SHAN ZHAI 2.0 The Ecosystem of Makers and Startups Terry Cheng @ Terry & Friends ShenzhenWare.com
I am Terry from Terry & Friends Age 27 Joined HP Taiwan Age 40 President, China HP Age 45 President, TI Asia Age 56 Executive VP, Foxconn Technology Group Age 59 Foxconn International Holding Age 60 Retired Today Mentoring young Makers on the startup journey Cartoon, by Shining Hsiong, founder of ShenzhenWare, with Pencil Fifty-three on iPad.
From Maker to Entrepreneur: Innovation comes from Long Tail, Entrepreneurship comes from Makers Phases Challenges 0 Maker Space INNOVATE Manufacturing Space 0.1 From Idea to Prototype module Crowdfunding Sales REPLICATE Small batch Small batch manufacturing Domestic & 1K Supply Chain Overseas & CM Accelerator COMMERCIALIZE Accelerator VC funding Scale production 1 Lacks supply How to attract chain & attention of large Manufacturing Scale production companies expertise MANUFACTURE Sales 100K+ Diagrams from Terry Cheng’s keynote speech at MDCC presented by CSDN in 2013.11
August 2014 Shining and Terry started the “Terry & Friends” group as a means of connecting and mentoring Makers on the Start Up journey. The group started with 40 members to over 6,000 today. Enabling Hardware Entrepreneurship For makers in Chine through a series of public events
IN THE FIRST 248 DAYS What did we accomplish?
WECHAT WECHAT WECHAT Reply every single message from members on WeChat
WeChat as a social platform Managing relationships with 6,000 members Endless replies on WeChat everyday through the iPad: • Al handwritten in traditional Chinese characters • Every new member receives a personalized message with Terry’s bio • Personalized dialogue and discussion • Ensure al replies are prompt and completed before EOD • Encourage participation from new users of WeChat Cartoon, by Shining Hsiong, founder of ShenzhenWare, with Pencil Fifty-three on iPad.
turtle 龟 龜 English Simplified Chinese Traditional Chinese
Public events Over 20 events in 6 major Chinese cities Every month Terry travels to China from Taiwan, hosting events in Shenzhen, Guangzhou, Shanghai, Beijing, Chengdu, Taipei, and Hangzhou to strengthen relationships through oﬄine events.
One-on-one mentorship Providing mentorship to local startups 218 90 327 Teams Minutes Hours mentored per team in total
Mentored teams Product categories Smart Home 28 Smart Wearables 24 Robots 9 Smart Toys 9 Sports & Lifestyles 8 Health Cares 8 Video & Entertainment 7 IoT 7 Smart Oﬃce 5 Smart Car 5 Tablet 4 Wiﬁ Charger 4 O2O 4 Overseas Ecommerce 3 Security & Protection 3 3D Printing 3 Drone 2 Smart Building 2 Smart Store 2 Industrial Equipments 2 Mobile 1
Mentored teams Service categories Maker Spaces / Incubator/ Accelerators 15 Supply Chain 13 ODM/OEM 10 Resource Channels 8 Industrial Design 5 System Integration 4 Open Hardware 4 Education 3 New Materials 3 Media 0 Investors 0
Challenges in hardware startups On the product level Product Technology Supply Chain Sales Deﬁnition Realization & Fabrication Strategy ‣ No product ‣ Lack of feasibility ‣ Low quantity ‣ Lack of sales diﬀerentiation ‣ Low technical ‣ Lack of manufacturing channels or wrong ‣ Lack of market competence vendors channels direction ‣ Dependancy on supply ‣ Unclear online vs. chain oﬄine strategies Talents Equity Business Funding Distribution Model ‣ Lack of speciﬁc ‣ Over distributed ‣ Long product ‣ Not enough talents ‣ Over centralized iteration funding ‣ Lack of attraction ‣ No sustainable ‣ Over reliant on business plan for investors … growth
Lack of vision A common problem Most teams have young members with little work experience. Most teams do not plan for the future and also lack the whole picture. They can’t see the forest for the trees. Cartoon, by Shining Hsiong, founder of ShenzhenWare, with Pencil Fifty-three on iPad.
WHAT IS THE FUTURE OF T&F ? I am also contemplating.
You read a book from beginning to “end. You run a business the opposite way. You start with the end, and then you do everything you must to reach it. ” Former ITT President：Harold Geneen
T&F Future: REDEFINE SHANZHAI
Shanzhai Ecosystem in Shenzhen Is Shanzhai equals to Low Cost Shan Zhai 山寨 =? COPY IP Infringement Low Quality Avoid Copyright Fee
Shanzhai 1.0 Shenzhen Shanzhai Phone Ecosystem In fact, the Shanzhai Phone ecosystem in the past provided environment for innovation and creation. It continuously improved supply chain ecosystem that brings ideas to mass production eﬃciently. It also ful y unleashed the technical advantage from tooling materials to industrial design replying on the diverse distribution channel across the country and the world fertilized hundreds of thoughts of smal businesses… Shanzhai plays a crucial role in Shenzhen becoming the global manufacturing center!
Shanzhai 1.0 Shenzhen Shanzhai Phone Ecosystem Funding Platform Order Branding Channels Design House (e-BOM) Foreign Brand Consign Order PCBA Assembling Shipping Factories Domestic Brand PCB Shipping Distribution Channels System Assembling Order Mobile Brand Factories Consign 4 Core Modules Order System Brand Integrator Phone Case
Shanzhai is dying Why is the ecosystem decaying ‣ Single mobile phone market has matured, proﬁt margin gets smal er ‣ Higher technological barriers as smart phone enters 4G/5G ‣ Internet and e-commerce replace the advantage for physical distribution channels ‣ Government policy suppresses copying, infringement, low quality…
Chance for Shan Zhai to be Reborn Rethinking about Shanzhai’s future Internet IoT Maker Movement Modulation Open Source Shanzhai wil not Everything is More creative Accelerated Open source be in Shenzhen connected, one and innovative product hardware + only, but the product to talent development software， entire country, product system shorten R&D even the world time, lower development barriers Incubator, accelerator, foundation, media, government policy that encourages innovation and entrepreneurship..
T&F Shan Zhai 2.0 Ecosystem Structure Main Group #1 #2 #3 #4 … Product Dev Health & Smart Wearable Toys Robots Drones Beauty Connected … Group FItness Audio Home Router Automobile Resource Industri Marketing Supply … Group al Design & Sales Chain Investing Incubation Media Regional Southwe North Beijing Hangzhou Taipei Hangzhou … Group st America Entertainment Leisure Soccer Biking Foodie English … Group
Shanzhai 2.0 Leveraging by the Internet Congregation Consolidation Integration of resources of expertise of information and based on main based on value flow system, group specialty group based on software platform
Shanzhai 2.0 What else we need to do? Integrate Online and oﬄine to establish Core Value System and to build The unique Shanghai 2.0 culture : Integrity Open Source Innovation
WHY I AM DOING THIS Many people ask me the question：why are you doing this? I can spend time doing things with more monetary return. Bil Gates earns mil ions per hour, but he stil gotta pay movie tickets.
This makes me HAPPY!
SPECIAL THANKS TO David Cranor Dellaena Maliszewski Jon Bruner for helping to make this happen. Shining Hsiong Mengmeng Chen Zichuang Xiong for helping me with the slides. Seeed Studio | O'Reilly Media | Techshop | ShenzhenWare
THANK YOU Contact me via: firstname.lastname@example.org The Ecosystem of Makers and Startups Terry Cheng @ Terry & Friends