Find here the China paradigm episode 21. Learn more about Tom Xiong’s story in China and find all the details and additional links below.
Full transcript below:
Matthieu David: Hello, everyone. I am Matthieu David, founder of Daxue Consulting and its China marketing podcast, China paradigms. I am today with Tom Xiong. You are the founder of Move Shanghai, a fitness app in China for I think premium health fitness membership to enjoy experiences of fitness and sport in more than 150 places as far as I understood of Shanghai. I used your fitness app in China today. I went through the map. Indeed, I found like 3 or 4 places next to my office, which is something I was looking for for a long time. So, I may be using it after the talk.
You are also the co-founder of the podcast called Digital China, I just learned before, right now some years ago and so I am going to listen to it. Since very, very active, I see like one or two episodes or one two episodes per month or even more – two or three in some times. So, it looks like very, very active. Do you have a certain experience of Chinese startup? You are having that P1-P4, you have a different startup – so that’s something I will be interested to know, how it worked out for you and also you have been working in consulting as far as I understand you have advised some company in the past. But first of all, I like to understand that what’s Move Shanghai and I like to go in-depth in how you built it, how you manage it and what you provide for your clients. Thank you very much for being with us in this new episode of our China vlog, China paradigm.
Tom Xiong: Thank you. Nice being here. So, Move Shanghai, we are basically a digital platform that allows people to access thousands of different fitness activities around Shanghai. So, it’s a pretty simple marketplace such as Airbnb, Uber, etc., etc. where we instead of you as a consumer you need to go to one gym in China and get one annual card or what not. You can access everything through us instead and just buy our membership through us instead or just pay per time. And we also have everything – from 5-star hotel swimming to MBA style basketball classes to cross fit and yoga, etc., etc.
And the purpose of these being actually that’s – we saw a huge part of the market of people that wants to have fitness because it makes them more healthy, but the main problem is that they are not super into fitness. So, the kind of stuff you see, it’s very fast because they get bored by only going to one place. So, we hope to be able to allow more people to work out and make the pie bigger, so to say.
Matthieu David: Interesting. Before we go back at the idea of the mission you have with Move Shanghai, could you give us an idea of the size of your business? It could be the number of clients; it could be a number of places. I think I found this number of places you are offering – it could be the size of the team to give an idea to people who are listening to us – which stage of development you are.
Tom Xiong: Yeah, so we are still fairly early stage. It’s taken a while to kind of find the product market fits, but we are at the stage now where we are growing quite a lot. We have about 20,000 members in Shanghai, about 150 different studios. We are adding about now at the rate of 20 to 50 studios a month, so it depends on when this is published, there might be way more than 150. And also, the team is fairly small – we are about 10 people in the team here in Shanghai that includes both technology and customer service and marketing, etc.
Matthieu David: I see. About the business model in China, how do you work? I went on your website, and I understand that I can subscribe to your services and then I have a certain amount of classes every month like 10, 15 classes and also, I can pay per session. So, you have different ways I feel about monetizing. Could you give us a better understanding – what you sell and also the business further behind?
Tom Xiong: So, the business model in China, the actual how it works is very close to how, for example, Spotify works. So, I negotiate the fixed rate with all the venues that work with me. So, let’s say you are at the gym. So, every time someone from Move Shanghai goes to your place, I am going to pay you a fixed fee. And you as a gym in China, you don’t need to do anything – you don’t need to do any marketing, you don’t need to sell our subjects, we are going to bring a bunch for you to focus on the thing you love – which is, let’s say, home to yoga class.
And what I do – on the other hand, to the users, to the B2C, is obviously that I charge them a fee that is higher than what I pay to the actual studio or the actual gym in China in order to in there have a margin. What you pay as a user is that you get to buy, let’s say, a pack of 10 classes but they are valid anywhere. So, for you, as a user, you are paying for the flexibility, you are paying for being able to live free and do whatever you want, and at any time you want to do it. And then we obviously also have, we have something called Move GO which is very much inspired by WeWork’s GO which is meant for you to just go to one or two classes without buying any type of membership anywhere.
Matthieu David: I see, I see. So, I am on your pricing page, and I see 999 Renminbi, 1499 and 88 for Move GO per session. If I understand, you are pricing a little bit higher to have access to more venues and more activities. You are not pricing higher for more bookings, so actually you feel that value is the access to the number of places, more than the number of sessions?
