I’m Djoann Fal, CEO of GetLinks, a Series A, Silicon Valley and Alibaba invested startup (500 Startups Mountain View, Batch 15).
I am writing this from Hong Kong, but I was in Shenzhen yesterday, attending government-held event to promote China and France technology collaborations as #startupnations. And I can tell you that I freaked out seeing how China is taking the edge in innovation, how Asian talents are smart, hard workers and creatives. Stay tuned.
Silicon Valley is traveling back in time
Back in the 90s, large tech giants like Microsoft would ruthlessly dominate markets by “embracing, extending, and extinguishing” new competitors. Microsoft would slowly release new features built on top of open-source or free frameworks until Microsoft-owned software became industry standard. The company would then cut out competitors from using their patented add-ons.
Excel originally launched to take out IBM’s Lotus 1–2–3, one of the most successful spreadsheet applications of the time. Microsoft slowly released new proprietary features — a word processor (Word), a presentation tool (PowerPoint), and powerful macro tools. Lotus was slowly edged out of the market until it shut down in 2002.
Google, Facebook, and Amazon continue to make it difficult for upstarts to compete. When Snap turned down Facebook’s $3B acquisition offer, Instagram shamelessly copied Snapchat Stories. When Twitter acquired and integrated Periscope, it all but killed live-streaming app Meerkat.
Facebook, Alphabet, Amazon, Apple, and Microsoft spent $31B scooping up companies in 2017. The flood of acquisition activity has probably changed incentives for startups — instead of working on the sorts of groundbreaking ideas that made the Bay Area the center of the tech world, they’re instead building towards being acquired by the Big 5.
Chinese startups aren’t having the same problem…
Chinese billion-dollar unicorns outnumber their American counterparts 162 to 132, and Chinese decacorns ($10B+ in valuation) outnumber their American counterparts 11 to 6. Chinese startups accounted for half of 2017’s ten largest fundraising rounds, with Uber competitor Didi’s massive $5.5B round on top. The average Series A startup in China last year raised $32.8M, more than 3x the number stateside.
This is no mistake. American tech companies struggle to compete with China’s protectionist business policies. Founders in China develop homegrown copycats of every major Silicon Valley success: Baidu instead of Google, Sina Weibo instead of Twitter, Didi instead of Uber.
(Interesting: India faces the opposite problem. American tech firms are given free reign, which has limited local innovation.)
… and they’re not just copying US tech companies either.
There are a number of drivers behind their success, according to Lambda School CEO Austen Allred:
- Work ethic. Their engineers work “9–9–6”: 9AM to 9PM, 6 days a week. The mere mention of this in SF would have people running for the exit.
- State support. The Chinese government is often the first investor and biggest proponent of new firms and startups.
- Greater supply of STEM workers. China has 4x the population as the US, but 10x the tech employees.
- Local factories and deep manufacturing expertise. As US startups steer away from hardware, Chinese startups have easy access to the biggest manufacturers in the world.
… It’s not only Chinese startups, it’s the whole Asia that has became a crazy massive startup ecosystem.
You probably never heard about it before. Look at this.
These are annual startup community events and conferences happening in Bangkok, Hong Kong and Singapore. These events hold between 10,000 and 30,000 attendees for 3 days.
Asians have been known to be more social than any parts of the world. And surprisingly when we start about community, after three years traveling to all these events I can tell you that there is no place on earth people can be as kind, as welcoming and sometime though provoking as the people you will meet in the new Asian Silicon Valley.
Only time will tell how many US tech startups cede to their Asian counterparts. One thing is clear: The Asian tech scene is hell-bent on success. Silicon Valley people could learn a few things by looking east, or maybe travel there check this out, or maybe think to find a tech job there.
Reposted and edited from https://angel.co/.
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