Startups in China - Insights on Founding a Company

Startups in China
Build & Manage Servers - Optimize & Manage Servers - Managed Cloud Servers Copyright © 2015 ChinaNetCloud
Steve Mushero
STARTUPS IN CHINA

Startups in China
• China had a critical shortage of skilled labor
• ChinaNetCloud was founded to help solve this problem
• How two white guys succeeded in China
FOUNDING
CHINANETCLOUD

Startups in China
FOUNDING CHINANETCLOUD
China had a critical shortage of skilled labor
• A big problem in China is ﬁnding the skilled employees that
you need to build your business.
• China has shortages of almost every critical profession.
• Not enough engineers.
• Not enough expertise.
• All due to the fact that these industries are still very new to
the area.

Startups in China
ChinaNetCloud was started to help solve this problem
• The amount of infrastructure needed to supply the country’s
demand for data is just massive.
• Companies need help ﬁnding the talent to run it all.
• Outsourcing provides access to world-class talent,
processes, and procedures at an affordable cost.
• CNC is here to build and run it all.

Startups in China
How two white guys succeeded in China
• There are a lot of very successful foreign-owned companies
in China.
• Most of the time you simply don’t hear about them.
• For example, a friend in Beijing is a top exporter of granite to
the US, working directly with the miners in Shaanxi.
• It is a huge business, with an equally huge market that no
one has ever heard of.

Startups in China
• In China, it doesn’t always pay to automate.
• Dealing with Venture Capitalists
• Reducing Risk - “Can you do it?”
• Example - ChinaNetCloud
• Keys to Early Success
• Finding the right pricing mix
FOUNDING A COMPANY

Startups in China
FOUNDING A COMPANY
In China, it doesn’t always pay to automate
• Automation requires an investment in technology,
programmers, and equipment.
• Local labor is an abundant and affordable resource that can
be trained and developed.
• Interns are also valuable, as some can have years of work
experience and noted achievements.

Startups in China
FOUNDING A COMPANY
Dealing with Venture Capitalists
• Approaching VCs is all about risk reduction.
• VCs hate risk, and they’ll do anything to reduce the potential
risk.
• Presenting a good value proposition is sometimes a
combination of a growing market, large outcome, high
margins, and low risk.

Startups in China
FOUNDING A COMPANY
Reducing Risk - “Can you do it?”
• Investors are paying to reduce risk.
• The next great idea is awesome but the key question
everyone will ask is “Can you do it?”
• Answer this by ﬁnding 10 people that are credible and willing
pay for your solution.
• Find well-known advisors that have experience in the market
and ask for help.

Startups in China
FOUNDING A COMPANY
Example - ChinaNetCloud
• Having a business plan is nice.
• Proving that you can do something is better.
• Before becoming a legal company, ChinaNetCloud had an
ofﬁce, employees, revenue, and even customers.
• We were doing things, showing that we could take an idea
and grow it into a thriving company.

Startups in China
FOUNDING A COMPANY
Corporate Culture
• Corporate Culture is very important for startups.
• The employees are led by the Founders, their style of dress,
their idiosyncrasies, and even language use.
• Employees will follow their good habits, and will deﬁnitely
pick up the bad ones.

Startups in China
FOUNDING A COMPANY
Keys to Early Success
• The three most important things in the restaurant business
are location, location, and location.
• But investors say it’s people, people, and people, followed
by the products, and then the market, ect.
• If the people are awesome and have a strong drive then it
will be hard to fail, especially with so many individuals
pushing forward.

Startups in China
FOUNDING A COMPANY
Keys to Early Success
• Fewer partners are better.
• It’s hard to start a company with friends, especially more
than a few.
• People will inevitably ﬂake out, you’ll never know who is in it
until the end.
• Families, commitments, job offers, there are a lot of outside
reasons for someone to want to duck out early and
complicate things further.

Startups in China
FOUNDING A COMPANY
Finding the right pricing mix
• Being able to go out, ﬁnd a customer, and then make a large
one-time sale is a great skill to have.
• Being able to do the same and have that customer pay you
every month until they die is better.
• Cash is very important to a startup.
• A steady inﬂux is much better than one that relies on many
different variables.

Startups in China
• Finding Startup Employees
• Cultural Dynamics
• HR Challenges
STARTUP CHALLENGES
IN CHINA

Startups in China
STARTUP CHALLENGES IN CHINA
It’s hard to ﬁnd startup employees
• In China, few people will work for free or for equity for any
length of time.
• Finding someone to work on a reduced salary is likewise just
as tough.
• People can be overly greedy, often lacking vision of the
future.
• There are very few role models for the Chinese to look up to,
very few people started with nothing and built an empire.

Startups in China
Cultural Dynamics
• In a country such as China, there are vast cultural gaps
between cities and towns.
• China is like the US 100 years ago. It is quick, ﬂexible, and
very different from the current US.
• However, some things are still easier to do in California.

Startups in China
Cultural Dynamics
• China has very low wages, and with little upwards wage
pressure it creates a lot of stress to meet cultural
expectations.
• A typical man is expected to have an expensive car and an
even more expensive house before even thinking about
marriage.
• On the other hand, people end up walking around with brand
new iPhones that cost two months of their salary.

Startups in China
Cultural Dynamics
• China has a hierarchical or experienced-based culture, older
people feel that they should be paid more regardless of
actual job experience.
• Older = Senior, so they expect triple or even 4x the pay.
• This creates a pool of unemployable people, with more
being added as they now lack English or other needed
technical skills.

