Ask HN: YC out of touch in China/SE Asia?
I am not sure if I am the only one seeing this through but I feel that we are in midst of changing times in terms of the market shift. YC startup playbook is very relevant for valley (meaning a much more mature market such as US or EU). But what we are seeing with China to SE Asis and then India starting to follow defies most of the - how to start a company theory. There are quite a few models - marured to moid and even early stage - from wechat, alipay, grab, mobike, pinduodup and I won't mention a host of new one's emerging in ecom/fintech space. None of these map anywhere near YC theory of how to start a company.
This is not a criticism.
I am just asking if what I am seeing is what non valley founders are realising also - I am speaking from first-hand experience working in China/SE asia for past 3 years and recently Vietnam, where I met many founders.
Finally - what I really hope for is if someone can suggest good reads/books on growing scaling companies in Asian environments. The english literature is sparse on the topic and usuals of sam altman to peter thiel honestly does not fully apply in the global / cross border dynamics. World works somewhat differently for people starting company in Asia now and I kid you not - markets are huge and many huge names will continue to emerge beyond Tencent and Alibaba or Flipkart.
I am just turned off by how much good valley advise is now out of touch on what is happening in asia - circa 2018. As a partner at YC, I can say that we are actively working on how YC can help founders in China. One difference I've noticed with Chinese startups is the relative speed at which they move. If you thought SV moved quick...it's nothing compared to Beijing! Re: what SV advice is transferable, we're still very much figuring this out. It's not 100% but I highly doubt it's as limited as I've heard some BJ investors and founders imply :) Good resources on China and startups:
- 996 Podcast by GGV https://996.ggvc.com/category/podcast/
- Sinica Podcast https://supchina.com/series/sinica/ Daily/TC style news
- Axios China daily email http://link.axios.com/join/signup-all
- Pandaily https://pandaily.com/ Thanks - here is another one that I have discovered. I have no idea who these people are but they seem to bring good insight from China. https://kr-asia.com/ https://technode.com/ also useful sometimes Another one - mostly shallow grapevine with SE Asia view https://thelowdown.momentum.asia/ - probably many such exist I have no affiliation with any of above. Thanks to google - I keep hitting these more than others. I'd be interested in reading a blog article that describes in what way Chinese startups move faster, I feel there is a lot to be learned here. I think it is mostly that competition is insane. Not that competition is low in Silicon Valley, but you are still able to carve out some niche for yourself. In China not so much, or at least it is a lot harder. People will come in and do what you do, what your supplier does and get the same deals as you, on every level of your business. SE Asian here. Some things I've noticed: * Talent is extremely rare. The ratio is about maybe a tenth as much in good areas vs somewhere like NYC. Put it this way - our interview process for senior engineers involves asking them to build a linked list, and it involves a lot of hints. * The unicorns of the region are app+logistics, things like Grab, Lazada, ofo. * Or things that cut through heavy bureaucracy - alipay, iMoney, iPay88, WeChat. Stripe and similar companies have tried but it's hard to pierce the bureaucratic layer. * Scaling is a very different game. You simply can't hire a hundred of the best people. You can get maybe 2-3 excellent people, and the rest will have to be trained from scratch. This makes moving fast difficult. * However, living costs are low... founders in SEA except Singapore can live off $10k/year. So from all these points, it's extremely dangerous to move fast. A lot of local startups overextend into multiple countries then run out of money or can't manage. The SE Asian game is similar to the Vietnam War. One has to move slowly and carefully. Higher tech may not defeat a well entrenched local, and companies like Uber have bled trying. I think the startup game in SE Asia and China is moderate tech. You won't have Google or Apple, but you'll have Tencent, LTE, and Huawei. The biggest tech companies in SEA are things like telcos and job listing sites. Asians are not sharks but bottom feeders - they can survive at lower depths, under more extreme conditions. Ideally startups in SEA would be more like MailChimp, Reddit, Postman, Runcloud. Where it's not a race, but the unit economics matter. Can you zero in on a few specific pieces of YC advice that are most wrong for early-stage companies in Asia? I think it'd be more productive to have a discussion around some specific issues. YC has much less experience in Asia than the US, and we'd like to learn. I am myself somewhat formulating a view and I still think many of YC fundamentals still very much apply - so below thoughts may not be well-formed - please read at your own risk. The backbone of years of manufacturing from shenzhen belt in itself is becoming a moat. For example - I was literally talking to a fast fashion seller with a few shops in seoul yesterday - historically - korea has had edge on design lines to adopt and produce fast fashion from NY/EU creative trends and then manufacture