There was no whistle signaling the break or cheer squad prancing on court, but from what everyone is saying, the proverbial Second Half of the Chinese Internet is in full swing.
Niu Wenwen, the founder of Dark Horse, a company that provides consulting training services to entrepreneurs, says the new era has seen substantial paradigm shifts, and marks the ascent of the “Earth Clan” entrepreneurs, while the “Heaven Clan” loses favor.
The “heaven and earth clan” are terms coined by Niu to differentiate between two kinds of entrepreneurs. As the name implies, the Heaven Clan refers to those who have a tendency to have ‘their head in the clouds’– “the have a larger user radius, and they grow exponentially with funding, which is to say that they put their investors before their users, sometimes we call it a ‘2VC’ model. ” Niu says the Heaven Clan types may be better at finding funding that actually turning a profit, and have more experience in the IT industry than in industrial verticals. “Most of the Nasdaq listed Chinese companies belong to the Heaven Clan, JD.com is a good example–today it’s still not profitable, and to them, providing a different vision, and possibility for a new lifestyle, comes before making money. ”
In contrast, the Earth Clan would be those who have their feet planted on the ground, though they might not be making TMT headlines or flourishing in a short amount of time, taking it slow and steady will win the race in the second half. “If the Heaven Clan represents entrepreneurship model favored by VCs in Silicon Valley, the Earth Clan draws reference to century-old business of Japan and Germany. They might not know that much about capital and funding, but they gradually expand with retained earnings. This way, users always come before investors,” said Niu, speaking at TechCrunch Beijing.
Niu believes that in the Second Half, Earth Clan qualities will prove more valuable, the Heaven types have worn themselves out in the first half, they desperately need to know how to make money and have their users pay without first offering subsidies, which are some strengths that Earth types already have. “The latter have a better chance in the second half, while if you are a unadulterated Heaven type, harsh times are coming, even if you are a unicorn, not because capital is scarce, but because of shifts in underlying technical trends, and internet dividend.”
Niu reminds entrepreneurs that the mere fact that you’re starting a business doesn’t entitle you to glory and success. “One unhealthy trend that I’ve noticed: entrepreneurs think that they don’t need to be concerned about making money, the government invites creating businesses, and they are here to change the world– so I’d like to remind businesses, society may be of supportive towards entrepreneurs, but they still shouldn’t forget who they are, they are here to create, and what they create must essentially be of commercial value.”