Tom Xiong: Yeah, of course, of course, it is. I mean, there are two types of fitness consumers out there. There is one person that loves yoga and loves going to yoga at a certain place. We are not targeting that type of customer because they should go to an actual yoga studio and buy their annual card, you know, whatever – it usually costs them around 10,000 to 12,000 here in Shanghai.
They should go there, and they can go there every week at any time they want, only that place because they love that activity and they love that venue. That represents about 15 to 20% of the paid fitness market in China. The rest of the market are people that are either new to fitness or not super loyal to fitness due to lack of interest. I mean a lot of people will despite being interested in it, because it’s good for your body, right. And those people we have found that they overtime very fast decline in their consumption, so they go down in their consumption because they get bored. And what we are fixing is exactly that problem, but obviously, per time, you are going to pay slightly more if you want this very wide and broad access versus if you just go to one single place and commit to them for a year.
Matthieu David: I see, I see. I understand. The question of the business model in China behind it – a couple of questions in terms of how to operate. The first thing is how can you harmonize and get 999, let’s see, 1000 Renminbi for 10 bookings and I believe each of those studios have different pricing for the different thing?
And secondly, I may have misunderstood, but I feel that you have some inventory that you are paying first some studio, already the profit-sharing model because when I look at your business, I thought you were a profit-sharing model. I used to manage a company in Beijing where we had, we were selling gift boxes and inside you can go for a spa and whatever and it was profit sharing model. So, I do not understand how you are operating, but now I am being confused if you have any inventory and you pay first some studio, and then you have kind of deposit visit – how do you work?
Tom Xiong: No, we work on the after-play model, which means that, let’s say, you are a Move member – so today on April 2nd you go to yoga class. By the end of this month, I am going to calculate how many visits in total there were to this yoga studio, and then we pay the yoga studio for what we owe them for the number of visits they receive. So, it’s an after-pay model. The reason actually we can go for – so there are two ways to this business model in China. One way is that I talk to each, 150 studios, right and I say “hey I want to pay you xor y” and then we negotiate, and then they give me a price of between x and y. That’s how we operate. And then there is another way to operate which is telling the studio saying the same way DiDi or Uber does – saying “we are going to charge the end user, don’t really how much but I am going to give you, let’s say, 70% of the revenue.” I am going to keep 30, and I am going to distribute 70 to everyone working with me.
The reason why we did not choose the latter option is that the fitness market in China is very immature and you have very, how to say, differentiated pricing, sorry, very varied pricing between different studios, different locations of the city, etc., etc. And in order to have a profit-sharing model, you need to have a slightly more mature market where the pricing levels have matured, where people are charging after what their demand is, and you have more clear layers of different qualities.
So, in Shanghai, everything is a bit more mixed together because the fitness market in China is such a new industry and the prices vary quite a lot, and when that happens it means that if we do a profit-sharing model, you either create very happy or very unhappy suppliers. i.e., the gyms in China, because someone says “oh you know I usually charge for 300 per class and then this month in the profit sharing with Tom I averaged only 30 Renminbi per class.” And some say “oh, I only charge 30, and I got 30, it’s awesome.” And because just the variation is so much in the price level – well, for example, in some other markets, for example, in Stockholm, Sweden there is a model like ours where they do only profit sharing, and that’s because that industry is super mature. Everyone is charging exactly what they should charge.
Mathieu David: So, I am a bit confused. You don’t have a profit-sharing model, meaning that you don’t charge the same thing to the end consumer, can you explain then how you work yourself because the profit-sharing model is pretty clear for me. 30%, 70% is pretty standard actually – to take 30% when you are in profit sharing model I feel like a gift box business like Smart box in France, Europe and the one I was doing in Beijing, it was 30%. But how do you work? I am not working that out.
Tom Xiong: So basically, the way our model works is that we go to each studio and we say “okay, let’s say, you charge 300 Renminbi for a class to the end user as a studio, okay.” And then we say, we say “based on our data, based on the expertise of the fitness market in China we feel we should pay, let’s say, 50 Renminbi for a class here.” Okay, because that is the actual true market value of this product because when we sell it in our packages, I need to have a margin, but compared to all other inventory I have, you should be priced at 50.
