Had the chance to listen to Kai-Fu Lee’s talk at Stanford today on the Internet in China and his new VC/incubator, Innovation Works.  Lee was previously the founding president of Google China.  Lee provided some great anecdotes about some of the differences in internet culture between the US and China.  I’ve posted some raw notes below.

Greater reliance on the Internet. Internet in China is not all about censorship.  Print is controlled tightly, but not Internet.  Healthy ecosphere of news and blogs.

Blogs. More than 50% of Chinese users have blogs.  Random article by Chinese celebrity blogger got 980K visits and 7k replies.  Blogs increase expressiveness.  Chinese sites have blended blogs and news.

News + Blogs. Reporters are mining blogs for news.  Blogs are commenting on news.  Almost circular.

Users are more curious. In America, a user typically looks for the upper left side.  “Top 3″ is the golden triangle in America on Google as people only look there.  In China, users are more curious – want to be a sponge and absorb more content.  Chinese users spend 30-60 sec on results page.  US users spend 10 secs.

Internet Cafes. 30% of Chinese users are on Internet cafes.  25 cents per hour.  How to cafes make money. Internet cafes barely break even – they make money from Coke and instant noodles.

Why are Internet Cafes important? In small villages, this is the users first experience with the Internet.  Cafes in the villages charge only pennies per hour.  Twin terminals for dates.

Obstacles to Ecommerce. Lack of trust.  Very few credit cards (1/100th of the US credit card.  US 2 cards per person.  China 2 cards per hundred people).  Bicycle cash on delivery. Order a book, will call a telephone.  Someone on a bike will deliver the goods and receive cash.  Laborer is very inexpensive.  Alipay.  Mechanism for escrow payments.

Tencent & “Innovative” Commerce. Avatar for free in Tshirt.  Free trial of NBA uniform for a month, 10 cents thereafter.  If you don’t renew, then you become naked.

Future of Ecommece. 360buy.com. ctrip.com joyo.  danddang.com redbaby.com.cn.  newegg.com.cn.  vancl.

A good percentage of Chinese people are willing to send $ before merchandise, especially from trusted brands.

When China matche US potential, 50x potential. E-commerce will accelerate advertising.  Enables advertising to be monetizable.

Entertainment centric pages are very busy and long. In China, the CINA homepage is 2mb.  Mobile users are incredibly frustrated.  About 150mb mobile quota.  Youseeweb – only leaves text.  2mb becomes 50k.

Top 10 Chinese Companies. Baidu.  Sina.com.cn.  Sohu.com.  Netease.  Perfect World. Alibaba.  The 9.  SNDA.  QQ.com.  Gaming is currently the most valuable internet business in China today.

Chinese internet companies are very innovative. To advance to the next level, you must bring on disciples.  10% of the users generate 90% of the revenue.  Some users spent $5-10k a month.  Some people pay for weapons for their own users.

Top 10% of users pay couple hundred to a thousand dollars. Typically, middle-aged businessman.  Want to be even more successful in the game, than in real life.  Like to meet girls.  “Real beauty certification”.

6 companies are worth over $20 billion. Ten years ago, gaming software was only $10 million.  Cloud computing came along.  On a per license basis, piracy was rampant.  Now on the cloud, subscription and item fees are possible.

Piracy has meant that there is practically no software industry in China. To get around this, build software run on the cloud.  Google App Engine, Amazon Compute Cloud, Calendar, ERP & CRM, Online Gaming, Personal & SMB Finance, Collaboration, Email.

Music is largely all unlicensed. Google China launched a free legal music search.  Content providers are very frustrated as they are not making money on digital music.

Video is heavily (but not richly) monetized. Foreign companies cannot stream video or news.  Yoku and Tudou are the leading Youtube copycats.  Youtube is on the path to profitability.  However, in China, advertising is only worth a fraction.  Bandwith costs much more.

In China, bandwith is not that great. The pause button isn’t that great.  Pause ad is a great idea.

P2P is very popuar.  Chinese technology substantially leads the American technology.  Average user in China reinstalls Windows every 4 months.

Social networking is now taking off. Xiaonei was the first social network.  First UI copied Facebook.  Created a more Chinese-friendly UI.

Kaixin.  Kaixin got Kaixin001.com  Kaixin.com sold for $1 million to Xiaonei.  Xiaonei created Kaixin.com.  Xiaonei cloned Kaixin001 on Kaixin.com.

Mobile Internet. Chinese government makig a huge bet on 3G, will make it happen.  Before, China mobile had all the market.  Now there are three players – China unicom and China telecom.

iPhone.  # Google searches 50x that of other mobile browsers.  Great UI + full features browser + flat rate internet = boom.

Evolution of the internet. News-based portals.  Entertainment and social network.  Utility and e-commerce.

Foxconn and Mediatek build most of the phones in China.  Shenzai phone.  Hiphone.  Google Android is free, high quality, and will be used.  Some phones have 16 speakers, used as a boom box.  Projector phones.

Human search.  Wife committed suicide and left a note on her blog.  Secretary exposed boss on the internet.

Returnee entrepreneurs. Robin Le.  Grassroots.  Scrappy and learned as they went along.  From this point forward, next generation of Chinese internet entrepreneurs will be locally grown.  Competitive advantage for foreign trained entrepreneurs will be erased by home-town advantage.

In 20 years, there will be great Chinese internet companies.

Great angels. Mike Markkula invested $92k, secured a bank loan to $250k.  Andy Bectolsheim, wrote $100k check to Google.  Need someone with 20 years experience.

US Angel Fund $19.2 billion.  VC $28 billion.  China.  No angels.  VC $8.3 billion.

Innovation Works. Angel investing/coaching + “Google 20%” model + “Idealab” model + super recruiting firm + software company.  Angel fund with investors willing to be coaches.

Unlike Silicon Valley – Entrepreneur + Engineer + Idea.  In China, very little angel funding, can’t get team.  Innovation Works has three parallel funnels.  Select best ideas, select the best entrepreneur, seelct the best team.

Innovation Works. Trial phase.  Angel fund gets $30k to try an idea.  Get $500k to run a small company.  6-9 months will be ready for series A.  Different from Idea Labs.  They found it tough because Silicon Valley exists.  In China, there isn’t an openness and networks.

Advantage of Innovation Works. Full and raid operational bootstrapping.  Recruit and grow best entrepreneurs.  Build reusable modules and infrastructure.  Build strong complementary teams.  All resulting in a higher success of ideas.

Innovation Works.  Spin off 5 companies in a year.  Deliver great return to investors.

Thanks to Euwyn Poon, here is the original post http://euwyn.com/2009/10/03/kai-fu-lee-on-the-internet-in-china/

要中文的，多用下李博士的旧东家吧，谷歌翻译 http://translate.google.com/translate_t#。