anna maybank

Photo: Beijing’s spirit, in poster form, is advertised in the city

It’s been quite a week.

I’ve interviewed 18 people in eight days in Beijing and now have close to 14 hours of recorded material as part of my Starting up in China research.

I’ve been back to 3W Coffee, spoken to VCs operating in both the US and China, met ex-pat, sea turtle and China-educated entrepreneurs, talked with a number of lawyers about Chinese IP – amongst other things – and met with some big internet companies too.

I’ve now arrived in Shanghai and before my final week of research kicks in, I’ve been digesting what I’ve seen so far.

I’m not sharing names on here as some of the insights I’ve been given were under the condition of anonymity. However, below are a few things I’ve found interesting.

1.) Chinese entrepreneurs are more likely to have experience in big companies

My view of innovation and entrepreneurship has been coloured by living in the US. The Facebook IPO is the culmination of the archetypal American entrepreneurial journey; the college-dropout makes it big in their early 20s as a visionary founder.

When I started this research, I have to confess I was looking for the same thing in China.

But I’ve learnt that Chinese entrepreneurs are a bit different. From the people I’ve met so far, the ones setting up companies in their early 20s with no previous work experience are the ex-pats. They are often Chinese extraction and speak the language, but have grown up and been educated outside of China.

In terms of the Chinese entrepreneurs – both those who have lived and worked all their lives in China and those who have received foreign graduate educations or work experience – they seem to be more likely to have had experience in big tech companies such Baidu, Tencent, Sohu or the Chinese arm of American firms like Amazon, Yahoo!, Microsoft or – previously – Google.

I won’t delve into the reasons for this in a short blog post, but I think it’s partly educational, partly cultural and partly about the current state of development of the Chinese internet. These three factors have also become a recurring theme in what I’m learning.

2.) ‘Copy 2 China’ involves innovation because the Chinese market is different

Functional literacy in the Chinese language involves knowing 3,000-4,000 characters. There are a number of different ways to type Chinese characters, but the easiest is in Pinyin – using the Roman alphabet to spell out Chinese characters phonetically. (This Slate article gives you an idea of the complexity of this problem). Although the Chinese school curriculum now requires all children to learn the Pinyin system, this still means that typing words into search engines is a real pain.

This affects the way Chinese netizens want to use websites; long list-based webpages are popular because you only have to click through to the next link, rather than type something – the Sohu homepage is a nice example. This is just one way in which US users and Chinese users are different.

Securing revenue from Chinese users is also different. Simply put, compared to the US, China has fewer people with large disposable incomes, but a vast lower and middle-income consumer base. I’m yet to meet anyone making revenue from selling apps to Chinese users – the business models of my interviewees have all either been ad-based, take a percentage of an e-commerce transaction or use micropayments (a few RMB for virtual goods in online games).

This is a fascinating and complex topic and I’m looking forward to finding out more about how Chinese and Western netizens differ in usage patterns. It also has implications for the copy-cat story in China: a site might initially look like a clone of something else, but its users are different and the features that really take off in the Chinese market are different.

3.) Big companies can be both a threat and a potential opportunity for startups

It’s really tempting to compare what’s happening in China to Silicon Valley and just dismiss the former because it’s not reached the same level of maturity as the latter. But the important thing is that China is still developing – it’s the direction it’s moving in that’s interesting, not just where it is now.

One of those areas which seems to be in development is the relationship between well-established technology players and the little guys. As I’ve said, it seems that the profile of a Chinese entrepreneur is more likely to include big company experience. A number of prominent Chinese angel investors have also made their money through Chinese IPOs. But many Chinese founders of the big internet companies are still running the companies they started, rather than supporting the next generation of entrepreneurs at the moment.

The other area which is developing in this respect is big company investment and acquisition of startups. There’s definitely at least the perception that if a small company comes up with something new, the big guys will just copy the product and ship it to their existing users, thus squashing the startup. But there seems to be the beginnings of a more collaborative relationship between the internet giants and Chinese entrepreneurs.