in vietnam/banglafdesh etc - he is just starting to shift some of his buying to China. Their work is now better quality and more so it is cheaper - in vietnam I also saw a fashion retailer going ga ga over quality of men belts he is sourcing from china and now cost is lower - earlier only luxury retailers types had access to such stuff from China - weak IP/copy/ better-trained workforce is making luxury produce more easy to produce may be. Cross border/brand less might be next frontier in ecom here. The spending and capital power of giants such as Ali/Tencent is becoming a moat. These giants got huge with breaking out market but now they are something like a governopoly working closely with policy makers for china vision. All of this is affecting SE asia and now even India. In nutshell - below might be different now for starting a company: 1) Being first and just being there might matter more - product-market fit can be weak? because you are dealing with a customer base that is just coming mobile and is much less sophisticated - they will still be ok with your service with some compromise - this is fundamentally against what I have known all my life! - in long term I bet good old best CX matters - but for immature markets not so much right now 2) Being first in small market / being market maker: great if you can do this but this is not needed in Asian context. There is enough size and potential growth coming that just building in the existing big market verticals is ok - you have an opportunity to differentiate by having stronger talent and actually improving existing experience if you can start with a smaller category or segment - ok to go head on with existing players - may be same thing YC says but I word differently 3) Talent is sparse - so you have lots of avg. stuff built and then iterated - this can be your secret advantage even more so here - you can do same thing but bit faster and at better quality I have think more about this to be more constructive. These are some of my early thoughts and I again - I just hope to share and exchange what I know. I may be wrong and hey that is ok! YC seems very oriented to Software and other businesses where iteration costs are low. In hardware you have to spend some money to test product market fit. The only way to not lose your shirt is to follow a waterfall approach with more traditional planning. From an external view it seems like the antithesis of the YC approach. YC started with software companies, but a substantial fraction of current companies are building hardware. See https://blog.ycombinator.com/yc-winter-2018-stats/ and the links to company descriptions. Waterfall means different things to different people. I think the key to success is getting several iterations in front of the customer, and being able to make major changes based on their feedback. That does usually mean some duplication of effort, but that's better than building something complete that nobody actually wants. Also, there's a new funding deal for biotech companies that provides more money: https://blog.ycombinator.com/yc-bio/. I think the issue for biotech isn't just you need more money -- you do to get initial POC (the most analogous concept to product / market fit), but can actually get to exit with less than tech co's nowadays -- but that you have to spend your initial money right. product / feedback cycles are orders of magnitude longer / more expensive, so you need to do more planning to make sure you do the right experiments. this is the hard lesson that the experienced biotech VCs have learned, that generalist VCs have struggled with and why you dont really see many generalist tech VC backed biotech co's succeed (except stemcentryx) more money without better planning = more money wasted Yes, but you’re also doing the typical apples to oranges comparison here. Just like the ol’ “China is light years ahead in mobile payments!”. Well sure, because we have a mature credit card system that works well and the Chinese never had a credit card in the first place. Long story short, because the economies are at different stages, the issues that China has now perhaps the US had 50+ years ago. You’re not going to sell a product to a 40 year old the same way you do to a 12 year old. Cutthroat competition of well-funded second-movers is a whole different ballgame. It's funny that you mention Peter Thiel. His "globalization" pretty much describes this. I think you'll find relevant advice in more traditional managerial business literature. You want operational excellence above all. What do you feel works in Asia, but isn't done or works elsewhere? Also what doesn't work in Asia that YC and others do? I would rather China/SEAsia grow their own networks rather than YC come in and impose their way of thinking onto a different culture and market. I get a sense that this notion of American exceptionalism is waning an that people, especially in China, don't look to America for leadership the same way as in the past. And I think there is a general sentiment that China is well on it's way. I suspect YC needs China more than China needs YC, or at least I think they're headed towards that future. I've noticed a lot of really talented Chinese immigrants and students who have worked in Silicon Valley for several years moving back to China to work for Tencent, Baidu, JD, Alibaba etc. I'm sure "Trump's America" is also a factor in all this. It's propaganda. They don't have the cultural tools for that (yet).