Extreme Tech Challenge 2017: Chinese Vertical on Vimeo.
From the New York Times Chinese Magazine
Terrance Philips, a wealth manager and banker to venture capital and private equity firms, remembers one of the first times he went kite-boarding at a MaiTai event, a group of Silicon Valley entrepreneurs and investors who meet up a few times a year to go kite-boarding.
“No one was flying well, we wanted to get lunch but that was miles away, no one had showered. Here we were, people crashing their kites and looking for food in the most primal way,” he recalled.
Despite the physical discomfort, Philips’ biggest takeaway was the strong relationships he formed during those hours. “No one handed out business cards. It was a different way of building a relationship,” he explained.
Kite-boarding, a water sport that’s part wakeboarding, part snowboarding and part windsurfing while attached to a power kite, has become a hot new sport among Silicon Valley’s work hard, play hard crowd. Over crashed kites and maybe a few bruises, entrepreneurs revel in the thrill of extreme sport and learn from each other not just as professionals but as people. It’s a refreshing change of pace from the typical conference-meeting-lunch circuit.
Now they’ve opened up the club to Chinese entrepreneurs. For the past three years, a handful of Chinese entrepreneurs have been part of the Extreme Tech Challenge, a competition for startups that’s backed by some of the world’s best-known venture capitalists as well as Sir Richard Branson. Combining outdoor sports with business, the contest is the world’s largest startup competition.
The annual event, now in its third year, is the brainchild of Bill Tai, a venture capitalist and angel investor who has invested in Tweetdeck, Tango.me and Zoom, among many others. Tai is an avid kite-boarder who, along with professional kite-boarder Susi Mai, started MaiTai, a group that creates community around kiteboarding and the work hard play hard mentality. He started the Extreme Tech Challenge almost on a whim, combining two of his passions: kite-boarding and startups. Today the main contest gets thousands of applications, has a presence at the Consumer Electronics Show in Las Vegas, and a final event at Necker Island.
Anchored between Richard Branson’s Necker Island and Larry Page’s island hideaway, Bill Tai welcomes China Vertical contestants to the XTC. Group is joined by Lars Rasussen, Co-Founder of Google Maps, Val Vavilov & George Kilvadze with Bitfury and Terrance Philips with Citibank.
Bill Tai and Geroge Kikvadze share Champagne with the XTC China Vertical guests onboard Super Yacht “At Last”
Jim Breyer, Bill Tai and Terrance Philips welcome Joy Wan, CEO of BestSign and guests to Necker Island.
44.17M super yacht “At Last” and quarters for XTC China Vertical. Yacht was Captained by Vincent Lauro.
Jim Breyer, Founder and CEO of Breyer Capital, Partner with ACCEL Partners and Early investor in Facebook hosts the XTC China Vertical group for lunch on Sir Richard Branson’s Necker Island.
This year, ten Chinese female entrepreneurs, ranging in age from 25 to 35 and focusing primarily on technology, spent five days on a 150 foot yacht docked off of Necker Island, Branson’s exclusive island getaway located in the British Virgin Islands.
Out of the 10 finalists, eight made it out to the island for daily outdoor activities, including kite-boarding lessons, lunches and meetings with other entrepreneurs, investors and industry experts. Judges included Richard Branson, venture capitalist Jim Breyer and Tom Siebel, founder of Siebel Systems, which was acquired by Oracle in 2006. The event also attracts industry insiders in China such as Kevin Qin, founder & chief executive of InnCube, a co-working space in China, who co-organized the XTC China Vertical and Soul Htite, chief executive and founder of Dianrong, a key sponsor. Harry Man of Matrix Partners China was one of the judges.
For the Chinese entrepreneurs, the Extreme Tech Challenge is a unique learning experience. For judges and mentors, the experience provides an energizing jolt of inspiration.
“There are differences in their businesses but you also see a common thread: they are all passionate founders. It’s energizing and exciting to be part of that,” said Jerry Huang, COO of Shanghai-based iTutorgroup, which also has offices in Dallas and Santa Clara. Huang was one of the event judges.
Though the contest brings people together, it also highlights some of the many differences between Silicon Valley and China’s fast-growing startup scene. China today is the world’s second largest economy, and its thriving startup scene is fueled by both USD and RMB denominated investment. Preqin estimates that venture capital investment in China in 2015 totaled about $37 billion. By comparison, venture capital firms invested $68 billion in the U.S. during the same period.
One of the things often said about Chinese startups is that they are rarely seen outside of China. The size of the domestic market means new businesses have plenty of potential customers, but it also forces companies to hit the ground running.
“The bar is pretty high on these startups to show innovation and ideation. Silicon Valley allows for a little more incubation so ideas can be shielded from market stresses until they’re ready. Should there be more of that in China? I could argue both sides. [The competition] makes businesses stronger and tougher but there are also some businesses that may have benefitted from some level of incubation,” said Jerry Huang.
