Me: Hello everybody, I am here today with Tree, the CEO and founder of See Mobile Technology and we are going to talk about his entrepreneurial journey as well as his current company that managed to grow quite significantly during the last couple of months and. Thank you very much for taking the time!
Tree: Hi Jan, thank you very much for having me.
Me: First of all, I would like to say that I love the energy and passion! It is Saturday's afternoon, and the office is still full of people. That is something I could not see that much back in the Czech Republic. Before we dive in, could you tell us a little bit about yourself, your company and your current focus?
Tree: OK, my name is 万旭成 (WanXuCheng) and people call me Tree. I am a serial entrepreneur since 2013, and we are working on something very interesting here. We founded See Mobile Technology at the beginning of 2015, and we already have 50 people. These are mostly builders that come from companies like Tencent, Alibaba, Baidu, and JD.com.
Me: Let me jump in with another related question. How do you attract talent? How do you compete with Alibaba for instance regarding hiring their employees? Is it about the company's culture, your vision or anything else?
Tree: 1) Some of them are my former colleagues from Tencent. Then, other people from Alibaba and Baidu noticed that we were growing fast and that we are capable of changing the fashion industry, so they joined us. 2) Very critical here is being able to persuade people that we can make it, that we can fulfill our vision. We already have some track record (working for Tencent, building different companies), and that is why it is easier for us. 3) Is to give people more than they expect. For example, if they want 10k RMB (salary), give them 12 or 14k, it is OK. We also offer stock options to every employee.
Me: Is this common in China?
Tree: Yes, this is a market standard here. If everyone does that, you have to do it as well. And usually, you need to give them even more depending on how important they are for the execution of your plan/vision. We reserved 15% of the company for future employees.
Me: What is your business model? How do you plan to make money?
Tree: See is an online platform for people to discover daily life fashion. It is also a social network in a sense that you only need to upload a picture of something you like and our community of fans and fashion experts with a help of our algorithm will find the right outfit for you, worldwide! Moreover, you (as a user) get three options to choose from, so you always have a choice.
We are a commission based business.
Me: So, you are trying to change the way how people (especially young generation) consume fashion, right?
Tree: Yes, exactly! We also collect data about the costumers' wants and needs. At the moment, we have 1 million users (it took us five months to get there) and from this pool we can extract some valuable information and with quite a high accuracy predict what will become popular in the future.
Me: OK, so people that are finding the clothes (on-demand) for the users on the internet are all your employees? Or is it more P2P service/platform?
Tree: First of all, we use very advanced image recognition algorithm. Our software is one of the best (maybe the best one) in China. Even companies like Tencent and Baidu lack behind. This technology is one of our big advantages. The whole process looks like this:
- You take a picture and upload it to our servers.
- Our algorithm searches the web (millions of products) and picks the ones that are matching your original entry.
- We push the results to our community of fashion experts (1000 at the moment and growing) who compose the outfits that you will love. We have experts in different categories (handbags, shoes, etc.). The system selects experts based on your entry. This set of procedures makes the searching process more efficient and faster.
Fashion experts are not our employees. They can be from anywhere in the world and by helping people to find the right stuff they can become part of the shared economy and make some money along the way (commission).
When you combine these three things, you will get in result even in less than 5 minutes!
Me: Impressive! Let's move on. Why did you choose the fashion industry? Isn't more women's industry?
Tree: When it comes to openness and “consumerism”, Chinese society is still very young. It has been only 40 years since the revolution. Till now all businesses focused on getting people “full” (food & beverage industry) but not more beautiful. But it is time to change this, and that is why we are here. Also, fashion is a huge business opportunity. We have 1.5 billion people here, but so far none of the companies focused on disrupting the fashion industry in a way we do.
The truth is when I learned about this opportunity I did not know much about fashion. I knew how to do business, how to raise money, how to run company, etc. but nothing about fashion. That is why I had to find the right co-founders.
To your second question, in China, men create stuff for women. All the big fashion related companies and run by men. At the moment, women in China do not have so much business experience and ambition to start a business. That will probably change in the future, though.
Me: Why and how did you become an entrepreneur?
Tree: I come from an entrepreneurial family. That influenced me a lot. I started making money when I was in the primary school by selling things to my classmates. Later, in college, I took a gap year and started an educational platform. But I think doing business and being an entrepreneur is something different. If you do business you only care about making money, however, real entrepreneurs want to build companies that can make people's lives better, they want to disrupt industries and at the end of the day change the world.
Me: How would you describe China as a “startup nation” in 3 words?
- Fast — everything is changing faster than ever. How we eat, buy stuff, take the taxi, etc.
- Wild — be the BEST or you lose. Society only admires the king(s). There is no room for little players, those slow ones.
- Opportunity — the market, in many industries, is still not saturated. Also, traditional companies — so-called SOEs (stated owned enterprises) — are not efficient, so the industries in which they operate can be disrupted. Last but not least, opportunity lies in China's large population (~1.5 billion people).
Me: What are the biggest challenges you, as a startup founder, have to deal with on daily basis?
Tree: Competition is a big thing. Once you come up with something new that is promising, basically in not time there will be many other firms just copying your business idea. We already have five competitors since our launch. The competition itself is not a problem, but from the “China-being-wild” perspective (winner takes it all) I mentioned earlier, startups find themselves under enormous pressure.
