Advertisement
Advertisement
Benjamin Black (second from left) and colleagues at Guiyang-based Flexbot. Black relocated from California to join Flexbot.

Young tech entrepreneurs from the West head to China

Western hopefuls find competition stiff in mainland

Benjamin Black had another 18 months to go before completing his computer science degree at the University of Southern California, but he just couldn't wait. Last October, the 23-year-old from Boulder, Colorado dropped out to join a start-up in Guiyang city, Guizhou, called Flexbot.

He got to know the team while studying Putonghua in Guiyang, and they offered him a chance he couldn't pass up. "You can get valuable work experience from a start-up and learn about all aspects of running a company," Black says.

"As a manufacturer with 3D-printing technology, we have a promising business model that allows us to shift from traditional manufacturing to customisable open-source smart gadgets."

He believes such technologies will eventually revolutionise manufacturing around the world, and China is just the place to test his theories.

Black's Western sensibilities have already proved to be an asset at Flexbot - he lent his voice to a droll little video that helped them to raise more than US$560,000 from nearly 4,700 pre-orders on crowdfunding platform Kickstarter.

With Silicon Valley accelerators eyeing the potential in China, more young technology entrepreneurs are heading east.

Premium incubators such as 500 Startups and InnoSpring and networking community Startup Grind have set up bases in Beijing; Chinaccelerator, a member of the Techstars network, has an outpost in Shanghai, while hardware-focused HAXLR8R (pronounced Hack-celerator) is in Shenzhen.

Quitbit co-founder Ata Ghofrani, whose team graduated from HAXLR8R's programme in Shenzhen, shows off their smart lighter at the Maker Faire San Francisco.

More than 100 foreign tech start-ups have emerged on the mainland under these programmes, many set up by graduates from elite universities such as Stanford, Yale and University of California, Berkeley.

By providing expert mentorship, seed money, resources like office space, links to a supplier network and knowledge of the local business ecosystem, Silicon Valley accelerators have made access in China much easier for these young entrepreneurs.

Even so, doing business in China is very different from their own countries; then there are the challenges of an unfamiliar language, culture shock and others.

Life in Shenzhen has sometimes seemed out of control for Lyssa Neel, founder of Linkitz, a Canadian outfit making wearable electronic toys designed to help children learn programming in a fun way.

"We'd never been to China before and we were shocked by the office elevator on the first working day here [in Huaqiangbei]," recalls Neel, who holds a PhD in computer science from the Massachusetts Institute of Technology.

"A true Shenzhen experience is observing how two fully loaded handcarts and 10 people manage to cram into one small elevator car," Neel says.

Her first lesson was learning how to squeeze between motorised carts on pavements without getting hurt.

Amanda Williams of Fabule Fabrications, another Shenzhen alumni, demonstrates her Clyde customisable desk lamp.

"They continually beep-beep-beep their horns to warn pedestrians out of the way because they are not slowing down," Neels says.

"But what's is amazing about all this is that you can order a component from Taobao [a Chinese equivalent of eBay] in the morning and have it in your hands and ready to test in your prototype by 1pm."

Like many foreigners, Neel and her colleagues face practical hurdles such as identifying reliable restaurants that do not use gutter oil for cooking and figuring out how to avoid inhaling too much polluted air.

Ironically, the smog is one factor that brought Hannah Hagen to China. The 21-year-old environmental science student at Berkeley is a co-founder of Clarity Inc., which is developing a portable air-quality sensor that keeps users updated on their exposure to harmful pollutants.

"Working in a foreign country makes it difficult to do simple things like ordering from Taobao in Chinese, talking to suppliers and Chinese business partners, and even looking up or asking directions," Hagen says.

"Communicating with our team members and partners in the US also means we have to schedule our calls to reconcile with the 15-hour time difference between Shenzhen and California. So for one of us, the call is almost always after midnight."

Despite the difficulties, they have been able to develop their product much faster in Shenzhen: "The lead time on parts is unbeatable," she says.

Her curiosity about Chinese culture and language also made for a richer experience. She has been living with a Chinese family, so "we've shared food, language and music from each of our cultures".

Hagen adds: "Moving to China has been much more than a business decision, as I have immersed my entire personal life in Chinese culture, people, music and cuisine."

Communication relied more on subtleties than I was used to
Benjamin Black, Flexbot

Antonio Belmontes, 22, and his team at smart bike developer Helios, came to Shenzhen for a three-month "boot camp" run by HAXLR8R. Belmontes stayed after the stint ended a year ago to act as their liaison with factories and suppliers.

The difficulties he encounters come from language barriers and sourcing material from trustworthy suppliers.

"You really have to keep communicating with the factories, convincing them that they can make the prototype you want. A lot of times, we sent an e-mail with 10 specifications and found they only did two or three. It's not because they don't want to; part of it is because of miscommunication," he says.

Workshop managers may be relying on apps like Google Translate for communication and do not fully understand what's needed, Belmontes says.

Having studied Putonghua for more than a year, Black found it was the style of communication rather than the language that he had to adjust to.

"I realised that factory bosses were rarely straightforward in explaining a situation; communication relied on more subtleties than I was used to," he says.

"I had to play a very active role and be persistent in making sure certain aspects of our project were progressing according to schedule, local manufacturers tended not to be proactive in keeping me informed."

Black and Belmontes are fortunate that their companies are targeting international markets. They can seek overseas funding through Kickstarter and at accelerator "demo days" in San Francisco, when start-ups make presentations to venture capitalists and investors.

Hex, a smartphone-controlled nanocopter from Flexbot.

But it's a different scenario for start-ups focused on the mainland market, as Andrew Boos discovered.

In 2012, the Canadian and two partners joined Chinaccelerator, then located in Dalian, and set up Appfuel to develop technology to facilitate mobile advertising in China for foreign companies. After a promising start, however, their venture failed.

"Our beta roll-out was a massive success: within four weeks of launch, we had registered apps and were displaying ads to over 180,000 users in China," he says. "But months went by without a single sale made, and we made a shocking discovery: B2B sales are tough and take a long time."

As unknown newcomers from Canada without business connections, achieving such sales was even harder.

They also ran into difficulty trying to raise funds because they were foreigners: "We had investors telling us that they had a policy to invest only in Chinese founders," Boos says.

Ma Rui, a China Venture partner with 500 Startups, describes doing business on the mainland as "a mad dash to the top" - its huge population and relatively scarce resources makes for an extremely competitive society.

"The number of successful expat entrepreneurs in China remains scarce and it is not an easy endeavour," Ma says. "Yet if you are very strategic and brave enough, there are always opportunities and markets or niches where explosive growth may await."

Ma's incubator has invested in some promising foreign start-ups on the mainland, including Dianrong.com a peer-to-peer lending platform established by a former chief technology officer of US credit platform Lending Club, cloud computing venture ChinaNetCloud, and BOXC, an e-commerce logistics company serving Chinese vendors who sell to the US.

Whether or not they succeed, many technology entrepreneurs believe their struggles offer far more useful lessons than a course at a business school. With acceptance rates at top incubators typically in the low single digits, the experience alone serves as endorsement for further rounds of financing.

Yale graduate Hassan Siddiq, who set up writing-and-review platform Daily Themes in Shanghai last year to help non-native speakers master written English, is among the believers.

"Graduates from top business schools may be suited to managing existing systems of companies, but they could struggle in the uncertain environment of start-ups," says Siddiq, a former investment analyst from Pakistan.

"For the time being, starting a company and attending an incubator is the best way to learn entrepreneurship," Siddiq says.

This article appeared in the South China Morning Post print edition as: Venturer highway
Post