Let’s PowWow is one of the latest start-ups to enter the LBS space in China. The model is a mix of LBS group-check in with deals, mainly focused on expat targeted bars and restaurants like Modo and Alameda. Deals are usually in the form of buy-one-get-one free during a certain period. PowWow was founded by Jack Zhu (founder of Clubzone), Adam Guli and Antonio Tinto in November 2010. According to Crunchbase, it has US$100k in angel funding.
Last night they had their official launch party at The House, a popular club in Gongti Beijing. Jack officially welcomed everyone to the event and announced the reason for starting Let’s PowWow was because Adam once saw a beautiful girl at a café but didn’t have an easy way to talk to her. I’m not sure how well Let’s PowWow can be used as an ice-breaking tool? With a crowd of roughly 300 people, the night was loud and buzzing with techno music. Everyone received an impressive goody bag of gifts, including wireless mouse, chocolate, coupons for spa resorts and tanning salons well as a bunch of marketing brochures from sponsors. But despite the big public relations dazzle, does Let’s PowWow have what it takes to compete in this very competitive check-in deal space?
Here are some reasons why and why not.
Why they can compete
1. Good relationships – Jack’s Clubzone is a very popular portal for people looking to find the latest on clubs in China. Let’s PowWow can quite easily cross-leverage these relationships and quickly build a decent inventory of deals. They already have about 37 deals on at the moment.
2. Good resources – This is an extension of the relationships they have through Clubzone. Let’s PowWow is able to secure deals with venues like The House for free and also call upon photographers and hip people to promote their product and events. This is not as easy for other LBS check-in deal players.
3. Niche market – It’s no secret that Let’s PowWow is aiming at the high end white collar working class in China (
foreign expat market in China. Even the front page of the website and the whole app is in English. This could either be really smart or incredibly dumb. If it sticks to only capturing the expat market in it could survive. Undoubtedly tier 1 cities like Beijing and Shanghai have carved out a strong Western orientated scene of bars, restaurants and clubs so they could drive hard at signing these venues. Also the other Chinese LBS check-in deal players are not even touching the English speaking market. (correction based on comments below). Big LBS players are targeting more mass brands like McDonald’s and Starbucks but Let’s PowWow are going after the hyper local brands.
Why they can’t compete
1. Lacks locality – Jack and Adam are both somewhat foreigners playing in China; Jack is Beijing born, Canada-educated returnee and Adam is a Cornell graduate, studied Chinese in Tsinghua and worked in both Asia and the Middle East. Although it is presumptuous to automatically discount the ability of the partnership, but the reality is, you really need to know the nuances of China and Chinese behaviour to do well here. Do they?
2. Limited scale – Although my above point argued that they can survive if they stay very niche in the expat market, at the same time the question is how long? Of course China is a very attractive market, but it’s really because of the growth in wealthy Chinese consumers, not the Westerners. The addressable market of expat style venues is a tiny fraction when compared to Chinese venues so there is a big question over how far Let’s PowWow can scale. Even if they do capture some of the more educated Chinese people who can read English, would they use it compared to more established Chinese LBS like Jiepang?
3. Heavy competition – I’ve heard Let’s PowWow is operating with only roughly 10 staff. To drive a good volume of new deals, it requires a competitive sales force. Don’t forget that their key offering to the users is the deals and the deal market is white-hot competitive right now. They are not only competing with the other LBS’s like Jiepang, Qieke or Digu but all the group-buying businesses as well like Lashou, Meituan and Gaopeng where VC’s are aggressively pumping millions of dollars into expanding their sales staff.
There is no doubt the expat crowd is in need of and deserves quality social networking services, with large global players like Foursquare intermittently blocked in China. But only time can tell if the niche expat strategy will work. I think there is a chance albeit a pretty slim one.