Meituan and Dianping Have Merged, and Wang Xing Is in Charge. What Did This Rare Serial Entrepreneur Build Before?

In the power shift after the Meituan-Dianping merger, the outside world seems to care about only one person: Wang Xing.

Didi and Kuaidi, 58 and Ganji, Meituan and Dianping: "merger" is this year's keyword for China's internet startups.

With every merger, the two sides announce co-CEOs and promise to keep operating independently. But growing companies rarely work that way. In the end Cheng Wei, from Didi, took charge of the new Didi. Earlier, after Youku merged with Tudou, Tudou's CEO Wang Wei soon left the new company.

Now it is Meituan and Dianping's turn. This week Dianping CEO Zhang Tao announced that he would give up his post as co-CEO and become chairman, a job with no real power. Meituan CEO Wang Xing will run the new company.

Rumors that Zhang Tao would leave had already surfaced at least three times, and nobody seems surprised.

Most people have more faith in Wang Xing, probably because Meituan and several of his earlier products succeeded. Six years after its founding, Meituan is China's largest group-buying site, with sales expected to reach 130 billion yuan this year. Before the merger, the two companies were already valued at US$7 billion, 17th among the world's most valuable unlisted startups.

Meituan is the fourth company this 37-year-old has started in the past decade. In China, serial founders like Wang Xing, each of whose products made at least a modest name for itself, are rare.

Xiaonei: China's First Successful Social Network

Xiaonei, launched in 2005, was Wang Xing's first internet product to win wide popularity. He had spent two years working up to it. For one year he polished a general social network called "Duoduoyou," refining the product for a long time, but users came slowly and it fizzled out. For the other year he drifted among several small products, none of which took off: an event-invitation site called "Dianyao," a site called "Youzitu" that printed photos for students abroad and mailed them home, even a Pinyin input method.

Only in 2005, when Wang Xing saw Facebook, then a one-year-old campus social network, did he decide to build a campus network of his own on the same model. He and his founding team, his college roommate Wang Huiwen and his high-school classmate Lai Binqiang, scraped together a few hundred thousand yuan, and within a few months they had launched Xiaonei.

Remember what Xiaonei looked like back then?

The team was small and had no designer, so Wang Xing simply copied Facebook's user interface. Xiaonei has been criticized for it from the day it launched to this day.

But Wang Xing also did something Facebook had barely done: offline promotion. He had learned this from the failure of "Duoduoyou": don't start with a social product aimed at everyone, and above all don't do what Silicon Valley companies do, building an online product and waiting for users to come.

Once the site was built, Wang Xing and his team promoted it using what they knew from their own student days. They picked a few universities, Tsinghua, Peking University and Renmin University, for offline events. Wang Xing had graduated from Tsinghua's electronic engineering department and knew how hard it was to get tickets to the department's student festival, so he ran a campaign: "Sign up for Xiaonei and enter a draw for festival tickets."

They also seized on the winter and summer holidays, when students head home, and offered "group buses" to the train station in Xiaonei's name. To get on a bus, students had to register and fill in a real profile photo, name, school and major; once 50 people signed up, the bus left. It was Xiaonei's first campaign in which users promoted the product themselves.

Ticket draws, filling buses, posters on campus, public sign-up counts for each school... Within a year Xiaonei had passed 1 million users. But the money Wang Xing and his partners had borrowed from parents and friends was nearly gone.

They had never worked out how Xiaonei would make money, and the team was almost entirely students with no work experience, so the young founders could not convince investors. Unable to raise money, Wang Xing had to sell the product in 2006 to Chen Yizhou, who was also running a social network at the time. Chen renamed Xiaonei as Renren, opened it to users of all ages, and kept copying Facebook feature for feature all the way to its IPO.

Xiaonei could not escape being sold, but it did bring Wang Xing his first pot of gold. With that money, Wang Xing said at the time, he might never need to work again if he didn't waste it.

Hainei, Beaten by Kaixin001

After selling Xiaonei, Wang Xing still wanted to build companies. In 2007 he saw Twitter, the microblogging site that had just become a hit at South by Southwest in the US. Quick to react as always, he talked Mu Rongjun, a younger schoolmate then working as an engineer at Baidu, into co-founding the social site Fanfou.

Less than six months in, Fanfou's user numbers had not taken off, so Wang Xing turned to a more focused, stickier social network for white-collar workers. The team reworked Fanfou, added music and photo features, and launched Hainei in early 2008.

Hainei as it looked then; the site has since shut down

Riding the buzz around Facebook and Xiaonei, Hainei quickly caught the media's attention. But competitors moved fast too. Kaixin001, with its "steal vegetables" mini-game built for office workers killing time at their desks, launched several months after Hainei, yet spread quickly because it let users import their MSN contacts.

A screenshot of Happy Farm

Wang Xing believed such mini-games could only draw crowds and that no internet service could live on games for long. But faced with his rival's rapid growth, Hainei added mini-games too. By then Kaixin001, online for barely more than a month, had already taken the market.

Mini-games later became a main source of revenue for the Chinese internet. Tencent, 360, NetEase, even the social app Momo all make money from games. Tencent in particular sells games to its QQ and WeChat users and has become the world's largest games company.