If you don’t feel if that is okay, only give me the classes that you feel are valued at 50. And that enables a more long term type of cooperation with, let’s say, with the studios because they can take the feedback then say “you know what, why don’t I design a class or design an experience that is more value for this 50 Renminbi type of price points” because we have so many new studios in Shanghai that haven’t achieved product-market fit, so that number of 300 is not verified, why they should charge 300. Yeah – because the fitness market in China is an immature market. If I wouldn’t do it like that then it would mean I just say “you know what, I can’t guarantee you how much money you are going to make next month – maybe 30 per class, maybe 60, maybe 300, depends on how much I sell and depends on how much they use it.” Makes sense? And then you have a problem because you can’t get because every fitness today in Shanghai are usually small businesses, so they need to have a very realistic view of how much money they are going to be making this month or next month.
Because it’s like you and me, we run a small business, right and we need to know how much money you are making. We can’t take any risks. So, as a platform, I need to take the risk, and I need to guarantee them actual money coming in terms of at least unit price. So, they understand that if I invest in another coach to run another class for me and I get 20 people, then at least I know I will make money back to cover my costs.
Matthieu David: I see. Talking about the 999 Renminbi for 10 bookings – still, I have a question here. How can you harmonize the pricing for different experiences and different classes?
Tom Xiong: So that’s the risk we take, right. So, we have certain partners that are more expensive, and we have certain partners that are less expensive for us. For the consumer, it is going to be the same, and that’s the risk we as a marketplace take where we guarantee you are going to pay 1000 for 10 classes period and then if you only go to the classes that are maybe very expensive, then I have lower profitability.
But that’s the only way to make the consumer feel secure about something new because we are at a point in Shanghai where the fitness market in China is very new and very immature and if people don’t trust the product, know what they are paying for, then no one will ever use it.
Matthieu David: I understand. When you say booking, is it a class – 1, 2 and class, is it a group class? Is it just to enjoy your session like going for one day?
Tom Xiong: We have mainly 3 types of things. We have group classes so which is, let’s say, a yoga class with 10 people or 20 people or a Zumba class. We have gym access, which is that you can go to a gym in China or a 5-star hotel to swim or gym and you can be there for as long as you want. That’s B. You can go there any time, and you can leave anytime within their opening hours, of course. And then the third thing is that we have sports and that is also obviously based on time. Let’s say, we have tennis, so you need to actually reserve on actual time to play tennis, and that’s depending on sports and venue, that’s everything from one hour to two hours in late.
Matthieu David: I see, I see. So not one-to-one, but group classes – other facilities, which can be sport or another facility, I understand. So, it’s the plan of the basic pass and user pass and my understanding that you have more venues in the universal pass and I feel it’s more expensive. I feel that actually, you may provide venues which are actually, maybe more expensive in the way for you to offer a higher price of venues without bearing the risk of being unprofitable on those. Is my understanding correct?
Tom Xiong: Yes, so there are two things in this. We actually just started with these pretty late last year, which means that we have two packages – the basic and universal pass. You have more access to venues in universal pass than you have in the basic pass and the reason why this happened is – like you say it’s a challenge with harmonization because when we started expanding outside Shanghai, cover Hongqiao, cover outer areas of Pudong, etc., etc. Usually, the fitness market in China and the fitness venues there tend to be much cheaper to the consumer, which means that our price point, our original price point of 1500 was a little bit too high.
If you leave out the Hongqiao, you only want to access Hongqiao basis, right and that’s why we started kind of a cheaper type of membership for you to access certain venues. And obviously, that is an overall issue is happening whenever the market matures where you are going to have a few more fixed price points. So basically, the way we look at it is that there are two types of users, there are the users that are sub 100 Renminbi per class, and then there are users that are 150 Renminbi per class. Those are very different in their behavior and in what they need and want.
Matthieu David: I see, okay. Then in terms of operation, I was wondering it’s never easy to plug a solution which is driving clients to a place. For instance, you invite a client, so you get the money from the client, and you bring someone to the venue, but the person at the venue who is at the reception may not know your offer. They may not know that the client has made through you or they may be some turnover of people, how do you solve this issue because I had this specific issue when I was working in this gift box industry? Sometimes we have like restaurants, spa and then people changed or even their clothes. Well, they are not even talking about clothing. They changed; the reception was different; they didn’t know about the offer. How do you solve this issue?
