Over the past weeks I have started to use Second Life a bit more again, after a one year pause. The main reason I left the community was because I just did not have time for it, and it became quite addictive. Nice if you’re bored, but not if you have hundreds of more important things to do.

However, now Zlong Games (a daughter company of Spill Group Asia) is building the virtual presence of several companies in Second Life. In order to follow the progress I fired up my avatar again, so I can now see real-time how the construction is going. Has managing staff ever been easier? You could literally do it from a tropical beach, and still watch all the people building the structures and interact with them as if you are sitting in the same room. Very cool.

Second Life has changed quite a bit over the past year, there is a lot more to see and do, and I enjoy flying around every now and then. But one thing has not changed, you still have to use a fictitious name. In my case that is Shanghai Ferraris, but I would have preferred to use my real one. Soon this will be possible: according to this article in the Sydney Morning Herald Second Life will start handing out real names by the end of 2007. But for a fee of course, about USD 100 upfront and USD 50 to keep it.

And of course this gives me a new business idea. Buy the names of some famous brands, and I am sure you can sell them for a much higher price to the multinationals that own the brands (and that will be too slow to act on this). It’s different from domain hacking, which is more like hacking a public good. SL names are part of a commercial virtual world, and if you buy and sell them you are just doing an online commercial transaction. I don’t think the brand owners could sue you for this – but I am not a lawyer of course.

For the past month or so blogspot weblogs have been blocked, unblocked and blocked again thanks to our friends running the Great Firewall. Nothing new there, and not worth blogging about anymore. The only reason I write about it here, is because a friend of mine in Beijing (with two blogspot blogs) said that she had not noticed any changes. She can still view her blog without a problem. Now I am just wondering whether the block is only in Shanghai, which is hard to believe. Or is she somehow on a different network with direct access to the world outside China?

For a while I tried to visit all new good restaurants in Shanghai. But because there are so many new restaurants each month, and I normally only have time on weekends plus I also want to revisit the best ones, I have given up on that goal. Another thing I gave up on is saying that a certain restaurant is the best in Shanghai in its category (e.g. best Italian restaurant). I think Shanghai has become one of the best cities in the world with regards to good quality food, and a good restaurant here often equals the best restaurant in many other cities on this planet. This weekend I had dinner in three good restaurants, an Indian one on Friday, and Italian on Saturday and a Japanese on Sunday. They are all among my favorites, and if you live in Shanghai and have not visited them, give them a try.

Friday my wife and I went to Bukhara, an Indian restaurant on the corner of Hongmei Lu and Yan’an Lu (3729 Hongmei Lu, inside the International Pearl City complex), in Hongqiao. The restaurants serves authentic Indian food (as least, that’s what an Indian friend tells me, I am no expert), and the fact that a lot of the customers are from India likely confirms that. The decoration of the building is excellent, both the inside and the outside (if you drive on the lower level of Yan’an Lu you can see it on the corner). The service is friendly and very fast, and the waiters all seem to be from India. The food is fantastic, and as usual I ordered and ate way too much. We have 5 different kinds of Naan (bread), two curries (seafood and spinach/cottage cheese), sheez kebab (lamb), and fragrant rice. If you don’t live in the Hongqiao area it is still worth the drive over, at night there are normally no traffic jams, so you can be here in 15 minutes from People’s Square.

Saturday we had our usual Italian dinner at Casanova (see also a review on the predecessor of this blog, dated April 18, 2005). It was the second Saturday in a row that we went here for dinner, but that was mainly due to the fact that it is one of the few good restaurants where you have a (small) chance of getting a table without a reservation on a Saturday night. The restaurant is located in a nice old villa, with a lounge bar downstairs, and the restaurant upstairs. They have good pizza’s, but actually you should go for the ‘real’ food. This time I had foie gras as a starter followed by a salad and as the main course a grilled tuna (medium rare cooked on my request, fantastic!). My wife went for the beef carpaccio and spinach-cheese (I think) ravioli. All excellent as usual, and also here a quite good service. Don’t forget to leave a tip, they even remind you when you get the bill (they put a small note in it, explaining that a tip is not included). Is this a new trend in Shanghai, where tips are normally not expected?

