Find here the China paradigm episode 29. Learn more about Kevin Yu’s career in app development in China and find all the details and additional links below.
Full transcript below:
Matthieu David: Hello everyone. I am Matthieu David, the founder of Daxue consulting and its podcast China marketing podcast, China Paradigm and today I am with Kevin Yu. I have to say I am so excited to have you on the show because I am very impressed by what you did. When I went through your LinkedIn profile, just to name a few elements, named ‘Best Apps of 2017 by Google Play’ and ‘Best Recipe Software for IOS and Android by CNet,’ and I am talking about the cooking app in China and the US you founded, which is SideChef. So, based in San Francisco and in Shanghai, you have founded the company in January 2013. You are in between the two countries as far as I understand, currently I think you are in Shanghai and this app I downloaded, I experienced it as well, is offering recipes for people to cook at home and also to order the ingredients from the app as far as I understand. Thank you very much, Kevin, for being with us.
Kevin Yu: Thank you for having me here. I am really excited about what you guys are doing and also your audience as well too. So happy to be here, happy to be sharing experiences.
Matthieu David: Can you tell us about the size of your current business, some ideas about, could be revenues, could be a number of users, could be the size of the team, any number that gives us an idea where you are in your app development in China and the US?
Kevin Yu: Of course. We recently, about six months ago, did series A round of funding. We have roughly around 40 people employed full time, split between the US in San Francisco office, and also in the Shanghai office. That’s kind of where we are in terms of company size, and you know looking to really start scaling our growth, a lot of the growth that we found so far with the product market fit, with apps both as a B2B platform solution, and also a B2C consumer experience, for helping people cook, helping them get their ingredients, being able to find recipes that they can interact with throughout the cooking process and also being able to connect into smart kitchen technology in the US and China.
Matthieu David: I see. We found on the Internet that your revenue – I never know if all those sources can be accurate or not – were $9 million, are you close to this number?
Kevin Yu: Not quite there, but we are on our way to grind the company quite a bit. Yes.
Matthieu David: Okay, it’s a bit of a study that you do have 9 million. So, you are based in two countries could you tell us how you split the two resources, and why are you on in between US and China?
Kevin Yu: Yes absolutely. Most of our development team is actually based in Shanghai. Shanghai is our headquarters where it was founded. We opened up our SF office afterward where we do all lot of frontend, client facing, growth, marketing, legal so forth, to help us really with the US market. The US market is actually our North America market, our primary market. When we first started back in 2013, 14, 15, I think once we got in about 2016, we started turning the business also to have a B2B angle, which we offered software to a lot of global smart kitchen technology in the US. At that point, it became much larger and so we do, even though we have a US office, we do have an office also focused on a lot of global business development as well.
Matthieu David: I see. Could you tell us more about the business model? I used your app, and I had nothing to pay. I was asking myself what your app marketing strategy in China and the US is? I got an idea that you could make money out of the ordering of the ingredients, but I didn’t feel that I was pushed to pay anything or to buy anything.
Kevin Yu: Yes, the grocery delivery experience is still relatively early. I think the adoption for it is early, so we are doing a lot of testing with our partners both here in China with JD and also in the US with Amazon Fresh, Walmart. But primarily our model to date from 2016-18 was pretty a lot of emphasis on the B2B aspect, so we do take our software and content and give licenses out to kitchen brands, and from there we were able to build a profitable app marketing strategy in China and the US and then do series A round of funding. So that has been very exciting for us, and it’s allowed us to keep a lot of the features and the stuff that we have free for the consumer side. In 2019 and 2020, we are re-listing and putting a lot more emphasis on the content in the consumer experience, in addition to of course going deeper on the B2B side.
Matthieu David: I am not sure I am very clear on the B2B side. Who are your clients exactly? I am not very clear.
