Founded in 2005, Beijing based Tianji is one of the first to do Linkedin type professional SNS in China. Currently, it has 6 million members in the country and is adding 200,000 more a month.
Tianji’s founder and CEO Derek Ling was a former VP in Sina when it had just 20 person in the U.S. He engineered the merger with Wang Zhidong’s corporation in 1998-9, which resulted in Sina.com.cn, the leading online portal in China. After he left Sina, he founded Qzone, a youth entertainment sites focus on music and personal homepage, with Excite co-founder Mark Wong-VanHaren. However, the operation closed down after the internet bubble burst in 2000. He went to Apple for a while, heading its business development division for Greater China, before he founded Tianji in 2005.
“At that time, it was the first wave of SNS in China. Most of the other players followed the Friendster model to do dating sites,” Derek recalled.
There were more than 20 competitors, but most of them failed. “They only cared about growing their number of users, but fail to attract users with real value and record their real information. They soon died,” said Derek.
In fact, the biggest challenge for a professional SNS in China is to have users putting their real information on your network. In China, the major trends for SNS is youth, entertainment and virtual oriented. And one of the clearest examples is Tencent’s QQ. Teenager assume a virtual identity in QQ and make friends with strangers. Inviting your real friends in the offline world to an SNS is less common.
Another challenge for building a professional SNS in China is how to manage your capital well. “Unlike Facebook, a professional SNS takes a much longer time to grow,” said Derek. He witnessed the death of a competitor just because its burn rate was too high. “Linkist was based in Taiwan and they were expanding into China. Just like us, they focus on quality of users. Many of their users were from the Taiwan PC industry. However, they were spending US$65,000 a month, while we spent US$15,000 a month. They could not survive.”
It is hard for a professional SNS to get revenue, especially when they are small. In fact, last year is the first time Tianji start to have some meaningful revenue. It started to charge for recruiting service. Recruitment (posting job ads, searching for talents) accounted for about 65% of Linkedin’s revenue.
Apart from recruitment, ads and users subscription are the other revenue source for a professional SNS. Actually, Tianji’s mother company, France based Viadeo, gets half its revenue from user subscription for premium services. Something like 6.5 euro per month, for more power in searching, viewing profile or contacting other persons. Tianji wishes to start charging for subscription next year.
In response to the question why professional SNS grow so slowly in China, Derek said it is because the Linkedin model does not fit China’s environment. “It is just like DangDang in 1999 when e-Commerce did not take off. It was not until Taobao appeared and changed user behavior and improved infrastructure, that the e-Commerce started to get popular in China,” said Derek.
“On the other hand, Group buying sites got really hot almost immediately after Groupon-likers launched in China,” said Derek. The reason is simple: people love cheap bargains in China and e-payment is ready.
“Changing people’s online behavior can take years,” said Derek. People’s altitude towards Internet is something of a culture. People in China has not got used to the idea of “web as business tool”. On this aspect, China might be 2-3 years behind the U.S., he added.
(end of Part I)