It’s a tool worth a portion of digital marketing’s $63 billion expanse – and it has been taken up by numerous MBAs since entrepreneurship swept through business schools like a brisk winter wind.
A current beneficiary, Hang Su, is the bright spark who now runs a social media enterprise. Hang, a graduate of one of China’s premier business schools, points out the sectors’ potential ten minutes into our interview.
He was struggling to make his first business, which hires out household maids in the emerging market, trend online. “How do you promote your business on social media, and how do you set-up a platform to sustain growth? Social media and strategy is definitely a value adding service for start-ups,” he says.
Hang is the workhorse behind a company that is now valued at around $15 million and whose services stretch across Shanghai. He joined the company, back then called RenWuTao but now known as Yunjiazheng.com, when it was a very small start-up.
By the time he left in 2012, it was incredibly popular and they worked with over 100 agencies, Hang says. He co-founded the business after an MBA to monetise the fragmented labour resources in Shanghai, starting with the housekeeping workforce. In other words, “maids”.
His second business, however, is much more exciting, he might insist. “Why did I leave? I wanted to focus on what I do best,” Hang says. “Social media marketing was becoming a smaller part of the business, so I thought why I don’t take my specialties to the wider audience?”
That specialty is social media strategy, and consulting local firms, he clarifies. He launched a second business, Shanghai HangChu InfoTech, in January last year.
“We did that for a year, and then venture capitalists came to me and said: ‘Look, I’ve known you for a while, you’ve had successful investments, why don’t you do your marketing and platform strategy consulting for a start-up firm. Do it for free and we’ll cooperate by investing in these firms you think have potential’,” Hang says.
“I’m like a venture partner now, I get them the leads.”
The benefit to Hang is that, if the investment proves fruitful, he gets part of the carry. The VC’s invest cash and get a percentage of equity in return. “And pay me the operation costs,” he adds.
If that partnership sounds a little too perfect, there are problems associated with the platform. The challenge Hang initially faced was getting a decent return for his services.
He invested capital in his first venture and remains a stakeholder. He still has to pay off MBA tuition; seeing a return on his start-up efforts is important. “My target customers are smaller companies. The ability to pay for our service is limited until they get larger,” Hang says.
“The challenge for consulting and social media marketing is that it’s hard to get good service [return].”
That’s why he changed his business model. Start-ups are cut-throat and it seems that he either had to adapt or move on. Consulting or marketing is valuable, but it doesn’t have explosive growth, he says.
“I’m partnered with VCs now, because they have the money. They don’t mind spending a few grand a month,” Hang says.
“So by doing marketing and strategy consulting I find out much more about companies. And by working with a VC you can capitalize on companies’ future growth.”
He is the middle man. The company has understandably grown in stature. After servicing them with social media, he tries to strike a deal between a VC and the start-ups’ owner. “The VC gives them cash and takes equity. And then in a few years, with some luck, they’ll exit [successfully]. I get the carry,” Hang says.
There’s a benefit to the start-ups, too. Funding ventures is a challenge – and that is partly why Hang wanted to study in China: more potential for investment.
Although he is Chinese, before beginning an MBA degree, Hang was working in the financial technology sector – in mutual funds – in Australia. But he harboured thoughts of running his own company and in Australia, that is more difficult, he says.
“The labour cost is very high and the population density and market is small compared to china. And also there aren’t enough venture capitalists. If you want to get money, it’s hard,” he says.
One year in at Shanghai HangChu InfoTech and the future looks bright. Although much of that is to do with the MBA from CEIBS. Hang is taking a non-traditional path, to both most business school grads and most entrepreneurs.
And that leaves him in the dark. “There is no one to guide you. I’m almost on my own and it’s a challenge,” he says. “In terms of getting new clients that’s not a problem, but how do you find out what they really want?
“It’s like going on your own path. You don’t have any reference, and that will be the most difficult [part].”
An MBA has given him a light, however. The network at CEIBS has been exceptional – and Hang has utilized it as much as possible. “I learnt the framework of how to run a business; I had a guideline to set-up my own company,” he says.
“And then through my MBA life I got to know a lot of alumni, local entrepreneurs or company directors who gave me help, by sharing industry-specific experience.
“I got close with a lot of EMBAs, and I think they are a vital part of my business now. I really used the network as best as I could.”
Now, he has merged the investing and social media strategy together. It could be a clever start-up, with potential to grow. Not that social media wouldn’t be enough on its own.
“Now it’s becoming one thing. I’m using my social media business as a platform,” Hang says.
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