Sean O’Sullivan ’85, 2011 Entrepreneur of the Year, Managing Director of Avego, General Manager at SOSventures, Advisor at Chinaccelerator, Chairman and Co-founder of MapInfo, co-creator of cloud-computing, rockstar, photographer, humanitarian, just to list a few, talks about his experience in China from his companies and entrepreneurship there.
Jackson: First congratulations on being recognized as the co-creator of cloud-computing.
Sean: Thank you very much. It’s a nice thing to happen to you. Lots of things going on partially because of this. I was recently asked to go to the Late Late Show, which is the equivalent to Johnny Carson Show, or the Jay Leno Show.
Jackson: That’s all good. Could you talk a little about your experience with MapInfo in China.
Sean: With MapInfo set up into China, even though I had a couple of opportunities to go, I never really went to China. It wasn’t until 1998 that I first went to China as a tourist. Because MapInfo was in China very early, we were very influential in the developing of mapping industry in China. And I ran into somebody from one of the leading mapping companies in China these days called MapABC. He was CTO of MapInfo China for six years and then he went on to form, with a bunch of other MapInfo people, MapABC, which is now the leading map info provider in China. They do a lot of for Google for example. MapInfo was very well-known in China for GIS (Geographic Information System). I see it on CV’s when I was interviewing technical staff in China more so than I in any other part of the world. It’s a very popular product. When I went to network operation centers or bus operators at a city, it’s great to see MapInfo product running at their back end. It’s pretty cool to see the impact it had even after all these years. And it also helped me in some way because most of the companies dealing with transport also know MapInfo and they used MapInfo. So when I mention I founded the company it’s a nice calling card.
Jackson: You brought both MapInfo and Avego to China. Is there anything special in China attracting you?
Sean: MapInfo is in all the countries around the world. Everyone uses it. Any fortune 500 companies use MapInfo in various departments. I doubt there is a fortune 500 company that does not use MapInfo in some part of its business, whether it’s an insurance company or delivery company or whatever. That was probably more true years ago than it is now because now with the web a lot of people just use Google maps. But even so there is a tremendous products built upon MapInfo. MapInfo was a platform that other people build on top of.
At the time back in the late 90s, China wasn’t a major player in the world stage. It certainly is now. One problem in China in general was the tremendous amount of freedom of software piracy. That’s something not very attractive to any software company around the world. In China it’s extremely common for companies to illegally use software. So it would have been as important as a market where there is higher respect of intellectual property. That’s getting better in China these days. But even now China has a long long way to go before traditional software applications are valued correctly. That’s fundamentally unfair.
With other types of business than software company or if you are doing software as a service or software and hardware, China is a great place to do business. And with both Chinaccelerator and Avego we will look whether there is such a potential. It is very expensive to do software development even in China. There is a lot of demand for good software developers in China. The domestic software developer in China is primarily served by companies that are providing software as a service so that the software will end up being paid. Commercially there are a lot of interesting opportunities for companies that doing hardware, or software as a service model in China than traditional desktop software or any media that you won’t get paid.
There are so many fantastic things about China: the people, the activity the thriving growth of the country. There are tremendous opportunities to do business in China as long as you choose the right model.
Jackson: Some of the alumni I talked with say they are doing fine in the US and never thought of expanding into China. IP issues may be one of the concerns but what could be other reasons?
Sean: There are so much opportunity in China but it does really depends on your business model. There are different culture values versus the rest of the world, there are different legal activities and frameworks. Where it is possible to do software business in China, it’s just much harder than doing business model accepted in China and people are willing to pay for.
So in terms of not expanding to China, there’s a lot of other reasons. Mostly it’s because most people don’t think outside home market. They are just happy enough selling in their domestic internal needed market. And the US market and the Europe market are big domestic markets. But software companies do think of selling out of the US. Any internet company will instictly try to sell anywhere in the world. And I think anyone who’s doing engineering these days should be thinking of selling into China. Generally with multinationals you can based in anywhere. And the closer you are to the market, the more likely you are going to be able to do better, understand the special needs, understand the special business model in this market.
If you have a multinational business, you are going to end up hiring a lot of the people in the market where you have the most sales. So it ends up being very balanced. I’m sure right now there are a lot of Chinese companies selling to the US don’t have many sales. But in 20 years or 30 years, if there continues to be some progress on the political front, it’ll be probably similar to Japan’s entering into the US market. Many years ago when Japan were entering into the US market, it first made everything in Asia and now they made tremendous of their products in the US or Mexico and they employ a lot of people in these countries.
