Corporate Focus

Helping Chinese Consumers Online: Ker Gibbs, CEO of MyETone.com

Ker GibbsTrust is an important component in conducting online commerce in China, and a new online company hopes to put trust into a new light. MyETone.com is an online Chinese community providing consumer product reviews and discussion. The website helps consumers leearn from other netizens about good and bad products.

Originally from the United States, Ker Gibbs is the CEO at MyETone.com. He first came to mainland China in 1985 and has also spent time in Japan and Korea, Hong Kong and Taiwan. Before joining the company, he worked for Apple Computer, Infoseek, NBC Internet, and most recently Secure Computing Corporation.

How did you become involved with MyETone and what is the value of the company's services to its users?

When I first came to China in 1985, there was literally nothing in the stores to buy. The big joke among foreigners was that all the stores must be selling mayonnaise because when you asked a clerk for something they all said "mei you." On special days we would ride our bikes down to the Friendship Store for consumer products. It was pretty grim.

Today the situation is completely reversed. There are thousands and thousands of products, some of them very good. But there is a lot of junk out there too, and fake products and products that don't do what they claim to do.

This creates the need for a place where people can get unbiased information and recommendations. The Internet is perfect for that. Before committing to purchase a product people can do a quick check to see which brand other people bought, and why. They can check prices and follow a discussion of certain brands and products. MyETone exactly fills this need.

Personally, I got involved with MyEtone just recently, through the investors. The main investor is a VC from the Valley whom I've known for many years. He and I talked when I was back in California and I got excited about the idea. It's a good space to be in–consumer products/user-generated content/community–and we can do a lot with it. The team is really solid.

How does MyETone make money?

We're an early stage start-up, so still technically pre-revenue, although we have already put some revenue producing programs in place. Part of our revenue model will be basically the same as it is for these types of sites in other markets — online ads, click-to-action, and taking a percentage of transactions that originate on our site.

However, we have plans to develop other revenue streams that do not depend on the actual transaction to take place online. We have the ability to play and important role in the shopping experience because we touch the customer at the time when they are actively making a decision about what product to buy and which brand to choose. We can earn revenues on that transaction even if it takes place offline.

Why is there a need for Chinese consumers to evaluate products online?

The Internet is simply a better medium than any other to get information about products. This is true in China just as it is anywhere else. The difference here is that while there is already a lot of online SHOPPING, there isn't as much online BUYING here in China, and there are a number of reasons for this.

Of the many reasons people give for not buying products online, over 70% of the people state some type of "lack of trust" as the main reason. It may be trust in transaction security or product quality, but the issue is fundamentally lack of trust.

It's true that the extent to which this issue can be addressed, this will help increase the e-commerce BUYING. Still, an enormous number of people today do a lot of online SHOPPING, in the sense that they are looking for and evaluating products online.

In fact, the low trust environment is one of the big reasons why the China market needs a site like MyETone. In a low trust environment, people look to people within their own personal network for information. They ask their relatives, friends and neighbors for advice about what to buy, which vendors to trust. MyETone is the online version of exactly this type of community. Using the MyETone community people can see other people's opinions, and they can see what other people in the community said about those opinions. Isn't this exactly the same type of behavior you see among friends and neighbors? Certain people get a reputation for giving good advice about certain topics. Therefore everyone seeks them out when they need to make a decision on that topic.

Are you currently looking for more financing?

We raised Series A from individual investors–many of them are quite active in the China market, so not typical "angels" that you never see. Some of them have been tremendously helpful to us. At this point we are raising Series B, but it looks as if that is mostly taken. We believe we can get to revenue and profit with just Series B, but it's impossible to say for sure!

How many staff do you currently have and what sort of people do you look to hire?

Currently we have 28 people, all local Chinese people, other than me. We look mainly for people we have a good chemistry with. Almost anyone with some creativity and an open mind can figure out how to work on the Internet, but we put in long hours so we want to pick people we enjoy spending time with.

We also make a point to go out and have fun as a group once in a while. Last time we went out for go-kart racing at the Formula One track here in Shanghai. We are thinking about doing the indoor skiing next time, since now it's summer and hot as hell.

How do you filter comments on your site and what sort of safeguards do you have for user-generated content?

Your question gets right to the formula for our special sauce! We don't filter or even rank the content–our users do. You are absolutely right to point out that the whole problem with user-generated content is how to filter and sort it for quality.

First, the content does go through a filter for obvious things like obscenity, irrelevant content, that sort of thing. But once we've determined that it's a legitimate consumer product review (or blog entry) then it goes up on the site. The first person who reads it gets to evaluate it. If they rank it low in terms of helpfulness, then the content gets immediately dropped down lower for the next person.

Users can set their own filters so that they ONLY see content that has been rated by other users. Naturally, members who have written content that has been ranked high get more power–their vote counts more when they rate other content, and so on. We call this our Inter-trust system, and it was built using what we learned from the ePinions experience.

What type of additional services does MyETone plan to unveil over the next 3-6 months?

Our users have been asking for wireless functionality, so this is a high priority for our development team now. Again, we see a lot of people shopping online, but the buying experience is still mainly in the shops where people are not in front of their computers. They do have the mobile phones, however. Therefore we are development functionality to allow our users to send an SMS and get price information in real time. This will help them decide whether to make the purchase or keep shopping, or perhaps negotiate a better price.

Lately we've put up new functions, like the "PK" section that supports active debate on any subject, as long as it relates to consumer products. We are also doing more in terms to direct question/answer functionality.

How do you differentiate yourself from your competitors?

The competition falls into two categories. There are "verticals" that tend to focus just on one or two categories, then there are the pure price comparison sites.

The verticals tend to use professional editors. There is nothing wrong with that, and we believe there will always be a role for those sites. But that's different from going out to the community and asking other consumers what they think about the products they bought. It's an entirely different type of content. The smart shopper is going to look at both types of content, as well as the content from the product manufacturer.

Second, there are the price comparison sites. We have this function on our site, but it's not all that we do. We are fundamentally a content site, and a community where consumers can exchange information and advice. The pure price comparison sites are useful too, but they are approaching things from a different perspective.

What sort of challenges do you face in running an online business in China?

Like any business in China, but especially a creative business like ours, it all comes back to the people. We put a lot of effort into finding the right people and we try to create a working environment where they can have fun and be creative. At the same time, we need to achieve certain goals as a company, so there is a lot of pressure as well.

For me as a foreigner here, especially coming from the Silicon Valley work environment, I need to strike a balance between the typical California hands-off style, which allows managers the freedom to experiment and make their own mistakes, versus providing the management that Chinese staff expect. They tend to look for more specific instructions and rules.

What type of advice can you provide to someone looking to invest in China's tech sector?

One of the big discussions is about the ecommerce numbers, and when consumer buying is going to take place online in big numbers. We think it will, but we are not counting on it by depending entirely on ecommerce transactions for our revenue model, the way this type of business does in the US.

MyETone can play an important role in the shopping experience and generate revenues without actually selling products on our site. The Internet is playing an important role in the shopping experience here in China, there is no doubt about that. It would be a mistake to not invest just because actual B2C ecommerce transaction numbers are currently low.

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