Young startup innovators challenge Internet moguls with apps

Young entrepreneurs are challenging traditional Internet moguls by using apps to lure a booming generation of mobile Web users.

After having failed in starting a web business twice in the past 10 years, 34-year-old Wang Liang dipped his toes into the mobile Internet business. This time, he hit pay dirt. Within two years, Wang's Yhouse, a Shanghai-based app that targets China's middle class, offering them luxury-lifestyle experiences, has attracted about 2.8 million users. It achieved a revenue of nearly 100 million yuan in 2014, since its launch the previous year. "If I had moved into the field earlier or later, I wouldn't have made it. It's the right time to be in the mobile Web business," says Wang.

Wang is one of countless young startup innovators who have poured into the mobile Web business in recent years as China sees a booming generation of mobile Web users. Young entrepreneurs in their early 20s or 30s are taking their chances in challenging the traditional Internet moguls to help users solve daily-life problems with new apps.

According to the China Internet Network Information Center, as of June 2014, China had 632 million Web users, among whom 527 million were mobile Internet users. Smartphone users make up 91.9 percent of mobile phone netizens.

Hugo Shong, partner of IDG's Capital venture fund, says that computer and Internet technology has dominated China's startups for a long time and made legendary entrepreneurs like Ding Lei (founder of NetEase) and Zhang Chaoyang (founder of Sohu). Now as the mobile Web industry has arrived, young people are rushing to catch up.

Wang Liang says the mobile Web attracts the rich segment of the population who used to stay away from the Internet because of their busy schedules. Using his app, they can arrange for a customized trip, make a reservation for a fine wine party or take part in an equestrian club activity, for example, with just an easy click on their smartphones.

Wang's Yhouse provides luxury experiences for the newly rich, who haven't yet learned how to enjoy life, and aims to offer an exclusive social network for the upper-class. In addition to setting up teams in the big cities like Beijing, Shanghai and Guanzghou, Wang has also opened nine more branches in second-tier cities like Chengdu, Hangzhou, Xi'an and Xiamen in the past year.

Wang was pleasantly surprised that users in second-tier cities are more interested in experiencing the luxury lifestyle, like going to parties where the rich and famous mingle and taking a test drive of the Tesla.

"Active users of our app are also very young. They were mainly born in the 1980s and 90s," Wang points out.

Before setting up his mobile Internet business, Wang tried establishing a dating website for college students in 2004 and then an online booking service for car maintenance in 2008. Both of the startups failed.

Wang says when he was setting up the dating website, Jack Ma's Alibaba, which has become one of the biggest online shopping platforms, was still in its infancy. Web portal moguls like NetEase's Ding Lei were wooed by private ventures. Now these Internet giants and other private ventures are chasing mobile Web startups.

Wang's Yhouse has just finished its second round of funding from a US company and he is waiting ambitiously for new funding this year because "lots of investment companies are interested in my app". The app company of about 100 employees is planning to expand its team to 300 later this year.

"Mobile Web startups are crazier than their Web counterparts. Because China has such a huge base of mobile users, a good idea can attract lots of users in a short time," says Wang.