LightInTheBox Co-founder Kevin Wen on How to Take A Chinese Company Global
In early 2005, BlogChina, a China-based blog service, announced to acquire BlogDrive, another blog service which was founded in the U.S. by Chinese and targeted at Chinese users. Kevin Xin Wen, co-founder of BlogDrive, thus moved back to his home country.
It was shortly after Google went public which reignited investors’ zeal for tech startups several years after the dot-com tech bubble burst. The new BlogChina raised a large amount of money then. Fang Xingdong, founder of BlogChina, planned to defeat Sina, then China’s Yahoo!, in one year and launch IPO in two years. But eventually BlogChina became a failed case that its HQ in Beijing would be closed in 2009.
Before that, in 2007, Kevin Wen left BlogChina and founded LightInTheBox, an online retailer that sells goods made in China to the rest of the world. The company went public on the New York Stock Exchange last year.
Mr. Wen shared his thoughts on why BlogChina failed and how to build a global tech company with China roots at TechNode’s ChinaBang Awards 2014.
A tech startup like BlogChina, according to him, should figure out a working business model and keep iterating. It must be a painful process and that takes time. But BlogChina didn’t have that time due to investors’ irrealistic expectations.
That’s why, to some extent, he chose e-commerce which is “nearer to money” when he started up again in 2007. The initial dream of LightInTheBox was to become a global company with China roots. In the fourth quarter of 2013, over 90% of the company’s total revenues were generated from outside China, with 65.3% from Europe, 16.7% from North America and 8% from South America.
Wen pointed out what brought LightInTheBox to this far is its team which include its CEO, Alan Guo (aka. Guo Quji), who formerly was a Google China exec before he joined LightInTheBox. Thanks to those experts in fields like search engine optimization, the company is good at targeting audiences in different areas around the world.
When it comes to becoming global, he reckoned, Chinese companies should embrace local business cultures, which is more important than expanding to other markets. They should learn about the local markets, hire local talent and play by local rules.
Mr. Wen himself has been making angel investments. Tuniu, an online travel service he bought a stake in, is planning to go IPO. The Chinese startups he would like to invest in are those who aim to transform the traditional businesses into the Internet-based or expand globally. He said he’d consider niche e-commerce startups too so long as they have good business models.
2005 and 2006 saw a wave of Chinese tech startups emerging and a flock of people like Kevin Wen went back to China to build Internet businesses. Although BlogChina failed, a number of of those startups succeeded like 58.com and Qihoo. Mr. Wen think today is another good time for startups. The new opportunities are in the mobile Internet. Differences are lots of online resources are controlled by a few Internet giants and competition is way more fierce.