Tom Xiong: Yeah, so I think that’s one of the very important stuff, like in an O2O business because you are one of your o’s. The offline is always going to have a huge reach, and you are going to have a huge diversity in terms of staff, in terms of language skills, in terms of education level and terms of everything, right. So, we have big huge internal processes to both.
Before we enroll any new gym on our fitness app in China, we obviously do QA on their actual offline experience – how are they? Are they premium or not, etc., etc.? And then obviously we make sure to onboard the reception staff, the people hosting the clients and taking them in and then we have actually, we have dashboards that they use in order to get the understanding of who is going to come, but also at the same time we have integrations with their booking systems and reception software depending on what they use. And then we have very active WeChat groups with every single gym. That’s our operation staff here at our office. So, any time there is an issue we are always there. So, if they get a user in, they say “hey I can’t find this person’s booking, how we solve it?” And then for us, it’s very important obviously that the experience would be good enough, so.
Matthieu David: Yeah, I remember when I was managing this business in Beijing, what we did is that people had to book through our hotline. So, they called us or sent us an email at that time whichever was existing, and then we have a booking for them, so we are making sure that they got the right package, etc. How did it work for you? You say that you integrate with each CRM, but it looks like a huge work because they have different CRM. I believe some of them may not be even; some of them may not be in China because it may have foreigners managing some fitness centers. Some of them may have an Excel or whatever, so – because that’s for a studio as you said. So how do you integrate that?
And you said that you send them notification; does it mean there is an app for them as well? There is a backend for them to see on your fitness app in China, the number of people who book? And then if I book from your app then it’s sending a notification to the studio – how does it work, what’s the flow, what is the process?
Tom Xiong: Yeah, so from a user perspective, they use our Mini program or our iPhone fitness app in China to do a booking, and the user experience is usually pretty okay so it means that they tap book and then it’s booked, you know, they get a confirmation. Sometimes that confirmation is delayed because there are certain venues where we need to wait for their confirmation and on the B side, on the venue side we basically have 3 types of solutions. So one is that we have a direct API integration with a few of the more famous or larger studios for you to use, and then we also have a second solution where we have our own backend and a dashboard for the staff. Let’s say, the – because sometimes a small studio, they use paper and pen and then it’s easier for them to get our dashboard up and they can see “oh yeah, I am registered on this class.”
And the third solution is that we have our own developed check-in system, so we have a, we put in the show-me pad, an android pad at the front desk. The only thing the user does is that they go to the front desk and they say I am from Move and then they get the pad, and then they enter their code they got from Move, and either the pad turns green or red. And then the front, like the front desk knows whether they should show the people in or not let them in.
Matthieu David: I see, so you even provide a POS like a device for some of them?
Tom Xiong: Yes, yes, yes, we do.
Matthieu David: Okay, that’s a big challenge it makes because if you do that for 150 places you have to do buy those products and to maintain them – that’s a different model. Okay, interesting.
Tom Xiong: Yeah. Well, I mean like we don’t do it with many. We only do it with the very high traffic ones that don’t have their own integrated CRM. So, it’s very, very few.
Matthieu David: I see, I see – interesting that you can adapt to different places depending on the ability and the flow of trying to send. You talked about iOS, you talked about the iPhone app, and I noticed that you don’t mention the android fitness app in China. I like to know what was your strategic choice on this. I interviewed some months ago Sebastien Gaudin from The Care Voice, and indeed he developed the only iOS because he found out that his clients, actually his users have mainly iPhone; only a few of them are using Android. So, I like to have your view on this and also your view on the Mini program. So, you have an iOS fitness app in China, you have a WeChat Mini program, and you don’t have an android app, so what’s your view on different formats?
Tom Xiong: Yeah, it was based on the same thing. When we launched about two and a half years ago, we concluded that most people were using an iPhone. So, we wanted to focus on iOS due to lack of resources. And that at the same time would be on the mobile website H5 that we integrated into WeChat and we thought “okay, you know if you have an android then that’s how you access us.” And then we actually finished the development of our Android app last summer and we were going to launch it but we actually put the brakes on it and stopped maintaining and didn’t launch it at all because we did not want to build up too many debts and to build up too much – with that I mean technical debts and too much stuff to maintain because we used to have so much product development to do. And instead, we went over to actually WeChat Mini program only.
