11 Angela Chan's i-Vision
“Killing Me Softly”
Christine Chang
An investment banker by background, Angela Chan, together with her friend Ivy Zhang, launched i-Vision to capitalize on China’s rising digital media market. Starting as a provider of interactive TV solutions, i-Vision realized that the future lay in offering a TV channel through hand-held devices such as 3G phones featuring trailers and synopses, micro-blogs, aggregation tools, and sharing programs. In order to pursue this strategy, Angela counted on her contacts in the government, a partnership with a state-owned enterprise, and the funding and advice provided by a venture capital firm.
Angela Chan is the well-respected and thoughtful founder and managing director of i-Vision, a leading technology company in China’s mobile television industry. She blushes when she talks about herself during our conversation, and speaks softly as she presents her company. She is a graceful and quiet woman whose appearance is as understated as her personality.
Since its inception, i-Vision has earned a number of high-profile awards. In 2007, it was named a Red Herring Asia 100 winner and a Top 50 Innovator for the Mobile Innovation Summit (Asia). The company has also received the Sony Ericsson-sponsored Golden Olive Award for “the best mobile phone advertising platform,” and a Top 100 Fast Growth Company Award from China’s Business Watch Magazine. Despite these accolades and the huge potential for the business going forward, Angela does not label herself a “success” just yet. Instead, she is modest and still considers herself a striving entrepreneur.
In 2004 Angela partnered with her engineer friend, Ivy Zhang, to form i-Vision. They took a leap of faith that their then-two-person team could build a successful media technology business based on the combination of their engineering know-how and business acumen. They believed China represented a vast marketplace of new digital media consumers and leapt at the challenge. Angela left her high-powered career in the financial/investment banking industry, while Ivy left her senior management job at a Japanese IC software design company in Beijing. The pair began their foray into entrepreneurship by launching i-Vision. Angela also garnered the support of family, friends, and former colleagues who provided the seed money to jump-start the new venture.
Market Background in 2004
When they established i-Vision, Angela and Ivy’s objective was to bring interactive services to cable digital television by integrating services on one-way broadcast with two-way telecommunication networks. In 2004 China was already the world’s largest cable television market, with around 100 million subscribing households—representing almost full penetration in the large cities. At that time, nearly all cable television subscribers received analog cable signals, and the central government was pushing an aggressive plan to digitalize the entire country, thus cutting off analog television signals by 2015.
Analog television was traditionally a one-way, vertical media experience. Consumers watched programs at set broadcast times, with little interaction with their televisions. In contrast, digitalization defined a whole new horizon for this mass-media platform by providing the audience with a variety of additional experiences and services via set-top boxes. Angela and Ivy envisioned that home consumers could enjoy new interactive services, such as choosing program enhancements, checking public information, voting, and even shopping—all while being entertained. The idea of "inter-activating” the nationwide cable television households seemed to hold unlimited possibilities and became too exciting to pass up.
Guanxi
Guanxi is the Chinese word for “relationships.” Historically, guanxi are the crux of how business is conducted in China. You know someone who knows someone who knows someone. This is how deals are still made in China. In fact, it was through her guanxi at the investment bank that Angela gained an entry point for i-Vision into one of China’s largest state-owned enterprises (SOEs). This former client owned one of the nationwide cable companies—a backbone of China’s cable television infrastructure. The SOE planned to work closely with China’s government to finance the digitalization process and further involve local cable television operations afterwards. Angela immediately identified this as an opportunity for i-Vision.
As she leveraged her relationships to set up introductions and meetings throughout the SOE, Angela’s strong reputation as a marketer in investment banking worked to her advantage. Her old guanxi assured decision-makers at the SOE that Angela and i-Vision were solid, reliable business contacts. Eventually, i-Vision found both its first client and business partner in the SOE. As Angela reflected,
In China, people have to trust or even like you before they start talking business with you. (This is somewhat different from the west where business can be transacted based on an understanding that there are mutual benefits.) This kind of trust may take years to build up, but very often it is more important to have trust than to have a written contract on paper.1
Although the scope of i-Vision’s initial project with the SOE turned out to be limited, it allowed the company to begin developing and testing its product while generating revenue. Although Angela and Ivy’s vision for their company was greater, they viewed the project as both a learning opportunity and a stepping stone toward a larger objective. Their relationship with the SOE opened more doors for i-Vision to work with other top industry players, including China’s licensed broadcasters, telecom operators, and internationally renowned technology companies. The initial project also enabled i-Vision to evaluate the technologies and products it developed side-by-side with top companies in the value chain of the industry. The project with the SOE also legitimized the company in the eyes of other potential business partners, clients, and investors. This partnership provided increased credibility that enabled i-Vision to gradually emerge as a leading digital media technology solution provider in China.
