Chin was born in Michigan and attended Yale University where he studied American studies. He has also attended the LSE and NYU.

He describes himself as an Internet entrepreneur, an educator, and a strategist.

His examples:

eBay went it alone and had to leave and now don’t exist in Japan having lost net auctions to Yahoo Japan and Rakuten. Friendster and now Facebook who have launched “localized versions” are not getting traction. Mixi, the Orkut knockoff with arguably a much clunkier interface, has 10M users and is public.

Infoseek, Technorati, Twitter, Six Apart/TypePad/Vox/Movable Type and other brands that we’ve helped launch are all doing pretty good in Japan IMHO.

I think the only two non-joint ventured web companies that are doing well in Japan right now are Google and Amazon and both took years and lots of investment to get there.

Why don’t foreign companies work in Japan?

Foreign brands have very little value in Japan without local promotion.

It is very hard to hire people into fully-owned subsidiaries. Many foreign companies pull out of the market. Japanese companies tend to go public more quickly than US companies. Even when US companies do, often they don’t give subsidiary team member any or as much upside incentive. Local partners tend to incentivize local teams and push for local IPOs. Everyone knows this. Even Google had a tough time and are finally getting traction.

Joi, by his own admission, is promoting his own services, since he has launched many foreign web companies in Japan.

For China, the need for a local partner is clear, but the reasons different. Asian markets have large local sensibilities.

When I pitched this business idea about a week ago in a blog post, I received numerous emails of encouragement and some with helpful suggestions. This is a refined version of the business plan presented on video and set to drumbeat.

Would you want this service?

His studies, published at Globalization Research, have included looking at the level of innovation in China, the relative gap in engineers graduated when comparing India/China and the US (His studies controversially assert that the US does not have such a huge deficit of engineers) and a study showing that the number of Indians and other immigrants in Silicon Valley is not as great as many presume.

Mr. Wadhwa writes a column for Businessweek and enjoys aiming to debunk popular notions and perceived wisdom.

“China is simply unable to innovate,” said Wadhwa, a Harvard fellow and Duke University professor. A former technology entrepreneur, Wadhwa now specializes in studying business creativity and innovation.

China’s tech economy is built on copycats that totally lack any sort of innovation, particularly given the amount of money spent on research and development by companies and the government in China, Wadhwa said.

As to Bao Bean’s assertion that creativity and digital garages will be inspired in part by the high level of investment brought in by foreign venture capitalists, Wadhwa said: “There is a lot of money being wasted by a lot of VCs in China.”

China’s younger generation is extremely creative, but those running China’s research and development are not bringing anything new, Wadhwa said.

Asked for numbers to back this assertion, Wadhwa said that the numbers tell the exact opposite story. China files a large number of patents and produces a large number of research-related papers, but there are few actual innovations coming out.

Nonetheless, those good number hide a total lack of creativity, based on Wadhwa’s qualitative analysis.

Wadhwa said the exact opposite seems to be true in India, where relatively little is invested in research and development. India has fewer patents and papers than China, but the country is building itself into a innovation powerhouse.

The fundamental difference, Wadhwa said, is that Indian engineers are encouraged to think beyond their narrow role and build more innovation into their activities.

Why?

1- Ecosystem – For the first time China now has the large crop of bloggers, VCs and entrepreneurs necessary for business creation.

2- Foreign VCs – Silicon Valley VCs have now actually started setting up shop in China, something they have not done in any other country. William cited as an example his own fund, which is the third Softbank-backed fund in China.

3- In China, less is more – A good idea in Silicon Valley will attract several hundred thousand dollars in angel investment, while a Chinese equivalent will attract one quarter that. The good news: “You can get a lot further on US$50,000 in China than you can with US$200,000 in the US,” William said. A US$30,000 per month burn rate in China is equivalent to a US$300,000 burn rate in Silicon Valley.

To support his argument William cites a company that he recently joined, iTalki, as an example of a Chinese company innovating on a global scale. iTalki is a language exchange site with a global user base that supports more than 100 possible languages. While it does copy some good ideas from other sites, William claims iTalki is the world’s leading language exchange of its kind.

William’s conclusion: “You will soon see an awful lot more digital garages in China.”

What do you think? Do you agree?

Inma offered 7 tips for entrepreneurs:

1- Hold no meeting longer than 30 minutes.
2- Insist that everyone think through solutions to their problems that can either get a “yes” or “no”.
3- When dealing with younger employees, make them clones of yourself, following the model of a Michelin chef. Give them the recipe so that they know how you like your omelette and can make it over and over again. It will make them comfortable in know what you expect. Once they know how to make that one omelette, they will start improving on the omelette in ways you could never have expected.
4- Start work at 8am, so that you get things done before everyone arrives.
5- Switch off (mobile phone OFF) at 7pm to learn a language or pursue interests outside work.
6- Stay friends with everyone, including investors who drop you. Life can take strange turns.
7- Embrace change, since it always brings opportunity.