So, we haven’t done an iOS app update since – I thought August last year, and we are moving everyone over to WeChat Mini program. Number one, instead of being able to only do one release a month, app release a month because of all the time it takes to develop iOS, we are now doing multiple releases a week with a smaller team.
Matthieu David: I see. Yeah, I was looking at your app, so I was surprised to be actually sent to safari at some point. I don’t know if it was when I clicked on how it works or learn about the pricing, and then I was sent out of the app. So now I understand that the iOS app is focusing more – than the mini-program which is your focus and you want people to follow you on WeChat directly, WeChat connecting you really on system. So, the concept of technical debt is very interesting. You mean by this is that by developing too much of too complex infrastructure or tech solution in China, you have a liability, you have more problems that put you in that sort of debt. Is that the concept you were talking about?
Tom Xiong: Yes, exactly. The more different code basis you use, the more bugs you need to fix. And the more bugs you need to fix means, the less time you have for actual development.
Matthieu David: Yes, yes. What about the Mini program? Do you feel that it is as powerful as in the native app on iOS? Do you feel there are some limitation, or do you feel its equivalent?
Tom Xiong: For our purposes like because we’ve got to remember what we do, right – so we run a very, I would say a simple recommendation platform. Basically what we do is that we give users a bunch of different lists and then we have a pretty heavy backend behind it to give you the best possible list but considering we have thousands of the things for you to choose from, our key thing is to give you the best possible list of things you can book, and then you tap, you book, you pay, you are done. Yeah.
So, for our purposes, WeChat Mini program is like the best thing that ever happened to us because obviously if I would do mobile gaming, etc., etc. may be iOS would be better and more powerful, but not for our purposes. And the only key thing I would say is that it’s usually easier to do very beautiful experiences in iOS wherein WeChat Mini program you need to do much more, how do I say, transactional experiences. So, it depends a little bit on the purpose of what you do. For us obviously we want to do a beautiful, inspiring experience, but at the same time it’s really hard for us to do because we need to give you information about thousands of things and we don’t need to drive inspiration the same way that, for example, Airbnb needs to because Airbnb is selling you your vacation house. And I am just selling you one thing you do in your city on Thursday.
Matthieu David: I see. Yeah, I use both of your platforms, and I don’t know if it’s because it’s more updated or more comprehensive but I stick to the Mini program a bit more, and it was very convenient, so I could see what time, which day, the next stations would be close to my office. So indeed, the experience was very intuitive and very easy. So, you talked about technological debt – in some way there is a bit of financial term here. Could you tell us more about how you financed your company? Did you raise your money, did you finance yourself, did you program yourself at the beginning – how did you start?
Tom Xiong: So, when we started, we raised Angel funding of a few million Renminbi and up-to-date we raised only in the single digits of millions and in the Angel stage we turned cash flow positive after about two years of business, and we haven’t raised any new funds since then and we will probably not for a while. And the main reason is that we are a paid service, so we are not one of those classical free apps that are supposed to generate millions of users who always lose a bunch of money, you know, until you’re IPR or what not. So, the product market fits in Move is about making money. If I can’t turn cash flow positive, then I didn’t prove shit to be honest.
Matthieu David: I see, I see.
Tom Xiong: Otherwise my business model in China doesn’t work, right. So that’s kind of, that’s how we are operating right now. We are kind of at a stage right now where we are growing organically quite fast with, because we have – we have put the tech solution in China in place, we have put our processes in place, so now it’s only about running slightly faster but in a more structured way. And then at the same time we are growing in other ways because our – the key thing for us to grow is not on the 2B side i.e. it’s not the amount of gyms or studios, it is on the 2C side.
So, the only question is how do we attract more people, get more people to try this out because we know what to do with them the second, they come in, and we know how to monetize that. So, the only question is instead of getting, let’s say, 10s or 1000s in, how do we get millions of people in? And that you can fix with a lot of different ways and me personally, I am not the super big fan of raising too much VC money too early. We actually turned down a few very big VC -VOs, now almost a year and a half ago; of that simple reason that I think for this type of business you need to grow differently.
Matthieu David: I see, I see. So, for you, it’s more sales question now, it’s on how to scale the assets you have built, the number of studios you have – what’s your strategy and kind of position so far?
