Silicon Dragon Startups (Dangdang) Show Their Stuff

I was at a holiday party recently for DCM, a well-known venture firm in the Valley that has seen a series of IPOs from among its China portfolio — e-commerce retailer and bookseller Dangdang and automotive website BitAuto as the latest examples — when I was asked once again. Why don’t you raise a venture fund? No, really.
I’ve always been terrible at math so I figure anything that has to do with high finance is better left to the numerically gifted. But all joking aside, this isn’t the first time the suggestion has been made.
Maybe I do have a knack for picking promising entrepreneurs and their startups to profile – though I never invest in these startups myself and don’t offer investment advice.
Just this week alone, three venture-backed Chinese tech startups I wrote about in my book Silicon Dragon – e-commerce retailer Dangdang, video sharing site Tudou and an energy savings producer LatticePower — are marking major milestones.
Each is on their way to being the talk of Wall Street as investment prospects: Beijing-based Dangdang for raising $272 million in an IPO and seeing its opening share price soar, video sharing site Tudou from Shanghai for being next in line to go public (following the lead of rival Youku and its share price surge of nearly 110 percent over the IPO) and finally LatticePower for raising $55 million from the IFC to continue developing its breakthrough light-emitting diodes from Nanchang.
Just three years ago, most Chinese startups were unheard of in the West, aside from search engine Baidu and online trading marketplace Alibaba, which were among the earlier wave of Internet startups to make a splash with successful public trading debuts. But now more and more small China businesses are following the lead of these trend-setters a few years ago and being recognized on the global investment stage as attention turns to emerging markets for improved returns.
The sheer numbers of listings and IPOs from mainland China alone is a head turner. So far this year, NASDAQ counts 34 new listings and 15 IPOs from Mainland China while the comparables at NYSE are 24 and 19.
Of the 34 mainland China IPOs this year, 19 are trading upward from their IPO price, with a few showing triple-digit gains such as NASDAQ-listed ChinaCache International and Hisoft Technology. Most of these startups have venture capital support, and from such leaders as Sequoia Capital, which alone is an investor in four of the newly traded Chinese companies on U.S. exchanges.
I wasn’t too surprised by Dangdang’s impressive opening day of trading. I recall interviewing co-founder Peggy YuYu back in 2007 for my book, when she and her husband were establishing the online bookseller. Then, I had been impressed by her quiet determination and keen intellect. Since that initial interview, she wisely kept a low profile, taking a cue from DCM investor David Chao to stay focused on fast and profitable growth of the startup and not get distracted by the noise of China’s booming marketplace.
The ten-year-old startup turned a profit last year. Moreover, it solidified its lead in the Chinese marketplace over an Amazon-owned rival, Joyo.com – thanks to micro-management of the business details – like relying on bicycle couriers to deliver orders — and Peggy’s own flair for merchandising in moving Dangdang from an online bookseller to an e-commerce retailer with a range of popular goods.
Next in line for an IPO among the Silicon Dragon startups is video sharing site Tudou.com.
Founder and CEO Gary Wang is another returnee who, like Peggy, got his education and work experience in the West before moving back to his homeland about a decade ago to try his own business – albeit both versions of business ideas that were proving successful in the U.S.
Over the past decade, these and many other Chinese startups have evolved quickly, and judging from insights I’ve gained from interviews with their founders, investors and competitors, are measuring up to the best from Silicon Valley.
Now, I’m spotting a new trend as Chinese entrepreneurs go to the next level and begin to show enough confidence to come up with new ideas and innovations – no longer just close copies of U.S. originals.
LatticePower, started by a physicist with skills and experience honed in China, is a good example of this new trend with its breakthrough technology for making a highly efficient source of light. I went to tour LatticePower in Nanchang and can still hear Sonny Wu, the investor at GSR Ventures, telling me that LatticePower will be a “billions” IPO.
That may be an exaggeration, but it’s clear that Chinese startups are maturing – and fast. They are beginning to set their own standards – be it on Wall Street or in the lab – and are a force that’s here to stay.

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Google China, Innovation Or Localization? Google China, Innovation Or Localization Google China, Innovation Or Localization

Yesterday, Google released Nexus S and Android 2.3 and the Chrome OS is also released today. Innovation, is definitely the DNA of Google which is the key reason people love it. In Beijing, Google China also held a so-called Google Innovation Forum talking about and demoing some latest technology Google has been working on, such as voice recognition technology etc. Goolge SVP Alan Eustace and Liu Yun, CEO of Google China etc were all there giving speech.

