The Indian ecommerce cauldron is simmering. On one hand, there’s market consolidation — Flipkart, the largest etailer in the country, acquired Myntra, the leading fashion portal, a few weeks ago, giving both additional scale to fight competitors. On the other hand, the new government is likely to open the gates for foreign direct investment (FDI) in multi-brand retail — a move that Amazon, the big daddy of ecommerce, has been eagerly awaiting.

Currently, FDI is allowed only in the B2B (business to business) segment in India, which is why Amazon India opted for the marketplace model, where an online retailer provides its platform to other merchants sell products. In order to cover that ground, Flipkart rolled out a marketplace a month before Amazon.in launched here. However, if new regulations allow Amazon to maintain its own inventory in India, bulking up scale will cease to be a differentiator. Besides, other global giants like Walmart and eBay are getting active in this space — Walmart announced its Indian online marketplace last week and eBay upped its stake in SnapDeal three months ago.

Flipkart realizes it will need more than scale to stay ahead. That’s why six months ago the company began working on what it calls ‘Intelligence @ Scale’. The idea is to leverage big data to go beyond scale. Krishna Raghavan, head of engineering for the seller platform at Flipkart, tells Tech in Asia that Flipkart is betting on this to be the game changer.

18 million customers, 100,000 daily transactions

Currently, Flipkart has over 18 million customers in India and processes more than 100,000 transactions a day. That’s a big data gold mine. The company started investing heavily into technology to mine this data and set up a team of data scientists for it about six months ago. Raghavan, who heads that engineering team, explains that they built a new customer insight engine (CIE) and are now fine-tuning it. At Flipkart’s annual hack day a couple of months back, CEO and co-founder Sachin Bansal, who is an ex-Amazonian, said that their focus would shift from scale to intelligence. The details are emerging now.

Raghavan let us into the nitty-gritty of the Flipkart strategy. According to him, the data team is looking for solutions to three key problems:

Problem 1. How do you sell and merchandise your product?

The customer data comes in handy here as this problem essentially requires the etailer to track the browsing behaviour of its 18 million customers. Their purchase history will give you clues on what are the best suggestions the site could make while shoppers are browsing. Take for instance a customer who just bought a DSLR camera after scouring through the web for the best buy. Now, it wouldn’t be smart to throw camera ads at the customer, though her browsing history shows her interest in the category. This requires intelligence.

It is also important to have intelligent pricing to convert a browser into a customer.

Product relationships are another insight the company is interested in. If customers who buy white shirts tend to buy brown trousers with them, the apparel seller could do well to bundle the two products together. Flipkart’s data engines would mine such insights and pass them on to the sellers registered on their platform.

Problem 2: Who is the best seller for the customer?

Flipkart is investing in seller analytics and recommendations too. For example, using the data mined, Flipkart can find out when demand is high in a certain region, and tell a seller to stock up in the local warehouse for faster delivery and lower transport costs. Using comparative aggregate analytics, the company can spot trends and recommend courses of action to its sellers.

Flipkart has over 3,000 sellers on board, and is currently on a drive to sign on tens of thousands more. Many of its vendors sell the same products. A customer would expect Flipkart to figure out who is the best seller for a particular product. For this, the company wants to rank sellers. To do this, they track five key aspects:

• Seller performance in terms of buyers’ experience using multiple parameters like cancellations, returns, etc.
• Customer preferences in terms of price, feedback, etc.
• Location data: The geo parameters are important for logistic reasons. For example, if a seller is located close to the customer, that will reduce the cost of order fulfillment.
• Personalization
• Machine learning: “Insights our machine learning throws up might sometimes be different from what we get as customer feedback. In that case, we need to pivot quickly,” Raghavan explains.

Problem 3: How can the platform weed out bad quality products?

This is a tough one. For most products, there are multiple sellers, most of them sourcing the product from the same manufacturer and rebranding it. To pick out the bad from the good would therefore require a multi-pronged straining mechanism. Flipkart’s answer to this is to heed customer signals like returns and feedback, track the entire journey from a customer’s browsing to order fulfilment, watch pricing analytics, and power pro-active resolution that would close the loop quickly. “We have an invite only model for on-boarding sellers to our platform. Besides, if a seller misbehaves, such as dealing in fake products, we would immediately de-list him,” Raghavan says.

With Amazon breathing down its neck, every solution that Flipkart’s data science team comes out with is expected to have a direct impact on sales. It is no secret that better personalization, intelligent pricing, and optimizing inventory are factors that can tilt the cart. Years ago, Amazon took the lead in personalization and cracked it in the global market. But India is a different ball game. According to Raghavan, the last mile delivery in an Indian city is unlike anywhere else. From route planning to optimizing the supply chain, the local dynamics are peculiar to India. Flipkart is way ahead of others in figuring this out, he says. It’s this local ‘intelligence @ scale’ that would help Flipkart keep its nose in front as its Amazonian competitor bears down on it. At least, that’s what Raghavan hopes.

(Top image: Flickr user Alvaro Ibanez)

China’s Ministry of Information and Information Technology (MIIT) intends to lay down new regulations governing Apple’s iMessage, according to Techweb.

The measures include tools to monitor and prevent spam messages, which the ministry says are prevalent on the iOS default messaging app. The report says iMessage’s vulnerabilities to spam have cost users “millions” of RMB. Up to this point, TechWeb notes iMessage has been in a “vacuum” area void of regulation.

Chinese authorities earlier this year embarked on a nationwide campaign to combat fraud, pornography, and other illicit goings-on on the internet. Just last week, Tencent cooperated with officials to wipe out millions of WeChat and QQ accounts used for activities ranging from phishing scams to prostitution.

MIIT’s announcement could also be a jab at Apple, which it says has not taken sufficient action to curb criminal activities on iMessage. Apple has been the focus of many a labor rights investigations and a target of state media smear campaigns.

(Source: Techweb; image credit: Erik Pitti via Wikipedia Commons)

An “all-female co-working space.” Upon hearing this phrase, some people might imagine a pent-up and pinked-out open office, designed to shield women from leering gazes and uninvited interactions with the opposite gender. They can’t be faulted for doing so, given the number of high-profile female harassment cases that have occurred over the past year.

But Michaela Anchan, founder of Singapore-based all-female co-working space Woolf Works, sees her space as an escape from a different “evil” – the craziness of the home.

“I’m a creative writer, and I have small kids at home, so I find writing at home really challenging,” she explains. “I wanted to find an office for myself, one that I could go to whenever I needed to get out of the house to write.”

Anchan was disappointed to find that the cost of renting an office for herself in Singapore was really steep. Digging a little deeper, she learned about co-working spaces, but quickly ran into another wall – most of the co-working spaces here in Singapore are tech-oriented.

“I was looking for something more ‘chill’ – a simple place where I could just sit back and write. I couldn’t find anywhere addressing that need locally,” she says. “At the same time, I was involved in an all-women group who were each starting their own businesses, and I loved their energy. They were always supportive of each other, and very collaborative. This led me to think, what if I created a co-working space for women-only to harness that energy?”

There are several like-minded workspaces around the world, such as the US-based Hera Hub and In Good Company. However, Anchan’s all-female co-working space will be the first of its kind in Singapore.

A Room of One’s Own

The name Woolf Works was inspired by the famous English writer, Virginia Woolf. “She wrote a book in the 1920s called A Room of One’s Own. The gist of the story was that, for a woman to create art, she needs a room of her own and some money,” Anchan explains.

I thought it was really interesting that, almost a hundred years later, it feels like nothing has changed. This is especially so when you have kids – to get some separation between the domestic sphere and the workplace, you need ‘a room of one’s own.’

It hasn’t been easy for Anchan to get her room up and running so far, especially since she has been organizing and bootstrapping operations by herself. Thankfully, The Athena Network, a community for female executives and entrepreneurs, as well as a handful of friends, have helped her on this journey.

Anchan says that in addition to providing a shared workspace, Woolf Works will hold regular events. While she hopes to build a community that’s female oriented, the club isn’t strict about its “no boys allowed” policy.

“The programming will be fairly female-focused, as I would like to spotlight prominent female business leaders and coaches,” Anchan points out. “But at the same time we’re not entirely exclusive – if a guy comes along who has a lot to offer my members, I certainly wouldn’t hesitate to ask him to speak.”

A professional and supportive atmosphere

To Anchan, design is an important part of the space’s appeal to women. “I’m working on making it very aesthetically pleasing, because I think females often respond well to that – that’s often what we look out for,” she says.

“I’m also very focused on making the space appear calm and professional, with no bright colors, because this space is supposed to be a place to escape to from the craziness of the house.”

Woolf Works is housed in a charming two-storey shophouse at Joo Chiat, and has an overall seating capacity of roughly 40 people. Apart from the communal work tables and permanent desks, there is also a small lounge area and a meeting area on the first floor. The second floor will feature a cozy attic space called the Den that can house about 10 to 12 people working comfortably together. The Den doubles as a workshop or meeting space for up to about 20 people. Renovations are still currently underway.

At the end of the day, however, Anchan believes that the main draw for prospective residents will be the energy and supportive atmosphere that emerges when women work together. She says:

Essentially, I want to create an environment where women can come knowing that there is someone there to talk to who is kind of in the same position as they are. So I hope to attract members across the whole range of strata, from those who are in the pre-startup stage, to those who are highly experienced in the field.

