This post is part of our series Say Hello To China’s Expat-preneurs, where we will talk to a mix of foreign founders and tech veterans 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.
Internet and mobile have invigorated the traditional restaurant delivery industry since emerging in New York more than a decade ago. Like in other parts of the world, China’s digital food couriers have witnessed a big boom in recent years.
“It’s amazing to watch how fast things develop in the Chinese internet space, especially how quickly Chinese users can learn new tools and technologies. Five years ago Chinese customers and restaurants didn’t even know what online food ordering was, but now they not only rely on it but leverage it to their advantage.” said Lucas Englehardt, founder and CEO of WaimaiChaoren (外卖超人or Delivery Hero), a restaurant delivery service targeting at white-collar Chinese users.
Unlike local competitors aiming at cutthroat growth, WaimaiChaoren has chosen to develop in a more balanced manner. This is partly due to their user group behavior and partly because of the management style of the team. “We could attract student users much faster with small coupons but white-collar customers are more loyal, stable and have larger purchasing power. They care more about food quality, the restaurant and platform brands and the overall experience such as the delivery speed.” said Lucas.
“Our goal has never been to have the biggest discounts or the most restaurants on the platform. While we do offer coupons, free drinks and other gifts, for us it’s about the brand experience and doing something unique rather than relying on big discounts. For restaurants, we aim to include the best ones regardless of price or cuisine type.”
“WaimaiChaoren won’t open a lot of new cities this year, but is instead digging deeper into our existing 18 cities. We still feel these markets still have big opportunity as there are still many people who don’t know they can order restaurant delivery online. We try to convert them by providing a quality, something they want to share with their friends.” Lucas noted.
Delivery Hero, the Rocket Internet-backed food delivery service that operates in more than 30 countries, invested in WaimaiChaoren in 2012 but the startup still operates as an independent brand in China after the capital injection. (note: WaimaiChaoren prefers to use the Chinese name, rather than the English one to fit local market and to emphasize its independence). In fall last year, WaimaiChaoren acquired Beijing-based Kaichiba to grow presence in the northern areas of China.
When talking about competitions from local rivals Ele.me, Meituan Waimai and BAT, Lucas said “it’s amazing how fast the market has expanded and good for us to be not the only player. Of course it will give us pressure but our biggest challenge is still to educate the market about online food ordering. Having a bunch of companies in the field helps to share the cost of educating consumers and restaurants. We believe it’s a huge market, and that there will be more than one winner.”
Regarding long term development, Lucas pointed out that “when you look though China’s internet markets, sectors like group-buying was super-hot five years ago with more than 1,000 competing for the market. There were really big companies who spent a lot of money and did advertising everywhere. However, only a few of them survived after a couple of years, and they are not always the biggest ones. Restaurant delivery will be similar and it’s the smart, metric driven players who survive. The O2O space is quite young and a lot of innovation is still to come.”
Lucas Englehardt As An Entrepreneur
Lucas came to China to study Chinese while at college. He moved to China in search of adventure in 2007 after working for PricewaterhouseCoopers right out of school. In addition to WaimaiChaoren, he is also the founder of BloggerInsight, network of Chinese experts.
Running a company in China can be tough for a foreigner, but Lucas has managed to fit into China’s startup jungle with deep market understanding and fluent Mandarin Chinese. He considers WaimaiChaoren a Chinese company with a little bit of foreign flavor as he is the only foreigner in the firm, which grew from a 10 person team in 2012 to more than 300 employees today.
Fully understanding the importance of product market fit, Lucas pointed out that all the strategic, marketing and product decisions at WaimaiChaoren are made locally in China by local people. “A lot of big companies have the problem of treating China like any other big market, they apply the same formula that works in other countries to China. But China is a unique and diverse country consisting of various regional markets, a uniform formula doesn’t work here.”
The influence of Lucas’ foreign flavor is best show in WaimaiChaoren’s flat management style and structure. “As an internet startup, our company culture is focused on moving fast. We are going to support the best ideas, no matter if it comes from an intern or the CEO, locally or internationally.”
In sharing his own experience as a serial entrepreneur, Lucas said “Being an entrepreneur is very tough. There are a lot of challenges big and small everyday. It can be really draining emotionally with constant high and lows. My main learning is not to get caught up on every little thing good or bad, just focus on the big picture, just to push as hard as possible and build a strong team.”
Changes of Chinese Internet Industry
“The biggest change since I arrive eight years ago is that the Chinese internet market used to completely dominated by BAT where everyone else is small. If BAT decided to do what you were doing, they would just copy you and try to kill you. What we see now is that they are starting to acquire and merge companies. The Chinese internet is no longer simply BAT as there’s a handful of rising giants like 360, Xiaomi and JD. Of course BAT is very strong, but there’s a whole ecosystem that’s developed around it.”
“Also, for startups there were very few angel investors when I first started. There’s a tons of investors, incubators and startups around now. In the past the only way you could have a successful exit was via IPO but now it’s an option to be acquired by a big company. Companies are starting to work together instead of just trying to fight each other.”
<Quick Questions>
What’s the most striking cultural difference that shocked you when you first came to China?
I think it is about how the management style could be different. In the U.S., especially for internet companies, they have a flat management structure were people are much more equal. In China, it is still more top-down where the boss dictates everything. I think that’s also changing now, especially in startups.
What do you love about China?
I love the sense of family. Not only one’s own family, but also close friends who treat you like a family. I also love China for the speed at which things change and develop. Some people forget what a special time in history this is. We are very lucky to be a part of it and have a front roll seat to observe it happening. I have been fortunate that Chinese people have been very kind to me and put up with my poor Mandarin. Overall, it’s been a fun adventure.
What is your personal motto?
To be passionate and loyal. Do things that you love and find exciting, follow your interests. Stay loyal being to friends and business partners, try to do everything to possible help and protect them. If one follows their passion and conducts themselves in a responsible way I think they are bound to be successful.