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“I can’t believe you’re here,” said a Chinese entrepreneur when we shook hands after a  conference in Shanghai. “Three years ago we set out to clone your business model in China, raised venture capital and just hit break-even. Meeting in person was not something we ever expected!” It was even more strange for me. Coming to the world’s most populous country for the first time, I expected little awareness about the mobile web challenges we are currently tackling at Mobify.  Instead, I found an active local competitor with 150 full-time employees, observed a vibrant and hyper-competitive mobile marketplace and even learned a few things about the startup ecosystem in China.

• Cloning business models is completely normal. Copying products and borrowing startup ideas (and sometimes more than ideas) from others is a standard way of doing business in China and is readily acknowledged by local entrepreneurs. There is even a term for it - Shanzhai. In an extremely competitive environment, described as “the ultimate form of capitalism” by one expat, anything goes. Everyone is hungry for success and they work exceptionally hard to get it so it is commonplace for the clone to be even better than the original! Keep that in mind when putting together your go-to-market plan for the region.

• “Mobile first” is a way of life for developers and consumers. Many new Internet users in China have never owned a desktop computer (or a landline phone) and have subsequently formed their opinions about various web services based entirely on the mobile experience. On one occasion, an American colleague of mine recommended LinkedIn to a friend in Shanghai. Accustomed to slick mobile products like WeChat, he commented that the mobile version of LinkedIn lacked features and wasn't interested in the desktop site at all. The lesson: if your product is not “mobile only” or at least, “mobile first”, it’s not going to take-off in China.

• Relationships govern the business and technology decision-making process. Trust and relationships are everything in Asia. There is no credit system. Corrupt officials only take money from people they trust. In many cases, customers choose to work with people they’ve known for a long time, even if there are immense business and technology benefits of trying a new software vendor. If you are trying to break into the Chinese market with a new product or service, having well-connected partners or resellers can be the difference between success and failure.

• Most companies are not yet comfortable with the Software-as-a-Service (SaaS) model. In an intensely competitive environment, data and IP are considered to be incredibly valuable. Vertical integration provides business and security advantages. As a result, many enterprise and technology companies are reluctant to host their data and software “in the cloud” out of concern that it might be stolen by the vendor. Subscriptions and consulting-based professional services are also thought to be “wasteful” and lacking value. Instead, customers prefer to pay a “perpetual license” and hire their own staff to reduce costs.

• Online business is huge, growing fast and highly centralized. Recently, The Economist predicted that China will be the world’s largest e-commerce market by 2020 - bigger than US, Japan, Britain, France and Germany combined. With that being said, don’t expect to find a thriving ecosystem of innovative e-Commerce companies just yet. At the moment,  most of these huge volumes are driven by several giant services like Alibaba and Taobao. What does this mean for startups? If your startup is B2B focused, the number of customers you can target is limited in comparison with the B2C market volume. Acquisitions are less likely as big players like Tencent are likely to simply copy your ideas and market to their user base.

• Access to the global Internet from China is limited and slow. It’s easy to feel just how slow Internet access in China is even compared to other places in Asia (see this Quora thread about some reasons why). Having no access to Twitter and Facebook makes it difficult to stay up-to-speed (literally!) on tech news in addition to causing some mild withdrawal symptoms when visiting from abroad. For your web app, this means that pages that used to be lightning fast barely load and social features don’t work as advertised. Some popular sites that heavily rely on Twitter, Facebook or YouTube sharing functionalities may not be usable at all (so make sure you think async). Akamai, Google’s AppEngine and many other global web infrastructure platforms don’t have much traction in China, ceding ground to local competitors like ChinaCache. Your SaaS product just might need some fast local edge nodes to function properly.

If your company is serious about China - which you will no doubt be asked frequently when visiting - make sure to invest in mobile optimization, local delivery infrastructure, local translation and integration with Chinese social platforms like Weibo and WeChat. If you do, you will be rewarded with amazing growth opportunities, cultural experiences and learning along the way!

Thanks to Howie Wu for contributing insights for this post. If you want to know more about startups and VCs in China, check out Steve Blank’s recent blog series.

“Masa - that guy from Japan - emailed again. He’s coming to Vancouver to discuss working together”, said one of my colleagues and a few heads turned. It was unexpected - to have someone fly all the way from Tokyo to talk to us about anything - especially doing business. Even though Mobify already had quite a few customers, the idea of having channel partners was brand new and we treated all incoming requests with skepticism. This time was different - things were for real. Days later we hosted Masa to discuss how his company, Domobi, would become our partner in Japan.

Team Domo with Masa on the right

We spent the following year on long Skype calls, product demos and sales training, quickly discovering the opportunity Masa was so persistent about. For many years, Japanese companies treated the Web as primarily a business destination, providing mobile functionality to users through dedicated services like i-mode. With iPhone and Android gaining popularity, mobile web traffic spiked and the need for adaptive websites emerged quickly. Masa moved fast, launching great mobile websites on Mobify and winning business from household names like Honda, Toyota and Kao. Here are some lessons about successful partnerships this taught us:

You’re there to learn

Early deals are important, but not nearly as much as discovering how foreign markets function and what needs customers there have. Focus on maximizing the learning velocity - for the partner (who needs to understand the product very well from sales, marketing and technology points of view) and your own team. Revenue will come after...

