Diary of a Chinese Startup Part 3 of 4        ( 中文 )

Startups—in China, in the Valley, or anywhere—live or die on their ability to control costs. George Cao, founder and president of travel meta-search site Go10000.com, has discovered that in Beijing, there are plenty of ways to keep costs down.

Cheap food’s certainly one way to start. So, Mr. Cao and “Strong” Wang, his VP for marketing and business development, had lunch this week at the Golden Land Beauty restaurant, a nondescript eatery in Beijing’s Shangdi neighborhood—a “wannabe high technology zone,” as Mr. Cao described it, in northwestern Beijing.

The restaurant serves hearty Northeast Chinese cuisine at only about a dollar a dish. “We’re trying to save every penny we can,” said Mr. Cao between bites of succulent braised eggplant. This type of penny-pinching doesn’t appear too terribly painful.

Directly across the street from the restaurant is a shiny, brand-new apartment complex that is filling up quickly with small business tenants: startups, mostly, like Mr. Cao’s, who are renting office space at a fraction of what Go10000.com is now paying for its shoebox in R&D Plaza just off the Tsinghua University campus. His company has already outgrown the space.

“Our WAP (wireless application protocol) partner rents there,” said Mr. Cao, contemplating a move.

Strong Wang may drive a Jeep Grand Cherokee—not the most economical of vehicles in gridlock-prone Beijing—but when it comes to the business he has shown a particular aptitude for economy.

Recently, Mr. Wang, who heads up marketing and business development efforts for Go10000, managed to wangle a new logo design, posters, business cards, and even an entire web site redesign—all for free.

In his former incarnation as a marketing executive at China Netcom, North China’s major fixed-line operator and ISP, he had formed a relationship with the graphic design outfit, doing the work gratis.

“I was good to them when I was in a powerful position at Netcom. So I cashed in a favor,” he said. “In China, the social network that an entrepreneur has really makes the difference.”

Web 2.0 Conversion

Social networks of the online type have been very much on George Cao’s mind of late—specifically, how to make them work for Go10000 to boost traffic numbers and the site’s stickiness.

For months, ever since Mr. Wang joined the company, he and Mr. Wang have been engaged in sometimes heated debate over the direction of the web site, with Mr. Cao clinging, stubbornly at first, to the notion that Go10000 should bestrictly a travel meta-search tool, and Mr. Wang pushing to include travel-related content.

“I’m not the kind of person who changes his mind easily,” said Mr. Cao. “It took me a good couple of months to start to see things his way. But when I change my mind, I tend to go all the way.”

Mr. Cao has become a full-fledged Web 2.0 convert, and now preaches the gospel of social networking and online community, user-created content, and information exchange. He has also become a faithful reader of the blog TechCrunch.com, which tracks Web 2.0 companies and products.

In the last few weeks, since his conversion, he has been looking closely at Chinese Internet companies that have seen huge traffic growth without any significant capital outlays.

“These are all user-powered, community-based sites,” said Mr. Cao. Two recently launched classified ad sites, Ganji.com and 58.com, are both seeing traffic skyrocketing, he said. “It’s about people participating in the creation of content—things for sale, or BBS posts. BBS is becoming big business in China.

“ChinaBBS.com, for example, which has just 60 people, now ranks in the neighborhood of number 100 in the Alexa rankings, and they started about the same time we did,” he said. Mr. Cao notes ChinaBBS is now one of the largest sites in the world in terms of traffic, and just picked up another $10 million in funding.

“China BBS is similar to what we do. They also aggregate content,” he said. “They aggregate BBSs, fetching content from most of the BBSs in China. They give you a portal interface. It’s just a BBS meta-search.”

Scalability and Relevance

Applying Web 2.0 principles to search is the next logical step in the evolution of search, said Mr. Cao. Human-edited directories—think early Yahoo—yielded good relevance but poor scalability, whereas automated information search along lines of AltaVista was scalable but yielded poor relevance.

“Users can make things relevant, but with mechanical help,” he said. “This will make for both good relevance and good scalability. We won’t have to do a lot of editing ourselves: that’s the users’ job.”

While he said that he is not yet ready to reveal details of the revised business plan, Mr. Cao said he wants to position the company as a “user-powered travel search engine” and a “search-based” travel community.

“We maintain our core competencies in search and travel, but we incorporate the good ideas of Web 2.0: user-created content, information exchange, community, and fun,” he said. “It will go far beyond just user ratings of travel agencies and hotels.”

By harnessing the power of community, scalability of content might not be an issue. But with infrastructure, it’s another matter. “If this works out like we’ve planned, then traffic will be much higher and our infrastructure will need to be upgraded,” he said.

“We’re trying to prepare for that, and we might be interested in some angel money in the interim before we close the first round,” Mr. Cao said. “So far, we’ve spent about 300,000 yuan ($37,000) on hardware, but we will probably need to triple existing hardware.”

Later in the afternoon, Mr. Cao rode across town in Mr. Wang’s Jeep to a meeting with Zhong Qiuyue, an investment associate from venture capital fund IDG, one of the most successful VCs operating in China, but infamous for the lowball opening valuations it gives Chinese startups.

The meeting, Mr. Cao said, went well. “They had clearly done their homework and were familiar with the space, and with our competition,” he said. “We didn’t tell them exact details of the new business plan, just what I said about wanting to make Go10000 into a user-powered travel search engine, and a search-based travel community.”

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And how did that go over? “Well, nowadays whenever you say ‘Web 2.0’ to anyone, they smile,” he said, admitting that it’s become an overused buzzword. “But I think they liked it.”

Source/来源: http://www.redherring.com/Home/14566