Shanghai’s Startup Scene Takes Flight

TAMAGOTCHI MEETS NALGENE

Why not, indeed. Chiang had found his calling. In November of 2014, he flexed his powerful network and rounded up a crack team of founders. With executives from Alibaba, IDEO, HP, and Intel, Chiang founded Bowhead Technology.

The problem? They didn’t have a product, platform, or service.

“We brainstormed quite a few unreliable ideas,” says Chiang, laughing. But they had a starting point: Chiang’s Wailing Wall epiphany. “We tweaked my ‘health’ into well-being and then into children’s well-being,” Chiang says. After months of intensive primary and secondary research — mainly involving parents of young children — the team identified 11 potential products fitting into four broad themes. “They are healthy habits, companionship, healthy social networking, and learning through play,” Chiang explains. Through the research, some 85% of parents expressed concern over their children drinking enough water.

The result was Gululu, a futuristic and interactive water bottle. Essentially Tamagotchi — a digital handheld “pet” — meets Nalgene, Gululu has a built-in, virtual pet for children to play with while offering parents a way to measure water consumption from afar. “An interactive bottle enabled by advanced technology and whimsical companions,” a woman’s voice says in a video Chiang proudly presents in his office, which resides in a Naked Hub, a Shanghai co-working space.

Gululu closed a $209,000 Kickstarter campaign earlier this month, nipping its goal of $200,000 to bring the product to market. Currently, Chiang has a team of 16 full-time staffers in Shanghai, a city of 25 million, and a couple of part-timers in San Francisco.

CHINA’S STATE-RUN VC FUND LARGEST IN WORLD

Chiang and his team are one piece of a burgeoning Chinese startup scene. Once an economy built primarily on state-run companies, the massive Chinese market is rapidly becoming a hotbed for entrepreneurship and private industry. In 2000, total revenues of state-run and private enterprises were about equal. In 2013, state-run revenues had increased six-fold and private enterprise revenues turbocharged 18 times over. “There’s no doubt China has become an important and central part to the world’s economy,” Chiang says, sitting on a couch in the Naked Hub in the French Concession area of Shanghai.

Despite slowing GDP numbers, China’s economy continues to buzz along. China’s government-run investment fund has zoomed from about $221 billion in 2014 to $338 billion in 2015, making it the largest pot of venture capital money in the world. Not to mention significant activity from leading international venture funds like Sequoia Capital, Northern Light Venture Capital, and Morningside Ventures, among dozens of others.

“Entrepreneurship in Shanghai moves so fast. And one of the most important things is timing,” says Paul Ju, a current CEIBS executive MBA student and manager of a Naked Hub location. Ju, who was born in Taiwan but grew up practically next door to Apple and Yahoo! in Sunnyvale, California, says he’s seen the market become significantly more competitive recently. “Five years ago you don’t have to be as smart,” Ju says. “You don’t have to be as connected or innovative. But these days, forget about it. You have to be fast.”

‘THE SPIRIT OF ENTREPRENEURSHIP TODAY IS BURNING’

CEIBS economics professor Bala Ramasamy has also seen a recent influx in entrepreneurship — particularly from MBAs. “For a long time, the majority of our students were from state-run enterprises. Until a few years ago,” Ramasamy says in front of a classroom of would-be MBAs during CEIBS’ annual five-day boot camp for young professionals interested in a Chinese MBA. According to a student survey Ramasamy conducts of executive MBA students entering CEIBS, three years ago was the first time more students came from a private enterprise instead of a state-run company. Now, he says, about 70% of executive MBA students are coming from private enterprise. “The spirit of entrepreneurship today is burning,” he says.

Ramasamy says the reason entrepreneurship is exploding is that people simply don’t want to be poor anymore. “With the freedom they have, the opportunities they have to grow wealth, that spirit of entrepreneurship is burning,” he says. Yvonne Li, CEIBS MBA career services and admission director, seconds Ramasamy: Over the past few years, she says, about 12% of graduates from each class have started a venture upon graduation.

FROM ISRAEL TO SHANGHAI STARTUP SCENE

But it’s certainly not only the locals who are keen on the entrepreneurial boom. Many expats also see China, a land of 1.4 billion, as a potentially explosive market. And a few are using CEIBS as a safe entry into it.

Arie Fasman’s family fled to Israel from their native Tajikistan when the USSR fell in 1991. Upon graduating with an undergraduate degree in management and finance from Israel’s Ben-Gurion University, Fasman traded on the Israeli stock exchange. It was a good job, but “from my own perspective, I wasn’t actually creating value for anyone,” he says. “Anytime I would gain money it meant someone else didn’t do that and I just took their money. It felt in the long term (that) I wasn’t creating any value in the market or to anyone else besides the company. So I decided to pivot.”

Like many driven young professionals, Fasman’s pivot involved an MBA. “I wanted to understand China on a deeper level,” he says of his decision to apply to just CEIBS. And Fasman, 30, approached his MBA open to wherever the pivot might take him. “I have this 18 months at CEIBS that is like a playground or sandbox and I can test different ideas and directions,” he says. “And when the MBA is over, I can always get an offer from a top company.”