Anchan emphasizes that this isn’t about being ‘anti-men’. “I’m not saying anything against men. Instead, I see myself as pro-women,” she clarifies. “My experience largely lies with all-female working environments, which create a really great energy that I’m looking to harness.”

Woolf Works is now officially open for registration. Those who are interested can sign up for a tiered membership plan on their website.

(Featured image credit: Flickr user tinitoac)

CyberAgent Ventures (CAV) announced today the conclusion of their its, US$24 million fund. But entrepreneurs eager to join the ranks of CyberAgent alumni like Kabuku and Mana.bo need not worry, for CAV also announced the start of its second fund, this one topping in at approximately $50 million. Focusing on seed and early stage investments, CAV has already invested in over 200 firms in and out of Japan.

CAV is not the only Japanese corporation looking outside of Japan. SoftBank recently confirmed a US$20 million fund for the Phillipines, Gree Ventures committed US$50 million for Asian startups, and Rakuten Ventures continues to search for new potential with its US$100 million fund. It is starting to look like Japan’s venture capital money is now fair game for the rest of Asia.

We’ve reached out to CAV for comment and will update this piece when we receive a response.

UPDATE:

CAV dramatically increased the size of this second fund in order to allow for investments in larger scale companies seeking seed funding as well as repeat investments, according to Tetsuya “Terry” Hayashiguchi, senior vice president of CAV Japan. Hayashiguchi also told Tech in Asia that the focus of the new fund would likely expand beyond information technology into the internet of things. Doubling the fund size might delight entrepreneurs but the CAV staff may have some conflicted feelings about the new workload; Hayashiguchi confirmed that CAV is not seeking to grow its own team at this time.

Tablet shipments in the Philippines grew 110 percent year-on-year, according to a recent report for Q1 2014 by research firm IDC. That’s the strongest growth rate for tablet uptake in Southeast Asia. In total, there were 598,375 tablets shipped in the Philippines in the first quarter of 2014.

While Samsung and Apple still lead the race, IDC underscores that tough competition is now arising from local gadget makers as well as other global players. This is similar to the smartphone situation in the Philippines where cheaper homegrown phones are in big demand.

This highlights the fact that Filipino consumers are now looking at budget-friendly devices. Among the local tablet manufacturers, Cherry Mobile and Starmobile are two of the strongest. Recently, Cherry Mobile launched an LTE tablet called the Superion Scope to ensure it has the 4G market covered.

Apart from the local brands, the report sees the tablet competition broadening. Jerome Dominguez, IDC Philippines associate market analyst, explains, “International PC vendors, like Lenovo and ASUS, are continuing to bring in entry-level tablets at attractive price points, competing head-on with the offerings of local and Chinese brands.”

See: 15 new Asian smartphone makers hoping to crush Samsung and Apple

Demand for better quality

Coupled with Filipinos’ appetite for budget-friendly tablets, the brands’ marketing efforts and endorsements backed by celebrities are helping them increase sales.

In addition to the price-tag, the report underscores that quality is also becoming an important consideration in purchasing a device. This is heightened by the fact that defect issues have been plaguing the Philippines tablet market since 2013.

Daniel Pang, IDC Asia-Pacific senior research manager for client devices, believes that “the growing competition between international and local tablet brands is good in that it will encourage the players to continue to innovate and improve product quality to stay ahead of the competition.”

Health-tracking gadget maker Picooc, best known for its smart body scales, has raised US$21 million.

The funding is reported by local tech blog 36Kr, though Picooc has not made an announcement. The new investment is said to be from two of China’s leading web giants, Tencent (HKG:0700) and JD (NASDAQ:JD). Gobi Partners also contributed some cash.

Picooc’s Latin smart scales, which sell for RMB 449 (US$72) in China, not only shows your weight but also indicates important metrics like body fat, body mass index, body water, and muscle mass. It ties to an app (pictured below) for a fitness-tracking experience that complements wearable tech gadgets.

The Picooc Latin is priced very keenly up against the Fitbit Area scales, which cost RMB 1,198 (US$198) in China. That’s nearly triple the price of the Latin. Fitbit launched officially in China earlier this month.

Picooc sells online through JD and Tencent’s Yixun estore. Tencent took a 15 percent stake in JD in March this year in a radical shake-up of its failing ecommerce strategy, so the two ecommerce stores are now effectively partners – something emphasized by this joint investment in a promising local startup.

(Source: 36Kr)

Over the past two years, investors and entrepreneurs have demonstrated a renewed interest in logistics, both in the west and in Asia. Amazon has hedged its bets on drones as the future of package delivery, investing over US$14 billion in the technology since 2010. Startups like Postmates and Wunwun, along with valley giants like Google, Amazon, and Ebay have thrown their hats in the ring in hopes of realizing the elusive “Kozmo dream” – near-instant delivery of anything, anytime.

But it’s not just about ecommerce. The excitement over the amorphous future of logistics is best exemplified by Uber, one of the most forward-thinking and controversial firms of this era. Earlier this year, Uber’s charismatic CEO Travis Kalanick announced the company will eye logistics as its next frontier, stating, “We’re in the business, today, of delivering cars in five minutes. But once you’re delivering cars in five minutes, there’s a lot of things you can deliver in five minutes.”

Let’s think about this for a second – what will “Uber for logistics” look like exactly? The company recently opened a bike courier service called UberRUSH, but it was just an experiment. Kalanick has also waxed poetic on the beauty of self-driving cars, but those vehicles probably won’t become commonplace for ten or twenty years. “Uber for logistics” might also mean the company commits to Kozmo-esque delivery – ice cream, newspapers, and Starbucks on demand – but beyond brand clout (which shouldn’t be underestimated), there’s little evidence that Uber can add value to this already fragmented sector. Needless to say, a shiny Uber Mercedes won’t be used to deliver your pizza anytime soon.

In Asia, however, where the logistics industry remains less sophisticated than that of the US, “Uber for logistics” is already happening. Moreover, the companies offering logistics-on-demand face a market size that likely far exceeds the market for late-night fried chicken. By shunning fancy black cars in favor of no-frills white vans and trucks, Hong Kong’s Easyvan and Gogovan have beat Uber to the punch.

Applying logic to logistics

The white van industry in Hong Kong bears a strong resemblance to the municipal taxi industries across the US. According to Gabriel Fong, executive chairman at Gogovan, about half of the city’s 70,000 commercial vans are registered with specific companies – meaning they’re not really for-hire. The remaining 35,000, however, are driven by “owner-operators” – in other words, freelancers. These drivers might form contracts with a number of small-to-medium enterprises, but when business is slow, they rely on dispatch centers to receive orders from clients. A driver whose base camp is in Kowloon, for example, might pay a local call center HK$2,000 every month for permission to use radio transmission equipment and receive orders from the center’s phone lines.

Much like the taxi dispatchers in New York City, these call centers generally provide poor customer service and operate under seemingly arbitrary sets of rules. If I open the phonebook to look for a van that can move my couch, I’ll see a long list of call centers, each of which works only within a specific district in the city. So if I want my couch moved from Kowloon to the New Territories, I’ll have to run down the list and contact each center. If I’m lucky enough to find the one that serves my route, that’s still no guarantee that they’ll have a van available. This fragmented and inefficient system will surely give endless headaches for anyone looking to book a van in a pinch.

Gogovan and Easyvan bypass the call centers by providing a peer-to-peer app that connects van drivers with individuals or businesses who need their stuff shipped quickly. While the apps sport different user interfaces, the song remains the same, and if you know how Uber works, you can probably start singing along. Open the app, enter a pick-up location and destination, input special needs (“I’m moving my six pet mastiffs,” “Please bring two dolly carts”), and request a vehicle. After a customer submits an online pickup request, drivers on the network receive a notification on their smartphones and can choose to accept the offer directly.

Gogovan and Easyvan look set to knock over the call center industry like a bowling pin. Fong claims most of the old-fashioned call centers usually have about 20 to 50 vans on their networks, with the largest one topping out at 1,000. Meanwhile, Gogovan, which isn’t yet one year old, has 18,000 vans on its network, while Easyvan has 8,000. Each call center also faces overhead costs for buying and maintaining radio transmitters, along with rent for cellular tower space. But thanks to the magic of the internet, overhead costs for Easyvan and Gogovan are next to nothing.

The ingenuity behind Easyvan and Gogovan partially lies in the versatility of the vehicles they have on their networks – the van.

There might be the occasional customer who logs on to Gogovan to get his mattress moved from Kwai Tsing to Hong Kong Island. But the truly valuable Gogovan user is the local wire supplier who needs 500 mattress springs moved across town every week. Fong says that this enterprise focus helps ensure that no one bails on a booking – a common problem for drivers in cities like San Francisco, where transportation network companies (TNCs) have deep penetration and compete fiercely.

“Unlike taxi apps, our completion rate is nearly 100 percent. Our trips almost always get completed. The user can’t and won’t just go out on the street and try to flag down a van. Whereas for the taxi apps, you have a very high unsuccessful rate. People will just book rides on Uber and other apps and then get in whichever car comes first.”

Gogovan and Easyvan have tapped into such a rich opportunity that Kalanick and his crew should be banging their heads against the wall for missing out. When one considers the legal and regulatory issues Uber inevitably faces when it enters each one of its one hundred-odd markets, it’s a wonder why anyone would want to disrupt the taxi industry to begin with. Unless you love labor disputes and stodgy bureaucrats, working for a passenger-oriented TNC is probably not for you. But while politicians might bend over backwards to protect vested interests in the local taxi industry, you’ll be hard pressed to find a Mayor Quimby type who has ties to the White Van Call Center Association of Hong Kong.

