell big enough to ride.
Aversion to Risk Is the Greatest Risk
Lee: What is the most difficult thing you have encountered since starting your ventures? Have you ever thought, "What if I fail?"
Lin: I look at this on two levels: one is the individual, fearing to fail; the other is how a company faces failure.
First, as an individual, I have always figured that out of every 100 people there is always a small minority with passion running through their veins that aren't afraid of failure.
It's hard to say precisely what drives these types. Personally, I have always believed that unwillingness to take risk is the biggest risk of all.
Plus, I actually don't believe that the risks of starting business ventures are greater. I've seen a lot of middle-aged people go unemployed, or become unhappy with their company and keep jumping from employer to employer. Working for a salary involves just as much risk and stress as starting your own business.
When it comes to a company, my philosophy has always been that the prospect of failure is always real for every company from the day it opens its doors – whether it be going out of business, getting bought out, or waiting until the end of the world.
So if failure is inevitable in this sense, I make it the company's mission to create value. I guide its culture in this direction, and ask everyone to make some changes, to do something meaningful for the world or the industry that people will remember you for.
The Joys of Creating
Lee: What aspect distinguishes your generation of entrepreneurs the most from the previous generation?
Lin: I have never thought that there has been a shortage of people that enjoy starting up new business ventures, like the people around me. Some people say that today's young people have lost a certain spirit. Maybe that is partially due to life being better these days, but youths these days aren't so into money; otherwise, why would so many of them earn enough money to go travel, then come back and make more. You cannot really say there is anything wrong with that approach to life.
I also cannot really say that there is anything about the new generation's motivations for starting new business ventures that makes me nervous. What concerns me more is whether fewer and fewer people will experience the joys of creation.
I think our generation, or the next one after it, has been kept down in the creative process. Young people do not respond to admonitions about hardship and difficulty. Instead, you should talk with them about how to experience the joys of doing something, creating something positive for society to derive even greater satisfaction.
Translated from the Chinese by David Toman