During our meetings over the past days in Shanghai it became once again very clear to me that there is no country for entrepreneurship like China. Things just go so much faster than in most other parts of the world. Just one example here, judge for yourself if this would be possible outside China:
Grace and I were meeting with an entrepreneur for breakfast. Grace had known him online for about 3 years and met him once in real life, but so far I had not seen him in person. Grace talked highly about him, because he was smart and had a lot of potential.
He indeed turned out to be a very smart guy in his early 30s who spoke fluent English. Not surprising considering his tech degree from one of the top 5 universities in the US and his work experience there. He mentioned that Canada had given him a permanent residence but that he let it expire because of the opportunities in China. This actually reminded me of Grace not taking a Singapore permanent residence after getting her INSEAD degree (at that time Singapore offered this to all INSEAD MBA graduates).
After ordering food and drinks on the terrace in Xintiandi he started telling us about his start-up. I hear a lot of pitches in my job a venture capitalist, but this was one of the best I had ever heard. The guy was extremely passionate about his idea and I immediately got what he was planning to do and how it could disrupt a major industry. The idea was a relatively simple (tech) execution play and I realized this was a potential multi-billion dollar idea. I can’t talk about the idea here because he is in full stealth mode, but if it comes out and becomes as succesful (as I think it will be) I will likely blog about it.
He started the company about 6 weeks ago and now already has 15 people on his payroll. Not just average developers and operations people, but top people from China’s leading online companies. I was very impressed but I understood how he had managed to convince them to join him in his start-up.
Although it was not an ‘official’ pitch I became intrigued and decided on the spot that I wanted to invest (something that’s highly unusual for me by the way). However, he then told me that 2 weeks ago he had had lunch with a partner of one of the leading Silicon Valley venture capital funds (a fund that I can’t name here either), where he had informally mentioned his plan. Although he wasn’t ready to raise money yet, he also offered to invest immediately and within 5 days all documents had been signed and the deal was closed! I guess we were just 2 weeks too late. Maybe there is a chance to get in at a later stage, but likely at a very inflated valuation.
Two months ago this was just an idea, and now it’s already a fully operational and well-funded company that will grow to 20 employees before its launch later this month. Wow, just wow.
When hearing this kind of stories I sometimes wonder whether I made the right decision to leave China. Of course I know I can’t really live in China anymore with my family because of the pollution, the food scandals, the traffic jams and the censored, slow Internet. Also I am very happy with my new life and job in Vancouver and I would not consider leaving. But as an ambitious investor and entrepreneur I realize the quality of life in Canada comes at a price. You can’t have it all, so it’s great to be back every now in the place where things really happen.
Let us know when it launches! I think many good ideas that work well in China have some potential in Vietnam as well (albeit often at a later date; tech startup culture is in its infancy here and not ready for all big ideas).
You say: “Of course I know I can’t really live in China anymore with my family because of the pollution, the food scandals, the traffic jams and the censored, slow Internet.”
I get your point and I would do exactly the same, but really, too bad over a billion people do not have that choice and have to put up with the pollution, food scandals, traffic jams and slow Internet.
Interesting post, here in Beijing I hear stories like this all the time. I agree there is no place on earth like China right now.
Actually your story does not sound all that unusual. Companies have been starting up like this for decades in the US, especially Silicon Valley. Sure, there are ebbs and tides, but what matters is the fulfillment of the ideas and the necessary grounding from hot idea to established business.
Your wife knew him 3 years, albeit online. He is no pledge to internationalism or business. This was just the launch point. Remarkable? Maybe, same as any tech startup. Certainly there is money and scale advantages in China, but the difficulties and weaknesses cannot be dismissed. That was the understatement of the year. Getting started is quite popular in China. Investing in the change, skills, people and processes that make a startup an established and leading presence, well, is an open vacuum.
Dan, if the story does not sound all that unusual you should become a VC 🙂 I don’t meet these companies regularly. Seriously, a company that goes in just a few weeks from a disruptive idea to a strong full team with a product that is almost ready to launch plus an investment from a top SV fund – to me that’s highly unusual.
I have seen hundreds of Chinese entrepreneurs over the years and invested in several successful start-ups there, so I am very much aware of how popular starting a business is and how often they fail. I believe this one is an exception to the rule, which was part of the reason why I wrote about them. Too bad I can’t name the company here yet…
Its easy to be an entrepreneur in a country that discriminates against foreign and other competitive investment and where Government contacts give you a leg up. Very few Chinese “entrepreneurs” make it outside of China. When you are protected it is easy to be King.
It’s never easy to be an entrepreneur, also not for Chinese in China. Competition is much stronger there than in the rest of the world, but if you make it returns are also much higher. Most successful entrepreneurs did not become successful because of their government connections, they normally built them over time while their company was growing.