Packing the trunk

Currently, neither Easyvan nor Gogovan imposes any fees for use of their apps. Yet the dual focus on both consumers and enterprises opens the door for a number of different monetization routes. One obvious option includes charging commission fees on completed transactions, as Uber does. The companies might also implement SIM card-esque top-up fees on the drivers that use the app, as GrabTaxi does in certain markets.

But Gogovan, which has a six-month head start on Easyvan, is already thinking bigger. Fong predicts that as long as Gogovan can displace traditional van call centers and accumulate a critical mass of drivers on the app, the company can earn money from display ads on vans.

“If you look at Hong Kong – the minibuses, the taxis, and the buses – they all run with ads on the side of the vehicles,” says Fong. “Traditionally, vans have not had that, because as an individual freelance driver you have no negotiating power with any of the ad agencies. Now, with a platform of 18,000 van drivers, we suddenly have that. We’re now working with one or two ad agencies to create that new revenue channel, and we’ll also share some of that with the van drivers.”

That negotiating power easily converts into purchasing power. The beauty of the TNC business model lies in the firm’s ability to broker transactions (taxi rides or product shipments) so efficiently that drivers themselves will shoulder the costs of facilitating those transactions (vehicle maintenance and upkeep) in order to access the broker. But a powerful TNC can negotiate deals with diesel providers, vehicle repair shops, insurance companies, or any number of other businesses to pass savings along to drivers on the network.

Does this mean that national or global logistics providers like FedEx should quiver in fear? On the contrary, the arrival of Gogovan and Easyvan marks a cause for celebration. Vans on these networks specialize in “last-mile delivery,” usually the most expensive but most crucial leg of any product transport. UPS and FedEx likely have logistics networks sophisticated enough to get a package from New York City to rural New York State in no time. But what about from Hanoi to rural Vietnam? Fong says:

Major logistics companies in Hong Kong are all using our services. These logistics firms outsource about 70 percent of their logistical requirements. They own the entire logistics chain except for last-mile delivery. Just imagine – if these logistics companies owned every truck that they need, not only would they have to buy and maintain more trucks, but they’d have to hire lots of drivers to drive those vehicles. If a van is just sitting there, it’s not earning money. It makes sense from a corporate perspective to own the fleet of trucks for the minimum base load and outsource everything that goes above that. How can they outsource efficiently? Use Gogovan.

The ecommerce trump card in Asia

Startups like Easyvan and Gogovan help facilitate a number of transactions that already occur in any given market regularly. Every week, there’s likely to be a certain number of bookings for moving the family couch, and a certain number of bookings for shipping disposable chopsticks across town.

But in Asia, the area for growth remains ecommerce. Rocket Internet has sunk almost US$1 billion in its Lazada and Zalora ecommerce brands partially in an effort to kickstart traditional ecommerce in the region, and partially because the logistics infrastructure that those outlets help build make it easier for Rocket’s other ventures to succeed. In addition, China’s Alibaba recently sunk US$250 million into SingPost, Singapore’s national postal service, in a bid to move beyond its borders. It also partnered with China Post to bring 24-hour deliveries within China. On the startup front, Thailand’s aCommerce recently landed US$10.7 million in funding to help grow its end-to-end ecommerce network.

It will take time and money before ecommerce booms in Southeast Asia, but one thing’s for sure – the number of packages in need of transport across the region will only increase. In markets with undeveloped logistics networks, it’s not economically feasible to build up a fleet that’s big enough to serve rural areas well. So when parcels need to reach those areas, it’s a drain on resources. Gogovan and Easyvan’s efficient mobile apps can help large-scale logistics providers cover up these small-scale holes efficiently.

As a result, Gogovan and Easyvan occupy an enviable position. What’s good for ecommerce and the logistics industry as a whole is good for them, and vice versa.

Hong Kong origins

Gogovan and Easyvan offer identical services, but their people hail from different backgrounds. Gogovan’s three co-founders – Nick Tang, Reeve Kwan, and Steven Lam – met while studying at UC Berkeley. Following graduation, they returned home to Hong Kong to start a business. Originally, they aimed to broker and sell advertising space on Chinese food takeout boxes. While the money was great, booking vans to deliver the containers to restaurants was a nightmare. Recognizing a bigger opportunity in ground logistics, the three of them pivoted and launched Gogovan in July 2013. Gabriel Fong came on board in September to serve as the grown-up in the company, after departing from his role at Och-Ziff Capital Management.

Basically, I retired. Part of me wanted to do something more interesting, and part of me wanted to do something that was giving back to society. Hong Kong has always been synonymous with property and finance, and innovation has always taken the back seat. My twenty years was about investing in early-stage companies and working with management, so when someone asked me to help these guys, I met with them, and I really liked them.

Fong states that the company has raised funding in the seven-figure range in US dollars from various angels and Hong Kong families.

Easyvan’s founders have more extensive resumes than Gogovan’s founders. The company grew out of discussions between Boris Stoyanov-Brignoli, a recent university graduate who arrived in Hong Kong looking for job opportunities, and Shing Yuk Chow, a serial entrepreneur who had been dabbling in health and beauty. Shing introduced Boris to Andrew Chung, founder of Compass Offices, one of the leading providers of serviced workspaces in Asia. The three of them, along with Gary Hui, a former Groupon Hong Kong employee, pooled together their own funding to launch Easyvan.

Both companies have yet to celebrate their first birthdays, but the two are already expanding rapidly. Easyvan and Gogovan launched in Singapore almost simultaneously, and both have been actively working on moving into other parts of Asia along with Europe. Neither company has ruled out the US as a future destination, though Trucker Path and Keychain Logistics are already working on cracking that market.

The eagerness to move quickly comes with good reason. Gogovan and Easyvan not only have to watch out for each other, but another potential competitor – Uber. As some writers have pointed out, the transport network industry has a low barrier to entry and is subject to commoditization. Any team with a decent coder and some hustling marketers can build up a viable competitor in no time, so speed is the name of the game. With more than one billion dollars to spend and a brand name that’s already well-known, a shift from black cars to white vans could quickly put these two Hong Kong startups on the skids. Acquisition remains a possibility (both firms declined to comment on such matters), but Uber has built driver networks before, and can easily build them again. It might be cheaper for the company to spend six months pinning fliers on windshield wipers than to buy a competitor.

Fong doesn’t shy away from addressing the high stakes of the van-on-demand game.

I’m scared like hell to be honest. They’re a giant, we’re tiny. That’s why we need to run as quickly as possible, because once we’re in a market we can scale very quickly. So we’re strong in Hong Kong, we’re starting in Singapore, and in the next two or three week’s time we’ll be in another city. Then within the next three or four months we’ll hopefully be in about five or six cities. Uber is going to do it eventually. But we’re not standing still.

Editing by Paul Bischoff, top image via Flickr user pamhule

Teens in India just got another tool to keep their chats hidden from the prying eyes of parents, or anybody else for that matter. Free messaging app Hike, the Indian answer to WhatsApp, Line and WeChat, just crossed the 20 million registered user mark today, and to celebrate the occasion, it has introduced a ‘hidden mode’ that protects private chats with a password. No one will know the chats exist until they’re unlocked.

“In a country like India, where teenagers stay with their parents and families, where their need for privacy is constantly challenged, we believe this feature could be a boon,” says Kavin Bharti Mittal, who directs strategy at Hike. The app was launched in December 2012 by Bharti Softbank, a joint venture of Bharti Enterprises and Japan’s Softbank Corporation.

Hike has been trying to differentiate itself with features designed for Indians, who make up 90% of the app’s users. For example, its offline option converts messages into SMS for those who are not connected to the internet, either temporarily or because they use feature phones that are not internet-enabled. The SMS reply gets converted back into a Hike message, and so the chat can carry on seamlessly even if one of the chatters is offline. Given the large number of feature phone users in India and poor internet coverage in many parts of the country, this can be very useful.

Another feature, which the team unveiled today, enables a transfer of up to 100 MB in any file format. This should help small businesses and traders in India, for whom free messaging apps have been a boon for cutting communication costs. They will no longer have to switch to email or memory cards to share documents, images or audio files.

“We’re building all these new features based on feedback from Hike ninjas (beta-users). This approach is working really well for us,” Kavin Bharti Mittal says.

The rapid growth in its user base in just a year and a half appears to support that view. It was in late February this year that Hike crossed the 15-million mark and now it has 20 million plus registered users. With over 100 million active mobile internet users in India, more milestones can be expected in quick time.

That’s not to say the competition is flagging. WhatsApp, with its no-nonsense interface, is still the most popular messaging app in India, with 50 million monthly active users.

When Shingo Ogaki was 16 years old, he left his quiet town on the outskirts of Osaka, Japan to follow his dream of becoming a Major League Baseball pitcher in the US. He would spend the better half of the following decade bouncing back and forth between the US and Japan, attending training camps and cutting his teeth with Seattle Mariners’ minor league team and on the roster of several non-MLB pro squads.

