This post is part of our series Say Hello To China’s Expat-preneurs, where we will talk to a mix of foreign founders who have tackled China’s growing tech space and won. Stay tuned over the coming three weeks as we talk to foreign founders from Beijing to Shenzhen about what it takes to thrive in China. You can follow our updates at @technodechina, or check back here for new stories in the series.
English education is a big business in China.
If you have been keeping an eye on China’s booming online education market, you know that most of China’s language learning startups focus on the domestic market. From a numbers game, the number of Chinese interested in learning English is huge and growing quickly.
Kevin Chen, an American entrepreneur who co-founded italki, chose to approach the problem differently. “We are building a global platform for anyone to learn any language. We are not only focused on teaching English to Chinese,” he says.
Kevin started italki in Shanghai as a language learning community in 2007. The site evolved into an online teaching platform in 2010, by creating a marketplace that brings students and teachers together for paid lessons. Kevin describes it as “Airbnb for international language teachers”.
Unlike most Chinese peer learning sites that focus solely on English, italki supports more than 64 languages, including Spanish, French, Japanese, German, and Arabic. English is still the most popular language, and accounts for more than 50% of the lessons. According to Kevin, the platform has amassed more than 1.5 million users worldwide and has over 3000 international teachers.
Although it is based in Shanghai, the startup has always had a global focus. “A quarter of our users are from North America, and roughly half are from Europe. Less than 10% come from China. It surprises many people that more than 90% of our users and revenues come from outside of China,” Kevin notes.
“We do have Chinese users. They tend to be more mature learners, between the ages of 25 and 40. They have international aspirations — they want to live abroad, have foreign friends, understand international culture, and of course, they want to become fluent. They also value 1-on-1 lessons, and don’t believe in traditional language education.”
“It is a nearly universal experience — people study a language for years in school, but are still unable to have a basic conversation. This happens because traditional language education is missing human communication.” With italki, Kevin wants to build an online platform where users can apply their new language skills in a real setting, and immerse themselves in conversation with real native speakers.
To keep up with the mobile trend, italki is planning to launch a mobile app in the summer. The initial version will mirror many features on the website, with a focus on facilitating human communication and scheduling lessons.
“We love apps and tools. They are great for learning in your spare time. You can memorize some extra words or learn a new grammar structure. However, nobody became fluent purely through language games. Anyone who became fluent in a foreign language spent time speaking with real people.” says Kevin. “The good news is that you don’t have to choose just one language learning product. As we move towards a student-centric world, learners should use every service that helps them learn faster.”
Italki Founder Kevin Chen
Financing Obstacles for a Global Company Based in Shanghai
As a company with a global customer base and offices in Shanghai, italki has faced challenges explaining its story to investors, said Kevin. A lot of Chinese investors are very excited about the domestic online English teaching market, and they find italki too foreign, since China is not a dominant part of their business. Overseas investors, in contrast, find investing challenging because the company is based in China. “This is one reason why we are looking for investors with a global perspective.”
The company generates revenue from transaction fees. italki has been cashflow positive and financing operations is not a problem. “Our goal is to find the right investors. We are looking for people who understand the global potential of this model, and how we can revolutionize language education.” Kevin noted.
Words of Advice for Expat-preneurs
Given the already high difficulty of doing a startup, Kevin said jokingly that it might have been a huge mistake to start a company in Shanghai. Soon after he came to the city more than ten years ago, Kevin founded his first startup, Famento, which was focused on recording family history. Like many expats, he was drawn to the rapid growth and change in China. “However, I underestimated how difficult doing startup in China could be, and I had to pay a lot in time and tuition fees.”
Kevin said he learned a lot from the failure of his first startup. “Obviously you need a strong founding team, with a strong tech lead and product manager. You have to communicate with your customers as early as possible, and validate your assumptions. If you don’t really understand your customers’ needs, you will end up building the wrong product,” Kevin says.
“Overall, I think it’s worth starting your own company at least once in your life. It is a difficult experience, but also helpful for your personal growth. You learn a lot about yourself, your strengths and weaknesses.”
Starting a Company in Shanghai
Shanghai’s entrepreneurial environment has improved significantly in recent years. “Although it is still smaller than Beijing, it is easier for foreign talent to adjust to Shanghai. There are also increasingly more resources like foreign-friendly startup events and startup accelerators. Shanghai can be good for people who want to work on projects with an international focus.” he said.
1. What’s the most difficult problem you have in China?
I think communication is always a challenge in China. There are straight-up communication problems and also problems that are more cultural. In our own team, I sometimes find that I think I am saying one thing in Chinese, and somebody else is hearing something very different. Certainly, it is part of the challenge of being an international company. You have to spend more time and energy on getting people on the same page.
2. How do you get involved in the local startup scene?
There are two main things I do outside of italki. First, I am one of the organizers of Techyizu, a non-profit group that organizes startup and technology events in Shanghai, including Barcamp Shanghai. Second, I am a staff member of Xinchejian, the Shanghai hackerspace. I am also helping as a mentor at Chinaccelerator.
3. What is your personal motto in your life?
I don’t think I have a personal motto. Maybe, “What is to give light, must endure burning.” from Viktor Frankl. Anything that is worth doing is going to take a lot of hard work.
image credit: ShutterStock