Last week, Startup Grind Seoul hosted their fourth event at Maru 180, this time with Alvin Foo (@alvinfoo) of Airwave China (Omnicom Media Group) and previous Head of Mobile for Google China. As a veteran entrepreneur and the first speaker from outside of Korea to join us at a Startup Grind Seoul event, Alvin had a lot to share with the crowd, especially about his startup experience in China.
On top of heading up Airwave China, the Mobility Business Unit within Omnicom, Alvin is also the co-founder of AppBoost, his third startup, where he takes on more of an advisory role rather than running the day-to-day operations. AppBoost is a performance-based mobile marketing agency based in Shanghai that mainly focuses on Chinese companies that are targeting the global market and helps app developers reach the top quality users they’re looking for.
“Mobile is growing so fast, but our clients are very far behind,” Alvin says. “The acceleration is actually on the user side, not the client side. The client knows a lot about mobile, but at the same time, they only put a small percentage of their money on mobile.” It’s these clients that Alvin aims to help with AppBoost.
With Alvin’s extensive business experience in Asia and most recently in China, his insights and down-to-earth advice were quite helpful, especially when considering a topic as daunting as entering the Chinese market.
Here are six highlights from Alvin’s fireside chat for any startups planning to tackle China:
This is likely true for entering any new market, but Alvin says it is absolutely critical for companies wanting to enter into China to already have a successful product and model. “You don’t want to tackle China when you are testing your model. You are going to China when your model is proven.” Alvin gave KakaoTalk as an example of a company that is at least in a position to even think about entering China, as it is a company that has already proven to be very successful in the Korean market.
So, what do you do if you’re not the most popular messaging service in South Korea? One viable option that Alvin suggests especially for gaming companies is to find a local Chinese distributor to work with in distributing your product. “If you already have a successful product, then finding a good partner in China will not be a problem,” Alvin says.
If there’s one word to describe doing business in China, Alvin says, it’s “ruthless.” According to Alvin, Chinese companies are willing to be ruthless and do whatever it takes to succeed, whereas foreign companies from the U.S. or Europe may not be familiar with this “Chinese way” of operating, and therefore lose out on market share. “I’m not saying ruthless is bad,” Alvin says. “I’m saying, in order to win, you have no choice but to adopt that way.”
One example Alvin gave is Xiaomi, the 4-year-old company that was making zero revenue four years ago, which is now surpassing Samsung in China. “The guy who’s running this company is smart and at the same time, very ruthless. You need to understand, if you want to win this game, you have to be so agile, so flexible, and willing to change all the time,” says Alvin.
Just as he described Xiaomi, Alvin says that “in a difficult market like China, you really need to evaluate your business model all the time.” In order to make your business model sustainable yet agile, Alvin recommends not only looking internally but also outwardly at what your competition is doing. “Even if Omnicom is a big company, we are competing with a lot of local companies [that] keep growing and changing every year,” Alvin explained. In order to keep up with the competition, find out what everyone else is doing, and sometimes that can give you ideas to improvise and modify to your advantage.
“Everything is accelerating. Instead of having a 5-year plan, chop it up into every 6 months, and see what’s working and what you can do better.” — Alvin Foo, Omnicom Media Group
Many companies make the mistake of thinking that localization is simply converting to whatever the local language is, but this is an oversimplification. Alvin says that in order to truly localize, you also need to look at the feel and the user experience, but many foreign companies fail to gain traction in China with their product because they don’t put enough emphasis on the user experience. “Even if it’s an imported product, if the user experience is so poor, the quality will be worse off than a local product,” Alvin says.
One example that Alvin gave of a non-Chinese company that has done very well in China is Evernote, which was so well-received by the Chinese market that many Chinese people thought it was a locally made product. Why was Evernote so successful? Alvin says it’s because “they brought the entire service into China and built the product from the ground up” with the user experience and interface entirely tailored for the Chinese user and market.
“I’m not trying to paint a bleak picture of China,” Alvin started off, but I think many would agree that it’s a tough market to get into and few foreign companies have had outstanding success in China, even big companies like Google, Facebook, or Amazon. From his experience, Alvin says that in reverse, many Chinese companies ask him how to go into the U.S., and his advice is to make sure to learn and understand the market first.
“If there was a war to fight, U.S. would be the last market. So go ahead and conquer everywhere else first, and when you win, maybe you can start thinking about how to win in the U.S. I think it’s the same thing for China as well.”
Many companies set their eyes on China, lured in by the market of 1.4 billion people, but the competition is proportionately fierce, and Alvin urges everyone to ask themselves if they’re truly ready to take on China, in terms of product, team, and finances.
So if markets like China and the U.S. would be the final battleground in the war of startups going global, we want to know what countries are good options for the first battle. Alvin recommends, “Try a small market.” Countries like Singapore, Malaysia, and Hong Kong, especially those that can be covered with one language for the whole area, are good testing grounds for entering a new market. With a smaller market, Alvin pointed out, the cost of promotion is low, and the cost of potential mistakes is also low as well.
BONUS: Alvin also shared three final pieces of advice that he’d like to give to aspiring young entrepreneurs that we can all relate to and benefit from:
In the late ’90s, Alvin was able to succeed because, as he puts it, “ideation was easy for me because there was little legacy.” Nowadays, there is so much information and technology out there that if you want to do something, you need to make sure you do your research and know enough. Find sufficient information about the market, the competitor, and the need before diving in. Make sure you know your product and understand the potential of your product.
Alvin says that he owes his previous success to having met the right team at the right time. Even if he didn’t come from a tech background, his team took care of the technology and the product, so that all he had to worry about was driving sales and managing investors. “Finding the right team of people is so important,” Alvin says.
What is the right number of people for starting a team? Alvin says, “Find a small team… maybe 3 people. Two is the best, actually. I think four is a bit too many already.”
“Try to have a founder that can ride with you at least for the next few years. There’s no way you can run a business on your own.”
— Alvin Foo, Omnicom Media Group
“A lot of people have a fantastic idea, but they never know how to do monetization,” says Alvin. Many people in startups have great ideas, but forget to look at monetization and only have a vague idea of a business model. “If you don’t know how to make money, how do you convince investors that you’ll ever make money?” Alvin pointed out. Even if you’re not driving monetization right now, it’s important to have a clear business model.
A huge thank you again to Alvin for his insights and for flying out from Shanghai to join us for this Startup Grind event. To watch the entire fireside chat, check out the full video on YouTube from Startup Grind Local:
Next months’ Startup Grind Seoul event will be on Wednesday, December 17, this time hosting Hee-Eun Park from Altos Ventures and co-founder and former CEO of IUM, so come learn and connect with the Seoul startup community! Don’t forget to register and get your tickets at the early bird price on Eventbrite or Onoffmix.