Category Archives: China

Quick take: GOAP Beijing Part 2

Just got back to the US from a few days in Beijing, participating in the Geeks on a Plane tour there.  Other than a little case of sicknessthat felled me on Monday, it was a great trip.

A few very quick impressions.

Hiring and scaling startups is a totally different game in China v US.  In Silicon Valley, startups are struggling mightily to hire talent.  Google is paying to retain talent; Facebook, Zynga, Twitter and others are paying up to acquire talent.At the same time, with the rise in angel money and incubators, talented engineers with risk tolerance are tending to find the allure of founding a company very attractive.  The result: an extreme shortage of technical engineering talent going to earlier stage startups.  This makes it very difficult for Sereis A and Sereis B companies to scale technical talent here.

In China, what I saw was pretty different.  One startup I visited had grown from roughly 10 employees to nearly 100 in about 11 months, with more than half those employees talented engineers.

Its often talked about the stark cost differences between hiring engineering talent in the US versus China, and this is certainly true.  Beyond that, however, what really impacted me was the sheer numbers of engineers available.

It underscores big challenges to the US economic model–lack of focus on technical skills and degrees in US education system, a reticence on immigration letting more technical talent leave our country, etc. The US continues to avoid these issues at its long-term peril.

Armchair Blackberry analysis. On Bloomberg TV in the hotel room, I saw a brief report on Blackberry, in which one of the Co-CEOs was pitching the RIM/Blackberry development platform.  What development platform you ask?  (Good question.)  Anyway, the sound bite that got covered was that he said something along the lines of Blackberry developers make more money and have better discoverability on the RIM platform than on other platforms.  I don’t really buy the make more money point, and nothing was used to support this.  And the better discoverability point only really means that there aren’t any apps on Blackberry’s store, meaning its easier to find the few that are.  In other words, at best: meh.

Always drink bottled water.   Nuff said.


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Geeks on a Plane Update — Beijing’s Lei Jun on Angel Investing

Yesterday the Geeks on a Plane crew arrived in Beijing.  After getting everyone situated, we were off to an event dubbed as a “Face Off” between 500 StartupsDave McClure and Lei Jun, a prominent seed angel investor here in Beijing, dubbed the Ron Conway of China.  The two of them discussed their approaches to investing.  Their similarities and differences were interesting. In particular, what I thought was most interesting and worth writing about was what I took from Lei Jun’s perspective and talk.

The first part of the discussion was Lei Jun providing his perspective on startups and on angel investing broadly in China.  What was striking to me about his talk, via translator, was how similar it was to the conversations I have with angel investors in the US.  He talked about the importance of really investing on the team and the people.  His point here was that with angel investments, one so rarely has any concrete market data or validation to speak of that its vital to invest in very strong teams.

Also, with as strong a track record as a founder as he has, Lei Jun was very forthright and humble in describing what he called ‘many mistakes,’ which he aimed to help his portfolio avoid.

He also talked about the importance of big markets as a key requirement for investments he makes.  This is a philosophy I agree with strongly, and so it was interesting to hear this perspective reflected so exactly from the first angel investor I met in China.

In addition to saying much that was similar to what I hear in Silicon Valley, there were some key points from Lei Jun that I thought were really insightful and useful for us in the Valley.

One example: Lei Jun talked about angel round valuations in a very crisp and interesting way.  His first statement on angel round valuations was that one must just bargain and find a price.  His second point, also interesting, was that in general he looked for a 2/3 discount on whatever a venture round would be, as he felt he was taking 3x the risk by being the first ever money in.  Whether I think he’s taking 3x the risk or not, I thought it was a pretty intersting way to frame things–he’s right that angels are taking more risk in an angel round on a lot of levels, and for that he wants to see daylight in the discount he gets.  This I thought was intersting.

The other thing he said that I thought was interesting was his stated willingness to back his friends 3 or more times as an angel investor.  This was a different perspective than what I hear from angels in the US.  His perspective was that if he thought the person was known to him and very strong, then he was willing to put his money into them not just now and once on this deal, but that he was thinking about investing in them over time on several projects.  His rationale was that he felt that the people he surrounds himself with are very strong, and that even if they fail, they’ll be learning and are worth backing on subsequent rounds.

All in all, I thought that Lei Jun’s perspective on angel investing in China was super interesting.  Much sounded similar to what we’d see anywhere in Silicon Valley, with some very interesting and useful differences.

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