In the end, an elbow injury dashed Ogaki’s hopes of making it big in America. “I had to decide to quit or get surgery, and the surgery wasn’t guaranteed to work,” he told Tech in Asia. “My generation already had so many famous baseball players, so I just couldn’t break into the pros back in Japan. I had to think, ‘What’s my next career?’ and originally decided on becoming a teacher, a job where I wouldn’t have to rely so much on my body.”

Ogaki would go from teaching computer science to software engineering before uncovering his true passion – entrepreneurship. Taking a page from his experience in the minors, he decided to form an amateur baseball league that would make weekend warriors feel like pros. Founded in 2011, Gigathlete’s G-League currently boasts 85 teams and more than 1,200 players (New York City’s Metro Baseball League, for comparison, has only 17 teams this season). The company’s G-Score service offers real-time scoring that can be updated via feature and smart phones, while its G-Lockerroom platform provides real-time statistics, player interviews, and photographs. Part-time Gigathlete employees who attend each of the league’s match-ups – as many as 10 per week – upload all of the data and post highlights on social media.

The majority of G-League games are played in and around Tokyo. With the Greater Tokyo Area home to roughly 20 percent of Japan’s population, it makes sense to keep things local. Most players have jobs and families, so traveling to another city for a weekend game would be almost impossible.

Ogaki says that the majority of players in the league are about 30 years old. “That is the age when they have been in their company for five or six years, so they have much more scheduling flexibility than when they were new recruits,” he says. There are also a number of university students and retirees in the mix, giving each team a range of age groups and backgrounds.

Incentives to keep playing

For anyone who has ever played in a casual sport league, the hardest challenge is often getting people to show up for each game. Ogaki says that the scoring and game recap service is a big motivator, but that losing players is inevitable. To avoid cancellations when a team can’t field enough players, Ogaki developed the G-Dugout player matchmaking service to connect them with substitute players.

Getting crushed by a team with much stronger players might also hurt morale, and thus a player’s willingness to continue playing. To avoid this, teams choose their own opponents based on current league rankings and individual player statistics.

“Pro sports remind me of show business because the stadium is like a stage, spectators are the audience, and players only want to be the champion – to become more famous and appear on TV more, like a movie star,” Ogaki says. “Sport should simply be for amusement, for recreation. I wanted to build a good amateur platform for people just playing for fun, not solely for winning.”

Another tactic that G-League employs to keep players in the game is what Ogaki calls “double seasons.” A season that starts in August, for example, ends the following August. The final two months are devoted to playoffs and the league championship. To avoid downtime waiting for the current season to end, a fresh season kicks off every six months. The overlap in the beginning allows new teams to get in on the action without having to wait for a full season to end, and it also allows teams that didn’t make it into the playoffs to keep playing and improving their skills.

Staying the course without VC support

At present, Gigathlete employs a lean staff of only three full-timers (Ogaki included), two part-timers, eight interns, and about 30 staff to cover games.

The startup received 4.5 million yen (US$44,000) from Samurai Incubate in 2012 and is currently fundraising – largely without the help of established VCs. The company has so far secured about US$200,000 from private investors in what Ogaki describes as a “between” round in the middle of seed and series A. Dai Tamesue, a Japanese Olympian who holds the country’s record for the 400-meter hurdles, is one of the company’s latest investors and has also joined the Gigathlete team as an advisor.

Gigathlete’s current monetization model is mainly based on fees – teams pay 50,000 yen annually (US$490) and 1,200 yen per game (US$12) for access to playing fields and the company’s various services. G-Dugout’s substitute player matchmaking service costs 500 yen (US$5) per player, per game. Basic necessities like extra balls can also be purchased directly at games.

Gigathlete’s G-ShopBoard also offers discounts on team jerseys and equipment through sponsored mom-and-pop sporting goods shops in the greater Tokyo area. The company is also working on partnerships with some of the world’s most recognizable sporting goods brands, but asked that they not be disclosed until an official agreement is signed.

The Amazon of amateur leagues

Though Ogaki is particularly passionate about baseball, he hopes to bring the current G-League formula to a variety of other sports – starting with soccer, futsal, and basketball. However, scaling the current business outside of Japan is his top priority.

The sport business market in the US is 20 times bigger than in Japan. I want to grow this market domestically, but Japan is limited. I wanted to establish a strong platform for amateurs, and baseball was the obvious first choice.

He says that the company’s next stop will be Taiwan – a country that is baseball-obsessed like Japan but a lot closer to home than the US. If that proves successful, Gigathelete will expand into New York City. Real-time game scoring solutions like PointStreak already exist in the US (that particular company is already partnered with the New York City Metro Baseball League), but require a team’s own scorekeeper to enter the stats and scores manually.

−試合詳細− 5/31(土) 武蔵野サイドウォーカーズ 9-11 原宿フェロース http://t.co/g0qSsfq91r pic.twitter.com/EDLvGXzKFi

— 全国軟式野球リーグG-LEAGUE (@G_LEAGUE_) June 13, 2014

Ogaki may not have made it into the Majors, but he has still made a career out of baseball. Gigathlete gives amateur players an opportunity to feel like pros – even if going pro never crossed their minds.

“When I was deciding whether or not to get elbow surgery, I never imagined becoming just an amateur player – I felt like they were losers,” Ogaki says. “Years later, I asked myself why I thought that. I realized that the pros aren’t always winners and that the amateurs are definitely not losers. Gigathlete changed my perception of them completely.”

A much shorter domain for Indonesia, .id, can now be acquired by Indonesian citizens or brands that are owned by local citizens. This top-level domain is needed considering the growth of internet usage in Indonesia has been rising in the recent years. Therefore, internet users in Indonesia need a domain that is shorter and easier to remember. This is also a good chance for both established companies and newcomers to secure a catchy domain name that could be worth some serious dough in the future.

As of today, the domain sale has entered into the last priority phase called the Landrush phase. To participate, a registrant has to pay an administration fee in the amount of IDR 100,000 (US$9) and an acquisition fee for a minimum of IDR 1 million (US$85). If a domain is registered simultaneously by two or more parties, it will be auctioned off to the highest bidder.

On August 17, domain names will be sold to members of the general public. In this phase, administration and acquisition fees will be waived. Domains can then be acquired on a first-come, first-served basis, with a maximum annual fee of IDR 500,000 (US$43) through this site.

This domain acquisition has already been put through two phases: Sunrise (for established global companies that own trademarks) and Grandfather (for big Indonesian companies). Apple already participated, snatching up apple.id, applestore.id, and appstore.id. Google Indonesia has also acquired google.id. Local startups like Traveloka, DisDus Groupon, and Zalora are joining the fray by buying a handful of domains for themselves.

(Featured image credit: Flickr user sebasanjuan)

(Editing by J.T. Quigley and Paul Bischoff)

China’s ecommerce titan Alibaba edged slightly closer to its much-anticipated IPO overnight when it filed new information with the SEC. The company – which runs leading Chinese estores Taobao and Tmall – revealed that its profit margins are under pressure, falling from 51.3 percent to 45.3 percent in Q1 2014 compared to the same period a year earlier.

Taobao and Tmall account for 81.6 percent of Alibaba’s earnings. For the first time, Alibaba disclosed that Taobao pulled in RMB 1.173 trillion (US$190.6 billion) in gross merchandise volume (i.e.: sales) from Q1 2013 to Q1 2014, compared to RMB 505 billion (US$82.1 billion) for Tmall in the same period. So Taobao’s shoppers are spending nearly double those on Tmall. Of the combined gross merchandise volume of US$272.7 billion on Tmall and Taobao, 27.4 percent is spent via consumers on mobile devices – up from just 7.4 percent at the end of 2012.

However, Tmall – which is a marketplace for large merchants and major brands – is growing faster than Taobao, which is home to small merchants and individual sellers. Sales on Tmall grew 90.1 percent in the past year, while Taobao’s sales volume grew 32.3 percent.

For a sense of scale, China’s ecommerce spending for 2014 as a whole looks set to top $300 billion this year after US$74 billion was spent online in Q1.

Bloomberg notes this morning that concerns over falling profit margins and slowing revenue growth – Alibaba’s slowed from 71 percent in Q1 2013 to 39 percent in the most recent quarter – caused shares in Alibaba’s major investors, Yahoo (NASDAQ:YHOO) and Softbank (TYO:9984), to fall.

The new Alibaba filing also reveals the ten-member board of directors. There are six insiders, including Alibaba founder Jack Ma and Softbank’s Son Masayoshi, along with four independents that include Yahoo co-founder Jerry Yang. The full F-1 filing is here.

Alibaba is still some way from its US listing, and a great deal of information has still not been revealed – such as how much it plans to raise and what the share price range will be. The latest rumors suggest it will IPO in August and could be the biggest public listing for a tech company ever, raising over US$20 billion.

Image recognition technology is slowly but surely going mainstream. Earlier this year, Amazon added a feature to its mobile app that promised to make shopping on their platform even easier than it was before. The feature, called Flow, lets users identify products simply by snapping a photo of it. Users can then purchase the product instantly on Amazon – remarkably simple and efficient.

The thing about image recognition as a feature is that it needs to be lightning quick. Human beings have attention spans that are progressively getting shorter, and extended loading times are a surefire way of losing a potential customer on the spot. For this reason, the team at Taiwan-based visual search service Viscovery made speed the top priority when developing their image recognition technology.