Kevin Yu: No, that’s a good question. Just recently at CES this year, we did demos, live demos with our partners being Google, LG, GE, Sharp and Bosch, so there are five other partners that we demoed with live in their booths, in terms of showing off how SideChef connects with their devices and is able to enable that smart kitchen technology in the US and China through recipes. For instance, imagine if you’re in step one, it says to preheat the oven and you press ok. You press check and it sends the command automatically to the oven and it starts preheating. Then you go to the next step, you are doing step two, chopping the onions, mincing the garlic and so forth. All the ingredients are now prepped. They want you to put it into the oven, which now is preheated and the app knows this as well. You press check and put this into the oven. We know exactly what’s going into the oven in terms of the ingredients, we can also change the cooking algorithms to match that as well too, so we are able to control the whole entire kitchen experience from the recipe-guided experience itself. So that’s step-by-step cooking. All you have to do is focus on the step by step, you don’t need to worry about anything else and everything is orchestrated from the recipe itself. So, we have been offering this service to now multiple kitchen manufactures. The partners that I just mentioned were some of the ones that we have demoed live with and we have not announced all the partners, but generally, we are working with a majority smart kitchen technology in the US and around the world, providing again the software cooking experience. We didn’t do a demo with them at the CES because they don’t usually demo at CES, but Amazon is also one of our largest partners as well too. The Amazon Echo shows you can actually ask the recipe as a needed experience, meaning Alexa finds me a Lasagna recipe and it will actually show you SideChef recipes by default. So, they are also a huge partner with us as well, which we use that to be able to connect into the open cooking ecosystem too.
Matthieu David: Is the revenue coming from the users of the smart speakers? I am not sure I understand.
Kevin Yu: We do license of our smart kitchen technology in the US and our content as license deals to the kitchen brands. Sometimes we also do custom projects, such as GE appliances announced a project called the ‘Kitchen Hub’ at CES, I think, two years ago now. That product, will be going out to market this year, is a product that we built with them, and we really kind of built that out in terms of the software product. We do the custom implementation of SideChef smart technology in the US and the content, or we license our technology and content to them, in which they can build display within their experience. Those two are two core parts of our business. We also do have revenue coming in from the consumer side, so those are all B2B and consumer side through grocery, delivery. We get revenue shares from the grocers, and we also do premium content that is able to be sold, and every so often we do certain types of targeted advertising, more focused on testing different advertising inventories to see what could be really useful to engage with users without it feeling like a banner ad. So those are all, that’s more elements that we are testing in 2019 this year.
Matthieu David: I see. Actually, it’s much more complex than what I was thinking. I thought your business model was only grocery and delivery. So, you have also the business model of licensing your content and smart kitchen technology in the US, because coupled with technology is a content created on the cooking app in China and US as a different step of a cooking recipe, isn’t it?
Kevin Yu: In many ways, I usually explain to investors. Our business is very much content plus tech, where the really special part of SideChef is compared to other contemplators. There are other websites like Allrecipes who has millions of recipes, but we have this smart kitchen technology in the US that allows our recipes to connect to the whole entire ecosystem of partners, of verticals, and really goes down to the smart recipe format itself. It’s not only guided cooking with step-by-step photos and videos. It’s able to be mapped on to, again, Amazon Fresh’s database, tons and millions of kitchen appliances and devices and be able to control them. These are all that makes that content partly special and makes us very different from the content that is out there. We have a tech to beat out the current content players, but there are also other tech players that do connectivity for IoT. We do that connectivity but we also provide the content. It’s not just we’re building a connection that is a remote control, turning on your oven, or turning on your cooktop. It actually tells the oven or your cooktop what to do in relation to a recipe. Again, it’s not a remote control, like I can turn on the oven from my living room, of course, we can do that too, but that’s pretty boring. How do you actually orchestrate it together or have multiple devices talking to each other work together? So, we have content that commands and controls that experience. This is where you might have Allrecipes, a million plus recipes, but you are not able to communicate to your ecosystem with that. You are not able to get all your groceries, you are not able to do one of the things that are in beta for us right now, called multi-recipe cooking. Choose any number of recipes within our 15000-recipe database right now and we will tell you when to start what, so they will all come out warm at the same time. We’ll mix the prep steps together, so if you are prepping all the garlic together, prepping all the tomatoes together, and then be able to split it out for multiple different meals if you are using these similar ingredients.
Matthieu David: I see. In order to connect with the devices, is it that you sell specific access to an API, or you go further into eyeing the end app development in China and the US with different companies?