Again, however, even if the Chinese market has the potential to develop in the same direction as Silicon Valley, with a strong culture of investment coming from those who made their money as entrepreneurs themselves and a healthy acquisition market, who’s to say that the role of big companies in the Chinese startup ecosystem might turn into something different altogether?

4.) American tech companies don’t seem to be nurturing Chinese talent in-house

I need to look into this one more, but it’s been interesting to hear repeatedly an entrepreneur describing being at the top of their game in the Chinese arm of a large American company then moving to the American arm and feeling like there is a ‘glass ceiling’ – they think that the American firm doesn’t give them adequate responsibility or opportunity and so they leave, frustrated.

I haven’t worked out why this is, but it doesn’t seem to be altogether a bad thing for entrepreneurship in China – the people I’ve spoken to are starting companies instead. But if I was a big US tech firm serious about the Chinese market, I’d be asking myself whether there’s a problem here and if so, why it exists.

5.) Hiring talent is a big challenge for Chinese startups

This has been the number one challenge given by the entrepreneurs I’ve interviewed. Some also mentioned raising money, but I think talent has been a bigger theme. Interestingly, I think you’d hear the same from Silicon Valley founders right now, although the reasons are different.

Hiring Chinese talent seems to be particularly hard for a startup in part because engineers can make a lot of money in a big company and Chinese employees are more risk adverse. But there also seems to be an educational element to this: the founders I have talked to said they hired both recent graduates and those with big company experience, but they often talked about the need to train their employees. There’s still an educational/training gap here.

Other challenges included the bureaucracy of legally registering a Chinese entity – you need quite a large amount of cash in the bank to do it, it takes a long time and ultimately a foreigner can only own a certain percentage of a Chinese firm which restricts or complicates investment deals (it’s not one set percentage, but differs between industries and results in VC firms often having both RMB and $ funds together with complicated foreign ownership structures).

I think it’s striking that in the conversations I’ve had with people who don’t know China well, the first thing they want to talk about is how the legal and governmental framework isn’t conducive to doing business. This isn’t the first thing people actually operating here talk about as a challenge. Maybe it’s because it’s a given that you just have to work through. Challenges like hiring good people are perhaps ultimately more complicated to solve.

There’s lots more, but I’ll leave it here for now.

Writing half-finished, half-researched findings down before you can see the full picture is a risky business.

If you think I’m way off or have any suggestions, please do let me know. A bit of crowd-sourcing ideas never does any harm!

As I’ve come to the end of my first week in Beijing I’ve learnt to take the phrase ‘it’s the INSERT WELL-KNOWN WESTERN EXAMPLE HERE of China’ with a pinch of salt.

This week, I’ve trekked around the Silicon Valley of China; visited the Y-Combinator of China and attended a product launch of the Facebook of China.

Metaphors are a great way of giving someone a basic sense of what something is very quickly. It’s just that beyond that, they’re not really very helpful. And in the aforementioned cases, they leave you with the impression that there’s nothing new in China; everything’s just a copy of something from elsewhere, but a bit more, well, Chinese.

After a week here, I just don’t buy that. What’s happening here isn’t the same as in the West and it may well ultimately be at least as successful.

The highlights

Here’s a quick overview of some of the places I’ve thoroughly enjoyed:

3W Coffee

Garage Cafe and 3W: I hesitate in grouping these together, but they’re two of three ‘coffee shops’ in the Zhonggancun district (the aforementioned ‘ Silicon Valley’ of China) where aspiring entrepreneurs can find a casual space to work. The third is Beta Cafe, which felt much more like an ordinary coffee shop.

Garage Cafe is a large space on the second floor of a hotel with a cafe bar and plenty of desks. The owner, Su Di, prowls the tables to hurry along those who more interested in the atmosphere than building a company. Around the corner, 3W is on the ground floor of a building opposite Microsoft. It looks like another cafe/workplace at first glance, but it’s really an events space and network for many of the large internet companies situated in the area.