Venture Capital Partnership
At the same time, Gobi Partners, an early-stage venture capital firm focused on digital media investments in China, was also paying attention to the same SOE’s activity. The firm observed that the SOE already had significant exposure to the digital media area and had been watching it to measure the pulse of the digital media landscape. Although Gobi Partners was unable to invest directly in an SOE, it was aware of this particular SOE’s assets and relationships. After following the standard due-diligence process, Gobi Partners invested in i-Vision, becoming its primary institutional investor.
Gobi Partners not only provided much-needed capital as an investor, but also served as a business advisor, helping to develop Angela and Ivy’s vision into that of a sophisticated business objective. Angela describes herself as “naïve”2 compared to Gobi Partners. However, both parties shared a similar vision for digital media in China. As Angela described the exchange, “We were looking from the ground up, [and] they were looking down from a higher plane [with a] fuller picture. [Gobi Partners] was able to see a bigger value the team could create than we saw ourselves.”3
Gobi Partners had already been studying the digital television market and understood the labyrinth of China’s government policies as they related to the digital media market. Having already invested in 60–80 digital media companies, Gobi Partners had key expertise and real exposure to the industry. A venture capital firm such as Gobi Partners—that had already been analyzing the market, the latest technologies, and the environment of an industry—was able to advise its portfolio companies, providing additional business perspective. With i-Vision, Gobi Partners was interested in helping the company find a way to turn its technology into a business advantage by generating an entire business ecosystem.
When venture capitalists evaluate companies to invest in, they are concerned with two main factors. First, they are interested in whether the business is viable. Gobi Partners, focused as it is on technology and digital media, views technology mostly as a Trojan horse that gives the business a head start in the larger game. Second, and perhaps more important, a venture capital firm such as Gobi Partners evaluated the quality of the business manager(s). This firm believed that, although the specific technology is important, actual business skill is still very necessary. According to Wai-Kit Lau, founding partner of Gobi Partners, “we watch the same old movie over and over.”4 Throughout their work as venture capitalists, Lau and his partners observed the reasons why some businesses fail while others succeed. Lau believes that when businesses fail, “most of the time it is because the manager didn’t deploy [effectively].”5
A Heavy-Duty Team
In i-Vision, Gobi Partners saw the assets as both i-Vision’s technology platform and services business and its unique business team. Lau recounts how he was intrigued upon meeting Angela and Ivy. As he led the pre-investment due diligence on i-Vision, Gobi Partners sought to uncover why and how i-Vision was able to accomplish all that it had to date. Lau concluded, “I think a lot of it has to do with their personalities.”6 Ivy was an extremely competent and well-respected engineer. While she focused on the technical aspects of the business, it was Angela who led i-Vision’s business development. Lau described Angela as sophisticated, pointing to her “relationship management” capabilities. He said, “this does not mean ‘wining and dining.’ Those times are long gone.”7 Instead, Angela’s style of relationship management was centered on integrity and consistency.
In fact, Angela was by no means a flashy CEO. Rather, she came across as a quietly confident woman with a strong business focus. Lau believed that the straightforward and trustworthy management style of Angela and her team allows i-Vision to consistently stand above the crowd, especially in the Chinese environment. He proudly described i-Vision’s management team as “killing you softly” (referring to Roberta Flack’s 1973 song). He explained that the Chinese technology market was a male-dominated community where others may underestimate the potential of the female team of i-Vision and see it as a threat to viablity. i-Vision may appear to be “soft, but they are strong . . . heavy-duty.”8
This management ability also lent itself to Angela’s skill in enabling i-Vision to respond swiftly to changes in the market. Indeed, Angela has led i-Vision to significantly change its original business from that of set-top boxes for cable television to today’s focus on mobile television services. Lau pointed to Angela’s experience in working at the investment bank/multinational company. He believed this gave Angela the general background to lead business development for i-Vision. The company benefited from Angela and Ivy’s partnership—while Ivy is a talented engineer, Angela is a business person who keenly understands the continually evolving business needs of a rapidly changing industry.