Kevin Yu: Because this smart home market is still relatively new and there are a lot of partners that have different types of requirements of smart kitchen technology in the US and China. We do offer API but, many times, we actually do help the custom implementation of such an experience. Think of it like SAP, often times the companies will use SAP out of the box, or they will hire the consultants from SAP or other third-party agencies to be able to implement it or even customize SAP to be able to have the function the best for them. So, we have to have an out-of-the-box experience that we can work with any small smart kitchen technology in the US and China as well too and be able to control them and have our recipes be compatible, but we also do custom projects that can show off what the smart kitchen technology in the US and China could look like in the future. Because this is so new, I think there are a lot of opportunities for companies to take leadership in this area. And as I mentioned before, we demoed at a CES with GE, their Kitchen Hub product, which is basically a ventilation hood that goes over your cooktop and has a huge screen on it, kind of like a Tesla, an LCD screen that allows for the whole entire cooking experience to be presented right there. So that’s a new product in the market enabled by a lot of the smart kitchen IoT and the content that is able to interact with users.
Matthieu David: Okay, I understand. Actually, your capability could come from licensing, because I believe your invoicing by the number of devices which are using your smart kitchen technology in the US and China, isn’t it?
Kevin Yu: We do have license deals where they are scaled to the number of devices that go out to market. We also do work with, on the content in the grocery side, where a lot of users end up using these services, and that’s our B2C scaling.
Matthieu David: I see. Very interesting. What differences do you see between China and the US, in terms of B2B side, working with the manufacturers, the brand, the tech company you mentioned Amazon, Google, should we mention Tencent, Xiaomi, all those smart speakers?
Kevin Yu: Yes, I think one of the largest differences between the smart kitchen technology in the US and China is in the US, they mostly focus on the kitchen itself and I think there is a lot of disruption being happening there. They have focused on the kitchen for over 100 years or since the very beginning. A lot of brands in China and also in Asia in general, what they are looking at Midea or Haier or the Korean brands like LG or Samsung, they are just electronics companies in general, and they have kitchen divisions. Some of them have started from the kitchen even in China with the Midea or Haier, but have expanded out into just being electronics in general. So, I think the market size or field of products is larger in Asia. A lot of these companies are, I would say, are comparably more tech-savvy in that sense, or having that core expertise internal. Yes, I think the way they look at technology is a little bit different.
Matthieu David: Are you working with them? Are you working with Tencent, Baidu, Xiaomi, Alibaba?
Kevin Yu: We have a few of the large partners in the smart kitchen technology in the US and China. We have not announced yet, and we are working with them now, but of course, if there is any other opportunity in China, feel free to reach out to me.
Matthieu David: The kitchen business, I mean whatever the model is, seems to be hotter and hotter recently the now ex-CEO of Uber said he would invest primarily in a shared kitchen in China. Could you tell us about what’s your vision of the smart kitchen technology in the US and China of the future? Could it be shared? Could it be private? Could it be with smart speakers, with every device connected? Could you share what will it look like? Will we have still a kitchen in the future in ten years at home?
Kevin Yu: To be honest, I think there are going to be a ton of devices happening with this whole kind of IoT evolution, but our vision specifically is very focused on building a user experience where users have one single destination to go to, when they think of home cooking or when they want to cook at home. Everything else in the world will constantly change, but for us, similar to if you want to get a car, you will probably use Uber or in China maybe you will use Didi or Meituan. You have a one-stop solution. If you want to get movie entertainment or TV shows, maybe go to Netflix or iQiyi. These are single destinations. For music, you go to Spotify. You have a single place you go to that solves all the problems. Whereas right now when you think of home cooking, whether in China or the US or in Europe, where you find a recipe is most likely a different place, where you get your groceries, if you wanted to actually know how to cook, or even deciding what you’re going to cook for the week with your family or meal planning, if you guys do meal plan, let alone smart kitchen, precision cooking all this other stuff. The truth is you would just go to so many different sources to get this idea of home cooking done and it’s very complicated. So, we believe there will be a single destination that people can go to, to address the whole entire cooking journey. So that is what SideChef is really dedicated to be able to build and to offer to its users on a global level. Again, we will work with ecosystem smart kitchen technology in the US and China across all different verticals as we have, and that’s again part of the offering. In terms of predicting what the future will look like in this area, it’s been a very interesting adventure in learning all the different projects that the smart kitchen technology in the US and China they have a certain vision of what it will look like technologically and through hardware, working with Amazon, Google like seeing their kind of angle of it as well too, and then a lot of the content. People are just looking to be relevant to still do what they do best, which is showing off really good recipes for users. Our job is to bring in all the smart kitchen technology in the US and China into one cohesive experience, where is again seamless. So that’s our focus and I think again all of the ecosystem partners will change. I think there is a lot of change happening in how millennials cook compared to previous generations. The kitchen devices themselves are changing. I use the sous vide machine to cook, whereas my parents obviously they see a sous vide machine, it’s like totally foreign. So, the device will change but again, but I think the cooking, that journey is still very fragmented. That’s the part that we aim to build in order to make a future.
