Given the circumstances, the discussion had to start with me asking him about the World Expo. Had he been? What had he thought? Like me, he only saw a small part of it – too big, he said. My sentiment exactly.
William, who is among the mentors and advisors of the WITovation Entrepreneur Bootcamp on October 18, is a partner at Softbank China & India Holdings, an early stage venture capital firm that is backed by Softbank of Japan and Cisco and focused on the technology, media, telecom and consumer sectors.
William heralds from the mighty Deutsche Bank where he covered the Asian online travel market. In 2007 he joined three other partners at Softbank where besides China and India, they also look for investment opportunities in South-east Asia. Needless to say, the travel trends are very different from country to country.
China has a larger population of travellers than India and has a more advanced segmentation of the market, he said. In China, traveling has become a middle-class pass-time, as well as an expression of increasing wealth.
In India, however, there still seems to be this trend where the people who have always travelled will continue to travel, and the ones who haven’t travelled before are most likely not going to do so for a while.
Despite the differences, domestic and international travel in both is booming.
So, where is Softbank putting its money these days? Unfortunately, William said it hasn’t been able to invest in any travel companies yet. They had looked at a couple of companies and, in both cases, they were outbidded.
On a personal level though, he has made some smart investments in the travel industry such as the Orange Hotel Group, a local group of high-design, high-value hotels started up by online travel entrepreneur, Wu Hai. William is very optimistic about the booming boutique and budget hotel sector in China.
In the last four years, Softbank had initially looked at early stage funding but are now slowly moving into later stage funding opportunities. Besides budget and boutique hotels, it is also looking into corporate travel and online packaging. But he concedes it’s tough to provide a decent travel product and make some money along the way. Scale is of utmost importance in this business.
From his days at Deutsche Bank, William had worked on many IPOs. So what are the upcoming IPOs in the OTA sector that we need to know about?
William said that although companies like Makemytrip had done well by being disciplined and not over-spending, he didn’t see many IPO opportunities in the OTA sector in China, the reason being that there simply aren’t many new players.
OTAs, he said, were facing a tough time in China for several reasons.
New entrants such as the large mobile operators and credit card companies like China Mobile and China Merchants Bank are conquering the profitable business travel market. Initially these companies partnered up with OTAs but soon realised that they didn’t need them and in fact, could do things much better by themselves.
The new trend where companies were getting rid of international commissions and cutting domestic commissions was also changing the online industry. At the same time, suppliers are trying to cut their exposure to OTAs because of high commission rates.
Instead they’re either going direct, through travel-meta search engines like Qunar or building up their own loyalty programmes.
Hotels are very keen to have their customers come to them directly rather than through an OTA. And the way they do that is not by undercutting the prices that are also available to the OTA but by offering extra perks such as club memberships and other benefits, he said.
Finally, I asked William, if you’re looking to invest in China and India, what must you do right?
William said that even more so than in other countries, the team is perhaps even more important than a solid business plan. Of course, the overall strategy and direction of the business is important, but the team to execute the plan is vital. And getting the right committed and experienced team to give shape to your business plan is easier said than done.
From our conversation, I can tell that entrepreneurship runs deep in William’s veins. There is an excitement in his voice when he talks about all the opportunities out there. He doesn’t really have any one entrepreneurship guru; instead it’s the amalgamation of all his life and work experiences that have taught him the most about business.
To learn from the many mistakes you’ve made and more importantly, not to repeat them. And definitely try to limit the expensive mistakes, he quipped.
When he was in equity research, he saw himself as a giant whale, a giant filter system swimming in the vast ocean, taking in anything and everything and sifting through the nuggets, the little shrimps that seemed important at the time.
Now he is in the venture capital side of the business, where he is getting more involved with the operations of the companies and helping entrepreneurs build a company. VC is high on passion, high on intellectual challenge and day-to-day satisfaction. So much, that he doesn’t envision himself ever going back to banking.
So if he likes entrepreneurship so much, why not start your own company, I asked. Oh no, he laughs. Early stage people have to be certifiably crazy to do what they’re doing. Huge risk, yes, huge reward potential and a number of sacrifices that “normal” people would not be willing to take.
Are you ready for that?
Featured image credit (talking): Ockra/iStock
