technology startups ecosystem in china - lessons to other ecosystems

TECHNOLOGY STARTUPS ECOSYSTEM IN CHINA

Lessons to other ecosystems

Daniel Cukier @danicuki

CONTEXT

cities urban population China USA Brazil

> 1M 144 10 18

> 3M 38 2 4

> 5M 22 1 2

> 10M 10 - 1

> 20M 3 - -

https://en.wikipedia.org/wiki/List_of_cities_in_China_by_population_and_built-up_area

1.4B PEOPLE

GDP PER CAPITA

https://www.google.com.br/publicdata/explore

GDP


% WOMEN IN NATIONAL PARLIAMENTS


China USA Brazil

GDP (US$ T)

10.4 17.4 2.4

Internet Users

721M 287M 139M

Global starting yes no

Internet Marketing

SMS, push

e-mail marketing

e-mail marketing

B2B / B2C 5% / 95%

40% / 60% ?

Deal flow Long game

short game short short game

CHINA IS DIFFERENT: CURIOSITIES

➤ Red color means up in stock market

➤ Motos and bikes can use pedestrian lanes

➤ Yes, they have odd snacks

➤ Great Wall of China became Great Firewall

THE TECH SCENE

China USA Brazil

Innovation 1 to n 0 to 1 ?

Startups 26K 104K 5K

Engineers per startups 23.1 18.6 2.3

VC fund (2015) 6.9B 35.2B 0.2B

Unicorns* 38 98

*https://www.cbinsights.com/research-unicorn-companies

https://www.cbinsights.com/research-unicorn-companies

ECOSYSTEM MATURITY

➤ 1976: China = chaos!

➤ 20 years ago it had nothing

➤ 38 unicorns

➤ 136 companies listed in NASDAQ

CHINA TECH STARTUPS

➤ 26K startups

➤ 893M people have bank accounts

➤ 38 startups valued more than US$1B

➤ Government Investments fund for startups: US$338B

CHINA STARTUPS CULTURE

➤ Fast is the only way, if you don’t go fast enough, someone will

➤ Highly competitive and agressive

➤ “Take decisions without knowing everything” (risk takers)

➤ Automate vs. roothless opperate

➤ Collaboration = common objective + communication (trust)

➤ Business is all about trust and relationship: start with football conversation

➤ CRM = alcool

➤ “More irrational than Silicon Valley”

➤ Live to work instead of work to live (996)

PATENT APPLICATIONS - RESIDENTS


SOFTWARE ENGINEERS COST (WITHOUT LABOR COSTS)

China Brasil USA

avg. salary / week US$575 US$715 US$1979

work hours per week 72 44 44

cost / hour US$7.98 US$16.25 US$44.97

CHINA STARTUPS CULTURE

➤ Mobile, mobile, mobile!

➤ Perfect for BigData: everything in China is above a billion

➤ Multi-cultured, adapted and flexible for each sub-culture, not standardized

➤ “VR in China is 10x than in US”*

➤ Chinese find resources outside and build

➤ “Difficult to succeed if you don’t have money and friends”

➤ Long term vision

➤ Slow regulation help high tech to grow fast

* not verified

ECOSYSTEM MATURITY: VITUOUS CYCLE

Name Fortune Company Market Cap

Jack Ma 20.5 192

Ma Huateng 16.6 193

Robin Li 11.0 65

Lei Jun 9.8 46

William Ding 8.1 18

Liu Qiangdong

6.3 35

APR, 2016

STARTUPS

XIAOMI (WESTERN EQUIVALENT: APPLE)

➤ 8 co-founders at Apr/2010

➤ 3rd e-commerce in China

➤ Apple clone, with innovative business model

➤ Sales at cost, monetize with services

➤ Fans, not users or customers

➤ Android fork by fans

XIAOMI (WESTERN EQUIVALENT: APPLE)

➤ Fans, not users or customers

➤ Pull brands x push brands: no ads means economy to customers

➤ Release every week with a lot of social media buzz

➤ CEO is a tech celebrity

➤ Culture is in DNA, can’t be copied

➤ Ridiculous on purpose

➤ Speed is the only way

BAIDU (WESTERN EQUIVALENT: GOOGLE)

➤ Cloud, ML, BigData

➤ 40k employees

➤ 1.6B users

➤ 10.5B revenue

➤ $60M fund in Brazil (min $1M ticket)

➤ 42% of Play Store Apps

➤ 1st chinese in NASDAQ100

ZHENFUND (WESTERN EQUIVALENT: YC, 500 STARTUPS)

➤ +150 investments

➤ US$300k for 12% - US$800k for 10%

➤ Bet 100% on people

➤ Sequoia Capital owns 50%

DIDI (WESTERN EQUIVALENT: UBER)

➤ 400 cities

➤ 15M rides / day

➤ Merged with Uber

➤ 26 avg employees age

ALIBABA (WESTERN EQUIVALENT: EBAY)

➤ Biggest mobile commerce in the world

➤ Cloud provider (3rd in world)

➤ Pillar: Health and Happines

➤ 450M users

➤ Funding: strategic, not for financial return

➤ BigData and ML over consumer behaviour

JD.COM (WESTERN EQUIVALENT: AMAZON)

➤ #1 e-commerce in China

➤ Biggest company revenue in China

➤ US$5 trillion / year

➤ Top 10 in revenue worldwide

➤ Wallmart: 5% shares

➤ Access to products by countryside people

➤ Efficient delivery system

➤ Staff care

URWORK (WESTERN EQUIVALENT: WEWORK)

➤ Biggest co-working network in China

➤ Founded in April/2015

➤ 16 cities, 15.000 positions in 18 months

➤ Strong team and relationship with government

➤ Real-state business

➤ Opperates government high-tech park

TENCENT (WESTERN EQUIVALENT: FACEBOOK)

➤ Internet in China

➤ WeChat (old QQ Chat, ICQ copycat) - much more than a chat app: payments, services, news, etc.

➤ 700M accounts

➤ #1 games in world

➤ QQ Music: 100M MAU

➤ 50% engineers

➤ Co-investments with Alibaba

FOOD FOR THOUGHT

Focus GrowthUSA ChinaBrazil

?

DICTATORSHIP X DEMOCRACY

➤ Time is the most valuable asset

➤ Dictatorship tends to be faster (needs clear vision and communication from dictator)

➤ Money, direction and people

➤ Don’t dictate ‘how’, dictate ‘what’

LESSONS FOR BRAZIL

➤ Change mindset and start looking global if we want to attract investors

➤ Technology is a global business with local expertise

➤ Instinct in home country doesn’t work in China

➤ Brazil is not Brazil, it is only a battlefield between China and USA

➤ We must understand our environment instead of copying USA or China

➤ We are not thinking strategically about our future

DOUBTS AND FUTURE

➤ Is China selling itself too much?

➤ Can China be innovative?

➤ Is the ecosystem self-sustainable?

➤ Perfect partner for Israel: high-tech + big market?

➤ What if there was no firewall?

TECHNOLOGY STARTUPS ECOSYSTEM IN CHINA

Lessons to other ecosystems

Daniel Cukier @danicukiThanks!