L.O.S.T. = Lessons On Startups Today
This is a much-delayed piece, as I have been traveling around Singapore, Shanghai, and Beijing in recent weeks. On this trip, I caught up with friends who are entrepreneurs, working in startups, and venture capital investors. It’s interesting to see how the momentum and sentiment in the local startup communities have evolved, especially during the challenging times of trade dispute and economic growth slowdown.
One of the most resonant and lingering messages to me in the past year is from a podcast hosted by Kara Swisher and Scott Galloway, where Scott mentioned his impression on Chinese companies — that they can build great products but haven’t yet built great brands. It’s been stuck in my head ever since, and I have been thinking over and over about this.
There is a historical factor in this phenomenon. People may think that modern China only has 40 years of history with the market economy, and therefore is still too early to talk about building great brands. However, many brand names that exist in China now have hundreds of years of history dating back to the Qing Dynasty, which is called 老字号 in Chinese. Even with these brands, the idea and philosophy of what a brand name stands for are quite different from the western world.
Because China is such a big market with vastly different populations but primarily an agricultural-based society in the past, building a brand and reputation has been mostly focusing on the quality and reliability of the goods, rather than the modern sense of how “cool” the products are and the focus on the values and emotions behind the brands. For example, when you see the logo of Apple or Coco-Cola, the most important message associated with those brands is the creativity, boldness, lifestyle, and happiness that they represent, beyond just the products. On the contrary, the 内联升 and 六必居 (brands that last for hundreds of years dating from Qing Dynasty) or the Haiers and Lenovos (new brands from the past decades) traditionally emphasize on the durability, quality, and peace of mind that their brands represent.
That said, the rising new wave of fashions (国潮）strive to add a modern designing twist to the traditional brands and cultural phenomenons and try to find the deeper value and philosophy behind the brand image. For example, as I was talking to an entrepreneur friend, I was surprised to find that he actually spent a whole week in New York meeting with the top branding agencies. He thinks the old way of first building a product and then thinking about branding is for the past, and the new way should be integrating the product-building with brand-building interactively.
I’m very happy to see design thinking and brand thinking so widely adopted by the new generation of entrepreneurs in China and hopeful that soon we will be able to see world-class Chinese brands.
Discipline is one of the top principles according to my friend who recently launched his own startup. Before becoming an entrepreneur, he was the youngest Managing Director in the history of JPMorgan in Asia. As a very successful investment finance professional, the decision to become an entrepreneur was not an easy one to make, and it was definitely hard to change his mindset from a career-driven professional to an entrepreneur.
However, the good thing about a successful career in finance is that the training has shaped you to become highly disciplined. What the founders do and how they do it are so important in shaping the culture of a startup, which is critical for its long-term success. And being disciplined is vital for the founders to be consistent and coherent in what to do and how to do it.
Especially during challenges and difficult times, founders need to have strong hearts and stick to the disciplines, not only because this is key for the team morale and confidence, but it can also set up a good benchmark and example for the more challenging times in the future and significantly enhance the resilience of the team.
3.Product Strategy Pivot
In talking with another friend who founded arguably the most promising manufacturing SaaS startup in China, it was inspiring to hear that he was using the economic growth slowdown period to explore pivots in his product strategy.
Very interesting timing, but it also makes a lot of sense. During the downturn, you will find it challenging to maintain the growth, but on the other hand, it may be the most stable time for your team’s turnover, because other competitors are not doing well either and thus can’t hire your team members over. Therefore, with a stable team, it is a tailwind for you to experiment with new product strategies and reshuffle your team as needed.
Specifically, in my friend’s case, the question is either to focus deeper on the now major user cohort of large enterprise manufacturers or to expand into the small- and medium-sized ones. The former involves deepening and iterating on the current product offering, whereas the latter involves a more flexible and adaptive product strategy.
This is a classic dichotomy for enterprise solutions startups, and there are successful cases with either choice — good examples are Adyen for the former choice and Stripe for the latter case. So the answer is there’s no perfect answer, and it should depend on whichever strategy fits the founders’ conviction and the team.