So I would hope the same thing would hold true for China eventually. I don’t think China is thinking that way right now. China will take a while to think that way. But American companies certainly are thinking that way. And American companies for a long time have tried to employee people in China especially the big American companies like Microsoft, and Google until the crank down happened. So there is a lot of opportunities for multinational companies even if you have less than 100 employees, like Avego has 50 – 60 employees we have people from three countries: US, China, Ireland. But it’s a natural thing to be multinational these days. Much more than they used to be.
Sean: Some elements are social networking. There’s always been a lot of e-commerce related activities. I can’t tell you how many different implementations of Groupon I’ve seen. Traditionally in the Chinese market, there is a willingness to essentially look for what has been successful in other places and copy that. That’s not particularly innovative however it can be successful, or somewhat successful because they are protected. Because of the great firewall most foreign companies are kind of shut out, unless they have a physical presence in China. If you are going to be an internet company, you have to have a presence in China or you will be copied very quickly, which isn’t true for most of other countries where you can get away with not having a lot of web servers, or you could have very responsive times. That’s not too interesting to me because it’s way riskier than it sounds. One, maybe two, of the clones is going to be successful. But most of the times the clones are made by one of the bigger companies anyway. So all the other copycats are going to fail anyway most of the times.
Jackson: But what are the things you like?
Sean: What I do like to see is things that are really innovative. You do see some amazingly cool stuffs. And a lot of times it has to do with hardware and software, for example display-oriented technologies. I see a lot of cool stuffs with 3D displays, with surface computing. Chinaccelrator this time around has a company called NextGoals. They developed a computer on your wrist that measures your physical activities. That kind of stuff we see a lot of and it’s really cool, innovative. The hardware and embedded software developing capability is definitely a strength in China. You don’t see that in many other places. I think those are things Chinese entrepreneurs compete very strongly.
The Chinaccelerator is mostly software and web technology. That’s been done in Dalian. It is the China’s first mentor-driven seed fund start-up innubator of Chinaccelerator. It was ahead of other companies in that space at the time. The Chinaccelerator is actually starting another program called HAXLR8R, which is hardware and software, or basically the hardware packaging. It’s actually the world’s first mentor driven seed fund for hardware startups. It’s a program going to be kick off in a few months in Shenzhen. That’s one way we respond to the unique opportunities in the Chinese market. It is definitely more challenging to do hardware in the US but it is completely possible to do it in China. It’s much more practical.
Especially if you are a Electrical Engineer, it’s really a great place to be in Shenzhen. If I were to graduate with a EE from RPI right now, I will go to no other place than Shenzhen. Anyone, American, Chinese, European, I go to Shenzhen.
Sean: Have you been to Shenzhen Jackson? There’s couple of unique things about Shenzhen. Different parts of China have different cultural heritages. In Shenzhen basically it’s kind of more like America. You are judged by your meritocracy but not your connections. Other cities, like Shanghai, you have to be Shanghaiese to be more successful. That’s what Chinese people told me. And if you look the demography, populations grew and everyone is not from there. It’s kind of like Silicon Valley, or America in that way.
The second thing is it’s just a great place from an electronics point of view. You can go to market place in Shenzhen where you can see those malls with thousands of factories. On each different store there’s a different factory selling all different products. You can go to a floor just sells iPhone accessories and another just Nokia accessories. So there’s just incredible access to readily available components. There’s a community which hacks different type of phones, or “Shanzhai”. They are better than copycats. There are some really innovative stuff things done there. They are more innovative things done there. Steve Jobs said great artist steals.
That’s why I said Shenzhen.
Jackson: What do you think are the advantages and disadvantages of Chinese entrepreneurs compared with Western counterparts?
Sean: I kind of think people are the same everywhere. You have workaholics like me in Ireland. You have people won’t stop until they re-invent something in China, or Silicon Valley, or all over the world. I think it’s probably the two soceities that are most similar in terms of their entrepreneurship nature wouldn’t be between American and Europe. There’s a big difference between American entrepreneurs and European entrepreneurs. I’d say there is a greater similarity between entrepreneurs in China and in America. In both China and America, people want people to succeed and people believe they can succeed. It’s not so true in Europe. I wouldn’t break it up between the East and West. I would break it up between the two types of the West. That is some funny observation. I may be incorrect.
Chinese people at large, not Chinese entrepreneurs in particular, are hard working and are capable of skills like math. As a society they have definitely more people that are going into engineering. That gives an advantage to Chinese entrepreneurs, also to Chinese economy. But in terms of disadvantages, it’s evidently. I know very creative Chinese entrepreneurs but it’s been said that educational system in China doesn’t encourage individual creative thought. I feel definitely there are many great creative Chinese who break the stereotype but it maybe easier and more common for people in the west to have the additive advantage where dissent and creativity is encouraged.