Amazon helps ex-Googler turn mom’s money into a billion dollars
HONG KONG: After Steven Yang left his coveted job at Google, he asked his mother whether he should take venture-capital money to fund his business idea.
If his online consumer-electronics enterprise was a risky bet, she told him, go with the venture capitalists. But if building the business into something great was his destiny, he instead should use her money from a pharmaceutical career in China.
So Yang combined his Google money with his mom’s, and with less than US$1mil in seed capital he moved from California to Shenzhen, a hub in southern China for technology companies. Seven years later, Anker Innovations Technology Co sells products ranging from smartphone chargers to portable power banks on Amazon.com. And it’s getting even bigger after recently reaching a deal to put products in almost 4,000 Walmart Inc and 900 Best Buy Co stores in the US.
Recent trades on China’s over-the-counter New Third Board market valued Anker at about US$1.1bil. Yang, 36, and his wife have a combined stake of about 54%, according to a Bloomberg analysis of the company’s first quarter report for 2018.
Anker offers chargers that are alternatives to those from companies like Samsung Electronics Co or Apple Inc and come with proprietary PowerIQ technology, which detects each phone’s maximum wattage to help minimize charging times. Yang also has branched out into just about every other smartphone-related gadget, including cables, headphones and wireless charging pads. And he’s making household products like robotic vacuums under the Eufy brand.
“We really put a lot of love, and hate, into our products,” Yang said, referencing the year-long tedium of shrinking the vacuum robot down to 2.85 inches in height so it could fit under couches.
Sweet spot
As smartphone maker Xiaomi Corp. prepares for a Hong Kong initial public offering, Yang figures the timing may be right for him, too. He’s studying the possibility of going public in China, Japan, Hong Kong or the US.
If he decides to proceed, he could have his work cut out for him. As of early May, twothirds of the 21 China tech IPOs in the past year were below their issue price. Xiaomi had been targeting an eye-popping US$100bil valuation for its debut, but now is eyeing US$60bil to US$70bil, people familiar with the matter told Bloomberg earlier this month.
Yang has taken on several funding rounds over the years, and investors are coming knocking again. Jumei International Holding Ltd., a US-listed Chinese beauty e-commerce firm, bought a 60% stake in Anker’s powerbank-rental unit last year for 300 million yuan (US$47mil).
Anker’s revenue surged 56% in 2017 to 3.9 bil yuan, and profit grew 9.9% to 356 million yuan, according to its annual report. It has offices in Seattle, Dubai, Tokyo, Shenzhen and Changsha, China, according to its website.
Almost half of its revenue comes from the US, but China sales doubled last year.
Like many China tech companies, Anker is also following President Xi Jinping’s goal of making the nation a leader in developing artificial intelligence, and it has a lab for developing facial recognition for security purposes.
Its expansion has come as Yang seized opportunities created by gaps in the technology industry.
In the smartphone business, he targeted the opening between Apple’s expensive chargers and low-quality, white-label replace- ments.
Anker occupies the space between five-star and three-star Amazon reviews (most Anker products have about four).
That is Yang’s sweet spot, where he creates an accessory that isn’t the most expensive but still is of good-enough quality to win consumer trust.
That also means his brands must contend with fierce competition online.
“Selling via Amazon is absolutely still a viable strategy for smaller brands,” said Benjamin Cavender, analyst at China Market Research Group. “However, Amazon is increasingly selling its own brand products via its marketplace, which means that smaller companies need to be very aggressive about providing good products and service at attractive price points.”
These days Yang is also hoping tensions around a trade war between China and the US don’t escalate. Nearby is the Shenzhen campus of telecommunications giant ZTE Corp, which had to shut major operations after a Trump administration ban on its ability to buy US technology. Trump earlier this month tweeted that he was working on a way to get ZTE back into business.