Connie Huang, business development manager at Viscovery, claims that they have the best recognition speed in the market right now. How good is it, you ask? Here’s a video that demonstrates how fast the process of recognition is:

As can be seen, Viscovery is markedly faster than other apps in recognizing the products from the image taken.

How was the team able to achieve this? Offline image recognition is the answer. According to Huang, images that are taken do not need to be uploaded to the main server to be recognized – the recognition occurs within the mobile app itself. As a result, recognition of the image is extremely quick.

In addition to speed, taking image recognition offline could come in especially handy within Asia, where internet penetration rates are still fairly low, though certainly on the way up. Viscovery is able to help merchants reach out to a far larger market segment than they would have been able to with conventional cloud-based image recognition technology.

Making it more accessible

The company started off working on Chinese character translation using visual search. Like many fledging startups, they were initially unaware of the broad applicability of the technology they had on hand.

“Eventually Viscovery found its identity and strength in developing visual search technology for mobile devices. The proliferation of mobile devices such as smartphones created ample business opportunities for visual search technologies to be used in everyday life,” Huang explains. “Our research and development team then zoomed in to focus on the development of solutions such as cloud-based image recognition and offline search using wearable technology.”

From there, they began to identify several industries which would benefit greatly from instant information provision:

We have since signed up major clients in the consumer health product segment such as Watson and Amway, as well as book retailers and cellphone operators in Asia. On the consumer end, the convenience of using smartphones to identify, learn, and interact both online and offline really improves the consumer e-commerce experience tremendously. We believe the potential for our products is immense.

Viscovery has entered a couple of startup events and has seen some interest in the technology thus far. “Our future plan involves efforts to seek well-placed partners to scale our products in Asia, and eventually globally,” Huang says. “We are well underway on that plan, and it is great to see the excitement from our initial focus markets through events such as GMIC in China and Belaunch in Korea.”

The team was chosen as one of the top 10 startups at GMIC. They have received seed funding from Pinehurst Advisors, and are currently looking to raise a round of series A funding to accelerate growth both in Asia and beyond.

Chinese ecommerce leader Alibaba last night updated its SEC prospectus, revealing, among other things, details about last week’s acquisition of mobile browser maker UCWeb.

The deal, which Alibaba proclaimed to be the biggest in Chinese internet history and bigger than Baidu’s US$1.9 billion acquisition of 91 Wireless, cost Alibaba US$479 million in cash and 12.3 million company shares for the remaining one-third of UCWeb.

Because Alibaba’s exact valuation won’t be known until it lists in the US later this year, how much it actually paid is also up in the air. However, based on analysts’ esimate of Alibaba’s valuation, UCWeb is valued at about US$4 to US$4.35 billion.

Those 12.3 million shares accounted for half a percent of Alibaba’s total shares. Alibaba’s average valuation currently stands somewhere between US$140 and US$180 billion.

Alibaba’s previous investment in UCWeb during 2013 gave the former a majority stake in the latter for US$506 million.

The prospectus also shone a light on some of UCWeb’s user numbers. UCWeb in the past has only revealed the quarterly active users of its mobile browser, which it says is over 500 million worldwide. Monthly active users, according to the prospectus, are only about half that at 264 million as of March 2014.

The Taobao mobile app, Alipay, and UCWeb make up three of the top five mobile apps in China based on mobile monthly active users as of April 2014.

GREE (TYO: 3632), the Japanese internet services company best known for its games, revealed a new hotel booking service today. Known as Tonight, the mobile app available for both iPhone and Android. Tonight promises to make reserving hotel rooms a ten second task, placing GREE in competition with popular startups like Hotel Quickly and Hotel Tonight, which are becoming increasingly popular.

At launch, the service is limited to Tokyo and has about 130 hotels registered. This represents about 20% of the Tokyo hotels registered with the popular Japanese travel site Jalan. GREE maintains that the remainder will join the network by the end of the year.

After taking the app out for test drive, we find it promising but somewhat limited. The design is smooth; hotel prices show up on the Tokyo map and the images of the rooms and amenities are crisp. However, the app might not be user-friendly for visitors to Tokyo. With no search function, users are left journeying through the app’s map to find their desired destination. Further, since there are no basic categories like price, location, and reviews, users are unable to comparison shop.

Almost a year has passed since GREE’s cost-cutting moves started to impact its Japan operations. “Tonight” marks a new attempt to diversify its revenue stream and reduce dependency on the fickle gaming market. It could be an indication that GREE is ready to rethink its core strategy of creating offshoot verticals, like physical gaming cards, from its social gaming business.

The next time you visit Bangalore for a startup meetup, you might want to take a day off to drive down to one of the coasts flanking this tech hub in the Indian peninsula. A Google search for a beach within 200 kilometers will throw up about 1.4 million results. You get myriad options for “Weekend Getaways” or “Must See Places” and the links even take you to Alleppey in Kerala, 590 km away, or Amboli, a hill station 573 km away.

To narrow that down to a quaint beach within reach and figure out how to get there and where to stay might take you a few hours. And then you have to find sites for hotel and travel bookings.

What if you could do all that in one place? Refine your search after beginning with a vague idea, find the best deals for transport and accommodation, and do the bookings. FindmyCarrots (FmC) uses data analytics with semantic search to offer such a solution. It mimics the aggregation model of a large travel portal like Expedia or MakeMyTrip but has other variables and layers of metadata for destination discovery and booking to one’s taste.

Search like a human

Arijit Mukherjee, co-founder of FindMyCarrots

Semantics built into the backend lets a user enter search text in natural language and get meaningful responses. This is different from entering keywords and choosing options in multiple boxes. “FindmyCarrots allows our users to converse in the way they think,” says Arijit Mukherjee, who runs this startup from Bangalore along with Sivaramakrishnan Nageswaran and their US-based co-founder Kanwar Bir Singh Sangha.

If you type in a rambling phrase like ‘romantic places in South India to enjoy the monsoon’, FmC presents a dozen or so options on a map, mostly in ‘God’s own country,’ Kerala. If you click on one of them, say Wayanad, you get a host of related information, from weather, pictures, and a TripAdvisor rating to a summary of blog posts.

Get flight prices and hotel reviews

FmC has partnered with SkyScanner and TrustYou for flight price comparison and hotel reviews. Broad queries like “hotels with big rooms, clean bathrooms, good internet and delicious vegetarian food that is family-friendly near Baga Beach costing below Rs 5,000” will yield results that best match what travelers have said in reviews about the various properties near Baga Beach. “We train our machines to match the quality of a property with the context and intent of a user’s query, so that we can produce relevant results,” says Arijit.

Not every feature works for every destination yet, and ‘coming soon’ pops up here and there on the beta version of FindmyCarrots. Some queries like ‘home stays near Srinagar that serve authentic Kashmiri food’ also go unanswered as of now, but Arijit points out how far they have come since their launch in September, 2013. “When we launched, the query support was in its infancy. With the help of such feedback as you’re providing, we have been able to make it into what it is today. But to be brutally honest, our platform is not yet foolproof. Every day we improve it one small step at a time. It is this constant improvement that makes building FindmyCarrots well worth the sleepless nights and crazy days.”

Context sensitive ad platform

A key improvement last month was a context sensitive ad platform which leverages FmC’s semantic capability to show relevant ads to visitors. This enables FmC to offer advertisers a higher return-on-investment than what they get on most other ad publishing platforms. FmC also collects a commission on the leads it generates for its partners in travel and hotel booking.

FindmyCarrots is thus making its semantic technology available not only to travelers but also its advertising partners.

In Part 2 of this article, we will go on to look at how big data and machine learning are reshaping the Indian travel space.

(Top image: Flickr user Mehul Antani)

Leo Chen, co-founder of Jumei (right).

If Leo Chen and Steven Liu didn’t quit Garena, then Jumei may not have existed. By now, everyone in the tech industry knows Jumei (NYSE:JMEI), an online cosmetics store in China. After all, it is one of many Chinese internet companies to list recently in the States, raising US$245 million in its New York Stock Exchange debut.

As its founder, Leo is now a billionaire: he owned a $1.2 billion stake in Jumei on the day of the listing. Jumei made $483 million in revenue and a profit of $25 million in 2013.

But Leo and Steven, both Chinese nationals, trekked a twisty road to the top. Not long ago, they were clueless student entrepreneurs sitting in their college dorm rooms, struggling to come up with their big idea.

The next few years consisted of a series of costly mistakes, power struggles, and betrayals which eventually caused both to leave Garena, which by now is the largest game publishing and online gaming platform in Southeast Asia. Forrest Li, a China-born Singaporean, took the reins as the CEO and founder – the latter is a title disputed by Steven.

So, who betrayed who? That depends on who you believe. On the Chinese internet sphere, a war of words broke out in the past week, starting with an accusatory note written anonymously to portray Leo as being less than the new golden boy of Chinese tech startups. Steven then wrote a lengthy rebuttal and published it on Chinese social network Weibo, siding with Leo and detailing his version of events. The timing coincided with Jumei’s IPO on the stock exchange.

“I had planned to write an article to clear up the facts, but Leo Ou (Leo Chen) stopped me. Things got pretty ugly and unhappy, but after all we were classmates. We wanted to give each other ‘face’, and we had a lot of good friends who were in Garena with us, and I was afraid I would hurt someone innocent in the process.”

“But after that anonymous, fact-distorting smear essay came out, I needed to say what I’ve been bottling up for two years. Leo is no longer my CEO, and he cannot stop me.”