Huang, who was one of the contest’s judges, noted that though Chinese startups increasingly have their eyes on global expansion, the demands of the domestic market can easily become overwhelming.
That’s starting to change with more Chinese entrepreneurs looking to go global. Highlighting a generational shift, young people today are more willing to leave the security of a large company and start their own business. Entrepreneurs who do go on to startups tend to be independent thinkers. Many have studied abroad and have a global perspective.
If the ten contestants at this year’s Extreme Tech Challenge are any indication, the outlook for China’s startup scene is bright. China’s best can easily stand head to head with any American or international startup. Among the contestants were Joy Wan, Founder & CEO of BestSign, China’s leading e-signature provider, Isabell Liu, Founder & CEO of Banmi, an Airbnb-like travel company; Ivanka Xu, Founder & CEO of Merak, an intelligent MICE procurement system; Dian Guan, co-founder of PatSnap, a SaaS provider for R&D and IP, Xixi Yang, co-founder of Plus, a real-time photography solution, Tracy Dong, Founder & CEO of Xinshang, an online marketplace for used luxury goods and Christine So, founder of Hosbby, an online marketplace for hobby matching.
Though this year’s Chinese contestants competed in a separate competition (other regional contestants also competed in separate competitions), this may be the last year Chinese contestants compete only among each other.
Previously, “it wasn’t clear if the regional winners could win the main competition,” said Tai,“but that’s no longer the case.”
Women Hold Up Half The Sky
The Chinese cohort at this year’s event represents a fascinating cross-section of China’s startup scene. China today is home to two-thirds of the world’s self-made female billionaires, according to Hurun. China is also home to 8 out of 10 of the world’s richest self-made women.
Perhaps one of the most noticeable differences between Silicon Valley and China’s startup scene is that there are more women – both on the startup and investing sides.
“Silicon Valley is a more mature industry and set in its ways. The people that established it were an old boys network, which is still very strong. Despite all the talk of change, it hasn’t really,” said Ruby Lu, former co-founder of DCM China and one of the judges of the Chinese finalists.
China has enough companies and investment firms that are lead by women that it’s nothing unusual when a woman-led startup shows up and asks for funding.
“We all know that the first rule of business is to have trust. People are more likely to have confidence in a person if you are more like them. Familiarity enhances trust,” Lu said.
That’s not to say that the barriers aren’t there.
Early on in Joy Wan’s fundraising experience, one male investor told her directly that he would not invest in her company because she was a woman and “according to data, no woman entrepreneur has had a unicorn company.”
“At that moment, I felt so embarrassed but then I thought ‘I shouldn’t be embarrassed about my sex, ” said Wan.
“If you are a woman, many [investors] will suspect you in the beginning. Many will wonder how you will balance life and work. Sometimes, they’ll ask your marriage status. If you are a male entrepreneur, no one asks those questions. It’s unfair,” Wan continued.
Eventually, Wan’s business acumen and persistence paid off. “If they trust in the business model and want to invest in the top of the market, they won’t care too much if the founder is male or female,” she said. Today, BestSign is the largest e-signature company in China with 111 times year over year growth in quantity of documents signed last year.
The Next Step
Extreme Tech Challenge and MaiTai Global, one of the contest’s main sponsors, highlight some of the more idealistic yearnings of Silicon Valley. Contestants were encouraged to push through some of their personal comfort zones. Many weren’t comfortable in the ocean much less kite-boarding.
Jackie You, founder of FinMai, a SaaS solution of financial management for startups in China, which automates accounting and offers real time financial analytics to managers said that her days on the yacht were memorable but the biggest takeaways were discussions about business, social issues, religion and the meaning of life.
“We were all inspired by the XTC experience and wanted to allow more women to be able to experience such an internal breakthrough and realize their full potential,” she said.
Inspired by their experiences, the Chinese contestants formed a group called WINN, short for “Women Innovators, the New Normal” that will seek to empower women by cultivating the “pay it forward” approach to life.
“We want to encourage the proactive approach of taking the first step of giving to society, not allow external obstacles to hinder us, and become a WINNer!” You explained. As part of the next step, the group will be meeting in Beijing on March 8, International Women’s Day, to sketch out plans.
Bringing people together to do great things is something Philips feels strongly about. He’s idealistic about what can happen when you can bridge those obstacles with strong relationships.
China has regulations that make it harder for foreign businesses to enter the market and do well; the U.S. is restrictive too, he said. But he’s seen first hand how relationships can help define the way companies do business.
A strong relationship between the global CEO and Chinese manager of a multinational company can mean the difference between a growing business and one that gets divvied up.
Whether future business partnerships or the women’s initiative, Philips is optimistic great things will follow. “I fully expect they will take this, run with it and take it to levels never imagined.”