To protect ourselves we have to raise as much money as possible and as soon as possible, ideally from the big guys (like Alibaba or Tencent). Also, we focus on the fast growth so that the “copycats” have a hard time to catch up with us.
Another challenge is people—attracting and investing in talent. If the company grows fast, all the people have to develop and adapt quickly, otherwise, they will not be the right fit for the startup anymore. If this happens, you need to fill the gap(s).
Then, there is an overall strategy (with the focus on revenue streams). We have to keep an eye on the competition (and the environment we do business in) and adjust our business model if necessary.
Me: How did you manage to raise the money? From whom?
Tree: First, we closed $1 million angel investment. Then two months after the official launch we received seven term sheets (from various investors, among which were also companies from famous “BAT*” elite club) and several million USD in a Series A round. We decided not to go with those “big guys” as it was quite early. Now, as we started thinking about Series B funding, our communication with Tencent will continue.
In this early stage, our main goal is to raise money as soon as possible. We chose three funds (IDG, Morningside, and BAI), all among TOP 10 VC funds in China (we rejected Baidu for instance, but we are still in touch). Currently, we are looking for a strategic partner that can provide more than just money. Tencent has both.
Me: How did you make the first connection with Baidu, Tencent, etc.?
Tree: Actually, most of them approached us directly after our launch because our product looked great and was quite successful since the very beginning. Also, our past success and personal connections helped us a lot.
Me: What about your pitch? How did it go?
Tree: I think I am quite good at pitching (he smiles). Almost everybody I met offered me a term sheet. When I pitch, I do not have any presentation. I like to create an informal and friendly environment full of mutual interaction. I explain our vision, introduce See to them and then literally “draw the future strategy” and how we will get there right in from of them. I also ask a lot of questions and try to get as much feedback as possible. We just have a conversation. I try to be different.
In general, the equation could look like this (author's note):
Probability of success = (TRACTION * PRODUCT * track record) + creativity
Me: What about your revenues, can you disclose some numbers?
Tree: At the moment we are at 1 million RMB per month let's say but we are growing very fast, and our plan is to get to 10 million RMB in sales at the beginning of the next year.
Me: How does the co-operation with VCs in China work?
Tree: We already have four shareholders (angel round + Series A). I usually send them a monthly report (operations, finance, progress in development, etc.). And then I also meet with them on a regular basis (once or twice a month) to discuss some problems, challenges, and so on. And lastly, all the shareholders meet once every ~6 months to talk about strategy, next round, etc.
Me: When you need to discuss something urgent, do you have a number to call? Or, how do you get in touch with representatives of the given fund?
Tree: In China, we use WeChat for all the communication. WeChat killed calls and email here. I even received the term sheet via WeChat.
Me: Let's talk about marketing strategies. How did you manage to get first users?
Tree: Before we launched the app we already had around 2000 beta users who helped us to spread the word. Thanks to this word of mouth we grew to 10 000 users during the first week.
Me: How did you get these beta users?
Tree: We approached students from the universities, organized some parties/events, WeChat groups, etc. They liked the idea and the product and wanted to be part of the community. Then we used other social media like Instagram and Weibo (the Chinese equivalent of Twitter — author's note) to expand our user base.
I used to work in the user research department in Tencent. To get our first users I just did some research as usual. It is not a rocket science. People enjoy being part of something bigger, some community where they can contribute and meet new friends. Also, we take their suggestions seriously. That keeps them motivated.
To maintain the community we have dedicated community managers who meet with our “raving fans” both online and offline (WeChat, conferences, parties, etc.) to solicit feedback and share our next steps with them.
Me: What about some other marketing strategies? Do you spend some money on advertisement?
Tree: We did not spend any money in the early stage, but now we do. We found out that Weibo is an excellent channel for us. We team up with celebrities, and they share our product/app with their fans, alongside with some endorsement.
Me: How much does this user acquisition cost?
Tree: Usually around 4 RMB per user.
Me: I guess we are running out of time, so, let's wrap it up with three simple questions. What are the other two startups (outside of your field) that we should follow?
- FenQiLe — startup that offers small loans to students valued at more than $1 billion in about two years.
- WeiNong — young company that helps farmers to market their products (fruits, vegetables, etc.) via a mobile app. The founder is 22 years old girl.
Me: I noticed that almost every startup founder I know in Shenzhen (including you) has read the book The Hard Thing About The Hard Things from Ben Horowitz. Where are some other books or blogs you read?
Me: What about some Chinese books or resources, any recommendations?
Tree: Chinese startup founders do not want to share much about their entrepreneurial journeys (successes & failures), so we do not have many local books/blogs to read/follow. As a result of this shortage, not many people follow blogs in China.
Me: I think it is going to change. You, new generation, you are already sharing a lot of stuff with us. It is beneficial for the whole startup community not only in China. I appreciate that!
So, the very last question is following. What is the #1 tool (app/website/service/, etc.) you use every day (or very frequently), and that is making your startup life much easier?
Me: OK, Tree, thank you very much for taking the time. It has been a blast! I learned a lot and, I hope we can meet up soon again to talk about See's progress. Good luck!
Tree: Thank you very much, it was my pleasure.
*Baidu, Alibaba, and Tencent — China's three big internet leaders.
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