Before Garena, there was GG

In Steven’s telling, Leo planted the seeds for GG when they met for snacks. It was 2006, and both of them were foreign students at the Nanyang Technological University in Singapore. Steven was curious about Leo because he was reputably the top WarCraft player in university, plus he ran its esports club.

Leo, meanwhile, sought expert programmers to build out his dream of creating an online platform for connecting competitive gamers globally. The goal was to bring esports beyond physical locations and onto the internet. Singapore would be a perfect base for expansion into Southeast Asia, followed by Europe and the Americas. Leo said to his new friend:

Steven, you’re a college freshman, have you ever thought about having your own business by the time you’re a junior, without having to squeeze into the subway everyday for work?

Steven doubted. Leo didn’t know how to code, but said he could learn as he went along. Nonetheless, Steven joined the project. He writes:

“When I was young, as soon as my brain got excited I turned into an idiot. And when two idiots get together, don’t underestimate their power.”

Leo committed to the idea from the onset. He only had textbook knowledge of the C programming language, but promised he would take charge of building the server and client. Though Steven remained unconvinced, they had no other choice as the team was small. Steven would focus on building the website and database.

Leo was a workaholic. For a few consecutive months, he slept only five hours a day, never left his home, and ate egg and tomatoes for all three meals everyday. He grew a beard because he didn’t shave.

“The handsome, professional esports player had become a bearded code monkey, sitting in a corner and staring blankly at a computer screen,” Steven writes. “He became like a hermit, spoke little words, and many college mates asked me if something happened to Leo. Apparently, many people pitied him. The Singapore mindset is that getting a job at a bank is the proper path. No one thought his venture could succeed.”

The GG platform – which stands for ‘good game’, an internet slang which means that a game was fair and enjoyable – materialized. The product was raw: Steven found that the software had “rubbish code”, and his girlfriend sketched the logo. But the product worked, and that was a cause for a drunken celebration.

“We had many wild thoughts about the company, from fundraising to listing. I became drunk and vomited, Leo was sprawling on the table, couldn’t move, and he mumbled to himself.”

After testing the software among professional gamers, the team believed that the product was epochal and would disrupt an entire industry. Those were big words – but what can you expect out of naive college kids with big dreams?

Using his influence in the esports community, Leo reached out to fellow gamers. He brought together two world champions for an online showdown using GG, then unprecedented in the esports world.

The platform was starting to get some recognition. Servers overloaded, and user numbers were “jumping crazily”. That happened at the start of 2006.

Coverage of GG in the esports media.

Reality smashes through the door

GG continued growing. The platform was breaking its own records every day, and leading European Warcraft competitions like INCUP and WC3L were using GG for intercontinental competitive play.

Since GG’s code base was still rudimentary, they did not open it up for registration. Instead, they sent out invite codes. Many top gamers joined, and a GG invite became a sort of status symbol.

It was time to take the next step: get sponsors. In reality, they had no choice. GG teetered on collapse as they couldn’t pay for the server costs needed to manage GG’s growing bandwidth needs. Leo relied on scholarship money and competitive game prizes to fund the business. But those sources were drying up.

GG did not face a shortage of sponsorship requests from around the world. But finding the right one was tough: the team was well aware that many sponsors ultimately want to control the product, and Leo knew he needed to avoid that trap.

“In those days, Leo would wear his best shirt to meet sponsors. Before leaving the house, he would tell us: Do great work today, brothers, and wait for me to bring back the money. But the money wasn’t enough,” says Steven.

“Leo would tell me excitedly how he got a reply from an investor. Yet not long after, he would be at his seat staring blankly. Leo doesn’t hide his emotions, so we saw his helplessness and anxiety. Since I only know how to code, there wasn’t much I could do to help.”

Investors kept their distance. Leo heard from few of those he wrote to. An investor agreed to a meeting, only to abandon it later.

It turned out that getting investors at 5,000 users was a pipe dream, especially back in 2006 when Singapore didn’t have a lot of tech startup-friendly investors. Yet they saw competitors with inferior products get funding, and that angered them.

The team reasoned that their competitors got money because of their MBA backgrounds, so investors trusted MBAs rather than a bunch of broke kids. That was the exact term investors used against Leo.

Leo faced objection, both from his family, and his then-girlfriend’s parents. His family owned a traditional mindset, believing that entrepreneurship was a hopeless career. Leo avoided defying his parents in their faces, but they could not stop him either since they were back home in China.

His girlfriend’s parents found Leo’s business bewildering since it eschewed revenue in favor of growing a user-base.

“His college romance was in a precarious position,” Steven writes. “During meetings, Leo would confidently tell everyone that the challenges were about to pass. But we know he frowns when no one is around.”

Forrest Li enters the scene

Under siege on all fronts, Leo reasoned that the best way out was to do an MBA at Stanford in San Francisco. Over there, he could raise money from American investors for GG. Soon after 2007 arrived, Stanford accepted the 24-year-old Leo.

“Upon getting the confirmation letter, a drunk Leo hugged me and wept, with no words to express how he felt. That year, the young Leo became GG’s father and the team’s big brother.”

Yet things started to turn around. GG had reached the 10,000 user mark. Advertising money came in and boosted revenue. Its financing problems were going away. Leo had no need to go to Stanford anymore.

But he was still worried: how far can GG go without an experienced manager at the helm – the proverbial ‘adult in the room’? As he mulled the question, a friend at Stanford, a student who interviewed Leo as part of the admission process, introduced him to Forrest Li, an MBA graduate who had worked in Motorola China. Leo found the solution he desperately sought.

“Forrest looked honest, and when we met he had a warm and generous smile, which made people comfortable,” Steven says.

He came on board as a part-time business development manager. After witnessing GG’s growth, Forrest asked to join full-time as the CEO, with Leo becoming the president.

“In hindsight, investors were right to call us kids: we made a series of painful mistakes. Forrest was too skilled a ‘professional manager’ for us to handle,” writes Steven.

Forrest explained his request this way: the president is the company’s head, and the CEO is responsible only for business operations. The founders don’t typically become CEOs, and engineers especially aren’t suitable for the role.

According to Steven, Forrest’s explanation confused them, but they agreed to the demands because they never valued company titles anyway. They failed to realize that the CEO was usually the big boss, with the president taking orders from him.

Forrest pressed further. He told Steven that CEOs who join a startup typically get 30 percent of the shares. Steven was afraid of that figure, because angel investors typically take only around 10 percent. Further, he later found out that CEOs who join a startup after its founding typically take less than a 10 percent stake. Forrest also asked that they give him the title of ‘co-founder’.

“Now that I think about it, this request to be a co-founder seems honest coming from him, compared to his claim that he is now the ‘founder’,” writes Steven.

Leo lacked experience to deal with all this. According to Steven, Leo was a person who slaves away for the company to the extent of sacrificing self-interest. Faced again and again with Forrest’s requests, he gave in, choosing to believe in his “Stanford aura”.

But Forrest’s requests may not be that unreasonable. He quit his job at MTV Networks to join GG, he did not collect a salary despite being a full-timer, and GG struggled despite its early traction.

Broken promises

In Steven’s perspective, things went from bad to worse for Leo. The share distribution was as follows: Leo held on to 35 percent, Forrest had 30 percent, a new investor held 10 percent, and another 25 percent went to the employees’ option pool. The company had three board seats, one for Leo, another for Forrest, and the last one for the investor.

A takeover became a legitimate threat. With this structure, Forrest and the investor could gang up on Leo and override his decisions. The investor turned out to be a classmate of Forrest’s wife. But Leo still believed Forrest would not override his authority.

The stage was set for Leo’s departure. But circumstances under which it happened are contentious. The threat of Forrest stamping on him may not have materialized.

The anonymous note, allegedly written by a venture capitalist who spoke to both parties, portrayed Leo as an irresponsible business partner who reneged on a promise to Forrest to give up his Stanford dream and focus on GG. The note alleges that Leo made his decision unilaterally:

[Forrest] and Leo sat next to each other, and Leo would be filling up some application forms from Stanford. So Forrest felt uneasy about their initial agreement. One day, Forrest could no longer tolerate it but asked Leo point-blank if he has changed his mind and would still go to the US to study. Leo admitted it: his parents asked him to do it, and he had no other choice. He emphasized he’s doing it for the company, and that he would continue working on GG.

Forrest called Leo out on it, citing how the 16-hour time difference and the remote working environment would make working for GG impossible. Getting a degree at Stanford is no walk in the park; it’s one of the most rigorous colleges in America.

In fact, leaving for the States could jeopardize GG’s ability to raise funds. The note’s author writes that investors could see Leo as a burden since he would be holding significant equity while contributing little to the company. Staff would be unhappy too since they would pour so much more into the company, only to get comparatively less shares in return.

But Leo was adamant. In September 2007, after a dinner together, he left and never returned.

In Steven’s narration, Leo’s flight to Stanford was a product of Forrest’s manipulation as well as an attempt to save the company from internal strife.

The two had one major difference in decision-making. Leo, with his science and mathematics background, was numbers driven, while Forrest, in Steven’s words, was more adept at “playing tai-chi analysis”. So whenever Leo raised his doubts, Forrest would tell him off for lacking business sense while emphasizing his own experience and proven track record. Steven writes:

“Leo likes to communicate transparently, and he willingly shares his frank thoughts with others. He lacks subtlety, and would never hide his viewpoint. But Forrest speaks little, and is rarely vocal about his position. Every time Leo speaks, he would think he has brought across a point clearly and reached a consensus. But the real result was that Forrest got to know Leo more, but Leo could not decipher what Forrest was up to.