Innovation Works – this photo doesn’t really give the space due credit

Innovation Works: China’s most prominent software incubator. They invest in and provide support and office space to early-stage startups. There’s a lot of money in Chinese VC at the moment, but there’s still an early-stage funding gap and that’s partly what Innovation Works set out to fill. Founded in 2009 by the former head of Google China, Kai-Fu Lee, Innovation Works started by seeding ideas in-house and recruiting an external team for them. They’ve since begun investing in existing teams and raised a $180M fund in 2011, whose participants included the likes of Ron Conway and Sequoia. They’ve got a fantastic office space, an impressive mentor lineup and an extensive network from which they help teams recruit top Chinese engineering talent.

Global Mobile Internet Conference: Thanks to the Great Wall Club, I was able to attend GMIC. I always find conference etiquette in different sectors and different parts of the world strangely fascinating. Most of the people wearing suits were Western and made up less than 10% of attendees; I’d guess that most of the 5000 participants were under 35. The majority of the two-day conference was devoted to fairly standard speaker panels, but there were also some interesting company demos. At one point, I was wondering why one stage was so jam-packed, only to discover that Ren Ren was giving an afternoon-long session – they can certainly draw a crowd.

What I’ve been reading

Here are a few things I’ve been reading this week:

The story of W&L: China’s great internet divide: All about the idea there are two Internets in China, split according to the wealth of their users, and the ramifications this has for Chinese internet companies.

A tale of two microblogs in China: Interesting history on Twitter and domestic mircoblog or ‘weibo’ and their relative political significance.

Copy factory: A list of Chinese sites that replicate the functionality of other software products.

Showcase of web design in China: From imitation to innovation: Even if you don’t speak Chinese, browse through sites aimed at the Chinese consumer and you’ll be struck by how different design for this market can be. This pieces gives you an insight into why that might be. It’s two years old now and I’m trying to get hold of someone who can give me a more updated story.

Thirty days in a Fuzhou barber shop: An American anthropologist’s account of spending a month washing hair in Fuzhou, the capital of Fujian Province. Nothing to do with starting companies; lots about understanding ordinary Chinese life.

I’ve just arrived in Beijing as part of my ‘Starting up in China‘ project.

Over the last few weeks, I conducted a handful of interviews in the US with investors and founders focused on China. From these first few conversations and background reading, I’ve been trying to pull together a few commons themes about what the West assumes about Chinese entrepreneurship.

Here are the top five generalizations I keep coming across:

1. That China only copies, it doesn’t innovate
2. That any innovation that does exist in China is in the commercialization process: i.e. that Chinese companies are more comfortable with launching an early product into the market and seeing what the customer response is
3. That the weakness of the IP system is a big problem for early-stage companies
4. That Chinese companies aren’t that interested in international expansion: the domestic market is more than big enough
5. Government’s role in companies is such that you have to be a local to succeed in business

My hunch is that some of these ideas are going to be more relevant to my focus for this study – early-stage consumer-facing software startups – than others.

These first conversations have also helped me narrow the focus of this project.

I started with three questions – about who is starting consumer-facing software companies in China, the challenges/opportunities they face, and what that means for the US.

But the story I’m most intrigued by is really about innovation.

This is the topic that seems to have most animated my interviewees thus far and I’m already getting the sense that the question of Chinese innovation is far more complex than stereotypes 1-3 above suggest.

Even walking around Beijing’s hutongs you can find a kind of culture of innovation and creativity. Every other street corner seems to have an ad-hoc workshop specializing in all kinds of bike-hacking – adding electric motors, extra seats or fixing wheels. Surely reusing, remixing and reappropriating are key to innovation? I’m wondering if the culture evident on the streets of the capital is reflected elsewhere in Chinese society.

It’s going to be an interesting couple of weeks.

Over the last few months, I’ve been struck by how many of the really talented fellow graduate students I’ve met at Berkeley are Chinese and interested in founding companies.

It got me thinking about the start-up scene in China – who’s involved, what are they building and what are the opportunities and the challenges?

So – thanks to the flexibility of graduate school! – I’m putting together a project to find out, with the help of some Chinese friends.

Two trends

Although much debate surrounds the exact figures, China is graduating a vast number of engineering students and many more are traveling to the US for their education. Increasingly those students are choosing to return home after their studies to find jobs.

As the quantity and quality of Chinese engineering talent increases, the market opportunity at home appears to be growing.