Inma just reacted to this blog posting to add the following:

From my days teaching high school in NYC and Spain I am most keen on the “Tao of the How”

Debate is so enriching!!!

Having left journalism to take up business development with one of Asia’s more successful serial entrepreneurs, I’m always on the lookout for new business opportunities.

This idea strikes me as quite complex to accomplish alone, but too compelling to drop.

For that reason, I wrote it up and now share the idea here online in the hopes of feedback or – who knows – potential partners. What do you think?

Executive Summary:

Taiwan companies export most of the world’s large flatscreen televisions, but Taiwanese buy relatively few.

Why? Taiwan television is bad. Really bad.

Hampered by regulations, cable companies in Taiwan have no incentive to invest in compelling content or develop new distribution models.

Stuck in the 1990s, Taiwan suffers one of the world’s biggest digital TV deficits.

Taiwan’s digital TV deficit is so great that it may actually offer a business opportunity.

For my full idea, please read below the fold.

The Business Case for Selling a New Type of Digital TV box for Taiwan

June 10, 2008
By Thomas Crampton

Taiwan is one of the world’s most high tech and developed places
- A population of 22 million with GDP per capita of around US$15,500 makes Taiwan an attractive consumer market.
- Taiwan’s broadband penetration ranks in the world’s top 20, according to the ITU.
- Taiwan companies supply the world with everything digital, from laptops to flat screen televisions.
- The Taiwan government has long nurtured high tech ambitions, with a current goal of making Taiwan the WiMax capital of the world.

Taiwan cable television penetration is among the highest in the world
One of the first markets in Asia to liberalize pay-TV, Taiwan’s cable penetration has increased from 17 percent of households in 1990 to nearly 90 percent today, according to Media Partners Asia.

Yet digital television virtually does not exist in Taiwan
Digital delivery of television, which allows High Definition TV, movies on demand, pay-per-view, etc barely reaches six percent of the population, according to CASBAA.
Irony alert: Almost nobody in Taiwan is able to use the HDTV sets so successfully exported by Taiwan’s manufacturers.

Why do Taiwan cable companies invest so little in digital TV?
No incentive. The national government restricts Taiwan cable operators to subscription fees of roughly NT$500 (US$18) per month. Local officials further influence pricing, with the Taipei mayor recently making lower cable fees part of his election platform.
Faced with dismal returns, Taiwan’s cable companies invested an annual average of US$68 per household, compared with US$230 in Hong Kong, US$281 in Singapore and US$605 in the United States, according to CASBAA.

Why are Taiwan TV programs so bad?
There are more than 100 channels, but no way for cable operators to charge a premium for special programs. The only hope is to make everything cheap, mass market and hope to sell advertising. As a result, all cable operators offer a very similar set of programs. Government regulations inhibit selling premium-priced “bouquets” of special channels. Subscription restrictions mean that revenues at cable companies are roughly 70 percent from advertising and 30 percent from subscription, I am told.

What is the market context for Taiwan’s cable companies?
Taiwan’s cable companies have divided up the market with little geographical overlap. The top 3 players control a 60 percent market share, according to the Government Information Office.

Private Equity, of course
Taiwan’s top 3 cable players received investment from private equity investors in recent years:
CNS: Former Carlyle Asia chairman Michael Kim bought a 60% stake for a reported NT$30.9 billion in 2006.
KBRO: Carlyle Group acquired KBRO in 2006.
TBC: This month (June 2008) Macquarie Korea Opportunities Fund (MKOF) is set to buy Macquarie Media Group’s 60% stake in TBC for $400 million. This is a 34% rate of return from the two years of MMG ownership.

Stagnant revenues
While private equity investors streamlined internal operations, there seems to be little opportunity for them to increase actual revenues until regulations are dropped.
The average monthly fees per user in Taiwan increased 0.4 percent over 2003 to 2006, compared with a fee increase of 14 percent in Australia, 6 percent in the UK and 5 percent in the United States, according to CASBAA.

What is Digital TV state of play?
The major cable companies have nascent digital offerings with 20 to 30 thousand subscribers, but the government-owned Chunghwa Telecom claims the largest number of set top boxes.


How many people really use Chunghwa’s digital TV?
Claiming roughly 400,000 boxes so far, Chunghwa hopes to reach 1.2 million homes by the end of this year, thanks to their exclusive rights to broadcast the Olympics online.
The only way for people in Taiwan to watch the Olympics in High Definition will be through Chunghwa’s service.
Based on calls to consumers in Taiwan, however, I really wonder how many Chunghwa boxes are actually operational.
One consumer I called described the Chunghwa broadband installer as insisting that he leave a digital TV box, even though the customer’s television was too old to use the service. “But I am not permitted to bring the box back to the office,” the repairman told the customer. That box now sits unopened in the original packaging.

