Every successful entrepreneur has their eureka moment, the discovery of an idea that promises to bring fortune. Heidi Hsueh's came to her while visiting China's Tiananmen Square.
"If you stand in Tiananmen, if you just stand there and stare into the sky, you'll only have to stare for five minutes, and then maybe there will be 10,000 people next to you doing the same," says the 28-year-old Hsueh. "And none of them will even know what you're looking at."
An MBA graduate of National Chengchi University, Hsueh is the co-founder and executive vice president of pAsia, operator of the largest auction Web sites in Taiwan and China.
Standing in her Taipei office, her faded jeans and Chuck Taylor-like sneakers belie the savvy business woman that has helped pAsia's auction site, CoolBid.com, realize growth of more than 30 percent per quarter.
Speaking of Tiananmen Square and the Chinese cultural idiosyncrasies her company have cashed in on, Hsueh concludes, "Chinese people love to do the same things together."
She's applied the same thinking not only to CoolBid.com, but also to pAsia's China portal, instant messaging services and other Web offerings.
In many not-so-superficial ways, pAsia has become what it set out to be -- a company with a Chinese personality.
The boss's office is oddly placed on account of feng shui. The company's literature has a penchant for aphorisms and philosophy. Sales strategies play to group mentalities and predilections for bargaining and gambling.
Advertisements that appear in China even dabble in Maoist rhetoric: "Unity is strength and will bring down the price."
But make no mistake, this is a Web company, and it's young and hip.
The reception area of pAsia's Taipei office is adorned with back lit panels of translucent plastic, resembling the insides of an iMac. The average age of employees is somewhere between 28 or 29 -- and their salaries are heavily padded with stock options as well.
Moreover, employees work according to new age administrative concepts, or what the company calls a non-hierarchical "honeycomb" structure.
And of course there is the bottom line -- pAsia is an Internet company with branches for e-commerce, community building and instant messaging.
Crossing many lines, not the least of which is the Taiwan Strait, pAsia has formed itself into a very admirable hybrid: A Chinese Internet company based in Taiwan.
That was the plan from the beginning.
Reaching to China
In 1995, when Hsueh was still in her first year of graduate school, she established Inforian with Lawrence Ho, who was then a graduate student at National Taiwan University's business school.
Between them, they had just US$20,000, money which they had earned translating, writing articles and doing other odd jobs.
"I earned every cent myself," Hsueh says.
The pair used the money to set up their company in Silicon Valley -- on paper. Hsueh says it was the first time she ever went to the US. The company's main operations, meanwhile, were based in Taiwan, where it has grown to 150 employees today.
Five years since that Californian trip, pAsia's decision to formally discard its Taiwanese identity is paying off. As a relatively non-politicized hub, California has allowed pAsia to directly manage its operations in China from Taipei. Running with fewer than 10 employees, the US office is a paper formality.
pAsia wins trust from China and Taiwan authorities by playing pool with the necessary government agencies. In China, for example, the company is registered as an "Internet Technology Provider" and keeps its servers at a government center, where the authorities can shut them down any time they like.
In Taiwan, where information is not controlled, the company keeps its servers at state-owned Chunghwa Telecom (
There, pAsia finds its most direct tap into Taiwan's Internet infrastructure, which is important for download speed and end-user convenience.
Political considerations aside, pAsia's US incorporation has brought other benefits.
"We pay our employees with huge amounts of stock options," Hsueh says. "Such amounts would not be possible under Taiwan law."
Moreover, US connections helped pAsia take an early lead on this side of the Pacific. It was only a few years ago when crisis-struck Asian investors were not quite prepared to throw their money into the Internet. US investors, however, were hungry for technology shares and more willing to take chances.
More importantly, Hsueh knew it.
"Several years ago, we found it difficult to prove these markets workable," Hsueh says. "So I went to Intel, because in America, I knew they could appreciate the value of a startup."
Intel was brought on in 1998 and became pAsia's third investor. Other backers include venture capital firms from Singapore and Taiwan.
By that time, Hsueh had earned her MBA and Ho ... well, he'd pulled a Bill Gates and dropped out of school, too busy running his new company.
From the very outset, Ho has been responsible for heading up R&D. For that, he also got the title of CEO. At a recent Taipei press conference, which projected Ho's virtual image fed from Beijing, he was seen wearing a light colored blazer, no tie, an ivory shirt open at the neck, his hair swept back and thin wire-framed glasses.
On the occasion, Ho possessed an almost Quentin Tarantino-like brand of geeky cool.
Is Heidi his Uma Thurman? Perhaps. It would be very much in keeping with the company's "cool" image.
In 1997, Ho engineered the company's first big success -- a Chinese-language search engine that ended up selling more than 3 million copies in at least 30 countries.
