Very few Chinese I know like Renren, either as a service or a company. Some believe its founder, Wang Xing who is currently the CEO of Meituan, would make it a better service if it weren’t sold to Joseph Chen, current chairman and CEO of Renren, as if it wasn’t a copy of Facebook when it was only serving college students. What I agree on is it’s a pity that Renren, with tens of millions of college student users, never came up with interesting services tailored to them and monetizing their youth lifestyle. Eventually, it took the universal antidote for Chinese internet services, online gaming.
I read a transcript of an interview with Joseph Chen, finding, surprisingly, what he said about Chinese mobile Internet and Renren makes sense (source in Chinese). For instance, Joseph Chen is grateful about the cash Renren grabbed from its IPO that now is sitting in the bank “so that it’s possible for us to invest in the future.” “What can you harvest without making investments, especially in China Internet market, such a Red Sea market that is hardly seen anywhere else in the world?”
Mobile isn’t the second wave for tech entrepreneurs?
“People are saying it’s the second wave of the internet industry, but you can see it’s a false proposition after taking a look at the market”, he means that big players have already taken it all and the rest can hardly sleep at night. “I guess even Victor Koo (CEO of Youku) and Zhou Hongyi (CEO of Qihoo) cannot sleep well.” He thinks it will take only half a year that we can see a clearer picture of the mobile Internet sector.
At the same time he doesn’t find products created in this sector interesting, “it’s hard, to be honest, to find good products. To find the killer apps, you have to take a magnifier or a telescope.”
Small companies cannot afford to attend the party of the mobile Internet?
Chen agrees that all internet companies have to shift to the mobile Internet, no matter for how long you plan to operate a service; however, he doesn’t think small companies can afford it, for 1) they don’t have that much cash as the giants have, 2) trials and errors are no more than experiments done for big companies.
“It’s very hard for the new generation. It seems that some products have performed well, with high user growth rates. But how about two or three years later? Problems would come along if they were doing well but not acquired then. Now the market isn’t big enough and nobody would pay attention to you. But how big a room will be left to you when everyone begins attacking you when your user base is big (and worth much attention)?”
He suggests entrepreneurs explore opportunities in other industries other than the Internet or mobile Internet, saying “there isn’t much room for startups in mobile Internet.”
Renren is an airship, with holes to fill.
Joseph Chen says he has been sleeping well ever since the founding of Chinaren, the first startup he co-founded. It seems he never showed any ambition in Renren. Now, although he set a goal for Renren employees to increase all metrics by three times, he thinks to himself that doubling the existing active users is enough. He compares Renren to an airship, but, with holes to fill, hoping it can fly faster after being repaired. To him, it’s more cost-effective to upgrade a user base than starting up from scratch.
Chen lamented that Renren was reluctant to join in the mobile Internet “land grab” movement. “Shortly after we went public, we made some profits in one quarter. Good days didn’t last long, for smart phone became hot in the next quarter. I said, alright, we were set to work again, land grab era came again. Land-grabbing in the mobile Internet, in fact, is very troublesome and tiring. How large an area of land you can occupy depends on how fast your horses can run. But if what you have grabbed are saline lands, you may have to make much more effort to harvest the same amount of crops than before. “”Weibo emerged before Renren could enjoy anything brought over by the mobile Internet. Then came Weixin not long after Weibo had became hot.”
As Renren hardly made profits in the past years, Chen concluded that “don’t try to make money from services that are not supposed to be used for making money. Those are for gaining users. Platforms are needed for user stickiness. Placing monetization ones at the back end, such as gaming, e-commerce, video, etc.. This is a matter of structure. Those on the back end cannot deliver well if the front end doesn’t perform well.”