Matthieu David: Okay, so your vision is a bit like you may have a bike, a car, even buses and trains on the app, just making it possible to commute easily with different modalities. You say that your cooking app in China and the US will make it possible for you to cook in a chef kitchen, in your kitchen, a kitchen of the neighbor with this device if you need. If you don’t have this device at home, you may go to a chef kitchen. This is an accessory. The key is that you have the cooking app in China and the US where people would go to cook and to interact with these devices. That’s your vision?
Kevin Yu: Yes. Imagine Matthieu, you and I, we are to say we are going to cook tonight. I invite you over to my place right now, the cooking app in China and the US add your profile to mine, it will automatically know your personalization as well as my personalization, what would you like to eat. It will probably recommend dishes for the two of us, and then we can one-click order, get all the groceries from JD, and then we are off to be cooking.
Matthieu David: You are talking about building contact with Google and Amazon. This looks like a dream of many startups, of many small and medium business, to be in contact with the giants and open the door. How have you been able to meet with them? I read, Sophia who prepared the notes, wrote that you are born in Silicon Valley, in this environment. Is it because you are from this place where everything is happening intact and you had easier access? Is it because you were participating in a lot of events like TedX talk, we saw that you have been speaker so many times? How do you connect with those big giants? What app marketing strategy in China and the US did you use?
Kevin Yu: Again, we share the same kind of backgrounds as most startups in the app development in China and the US. We got a lot of no’s in the beginning. Eventually, there is one ‘no’ turns into a ‘yes’, and then we turned two into a yes, and then three into a yes as we build more momentum. Then people are more curious about what you are doing and then eventually more opportunities start knocking at your door. Even with Amazon, to be honest, we had our intern at the time, who is my head of business development now, she actually just called somebody at Amazon on LinkedIn. After a couple of different tries, we finally called somebody on LinkedIn and they accepted it. Then we used it to give a pitch and did a phone call. A phone call led to a meeting, and then the meeting led to a demo and then we started a working relationship with them. As you work with one department and then two. You announce something and then Google finds out about it, and then you are on the map. Getting a second meeting with Google now becomes possible. It’s just building the momentum, but it does start with a lot of no’s at first.
Matthieu David: I see. To be persistent basically, there is no easy way is what you say, even if you have some proximity and are close to them by being localized in the US, you still have to fight to get the contact. I’d like to understand better the user acquisition strategy in the US. I feel I didn’t understand initially your business model. I thought you would advertise a lot, do SEM, pay Google platforms and iOS to do the advertisement on their App Store. But I feel now that the more devices you equip, the more companies you partner with, the more users there will be. So how do you get users?
Kevin Yu: Yes, we do a lot of user acquisition right now through the B2B site, through our partners, especially SideChef is a new brand, it helps to be side by side with a larger name such as LG or GE or Amazon for that matter. That’s our primary kind of user growth as well as the pretty good press that we have got as well too. We have not actually spent large sums of money in user acquisition yet, this is where again 2019. In 2020, we are focused on the B2C side in a different way, but we are scaling this further. But in previous years, a lot of it, to be really honest, was about monetizing and building a sustainable business, which led us to convert into a B2B aspect and really build that out. Now we get a chance to go back and do the B2C side on a different scale.
Matthieu David: I see. I am on an app, the paid premium version. I went on your SideChef and I see that yours is also pretty good in terms of users. You are in the Top 1000 for food and drinks in the US and from time to time in China, not all the time but more and more in the recent weeks, you are in the sometimes 500, sometimes in the 700. So, this user acquisition is coming from the partners mainly, that’s what you are saying.
