Secrets of the lean startup machine

Updated: 2013-04-19 08:45

By He Feng (China Daily)

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Secrets of the lean startup machine

China can catch up with Silicon Valley through content creation

Last month Y Combinator, the legendary startup accelerator program run by the Silicon Valley investor and online essayist Paul Graham, held a demonstration day for its latest batch of startups. About 50 young companies showcased their work, ranging from an easy-to-use mobile website builder to big-data analytics for e-commerce.

Y Combinator, among whose portfolio are success stories such as Dropbox and Airbnb, is a prime example of a Silicon Valley startup culture that loosely falls under the name "lean startup movement". As the name suggests, its core thinking is low-budget operation and rapid iteration, the goal being to bring a young company quickly to product-market fit, which is lean startup lingo for "making something people want".

Silicon Valley has long enjoyed a strong lead over the rest of the world in technological innovation, particularly for Internet startups. Many countries aspire to create their own Silicon Valley, yet few have risen to become worthy rivals, and the valley still leads in introducing new technologies that revolutionize how we learn, work and socialize.

China seems to have much going for it to challenge the US dominance in Internet technology. It has no shortage of capable engineers and an enormous market to boot, two essential ingredients for a vibrant startup scene. Yet China falls short of producing companies with the kind of global clout enjoyed by Google or Amazon. One possible reason is that Chinese entrepreneurs have not caught on to startup cultures such as the lean startup movement, which seems to be what it takes to produce truly innovations that create new markets and value networks, instead of piecemeal improvements.

Of course, new Internet services are being created in China all the time, but they tend to be of a different sort, and the venture-capital startup ecosystem operates rather differently. The big stories in recent years in China have been weibo and weixin. The former is a Twitter-like service; the latter, a voice chat mobile application. Both services came out of publicly listed technology giants.

Unlike in Silicon Valley where nimble start-ups outmaneuver large companies all the time, in China the dozen or so established companies are able to leverage financial strengths and existing user bases to muscle out their small competitors.

As a latecomer on the Internet scene, China has been playing catch-up to Silicon Valley, and this has left a mark on its startup culture. For many years, C2C (copy-to-China) was the name of the game. Most successful Chinese Internet companies have been clones of successful models from elsewhere.

In the C2C game, what is important is not lean operation and swiftness in shifting course, something that the lean startup movement advocates and in which the tiny start-ups have an advantage over large companies. In a C2C move, the technology and business model are already established. What is needed is well-financed large-scale rollout and intense marketing. It is a game for the established players.

If the lean start-up movement is yet to catch up in the tech sector in China, it may have found an unlikely following in content creation.

The author has friends who are popular bloggers in China's social media. In fact, calling them bloggers is misleading. Although many started by writing blogs, they have since fine-tuned the craft of figuring out what their audiences want, and have branched out to producing popular, and often profitable, online lessons, books and podcasts.

Even though they do not often consider their operations start-ups, much less lean ones, these content creators put to use many of the principles from the lean startup movement. They leverage social media to test ideas, develop those that seem promising and, through a series of rapid iteration, often produce something that achieves product-market fit.

Ideas from the lean start-up movement have turned out to be neatly applicable in both tech innovation and content creation, creating an interesting parallel. In particular, content creators are increasingly beginning to think of themselves as entrepreneurs. They have been traditionally known authors, teachers and musicians, often having to rely on established distribution channels to get their works out.

With the help of technology, they are increasingly running their own show, reaching out to a global audience at next to no cost. It was not that long ago when software engineer meant only someone working at IBM rather than a startup founder. Technology lowered the cost (and risk) of doing start-ups, and gave birth to the lean start-up movement. What happened to the engineers and the tech sector is happening now to the musicians, authors, teachers and filmmakers.

Of all the content that people are creating, one of the most visible and international is films. It has been a good couple of years for China's film industry. The streak of hits began with the 2011 romantic-comedy Love is Not Blind, an Internet novelette turned into a low-budget runaway hit that is arguably a shining example of the lean startup success. Since then a series of domestically produced hits have edged out Hollywood's grip on the Chinese film exhibition market, culminating in the most recent record breaker Beijing Meets Seattle.

When will Chinese films expand their audience globally, or even take a noticeable share of the US box office, thus beating Hollywood in its own backyard? Many will point to language and cultural barriers, but Chinese filmmakers, and by extension content creators, might have as good a chance as Chinese technologists.

When it comes to content, regional and cultural differences seem to matter little, or even play to one's strength. Take Sweden, a country hardly noted for its crime rate, has unexpectedly risen to be an leading exporter of crime thrillers, championed by hit series coming from authors such as Stieg Larsson (of The Girl With the Dragon Tattoo fame) and Henning Mankell.

Or take Rovio, the game studio that developed Angry Birds and a company that is as much a content creator as a technology startup. Its Finnish origins hardly hindered its games from reaching a global market.

One of the most notable cultural phenomena to sweep across the globe, Gangnam Style, came out of South Korea. It is an encouraging sign that, while Silicon Valley has predictably been coming up with innovative tech start-ups, there is no telling where the next cultural hit will come from.

Unlike in technology and Silicon Valley, no comparable monopoly exists for global content innovation. In contrast to the often winner-takes-all tech sector, content creation is marked by regional differences, rapid-shifting tastes and niche segments, providing fresh opportunities to resource-limited entrepreneurs to practice their lean content creation skills. Perhaps it will not be long before we see Chinese creators delivering innovative content to an appreciative global audience.

The author is an independent commentator based in Beijing. He can be reached at The views do not necessarily reflect those of China Daily.

(China Daily 04/19/2013 page9)