It's OK if Aibnb doesn't "win" China
There’s a lot of concern about Airbnb not winning China in my feeds and in my inbox today.
This stems from a Bloomberg story today that points out how small Airbnb is still in China, and that it plans to double spending in China next year to compete.
ALARM BELLS, EVERYONE!
An Edison research report talked about how unlikely Airbnb is to break the “American losing streak” in China, also comparing it to Uber.
First of all, Uber and Airbnb don’t belong in the same research report when it comes to execution in China. Uber went in arrogance and guns blazing, resolute that they would win, blew billions of dollars and failed. Airbnb has had a far more measured approach.
Airbnb is also profitable. Airbnb is also an inherently more global business. Airbnb could carve out a nice business in China catering to the more global traveler, while still not winning the local customer. It may not be all or nothing.
Airbnb also doesn’t belong in the same category as a Facebook or a Twitter or even Yahoo-- Companies who butted up against China’s free speech issues and simply couldn’t compete.
But beyond the faulty comparisons, there’s the logic of the question itself: This idea that some American company must break this losing streak and dominate China.
Why? Are we stunned that Didi Chuxing isn’t dominant in America?
The question of why Valley giants can’t win in China was an interesting one about ten years ago, when the US was the dominant driver of what the Internet was all over the world, China was surging and everyone wanted a piece of it and we saw a clear track record of major companies failing in China no matter what approach they took.
But that was ten years ago. Today in 2017, “Why can’t Valley companies compete in China” is simply no longer a valid question. It makes about as much sense as being flummoxed that Alibaba hasn’t yet killed Amazon or expressing shock that Weibo isn’t a meaningful competitor to Twitter.
I know we aren’t used to this as AMERICA!, but China doesn’t actually need our apps. China is home to multiple multi-billion dollar Internet companies. There is billions of dollars in local capital funding those companies… and increasingly funding our largest Internet companies as well. There is now a huge pool of talent who have helped build and scale Internet companies in China.
Kai-Fu Lee-- who just six years ago was one of those people pooh-poohing China’s ability to innovate-- has articulated the case for why China actually has an edge on US companies as the battle moves into AI. It all comes down to data and China has shit loads more click data than anyone. It also has far more transactions, which is why Uber burned billions of dollars trying to compete there. Didi did 40% more rides in a single year than Uber did in eight.
I continually have to remind people that Uber is not the largest ridesharing company in the world, in terms of rides, Didi Chuxing is. And if Uber had to raise money now, I’m certain Didi would be the largest in terms of valuations as well. We are now at the point where startups in China are outdoing US startups on a global basis, well before anyone goes public.
No US company should assume it will be the dominant player in China, just as no Chinese Internet company should assume it’ll be the dominant player here. What’s increasingly up for grabs and where the story is about to get interesting is who dominates the rest of the world. It’s not crazy to imagine a scenario where the global consumer web game gets carved up with Chinese tech companies dominating in South East Asia, Russia, India and even Africa and US tech companies only dominating the West.