A DATE WITH DATA
Song Li made himself into a computer cupid by establishing China’s most successful online dating site
Song Li has the qualities of a textbook serial entrepreneur: he loves talking about ideas, pivots when necessary and loves risk. He walked away from a lucrative job at Morgan Stanley to start his own business, and that big step has turned into a big reward.
In November last year, he sold a controlling stake in his online matchmaking business, Zhenai.com, to PAG Asia Capital, one of Asia’s largest private equity firms, and now he’s planning his next big thing.
“Life’s a journey, I’ve given more than a decade of my life to Zhenai, and now I’d like to try something different,” says Li.
Born in a suburb of Shanghai, Li trained as a molecular biologist at Cornell University and, after realising that fiddling with Petri dishes in a lab wasn’t his thing, switched to Columbia University, where he earned a PHD in finance. After years working as a senior investment banker in the US and Hong Kong, he fulfilled a lifelong dream to run his own business.
Zhenai, which translates as “true love”, was his second venture. The first was Memestar, a short message-based chat forum that he sold to the Chinese telecom firm Sina. Following a year of “gardening leave”, he set up a music sharing company in 2005. He then noticed people were going online not just to share music, but to chat. He realised that what people wanted was a platform for singles to meet. The music sharing business morphed into a dating business.
But it wasn’t until 2008 that Zhenai the dating site really took off. Li attributes the phenomenal success that followed to the rapid adoption of smartphones. He recalls long management meetings discussing whether to spend the advertising budget on the website, the mobile app or to split it between the two. He was undecided until one day he was on the MTR and noticed that everyone around him was glued to their smartphones.
“I realised this has to be the trend. I got off the train and called my chief operating officer and said: ‘The debate is over. I don’t care if we have to spend extra money, just do it.’ I’m glad we did because otherwise we would have missed it and the company wouldn’t have survived. Today 90 per cent of our new members register through their smartphone,” says Li.
Smartphones were an ideal tool in the dating game – not only could users specify the type of person they wanted to meet, but the mobile devices meant they could get information about prospective dates fast.
“People don’t sit in front of their computers all day. Smartphones meant that we could send people the right prospects in real time,” says Li.
Li has never used the dating site himself – he’s married with two kids – but that doesn’t stop him from getting excited about the online dating world. He can reel off all sorts of interesting facts gleaned over his years in the business. For example, it turns out that men are especially keen on women who are primary school teachers and nurses.
“Men are less interested in women who are in IT and engineering, or who are investment bankers. I think because they perceive these as high-pressure jobs and they might be working all night,” says Li. On the other hand, men prefer women who are three years younger than them, however, that’s variable.
“The higher the earning power of the man, the more likely he would ask to date younger women,” he says.
Women, on the other hand, are interested in men who work in finance and IT – money is the key factor. Li has charted the correlation between how much a man earns and how many virtual “winks” he gets on the site. “It’s almost a perfect graph trailing up. You can … very accurately
“MEN ARE LESS INTERESTED IN WOMEN WHO ARE IN IT AND ENGINEERING, OR WHO ARE INVESTMENT BANKERS”
– Song Li
calculate for every 1,000 yuan salary increase how many more winks he will receive. For women (response to earnings) it’s flat, it makes no difference,” says Li.
Zhenai.com has more than 120 million registered users, and new users join the dating platform at a rate of 40,000 to 50,000 a day. Last year Li said the platform grew 50 per cent in a year and it is projected to grow at least 30 per cent in 2018 – little wonder the company was an attractive prospect for a buyout.
In February this year, Xiao Suining, chairman of China for PAG, complimented Zhenai’s business model in a statement to The Peak, suggesting that expansion was in the cards. “PAG will continue to support Zhenai’s rapid growth and bring to bear PAG’S broad strategic and financial network to help the company continue to consolidate its leadership position. We see tremendous potential to grow and expand Zhenai’s business in China and across Asia,” said Xiao.
Li is now a minority shareholder and remains on the board, which means attending a board meeting every few months. Essentially he’s free to do his own thing. Since he stopped running the company, his daily routine – once his wife, a venture capitalist, has left for the office and his sons have gone to school – is to go for a swim in the rooftop pool at the Four Seasons Hotel.
