“We were having a drink at The Den in Beijing,” Fritz Demopoulos recalls. The year was 1999, and The Den was the spot for power brokers to hobnob back then. “Rupert Murdoch has told us that News Corp, one of the biggest media corporates in the world, makes a lot of money from sports. We thought, ‘Wait a minute, if traditional media makes a lot of money from sports, why can’t we bring sports online?’”
Shawei (“brave shark” in Mandarin Chinese) was soon launched. In the span of a year, it became China’s largest sports internet company and sold to Tom.com in a US$20 million deal. Yet Shawei’s success was dwarfed by Fritz’s next venture: Fritz and his co-founders went on to found Qunar, China’s first and largest travel portal valued at US$4.4 billion.
Where did Fritz’s billion-dollar ideas come from? The spark of innovation “sometimes seems as if it comes out of the ether,” Fritz observes. “Does it come from the unconscious? No. I believe there’s a rigorous and systematic way to come up with entrepreneurial ideas.” At Chinaccelerator’s annual 8×8 event, the serial entrepreneur lays out four methods of idea creation and positioning for founders. Let’s dissect them.
1. Visionary founders
Among founders who have passed into legends, Jack Ma, as Fritz puts it, has a “messianic vision to help businesses do businesses better” — whether with Alibaba’s enterprise marketplace, consumer business, or payment cloud. For “super-app” Grab, the vision wasn’t to get people from A to B with ride-hailing, but to “drive Southeast Asia forward.”
“The thing about visionaries is that they see things other people don’t see clearly and they hear things that other people don’t. There’s a fine line between being a visionary and seeing something people don’t see and being considered nuts,” — Marc Porat, CEO and cofounder at General Magic, the “most important dead company in Silicon Valley.”
In 1992, Marc Porat holds up the design of what is now the iPhone in a scene from General Magic–A Film by Sarah Kerruish and Matt Maude. Photo: courtesy of Spellbound Productions.
Now, is your co-founder visionary or delusional? The truth is that you can never tell until the vision is realized. True visionaries almost always have a touch of fanaticism verging on the dysfunctional. Steve Jobs comes to mind: a fanatic with a steadfast, absolute reverence for the vision. Jobs learned from General Magic and eventually realized its vision more than a decade later, in the form of the iPhone.
2. The “can’t-miss genius”
These ideas abound in Silicon Valley or university labs: specialty AI, a superior understanding of certain niche areas such as human-computer interaction or machine vision. “This I describe as a pedigree-driven approach: a solution looking for a problem. It may be a slower approach, and we don’t see it too often, but we do see it,” Fritz observes.
3. The problem-solver approach
As the founder of Queen’s Road Capital, Fritz has been investing in technology companies for a decade. Citing Eric Ries’ classic text Lean Startup, he encourages founders to get up close and personal with customers. Here’s an example of a New York-based company looking to change the personal assistant industry.
What’s amazing about these founders is that they have interviewed 100 personal executive assistants. They video-taped these conversations, they documented them, they prioritized, they created meta tags to figure out the exact pain points and then create amazing products and services around that.
“As an investor, I love that approach,” he says. An intimate understanding of people with real pain points can lead to companies that disrupt several industries at once, creating whole new segments. Think Airbnb and the sharing economy. While the number one reason startups fail is still lack of market need, getting the problem right might sound easier than it is.
4. The “show-me-the money” approach
Also dignified by Fritz as “the businessman approach”, this was how he and his team co-founded three companies over the years.
Just as Shawei.com was born over drinks at The Den, Fritz’s next venture was made in the lobby of the China World Hotel. Having found out that half of magazine advertising spending went to women’s magazines, the team created a digital women’s magazine to catch this wave. Gaogenxie (“high heels” in Mandarin) came about and successfully merged with another company not long after.
Bitten with the startup bug, the team thought that they had it in them for one more. “We keep downgrading ourselves: now we met at a Starbucks at the Hong Kong Airport Express. We thought that the three of us had to make another business,” Fritz remembers. One of the co-founders said, “Google was this huge company. Why don’t we figure out where Google makes most of its money and carve out a piece for ourselves?”
“Google’s biggest areas were travel, financial services, automotive, and medical care. Those were the four biggest verticals in 2004–2005. I said let’s pick one and build a better mousetrap,” says Fritz.
Qunar (“where are you going?” in Mandarin) was launched in 2005 as China’s first travel search engine. The rest is history. The company was listed on the NASDAQ and later acquired by Ctrip in 2015. Years after Jerry Maguire, “Show me the money!” still makes bank.
Honorable mention: the imitation approach
Confucius once said, “By three methods we may learn wisdom: first, by reflection, which is the noblest; second, by imitation, which is the easiest; and third, by experience, which is the bitterest.”
In entrepreneurship as in life, as Fritz puts it, “you can think about things, you can learn from your mistakes, or you can copy others.” Analytically minded entrepreneurs can go to the website of top venture capital firms, research the top 50 companies they invest in in the last 12–24 months, and find the patterns. “Look what ‘smart money’ is doing. Or write to William Bao Bean,” he quips.
A few final thoughts from Fritz
- Remember to not take yourself too seriously. It’s true that capabilities drive passion, but so does serendipity. Sometimes we have to fly blind and hope to land the plane without crashing it.
- Don’t get stuck on any one way. Deng Xiaoping famously said that it doesn’t matter if a cat is black or white, so long as it catches mice.
- Success or failure is only a partial reflection of who you are. Enjoy the entirety of your entrepreneurial adventure: it would not be an adventure without it all.