Yes, Google does not want to forget about China. Liu Yun and Alan emphasized that Google is still very interested in Chinese market, and the revenue from local market keeps increasing every quarter. China is still one of the biggest online display ads market for Google. However, we have to see that the core business of Google, the Search has shrinked to 24.6% from 27.3% according to iResearch.

I recall the Google Developer Day conference I was invited to give a talk about OpenWeb. Google was also demoing some cool technology such as Google Wave, HTML5 etc, and most importantly they revealed several localized products. e.g. Gaokao map a map-based service for Chinese high-school graduates. There were over 1000 audience there as far as I remember. But this time, it’s all about innovation and I heard that there were only 200 heads showed up.

I love innovation, but for Google in China, the big question is how to localize the innovation. Otherwise, people will eventually leave you.

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Who is Eating IE’s Lunch?

When Chrome was launched, everybody termed it as Firefox killer (after all, Google used to fund Firefox development). But then, IE turns out to be the biggest loser. I decided to share Pluggd.in’s browser usage statistics and compared the current data with last year’s data (December 2009).

Browser Share Ending December 2009

Take a look (legend at the end of the post) at the data till December 2009 (total visits).

Browser Share [January - December 2010]

Since January, IE lost ~11%, Firefox lost ~4.3% and Chrome gained the max, i.e. ~15%.

Of course, Pluggd.in reaches out to the most geeky/early adopter community (hence the data is skewed), but it’s the same community that drives adoption of software in their friends and family circle.
And IE losing market share in India is no different from rest of the world – just that Chrome adoption surprises me a lot (have you noticed how fast Chrome has been adopted by cyber cafes?).

As far as Firefox is concerned, it surely has lost mindshare and like I said earlier – Firefox is the new IE, Chrome is the new Firefox and Opera is …

What’s your take?

* Legend

Blue : IE, Green: Firefox, Red: Chrome, Yellow: Safari

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Fashion And You Secures $8 Million from Sequoia Capital India

Invitation-only Private sales site, Fashion And You has secured $8mn from Sequoia Capital India.  Fashion and You partners with high fashion and luxury brands across fashion apparel, accessories, footwear, watches, jewellery, fragrances, home décor, and holds private sales events for these brands.

This investment will go towards growing the company’s product offering, strengthening its enterprise technology, expanding its distribution capacity and funding future growth initiatives.

Fashion and You is backed by Group Buying Global AG (owns Gilt Groupe and several private sales site across 8 countries).

Very recently, Accel Partners invested $2.8million in Exclusively.in, an ecommerce site that sells high-end Indian fashion products to US.

What’s your take on Sequoia’s $8mn bet on FashionAndYou?

Here is the Press Release (hint: look at Facebook fan mention!!)

New Delhi, December 8, 2010: Fashion and You, India’s leading online private sales website today announced that Sequoia Capital has invested USD 8 Million in the company. This investment will go towards growing the company’s product offering, strengthening its enterprise technology, expanding its distribution capacity and funding future growth initiatives.

Mr. Shailendra Singh, Managing Director, Sequoia Capital India, said “We are delighted to partner with the founders and management of Fashion and You, who have quickly built Fashion and you into the leading online retailer of premium fashion brands in India with over half a million members who are part of the private shopping club. We are confident that the company will strengthen its position as a frontrunner and continue to grow rapidly even as this space witnesses rapid growth.”

Harish Bahl, Founder and Chairman, Fashion and You said, “Fashion and You was the third to start in its category & is now a clear market leader in Online Fashion Retail in India. The core strength of the organization has been the team and the partners that we have. We are overwhelmed by the response that we have got from our consumers and how our teams and partners have made this otherwise very complex to scale model, work so efficiently. With a premium partner like Sequoia now on board with us, we are even more confident of achieving our initial goal of being the sales platform for most high fashion brands in India contributing to at least 10% of their sales by end 2011.”

Pearl Uppal, Co-founder and CEO, Fashion and You said, “Fashion and You offers its consumers and clients a pan-India marketing, retail and distribution platform for fashion and lifestyle brands. We believe we are creating a shopping revolution in India and the investment from Sequoia Capital gives us the tremendous impetus that we require right now to leap into a growth spiral. We have committed to deepening our partnership with brands in delivering a world-class direct to consumer marketing and distribution platform, helping brands build a pan national footprint.”

Fashion and You launched its retail operations on January 15, 2010 and within 10 months of its launch, has established itself not only as India’s #1 Online Fashion Retail Company but also amongst the top ecommerce companies in India. In line with the growing emphasis on social commerce globally, brand Fashion and You’s growth in India has largely been viral. Fashion and You’s Facebook page is one of the leading Facebook pages in India with over 550,000 followers. For many fashion and lifestyle brands, Fashion and You has already become the largest retail avenue in India.