Fundamentals now, details later

...if you get the fundamentals right. While you won’t know all the details (or foresee everything that’s going to go wrong), it’s important to structure the partnership in a way that won’t require major revisions. Think of it as starting a brand new venture - if you answer difficult questions early on, there will be less trouble later. 

It’s a long-term relationship

When facing important decisions about the partnership, take the long term view. Success won't come quickly and both sides need to be prepared for a marathon - emotionally, financially and otherwise. Make sure the values of both organizations are very similar - this will help communication big time (especially if there is a language barrier). Besides excellent work ethic and passion for making the Web better, Mobify and Domo share love for cats and baking, which makes every call a lot of fun.

Tech support is about to get complicated

If you thought providing good customer service was already difficult, get ready for more challenges. Who is providing front-line support? Have the international features been tested? Are examples and case studies localized? These and other questions will need to be answered quickly. You're also about to discover peculiar difficulties of supporting foreign character sets in your product.

Have fun!

Above all, make sure everyone’s having fun (including your new customers). Life is short and being connected to a bunch of like-minded people from somewhere far away is a rare, lucky occurrence!

When Masa told us that the Japanese edition of GQ might be interested in Mobify as part of its entrepreneurship feature, it seemed unreal - after all, we’re just a web technology company that helps developers launch great mobile websites. Masa knew the reporter and after a quick interview at a conference we were attending, the story was accepted. Two months later we got a copy of GQ and sure enough - the article was right there, hiding between glossy photos of fast cars, expensive whiskey and watches with too many moving parts. 

If you're working with a great partner, anything can happen.

We're big in Japan

Ever since the early days of Mobify, I've rarely had a permanent desk to work from. In some cases - seen in the 2009 photo below - we simply had no more space in our shared one-bedroom-and-den flat. Later, when we started to grow our amazing team, new design and engineering hires always had priority in terms of getting desk space and hardware.

Tomorrow, I have to move again - I've been borrowing @b1tr0t's desk while he was on vacation. I look forward to it - being mobile offers a number of great benefits for doing my job better:

• Mobile-first Outlook. Without a fixed place to stack PC hardware, paper and rarely used gadgets, we're forced to think about productivity, Web and Internet in a mobile way. It's not surprising Facebook HQ is experimenting with limiting the use of their desktop website internally - this will help them with coming up with better mobile use cases.
  
• Communication. It's amazing how many new ideas, useful data and potential bottlenecks can be discovered by spending a day working from a less familiar part of the office. Maybe sales and marketing aren't communicating efficiently, or perhaps a bug reported by the customer success team didn't make it to the product team queue. Hearing about a problem early helps with timely resolution.
• Bandwidth. By virtue of roaming around the building, you'll be bumping into more people, meetings and conversations. This creates more opportunities to listen and inform. You'll also see if certain parts of the office are less welcoming than others, prioritizing any "home improvement" projects.
• Training. Some teams can expand very quickly, hiring several people in a matter of days. Being able to move to an area where new hires sit and help with on-boarding, product training and company Q&A is both awesome and rewarding.

The "No Desk" trend for founders in non-engineering roles can even go all the way to "No PC" - check out Jack Dorsey doing all his office email on an iPad Mini. Exploring these new modes of work and communication is a lot of fun - today, Mobify has lots of desks - but not having one is pretty awesome indeed.

TL;DR: Smart move by Facebook that will make Vancouver more competitive in the long run.

Today Facebook announced a new technology office based in Vancouver. This will change quite a few things around here:

It will be more difficult for startups to hire new graduates from SFU, UBC, UVic and other tech schools.

Recruiters from Facebook and Google have been active at local university career fairs for a few years now. The FB offer just got a lot more appealing - while Facebook won't lower its hiring standards, many talented new grads can work for a Valley company without leaving Vancouver. This means median salaries are likely to go up a bit as well. 

Facebook will bring a lot of talent from Canada and the world to Vancouver; many will stay here.

Some of the most talented engineers in Vancouver are from the prairie provinces, thousands of others (myself included) immigrated from all over the world. This trend is about to get an upgrade - it would be particularly great to see new grads from Calgary, Edmonton, Winnipeg and, of course, Waterloo move to Vancouver and stay here, instead of heading straight to the Valley. This is similar to the effect the local Microsoft office had on the city.

Another strong link between Vancouver and Silicon Valley will raise the bar for local startups.

The Facebook office will attract a lot of attention from senior talent, bring some of its engineers back home to BC (hey, Beau!) and generally upgrade Vancouver's visibility like the 2010 Olympics and TED have done in other areas. This will have a lot of nice secondary effects - more presence by Internet companies, more funding and more great advice for start-ups that are just beginning their journey.

Expect to see a lot of blue at Vancouver tech events a few months from now!

If you work at a startup, you work a lot. It's exciting, there are lots of new things to learn and you don't mind working 80 hours a week even though your friends at Google "only" put in 50. Then one day, you start to notice that work keeps multiplying while the goals are still distant. To eliminate "busywork" and focus on what matters, apply the following Rule of Three.