The State of Mobile: A look at GMIC SV 2014

Hans Tung

When I moved to China in 2005, the world had 1 billion internet users. All on PCs. Baidu and Alibaba were the highest-valued Chinese internet companies at $5 billion each, but neither ranked in the top ten globally.

Fast forward to now: There are 3 billion internet users worldwide. Alibaba (without Alipay), in which GGV invested in 2003, is now valued at around $300 billion - a whopping 60x of its valuation 9 years ago. Four of the top ten internet companies in the world by market cap are from China: Alibaba, Tencent, Baidu and JD. And that doesn’t include the still-private Xiaomi, (in which I was an early investor), which is now the #3 mobile hardware manufacturer in the world. This massive shift has occurred for three reasons:

  • Low-cost, good-quality smartphones have made the internet accessible to more people worldwide than the PC.
  • Economic growth in China has supplied 1/3 of the 2 billion new internet users.
  • Monetization innovation being led by Chinese entrepreneurs, who are advancing e-commerce and virtual goods sales, instead of relying on advertising.

With one foot in Silicon Valley and one in Shanghai, we at GGV have seen how much easier it is to expand across geographies and achieve massive, Alibaba-like growth trajectories in the mobile era vs. PC era. This the reason we were excited to be involved in GMIC SV last week, and in looking back at all the great content and discussions, a few themes consistently emerged:

Growth is coming through mobile-first users
We heard repeatedly from mobile companies who have realized that their biggest opportunities are in finding new consumers and offering them a mobile-first experience instead of trying to convert existing web users to mobile. HotelTonight CEO Sam Shank explained that they used to look for partnerships that would help shift consumers from booking hotels on the web to booking on mobile, but now they are focused on reaching new users, who have never booked a hotel room before.

Mobile-first means global-first
My partner Jeff Richards said it clearly, “If you are only focused on the US market, you aren't going to be the global winner.” In fact, Guru Gowrappan, COO of Quixey, believes it’s China-first when it comes to mobile. Emerging markets are going to provide the next billions of users, so companies that are looking to grow and investors looking for the next big thing have an eye toward China, India, Brazil and more.

Lost in translation
Reaching global markets is almost never as simple as just translating the strings of your app. Eric Feng, CTO of Flipboard, noted that monetization models, payments infrastructure, broadband access, local competition, and differences in user behavior make new markets a challenge. Mobile leaders who are crossing borders recommend when entering a new marketing to be there. That means having a team on the ground and visiting often as a CEO. Their second recommendation is to find a partner. This is particularly critical for US companies looking to enter China.

Friends with benefits
There’s been a lot of buzz lately about the China internet giants (Alibaba, Baidu, Tencent and now Xiaomi) investing in US startups. These are not passive investments; they are about strategic partnerships. For the Chinese companies, US startups offer them access to new technology and the opportunity to learn about US consumers. For the US startups, their China partners give them a means to enter the extremely competitive Chinese market and to learn to tailor their product, business and operations to be successful there.