–

This was first reported by Nikhil [we were aware of the same earlier].

Recommended Read : Startups – That Number Game They Play

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Rakuten reveals Indonesian website and logo

Rakuten, the Japanese ecommerce giant, just went live in Indonesia. After confirming its joint venture agreement earlier this year with PT Global Mediacom Tbk, Indonesia’s largest media company, it reveals its Indonesian teaser website and logo.

The joint venture plans to begin operation sometime in 2011 with an aim to be the number one internet shopping mall in the country. It plans to initially offer domestic products from local vendors before expanding to include stores from its global network and eventually becoming one large worldwide operation.

The website serves as a teaser for the public as well as an open invitation for any merchant who may be interested in opening an online store in the near future. Rakuten expects a rapid increase in Indonesian online usage citing figures from BCG Report which shows an increase from 33 million in 2009 to 100 million in 2015.

This marks another step in a hasty internationalization of the Japanese company after acquiring Buy.com in the US, signing a deal to operate in China with Baidu, and enforcing English as the company’s official internal language, all in one year.

According to Asiajin, the deal between the two giants is worth US $4.3 million with Rakuten holding a controlling stake at 51%. Rakuten’s online shopping mall has 64 million customers in Japan alone from 35,000 merchants.

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Select-TV getting Asia into IPTV through telcos

Malaysia-based IPTV solutions company Select-TV may not have hit many headlines since it began in 2006, but it blipped on e27′s radar when Intel Capital announced on 16 November that Select-TV was among the 18 start-ups that it would be investing US$77 million in.

The amount invested by Intel Capital was undisclosed, although Elfred Yu from Select-TV recently told e27 that together with another round of funding Malaysian Venture Capital (Mavcap), the total amount raised was about US$5 million.

Select-TV itself is no spring chicken, and has been quietly making strides across Asia, particularly in the Middle East, Vietnam, Thailand, and Singapore, where it has been forging partnerships with telecommunication companies interested in making a content play. Where Malaysia is concerned, however, is it makes up only a fraction of Select-TV’s revenue – perhaps explaining the lack of local press coverage.

We spoke to Select-TV’s CEO CS Goh on what the company has done so far over the past four years, and how it seeks to grow rapidly in the coming year as the IPTV space becomes increasingly competitive in Asia.

Could you explain to us what Select-TV does, and where its business is focused at?

We provide end-to-end IPTV solutions, and started providing our services for Star Cruises and hotels when we launched in 2006, with most of our markets outside Malaysia. We’ve been gaining good ground with the hospitality market, and after landing a few good deals in the Middle East – The Emirates Palace Hotel, The Burj Khalifa and the Yas Island Ferrari Theme Park – our reputation has increased, and we’re now recognised as a premium service provider.

Then, nearly two years ago, we decided to move into the home markets. Six months back we started pitching to telcos and we landed our first deal with M1 in Singapore to provide home IPTV. Since then, we’re now in Vietnam, and Oman as well, but we’re still trying to break into Malaysia.

Where homes are concerned, we’re seeing the big boys coming in from China and Europe jumping into IPTV, but we noticed a big flaw. IPTV services are targeting telcos that are interested in going into content, but they don’t think through the business viability of such a move.

Many telcos are jumping in because they have the infrastructure, but that’s one of the largest mistakes and explains why there are so many failures in the IPTV space. Telcos have to understand that when they go IPTV, they have to ask themselves: what are you going to do to encourage and increase the average revenue per user to justify that 200% increase in penetration cost compared with incumbent content providers like Astro and Starhub? Many of them trying to compete head-on in terms of channels, and with that they’re choosing a battlefield that the enemy has mastered.

So when we designed our product, we needed to come up with something that was viable. We came up with creative solutions and services that avoided direct comparisons with incumbent channels – we focus purely on on-demand video, and also provide about 100 other add-on services across the markets. In Thailand, for instance, where there are many free-to-air channels, users can opt to pay 100 baht a month for a service to record programmes. Other services include a Feng Shui service and stock market services.

We can also now take on the role of an outsource partner, where if the telcos don’t have the core competency to run an IPTV service, they’ll let us run it. We’re growing from being just a technology provider to becoming a total outsource partner.

What’s your subscriber base like?

We have about 40,000 individual subscribers, and target another 150,000 by the end of next year – which isn’t much, considering that our Vietnam telco client is targeting 700,000 customers overall. Seeing that our product is a niche one, we’re aiming for about 20% of that number. Most of our client base is in Thailand, Vietnam, and the Middle East, and currently about 90% of our total turnover comes from outside Malaysia.

