The new age of internet is clearly becoming more and more social. I remember a few years ago when I first heard about Facebook from a friend who just returned from America to Australia, I thought ‘this won’t last’. I thought Facebook was just another social network that will get hot then burn and die. The idea of sharing things on a ‘wall’ was so new and bizarre it made me feel a bit uneasy, because anything I wrote or was written on my wall could be seen by my whole network. But clearly I predicted wrong and Facebook has forever changed the way how we interact online.
Due to the popularity of online social networking, China caught on quickly. RenRen followed Facebook’s footsteps and grabbed the student market. But just like in reality, people have different social networks and don’t like to mix them; for example your work colleagues’ vs. your close personal friends. That’s why networks such as LinkedIn and China’s Ushi.cn were created, because they cater towards different social graphs. Similarly, P1.cn in China recognized early on that there was a segment in China that was unserved and growing extremely quickly – the affluent class. Now with over 1 million members, P1 is in a strong position to tap into this valuable segment. To better understand and gain insights into the affluent class of China, I talked with Sophia Pan, Co-Founder of P1.cn.
So What is P1.cn?
“It’s an online network for the affluent people in China. We class ‘affluent’ as people according to McKinsey’s definition as people who earn more than 8,000rmb (~USD$1,200) per month. We target 20-40 years old and P1.cn is made up of an interactive Facebook like feed, e-commerce, brand pages, events and a magazine.”
FYI, I first heard about P1.cn when my friend invited me to go to the P1 New Years Eve event at LAN Club, an opulent club designed by Phillipe Starck in Beijing. It was an interesting experience, asking ‘so what class of P1 are you, gold or silver?’ This class system reminds me of the book I studied in high school, Brave New World by Alduos Huxley, where a caste system of social class determined what your purpose was in life. That book was published in 1931 and strangely, the same concept has now manifested in an online form.
How did P1 get started?
Sophia and her business partner Yu Wang, met in Sweden. Sophia worked for Pwc in M&A and Yu for Sony Ericsson. Both wanted to do an internet related product in China. At the time in 2007, Facebook was “growing like crazy” and another called Asmallworld.net which was a popular private SNS for celebrities like Paris Hilton and Tiger Woods. In Sweden some websites became popular by going to clubs and taking pictures or the beautiful and rich. The pair decided to take elements from each and fuse them together to form P1 and so they launched in October 2007. RenRen already existed but focused on college students and Sophia believes that the “affluent class people don’t relate to that”
Seeding the network
Naturally P1 has to carefully curate the network for users, especially if it caters towards the affluent. Its mission is to “connect the exceptional”. So instead of making the network fully open, the founders used a ‘top-down’ approach where a select number of ‘P1 Ambassadors’ in Beijing and Shanghai who were deemed exceptional were tasked with recruiting ‘Gold’ members. Originally these Ambassadors were supercar club presidents, Harvard alumni, company executives etc. Gold members could then invite Silver members and Silver could invite Bronze. This approach was used to control exclusitivity and quality of the network. This was the key to making the network relevant to members so they could talk and hang out with each other.
The second approach to attracting members is done by recruiting young student street photographers and sending them to popular shopping malls like Sanlitun Village in Beijing during the day and exclusive clubs like Punk or D Lounge at night time to photograph people and then give them an invitation code to join P1.
Why there is a need for P1
The market potential is huge in China because it is now the 2nd largest economy to America and also the 2nd largest luxury goods market in the world after Japan but is expected to overtake Japan in the next 2-3 years. “Three years ago, there were 50m affluent people but now it is reaching 100m, so even if we capture 10% of that, we will be satisfied with 10m members.”
Sophia says, the “core value is access to people in the same social circle and status as you and easier for you to find people you like or know.” The people in P1 are usually busy people who don’t have much time to socialize, so when they do, they want to make it relevant to them. That’s why P1 organizes special events such as dinners or co-branding events for its members. “People use P1 now because the network is tightly controlled people can trust people that are more similar to them.”
Chinese are not as open
This is a really interesting cultural observation of Chinese people. Although China is going through a staggering amount of change online, people are still not as open as their Western counterparts. This is also why there is very little user generated content on Youtube like sites such as Youku or Tudou. The reason for this relatively closed attitude is the peoples’ level of trust. Chinese people are quite shy and largely not exhibitionists. “On Facebook you can have childhood friends, but in China if you became very rich compared to your childhood friends, they will think ‘now you are rich and don’t eat at the same restaurants as us’, so you don’t dare to share your real lifestyle to them.” P1 tries to build the level of trust by creating a community of common people.
What value of P1 attracts the members?
“Exclusivity, Fashion, lifestyle, business contacts, dating. feeling cool and international” says Sophia
What has changed over the past few years?
“There are very clear trends in street style now. A few years ago Chinese fashion was not very strong and our photographers could not find many people to photograph. But now you walk around Sanlitun Village, The Place and around 50% of the people are our members now. Even fashion designers will look at our site to check trends and find inspiration. Also a few years ago, people hung out in more mass market clubs like Vics or Mix but now they go to more exclusive clubs like Punk, D Lounge, Lan, Xiu and Capital M.
Before only people who made their fortune overseas and returned to China could afford super luxury things like yachts, jets or supercars but now its local Chinese people who can afford these things. Even people from tier 4 cities are very rich now.”
“Every year we cooperate with many luxury brands on various events, one year our members – a very beautiful girl and her boyfriend bought a Lamborghini after we invited they to a Lamborghini event.”
“Currently most revenue is made from off and online advertising but in the future we feel e-commerce has big potential.”
What’s next for P1?
“We will expand into 15 tier 2 cities. Also we will launch mobile apps too. We want to add a lot more social functions to the site to help people interact.”