Tom Xiong: So obviously we have seen a lot, we have tried a lot and what we mainly see is that it’s really hard to sell fitness standalone. So, imagine I come to you, and I say, “hey man, you want to work out?” And you are like “yeah, sounds good.” Everyone says that. I am sure I want to be healthy, but that delay is very long, and then after a week I come back, “hey man, aren’t you going to work out?” So exactly what you said, at the beginning of this recording which is that “I think I am going to try it out,” everyone says that, no one does. So, because the top peak of it is itself is very requiring quite a lot of commitment. So, what we have found is that when we do co-marketing, co-sales, co-branding with other brands, everything from FMB to yoga clothes, etc., etc., then we actually get people to engage and get started.
So one example is that this month we actually just launched that yesterday – I am going to send you the QR Code to see it, is that we work with another very large clothing brands and what they do is that they will go to all of their daily for Shanghai and tell them you are buying our clothes workout, so here is an option for you. You can use Move, you can do whatever you want and here is a small discount voucher for you to try it out and help out and this is a beautiful way to work because it’s not only good for me, it’s good for the studios I work with because they get increased traffic that they wouldn’t be able to do by themselves. If I didn’t have 150 studios, I work with I won’t be able to negotiate with the very large clothing brands.
Matthieu David: I see. So, what are the means of major drivers so far in terms of acquisition?
Tom Xiong: The major drivers have mostly been, I would say, there are two things of it. Number one is creating an opportunity for people to learn about fitness, experiencing it without it been very hard. So, for that, we do a lot of at-work workouts. So, for example, we work with WeWork, so we do it every – about 10 to 30 different classes every week for WeWork and this is an opportunity for people at their workplace to experience what this whole thing about fitness is. So it’s more education and then the second biggest driver in this is to make you feel you are not risking anything, you don’t need to be afraid, you will be able to get something perfect for you because the main reason why people do not want to do this is that every single person, before they go to that yoga class for the first time, they feel and are afraid that everyone there is more beautiful than me, better at yoga than me and I am going to be embarrassing myself. Yeah. So, it’s about removing all of that so you as a consumer feel, “you know what – this is a new experience, let me just try it out and maybe it will be fun, maybe it’s not fun, and then I will try something else out.”
Matthieu David: Okay, okay. You talked about working with WeWork and also other companies – when I noted your solution; I started to think it will be a good thing for me to see. I mean the company is – we want to offer some membership or experiences to this team, to their team – do you have such a section?
Tom Xiong: We work with corporates. We have a very, very clear, B2 C strategy. So, what that means is that we do not want a company as our clients. We want your employees as our clients, and we are more than happy to work with you to engage your employees, but that at the end of the day your employees need to come up, come and sign up for themselves.
And the basic reason why this is, is because currently with our prices and the fitness venues we provide, we are not at the mainstream pricing point, which means that all employees, all the thousand employees at your company will not be able to afford this, and for the company they need to have an average cost per employee, right, which means that we usually – and so the numbers just doesn’t make sense. But we do provide a lot of free and very discounted workouts for a lot of companies that we host and the company where the upside for companies is that they get workouts, the upside for us is that we get brand awareness.
Matthieu David: I see, I see. Talking about your experience, how did the past experience you had in all the firms, in all the start-ups, as a consultant, help you to build your current business, Move Shanghai?
Tom Xiong: Yeah, so the quick story is that I was born in China and moved to Sweden when I was 6 years old. And then in Sweden at that time when I was a teenager, the internet was a really big thing. So, I started coding, selling movies on CDs at my high school, stuff like that. And then I founded a few internet companies so I ran a total of about 3 internet companies in Sweden and after I sold the last one, I moved to New York for a while, to be kind of an entrepreneur, so I started up a new business but for another company based out of New York.
And through that I came to China and Shanghai and decided I wanted – I’ve always wanted to do something here but more or less decided on what I want to do, which is Move Shanghai. And throughout this period and also currently right now as well I have also been working in different levels as advisor to everything from P1 and then I need to be in China but right now I am mainly supporting a very large global publicly listed brands in their China strategy and only as advisor because I have a start-up to run.
Matthieu David: I see. Interesting, very interesting. How do you feel about the Chinese diaspora, who left China at an early, at an early age as you did and who want to come back to China – I feel China is attracting a lot of Chinese who have always been, who are living overseas, who have been raised overseas. Most of them want to go back to China to do something because then they see China growing so fast that it seems not that easy to come back to China and to start a business even if he has a very good background, academic and professional from overseas, but what’s your opinion on that?