Why not Malaysia?

We tend to lack the aggressiveness when it comes to new technologies, but I made a pledge early on to get at least 30% of our revenue from Malaysia. We’re looking to complement HyppTV (the IPTV service by Telekom Malaysia) to come up with a viable business model for the IPTV space, as we definitely see a gap that can be captured.

Consider the new generation of viewers that don’t sit in front of the TV, but watch content on their own time – this is the generation that we are catering to, a generation that allows for an entry point for a newcomer besides the incumbent, like Astro. But for that to happen, there needs to be someone that’s ready and focused on this market.

What would the recently raised funds be put into?

It would go mostly into the company’s growth, including setting up more regional offices and marketing more aggressively. We’re starting to position ourselves more strategically, and with a larger size we can tackle new markets like North America and Canada, where we just had a confirmed order of 30,000 units.

Besides funding, what else does Intel Capital do for Select-TV?

Intel opens up markets that we never dreamed of – thanks to them, we’re getting new opportunities almost every week, like meeting up with potential telco clients from Poland and other emerging countries. You’d be surprised at how well the infrastructure is in these countries; while we were busy laying copper, they were busy doing something else – like having a war – so they had a blank slate to begin with and started laying out fibre straight away instead of tackling legacy issues.

Is your company profitable right now?

Yes, it has been profitable for the past three years, and last year we managed RM3.5 million profit after tax, and we’re hoping to hit more this year. Over the past three years, the hospitality sector contributed to a bulk – about 90% – of our core business, but since last year, the telcos now pick up about 50% of our revenue, and we foresee it making up about 70%, thanks to the sheer volume of their subscribers.

What’s the future of IPTV in Asia and Malaysia?

People say there will never be enough space for another box in the same house, but I disagree. Your broadband connection, for instance, also needs a box which provides you another content service. In Malaysia, the problem is that we’re too concerned about the technology side of things – about laying out fibre, for instance, but the fact is that we don’t need to have fibre to the home (FTTH) first.

What we need is a solid backbone and a DSL 2+ connection – and copper is more than enough to deliver HD content. What we’re doing in Vietnam is carried out through DSL lines –delivering 180 channels, including High Definition content. It can be done, there’s no need to have FTTH first. So we want to make that a workable operating business first, and when fibre is ready, all we need to do is upgrade the offering.

How much funding has Select-TV received thus far?

We’ve raised about RM20 million in funding over the years, with Malaysia Debt Ventures Bhd (MDV) providing RM6 million for project financing initially, which we’ve paid up, and after that provided us with another RM3 million line.

While we do qualify for an IPO, we thought the cost was too high and the market isn’t really that strong. Besides, the money from Mavcap and Intel has raised more than an IPO would’ve and it costs less. Investors like Intel do not see small-scale IPOs – they like to see things grow large enough for a big substantial IPO. So we aim to grow three to four times bigger than we are now to capture a larger IPO, and hopefully become one of the largest players in IPTV in Far East, if not the world.

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Rakuten Enters Indonesia With “Rakuten BELANJA ONLINE”

Rakuten just doesn’t stop internationalizing. In May, we reported about the joint venture the Japanese e-commerce giant (market cap at the Tokyo Stock Exchange: $10 billion) entered with Indonesia’s biggest media company, Global Mediacom.

And today, Rakuten announced the result of the deal, an online mall, which will be opened next year and give Indonesian merchants the chance to open virtual shops and offer their products in a collected setting. There are no shops active on the site currently, just some information for merchants with an interest to sign up.

Rakuten proper currently counts well over 30,000 merchants and 60 million members on its Japanese site. The deal it inked with Global Mediacom is worth $4.3 million, with Rakuten saying it will at some point link all of its sites (in Taiwan, China, Japan etc.) together to become something of a global online mall.

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How Event Organizers Can Use Pigeonhole To Improve Engagement

Ever been to a conference and finding yourself in a Q&A session, frustrated at the oblivious soul hogging the microphone with meandering and pointless drivel? Ever felt that precious Q&A time was slipping away while everyone was just too polite to tell the self-important pseudo-intellectual to stop talking? Ever felt that your attendees could benefit from a system which surfaced the important questions that everyone wanted to ask?

Pigeonhole, a Singapore start-up has the tools to help the beleaguered event organizer improve Q&A sessions for the attendees.

Here’s how.

1. Pigeonhole Live allows the audience to post and vote for questions on their web devices, such as smartphones, tablets and laptop PCs.

2. Attendees can see all the questions that are being suggested and vote for the questions that interest them the most.

3. Conference organizers have the option to enable moderation for efficient management, editing and filtering of question content at the conference.