Kevin Yu: I mean all of it is organic yes.
Matthieu David: You made a Kickstarter campaign ‘Chip’. Could you tell us more about why making a Kickstarter campaign for an app, it’s usually more when you create a device or a product?
Kevin Yu: Yes. In terms of the Kickstarter, we had a really cool device called ‘CHiP.’ It was a smart cookie oven. We had this idea of a software piece, such as SideChef connecting into an oven that you didn’t have to program whatsoever. You can literally scan the QR code off of a chocolate chip cookie or something else that you bake and the oven knows exactly how to make it. It knows when you put it in and then it’s done in a small amount of time. It’s a smaller oven, therefore it heats faster and is able to make that cookie or bake a product much faster. We actually got into a prototype phase for it, but it didn’t actually go to market. We ended up refunding a lot of our Kickstarter backers, because to be honest, in many ways we struggled with the hardware production side of it, which is not our core expertise as the software. This was important to understand the timing of this, compared to where we were as a company. We had launched a successful cooking app in China and the US, but we had not gone into IoT. We actually reached out to several smart kitchen technologies in the US and we were like, wouldn’t it be cool if we created this experience where the cooking app in China and the US in the cooking process could control ovens and so forth. In many ways, CHiP was kind of our demos of that, because we actually didn’t have any partners at that time. We didn’t have any smart kitchen technology in the US that believed in us that we could actually build this product or the experience. But we are able to see what it looks like. CHiP, the smart oven actually was our first client, in terms of being able to build an IoT cooking product. From that, we also had a demo to be able to show a different type of partners, and then really quickly SideChef had a B2B side of the business. While I think the Kickstarter itself was unfortunately unsuccessful, we had to refund a lot of our backers, or all of our backers, it was an important evolution of the company to get to where it was. As I mentioned before, it’s not like we had a bunch of high-level connections that just gave us free deals with these large companies. We had to always prove ourselves, in terms of, it’s not just having a good pitch, it’s willing to go out there to show that you can build it, evolve it and even fail at it. But still to be able to make that step towards it, and I would argue that has led us at that time to jump into the IoT sector.
Matthieu David: Very interesting. Because I feel there is a lot of failures, which are actually leading to success or to creation. And myself experienced that with my first business, which was a failure but learned so many things and gave me the credibility to start the second business which I think is very similar to what you have experienced.
We talked about the smart kitchen technology in the US and China and how you could be at the center of cooking, where you’re going to share the kitchen, with whatever the device. When I look a little bit in the future of the kitchen, some people say the key will be the rubbish bin, because the rubbish bin will know exactly what you have used in the kitchen, you’ll be able to track if you scan it, what you have used to reorder, to know what you have eaten, etc. What’s your view on this? Do you feel that’s the right vision?
Kevin Yu: Yes, so that’s actually the first time I have heard of that but I think it’s a very creative way to look at the kitchen in terms of what is being used, but it really depends. Your question is about what is the most important device or hub. I mean in my opinion, I think it is the device that most numbers of people have. When you are able to, like everybody has a TV, therefore you can have a very uniform smart TV experience on it. Again, every smart TV probably has Netflix. It’s because it’s so standard of the device. I think the kitchen itself also needs a standard device that everybody has, therefore you can build a uniform experience on it. That gives them all the bells and whistles, just like as everybody has a smartphone, therefore cooking app in China and the US can be really powerful. If smartphones were not so popular or super fragmented, you wouldn’t have the rise and importance of a lot these cooking apps in China and the US. Again, I think it’s making sure that the device is in the kitchen or needs standardizing in some affordable, economical way for a large range of people, not just the elite, but accessible to everybody, as is the same as with the smartphone, almost everybody in the world has a smartphone.
Matthieu David: You have written many times when we are looking about yourself, your experience that you are leading through a design, a vision-driven design thinking for the app in China. Could you tell us more about what it is and how it’s influencing your way of app development in China?