Tom Xiong: We had to do a podcast episode about this with the title Is China a Better Place for talent than Silicon Valley in taking, of course, and we interviewed some people. I mean like my view overall, my overall view is that for the last few years, China – for both China overseas but a lot of western talent has been a place where you see huge growth, and you have a lot of career opportunities, have a lot of business opportunities, especially in Take.
And here with the WeChat, with the tick tocks and the DiDis and the Ali’s, etc., etc. actually more, a lot of – and especially with facial recognition and AI, a lot of more stuff is happening than the rest of the world. But what we found in the episode is sure, everyone knows it, everyone wants to come back, but just the last year or so, Chinese tick sector has gotten a little bit of a bad rep abroad, because of 996 mainly where a lot of people think of coming back but there are seen all these articles about people working 9 to 9, 6 days a week, hearing about people not getting, don’t get any bonuses and what not. And thinking oh, my life is pretty cozy here in Palo Alto at San Francisco at Facebook or Google, should I move back?
Or maybe I should just wait a little bit. But overall I would say I think there is a huge curiosity because right now in China there is not only money to be made but a lot of things to learn and the thing that hits me very much with people coming here with either ABC type of profile or just foreigners coming here is that everyone is looking for that life experience of being part of something that grows very fast, grows very big. And so, everyone is here. Actually, I would call it more – pure reasons than you see people move to, for example, New York where they say “you know I am here because I want to make so much money and then I am going to get out of here.”
Matthieu David: Yeah, yeah, yeah. Yeah. I see there is more experience and learning people want from China than purely a financial plan. I see. In terms of, for audience and listeners, who don’t know 996 – 996 means to work from 9 am and 9 pm 6 days a week, and I think that’s Jack and me, we initiated this word 996, then it was reused by many people. And Jack Ma, by the way, he is saying very contradictory things. Sometimes he is saying that you should enjoy life and take time and then he is saying that you have to work 996. I refuse to follow him. Now, how well did you do in the other two up-to-date in terms of technology, in terms of news about the fitness market in China? My fear as an entrepreneur in China sometimes is to be out of the technological race or to be out of what’s happening. How do you keep up-to-date and make sure that you are in the race?
Tom Xiong: I think that’s one of the main reasons I do the podcast Digitally China. I think, seriously that is the main reason I started doing it because it is the way -and Eva and our producer Jacob to keep up-to-date about things and keep learning about things and get actual outputs of these learnings instead of just reading stuff online and that’s it. And through that, you get to talk to a lot of very, very interesting people with a lot of detailed knowledge and that builds a platform that enables you to get actual information from the fitness market in China and not just the stuff you read on Tech note or Tech in Asia. And I think it’s very important for personal growth.
Matthieu David: I think Eva is working at – if I am not mistaken, she is working in one of those tech blogs, right?
Tom Xiong: Eva was at Tech in Asia before, and right now she is a journalist at ASP, and they are based in Beijing.
Matthieu David: I see, I see, I see. Talking about your podcast, personal interest, but it may interest as well some listeners, how do you shoot your podcast? We are currently on Zoom.us; I mean it’s pretty good so far, but what do you use – the software and tools?
Tom Xiong: So, we use, as I use pretty low priced, a very good microphone called Blue that I recommend to everyone. It’s like 1000 Renminbi, so it’s not very expensive and now what we technically do is that we do local recordings on every computer when we record because Eva is in Beijing, I am here – so the production flow is basically that one of us comes up with a concept. We usually interview people, so one of us interviews people, record the interviews. One of us – the person doing interview casts that interview into pieces we are going to use for the podcast that is interesting, and then we record locally on each computer, we do a WeChat call actually but we record the actual voice on our local computers, and then we talk to our kind of the entire structure of the podcast.
We usually record a total of about one hour for a 30-minute podcast and then we send all of that through our producer Jacob, and he puts all the entire sound effects and everything on it. So, it’s kind of little bit complicated processes than normal but to tell the background, everything started with Jacob and me doing a Swedish podcast called the Digital Dragon in English, and that is a very, very highly produced one-hour format, story-telling format. So, we really – the main podcast we are looking at was this American life, but we want to do that about the tech solution in China. So, we actually did one full hour production about Jack Ma, only Jack Ma, and his life story. But every episode for that podcast takes about 80 hours in total to produce.
