Kaixin001: China's Apple of Social Networks

Editor’s Note: This guest post was written by Alan Rutledge, who formerly worked as a developer for Idealab, the startup incubator behind Google Picasa and Yahoo Overture.

Kaixin001, the latest newcomer to the Facebook clone wars in China, is China’s fastest growing social network having amassed a staggering 7.5 million users in the first 5 months since it launched in May 2008. The site tripled Twitter’s traffic reach in the month of September alone and is currently the 250th most popular site on Alexa worldwide.

Compared with rival incumbent Xiaonei, which targets college students, Kaixin001 appeals to white-collar office workers with a simpler UI that is more intuitive to older audiences. This is a significant detail in China, where one in four college students does not own a computer and can only access Xiaonei by walking to an Internet Cafe and paying by the minute. White-collar office workers by comparison, spend an average of nine hours a day in front of the computer.

Kaixin001 succeeds simply by cloning only the most successful Facebook applications and bringing them to the Chinese market before anyone else. Examples of viral hits that they have cloned are:

  • Friends for Sale: Females have an unfair advantage in this game thanks to China having one of the highest male-to-female ratios in the world.
  • Parking Wars: Ironically most people in China can’t afford a real car, which makes this game all the more compelling.
  • iLike: Up until recent crackdowns, the Chinese equivalent allowed you to upload and share your entire music collection with your friends.
  • Where I’ve Been: This application defaults to a province map of China because most people have never left the country.

A non-clone worthy of note is Online Storage, a cloud-based file sharing application that harks back to Facebook’s early forays into peer-to-peer file sharing, when Sean Parker of Napster-fame was still president of the fledgling startup.

Blatant cloning may be shunned in the Valley, but in China and other parts of the world, cloning is the expectation of financial backers who benefit from the lower investment risk profile. Being too slow to clone has in fact hurt Xiaonei, which is now being overshadowed by Kaixin001’s 90% month-to-month growth rate.

As a fledgling 20-man startup with limited resources, why does Kaixin001 develop all of its apps? At a time when the Western World is embracing open web platforms, this approach strikes us as counter-intuitive and even backwards. Chinese web platforms, however, face several critical issues:

  • Limited access to capital: Venture capital is scarce in China. By comparison, close to a quarter billion dollars has been pumped into Facebook applications to-date.
  • Weak online ad markets: Chinese web companies rely heavily on virtual goods and micro-transactions; neither model works for most of Kaixin001’s applications.
  • Rampant software piracy: There are proportionately fewer developers available to build 3rd party applications in China due to limited job opportunities as a direct result of piracy keeping the market for software stagnant.
  • The Language Barrier: Most open source languages and documentation are available primarily in English. Chinese people who would otherwise make good programmers struggle with this additional hurdle.

The 700 third-party applications on Xiaonei have a huge variability in quality. Kaixin001 has only 25 applications, yet it retains complete control over quality and and has the speed and focus needed to bring well-tuned viral hits to the Chinese market faster than its competitors—perhaps the better strategy in hindsight.

Hundreds of thousands of people quite regularly visit kaixin.com instead of the correct kaixin001.com domain name. Recently, Xiaonei’s parent company purchased the kaixin.com domain name with plans to launch a Kaixin001 clone that would steal its rivals users. This effectively makes Kaixin a clone of a clone of a clone. Amazing.

Kaixin001 was founded by a former executive from Sina.com (the Yahoo! of China) and recently closed a $4-5 million first round from Northern Light Venture Capital.