In the Hutong
Up with the Birds
Over the last two decades, I have watched China’s allure overwhelm the reasoning powers of a battalion of intelligent, experienced, and successful executives. I have seen massive companies enter the market on the thinnest of pretexts without bothering to identify and evaluate the opportunity first. And in some cases I have watched, helplessly, as great companies and captains ignored good advice and their own common sense in the dogged pursuit of a billion customers.
There is something altogether too enticing in the image of a great leader, impelled by nothing more than animal drive and gritty determination, ignoring his counselors, spitting in history’s face, and in the end accomplishing what others said was impossible. If that self-conception proves too seductive for a baron of industry who bears the scars of five decades of experience, it must be irresistible to a twenty-seven year old billionaire CEO who has succeeded at almost everything he has attempted in his life thus far.
I suspect that this and perhaps pressure from investors is what draws Facebook to China.
Motivations notwithstanding, if Facebook has made the decision to enter China, all that is left is to offer advice that may smooth the path ahead. The obstacles ahead of Facebook are formidable, and I enumerated many of them yesterday. While there is nothing Facebook could do to guarantee its success in light of those obstacles, there are steps it could take to improve its chances for success in China, should it decide to take the plunge.
At the top of the list of those steps are the following:
1. Explain exactly what you plan to do. To everyone. The largest risk to Facebook is the potential of a backlash from users and censure by U.S. lawmakers for complying with Chinese requirements to control content and provide user information on request. Google has been through that storm, and it is hard to see how Facebook can avoid it.
What Facebook can do is eschew Google’s approach, which amounted to ignoring the potential for a problem in the hopes it would never become an issue. We all saw how that turned out, and what Facebook must do is tell its investors, its users, and the public how it plans to operate in China and why. It has to assess, plan for, and communicate in preparation for the worst case scenario. And it has to be completely open with its users in China that it will hand their information to authorities on request.
Further, Facebook needs to explain how it is going to secure the personal information of users around the world from the prying eyes of Chinese hackers, whether they are simply rogue electrical engineering majors with nothing better to do or in the employ of the national government. Information released around Google’s departure from China has left the impression, right or wrong, that servers in China are something of a huge trojan horse. Facebook needs to tackle that head-on.
If the company cannot take those steps and publicly defend its approach in China today, better to avoid doing business in China altogether.
2. Build a local service from the ground up. Websites and online services that are transplanted wholesale from the US to China are doomed to die in the alien cultural soil. Facebook China should not be Facebook in Chinese, but a service that grows and evolves naturally out of Chinese culture the way MySpace grew out of the US collegiate music scene and Facebook itself grew out of American university culture. That means that Facebook in China may look nothing like Facebook anywhere else, and everyone needs to be comfortable with that.
That doesn’t mean throwing out everything that’s been created elsewhere. It means letting user preferences and local conditions dictate the thousands of little choices about what to create and how it should look, rather than allowing those decisions to be dictated by what was created elsewhere.
3. Move Mark Zuckerberg to Beijing. As I said at GMIC in 2010, there is no way any foreign web company can beat a local competitor in China, because the guy running the local competitor is here, and the foreign competitor’s boss is between 6,000 and 8,000 miles away. If Facebook is serious about China, the company should yank the CEO out of his apartment in Palo Alto and drop him into a 4th floor walkup in Haidian for at least a year if not two.
Zuckerberg’s job will not be to create the site, but to enable the team on the ground, to keep the company’s resources at hand, to provide quality control, to give the authorities comfort, and to learn what it is like to do business in China’s internet industry. And please, no objections about how he cannot run Facebook in the US while sitting in China. He’ll have a much easier time doing that than trying to run Facebook China from Palo Alto.
4. Find The Guy/Girl. Facebook needs a local CEO to be the chief site visionary and to actually create the service. The foreigners – even the overseas Chinese – cannot do it. Facebook China needs to be local down to its core, or the results will be disappointing. This will be one of the most important hires in the company’s history, and the individual needs to be selected with great care.
That person probably should be fluent in English, have SNS leadership experience, should be a coding monster, and be a natural leader in a Chinese context. And be ready – he or she will be expensive. But Facebook will fail without him or her.
5. Get a great Chinese name. If they can’t say your name (and say it without laughing at the dumb foreigners), they won’t use your service. Facebook needs to hire a locally-wise branding agency in Beijing to come up with a brand and test the hell out of the name using a great marketing research firm. The name should reflect what the service is about, and Facebook’s leaders shouldn’t worry if it they cannot pronounce it or it doesn’t sound like “Facebook.” They just don’t want to wind up with a name like feici buke (非死不可).
6. Think lean. The easiest thing to do to a China startup is to drown it with too much cash. The funds should be there when necessary, but the offices should be inexpensive and things kept as lean as possible. Great sites and great code come from people who are improvising because they cannot afford to throw money at a problem. Facebook China should forget fancy offices, company cars, and Herman Miller furniture. Replicate the dorm-room mentality, forge a tight team, and spend money on talent, IT, and the stuff that will show up on screen. Zuckerberg should take a taxi to work, or a simple Volkswagen Santana with a bodyguard.
7. Forget revenue – for now. The China service should replicate the Facebook growth story – forget revenues for 2-3 years while focusing all efforts on experience and scale. Having to go out and sell ads is a monstrous drain of senior executive time right when the focus should be on forging the product. Build something great, and the advertisers will come to you.
8. Get humble. Facebook China needs to talk and play like the underdogs, be grateful to be allowed the opportunity, and learn to be superb listeners. The company’s success overseas only buys them a skeptical reception. The way to overcome all of that, and to create a successful company and a lot of goodwill, is by personifying humility at every step.
That also means eschewing the limelight. The first temptation will be to throw a big press conference at every milestone, starting with a big announcement of the company’s decision to enter China. Facebook has to resist that temptation. Expectations and awareness will already be high enough. Speak softly and create a superb service.
9. Play clean. There is a double (maybe a triple) standard for companies in China. There is one set of rules for state-owned enterprises, one set of rules for private companies, and a third set of rules for foreign companies. Foreign companies have to operate with greater integrity, transparency, and care than local companies do.
For this reason, Facebook needs to operate in China as if it was in the United States and being simultaneously investigated by the FBI, OSHA, and the EPA. Doing otherwise will give the competition and the government an perfect opportunity to prove that Facebook is a scofflaw company at best, and at worse subversive. Facebook cannot afford the distraction of government harassment.
I could go on, but these are the most important steps Facebook needs to take right now, some of which need to be done before setting up shop in China.
I will be watching with great interest to see how many of these Facebook decides to follow.
Tomorrow, a post on the moral question of Facebook’s entry into China.
- Youth In China: Cultural Revelations (ypulse.com)
- Renren debut leaves Facebook with sobering thought (ft.com)
- Zuckerberg’s Taking Facebook Into China, But It’ll Be a Baidu Beast (fastcompany.com)
- Facebook China? What Would The US Say About It? (blogs.forbes.com)