After losing to Kaixin001, Hainei grew very slowly. It quietly shut down along with Fanfou in July 2009. Fanfou's many users rallied on scattered social sites with calls of "Waiting for Fanfou"; Hainei's closure drew almost no attention. But that came later.

Fanfou: A Good Product, a Good Team, and Still It Hit a Wall

Fanfou, the microblogging site Wang Xing built, came back from the dead and survives to this day.

In 2008, as Hainei was losing ground, Wang Xing was surprised to find that Fanfou, which he had left alone, was doing quite well.

When this 140-character microblogging service launched in 2007, its concept was a little ahead of its time. Its open, free spirit won over some bloggers. But as with early Twitter, people did not yet know what to do with it, and 80% of the posts were scraps of daily life of no use to anyone else: what someone had for breakfast or dinner, plus a dash of wistful melancholy.

Fanfou in 2008

A year later, Fanfou had drawn a crowd of media figures, cultural celebrities and young students. You can still see them today among the recommended accounts in the right-hand column, though their last posts are frozen in 2009.

Like Twitter, Fanfou opened its API so users could write their own plug-ins. To this day, most of Fanfou's apps, for iPhone, Android, Windows Phone, WeChat and more, were built by its users. Users also invented playful features of their own: bots that @ people every day to say good morning and good night, "tree hole" bots for anonymous confessions, bots that announce the time on the hour...

The "Yufan" client, built by a Fanfou user

By early 2009 Fanfou had more than 1 million users, and some were willing to pay 50,000 yuan for a public account. Some internet news stories of the day were even sourced from 140-character Fanfou posts. Like Twitter, Fanfou was a good product that caught the industry's rising wave, and it changed how fast information moved in China.

But Fanfou could not get past the regulators. In July 2009 it was shut down. Wang Xing kept the team together, having them improve the product while waiting for the authorities to relent. The money was running out, and Wang Xing paid out of his own pocket to keep things going.

How loyal were Fanfou's users? After the forced shutdown, they scattered across internet forums and social sites, waiting for its return. On Douban a group called "I Love Fanfou" appeared, where users compiled a directory of Fanfou friends to stay in touch. Some even updated their Fanfou accounts by text message every day while the site was down.

On November 25, 2010, after 505 days offline, Fanfou finally returned. By then Sina Weibo, built on celebrities and verified big-name accounts, had been running for more than a year and dominated China's microblogging market. Wang Xing had started Fanfou early and got the product, the team and the timing right, yet a collision with policy cost it its best window for growth.

China's Largest Group-Buying Site

Meituan was the project Wang Xing started to keep his team from losing heart while they waited for Fanfou to come back.

At the end of 2009, as before, Wang Xing found a template for his new company: Groupon. The American group-buying site was hugely popular then. Users got discounts by buying together, and offline merchants got real customers in return.

After several months of tinkering, Meituan launched in March 2010. Chinese entrepreneurs had also learned to copy foreign models by then, and they moved fast. Lashou, Nuomi and others raised funding within two months of Meituan's launch, and group-buying sites sprang up everywhere, several hundred of them within a year.

Meituan

While rivals burned money on armies of street salespeople and on advertising, and even won more investment by expanding fast through sales agents, Wang Xing had not yet raised money and insisted on doing things in-house: hiring his own sales staff and visiting merchants one by one. Meituan moved slowly, too. Like early Groupon, it offered only one deal a day, but it vetted merchant quality and sent its traffic to one merchant at a time. Compared with sites that posted dozens of deals a day, Meituan's approach went down better with merchants.

His earlier ventures had made Wang Xing more "stingy." In its early days Meituan did not follow rivals into advertising unless an ad led directly to purchases. Rather than buy outdoor ads, it brought in traffic through partnerships with the group-buying directory Tuan800 and with hao123.

Wang Xing put the money saved on promotion into a "refund on expiry" guarantee for users and set out to build a reputation. At the 2011 TechCrunch conference, he shared the stage with another group-buying founder and said bluntly: "Only one group-buying company on this stage today will survive." He was right.

In this "war of a thousand group-buying sites," many did not survive, Lashou among them. After its US IPO failed in 2011, its market share quickly slipped to third place, and it faded away along with the many badly run sites whose cash ran out. According to Analysys' figures for China's group-buying market in the first half of 2015, Meituan, Dianping and Baidu Nuomi now hold a combined 95% market share.

And now, after the merger, Meituan and Dianping together control more than 80% of China's group-buying market.

By any measure, Wang Xing is a rare kind of tech entrepreneur. In 10 years he has built three fairly successful products: Xiaonei, Hainei and Fanfou. He has not yet made anything like Mark Zuckerberg's Facebook or Jack Dorsey's Twitter, but he spots new trends faster than anyone.

Starting a company, especially when the founder still builds the product, is grueling work. Asked whether he would ever start another company, Paul Graham, founder of the incubator Y Combinator, said: "I never want to do it again. Being an investor is so much easier than starting a company."

Yet Wang Xing, now on his fourth company, still watches the product as closely as a product manager, keeps up with the latest technology, and posts the day's observations on Fanfou every day.

A few days ago he wrote on his personal Fanfou account: "I've had my iPhone 6s for a week and haven't used 3D Touch once. It really does seem pointless. Its affordance is just too poor."