Today we sit down with Spencer King, who's a divisional head at Yixia Technology. Yixia is the maker of China’s most popular short video app Miaopai (秒拍) and live-streaming app Yizhibo (一直播).
We start with Spencer's story and learn more about what it was like starting a company in China that was acquired in just eight months. Key lessons include a different approach to UI/UX, execution and speed as a competitive differentiator, the prevalence of fraud and blatant copy-cats in China, and more. We then cover Yixia Technology and examine the broader online video space in China, discussing not only China specific trends across online video, short video, and live-streaming when it comes to content preferences and delivery approach, but also how they compare to the U.S.
Starting a Company in China and Key Lessons
Adam: Spencer thanks so much for joining us today. Before we get to Yixia Technology, let’s spend some time talking about your experience in China to date.
Spencer: Sure! I studied computer science at Stanford, both undergrad and for my masters. After graduating, I joined Operator, which was founded by Robin Chan and Uber co-founder Garrett Camp. I was the founding engineer there. After working there for more than a year, I saw a void in the video mobile space in China. I subsequently founded Tian Tian, which is a video-based social platform. It was acquired by Yixia Technology in just eight months.
Adam: So you’ve worked at a stellar U.S. start-up with amazing co-founders, came to China and sold a company within eight months. What was that process like? What did you learn about China during that period?
Spencer: There are some pretty big differences when it comes to working in China vs the US. For example, when it comes to UI/UX (user interface/user experience), Americans generally prefer simplicity, whereas in China information density is a lot more important. There is also less UX innovation in China, because typically product managers would design a product, and then a UI designer would just fill in the color and apply the branding.
Secondly, I think that copying is a very important point to understand about China, because people in the States frown upon copying. But in China copying is actually very very normal. There is no shame in copying. Expect your product to be copied by ten other apps. When Instagram copied Snapchat's story feature, everyone was talking about it… folks were really surprised. But if this had happened in China, it would have been super normal, even expected.
One more point would be the prevalence of fraud. In China, fraud is not uncommon. For example, you would see a lot of fraudulent resumes. And when you do business, even if you sign a contract, unless the money is in your bank account, the deal is not done. So in order to minimize the risk, it is very important that you work with people you trust, and also have mutual connections with the people you are working with.
Adam: Got it. So when you say fraud happens a lot, and you must make sure that the money is in your bank account, are you talking about commercial arrangements or fundraising?
Spencer: Commercial arrangements for the most part.
Adam: Makes sense. Another key point you mentioned was that in China, companies are focused on execution and moving really fast such that copying is okay, and even normal. Why is that?
Spencer: If a product is proven in the States, the chances of it being successful is a lot higher than those of a brand new product, so Chinese people in general feel safer copying a proven product.
Adam: Right. In some cases, VCs even prefer that because a proven model is more likely to be successful. And also, given that the investment horizon tends to be a bit shorter here vs that in the U.S., they all want something to work and start monetizing relatively quickly.
So we agree that execution is key, and it seems that you executed very well and very quickly. You came to China, worked on your app for about eight months' time, and had it acquired by Yixia Technology. How were you able to achieve that?
Spencer: We were fundraising and a VC really liked our product, so much so that he introduced us to Yixia Technology because he had previously invested in that company. It is very hard for foreign founders to execute a product, even more so a social product, without a proper local partner with a lot of resources. So we thought the partnership with Yixia could actually be a very sound idea. We met with the CEO who really liked the product, and quickly decided to acquire our company.
Adam: Right, but it all happened so quickly. You were working on your product and got your prototype out in five or six months' time, then the entire acquisition process happened. Can you speak to that experience and how it might differ from that in the U.S.?
Spencer: I actually think that in an early stage, it is not that much different from the U.S. We purely made a decision to sell, thinking that it would be a lot easier to make a successful product with a local company that is successful, with so many resources and on the ground experience.
Yixia Technology and the Lucrative World of Short Video and Live-Streaming
Adam: Got it Spencer, and congratulations again on your sales process. Let's get to Yixa Technology now. Can you tell us more about what Yixia is, what your core products are, and what you do?
Spencer: We have three main products. The first one is Miaopai, a short video platform launched in 2013. It is the largest professionally generated content platform now in China, with almost 300 million monthly active users. It got very popular right after the Ice Bucket Challenge in 2014, which was when the product started going viral.
Our next product is Xiaokaxiu, which is a content-creation app launched in 2015. It quickly became the No. 1 app on the App Store in China. It is now known as a trendy product with millions of daily uploads.
Our third product, Yizhibo, is a live-streaming platform founded in 2016. With around 60 million monthly active users, it is now the No. 1 live-streaming app in China, and over 3,000 celebrities in China use Yizhibo to share their lives with their followers.
Adam: I know Yixia is doing very well in China. I've certainly used some of these apps you mentioned. But also in China there is a very competitive market with other players when it comes to video-related apps. What differentiates Yixia from its competitors?
Spencer: Well, quality of team and product aside, we also have a partnership with Weibo, the largest social media platform in China. We would leverage Weibo's distribution power and social graph. We also have a lot of celebrity resources. As you can see, many famous people would use our products to post and share their livestreams to their followers.
Adam: Are those celebrities exclusive to your platform?
Spencer: Not necessarily, but a lot of them willingly post on our platform because of our ties with Weibo, and due to the demographic of our users. The size of our user base goes without saying.
