Serial start-up man Richard Robinson: why China's the best place to be an entrepreneur

An entrepreneur in China: serial entrepreneur Richard Robinson reckons China's the best place to be an entrepreneur. Richard has been involved in numerous e-commerce startups in China, including Ren Ren, the Chinese take on Facebook. Boston-Irish Richard's newest venture, Youlu.com, is working to reinvent the mobile phone address book, www.youlu.com. Robinson is also very bullish on selling virtual (online) items as a business model.

Why are you so bullish on selling virtual items as a business model?

I would contend that it's not only the best business model which has ever existed in terms of margin, it's also the best business model that may ever exist. Usually they are sold around communities and games and there are three general categories that are usually lumped into - decorative, functional and behavioral. The decorative category would include paying to gussy up an avatar or customize a personal space. Functional would include purchasing say a better tractor or sword or even extra strength for a character. And lastly behavioral can include sending a flirty gift like roses or a birthday cake or even a virtual beer to a friend who's just gotten a raise.

Did Kooky Panda have a good year in 2010?

Kooky Panda did a pivot in their business model this year from a developer of connected applications to a developer of browser-based mobile games so while it was a good year, it was a transitional one.

You spoke at the big China entrepreneurs conference lately: Is there an increasing flow of foreign entrepreneurs coming to China to try their luck?

I believe so. I don't have data, but have personally come across a significantly greater number of both seasoned entrepreneurs coming to China as well as recent grads. Since it's so much cheaper to become 'Instant Noodle Profitable' (cash flow breakeven with a little extra to keep the startups knee-deep in noodles) it seems that there are more grads now becoming entrepreneurs or joining startups. I mean international grads, but local grads are certainly jumping into the entrepreneurial fray as well.

You've said the cost of start-up has been drastically reduced - is that resulting in a far greater rate of start ups in China and in USA?

Yes and it's happening globally. I'm a mentor at a group called www.Chinaccelerator.com and they fund select startups for three months with very little money but they get to demo and hopefully on through to being funded.

What's most exciting about the explosion of smartphones for your ventures?

In the west there are too many other options for users. They may have multiple computers at home, maybe an ipad, high speed connectivity, plus a smart phone. For them the smartphone is an inferior interactive experience. For developing markets, which is where we focus, a smartphone is a user's window to the world. The smart phone has an amazing democratizing effect and my mobile ventures leverage the smartphone channel heavily to get in front of potential users.

How has the VC scene evolved for your industry? is it good for the sector that there's so much VC attention on China firms?

In the past decade the VC scene has transformed dramatically here. Right now series A valuations here in the Chinese market for tech startups are the highest in the world -but admittedly the companies raising them are usually much further along than western counterparts in terms of users and revenues. What's also driving that is the very, very robust IPO [initial public offering] market. Chinese tech startups are partying like it's 1999 all over again. And they're not just listing in China or Hong Kong, but mainly going to NASDAQ so that path to liquidity is attracting more money and driving up valuations even more. What's lacking are a deep bench of seasoned entrepreneurs, but there are many world-class first time startup founders and CEO's out there as well. There's also a gap in the market in terms of both early stage say 600,000RMB to 6,000,0000RMB and also non-listing liquidity events as the M&A market is quite weak here as the bigger pla yers mainly want to copy or compete instead of acquire, but I'm confident both of those areas will mature quickly.

You see China as a base to use local tech skills to develop products for the world - is that common in your sector?

Not as common as it soon will be. Chinese tech companies are poised for enormous regional and international growth. Partially because there are so many listed entities collectively sitting on a war chest of tens of billions of dollars for acquisitions and also because the Chinese market will start to reach maturity in a few years. When I got here in 1996 there were maybe 50,000 internet users who were mainly academics and governmental workers and zero mobile phone subscribers. There are now over 800 million mobile phone subscribers and nearly a half billion internet users. Alibaba's local online payment company, Alipay, just today passed PayPal in terms of both users and revenues with an enormous growing international user based. Two of the top five internet companies in the world in terms of market capitalization are in China -Tencent and Baidu... for these larger companies to move the needle and for smaller companies to cut through the clutt er and enjoy higher ARPU [Average Revenue Per User] they will inevitably and increasingly develop more for markets outside the borders of China.

Mark Godfrey