Matthieu David: Wow, such as commitment and investment. I talked to you, the producers and actually makers of the podcast of Tech Note and they told me that we are recording actually through – no, they were not recording through WeChat, they were using WeChat to talk to each other but they were recording on their phone on each side or from the computer directly, and they were using WeChat on the computer because you cannot use WeChat and record from the phone the video. And neither the voice. I don’t know if there is security from WeChat to avoid people to record it to each other and to spy on each other, that actually it’s technically not possible to run a China podcast or China Vlogs through WeChat directly and record your phone. Do you understand it?
Tom Xiong: Yeah. Well, actually no – yeah well, we don’t have issues like that because we do local recordings because we are very, very aware of our audio quality, so we use real microphones. We use isolated sound booths. Most of our podcasts we do in the studio actually, and all are local recordings, yeah. It’s only when we interview someone, we do over-phone recordings but then we never, we don’t do interview episodes, so we only use – of every one hour interview, we use maybe 5 to 10 minutes of audio clips from it.
Matthieu David: Okay. If you are in the studio with Eva and yourself, you are both in different cities, Beijing and Shanghai, so you are not talking at the same time; its step by step, I really need to listen to your podcast, I didn’t know you have an English one. Sorry for that but I will, just after. And is it a discussion or is it one by one?
Tom Xiong: Yeah, so it is a discussion. So, we usually together go through topics, so, for example, our first episode was about Luckin coffee where we – this was a while ago but where we want to understand what Luckin coffee is. We did an episode about comparing Spotify to TME because TME had listed. We’ve made one episode about Project Dragonfly entirely about Google’s To Be or Not To Be in China, and the leaked documents say that they were working coming back to China.
So, we used to have a topic and then the usual flow is that we are trying to understand what’s actually going on through interviews with experts and what not. And then we discuss that, and we usually conclude on something, and all that in about 20 to 30 minutes, and the key thing for us is that we are trying to – through the audio format, through music and clips, news clips and other types of audio to kind of build a good experience for the listener, so even though you are not super into tech you feel you are learning something from it and understanding what the actual implications are on a broader basis than just for Google or something.
Matthieu David: Okay, I see. My last question is, how often do you exercise then?
Tom Xiong: Well, I actually like – it varies obviously. I found that I, I very, very much. Sometimes I exercise in the evenings, sometimes I exercise in the mornings, so it very much depends. You know it’s based on mood, and that’s the beautiful thing I think about it because sometimes I just feel like “damn, today is Saturday. I am going to eat brunch at 1 pm. This is awesome. I don’t have a lot of work today Saturday, so I will just go somewhere, just experience it and have a nice time.” And sometimes I am super stressed out, and I only want to exercise because it increases my performance because I don’t need to sleep that much. So, then I do some stuff at home instead.
And I think that’s the key of it because for me the reason why I started Move Shanghai to begin with is that I really hated going to the gym, and then I got really frustrated because whenever I went to the gym, someone was telling me how bad a person I am and how unfocused I am and how I just need to shape up my life. And I was there; I was like, I’ve run four start-ups I think I can be a pretty focused guy at certain points, so why are you giving me all this shit. And then I realized it’s only because your product sucks and your way to sell your product sucks. It’s not me – which other consumer product tells their clients they are shit. Seriously, right. And through that – that’s why we started to work with Move because we really wanted to fix the issue among consumers like me. I mean I have no problem to pay for fitness; I need that because I am going to sleep better, I am going to work better or my friends, they are going to have more time with their kids, but that’s why we need fitness not because we are in love with yoga or cross fit. And that is actually a much more, a much larger addressable market, at the same time actually their pay willingness is higher because you are asking someone how much are you willing to pay to get that two focused hours where you are not tired with your son or your daughter. When you ask a consumer that question, they can pay anything.
Matthieu David: Interesting. Congrats for all you did. I am really going to hear that, believe me. You are going to see me in your subscribe list soon and thank you very much for your time. It was a very interesting talk; this episode of China paradigm I guess in two weeks. Thank you, everyone, for listening to this new episode of our China business podcast where we interview entrepreneurs in China and talk soon.
Tom Xiong: Thank you. Bye.
Matthieu David: Bye.
China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.