What does Chunghwa offer consumers?
Chunghwa’s offering, called MOD, costs NT$89 per month, with the NT$800 installation fee waived for a 12-month contract. You get 14 channels for the basic subscription and then a range of other channels if you pay more. The extra channels heavily promote their “adult” content. Unlike Taiwan’s cable companies offerings, you can select specific channel subscriptions and even order movies on demand. Movies range from free to NT$20 to NT$90 for recent hits.

So where is the business opportunity?
So long as the restrictive regulations remain in place, Taiwan’s broadband-enabled households have televisions stuck in the analog era.

How do you bring digital TV without being a digital cable company?
There’s a number of boxes, but none I know designed to suit Taiwan’s exact situation.

You would need:

• Timeshifting: A digital video recorder such as TiVo could record the 100 cable channels and allow for a later viewing of the content, a sort of video on demand.
• On Demand: Additional content could be brought in through a system similar to Vudu, which downloads movies, TV shows and HD films over broadband.
• Wireless: Wimax, being pushed heavily by the government, could offer a wireless route for downloading content, while Fon routers could be another. Or, to simplify things, the box could be hooked up to a regular broadband connection by wire.
• Transactional: E-commerce should be built in, so that revenue could continue after selling the box.
• Cheap: It must be cheap. Super cheap. Preferably US$20 to the consumer (perhaps with subscription to make up the remaining cost).

What content?
One difficulty is cutting deals with content providers, who usually work on a geographical basis through agents. If the device were left open to show any program on the Internet, users could watch any program available online. More and more US programs are available through the web, for example. Or perhaps you work with Hulu or Joost, providing them with a direct link to Taiwan’s television sets.

The sales pitch
You must convince consumers that – in addition to their cable subscription – they should buy a box. In order to make the box business worthwhile, there should be a subscription or way to encourage further purchases.

The danger!
One inherent danger with this project is, of course, that government regulations change and cable companies can install digital boxes. Presumably they have already put the infrastructure in place for this to take place quickly.
The recently elected government of Ma Ying-Jeou has promised economic reforms and deregulation, but taken no steps on the cable TV so far.
On the other hand, such a device might be applied to other markets with similar problems and with similar potential demand. China and India come to mind.

What are your thoughts?
This is an open business pitch. If you have any further thoughts, refinements, ideas or desire to develop, co-invest or partner, contact me.

Update:
Paul Denlinger at ChinaVortex suggests looking at:
1- Gaming company Shanda’s launch of Ezpod with 1,000+ systems engineers at the height. Test launched in Yiwu flopped, leaving retailers stuck with unwanted dead boxes.
2- TiVo’s Taiwan launch could have some useful lessons. Here are Tivo Taiwan advertisements.
Bill suggests looking at Gigamedia, which may have been doing something similar before they switched from broadband/convergence into a gaming company.

Players in eRepublik collaborate to develop their own countries. Described as a Massive Online Social Strategy Game, all citizens (active users) are real people who interact with each other as politicians, entrepreneurs, soldiers and journalists to establish organizations, companies and affect politics. Time is accelerated, with one year online year passing for each real world week.

Over time, the political map of eRepublik resembles less and less the real world. Sweden, Spain, Indonesia, Romania and Italy are nowadays the first five powers. One unrealistic development: France invaded another country (Though it was only Switzerland).

Although still only in private beta, 19,000 users from 43 countries log on for an average of 15 minutes each day to play.

What is the reverse strategy of the game’s business model?

Alexis and his team decided to build the game WITHOUT a graphic interface until the concept has been proven. Rather than take the classic approach for a new game – invest millions upfront before launching – Alexis and his team decided to take a beta approach and build on a proven concept. (See eRepublik video here)

This round of investment – intended to finance the public version of the site – goes towards proving the strength of this novel approach.

Congratulations, Alexis!

Online gamers might be amused by this posting I did on World of Warcraft invades Hello Kitty

All three have strong links to Silicon Valley, but only Loic is currently launching a company there.

Loic moved from Paris to San Francisco last year to launch Seesmic, a community for video conversation. San Francisco has been treating Loic well and from his level of enthusiasm it does not sound like he will be moving back to Europe anytime soon.

“You can succeed in Europe, but only locally,” Loic said. “You are more likely to have a global hit if you are based in San Francisco.” A European website must be translated into 22 languages in order to reach the same potential audience as an American website in English.

A further advantage of the US, Loic added, is the network effect. “In San Francisco everyone is just one block away and you can meet them for coffee.”

Martin, whose latest company is Fon, insists that Europe has one great inherent advantage due to lifestyle: “I do my work and then when I go home, I am here in Europe.”

The issue of US vs Europe is one that Martin has considered deeply and has now concluded that it comes down to an issue of lifestyle. “You really have to make a lifestyle choice to see where you set up.”

While the US might have a larger market, Martin said the exchange rate of what he calls the “peso-dollar” means that American companies are making much of their money in Europe.

Japan offers a fairly large and affluent homogenous market, but Joi Ito still tends to invest in the US and Europe.

A key difference of dynamic is that companies can more easily go public in Europe, while US companies look to be acquired. This changes the dynamic under which they are operated.

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