1 – Pick a segment within a fast-growing market sector that still has an unmet need your company can fulfill with a differentiated product or service. Brand leaders are already developing in many Asian markets, which means opportunities are becoming far more limited, notes Ray Zhang of eHi Auto Services, who returned to Shanghai from the U.S. to establish his car rental service just as China’s automotive service market was beginning to boom. His service offers experienced drivers rental options ranging from passenger cars to limousines. eHi leads the car rental market in China, where most competitors are state-owned enterprises lacking his startup’s marketing prowess.
2 – Find a mentor who understands your business, the local culture and can also help you cement connections, stretch financial resources and expand into new territory. Dominic Penaloza, the founder of the Chinese LinkedIn (Ushi), regularly seeks advice from Bill Liao, the co-founder of Xing.com, a German business social networking service. Penaloza credits Liao for advising him on how to jump-start Ushi as an invite-only service. “We meet on Skype every two weeks,” says Penaloza. Ushi has climbed to 600,000 members and is China’s market leader in this burgeoning category.
3 – Scale your business by tapping professional management from outside the home market, who can bring in sophisticated financial and management tactics that are still lacking in many of Asia’s emerging markets. Le Hong Minh, founder of VNG, called on Bryan Pelz, a startup maven originally from Los Angeles, to coach him on high-level strategic issues, freeing Minh to focus on day-to-day management. “Byran is the big-picture person,” admits Minh, who still finds time to play video games for an hour on a daily basis. VNG also gained Tencent’s former M&A director Johnny Shen as a CFO and executive vice president when the Chinese instant-messaging service became a minority investor in the startup. Today, VNG is by far the dominant gaming and social networking business in Vietnam, with no comparable contender in sight.
4 – Be sure to retain a good corporate lawyer, who can help you to navigate intellectual property-protection issues. These crop up alarmingly often in China, where copying of products and services is still far too common, with occurrences happening regularly among startups. Cheng Binghao, founder of a Chinese Facebook-like site Kaixin001, sued social networking rival Renren when that competitor registered the URL for Kaixin, cloned the original site and branded it Kaixin. Confused users logged onto the Renren-owned site and Renren soon had $80 million in revenues compared to $30 million for the original Kaixin. “It’s not nice,” says Cheng about his competitor’s actions. While Cheng lost the market leadership, he won in court with a ruling that forced Renren to cease use of the name and pay damages of $60,000.
5 – Keep an eye on your cash-burn rate, ditching products that don’t work out quickly and focusing on the money makers. When inMobi founder Naveen Tewari found there wasn’t much demand for his mobile search service based on instant messaging, it took him only a few months to switch gears. “We didn’t see how we could add a lot of value,” he explains. “We didn’t have a lot of IP (intellectual property), and it didn’t look like a long-term, sustainable play.” Tewari directed his founding team to work on a new idea: a mobile advertising network. Today, inMobi is the world’s second-largest mobile ad network, following only Google-owned AdMop in this $2.7 billion market.
6 – Conquer markets within grasp before trying out new opportunities. With so many sectors growing so quickly, keeping that focus and building a solid base is harder than it sounds, notes Redbaby’s Xu Peixin, who started his business with offline operations before jumping into ecommerce. He built solid logistics and distribution channels to handle sales that were primarily from printed catalogs. Having that established back office operation gave Redbaby a head start when it moved into online sales a few years later. Today, about 40 percent of Redbaby’s $250 million in sales come from the Internet, and the startup is China’s biggest retailer for baby goods. “You really need two strengths—the Internet and the back-office operations instead of pure Internet,” he says.
7 – Keep human capital by rewarding fast learners with pay tied to results and new professional challenges. Training and retaining staff in China, India and beyond in Western business practices can be a challenge, particularly when a company has international ambitions. At inMobi, founder Tewari granted stock options to the entire team as an enticement to keep everyone united, spirited and moving forward. He also challenged his staff to think global, act global from day one and hires people with the mindset to understand the mission. “We had to convince the whole team to think global and think big,” says Tewari. “We want to encourage them to think we will make it happen. Most companies that are emerging don’t do that.”