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Business> Finance
UPDATED: December 18, 2006 NO.42 OCT.19, 2006
Starting Up Success
Two young Chinese entrepreneurs mastered everything from venture capital to product expansion to become industry leaders

Opening the window blinds in his office, Gao Ran remarked, "Look, that's Google's new building; they just moved in yesterday." Gao's prosperous neighbors are certainly a source of inspiration, but you can be sure Gao won't be playing peeping Tom, covetous of the success within.

That's because Gao, founder of MySee.com, is sparking China's own Internet economy toward greater development. And Mao Kankan, CEO of Beijing Times Majoy Technology Co. Ltd., is doing the same for the Chinese gaming industry.

How did they make their companies successful from almost nothing to begin with and become the center of attention in their industries?

These are compelling start-up stories, not unlike that of Gao's new neighbors.

The savvy financier

After two rounds of financing, Gao Ran's company is developing rapidly, although it has not been around for long.

Gao founded his company, MySee.com, with a friend in February 2005. Soon after the establishment, MySee ventured into new profit areas, one of which was live broadcasting.

In 2005, when high-ranking Taiwan politicians Lien Chan and James Soong visited the Chinese mainland, and when Shenzhou 6 spacecraft was launched, many Internet portals such as Sina and Sohu had live telecasts of the events supported by technology from MySee. As a result, hits on its website soared. This year's FIFA World Cup helped to further raise MySee's profile.

After a series of successful live broadcasts, MySee began to rise in the Internet broadcasting arena, attracting investors.

"At that time, many investors began expressing interest in our technology, and we started discussing how they could help finance our growth," Gao said. Soon after, Gao closed their first financing deal.

In the initial stage, many fledgling enterprises are restricted due to a lack of funds, and entrepreneurs invariably reach an impasse in negotiations with interested investors because they fail to find an adequate means of cooperation. Gao's experience provides some lessons: Do what you're best at, roll out your product at the most opportune time, promote your brand, and soon the investors will come knocking.

That made Gao picky.

"I was out to look for the best investor," he recalled.

By chance, one day, Gao came across Deng Feng's name card. Deng, a graduate of Tsinghua University, was working with a U.S.-based investment company. It was late at night when Gao shot his first e-mail to Deng. The reply came back almost immediately-Deng expressed interest in the project.

Gao understood that to get the attention of any investor, three prerequisites had to be met: First, the project itself had to have a huge scope for development in the market, because investors are looking for high returns. Second, the project must be managed by a best-of-breed team, which is able to tweak the direction of the company depending on the circumstances. Third, one must display core competitiveness. Deng saw an exciting future for the development of P2P technology in China's Internet economy and decided to invest in the project.

And, in contrast to other investors, who were only able to release funds from within three to eight months, Deng was able to inject the funds almost immediately-this was exactly what Gao needed.

More importantly, Deng had a track record of success in starting companies. In 1997, Deng established Netscreen, a technology company which was sold to Juniper Networks, a company delivering industry-leading IP networking and security products, for $4 billion in 2003.

Deng himself was seen as an investor with strategic foresight. He not only knew how to run companies, but also had hands-on experience in tackling real corporate problems. Gao's goal was to list the company on NASDAQ after a few years. Deng would catalyze the realization of that goal.

Gu Yongjiang, former Chief Operating Officer of Sohu, agreed that choosing the right investor is worthwhile.

"Strategy is all the more important when you're just starting your company," Gu said. "Money is only a small part of the problem. This is especially true when the entrepreneur is lacking in experience. Investors bring much more than money to the table."

On how he manages to maintain his competitive edge, Gao said, "In sports, everyone only remembers the gold, silver and bronze medallists and the rest are forgotten. Hence, that is what you should be aiming for. You must run fast."

Gao has set his two key objectives for MySee as follows: To make Internet advertising pan out and to provide corporate services. As many and more advertising clients logon to MySee from websites like Cyworld and eBay, Gao hopes that Internet ads and corporate services will each contribute half of his profits.

Gao describes himself as a down-to-earth and pragmatic idealist. His goal is to accomplish within 10 years what it takes other people 30 years to accomplish. When asked how he would rate his own performance in the last three years, Gao would only give himself a mark of 60 out of 100. He hopes to continue this way for the next seven years and then reap his harvest.