Kevin Yu: Yes. I think when we focus on design, design isn’t just UI UX. It’s a certain way of design thinking for app in China. For us at SideChef, it’s very much thinking in terms of systems. It’s not a particular product. For instance, as in many ways, I believe Steve Jobs had the design thinking for app in China and the US of wanting to make the technology very personal to you. Because of that design motivation, he then made the Macintosh, which was a personal computer. Because of that design thinking, he then made the iPod which made every person on a personal level has thousands of music songs in your hands. He wanted to make the computer closer to the user in an easier way, therefore the laptop and the iPad. These products as successes were not the focus itself. It was the outcome of design thinking and this is also what we look at. When you want to put out a product and make that successful, it still may or may not work, as Apple has had plenty of failures and success. SideChef has also made plenty of mistakes as well, but if you design a system which is not only one-part thinking, it’s also the team and the product. A team that has the process of trying things and how they learn, fail and “fail fast” in this. The team is able to keep trying, to move fast, to learn from it to either fail or succeed in it and then grow it. I am counting on each individual product or feature a lot less than on the team which knows how to navigate the uncertainty. So, we are trying to build a company of people that are so good at navigating the uncertainty and understanding the product fit in terms of what users are looking for, and they are just willing to keep trying or banking on the people in the design thinking for app in China and the US of what the user needs, rather than just each individual feature.
Matthieu David: I understand, I truly understand, but I think it’s easier to say than to execute. How does it translate into your company? Does it mean it’s very decentralized? Does it mean that each team member can allocate half the day of the week to work on an idea he has, but we know it’s happening at Google? How does it translate into daily management?
Kevin Yu: I think it comes down to the people that you hire in many ways, in which you are looking for a team that is not about just the skill sets that they have, it is about how they deal with challenges and failure. I think that is a key part. Just as I mentioned, our intern, in the beginning, is not my head of business development, which shows that we are willing to bring on people with lots of different levels of expertise, but they have grit or persistence that is able to supersede. That persistence is actually the word that you mentioned before. It is really the key to what we believe is success. It’s that ability to keep going. But persistence is a trait as an individual. How do you build that persistence that culture within a team? I can find the smartest person, a smartest engineer in the world, but they might not have some of these traits and be able to do this with the team. When things go wrong, you have people pointing fingers at each other or they get demoralized or blame other people or there is politics involved. Finding a team that is good to be able to go through these harder times, then I think you have something that’s successful. Each failure actually builds the team closer and then when you finally do succeed, the morale and team bond is very very high. And they then believe further what used to be impossible is now possible. When you can have an intern go and open up a deal with Amazon and be able to close it after having failed three, four, five, ten deals, before that, you can see how the team cohesion now becomes even stronger and believe in what is possible. A lot of it is multifaceted, it’s not just one thing that we do or one example, but the core I believe, is finding the right people that exemplify a core value that you have and then making sure that everybody you hire from there has that similar design thinking for app in China and the US.
Matthieu David: Where did you learn or get inspired on this design thinking for the app in China and the US? Do you have some books to suggest some conferences to suggest?
Kevin Yu: I mean I don’t really know. I did give a TEDx Talk about this on my first TEDx Talk. It’s really random but I still probably credit my father. I think he did this may be directly or indirectly, but he was an engineer and when I grew up for some reason. Every question, you know kids have a lot of questions, I asked questions about things, he never gave me answers to any particular thing, like why is the sky blue, why is the doorknob shaped the way it is, or why is this wall in this particular color. Instead, he just asked me why do you think it is, for everything. As a kid, it was actually quite frustrating, but It does force you to start thinking of what the possibilities are, in terms of why the world is around the way it is. Once you start understanding that, you can reverse engineer it. When you understand why a doorknob is shaped the way it is, there are probably tens of thousands of different doorknobs, you realize some are for function, some are for vanity, for style, for design aesthetics, to match with certain types of things. Some are made of materials that are made of fitting for the times or the materials that were available in that area like there are so many different reasons for this. You just got to keep asking the whys. So, I think it’s one way to start understanding the world in a somewhat different way.
Matthieu David: Thank you very much for your time for sharing. Very interesting. I discovered a totally new business model that I didn’t expect, and it was a total surprise when discussing with you and very, very inspiring. Thank you very, very much, Kevin.
Kevin Yu: Thank you for having me with you. Thanks, everyone.
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