Note: earlier this year, Giza invested in Koolanoo Group, a Web startup which creates vertical social networks. The company maintains two sites: Koolanoo.com – the first social network for young Jewish professionals; and 360Quan – a Chinese-language site which offers Chinese Internet users a wide range of social and entertainment-related features (e.g. blogging, video sharing, music downloads, and many more).
In the few months since it launched, 360Quan has become one of the fastest-growing Internet properties in China. I asked O.D. Kobo, co-founder, Chairman and CEO of Koolanoo, to write his impressions of the Chinese Internet scene. O.D. grew up in Asia, and currently oversees the company’s operations from its Beijing office.
I am completely fascinated by China’s Internet scene.
The melding of the economic magnitude of China and the powerhouse that is the Internet, what a combination! I greatly believe in the Internet industry in China and how important it is to be there.
Einstein said, “Logic will get you from A to B, but imagination will get you everywhere”. Well, if he were alive today, he would re-phrase the ending with, “imagination will take you to China”.
China has approximately 150 million surfers online and by 2009 it will be the largest online community in the world. But here is the rub: CNNIC reports 142 million online as of January 2007, Morgan Stanley reported 152 million in their assessment, and Deutsche Bank analysts have said 160 million.
Why the confusion? Internet cafes and multiple IP’s. There are over 135,000 Internet cafes in China, and as a result around 40% of the traffic comes from multiple users using a single reported IP (i.e., 1 Internet cafe has multiple users but one IP for all of them). During public holidays when Internet cafes are closed the online traffic drops by 35%. Even reputable Web statistical companies such as ComScore do not have good enough monitoring mechanisms for China yet. However, with a 26% annual computer growth rate compared to USA’s 2.2%, things will definitely change in the coming years. It is very difficult to assess the traffic and the usage of users from foreign companies with outposts in China, I prefer the local companies and my experience comes from “being local”.
The Internet will change with the awakening of China’s Internet industry. Online advertising will never be the same. Traffic will be referred to differently when discussing China. It is the last online frontier and the greatest place in the world to run an Internet start-up.
The industry in China is still very much at its infancy though. Think 1996 all over again, but with bigger numbers. There are a few giants like QQ, Baidu, Sohu, Sina, and 163, but even they have not reached their maturity yet. Netease’s 163, a leader in Web mail, only adapted a full blown marketing team this year. Baidu is constantly expanding. Sohu are doing some really interesting things with news broadcasting. And QQ, wow QQ, I love QQ, my favorite site on the Web. It’s China’s largest messaging service, and boy do they know how to operate a website.
I have had meetings with many of the senior level executives of the large Internet companies, some I call close friends. I am a big fan of the websites in China and the way they conduct business conduct. China operates Internet the way it should be run: strong, passionate and aggressive. Any other method is simply incorrect.
The users/surfers are the most fun. In the West, Internet users are spoiled with the vast variety of features and applications, everyone fighting over everything like advertising costs to bring traffic and sell space.
In China the issue is different. Sustainability is key -- staying in the game, because as the users grow so will you. If you operate a website in China and do not have heavy traffic within one year, you might as well go home. As most of the users online are between the ages of 18-25 (82%) most of the online activities entertainment-related as opposed to the West, which is information-related (Google, Wikipedia).
Viral marketing is still very fresh here, and the big sites do not make it easy for new ones to enter. But one of the biggest motivations for working so hard is to make a good product that you would want to use yourself. We thought we could contribute to the market. We at Koolanoo Group love great products, at our core we’re just a bunch of Internet junkies who want to create the best Social Network and offer it to our users.
360Quan recently became the official partner and sole Internet broadcaster of FTV (Fashion TV) for China. We believe it to be a landmark deal and a cool entertainment feature for our platform. This is a big thing, since cable TV is scarce in China. We are also implementing the mobile mapping feature this coming month. We are always looking to improve and add to our user experience. We’re a product company. We love great products, that’s what we hope to do.
As for the industry, well, it speaks for itself doesn’t it? China Internet, the sexiest two words in tech today.
I don't write enough about Koolanoo Group, which has emerged as our flagship Internet company. But as they say around here, when there's the occasion for a celebration, go for it.
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