The tech wizard

Meanwhile, Mao Kankan, CEO and chief systems architect of Beijing Times Majoy Technology Co. Ltd., is spearheading a Chinese revolution in role-playing games (RPG).

Mao's version of RPG where players actually gather in the same physical location will be put into trial operation this October at the International Sculpture Park in Beijing's Shijingshan District, and will be launched in 2007.

It will be China's first RPG project. Players will take on different roles in the virtual gaming environment but in the same physical location, and this makes Majoy's games different from all other RPGs.

"In the future, our games will be played in all major cities," Mao said. "We plan to create an 'all-time entertainment platform,' that is to say, besides coming to participate in the game at physical locations, players can also continue playing elsewhere through their phone or through the Internet."

So far, his company received an investment of 300 million yuan which will be disbursed over three years.

Mao has big dreams for his project, which perhaps began when he was young.

In his childhood, Mao loved watching movies and fantasizing about himself taking on certain roles.

His work now is helping him realize this dream. Indeed, even the company name, "Majoy" comes from the words "magic" and "enjoy."

As a grown-up, Mao fortunately now knows the ins and outs of investment success.

Mao highlighted that trial runs, site replication and launches of commercial activities can make profits in the initial stage. When investors see money coming in during the initial stage of a new project, they can estimate the profitability of the project, and if results are good, they can gain confidence.

Many entrepreneurs want to expand within the shortest possible time to maximize returns, but Mao believes that without first building your brand, doing so would be like building a skyscraper without a firm foundation. Mao said that he needs a year or two to stabilize the project.

"Then, as time goes on, it would be very easy for Majoy to sell toys, and create videos and other reality shows," Mao said. Mao estimated that the company will see returns of 1.5 billion yuan within five years.

Contacts also have helped Mao make Majoy a success.

Mao was a long-time acquaintance of Lin Qi, the boss of Beijing Aihang Industrial Co. Ltd. A few years ago, while working with Lin on a project at the Beijing Municipal Science and Technology Commission. Mao left a good impression on Lin. Mao took the opportunity to introduce to Lin his idea for Majoy, which engaged Lin's interest.

Mao introduced Majoy in this way: First, it's a project with multiple profit areas, from the on-site games to mobile interactivity and other peripherals. The projects are also highly scalable. Investors will have full control of how they want to steer the project as they go along.

Aihang's investment was not disbursed at once. The company first disbursed 10 million yuan to begin its cooperation with Mao's company. After a period of cooperation, and after the approval of Aihang's management board, Mao eventually acquired his 300 million yuan investment.

Mao also emphasized that for any entrepreneur to succeed, he must first master core technology. "Once you have the technology in hand, the opportunities will be right ahead of you, and the technology itself can be sold for a high value," Mao said. Seeing how many Chinese companies have reached a bottleneck because they focused purely on operations or content, Mao has decided that Majoy would be a technology-led company.

In fact, Majoy was Mao's second startup attempt.

Mao's first attempt was at running a PR company. Eventually the company closed down because he simply didn't have the experience. Nevertheless, Mao believes that this failure gave him an excellent foundation to manage Majoy.

"There is no shortcut," Mao said. "You first have to gain experience, and all that will come in handy in the future."

Indeed, it is so. Investors not only look at the project itself, but also the capabilities of the entrepreneur-whether he is able to lead a team to success and to create profit. Investors will only make the decision after making a careful consideration of the management skills and operational capabilities of the entrepreneur. Hence, starting up a company is not just about creativity. The entrepreneur must have experience in fundraising, management and operations.

While Mao's project consists of a very new idea, he believes that his operational mode is a very traditional one: Developing the project, enlarging the circle of strategic partners, creating profit channels and extending promotion for brand-building purposes. Mao hopes to do each step well before moving on to the next one. (Xinhua Finance)

DISCLAIMER: The information contained herein is based on sources we believe to be reliable, is provided for informational purposes only, and no representation is made that is accurate or complete. This briefing should not be construed as legal, tax, investment, financial or other advice, and is not a recommendation, offer or solicitation to buy or sell any securities whatsoever.  

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