This extremely pragmatic mindset is a common trait among most Chinese internet entrepreneurs. “Many start-up founders in the US start out with a technological idea they want to realize, and don’t worry about money until much later,” says Chen Tao, a partner for China at Roland Berger Strategy Consultants.
“In China, it’s the other way round. Monetization comes first, innovation comes later.”
The biographies of many Chinese internet entrepreneurs reflect this more conservative outlook. Very few are university dropouts like many of their US counterparts. Most have much more industry experience before they start their own business than their American peers.
Robin Li worked as a software engineer for a division of Dow Jones and for Infoseek, an early US web search engine, before setting up Baidu in 2000. Jack Ma lectured at university on international trade and headed an IT company set up by a unit of the foreign trade ministry before he founded Alibaba, China’s largest e-commerce company by revenue, users and transaction value in 1999.
At Qiyi, Mr. Gong’s background is similar. “Although I knew already in university that I very much wanted to set up a business, I didn’t feel ready,” he recalls. So he first went to work as a software development and maintenance engineer at Itochu, the Japanese trading company, and later helped set up the China unit for a company founded by a friend in the US before he dared to start his first own venture, the online portal focus.cn.
“On the first day, the office was completely empty - it was just me,” he says, recalling how unfamiliar and slightly fearful he felt.
There was no long tradition of entrepreneurship in the People’s Republic of China when the country’s first internet companies were set up. Capitalism was new, and the internet even newer. The resulting caution can be seen among the investors who back the sector, as well as its entrepreneurs.
Lei Jun, China’s most prominent homegrown angel investor, only backs the companies of friends or friends of friends, and prefers serial entrepreneurs because the chances of success increase over time. Mr Lei has invested in less than 20 companies such as Vancl, an online clothing retailer, and Keniu, a security software maker.
But foreign venture capitalists and stock market investors, a far larger source of funding for Chinese technology start-ups, follow similar principles. The rise of the thousands of Groupon clones in China has been fuelled by a wave of venture capital money from the US.
Benjamin Joffe, chief executive of Plus Eight Star, a digital strategy consultancy, says: “Investors love to recognise something they know.”
