WeChat Model

[Daniel Chong]

I have been fundraising since Dec'18 without success on a WeChat model where Instant Messaging (Mobile Communication), Wallet (Payments), Social Media and Platform (SaaS) is utilized together as an ecosystem for a seamless lifestyle.

I've heard some VCs, Angels and Accelerators wave it off, saying it is too difficult to make it work and the wave for this is over.

I personally do not think it is difficult nor over since till today, we are not using a WeChat kind of application anywhere else except China with China bank accounts and China registered businesses.

If you search for a WeChat alternative, there is actually none. Current alternatives provided through online searches are all based on WeChat as an Instant Messenger but WeChat is more than that.

Investors I have approached are saying the model is not new, I totally agree. Was WhatsApp a new concept? No! Was the iPod a new concept? No! Was Facebook, Apple or Gmail new when launched? No!

We often take something old, twist it and it becomes something new, something more usable than the old version.

And yet, we see various types of Wallets getting investments with one feature that is different from their competitor (But still a plain wallet) and we see co-working spaces getting funding every now and then.

Say 'cross-border', you get funding. Say 'blockchain' you get funding.

So why say the WeChat model is over and out when there is no such other product in the market out of China?

I am just puzzled. People whom I have personally spoken to were excited.

Singaporeans whom I spoke to about it was excited to be able to use something in China.

Any of the above interests anyone that I may buy you a coffee and chat over it?

[Roland Turner]

Hi Daniel,

You appear to be making the argument for the existence of a [potential] market, not presenting evidence of your ability to reach it. Market existence is necessary, certainly, but nowhere near sufficient.

- Roland

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[Daniel Chong]

Thanks Roland.
Will tweak the deck a little.

[drllau]

Daniel, it's not that the bundled portal model doesn't work, but the dynamics of fostering a social networking site. You look at the emergent end result and think you can bootstrap an equivalent providing similar functionality but without understanding network effects. Every SNS started off with a core communications service with an atomic unit, AOL-email notification, Facebook (update) Twitter-tweet (online SMS),  with the Chinese equivalent behind their Great Firewall ... only AFTER they gained critical mass, then they started adding all the other services you described (AliPay, Instagram, YouTube).

For users to abandon one network and join another there needs to be 3 components, Dissatisfaction (Facebook fatigue), Desire (what is the unique value proposition), and Demand (often artificial like selective invites) .... SNS is not a technology play but a PsychPlay so unless you have a unique market insight, most professional investors will waveoff because after blitzscaling, only 3-4 giants dominate with the gorilla earning the bulk of the profits.

>So why say the WeChat model is over and out when there is no such other product in the market out of China?

So if you are starting off, effectively you are a niche play and therefore you have to think hard about what your target audience avatar is unhappy about (enough to abandon existing SNS) and give them that, whether privacy, distribution (Dispora), or some other trait. Keep in mind they are not interested in the tech per se but the business model, unless you have good evidence of user growth (monthly unique visitors), stickiness (time spent with platform) or valuable data (like purchasing intents) then they are skeptical. Ignore the buzzword du jour, there has to be something special for a blockchain distributed datastructure to justify the performance/scalability hit. (google CAP theorem)

> Any of the above interests anyone that I may buy you a coffee and chat over it?

If what I have said is unclear you are welcome to skype me (I'm in Perth at moment) and we can talk about state of play and the unit economics (CAC vs LTV) ... there are opportunities opening up with 5G so don't be disheartened as a lot of successful companies had to pivot in the early days to get to where they are (slack, twitter, etc).

Lawrence

http://www.linkedin.com/in/drllau

[Daniel Chong]

Thank you Lawrence, your message is clear. Have been waiting for such a response. Please let me reach out to you to further talk about this.

Daniel Chong.

[drllau]

skype me drllau_CN ... there are too many chongs in singapore to figure out which one. I have a client who won an award at Telstra maru-D accelerator pitch for his mobile oriented video-conf system so I can provide you with the tech building blocks (including blockchain-based identity) and cross-border nano-payment so you can tick all the VC boxes.

Lawrence

http://www.linkedin.com/in/drllau

[Meng WONG]

They call it the Kill Zone:

https://boingboing.net/2018/06/04/thanks-milton-friedman.html

https://boingboing.net/2019/07/22/podcast-adversarial-interoper.html

The kinds of bolt-ons you're talking about are beginning to appear on services like Grab, which went from Car to Food to Pay.

Which led to me remarking that the future of social networking looks like a marketshare grab through any means necessary – scooter sharing? bike sharing? food delivery? pet rental? photo sharing? – that can then be leveraged into payments, while the original business gets sold off or abandoned entirely. And maybe we can expect wave after wave of this kind of dynamic, powered by sheer intergenerational pout, because kids don't use Facebook, and their kids won't use Instagram.

So Roland is right: even if the market does exist, perhaps the right people to reach that market are Grab.

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[Roland Turner]

It occurs to me that innovations that are disruptive of incumbents who aren't tech giants are increasingly merely sustaining innovations for the tech giants. This is essentially what's going on in accelerator-VC-acquisition pipeline. For reasons that I can't immediately guess at, a tipping point has been reached: the build/buy dilemma has shifted drastically in the direction of build for the tech giants (synergies arising from multiple overlapping network effects perhaps), meaning that buy is only interesting at a steep discount, which is clearly not of interest to VCs who generally aren't interested in sustaining innovations. On this telling, the Kill Zone is simply the return of this historical norm. Perhaps it is simply an acquisition anomaly (tech giants being cash-rich during the GFC and looking for places to invest that weren't real estate?) reaching saturation. Perhaps there is an oversupply of startups chasing the same ideas, meaning that it's a buyer's market.