The Evolution of i-Vision
i-Vision began as Angela and Ivy’s brainchild during the digitalization process of cable television in China. Ivy was paying attention to the Japanese digital television industry and drew inspiration from the additional services provided to consumers through set-top boxes. As China’s cable television digitalization developed, Angela and Ivy sought to create a technology platform to provide similar services in China. i-Vision also joined the working group the SOE had formed with other top technology partners, moving on to develop digital set-top-box solutions to target the next generation of cable television consumers.
In 2005 i-Vision completed the first version of an open interaction platform to deliver services and applications through cable television set-top boxes. This platform enabled service operators, content providers, and advertisers to develop and implement interactive television applications, including govern ment public information services, enhanced and inter active television content, television shopping, online surveys, and interactive advertising.
In the same year, i-Vision, together with the SOE and other partners, ran the first commercial trial of interactive digital cable television in the Chinese municipality of Dalian. i-Vision’s iTV solution facilitated services through cable television, including an interactive program guide, voting, television messaging services, and interactive stock services. i-Vision also developed a television payment solution, in collaboration with Dalian’s local partners, which enabled Dalian’s consumers to shop and make payments through their television sets by simply using their remote control units.
While working on the project with the SOE, i-Vision gained the attention of a European technology company that was working on another project in Taiwan. The iTV solution was what the client, a Taiwan cable television operator, was looking for in its digitalization project. With this new partnership, i-Vision’s product began to find its way into the commercially sophisticated Taiwan cable television market. Throughout 2006, i-Vision dispatched engineers to Taiwan and Seoul, South Korea, several times to integrate its technology solution with that of its project partners. In addition to generating revenues, the Taiwan project was an important learning experience and milestone for i-Vision because it involved international partners. It also helped i-Vision gain additional credibility as a technology company.
Back in mainland China, however, the cable television industry presented challenges. First, the market was highly fragmented, with thousands of local operators each guarding their own territories. This made technology standardization almost impossible. (Unlike the industry in the United States, China’s cable television is a government-controlled, government-sponsored operation used for party propaganda purposes.) At that time, monthly cable subscription fees ranged between 12 and18 RMB per household for network maintenance while content was free. The sometimes-manual billing systems/mechanisms created money-making opportunities for small local operators. The central government’s digitalization efforts were seen by some local operators as a threat to these systems. In addition, set-top boxes were sponsored most often by cable television operators who were looking for only the most basic versions. These operators had no incentive to upgrade to the technology to which i-Vision’s interactive services were tied. Furthermore, consumers were not in the habit of paying to upgrade their cable television set-top boxes regularly, as is the practice with mobile phones, for example. As a result, by the end of 2006, i-Vision decided to redirect its efforts from cable television to mobile television.
This willingness to make changes to their business has enabled i-Vision to survive in the rapidly changing technology industry in China. Entrepreneurs often become too attached to their original business plans or technology solutions and fall prey to the force of inertia. As Lau notes, “Some local entrepreneurs are not as open-minded because they are holding on to one concept. i-Vision is very open-minded and listens [to suggestions from business partners].”9 i-Vision’s switch to mobile media represented a major change, as Angela’s strong desire to succeed and survive motivated her to lead the i-Vision team in this new direction.
The Growth of the Chinese Market
In 2006 China had already overtaken the United States to become the largest mobile telecom market in the world. By the end of that year, the mobile population in China had surpassed 461 million, with penetration at around 35 percent. This remarkable growth rate was expected to continue. Studies also showed that it was very common for urban mobile consumers to upgrade their handsets every 12–18 months.
At the same time, the Chinese government, determined to showcase the country’s advanced technological capabilities to the world, was pushing for widespread mobile television availability for the then-upcoming 2008 Beijing Olympics. A mobile television service was promised to be available to help distinguish the Beijing Games from previous Olympics.
Mobile television is generally understood to be television that is watched on personal handheld devices. It can be either pay video services via telecommunication networks, or broadcast services via terrestrial networks. It can also be in the form of Internet streaming video delivered over the wireless network to handheld devices.
In the run-up to the Olympics, the market was expecting Chinese regulatory agencies to grant 3G operating licenses and decide which mobile multimedia broadcast standard China would adopt. There were a number of competing mobile television technology formats, and it was unclear which one would prevail in China. The market was also waiting to see which entities would get the official licenses to operate mobile television services. Complicating things even more, the new digital media service of mobile television was sitting in the middle of the overlapping territories of mobile operators and the broadcasters/licensed content providers, under the jurisdiction of two traditionally “competing” government authorities.
