Former Senior Editor at TechCrunch and now Founder, CEO and Chief Editor at PandoDaily, Sarah Lacy generously took some time to send a message to us at our ChinaBang event last weekend.
Since Lacy has an affinity with the Chinese start-up scene. She was the lead advocate in creating and making TechCrunch Disrupt Beijing a reality and claims it as one her proudest moments in her fifteen year career. She has also been to China at least six time to perform research for her book “Brilliant, Crazy, Cocky – How the Top 1% of Entrepreneurs Profit from Global Chaos”. Given her fascination with China and the amount of time spent here, Lacy is one of the few Silicon Valley based start-up bloggers to really understand China.
China – entrepreneurial roots to tech giant trees
Lacy opened by explaining the origin of her new blog, PandoDaily. To Lacy, Pando Trees are the perfect metaphor for the Silicon Valley start-up ecosystem, “The root system is all interconnected and no matter what happens above ground, the root system stays alive, and continuously sprouts up new trees.” Metaphorically of course, the roots represent the entrepreneurs who operate below ground who are creative, bold and ambitious to start new ideas and projects. The trees are the result of hard work, proof of concept and happy customers. Now it seems the roots have spread to Mainland China and the Chinese giant trees are Tencent, Alibaba and Baidu.
Chinese entrepreneurs are misunderstood
Lacy also said she has “fallen in love with Chinese entrepreneurs” and feels like they are “misunderstood” particularly by America who sees Chinese start-ups as “nothing but copycats”. She says after drilling down into very successful and powerful tech companies such as Tencent, Baidu or Youku you will find “very different companies underneath” which has stunned her with their Chinese innovation in delivery, business model and process. She also praises some Chinese start-ups who pitched at Disrupt Beijing Battlefield last year and says some were even better than in America.
So difficult to get things done in China
One key takeaway Lacy learned when undertaking Disrupt Beijing last year, was “just how hard it is” to get things done in China. Cultural differences play a big part in why many foreign people and companies fail in China. Last November I explored some of the key difficulties foreign entrepreneurs in China have to overcome. Yes China is a bountiful land of opportunity with a large market size and many underdeveloped industries, but it is still extremely difficult for everyone, including Chinese. Competition is extremely fierce, rules and regulations are blurry and there are of course many things people can’t control. China is indeed a land of contradiction.
Let’s take China’s start-up ecosystem to the next level – more jobs, money and innovation
The second key takeaway Lacy learned fascinates me more. She explains that despite the large amount of investor money flowing into start-ups, many on both the start-up and investor side still don’t embrace risk and think crazy. “When it comes to these derivative business models that are similar to those in the West, I heard over and over again from Chinese entrepreneurs that, that’s what investors want to fund…but it was the Westerners [at Disrupt Beijing Battlefield] that really seemed to embrace innovative, new, crazy concepts that didn’t have a clear business model or path to the customer but most Chinese VC’s only liked businesses that had been proven in some other place.” Said Lacy.
I have also noticed such behaviour from both entrepreneurs and VC’s and to some degree it frustrates me. Chinese start-ups and investors appear to be more short-term focused and want the quick win. Investors think, ‘What will make me the most money the quickest?’ and entrepreneurs think, ‘What business can I get funded the quickest?’ That’s why there are so many clones of usually American companies that have either raised a lot of money or become highly valued. The drive and passion to solve really significant problems in China, doesn’t really exist. I mean do we really need more social networks, group-buying or coupon discount apps?
That’s why I support Lacy in urging entrepreneurs and investors to realize the reason they are doing something and be prepared to think a little crazy. Lacy says “To really take it to the next level, you need to start pushing on [feature, product, idea] and not just start with a familiar idea and localize it.” Lacy believes the daring entrepreneurs in China do exist but it is the investors who are more reluctant in backing them. Lacy urged the investors at ChinaBang to “get with the entrepreneurs and start funding the ones who are pushing the envelope, if you want this eco-system to get to the next level. We all know what happens when eco-systems get to the next level. There’s more jobs, more money and more features that change all of our worlds.”