I wonder what can be done to reverse this.

- Roland

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[drllau]

Roland, economists call this marginal utility.Interest you call on out the build-buy dynamic ... because that is EXACTLY what intellectual property laws are supposed to shape. Lets go back to fundamentals

network value ~= O(nlogn( #monthly unique visitors) x stickiness (time) x engagement

so once the consolidate waves level of the MUV growth, you can only shift the needle on offering similar functionality to avoid abandonment of network ... therefore there is incentive to copy the micro-disruptor (hey it worked for Microsoft) rather than work on engagement (actually really really hard problem).

> VCs who generally aren't interested in sustaining innovations

VCs are a different mindset ... I #include a blog I wrote

Outliers ... or Out(right) Liars?? According to author, every VC, at any stage, is looking for outliers. Therefore VCs do not want to take the risk if only decent growth or metrics, but no signs it could be a unicorn. So that means for majority of companies it becomes a crapshoot, either they be honest or else aggressively talk up the numbers. And we saw how well that worked with Enron and WorldCom. It seems to me that the whole system is unstable in being breeding ground for moral hazard, both in making a rod for founder's backs (in promising the impossible) or in sweet-talking VCs who promise the world pre-nup but abandon for the next Madonna after consummation. I think the lessons are obvious in that if there are a constant number of unicorns per year, adding more VC money is not going to balance the midrange as they'd just pile in higher/deeper on the few perceived 10% winners at the cost of wrecking the other 90%

> Kill Zone is simply the return of this historical norm

I believe technology is like waves in the ocean, if you understand the dynamics, you can start paddling like crazy before the crest and ride to top of market. But if you start afterwards, you're caught in the trough. Studies show VC returns are 60% due to selection TIMING which is outside their control so now you now how much value they add (40%) from skill.

> I wonder what can be done to reverse this.

The difference between a butcher and a surgeon* is knowing where to cut.

Lawrence

http://www.linked.com/in/drllau

*PS ... I'm contemplating starting a private angel investor study group based on my system for predict technology waves ... contact me privately if interested in knowing more.

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[Roland Turner]

On 28/7/19 12:57 pm, drllau wrote:

Roland, economists call this marginal utility.Interest you call on out the build-buy dynamic ... because that is EXACTLY what intellectual property laws are supposed to shape.

One blithely imagines that copyright/patent/etc. laws are supposed to incentivise innovation, whether internally or acquired. How does this shape build vs. buy decision-making?

Lets go back to fundamentals

network value ~= O(nlogn( #monthly unique visitors) x stickiness (time) x engagement

so once the consolidate waves level of the MUV growth, you can only shift the needle on offering similar functionality to avoid abandonment of network ... therefore there is incentive to copy the micro-disruptor (hey it worked for Microsoft) rather than work on engagement (actually really really hard problem).

I'm not convinced that it's an either/or question at an organisational level; established organisations can and should do both.

• The practical question that arises - and why the original Skunk Works was established - is that growth and stability for business organisations necessarily requires that approaches to delivering value to customers be systematised, including in supporting functions, which makes much innovation more costly/difficult. Christensen's Innovator's Dilemma is only a dilemma if you're unable to ring fence supporting functions (finance, counsel, HR, ...) for innovative experiments.
• Even once you've done so, the likelihood that all relevant innovations will arise within your organisation are low, consequently buy will often be necessary if the target has had the good sense to establish an auction/race situation (if you don't acquire then your competitor will, so you'll be late to market, so you need to buy).
  

Rail-related businesses ran out of steam (heh...), perhaps the same is currently true for ICT-related businesses.

> VCs who generally aren't interested in sustaining innovations

VCs are a different mindset ... I #include a blog I wrote

Outliers ... or Out(right) Liars?? According to author, every VC, at any stage, is looking for outliers. Therefore VCs do not want to take the risk if only decent growth or metrics, but no signs it could be a unicorn. So that means for majority of companies it becomes a crapshoot, either they be honest or else aggressively talk up the numbers. And we saw how well that worked with Enron and WorldCom. It seems to me that the whole system is unstable in being breeding ground for moral hazard, both in making a rod for founder's backs (in promising the impossible) or in sweet-talking VCs who promise the world pre-nup but abandon for the next Madonna after consummation. I think the lessons are obvious in that if there are a constant number of unicorns per year, adding more VC money is not going to balance the midrange as they'd just pile in higher/deeper on the few perceived 10% winners at the cost of wrecking the other 90%

Quite.

> Kill Zone is simply the return of this historical norm

I believe technology is like waves in the ocean, if you understand the dynamics, you can start paddling like crazy before the crest and ride to top of market. But if you start afterwards, you're caught in the trough. Studies show VC returns are 60% due to selection TIMING which is outside their control so now you now how much value they add (40%) from skill.

40% is a pretty improvement on pure chance. A mere 3% edge will allow you to beat the house on a roulette wheel... (6% in Vegas)

> I wonder what can be done to reverse this.

The difference between a butcher and a surgeon* is knowing where to cut.

Lawrence

http://www.linked.com/in/drllau

*PS ... I'm contemplating starting a private angel investor study group based on my system for predict technology waves ... contact me privately if interested in knowing more.

Thanks, not investing at present.

- Roland