Sunday afternoon we had a photo session that lasted a bit longer than we expected, but at 9:30 PM we managed to arrive at the relatively new Haiku restaurant on 28B Taojiang Lu (close to Hengshan, and almost next to O’Malleys Irish pub). I have to admit that I normally get my Japanese food at one of the many all-you-can-eat (and drink) places, but this place is a different story. Not only pricewise (although it’s not too bad, we paid about RMB 700 without drinks), but especially quality wise. What a fantastic sashimi they serve here, wow… And the hand rolls, simply delicious! The atmosphere of the restaurant is modern, very different from the other Japanese restaurants in Shanghai. The service of the Chinese waitresses is average, but manager (?) Mark compensated that with small talk at some of the tables and giving advice about the food. If you like Japanese food but have not been here so far, give it a try. But be warned: you might not be able to go back to your regular Japanese restaurant without being disappointed about the food!

On Friday I was invited to attend the VC – Entrepreneurs Summit 2007, organized by INSEAD. A very interesting conference with excellent speakers, covering the VC industry in China from the perspective of both the entrepreneur and the (foreign and Chinese) VC. The event took place in the KIC (Knowledge and Innovation Community), a new complex of working and living space for entrepreneurs, start-ups and VC’s in Shanghai’s Yangpu district (next to the Jianwan stadium in Wu Jiao Chang).

The conference was attended by most of the big VC’s active in China, including some of the major US funds. As usual, hardly any European funds… This point also came up during the summit, when Bruno Bersaid from the (French) China Expansion Fund raised the question why there are still hardly any European investors in China. There was no definite answer to that, but one reason is likely that Europeans are much more risk averse. That’s a pity, because they lose a lot of opportunities. Several US VC firms have people on the ground in China already, either through a cooperation with a Chinese fund or by having its own General Partners in China. Europeans you don’s see much yet, and if you see them they fly in and out, trying to make deals in a few days. That won’t work, but they will find that out soon enough. I know some European VC’s read this blog, so I hope this advice might help them. You need your own people in China for deal sourcing, deal valuation and deal follow-up. Without that you are very likely to fail – or for sure you will miss out on some excellent opportunities.

I don’t plan to give a whole report about all the speeches and panel discussions that I listened to (my wife was actually on a panel discussion, talking among others about how Tudou works with its VC’s), but just want to highlight a few key points that might be interesting for my readers:
– China is now the second biggest VC market in the world. Still much smaller than the US, but growing at an amazing pace. The focus is not only on high-tech, but also on high-growth (well, I guess most Chinese companies are high growth companies)
– The VC industry is the most internationalized industry in China
– There is a shift from offshore USD investments to onshore RMB investments. This year is probably the year that this shift will take place, partly due to SARFT regulation 75 which tries to limit offshore investments in China
– Local IPO’s become a more profitable exit option. For example a IPO on the Shenzhen stock exchange can be quite interesting, with a current P/E average of 51 and reasonable liquidity.
– The average life span of a business plan in China is….. just one month! The shows how fast the market (incl. regulations, competitors) change here. Foreign investors often don’t realize this. Competition is cut-throat here and you have to work twice as hard as outside of China to succeed, but you can also grow much faster than outside China.
– Because many funds are trying to get into China, it is getting easier for entrepreneurs to get funded. This means that they get more powerful, and as an investor you need a quick decision process to make sure you don’t lose the deal. I have some experiences here myself, and it is often difficult to explain this to investors from (especially) Europe.
– Chinese VC’s vs. US VC’s: Chinese VC’s are more hands-on, have tougher term sheets, invest in several tranches, are more short-term focused, and (of course) have better connections in China.

I had lunch at the IPO restaurant (great name!) with my wife and the successful US-Korean entrepreneur, Mr. Paul Song. He was also one of the speakers, and I was quite impressed by his achievements. He set up a company in the US in the early 1990’s (Aris Corporation) and without any VC capital managed to grow this to 900 people before listing it on the NASDAQ. He is now looking at opportunities in China and Vietnam, and we talked among others a bit about the opportunities for online gaming in Vietnam. Right after lunch I had to go back to the office, because I still had a lot of things that I wanted to finish before the weekend. A pity, because the first part was excellent, and I am quite sure I missed some interesting presentations.

