Page 89 - How China Is Winning the Tech Race

government regulations in the wireless communications market requiring,
among other rules, that mobile phone users double-confirm purchases of
games, ringtones, and music. Industrywide, mobile service slowed down. The
ringtone seller Linktone Ltd. lost $3.4 million in the first quarter of 2007, and
revenue and profits declined in 2006. The music and gaming company Hurray
Holding saw revenues and profitability tumble in 2006 and early 2007.
No wonder Chen has adopted a new management mantra: “Less is more,
fast is slow.” To wit, he has quashed a plan to take Oak Pacific public in
2007 but says he may shoot for 2008. He also is cutting some mobile
phone services and focusing on core Internet businesses. “The fisherman
who is used to turbulent waters expects the waves and never flips. Then they
catch the big fish when they come,” says Chen, putting a folksy positive spin
on the setback.
Chen may enjoy early-morning
bass fishing expeditions and the
“Joe is always looking for the next big thing.
occasional sea metaphor, but he He’s looking for what’s going to be top of the
has a long way to go before he list two years from now; then he lays out a
lands the big one. “Bass fishing is plan for the short to middle term."
like a start-up. You use your pat-
David Chao,
tern recognition abilities to find
cofounder and general partner, DCM
good markets or fish,” he says.
Oak Pacific still needs a lot more
bait to reel them in. Its leading
brand, Mop.com, claims 30 million users compared with 126 million for
MySpace in the much bigger U.S. pond. Moreover, Oak Pacific’s revenues of
$50 million compare with estimates of $525 million in 2007 for MySpace. On
top of this, as many as 500 local Chinese sites are jockeying for position.
“The online social networking space is still in the early stage,” says Duncan
Clark, chairman at the Beijing-based consultancy BDA China. “Leading
players in the market have yet to secure entrenched market positions and will
be threatened by new entrants.”
Even so, his venture capital backers are betting heavily on Chen. “He’s
able to move fast because he’s building a conglomerate of several sites, either
through making them or buying them, and then he’s integrating them,” says
David Chao, cofounder and general partner at DCM, a Sand Hill Road-based
venture investor in Chen’s firm. “Joe is always looking for the next big thing.

Oak Pacific Interactive—W eb 2.0 on Steroids 63