A year ago today, I was preparing “China 101” material for Uberversity (new Uber employee training).
2 days later, on August 1st 2016, Uber’s China business was merged with its fierce rival Didi Chuxing. The media drew a conclusion that Uber failed in China, calling it a “defeat” or a “failure”.
Along with 600+ colleagues working on Uber China, I felt the immediate shake up. Overnight, they were off the table. Uber China became a business unit of Didi.
362 days has passed, looking back:
Did Uber fail in China?
I don’t think so.
As a former Uber employee, a Chinese citizen specializing in bridging Silicon Valley and China, and a writer covering Silicon Valley
for major China tech and lifestyle media, I followed the aftermath of this merger closely.
For context, I was a Product Marketing Manager on Uber China Partnerships and spent time between HQ in San Francisco, and five major offices in China (Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen). Before Uber, I co-launched Whisper’s China operations from 2014–2015 with Tencent, wrote a case study
on Evernote China strategy and signed up hundreds of Airbnb new users in China
via viral blog posts.
Operating in China
China is a land of opportunities. However, with fewer rules, ruthless hustle and a 996 working schedule (9am — 9pm, 6 days a week), it is difficult for Western companies to navigate through. Operating in China with all-in style takes grit and Uber did it .
First, let’s define what success means in China for a Silicon Valley company.
Due to its closed ecosystem and government regulation, China is unlike any other market and requires a separate strategy. A complete win over local competitors could be an over-ambitious goal. Setting up realistic milestones and defining success metrics of “Winning in China” is a helpful exercise before allocating resources.
It’s also worthwhile to assess the nature of your business. For example, Airbnb and Uber are quite different. Unlike Airbnb whose global supply network makes it more defendable from local copycats, Uber is a hyper local business. To win in China, Uber had to head-on compete with Didi and Yidao. In contrast, Airbnb’s copycats in China are collectively providing free user education as Airbnb dominates the overseas travel market and savvy consumers tend to convert to the coolest platform.
Now, switching gears to my views on Uber China, both financially and culturally:
Financially, Uber is in a long term gain — taking 17.7% economic interest in Didi Chuxing. Didi is much more than ride sharing — any Chinese internet giant will branch out into new businesses and become an untouchable conglomerate, especially as Didi is a child of Tencent and Alibaba from a merger in Feb 2015. Didi is also a major investor in ofo, a leader in China’s bike sharing battle. As the Didi empire grows, even with dilution, Uber’s economic value will grow.
You may argue that Uber could have invested in Didi for the same financial outcome, without going all in and losing billions of dollars per year in China. However, that is purely financial and neglects Uber’s culture influence in both China and Silicon Valley.
- In China, Uber trained high calibre entrepreneurs. The “Uber China Mafia” continue to shape the future of China’s transportation and arguably the world, via bike sharing startups like Mobike and ofo.
- This rare breed of entrepreneurs with cross-border experience are well prepared to build unicorns from China. This could change the “Copy to China” reputation.
- In the US, Uber is the first company with “China First” OKR that led to an organizational level focus on understanding and working with China.
“Uber China Mafia” and Bike Sharing Battle of 2017
Chengdu, June 2016
Chengdu was the Number One city for Uber in terms of completed rides. After a long working week, we gathered to eat hotpot and hang out. One colleague remarked, half jokingly:
“One day, there will be an Uber China Mafia”
(Note: mafia is an analogy to the famous “Paypal Mafia” whose members have since started many successful businesses such as Tesla, Yelp, LinkedIn, Yammer etc.)
It was not a joke, and became a reality faster than anyone could think of. The Uber China Mafia now leads Mobike, ofo, bluegogo, Toutiao and other notable internet startups.
In China, Uber is nicknamed as “the Huangpu Military Academy” or West Point for tech talent. Any graduate of “Uber China” has the traits of hustle, extreme ownership and high productivity. In fact, bilingual talent as such is hard to find elsewhere in China.
This leads to my first viewpoint: Uber did not fail in China, but incubated entrepreneurs, and most notably, some of the highest performers from Uber China took the battlefield from ride-sharing in 2016 to bike sharing in 2017.
Bicycle to China is like cars to America. It is suitable for navigating small streets in China. Unlike America, China has a very developed public transportation system, notably subways, which make bikes handy to finish the last mile. Moreover, access to bikes is especially attractive to Chinese white collars with 996 working schedule. My friends say that riding bike home might be the only time for daily exercise.
Under the spotlight are Mobike, ofo and Bluegogo — all run by former Uber China employees.
The chart below (source: China Bike Sharing Report: March 2017
) shows how relevant bike sharing is in China’s daily life. Bike sharing apps are attractive to investors due to its access to millions of users in China on daily basis — a new advertising channel.
Coincidentally, bike sharing trend heated up in fall 2016, when Uber China’s top talent were looking for the next challenge that gave them both purpose and a daily adrenaline rush, like the Uber/Didi combat days.
The battle between Mobike and ofo boils down to different tribes within Uber China.
- Mobike’s CEO Davis Wang was Uber Shanghai’s General Manager.
- Ofo’s COO Yanqi Zhang is a Uber legend with one of the fastest promotion from Uber Chengdu city launcher to Regional GM overseeing North and West China within a year.
- On the product side, Mobike’s Jack Yang and ofo’s Michelle Chen used to work side by side.
- Tencent invested in Mobike; Didi and Alibaba invested in ofo.
