As the interview progressed, there was a glimmer of optimism about the opening up of Asian markets, as well as general enthusiasm about the prospects that were emerging for both interviewees. Tech Talk City Min and Lukoff confirmed that their bridge roles served to provide valuable insights. In their separate spheres, they give the insider scoop on emerging entrepreneurs and behind-the-scene stories of Silicon Valley companies competing in the Asia markets. Both believe there are lessons to be learned from the failures and successes of companies like Google, Facebook, and Twitter.
The conversation even took a philosophical turn. With increasing localization in Asian technology, could we expect a more Asian touch to computers? Is the copying and cloning of iPhones in China, or a Twitter knock-off in South Korea a temporary phenomenon? We discussed this and much more in this exciting conversation that bridged the best of Beijing, Seoul and Silicon Valley initiative.
(Editor’s Note: The interview took place over the course of two to three days, and some of the more salient highlights are provided in the transcript below. There’s also a 15-minute podcast of the last conversation between the two participants, an illuminating back-and-forth of insights and new ideas, for which you can tune in at the bottom of the transcript.)
AsianTalks: Richard, you describe Korea traditionally as a “walled garden” and Kai, perhaps you’ve experienced a similar attitude in China to outside influence in the tech field. Yet in both countries there’s overwhelming evidence of emulation and second-mover advantage. Why the copying and the cloning of Silicon Valley, is it something that’s ongoing, or just symptoms of an industry trying to find its way to better innovation?
Richard: (Laughs) Well interestingly, it depends how you want to look at that. The implication here is, again now, are we talking about being good business, being a good start-up, or being good innovators. Korea is criticized a lot on the innovation front, and even Samsung admits to being a fast-follower. And they do it proudly. So if you want to say that their ability to fast-follow is better than anyone else, in that sense, it’s a very good thing. So when you’re talking emulation, copying, or why is there so much of it, it’s because you can, and a lot of the forces that reach globally don’t hit Korea, and so then if they’re able to copy and do it better, then more power to them.
But at the same time I guess the underlying tone is here how do we release the walled garden of actual innovation, so that it’s not just fast following in a more expansive, rapid rate, but actually being an inspiration for new innovations in Asia. The first step is to lower barriers to entry, both in and out, which is very much what is happening right now. Korea has been the hermit nation forever, right? It’s been historically protectionist, which is a great way to be a Galapagos Island. It’s an independent evolution, where you see very unique things happening but no one really realizes it unless you’re here. But now with social networks and iPhones acting as Trojan horses in both directions, there’s no way to stop the leaks from coming out, and you’re just going to see more innovations. Plus Koreans are just innovators of cool technologies, which is why you’re going to see the beginnings of a renaissance of Korean start-ups in IT.
Kai: (In China) there’s a lot of copying and cloning, no doubt about it. There’s a whole word for it, Shanzhai, which is equivalent to a ‘mountain fortress,’ basically a secluded area where they copy lots of foreign innovations, or innovations of other companies. And the entire market in Shenzhen is built around building the “Hi-Phone” or the “Apple Phone,” just countless versions of the iPhone or the iPad, and every other product that one can imagine. I think the reason why is one, because the opportunities are there. There’s just so much low hanging fruit in the Chinese market, that both entrepreneurs and venture capitalists ask themselves “Why should I experiment or come up with a new business model, a new product, when I can simply copy one that’s proven to work in the US, and will probably work here too?” So I think that’s the story of the growth of a lot of businesses in China.
The second part of it I do think is somewhat cultural. In the US, in the Silicon Valley, if you came out with a clone, or an exact copy of the UI of another website, you’ll get hammered! You’ll be all over TechCrunch for all the wrong reasons. And you would really be like the black sheep in the industry. But in China the responses will range from, like, “Wow, how are you able to copy that so well,” to some consumers who believe they have the real thing, or never even heard of the US version, to some people frowning on it. But I think to some extent there’s an embracing of the Shanzhai culture.
AsianTalks: You’ve both built a web presence that addresses the interests and concerns of American and other business people interested in your markets. What is your most popular content, what do your readers like or demand the most, based on feedback?
Richard: It’s interesting. Feedback is always different than analytics. Feedback can sometimes be the loud minority. So on some things feedback has been more on controversial issues, whereas analytics would say something like Kakao Talk or the clone apps similar to the ones in the US. But other big stories like TicketMonster selling to LivingSocial, stuff with connections to the Valley that people feel they can relate to, those have hit big analytics. But what’s really interesting is, the stories that get the most engagement, are the insider’s insights into the market, like, how to actually do advertising on Naver, which is the number one search engine in Korea. It’s always a great anecdote to say that Google, which is dominant everywhere, has only a two percent market share in Korea, after ten years. That’s kind of a shocker for a lot of people, and reframes the conversation as to what’s going on. These kinds of things have been touch points and taglines of interest for many, so we’re really trying to focus on a good variety of just reporting on what’s going on. (Korea) is such a mystery that if you report on anything here, people are fascinated by it.
Kai: I think, in terms of feedback, I really only hear, or hear mostly – certainly — from the visitors from China, just because that’s where I’m located. So maybe that skews the particular feedback that I get. The posts that tend to be the most popular are analysis pieces about the Chinese start-up environment, or pieces about foreign Internet companies attempting to operate in China. So we wrote one particularly popular series on “Why Facebook Would Have Won If China Were a Free Market.” They’re blocked by the great firewall as is. And that did very well, as well as a piece on why MySpace failed in China, and questions about, you know, whether Facebook was going to come here via a partnership with Baidu. Also the analytics on (TechRice) is 40 percent visitors from China, 40 percent visitors from the US, and 20 percent the rest of the world.
On the side of local Chinese start-ups, some of the more culturally oriented coverage tends to do quite well. So telling the story of individual Chinese entrepreneurs, we wrote one piece called “The Story of W&L: China’s Great Internet Divide,” a translation of an original Chinese piece, but it portrays one entrepreneur, W, who caters to high-end, white-collar, urbanite Chinese, and another, L, who sells simple games for feature phones, for Chinese migrant workers and factory workers in third-tier cities. The article compares and contrasts those two worlds.
I also get really passionate about telling the story of individual Chinese entrepreneurs, because a lot of them have a hell of a story, like Jack Xu of Diandian, for instance, who got to university and had never seen a computer before. He realized he had to figure out how to type, so he drew up a keyboard on a piece of paper, and because he didn’t have computer access all the time, he used that in his dorm room to practice typing. He was CTO at RenRen, the Chinese social network, kind of similar to Facebook, and now he is leading his own light blogging start-up Diandian, that’s similar to Tumblr in the US.