The following year, pAsia began building the three main branches of the Internet system which has zoomed it into position as one of the hottest movers in Chinese-language cyberspace.
A network built on the other 3Cs
The "3Cs" is one of several platitudes at the core of pAsia's corporate philosophy. pAsia's 3Cs are not "Computers, Communications and Consumer Electronics" as they are for the rest of Taiwan. Rather they stand for the three pillars of Internet success: "Community, Communications and Commerce."
Community, which translates into market share, can be built in many ways. At first, Ho and Hsueh did it through a dating site. Love Town (love.in2000.com) services Chinese communities throughout Asia, and as many as 10,000 lonely hearts log on per week.
Currently, pAsia's main community forum is 8d8d.com (pronounced "buddy buddy" in Mandarin). The Chinese language portal offers free home pages, email, a search engine and chat rooms.
Recently, it also integrated pAsia's 8dcall (buddy call) instant messaging service.
8dcall, which now falls under the community and communications category, currently boasts 1.6 million members throughout greater China. pAsia's other communications offerings include a Web phone messenger and an MP3 music workshop.
The commerce portion of the 3Cs is CoolBid.com, the company's auction site. Operating only in Taiwan, it accounted for roughly 60 percent of pAsia's revenues last year. CoolBid for China was added in December, and in its first three months has signed up more than 120,000 users.
Currently, the two sites are pulling in NT$15 million and 1.5 million renminbi in monthly revenue, respectively.
Hsueh feels CoolBid has been successful because pAisa has put a Chinese spin on e-commerce. Because Chinese people love to "kill the price," or bargain, prices in CoolBid are bid down, not up.
The site also zeros in on the group mentality by lowering prices as more people buy the same objects. In truth, it's not really an auction site, it's direct, volume discount sales.
CoolBid sales work according to a downward sloping discount curve, which Hsueh says she invented. Along the curve, the price gets lower with each new purchase until the sale reaches its discount limit.
Because "users get to bargain with vendors," Hsueh is fond of using another of her neologisms, calling it a "C-to-B business model."
At least one competitor, hogo.com (meaning "buy together" in Mandarin), has copied her system. Hsueh, however, is smug that they have been unable to replicate her downward sloping discount curve. "It's a secret," she says.
Though sales are certainly the most important yardstick for an e-commerce site, CoolBid has also showed rare prowess in courting vendors. To keep prices down, Hsueh says her company's search teams target sources high upstream in the supply chain, like original manufacturers and OEM manufacturers for locally made goods, and dealers, distributors, and agents for import products.
To stave off the disillusionment of hidden shipping costs, she asks vendors to include shipping in their online list prices. For Web consumers, this gives the impression that shipping is free.
Though Hsueh admits that vendor recruitment was difficult at first, returns based on one year of business have created a situation where, "now the vendors, they come to us," she says.
Integration: The key to everything
"We don't make much from community," says Hsueh. "8d8d gives us a little bit of revenues from advertising, but we don't really concentrate on that."
Instead, she says that community feeds commerce and communications, which do generate revenues. So, in addition to CoolBid's online sales, pAsia finds a significant source of revenue in technical licensing of its 8dcall and other self-developed applications.
pAsia's integration, however, goes even deeper than on-screen links. The company is working to cut costs by integrating its various sites into a single data base and unified underlying infrastructure. It's March 24 announcement of a strategic partnership with Oracle is a means to this end.
Oracle is one of the world's leaders in information management and data base architecture, with products servicing household names such as Amazon.com and E*Trade. In the upcoming months, pAsia will implement Oracle's 8i database platform and enterprise resource planning applications system, which allows for online management of supply chains, demand chains and internal operations.
Further Expansion, IPO, and (GASP) profits?
On March 30, pAsia announced its third round of investment financing -- US$17.2 million from Goldman Sachs, Citibank Group and China-based venture capital firm Shanghai New Margin. The company's primary objective for the new funds is development of the greater China market.
As CEO Lawrence Ho says: "We are the first company to develop in Taiwan and spread to China."
That fact, combined with pAsia's track record of fast growth, is what has attracted such heavyweight investors.
An IPO seems imminent, but company officials are currently unwilling to disclose any relevant information.
Both Hsueh and Ho have recently cited "SEC regulations" as reasons for their silence, which can only imply that something is in the works.
In the past, the firm has expressed the possibility of entering capital markets in the US, Hong Kong, Taiwan, or Singapore, though if it hopes to continue walking the cross-strait tightrope, a US listing may be the most likely.
Last but not least, Hsueh says that unlike many Internet firms, pAsia is not unconcerned with profitability. Charting the current rate of growth, she predicts that her company will become profitable by the end of next year.
CoolBid China NT$5.5 million
CoolBid Taiwan NT$15 million
*pAsia registered users
1.6 million (an instant messaging service)
*Total registered capital:
US$37 million (estimated)
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