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Business> Finance
UPDATED: September 30, 2007 NO.41 OCT.11, 2007
Dreaming One Dream
3G.CN founders Deng Yuqiang and Zhang Xiangdong found a way to turn their cooperation into a story of success

One day in July of 2006, employees of 3G.CN were enjoying their lunch break just like any other day. At the same time, each was using a mobile phone to read the regular and entertainment news, listen to music online, view streaming media, read electronic books and play online games with friends. This was their way to relax. Michel, a French expert in telecom research and development, surveyed the office quietly, with wide-eyed bewilderment.

"Michel was astonished, because even in Europe, where the third-generation (3G) network is well established, the services available are only those similar to what he saw," said Zhang Xiangdong, one of the founders of 3G.CN. "But in our case we are able to do it under 2G, or shall we say, 2.5G."

In 2004, two once classmates of Peking University, 27-year-old Zhang and 28-year-old Deng Yuqiang, started their business in Guangzhou--3G.CN, the first free WAP website in China.

China's 3G network will become reality in 2007. China Mobile's control on service providers has intensified. Even Kong.net, the leader of value-added services for mobile phones, has felt the impact. On the other hand, 3G.CN, which advocates free services, has the makings of a very bright future.

Starting up

"I have a feeling that our website will go public around 2009," Deng told his partner Zhang in Guangzhou in 2004. "In 2005 or 2006 we will get some venture capital, and within 10 months after the establishment, we'll have a million users. We'll build a 3G website."

"I was surprised why he chose the flashback narration while envisioning the future of our business," said Zhang. In 2004, the 3G network was still part of the long-term plan in China and no one had yet dreamed of a 3G portal.

"In those days, there were only two mobile phone websites--China Mobile's Monternet and China Unicom's My Uni," said Deng in describing his original thoughts. "I thought about giving users choices similar to the traditional Internet. Freedom and sharing is the future trend of the wireless web."

After setting their goal, Deng and Zhang quit their jobs and devoted themselves entirely to the creation of their business.

Unlike what others might think, they didn't have a lot of difficulties at the beginning because their biggest expense then was labor.

"I stayed late every night to write the program, because the users would wait for my release at night as we always announced our new services in advance," recalled Deng. "I usually worked late and released the new service around midnight. By around two or three in the morning, many people would be using the new service."

The number of 3G.CN's users grew rapidly, without much advertising. "The number of users continued to grow, from a few hundred new users a day to two or three thousand a day," said Deng. "Basically, the number of users doubled every month." He believed this indicated mobile Internet users had a big demand for entertainment and were not satisfied at the time. In the absence of other free websites, their site in effect brought vigor to the entire WAP industry through 2004 and 2005.

After approximately six months, 3G.CN had to add five or six servers every month because the number of users was increasing at a rate of 200,000 to 300,000 per month. "At that time, our concern was not whether we could survive, but that we didn't have the money to handle the 500,000 or 600,000 users the following month," said Zhang. "This was the most difficult time."

Financing became the inevitable option.

In 2005, when 3G.CN was at a bottleneck prior to expansion, IDG Technology Venture Investment (IDGVC Partners) found them.

IDGVC Partners' injection of $2 million in capital allowed 3G.CN to grow rapidly. In 2006, 3G.CN obtained another round of financing, totaling more than $10 million, from a group of investors led by JAFCO ASIA. Other investors included WI Harper Group and IDGVC Partners, who had already invested in the first round.

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