More than half of the SMS messages that I receive on my China mobile phone number are spam. The messages vary from ‘normal’ ones such as business men trying to sell fake invoices, to more explicit ones such as a person offering the virginity of his sister to the highest bidder (seriously!). Very annoying, because unlike email I normally want to take a look right away when a message comes in. Somehow SMS seems a more urgent medium. There is nothing I can do about the spam, as far as I know (if anybody has a suggestion, please let me know).

But maybe the heavy punishments in China for SMS spammers may lead to less unwanted messages in the future. Earlier this week I read a story on Pacific Epoch that 4 mass SMS spammers were sent to prison for over 10 years each. However, according to the article they not only spammed, but also did not pay the SMS fees, causing a loss of about USD 40,000 to China Mobile. I am not sure what was more important in the sentencing, not paying the fees or the spamming itself. But I would not be surprised if it would be not paying the fees. Why? Because my spam messages really started to come in after I got a China Mobile VIP SIM card, meaning that the list of VIP members is somehow available to spammers. So spamming might actually be considered OK, as long as you pay your bills.

This morning I was working at home before going to the office, when I suddenly heard some sounds outside my study window. I looked up and saw a building cleaner hanging on some ropes outside my balcony! I managed to take two pictures before he used his abseil technique to clean the 36 floors below my apartment.

A Shanghai man wants to divorce his wife, because she keeps on surprising him with jokes. The last one was just too much for him. On the night of April 1 he came home from a tiring business trip, when he was shocked to see that his wife had hanged herself in the living room. According to the Shanghai Daily she had made it look as real as possible, and indeed her husband did not see it was fake.

He immediately called the police and the property management office. The property management helped him to put the body on a sofa, while the woman kept on acting as if she had died. While they were waiting for the police to arrive, the woman suddenly jumped up while shouting: “Happy April Fool’s Day!”.

This was too much for the man, and he now wants to file for divorce. He mentioned that his wife always made jokes with him, and he could not stand it anymore. He gave another example to the newspaper, saying that his wife once changed the lock and refused to let him in before correctly answering several quiz questions. The woman thought that making jokes kept the couple close, but it now turned out it had the opposite effect.

This afternoon I had lunch with Sam Flemming in my office, and we ordered two pizza’s from Melrose Pizza. I like their pizza’s, and delivery is always quick. I just received a flyer in my mailbox with a special promotion offer, two medium pizza’s for RMB 99, so we decided to go for that. While ordering we mentioned the promotion, but when the delivery guy arrived he wanted to charge us RMB 155. The receptionist came to my office to tell me I had to pay more, so I walked with her to the entrance to find out what the problem was. The delivery boy told us that they had made a mistake (the pizza’s that he brought us were not on sale, or something like that), so we had to pay extra. Interesting logic, they make a mistake, so we need to pay extra. The receptionist then called Melrose pizza to explain the problem, but they were quite arrogant and told us we had to pay. And if we didn’t want the pizza at a higher price they would never deliver to us again. I told the receptionist I would call the English number that they provided, and she mentioned that to the Melrose lady she was talking to. Her answer: go ahead, we won’t answer! I tried to call, and indeed they pushed my call away.

At that point Sam joined the conversation, who happened to indirectly know the owner of Melrose Pizza (Melrose is a franchise organization). He could not get hold of him right away, but the owner would call me back. So I decided to pay (my assistant had negotiated the price down to RMB 140 in the mean time) and wait for his call. He called within 5 minutes and apologized for what happened. He then asked which number I had called, and I gave him the number. He asked me to repeat it, and then said: “But that is not a Melrose Pizza number!”. He would check it out and call me back. He did call back about 10 minutes later, but did not tell me what exactly happened. He just wanted to know my address and would send me something to make it up to me.

That’s great service, and I appreciate it, but I now wonder whether there is a fake Melrose Pizza place in Shanghai. I noticed that the number on the pizza box was indeed different from the one on the flyer that I received. Yes, they not only copied the flyer, but even the box including the real phone number! In case you want to give it a try, the “fake” Melrose pizza can be reached at 021-5887 6011. Their fake English hotline is a mobile phone number: 1391 841 6180. If you want to make some prank calls, go ahead. But if you want the real Melrose Pizza call 800-620-9797. I hope the owner can quickly sort out this problem. Next time I will use the 800-number to order his pizza’s.