As I walked into Mobike’s office, it felt like Uber China all over again: CEO Davis, VP of Engineering Jia, VP of Product Jack, Design Director Yao, PR lead Xue and many more familiar faces. More than the faces, the sparkles in their eyes and the energy in the room remind me of Uber China days. In some way, Uber China Mafia found home for their unrealized dream, and now have full autonomy to operate a Chinese local company.
This removed the underlying lack of trust between US and China, different time zones, and communications errors. Unlike Uber China whose product and engineering were located in the San Francisco HQ, Mobike and ofo can build engineering team to move faster.
In the end, this story reminds us that people follow people.
Did Didi throw Uber China’s talent in the toilet?
One commonality among all Uber China employees?
Bilingual in professional capacity.
This trait is not required to work for Didi, and is not easy to recruit for in China.
Uber is a product that has touched the daily life of millions in China — from retired grandpa who gave up majong time for driving, to housewives who traded soap opera binge watching with earning extra cash. Uber’s brand value and purpose attracted top talent, overseas returnees, and type A personality doers with operations excellence — many from finance and consulting background.
This breed of talent did not belong to Didi, a local Chinese company. Instead of joining a department of a huge company, many wanted to write their own chapter.
Departing from Didi is mutual — the Uber disciples have the operational playbooks of launching new cities and the entrepreneurial hustle imprinted to take on new challenges. Bike sharing filled in the gap.
Besides local biking sharing and other transportation startups, some global minded talent from Uber China team joined Airbnb China, from design, copyright, public policy to user research. Airbnb also benefited from Uber’s China efforts.
The impact in Silicon Valley
Uber’s China endeavor also left long lasting marks in Silicon Valley. One of my roles at Uber was to assist cross functional teams in HQ to better understand cultural nuances to make product decisions and prioritize features, for example, in-app promo banners are displayed differently in China, WeChat and SMS messaging are more effective than email marketing.
I prepared “China Internet 101” presentations to explain Tencent, Alibaba, Baidu and other equivalent of big tech companies. Many American top talent have little knowledge about China and may not proactively learn about this rising power. However, Uber’s “China First” company wide OKR gave many colleagues a “passive” chance to learn about China’s innovation, user behavior and business etiquette.
Any Uber employee with exposure to Uber China product would benefit from the hands-on experience of combating fraud, and working with Baidu, Alibaba and other China companies. It is a preview of a future where cross border collaborations between US and China could be a norm. Despite the merger, Uber’s workforce will be more effective working with China wherever their next career leads them.
Lessons from Uber China’s culture and talent building
What are the key take-aways for other companies eyeing for a China presence?
- First, have a crystal clear mission statement in one sentence. Why? It will give remote team purpose in difficult times and help mobilize as the team grows. Uber’s mission in one sentence: “to make transportation as reliable as running water”
- Second, have actionable core values. Uber’s 14 Culture Values helped guide and motivate large remote teams: “Always be hustling” “Be an owner, not a renter.” “Celebrate Cities” are still virally shared in China till date.
- Third, invest in infrastructure to ensure productivity for global collaboration. Uber China’s 20+ offices were equipped with VPN, fast wifi, and working with global teams was seamless as if the Great Firewall were not present (In China, without VPN, Google, Dropbox, Youtube, Twitter, Facebook are all blocked.) This cannot be taken for granted as some startups may have opted for cheaper price. Your choice of VPN and wifi could greatly affect work productivity.
- Fourth, consistent communications channels as HQ. It’s important to stick to Google Drive, Zoom, Telegram, Google Calendar etc, consistent with HQ and global channels. In my previous startup, our China office used China’s version of Dropbox (Kuaipan) and email system (Tencent email). This gradually piled up communications frictions with HQ colleagues. Therefore, it is important to set up a global standard instead of giving in to local challenges or excuses such as “Gmail does not work in China!” It does, if you want it to.
- Fifth, religiously document best practices and share with global team via playbooks. To me, one of Uber’s most impressive practice is documentation: every successful campaign has been playbook-ed with step-by-step procedure, FAQs and doc ownership. For example, when China wanted to activate Ice Cream Day, marketing managers could search for Ice cream playbook and implement. Documenting religiously may be a painful practice to adhere to, but it will not only remove communications friction, inefficiency and error, it will allow any growth stage company to expand faster in a global context.
- Sixth, regional summits by functionality. This can bring together colleagues in the same vertical to debrief, align and strategize. When you have a business operating in 50 cities, alignment and face to face communications can go a long way.
Beijing, June 2016
“When do you think we can win over Didi?” an American manager asked me.
“Didi has 5,500 engineers. Perhaps the day we have engineering office in Beijing.” I answered.
I did not think Uber would win over Didi, but at the same time, Uber did not fail.In fact, Uber’s contribution to both China and the US can only be felt as the time goes by.
- Financially, Uber shares a growing pie with Didi.
- Operationally, Uber disseminated sharing / access economy in China much earlier than its peer Airbnb. Remember that Didi started as a copycat of Uber in 2012.
- Talent wise, Uber launched well-rounded entrepreneurs (The Uber China Mafia) who are leading bike sharing startups in China and collectively, they will shape China’s tech ecosystem. As a reader pointed out, Uber China mafia could create “the first cross-border teams that really knows how to build global unicorns from China.”
- Culturally, Uber brought China and Silicon Valley closer and perhaps it was the first time that a whole company paid attention to China, which will benefit Silicon Valley when collaborating with China in the future.
Special thanks to #Chris, Suhas, Matthew, Andrew, Sunny for the kind feedback on this article.
This post was originally published on Linkedin.
Chenyu Zheng is an Urban Nomad living on Airbnb | from China, studied in 5 continents. visual story-teller.