GGV Capital Managing Partner Hans Tung talks about lessons learned from China that can benefit global entrepreneurs. Initially presented at Y Combinator in October 2017
What Are The Drone Anti-jamming Systems Technology?
Hans Y Combinator Presentation on Lessons from China for Global Entrepreneurs
1. Lessons from China
for Global Entrepreneurs
Hans Tung
Managing Partner, GGV Capital
October 2017
2. q With investments in China and the U.S., we have
gained a deep understanding of both markets with
access to global resources
q Managing eight funds, $3.8 billion in total
q Over 240 portfolios, invested in 33 companies with
over $1 billion market cap and 29 public companies
The GGV Advantage: One Team in Two Markets with Global Perspective
2
3. Background on GGV, Hans Tung and 12 Unicorns
Experiences
E-Brands
E-Commerce
* Flipkart and Snapdeal are personal investments.
GGV currently does not have any portfolio in India.3
4. Data Replacing Oil and Credit as Most Valuable Commodities
And the Rise of Internet in China
Highlighted: Tech Companies; Red Text: Chinese companies;
Source: CapitalIQ. Capitalizations are in millions. Data as of 8/18/2007 and 8/18/2017.4
6. China Surpassed the US as World’s no.1 Market on iOS App Stores
Source: App Annie6
7. 400 million people moved to cities in one generation
≈ creating a new NYC every year, for 40 years
Hangzhou
Home to Alibaba
Net talent inflow No. 1 in China
Many Silicon Valley returnees
Shanghai
$400 billion GDP
(≈GDP of Michigan/Washington state)
24 million people
(≈population of Texas)
All in one generation (40 years)
1997
2017
1997
2017
7
8. China is No. 1 and No. 2 in Internet Users and Online Consumption
World’s Top 10 Countries by no. of Internet Users World’s Top 10 Countries by Online Consumption
(in $billions)
Source: CNNIC; Internet Live Stats; BCG Analysis8
710M
460M
290M
140M
120M
100M
90M
70M
60M
60M
9. China Accounts for ~40% of Valuation of World’s Largest Internet-
related Public Companies and Unicorns
*Naspers has a market cap of $95 billion (Naspers owns 1/3 of Tencent); Softbank has a market cap of $90 billion (Softbank owned 32% of Alibaba
in 2016)
Source: CrunchBase; BCG Analysis; Yahoo Finance
Note: Sample includes 63 Chinese companies and 112 American companies with valuations over $1 billion
World’s 10 Largest Internet Companies by Market Cap
(in $billions)
Distribution of
Unicorns by Number
211 in Total
China is Home to Five of the World’s 10 Largest
Public Internet Companies (as of 2017)
Distribution of Unicorns
by Valuation
Total Valuation: $796 Bn
China is Currently Home to a Third of the World’s
Unicorns; Their Valuations are 41% of All Unicorns
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10. No. of Millennials + Gen Z Users Online: 107M in US vs 390M in China
Source: China’s National Census Bureau, Otcom, BCG Analysis
Age Distribution of Internet Users in China
(2016)
Age Distribution of Internet Users in the US
(2016)
10
37%
54%
Total no. of Internet users: 290 million Total no. of Internet users: 710 million
11. Chinese Internet Users Congregate Around Fewer, More Complex “Super Apps”
Source: Google’s Global Mobile Research, China’s National Census Bureau, Localytics, eMarketer, BCG Analysis
Average No. of Apps Installed per Person
(2015)
% of Time Users Spent on Apps
(2015)
Only 15% of apps in
China are used more
than 10x
11
12. Takeaways
1) High >> low frequency, be a Portal/Entry Point
(WeChat Pay vs. Apple Pay)
2) Multiple functionalities > Focus, be a “Super App” Quickly
(WeChat vs. WhatsApp)
3) Verticalized start-ups pick a Super App ecosystem
(Tencent, Alibaba, Baidu, Xiaomi…etc.) to join
12
14. Aspiring “Super App”s in CN Incentivized to Raise $ & Freemium Model to Blitzscale
Source: BCG Analysis14
# of Years for App Penetration to Reach 50% Market Share in US vs China
15. Uber in China: A Success?
• Uber spent over $2Bn in China 7/2014-8/2016
• After <24 months, >30% of total Uber rides a day worldwide are from China alone
• Uber obtained 17.7% economic interest in Didi + Uber China in 8/2016 = ~$10B now?
