When deciding whether to buy a product or service, do you ever ask yourself, “I wonder how this works?” If you answered yes, you are either a part of the minority or you are lying to yourself. Most consumers do not give a **** how it works, as long as the product or service that they are using works. John and I learned this lesson from Brad Bao, the CEO of LimeBike. Brad understands this consumer behavior very well and he uses this philosophy in operating his own business. When we first met Brad, we were excited as it was one of the first Chinese entrepreneurs that we had met who was building their own startup in the Valley. We desired to know which principles from the Chinese tech ecosystem he applied to LimeBike, as we knew that this would separate him from other startups.
When we asked Brad about his philosophy when deciding whether a product was ready for launch, Brad used an example of Siri versus Chinese voice recognition software to explain his perspective. Brad began by asking us, “You guys know Siri, right? How often do you use it?” We thought for a moment and replied, “Well, not often. It doesn’t really work.” Brad waited a moment then sharply exclaimed,
“Exactly! You do not use it because it doesn’t work. This is something that would never happen in China. The Chinese would say, ‘“okay, we know our technology only works 70% of the time. Instead of asking our customers to deal with a lower functioning technology, we simply double check everything on the backend.”’ We use human power and artificial intelligence to make the technology 95% to 100% accurate. And guess what? No one knows or cares that there is a human operating behind the scenes, making sure that their query is answered correctly. This is why voice recognition has caught-on in China and not the US.”
It made complete sense. Use human capital, if you could afford it, to make the technology much better than it would be on its own. Then, wait until the technology develops to the point that human functions can be automated. It is important to note that this strategy would be more cost-effective in China as the cost of labor is exponentially lower than in the US. No one in China is making fifth teen per hour to act as your “automated” service system.
Brad could tell that we had understood the value in this approach and he began to share how he applies it to his own business. He went on to explain,
“Ideally, our bikes should be automated and rebalanced by themselves and go where the user wants. But, the technology just isn’t there yet. So, our philosophy is simple, put the bike out there and rebalance it using human power. This way, the service works like it should and the user doesn’t care whether it is human-operated or not. The name of the game is to grab market share. This happens all over China as competitors “pop-up” overnight. For example, in the US, there are a few video services like YouTube. Right? In China, if something like that is popular, there will be thirty services like that! You can’t wait for the technology to be 100%, it will be too late, and the market will be gone.”
This shows the stiff competition that is present in China, resulting in the need to grab market share as quickly as possible. It does not matter if the tech is perfect. Consumers do not care about the beautifully automated backend, they simply want to enjoy the product or service and forget the rest.
This philosophy makes me wonder how many products have been held from launch because the backend could not be completely automated. The wisdom to know when to launch and when to perfect a product is something that may vary depending on the availability of cost-effective labor in a given market. Nevertheless, finding the right balance between a hybrid of “human operated and automated” may be a better goal than attaining perfection in automation, as competitors could close in with each day that passes. This is a lesson from Chinese entrepreneurs that startups, here at home, should keep in mind.