I originally came to China as a way to continue my Chinese language study and pursue a career in consulting, government work, or perhaps an NGO. After getting involved in a startup competition at the Hopkins-Nanjing Center and interning at a startup involved in the ChinaAccelerator program in Shanghai, I changed directions and started working on building a skill set that would let me reach my goals of joining a startup and hopefully one day building my own startup.
In August, 2015 I joined my first startup in Shanghai, 学银钱包 or Stubank. Stubank was one in a new wave of fintech companies working to make digital transactions real. This was around the time of the iPhone 6 release, and the implications of phones that could be secured with finger prints was just being realized by the market. Although Alipay had already been in existence for some time, Wechat Pay was still a relatively new thing. I recall my first few days in the office using cash to pay for my Ele.me fast food deliveries, but after discovering how to bind my bank card to Wechat Pay, online services became so much more convenient. Stubank was out to get a piece of this market, but taking (what I thought at the time to be) a fairly unconventional route of targeting the college student market.
The idea behind Stubank was that Alipay and Wechat Pay were still largely used for paying for online services, and the opportunity existed to bring that convenience of paying via app offline. Of course Stubank wasn’t the only company with this idea, and the race was on to see who could capture the most market share before this window of opportunity closed. Whoever could win would have massive amounts of consumer data, from which many other products could be born.
Targeting college students seems counter-intuitive at first, but on further analysis makes sense. College students have no source of income, and thus spend less money than adults. So why would a startup mobile wallet company go after this no-income market?
- College students spend in much smaller amounts than adults. $2 here for lunch, $0.50 there for a soft drink, etc. They would be quick to see the advantage of abandoning a pocket full of loose change for a mobile wallet app.
- A larger percentage of young people are early-adopters.
- Lifetime value of a college student is greater than that of adults.
To get money into the hands of our consumers, we had built a micro-loan platform into our application. Students could take out loans up to 10,000 RMB (~ $1,500) after a review from our credit team. The long term goal of the company was to collect data on consumption behaviors and credit worthiness of our customers and use that data to build a credit-rating system that could be used by third parties.
During my interview, I thought the idea sounded very unique and innovative. Only after joining the company did I realize that there were already hundreds of companies in the market. Stubank only employed 20 people (9 developers, 2 product managers, 2 designers, 2 credit analysts, 5 marketers), with marketing making up 25% of the team. The way we marketed our product was by sending our marketing team to local colleges with all kinds of company swag. Every college would have one or two days at the beginning of each semester when they would allow companies to come and pitch products to their students. The pictures that were shared in our company Wechat group showed dozens of similar micro-loan companies almost identical to ours at every college’s event. Since the concept was still fairly new, competition was essentially centered on who had the coolest product or the best rates - depending on how economically savvy the student you asked was.
Growth hacking was crazy. We built ways to import contact lists, share passcodes that would give away cash to new users, and even built a wrapper on top of Taobao’s website to enable quick purchases to Taobao via our app and using our loans as payment. Our marketing team was visiting 2-3 colleges per week in and around Shanghai. Each college we visited would result in 2,000-3,000 new signups in our app. We were pushing app updates once every two weeks, and constantly being told we were moving too slowly.
Unfortunately, after only a few months at Stubank the company closed down after our founder sold the company to a competitor citing our slow growth as a reason for not continuing on. I’m forever thankful to him for giving me the opportunity to enter into the local startup ecosystem and for the faith he had in my development ability. The experience I had working at Stubank confirmed my desire to work in startups, and confirmed my opinion that the Chinese market is the future of mobile consumer business.