3 Months
6 Months
3 Months
6 Months
3 Months
6 Months
9 Months
3 Months
6 Months
9 Months
3 Months
6 Months
9 Months
9/2015
Uber’s Exponential Growth in China
15
1st (unofficial) meeting between
Uber and Didi in Spring 2013
Question: Maybe Uber could have
invested $10M for 15% economic
interest in 2013?
16. China’s Urbanization Model: Driver of Transportation Revolution?
Tokyo (8M rides/day)
Beijing 2005 Beijing 2015 (9M rides/day)
New York (5.7M rides/day)
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17. High Speed Rail (120-180 mph) = Backbone of Economic Growth &
Ecommerce Boom
China
1978 Mileage:
51,800 km (32,000 miles)
Current mileage:
124,000 km (77,000 miles)
US
1860 (before Civil War) mileage:
48,300 km (30,000 miles)
Now:
225,000 km (140,000 miles)
Japan
1950 mileage:
19,800 km (12,300 miles)
Current mileage:
27,300 km (17,000 miles)
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18. 18
Hub & Spoke: High Speed Rail + Subways Rides & Bike Sharing
19. 19
Alibaba’s Sales on 2016 “Singles Day” (11.11), China’s Black Friday:
$18 Bn > Black Friday + Cyber Monday
2005: Yahoo invested 1Bn dollars + Yahoo China and owned 40%
2015: after IPO, Yahoo's 20per stake is worth 40Bn dollars > Yahoo's market cap
$3.34B $3.45B $17.8B
Black Friday 2016 (US) Cyber Monday 2016 (US) 11/11 Singles Day 2016
(China)
Total Sales in a Single Shopping Event ($Billions)
(Online + offline)
21. How Will Your Business Go Global?
Case Study: Airbnb
21
"Chinese tourists represent the fastest-
growing user group on Airbnb"
(Bloomberg, June 2015)
“Airbnb will quadruple its China tech team
in Beijing.” (Bloomberg, August 2017)
"Chinese millennials are driving this growth,
given their general desire for different
experiences, rather than the typical package
tour. They want to be different — they are
always looking for unique experiences."
(Bella Ling, Head of Communications in
Airbnb China, July 2016)
Airbnb’s platform within WeChat
Source: Sheffield Wang, 2017
23. The Big Three: “BAT” vs. “FANG”
Market Cap 2016 Revenue
B $82 billion $10 billion
A $449 billion $23 billion ($68 billion in GMV)
T $407 billion $19.5 billion
F $497 billion $28 billion
A $476 billion $135 billion
N $79 billion $8 billion
G $646 billion $90 billion
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25. Valuation Gap Between Leading Chinese and US Internet Players Narrowing
2005 vs 2017
25
26. China’s “40 Under 40” in Internet
ZHANG Yiming
Founder of Toutiao
34
Jean LIU and CHENG Wei
President and CEO of Didi
39 and 34
WANG Xing
CEO of Meituan
38
HU Weiwei
Founder of Mobike
35
Frank WANG
Founder of DJI
37
SU Hua
Founder of Kuaishou
34
WU Xinhong
Founder of Meitu
36
Louis YANG and Alex ZHU
Co-Founders of Musical.ly
36 and 39
DAI Wei
Founder of ofo
26
26
Miranda QU and Charlwin MAO
Co-founders of Xiaohongshu (Red)
33
Cindy MI
Founder of VIPKid
34
28. UberBlack was great but niche…until UberX.
What is your UberX?
Source: The Numbers Behind Uber's Exploding Driver Force, Forbes Article by Brian Solomon28
29. The Fastest-Growing Brands: Mass Market & Fast Fashion
(Not Luxury Goods)
Brand Price Range
$60-7000
$4400
$130-1460
$ 30-7300
$17-174
$5-322
Founding Year
1837
1854
1913
1921
1963
1969
1975
1980
1981 $45-300
$ 8-145
$1-90
Market Cap
$38 billion
$76 billion
$8.5 billion
$14 billion
$9 billion
$109 billion
$1.2 billion
$37 billion
$37 billion
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30. Rise of the Rest: a $1M/Month Zip Code for Wish
30
32. Reaching Global Mass Market Consumers is the Secret to Becoming a Unicorn
Serve the 99 Percent (e.g. America’s Heartland)
Experience is the Product, Curation is Key
Millennials without Borders
Go Global
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