Adam: So let's talk a little bit more about these video formats. Let's start with live video because it's so popular here in China, and it's a very different experience here than in the U.S. For example, in the U.S., we had Meerkat, which came out in 2015 during SXSW. It was very popular for a couple of month but eventually died out. And Periscope, which was later acquired by Twitter, still hasn't reached its potential in the U.S. Whereas in China, apps like Yizhibo, and a few other ones, are doing very well with a ton of users while making a lot of money. So tell us more about these differences.
Spencer: Culturally, China is very different from the States. I think Chinese people tend to be slightly more reserved. Live-streaming is a great new way for them to meet friends in a more passive and comfortable manner. In general, Chinese people aren't as wealthy as their U.S. counterparts, so they have limited entertainment options. As a result, live-streaming is a great way for them to watch interesting and interactive content. Thirdly, I think people are more willing and happier to pay tips for a good show. This explains why live-streaming in China makes more money and is a lot more popular than outside of China.
Adam: On your last point about people being more willing to pay, I think there is an overall comfort with paying for good content, and increasingly so. Just as important however, is the fact that everyone has WeChat or Alipay on their phones, so it is very easy to use mobile payments and tip all these broadcasters. I imagine that broadcasters are incentivized to create better content because they are actually getting paid for it, and that kicks off a flywheel effect that creates even better content with a bigger audience.
Spencer: Yes, this is all true. But I would also say that the kind of content on Periscope is very different than what is on Chinese live-streaming apps. Periscope is more about what you see, more about events. Whereas in China, it is more about following a performer showing off a talent like singing, perhaps via selfie mode. Following a broadcaster that you like is a lot stickier than going onto Periscope to check out events.
Adam: You were getting to what the Chinese user base prefers in terms of content. Can you walk us through that?
Spencer: In general, there are a few kinds of content that are currently popular in China. Number one is performance-based livestream. For example, someone who knows how to sing or how to talk about an interesting topic would perform in front of the camera.
Games (e-sports) are also very popular in China. There actually are game broadcasters who are paid from $5m to $20m USD every year just to broadcast in a live-streaming app.
E-commerce is another theme that is prevalent today. A lot of people put links of their online shops in their livestream, and ask their followers and viewers to go to their store and buy their products.
Then there is education. A lot of teachers and schools started a broadcast on classes for students, and they would charge a fee for users to go inside the livestream, and that's how they make money.
Lastly, finance is also an interesting topic. People would talk about stocks, how to make money from the stock market. The more popular ones, once they acquire enough users, would start charging for people to enter their streams.
Adam: So how might these differ across other video formats, from regular online video to short video to live video?
Spencer: Live video is only just getting started, so there is a lot of exploration being done in different aspects. And it is a lot more interactive. Users can interact with, comment on, and receive feedback from the broadcasters. In short video, it's more of a one-sided thing. Short video has already been quite figured out. It has been applied to many different verticals, and there's a lot of existing content.
Adam: OK. Can you talk a little bit more about user-generated content (UGC) versus professionally generated content (PGC)? I imagine for live video a lot of it is UGC because things are real-time. I realize that some broadcasters can have set-ups that look a little more professional but it is still in real-time. When it comes to short videos, you can spend a lot of time editing to make it perfect. So can you talk us through UGC and PGC?
Spencer: Sure. In the short video space, there are a few leading companies, including Miaopai from Yixia Tech, Kuaishou, and Toutiao. There are two kinds of short video content. One is, as you said, PGC, and the other is UGC. For PGC, Miaopai is the largest video platform. For UGC, Kuaishou is the leading platform. In general, PGC is more about having professional content done by companies that are nowadays receiving a lot of funding, and the themes range from cooking to gossipy news to educational content. UGC, on the other hand, is more about the daily lives of normal users. This differentiates Miaopai from Kuaishou.
U.S. vs China, and Future Trends
Adam: One last question for you, Spencer. Now we understand that general videos, short videos, and live video streaming seem to be some of the hottest areas in China these days. Where are things trending to? For example, in the US there are apps like Monkey, where you basically do video-based social. It's almost like Chatroulette 2.0. Is that happening in China? Is that going to be the new trend here?
Spencer: You are right in that live-streaming apps nowadays are getting more and more into social. They are exploring things like Chatroulette, Monkey, House Party, and all kinds of different interactions among users. I think more importantly the cost of live-streaming technology is getting lower and lower. Soon it is going to become a common feature among a lot of apps, just like how short video did. Because of that, you will see live-streaming used in a lot more different industries. I listed a few earlier, but I believe it can be applied to a lot more.
Also, I think there will be more programmed content in live-streaming. A good example would be how live-streaming was used for a very popular reality TV show last month called The Rap of China. They actually did the final vote on a live-streaming app, and voted for the champion with virtual gifts. This turned out to be a huge success, and I think we are going to see more and more of these things.
And I think obviously AR and VR will play a huge role in the industry. You can already see advertisements shown in AR. And the rise of VR and 360 camera means that there is a lot more content to be seen in VR live-streaming that would just make the whole experience more immersive, which is great. The only thing holding this back from happening, I think, is band-width, which should hopefully be solved in the near future.
Adam: I can only imagine such a future where these experiences are even more realistic and even more entertaining, such that we would never leave our rooms and instead interact with people virtually. But that's the topic for another day. Thank you so much for your time, Spencer.
Spencer: Thank you for having me, Adam.
The opinions expressed in this article are Spencer’s own and do not reflect the views of Yixia Technology