Throughout this time of uncertainty, i-Vision continued to move forward by completing the development of a server-to-device mobile television operation system and participating in as many trials as possible for various technologies. This allowed i-Vision to continually cultivate relationships with business partners and to remain up to date with new technologies. Angela and Ivy continued to believe that mobile television would soon become one of the most influential new media formats in the country with the world’s largest and still-expanding mobile population. They aimed to be ready when the uncertainties cleared up and the technology standard was finally set in China.
i-Vision also recognized that the future of mobile television was not limited to the delivery of video content to mobile devices. To become successful in operating mobile television services, there must be a smooth convergence of both rich video content and interactive personalized services. Mobile television would become a whole new media platform, distinct from traditional home cable television or IPTV. i-Vision’s mobile television technology solutions have been focused on how to integrate relevant interactive services intelligently to complement video content viewed on small and large screens.
Before the final decisions were announced on technology formats and operating entities, i-Vision decided to work with various parties advocating different standards to maintain a flexible market position. As the company’s open technology systems were compatible with all the major standards and offered a unique value proposition to the other partners, the team was involved in almost all major mobile television tests and trials with different collaborating parties along the value chain. These included broadcasters, telecom carriers, systems providers, device manufacturers, and government agencies. During this challenging period, i-Vision managed to build its reputation as a reliable and advanced mobile television technology solution provider. Angela believes this is also the kind of relationship—or guanxi—building that would be useful for future developments and opportunities.
During the Olympics in August 2008, i-Vision partnered with BTVM (the subsidiary company of the Beijing TV station responsible for the new digital media business) to run a mobile streaming television channel called Jia You Zhan (meaning “gas station”) on China Mobile’s network. Mobile subscribers in Beijing could use their cell phones to access the channel, which continuously aired videos of behind-the-party scenes and social events going on around Beijing, with celebrities chanting “jia you” to the athletes. i-Vision secured the participation of Olympic sponsors, public relations companies, and international brands by showing their events on the mobile entertainment channel. The only problem was that 3G was not yet available in China. Thus, the video quality on the wireless devices was not as good as i-Vision had hoped. Nevertheless, the channel did gain the attention of a number of top consumer brands that returned to ask i-Vision to cover more of their subsequent promotional events in the country. This trial run confirmed that users, operators, and sponsors were, indeed, interested. It also confirmed to i-Vision that the market players were starting to pay attention to this new media platform.
By the end of 2008 it had become clear that China would adopt its homegrown technology, China Mobile Multimedia Broadcast (CMMB), as the country’s mobile broadcast television standard. In the first week of 2009 the government also finalized the issuance of 3G operating licenses after a restructuring of the country’s telecom industry that resulted in three operators providing full-range services, including fixed line and mobile. The market anticipated that operators would boost investment in the Chinese telecom market to upgrade the infrastructures. The convergence of telecom networks, digital television networks, and the Internet— combined with deployment of 3G and CMMB networks—would create tremendous opportunities for industry players, especially technology providers, in the next few years. For i-Vision, this also meant that the technology development and relationships cultivated in the earlier years had started to pay off as they generated licensing revenues from the company’s mobile television technology products. Angela believed that, without the team’s continuous hard work and guanxi-building at all levels with the clients over the past few years, it would have been nearly impossible for a small company like i-Vision to win such contracts.
In China you have to do multi-level relationship-building if you want to do business with the big organizations. It is not enough just talking to the top guys. Sometimes it is more important to win the trust of the middle managers.10
Although China was right on the cusp of a government-led investment cycle in upgrading its telecom infrastructure and i-Vision’s business volume has been growing, Angela and Ivy are feeling far from complacent. After carefully evaluating the market, the team decided the time was right to change direction from a technology company to a mobile Internet application/service company.
The Decision
i-Vision decided to focus on building a mobile Internet video-centric social networking service platform, taking what it believes is a bet on the development of 3G and the mobile Internet market. Angela believed that the mobile Internet would be a more successful network for mobile television for several reasons. First, mobile Internet users were growing rapidly, and there were more handheld devices with browsers embedded. Second, with 3G and mobile broadband networks, the quality of wireless video services has improved tremendously. i-Vision believed it should capitalize on its own mobile television solution to develop innovative mobile television applications and services to build its consumer user base to generate recurring revenues. The company called this new product “Pocket TV,” a video-centric mobile Internet social networking service platform. i-Vision did not expect most mobile users to watch 1-hour soap opera episodes on their handhelds. Instead, with the Pocket TV platform, users could discover entertainment news, view trailers and synopses, micro-blog, aggregate their own personalized channels, and share with their friends via the mobile Internet. The management team hoped this decision would help i-Vision prosper.