The scale of the consumer internet market in China is significant.

There are 477 million internet users in the country to North America’s 272.1 million. The total transactions amounts in China’s B2C market reached 240.07 billion yuan (USD 38.03 billion) in 2011, with an increase of over 130% compared to 2010.

A founder’s perspective

There’s quite a bit of literature focused on Chinese corporate R&D, basic science and the attempt to create clusters of innovation which mimic those found in Silicon Valley. (I helped out with one such study of science and innovation in China, India and South Korea a few years back).

But to what extent is there a viable Chinese start-up ecosystem? What’s it like to start a company in China from a founder’s perspective?

I’ve come across a couple of personal accounts, but nothing that really goes into any depth.

So I’m setting up an interview and survey-based study of Chinese founders and their companies with the intention of getting a better understanding of what’s going on.

Here’s what I’m interested in:

1.) Entrepreneurs and their companies: Who is starting up in China and what kind of companies are they starting?

2.) Challenges and opportunities: In terms of talent, money and legal infrastructure, what are the key challenges these companies face?

3.) Implications for the US: What does this mean for US VCs and entrepreneurs. As a current Berkeley student, I also can’t help wondering what this means for universities like Berkeley, who attract so many Chinese students. How can they make the most of their Chinese connection? What can they offer these entrepreneurs?

I’m going to be in Shanghai and Beijing in May. If you’re interested in being interviewed or know someone I should talk to, drop me a line!

Image: Startup Weekend Beijing. Courtesy of TechRice.

For the last 374 days, I have been sharing my feelings with my iPhone.

Happy, relaxed, awake or watching TV, reading or in the gym, I’ve been recording what mood I’m in.

This strange behaviour is thanks to a LSE project called Mappiness – the happiness mapping app. It’s a tool built by a group of researchers interested in finding out what affects a person’s environment has on their well-being.

The app is also part of a wider movement of people interested in self-measurement; Quantified Selfers using technology to create large sets of data about oneself, from pulse rate to calorie intake.

Mappiness pings me twice a day and asks me how ‘happy’, ‘relaxed’ or ‘awake’ I am on a sliding scale, then asks a few questions about who I’m with and what I’m doing.

I’ve now got a year’s worth of data – enough to be statistically significant – and I also promised the Mappiness team I’d write up a bit of user feedback.

So here are a few things Mappiness has taught me over the last year:

1. I get gradually more grumpy towards the middle of the week – Wednesdays are my low point and the weekends are my peak.
2. I’m not a morning person – I get significantly happier later in the day.
3. I am happiest when traveling on the bus. I can’t explain that one.
4. I don’t like being on my own.
5. The thing I do most is working – or at least that’s when I’m most likely to respond to the app. Followed by listening to music (which I know I do mostly when working), followed by socialising, followed by commuting and eating – a fairly accurate and somewhat depressingly routine picture.

And here are a few thoughts for the Mappiness team:

1.) Awake vs tired

The first question the app asks is how happy, relaxed and awake you are. I don’t know how the original questions were decided on, but asking how ‘tired’ you are, rather than how ‘awake’ you are might be more useful. I can be wide awake but utterly exhausted – and there are few things that cause me to be more irritable than tiredness.

2.) User experience

The next few questions ask who you’re with and what you’re doing, and there are quite a lot of choices. Judging by my answers, I spend the majority of my time doing about five of the 40 or so options. If my most frequent choices were automatically nearer the top of the page that would probably make it a little quicker to submit my answers.

3.) Richer learning from combining data differently

Mappiness provides you with a set of charts displaying the data you’ve collected in an easy-to-interpret format. The last of these I’ve found the least interesting – ‘What am I happiest doing?’ – because it doesn’t record a combination of activities.

So you can’t tell if listening to music and eating is making you happier than just listening to music, and so forth. I think there a few ways to provide a richer combination of data here, without me extracting it and working out for myself. I don’t think the default option tells you very much.