While the conflict was simmering when Forrest first joined GG, the differences became irreconcilable once Leo shed control of the company.

Within half a year of Forrest’s entry, the pioneer members of the team were marginalized while GG achieved rapid growth after the investment.

“Aside from the code and the server, we have lost total control over the company,” Steven notes.

The company splintered into two factions. Yet Steven failed to explain how Forrest cut off the pioneers from the company, if it happened at all. The two sides may have distanced themselves naturally due to mutual dislike.

In the end, Leo’s decision to leave was informed by the famous Chinese phrase of how one mountain cannot have two tigers. If the two sides battled one another without ceasing, GG could not go far. Leo could have stayed and fought, after all, his side still owned the code and the servers.

But he reasoned he could bring GG more money by being in Silicon Valley. He could do anything and not obstruct the startup’s progress.

Steven describes Leo’s departure as tumultuous. Leo changed his mind before boarding a flight from Beijing to the States. Apparently, he was thinking of ways to escape, and his family compelled him to board the flight. They only left after the plane closed its doors.

Whitewashed?

According to Steven, Forrest wasn’t done “plundering” GG. In the States, Leo persuaded investors to back the company. He even accused Forrest of orchestrating an information blackout between the pioneer team and Leo. Then, in February 2008, Forrest sent out an email announcing that he was renaming GG as Garena. He kept Leo out of the thread.

“When Leo asked me on MSN why Forrest suddenly changed the platform’s name, I fell silent. And so did he.”

Forrest started calling himself the founder of Garena, and allegedly began whitewashing Leo’s name, both within the company and to the media. In a recent interview with PEdaily, Forrest says this was a miscommunication.

There were two Garenas – one which Leo contributed to under GG, and the new company Forrest registered which also used the Garena name, but it had nothing to do with Leo. The use of the name caused confusion in public and within the team with regards to the two entities, leading to accusations of whitewashing.

In any case, Steven wanted to stay on in the company at first. He believed Forrest dared not touch him because he, after all, held the technical expertise in the startup.

But he received another piece of bad news: Leo intended to sell his shares in GG. Steven saw it coming, after all, it was a battle with no prospects of victory, “a tragic drama where the child in the family gets maimed”. For the first time, Steven felt like leaving.

To the media, Forrest portrays Leo’s decision as a reckless one which left Garena in a lurch. Its financial status was still unstable, which meant Forrest had to make a huge sacrifice to buy back Leo’s shares, to the tune of $700,000. Leo’s initial demand was $1 million. He took months to scrape together the money, which included his own. The transaction was done in May 2008.

Forrest says he acceded to Leo’s demand out of goodwill. He could’ve easily liquidated the company right away, declare it bankrupt, and start fresh. He didn’t need to give Leo a single cent.

He adds that after the transaction, Leo was grateful as he needed the money to pay the school fees and some daily expenses.

“We were still working together after all, and no matter the result, I sought a dignified end to this. We’ve always had a decent private relationship anyway,” Forrest says, adding that Leo initiated the exit, which means that Steven’s claim that Leo and himself were ‘ousted’ is inaccurate.

Garena faced a rough transition in the months ahead. Without Leo’s expertise, Forrest scrambled to keep the platform afloat while seeking a CTO to put things in order. He found Taiwanese Yang Heng Xian, who eventually rewrote all the code for the Garena software.

The company discovered another problem. Leo previously told the media that GG had 500,000 users, but the team realized that their engagement levels were unusually low.

An investigation surfaced the truth: Leo obtained customer data of over 400,000 individuals from a website in China, and put them into GG’s database. These registered users didn’t even know they were there. The company removed the data since holding on to them is illegal and unethical in Singapore.

Forrest eventually did dissolve the old Garena, sensing that the business model of relying purely on ads and digital content sales would fail. He formed a new one in 2009, bringing over 80 percent of the staff from the old firm.

Garena would still remain an online platform for gamers, but under Forrest’s direction would become a game publisher. By 2012, the company was making S$31.5 million (US$25.1 million) in annual revenue – triple the year before – and S$7.86 million (US$6.23 million) in profits, according to a financial statement released online. Garena turned into a sustainable business under Forrest’s watch.

Picking up the pieces

As the dust simmered, Steven and Leo consoled themselves into thinking that at least their baby now has a chance to grow without internal strife. Steven then began figuring out his next steps. Leo, as usual, had a bright idea.

“I’m about to graduate from Stanford,” he told Steven in April 2009. “I plan to start a company in China, and I’m not heading back to Singapore.”

“So, what do you plan to do?”

“I’ve not thought it through, Steven, but why don’t we do it together?”

Steven remembered that conversation vividly, because it brought him back to that moment four years ago, when on a rainy day, Leo asked him: “Do you want to have your own business before you graduate?”

Steven returned to China, sold his shares in Garena, and devoted four years to Jumei.

 Vanessa Tan and Charlie Custer contributed with translation work.

“The first thing we recommend for starting a business in China is starting a business in Hong Kong,” remarked Jacob Blacklock at the recent Lean Startup Beijing meetup.

The American attorney from Lehman, Lee, and Xu law firm came to speak to a packed crowd of aspiring entrepreneurs about the basics of registering their business in Hong Kong, and why they should do so. Here’s a summary of what he had to say:

1. Tax benefits

Blacklock suggests foreign companies entering China should register a Hong Kong Special Purpose Vehicles (HKSPV), then set up a wholly-owned foreign enterprise (WOFE) in China. The WOFE makes money in China, then sends it back to the Hong Kong company. While transfers cost about five percent, it’s much cheaper than paying China’s 25 percent income tax. The tax rate on money not earned in Hong Kong is zero percent. Profits earned in Hong Kong are taxed 16.5 percent. Startups are also eligible for VAT refunds. All funds can be managed easily and moved back and forth between the WOFE and HKSPV with no currency controls.

2. Intellectual property

Many foreign startups simply work in China under the radar, without legally registering their company anywhere. This is a risky move for many reasons, and a major one is the lack of protection for intellectual property. Trademarks, copyrights, patents, design patents, and domain names all should be filed and held by the Hong Kong company. China uses a first-to-file system, and prior use is not considered. With a HKSPV/WOFE registered, startups can transfer funds out of China using licensing agreements.

3. New streamlined rules for WOFEs

As of March this year, China made it easier for startups to get off the ground by streamlining and reducing many of the requirements necessary for company registration. The requirement for a minimum amount of registered capital has been eliminated, as have capital verification reports. Annual audits have been replaced by a system that lets the company send in its own financial reports. Blacklock noted this likely means more holding companies and hi-tech companies coming into China. While the easing of the law is beneficial to startups, he says this also means there’s a need for more due diligence on their part. “If the authorities aren’t watching, you have to watch,” he says.

4. Cheap and easy

Registering a HKSPV (Edit: originally said WOFE, our mistake) costs between US$200 and US$300. Remittance of funds is easier than if a foreigner were to start a joint venture in China. Exits are also much simpler, as a company can be sold or closed in just one day in Hong Kong, but it takes six months to a year in China.

5. Limited liability

Because the HKSPV is a limited liability company, the liability of each shareholder is limited to the capital they have invested. The Hong Kong company is also liable for the subscribed registered capital for the mainland company. This is important if lawsuits ever arise. The alternative is to run a joint-venture in China, which requires at least half the company be owned by a local partner. WOFEs offer more control and less potential for disputes.

The best option?

Both Blacklock and another attorney attending the event vouched for the Hong Kong company registration route. Besides a joint venture, other options include the Cayman Islands, Singapore, and other tax havens, but all have larger barriers to entry.

Note that registering a company in Hong Kong requires having an office address in Hong Kong, which means you’ll be paying rent for office space even if you aren’t using it.

For more info, check out Blacklock’s full slideshow below:

Editing by Steven Millward; image credit: Flickr user Jo Schmaltz

After bringing our much anticipated Meetup series to Hanoi for the first time (we’ll be back, don’t worry!), we are returning next month to Ho Chi Minh City for our third Tech in Asia Meetup in Vietnam. This time, we are bringing not one, not two, but four juggernauts of Vietnam’s social media scene.

The amazing lineup includes Esther Nguyen from POPS Worldwide, Vong Thanh Cuong from Boomerang (Vietnam), Toan Shinoda, a YouTube celebrity in Vietnam, and Hung Zino, manager of Pho and Toan Shinoda. These four distinguished speakers will touch broadly on the topic of social media in Vietnam and its impact on local startups.

Drawing on her experience and journey as a founder of POPS Worldwide, Esther will start off with a keynote speech on how to build a successful business by harnessing the power of social media. The second part of the Meetup will be a fireside chat where our Tech in Asia Vietnam editor Minh will pick the brains of our panel consisting of Cuong, Toan Shinoda, and Hung Zino. Given that Facebook is still growing rapidly in the country – at one million new users a month – the time is ripe to discuss the evolution of social media, the potential of social media startups, and the future role of social media in Vietnam.

If you are interested, please join us on July 10 2014, 6.30pm. Attendee tickets are free but limited in number.