Startups in China
HR Challenges
• Hire slowly and fire quickly.
• It isn’t at all strange to have to find, hire, and fire an entire
sales team multiple times.
• The best way to find people is through peers.
• Recommendations can be very powerful, more so than
resume sites. You can network your way to a solution.

Startups in China
HR Challenges
• Interns can also be a great solution.
• But hiring local interns can be tough, very few of them have
any work experience at all.
• Their resumes only say that they went to school and had a
good test score.
• Foreign interns usually have extensive work experience,
sometimes even solid accomplishments.

Startups in China
HR Challenges
• The best thing to do for local interns is to keep them
motivated.
• Find the ones that are good and push them, show them a
career path and where they can end up if they keep trying.
• And give them support, as they are often younger than you
think.

Startups in China
• China has a shortage of interaction in the startup community
• There is a lack of Entrepreneurial role models in China
• Working in a startup is very beneﬁcial
• China has a lack of Founders
DIFFERENCES IN
STARTUP CULTURE

Startups in China
DIFFERENCES IN STARTUP CULTURE
China has a shortage of interaction in the startup community
• There are a limited amount of useful things happening in a
month.
• Even in Beijing, it can be a struggle just to ﬁnd events to
attend.
• This limits the amount of cross connections and networking
options resulting in a lot of lone wolf activity.
• In Silicon Valley and other technology areas, there are
events for every niche, every night of the week.

Startups in China
There is a lack of Entrepreneurial role models in China
• In Silicon Valley everyone knows someone who’s made a lot of
money.
• The front desk girl at Google ended up being a millionaire from her
stock options.
• Outside of China there are a lot of young people succeeding at
creating startups.
• This generates hundreds of millionaires that then go on to become
investors and spawn countless generations of startups.
• The absence of this cycle leads to a lack of Serial Entrepreneurs to
continue to create and innovate.

Startups in China
Working in a startup is very beneﬁcial
• Working in a startup and developing your entrepreneurial skills,
etc., is very important to employers 5-10 years down the road.
• Do whatever you can to add value to your endeavors and to do
new things.
• Young people in China aren’t encouraged or allowed to develop
Entrepreneurial skills due to the pressure parents put on school.
• ChinaNetCloud even has to print HR books for some of the
local interns to give to their parents to help smooth over
objections.

Startups in China
China has a lack of Founders
• There’s no concept of working for equity in China.
• No one starts with a company, becomes famous, and walks
out with millions.
• Equity and stock options fund the Valley, yet in China there’s
no post-startup equity, think early Facebook and Google
employees.
• The 25% option pools typical in the US are only 5% in China.
• This ends up hurting the country, keeping the money very
centralized instead of within the startup community.

Startups in China
• There are a lot of business opportunities in China
• China is the expert in monetizing online games
FUTURE
ENTREPRENEURSHIP

Startups in China
FUTURE ENTREPRENEURSHIP
There are a lot of business opportunities in China
• There is simply so much going on in China. It is cheap, fast,
and has a limited amount of bureaucracy.
• However, a lot of stuff has already been done, the country is
reasonably developed after all.
• For the wild west, try Burma, Cambodia, or Vietnam.
• China still has advantages, and the experience of living here
and learning the language will help in the future.

Startups in China
FUTURE ENTREPRENEURSHIP
China is the expert in monetizing online games
• The US is nowhere near China on this.
• Tudou had services, features, and functions way before
Youtube, but there was no real demand at the time.
• The Chinese don’t watch TV like the Americans do, they
want their content instantly, without having to wait another
week for a new episode.
• This pushed streaming technology and is a primary reason
why Tudou grew so fast.

Startups in China
• Don’t be afraid to share your ideas
• Taking the ﬁrst step is usually the hardest part
• Failure is valuable
PARTING ADVICE

Startups in China
PARTING ADVICE
Don’t be afraid to share your ideas
• If your idea is so copyable that everyone in the building can
steal it in ﬁve minutes then it’s useless.
• Share your idea, show people, develop, and get ideas from
other people.
• Talk it out, ﬁnd out how hard it will be to build, who already is
doing it, what kind of pricing to use, etc.
• Ideas will follow you if you are out there, interacting.

Startups in China
PARTING ADVICE
Taking the ﬁrst step is usually the hardest part
• Join someone else’s company ﬁrst, work for a year or even
ten to gain the experience you need.
• Work for free if you have to.
• Let opportunity seek you out.
• The more planning and organization that you put into the
project will simply make executing it easier.
• But no matter what your idea is, just go and do it.

Startups in China
PARTING ADVICE
Failure is valuable
• If you fail then the worst thing that happens is you lose
everyone else’s money.
• Go eat at a soup kitchen for awhile, pick yourself back up,
and head into the next opportunity with new knowledge.
• The experiences you gained will still be valuable to a future
employer.

ABOUT CHINANETCLOUD
Founded in Shanghai in 2008, ChinaNetCloud is one of
the world's largest Internet Managed Services provider.
Our focus is on server operations, especially Reliability,
Performance, Scale, Security, and Cost Savings.
www.ChinaNetCloud.com
Startups in China

Startups in China - Insights on Founding a Company

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (10)

More from ChinaNetCloud

More from ChinaNetCloud (14)

Recently uploaded

Recently uploaded (20)

Startups in China - Insights on Founding a Company