4.) Hedonimetre

This is just brilliant – http://www.mappiness.org.uk/meters/ – the UK’s happiness in real time. There are so many things you could try mapping this data against to see what patterns you find: weather, sunset/sunrise, news stories, economic growth…. I can’t remember what personal information the app collects when you sign up, but I’d be interested to see the demographic spread of Mappiness users.

5.) Incentives

Lots of friends have commented that they downloaded the Mappiness app but stopped using it after their curiosity waned. They’re typically pretty surprised that I’m still updating it because they can’t understand what I get back from it.

I suppose I’ve kept using it because I think well being is an interesting concept in itself and it’s become a bit of a conversation point. But if you’re really looking for a large number of people to use it, you need to offer them something more useful back than just raw data.

This is a challenge for many of the Quantified Self products. Ultimately, assuming these ideas become more mainstream, it will partly be about saving money; insurance companies offering premium discounts for your data or supermarkets offering tailored deals. This is just another form of store loyalty card that already exist.

For me, I want to make the data personally useful. Mappiness is starting to get a picture of when I’m likely to be most grumpy (Wednesday morning is a prime moment) and it could easily ping me and make a suggestion to cheer me up based on what I’m doing when I seem to be happiest. For example, it could remind me to take my gym kit when I left the house on Wednesdays, since I report to be pretty content when I’m exercising.

Now I’m in the US, my data is no longer part of the research project, but I’ll be keeping an eye on this every once in a while, just to check what’s going on in the homeland.

After three-and-a-half years, today is my final day at Social Innovation Camp.

It all started as a three-month project I took on because I couldn’t pay my rent in January 2008.

The original idea was just to run a one-off experiment to see what would happen if we brought together a group of people with different skills and experience to work on an idea that used the internet to solve a social problem.

What we’ve designed – pretty much accidentally – has become a tool for people to start their own social ventures that use technology to tackle something that matters.

We’ve run five Social Innovation Camps in the UK, had over 450 people submit a back-of-the-envelope idea to us, helped prototype over 30 social ventures (Enabled by Design, The Good Gym, MyPolice, HomeslessSMS to name but a few) and, by the end of August, we’ll have supported other people to run the Social Innovation Camp model for the tenth time across eight countries. We’ve also set up Bethnal Green Ventures, a follow-on accelerator programme to help teams get that little bit further along the path of launching their service and helped a whole range of organisations think about how they can get the communities they work with involved in solving problems for themselves.

It’s been a phenomenal ride.

We’ve had some amazing opportunities, made a thousand mistakes and I’m really proud to have been involved in what we’ve created.

I’m hugely grateful to the wonderful team of people I’ve had the privilege of working with:

My co-founders Paul Miller, Dan McQuillan and Christian Ahlert, without whom none of this would exist.

My greatest co-conspirator Katee Hui who came on board when we had no idea what we were doing and has to be one of the best people you could possibly ever want to work with.

Simon Tucker and Melanie Hayes who’ve recently joined our Board to help guide us through our next phase and who’ve been so supportive (and repeatedly very wise) over the last few months.

And last but by no means least, Glen Mehn, who’s going to be running the show from here on in and who’s done an absolutely fantastic job with me hanging around for the last six months.

We’ve also been a constant thorn in the side of the School of Everything office and for that, we’re very sorry.

Finally, we’ve been lucky enough to have some fantastic support from the Young Foundation along the way, and we’ll always owe Roland Harwood and Rohan Gunatillake for being the first people to give us some cash to help get things going when they worked at Nesta.

Thank you. You are all great.

I’ve also been floored by how generous many, many people have been with their time in getting involved with Social Innovation Camp – from those who’ve come to every single weekend to mentor a team; to people who’ve helped guide me through setting up and growing something from scratch. I won’t embarrass you here, but you know who they are – and I’m more grateful than you’ll ever know.

As for me, thanks to the Fulbright Commission, I’m moving to California to be a student again – this time at the Haas School of Business at Berkeley. I’m planning to do a bit more start-up stuff, some more writing, a bit of figuring out what I’m going to do next – maybe even a bit of studying.

And to anyone thinking about setting up their own thing or working for yourself: do it.

It’ll be both miserably hard at times and the best decision you’ve ever made.

A happy first birthday to my new digital home.