Austin software vet pursues China market [Austin American-Statesman]
(Austin American-Statesman (TX) Via Acquire Media NewsEdge) Jan. 27--For his latest startup, Austin software veteran Brian Magierski looked to China.
"It's the largest and fastest-growing smartphone market in the world, and we wanted to develop mobile apps, so that's where we needed to be," Magierski said.
The result is Appconomy, a two-year-old mobile app development company that has been built with dual headquarters in Austin and in Shanghai.
In November, Appconomy launched its mobile platform − which connects merchants with Chinese consumers − in Shanghai and Beijing. Called Jinjin Marketplace, it lets retailers, merchants and brands build smartphone and tablet computer apps that include daily deals, coupons, rewards and loyalty programs, social network sharing and mobile payments.
Magierski, who has been living in Shanghai for the past year, was recuited to Austin in 1997 by Trilogy Software, and has since held executive roles at a number of Austin software companies.
Most recently he was co-founder and chief operating officer of business collaboration software company Moxie Software, which moved its headquarters to California two years ago. Magierski also co-founded iMark.com, an Austin-based online surplus marketplace that was acquired in 2000 by online business auctioneer FreeMarkets Inc..
The American-Statesman spoke with by email Magierski about his experience in China. Here is an edited version of the conversation.
Why did you decide to start your new company with a co-headquarters in China
When my co-founder (Austin software entrepreneur) Steve Papermaster and I looked at the global opportunity for the mobile marketing and commerce market, we decided that if we could launch our product in China first it would give us a substantial advantage over any U.S.-based competitors. The reasoning behind this strategic decision was simple. The U.S. retail market is already fairly well advanced. Credit cards are widely adopted and are very easy to use, without a real consumer or merchant pain point. Fees are low and transactions take seconds at the point of sale. Loyalty systems are widely deployed with millions of dollars invested by retailers.
In China, the opposite situation existed. Payments are largely done in cash and pre-paid cards. Loyalty systems are not widely deployed. The consumer economy is rapidly developing. Hundreds of millions of consumers are just now adopting smartphones. And many large, recognized western branded merchants are increasing their footprint in this emerging consumer economy. What this meant to us was a unique opportunity to present a leapfrog in technology for commerce directly to mobile from cash. And, we could present this to many popular western brands, that upon success in China, could take this system to other more developed markets without worries about risk and with a known value proposition.
What was the process of starting a company in China like The stereotypes held by many Americans are of a very smart, driven, but low-paid workforce and government corruption. What's the reality
The Chinese are wonderful people, and the team we are building in Shanghai rivals the best of teams that I have had the pleasure of building. Starting a company in China as a foreigner is a huge challenge. There are many hurdles beyond just the culture, language, and market understanding to overcome. Fortunately, when Steve and I decided to start in China, we began by forging a strong corporate partnership with Neusoft Corporation -- China's largest domestically built software company with over 20,000 employees -- and a strong investment partnership with Shanghai-based Qiming Ventures. Even with these relationships, entering China as a foreign company operating in a regulated market like electronic commerce was not a task for the faint of heart. It took many months, some very intelligent strategic planning, and a lot of hard work to pull it off.
The experience for me is also a big wake up call for America. As I watch the Chinese develop their country on a daily basis, I am reminded of stories I hear about the early days of the industrialization of America. I watch from my apartment migrant workers living in housing that was constructed over the course of weeks, where their only running water is a shared sink that is outside their living quarters and we have no idea whether they have heat or not in their living quarters. These workers came from the country-side to build a skyscraper in Shanghai. They are doing this to earn money for their family to build a better life, and possibly bring their child with them to be educated in the superior school system of Shanghai.
What have been the challenges in hiring and building a workforce in China Have there been communications challenges between Austin and the Chinese operations
These types of communication challenges are big and not to be underestimated. With the help of a strong partner like Neusoft the hiring challenge is less of an issue. The most important issue from my point of view is establishing trust and personal relationships with the U.S. and Chinese teams very early on -- this should be the first thing one does. Doing so may seem like a delay in actually doing work, but once the relationships and trust are firmly established, the pace of innovation and execution is very rapid and any delays that occurred in the early relationship building stages are easily overcome.
You, your wife Marlene and three daughters, ages eight, six and one, moved to Shanghai in January 2012. What has it been like
Our youngest was only four months old when we moved over here. For us the experience has been wonderful overall. Our older daughters go to an American-based curriculum school in Shanghai, so their education is roughly the same as in the U.S. However, their school in Shanghai is only about 40 percent American, with the rest of the student body represented by multiple different countries, including Korea, Taiwan, and many other Asian, African, and European countries, providing them with a more global perspective. Also, they have had the opportunity to study Mandarin daily from native speaking instructors. I too have been working to hard to learn Mandarin. While I think I have studied more hours than my kids, I can tell they are going to quickly surpass my Mandarin speaking and reading abilities very soon.
What is your advice for Austin tech entrepreneurs considering launching businesses in China
Answer these questions before proceeding to launch in China: 1. Is China the best place in the world to launch your business If the answer is not authentically and persuasively 'yes', then you should be very reluctant to forge ahead with a China-first path. The barriers for launching from China as a foreign company are significant and, thus, the advantages have to be tangible and clear to make it worth the investment. 2. Do you have a strong local partner You will need this for credibility on all accounts -- hiring, winning business, and gaining appropriate licensing. 3. Can you attract investment capital for this strategy At a surface level, China is an attractive market. However, those that are willing finally to put money behind a strategy for launching in China will already have deep knowledge of and experience in the Chinese market. It may seem like very few opportunities will pass the test of these three questions, but I believe the emergence of the Chinese consumer market will present many viable opportunities for launching in China and then going global.
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