4. With the questions sorted according to the votes from the audience, the speakers or the moderator of the panel discussion will be able to address the important questions with high degree of relevancy to the audience.

5. Conference attendees are empowered to drive the direction of the panel discussion and Q&A session, in addressing the queries of their concerns.

6. Since the questions can be stored, the conference organizers / speakers can continue to address the unresolved questions during the short span of Q&A sessions after the conference.

enough time for only one more question …

Get rid of the days when attendees feel shortchanged because their most pressing questions were not answered. As an event organizer, if you’re thinking of how to add more value for the attendees during the Q&A sessions, Pigeonhole Live might be worth a look.

Screenshots

Pigeonhole.sg on Facebook. The team recently chilled with us and Marc P Bernegger of Amiando.

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Wikileaks [PI Cartoons]

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Startups – That Number Game They Play!

Dear Startups

While you are toiling day/night on your business (and trying to make inroads into customers), you certainly get to see heartaches like these

-From Media/Bloggers : Company X raises $N+5 million dollar from an investor, Y [N is what you thought was a standard investment number].

-Press Release: Company Z’s web traffic goes up by 20X, Sales Goes up to Y Crores.

Some of you called me recently to inquire about the potential of certain business opportunities and the context of our discussion was the huge $$$s of funding your competitor has raised.

So let me share a few perspective here.

Funding Amount

Probably the most apt exception of WYSIWYG model is the funding amount announced when a VC firm funds a startup.

Some of the VC firms have a minimal number that they invest at. What you need to understand is that funding happens in tranches and is performance based. So if you hear a funding amount of $N+5 of your competition [N is what you thought was a standard investment number], do not take it at its face value. Talk to your VC friends and get to know the real deal (fyi – sometimes these deals hurt back startups, as they are restricted to not talk to other investors and have to modify/adjust their business plans as per the current VC’s advice).

And for god sake, please do understand that funding is a milestone and no perfect correlation exists between funding and long term success (that’s the basis of UnPluGGd, our flagship event).

Numbers Game

Traffic/Sales Etc Numbers

An interesting conversation happened recently, when a startup announced its traffic numbers and few bloggers covered it, without getting into the real depth of the numbers. Not that the startup was wrong, but a bit of analysis on incoming traffic/referral links/partnerships could have added more meat to the story.

Few startups take such stories on its face value and what really happens is that suddenly you start questioning the long term sustenance of your business (“we are at a fraction of their traffic – how can we beat them?”). And the worst impact of this is when you start investing your efforts in wrong areas (“we need to beat them in their game!”).

Always remember that the competition’s job is to distract you and sometimes, these number are part of the game.

Do take your competition seriously, but do not get trapped in their game.

Also Read: Entrepreneurial Lessons from Indian Traffic [Too Close To Beat] | Have you been ‘wiped’ out? Learning from Failures [Losing is winning]

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Tech WWWorld–Google Chrome Web Store, Salesforce Announces Database.com

Chrome Web Store

The preparation for Chrome OS is on and Google has launched Chrome Web Store. Right now the store is only available in the U.S., but will expand to many countries and currencies early next year.

Google also claims the number of Chrome users to reach 120 million users.

Also, Google has announced Chrome Netbook, a pilot programme meant for early user testing of Chrome.
“The test notebooks exist only to test the software—they are black, have no branding, no logos, no stickers, nothing. They do have 12.1 inch screens, full-sized keyboards and touch pads, integrated 3G from Verizon, eight hours of battery life and eight days of standby time. Chrome notebooks are designed to reach the web instantly, are easy to share among friends and family, and simply by logging in, all of your apps, bookmarks and other browser settings are there. Setting up a new machine takes less than a minute. And even at this early stage, we feel there is no consumer or business operating system that is more secure.”

Google Groups is on a beautification drive and Google has shared the first version of Google Groups (on the lines of Google Reader).

IE9 Gets Tracking Protection

In order to protect online privacy, IE9 has added tracking protection feature.

We believe that the combination of consumer opt-in, an open platform for publishing of Tracking Protection Lists (TPLs), and the underlying technology mechanism for Tracking Protection offer new options and a good balance between empowering consumers and online industry needs. They further empower consumers and complement many of the other ideas under discussion [details].

Salesforce Announces Database.com

Salesforce has announced database.com, an enterprise cloud database.

• Cloud: auto elasticity, auto security & auto backups
• Open APIs & Authentication: REST, SOAP & OAuth
• Social Data Model: profiles, feeds & status updates

Watch this intro video

The company has also announced freemium version of Chatter, the enterprise collaboration platform.

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