“I just need to leave home to pretend I’ve got something to do. I
ZHENAI.COM HAS MORE THAN 120 MILLION REGISTERED USERS, AND NEW USERS JOIN THE DATING PLATFORM AT A RATE OF 40,000 TO 50,000 A DAY
take my laptop, attend a class and then read market research reports – that’s how you come up with ideas, you study what’s going on around the globe,” says Li.
He’s also taking an online fintech course offered by Oxford University and when that finishes, plans to take another on blockchain.
“The reason I attend these classes is because I want to see the forest. If I’m going to get into a new industry, I want to have broad exposure first and see the entire value chain. Besides, after working non-stop for 20 years it’s nice to have a break,” says Li.
He’s still some way off knowing exactly what his next business will be, but he’s focused on artificial intelligence and blockchain fintech, especially with decentralised applications. “I don’t like the current status that you have a small number of internet giants monopolising data and traffic, which is really bad for entrepreneurship because they can jack up media price over time which makes customer acquisition costs prohibitively high,” says Li.
He’s confident that we will see applications on decentralised platforms in the future - it’s just a question of when. Is it a risky venture? Yes, but that’s what he finds so exciting. “That’s what tech entrepreneurship is all about – you take a big risk in doing something that is not in good shape yet,” says Li.
“Most entrepreneurs overestimate their own abilities; they overestimate the odds of success. You almost have to be a bit ignorant of the kind of risk you are taking,” he says.
And it’s this key quality, he says, that often determines who initiates new ventures and who chooses to be an employee rather than set up their own company.
“You have a lot of people who are very capable but are risk averse. Appetite for risk doesn’t have anything to do, as it turns out, with your ability,” he says.
If this is beginning to sound a little bit philosophical, that’s likely because one of Li’s great passions is psychology – he reads psychology books in his free time – and he enjoys pondering people’s motivations and choices. He even thinks of the role of the entrepreneur as not unlike that of a philosopher. “In universities, professors come up with a hypothesis and then make a small lab to test it. We (entrepreneurs) just use society to test it,” he says.
Being able to pivot quickly, in case a business model isn’t working, is another key quality that Li stresses, saying that he has no issue with changing an original idea and going back to investors with the bad news, and also with a new plan.
“You have to be brutally honest with yourself about your idea. If the market really tells you no one wants your product you should be flexible enough to change, to pivot,” he says. CB Insights did a study of the failure of over 100 start-ups and found that the number one reason was “no market need” for the product or service.
Fast emerging technologies mean that it’s even more important to be flexible and seize the opportunity to pivot when the opportunity arises. Li has seen businesses struggle with this. If someone starts a business on an existing tech platform and some time into the project discovers that a new platform has emerged, they typically begin by telling themselves it’s just a fad.
“They don’t want to think that they have spent a decade building a business only to have it made obsolete by a new platform so they will deny it until they are forced to acknowledge it’s not a short-term phenomenon,” says Li.
By the time they decide to get rid of their legacy system in favour of the new one they’ve often missed the boat. It’s for this reason that Li is glad that he’s free of his legacy system and ready to embrace new technological platforms.
Though Li is taking online courses in the latest tech, he admits that he’s not a technologist. Rather, he prefers to stalk tech conferences, looking for presenters who impress him and then chatting them up to see if there’s a match. (If only there were a matchmaking app for this process…)
“I don’t know anything about engineering or computer science, but it doesn’t matter. You only need to focus on the business idea, find the people with the relevant skills to join you, and then focus on the management side and sales, which I’m very good at,” says Li.
He honed his sales skills early in his career, selling derivative products at Morgan Stanley. He has used those same salesmanship skills to not only persuade top talent to join him, but also to persuade people to provide seed capital. But talking people into lending him money and investing in a new project is not such an issue these days because PAG’S acquisition of a controlling stake in Zhenai has left him sitting very pretty.
Li, it seems, is now more interested in tech and entrepreneurship for its own sake.
“I find the process a very exciting way of living – I can’t think of anything else that would give me the same pleasure and fulfilment as coming up with an idea, organising a team and executing it,” he says. And thanks to the investment from PAG, the world is his oyster.
“I have no fear of failure anymore because I’m financially well off – I’ve made more money than I ever dreamed of.”