Agenda:
6.30 – 7.15pm: Registration
7:15 – 7.25pm: Keynote – Bringing content alive on social media
7:25 – 8.00pm: Panel discussion – Potential of social media startups
8.00 – 9.00pm: Networking & light refreshments

Besides this, Tech In Asia will be giving a big opportunity to Vietnamese startups less than one year old to showcase their products to the community. Each startup will get half a table space to display and share about their product. Please register under ‘Startup Exhibition’. Participating startups will need to pay a deposit of 200,000 VND which will be refunded upon arrival at the Meetup.

Venue: Thông Tấn Xã Việt Nam – Vpđd, Bến Thành, Ho Chi Minh City, Vietnam

About the speaker: Esther Nguyen

Esther has founded a number of successful startups, and first started working in Vietnam in 2004. Her first company started in 1998, was a beauty and health e-commerce company. She sold the company in 2001 to move on to green technology. Her latest venture started in 2007 when she founded POPS Worldwide, a leader in digital media and game development in Vietnam.

Esther has been invited to speak at the University of Southern California, National University of Singapore, Music Matters Conference in Hong Kong, Midem in Cannes, France and many more on the topics of entrepreneurship and media. She earned her bachelor’s degree from the University of Southern California and her Juris Doctorate from Golden Gate University School of Law. Esther is a member of the California State Bar.

About the speaker: Toan Shinoda

Toan Shinoda (Tran Vu Toan) was born in 1987. He used to be major in English at the Hanoi-Amsterdam high-school and then studied a four-year course at Wesleyan University in the US. He is living in Vietnam now.

Shinoda’s style is different from other vloggers, some of whom are also his close friends, like JVevermind, Huy Me and Lam Viet Anh. Most of his vlogs are sarcastic or contain quite a lot of “sensitive” words, which is part of reason why most of his fans are men. Toan Shinoda invests in making new vlogs quiet often. He frequently changes topics, ways to approach audience, or the tupe of vblog (films, narratives or reports). He now has over 500,000 followers on YouTube.

About the speaker: Hung Zino

Hưng Zino (Nguyen Ngoc Hung) is currently founder and CPO of NVU Company, operating and developing Thich An Pho. He graduated from Founder institute in 2012 and then started a mobile dating app, Tapmee, which later failed. In 2013 and prepared a new startup – Thich An Pho – with two other people, Pho Dac Biet and Khuong Vu.

Thich An Pho is a product of NVU, which he founded at the same time as Yeah1. It is a series of viral clips based on the 2! Idol program (on air since 2008). Thich An Pho now has 2.4 million fans on Facebook, one million subscribers on YouTube, and 245 million video views (the most in Vietnam).

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A pirated movie plays in the QVOD mobile app.

Nearly two months after a police raid on the offices of QVOD, China’s most notorious video piracy app, there are reports today that authorities in the southern Chinese city of Shenzhen are seeking to impose a fine of nearly $42 million. That would make it China’s biggest piracy-related payout.

According to the report in Tencent Tech (in Chinese) this afternoon, the target fine comes from an estimation that QVOD – known as Kuaibo in Chinese – made RMB 86.7 million (US$13.9 million) from illegally streamed or downloaded content that was monetized via advertising. The Shenzhen Municipal Market Supervision Administration then tripled that number to come up with the $42 million figure.

QVOD remained online immediately after the April police raid, but its website and streaming service closed down some time in May.

Today’s announcement comes from a closed-door hearing in Shenzhen. There’s no word yet on a date for the trial.

More legal battles

Aside from facing prosecution, QVOD – along with web giant Baidu (NASDAQ:BIDU), which is not related to QVOD – is being sued by a collective of four leading video sites (Youku, Tencent, Sohu, and LeTV) who are seeking RMB 300 million ($49 million) in damages. This has not yet gone to court.

“Since the second half of 2010, LeTV has found evidence of 650 copyright violations by QVOD,” said LeTV COO Liu Hong late last year when the lawsuit was issued.

We’ve contacted Youku, China’s biggest video site, for comment on its legal battle with QVOD and will update if there’s a response.

Ladies, tell me if this sounds familiar: despite having a wardrobe chock-full of clothes that you’ve never worn before, every new fashion season you’ll be out there swiping your credit card. If you’re reading this and shaking your head, congratulations – you belong to a tiny minority.

Modern consumer-to-consumer (C2C) selling apps offer an elegant solution to the problem of overcrowded wardrobes. They help people sell idle items to buyers who are looking for a bargain. Marketplace apps, such as Singapore-based Carousell, have become extremely popular with this crowd. However, Stephanie Crespin, founder of fashion ecommerce website Style Tribute, wants to focus on the top end of the secondhand market.

“
In Asia, the high-end fashion C2C secondhand market is not properly exploited yet. However, on a global scale many secondhand fashion businesses have flourished, especially in the US,” she explains.

Style Tribute recently raised a round of seed funding from Great Simians, Crystal Horse Investments, as well as three angel investors, one of which is Trevor Healy, CEO of Amobee and former VP/GM of Paypal. The amount is undisclosed.

Catering to young corporate women

The idea for Style Tribute was born from Crespin’s passion for vintage and unique designer pieces. While in Paris and Brussels, she spotted several brick-and-mortar stores where she could sell her idle couture pieces and uncover incredible luxury products. As work became more demanding, though, she lacked time to hunt down original pieces or sell items to shops.

“I then turned to Ebay, and had a really frustrating experience there. Selling was a hassle, and finding a fashionable piece on Ebay was like looking for a needle in a haystack,” she recalls. With this in mind, she created a platform for young corporates such as herself who are passionate about fashion.

Selling on Style Tribute is easy enough. All you need to do is submit a form and a couple of photos of your item, and the team will take care of the rest – uploading your pictures and information onto the website, picking up your item from you, shipping it to the new owner, and finally transferring the proceeds to you.

Crespin thinks that this concept will work because it addresses the needs of the current generation of working women, who typically have one too many designer pieces but are simply too lazy – or short of time – to sell them. They might also have no idea where they can get a good price for them. She elaborates:

They are smart shoppers – they know how to find a good deal, enabling them to wear as many stylish designer items as they possibly can with their income level. After all, why should one have to pay full price when she can get it on Style Tribute at 85 percent off? 
We have arrived at a generation of value seekers and educated shoppers who are knowledgeable about the different purchase options available. Prices have never been more transparent, and finding the items at the best price is within everyone’s reach. Consequently, we are engaging everyone independently of their social class or economic power.

An overcrowded wardrobe might not be the only reason why women want to sell their clothes. According to Crespin, the motivations vary widely. “One of our first clients was moving to a colonial
 house, and was concerned that the humidity would damage her gowns,” she says. “Our latest client had experienced an event’s theme change at the last minute, and the S$3,000 dress she bought specifically for that occasion was no longer appropriate.
”

She might just be on to something. So far, the business moved rapidly forward, quickly outgrowing her apartment, then a storage warehouse, and finally settling into a 2,800-square-foot warehouse. Sales multiplied by a factor of six since business began to take off last October. She did not disclose exact revenue figures.

“We continue to receive new stock on a daily basis. We are currently uploading around 70 items per week, but soon we’ll be unable to keep up with the inventory coming in,” Crespin reveals. “Thus, we will start promoting the DIY selling option, in which people can upload the pics of the products themselves. There will still be a screening of each product before it is posted, as we want to preserve the quality of our assortment.” She adds:

Our customers know we have high standards – we accept only high-end designer clothing in pristine condition – and we want to maintain this at all costs.

Maintaining high standards

It is precisely in this manner that Style Tribute wants to set itself apart from the crowd of secondhand fashion businesses: by guaranteeing the authenticity and quality of products on their platform, as well as providing a premium service to customers.

The ecommerce website’s white glove service is currently free of charge. The team will arrange for the collection of your item, as well as take care of the photo shoot for you.

This aspect of curation and providing end-to-end premium services is one that estores in the US market have recognized and embraced, but none in Asia have gone for this approach, according to Crespin. “Certain ecommerce players [in Asia] have realized the potential of the secondhand market, however they largely act as merchants only, without a real passion and love for the product itself.”

In contrast, Crespin wants to build this business on genuine passion, creating a brand that has soul. With this in mind, the team is also building up in-house experts to specialize in different domains of the fashion industry.

“We want to establish a reputation for offering to the customer an assortment which is consistently and exclusively made of high-end quality pieces, and which are on-trend or of timeless style,” she emphasizes. The team does this by employing strict standards of curation on every piece that is sent in.

Style Tribute 2.0

With a round of funding in hand, Crespin is looking to expand from Singapore into other countries in Southeast Asia. The investors, which have a wealth of experience in the technology/digital space, will provide assistance.

“But our main goal for the year ahead is really to grow our community of sellers and buyers across certain key Asian countries.” The team aims to secure a second round of funding in the coming year.

A revamped version 2.0 of the website will be rolled out soon, which will feature a blog that will provide customers with fashion tips such as how to pair up items. The team will also launch a Style Tribute dashboard, where sellers can track their items on sale. They could find out which items are popular but not selling well due to being over-priced.

On the buyer front, they will soon be able to set alerts on coveted items and be informed once these items are on sale.

“Currently, there is no single dominant player in secondhand fashion, but I don’t think it will last.

 I do believe there’s a limit to the amount of players that can co-exist in this industry, as sellers won’t keep switching from one platform to another one. They need one trusted platform to become their key partner,” she says.