Miaopai founder Han Kun: “User-generated content has no value? How ridiculous”

“We want the people who make great content to make more of it — the 1% who create content serving the 99% who watch it.”

Han Kun founded a company called Yixia Technology in 2011, and in 2015 it raised 200 million yuan in a Series D round. Han announced the figure at the funding event and added that the company was now valued at more than US$1 billion.

The company has two main products: Miaopai and Xiaokaxiu. According to its official website, Miaopai has been installed more than 50 million times; users upload over 1 million videos a day, and videos are played 510 million times a day. Xiaokaxiu has more than 5 million daily active users and over 15 million registered users, and on one day last July it topped the App Store’s free-apps chart.

In short video, that is a good record. The social short-video apps that grew up alongside Miaopai — Blink, Miaoshi, Biu, Youyue and others — long ago sank below 500th place in the social-apps category and dropped out of public view. Weishi, built by the internet giant Tencent, has also been shut down.

Miaopai survived, and judging by its latest funding round and valuation, it is doing well. Chen Taifeng, the company’s vice president, thinks one big reason is that “Han Kun builds things with his feet on the ground. He reminds the team that when they design a product, they have to account for how much users like celebrity and comedy content.”

Lately Han has become a little obsessed with a livestreaming app called Periscope (Twitter bought the company in March 2015 for nearly US$100 million). On Periscope he found an American teaching in China who films his life there every day and shares it. “That’s more interesting than just telling a story with your voice. Besides learning, people need something else: fun,” Han said.

You will probably see a similar idea on Miaopai before long. Han’s gift is spotting whatever is most popular abroad, adapting it slightly and bringing it to China, where it quickly becomes more approachable. His office holds a one-wheeled bike with a handlebar, an automatic surveillance camera and a mini speaker. A colleague said: “Every time Apple releases a new MacBook, he buys one right away. He loves playing with new gadgets.”

Miaopai was born of the same habit. At first the company’s product was a video player called Yixia Video, but it never drew enough users. Han was also weighed down by the licensing and bandwidth costs of long-form video, and he hated being so short of money.

Liu Xinzheng, Han’s partner and now a senior executive at the company, calls Han a grassroots entrepreneur. He doesn’t approve spending with a flourish of the pen. He takes the budget sheet to Taobao and checks the price of every item. Han is more confident betting on things that have already been proven to work.

In 2013, short-video apps took off abroad. Six months after launch, Vine, Twitter’s short-video app, had passed 40 million registered users, and Vine videos had been shared more than 2.5 million times on Twitter.

That year Yixia Technology shifted its focus to Miaopai. It looked like a good business, but just before a Series B round planned for that September, a large investment firm pulled out at the last minute and left the company in a cash crunch. Han explained to QDaily: “They mistakenly believed that UGC — user-generated content — has no value. How ridiculous!”

Fortunately, not every investor thought that way. The size of Blink’s funding at the time, and the fanfare around it, showed the opposite.

Han took an investment from Sina, a deal he would bring up often in later years. As he told Caijing magazine: “We got our first users and promotional resources from Sina, and we helped Sina keep those users active. It was a win-win.”

The partnership with Sina Weibo did matter enormously to Miaopai. In August 2013, Miaopai was built into the Sina Weibo app, just six months after Twitter launched Vine. From then on it became clear how much social platforms mattered to short-video apps: there is almost no example of a stand-alone short-video app that has thrived.

Han even credits the Weibo partnership for Miaopai’s 10-second video limit: “People on Weibo usually post four photos; post five and it’s one too many. We compared file sizes after compression, and 10 seconds of video comes out to about the size of 10 photos. That way users don’t have to worry much about their data plan, and uploads are fast.”

With Sina’s traffic behind it, Han’s Miaopai, Tencent’s Weishi and Meitu’s Meipai became the leaders in short video. According to the app-analytics firm App Annie, Miaopai climbed from around 1,000th place to the top five in the App Store’s Photo & Video downloads ranking after that August.

Much of that was thanks to the celebrities Weibo brought. Step into Han’s office and the first thing you see is a wall covered with photos of stars. In the middle, in pride of place, are Ren Quan, Li Bingbing, Huang Xiaoming and Huang Bo — all members of the investment firm StarVC, which has invested in the company. In the Series D round just completed, YG, one of South Korea’s three biggest entertainment companies, also invested.

The celebrities brought users and traffic, and Weibo supplied splash-screen ads and promoted top-of-feed posts in exchange. The partnership did not cost Miaopai a single yuan, which Han is proud of. But the money was there, hidden in the two companies’ commitments to each other: a promoted post for an influencer with 20 to 30 million followers costs at least 200,000 to 300,000 yuan each time, and a Weibo splash-screen ad costs 900,000 yuan a day.

Han now seems to have an understanding with the entertainment industry: most film and TV promotion campaigns come to Miaopai and Xiaokaxiu. Last year Da Peng, director of the hit film Jian Bing Man; Xu Zheng, director of Lost in Hong Kong; and the actress Yuan Shanshan all made videos on Miaopai and Xiaokaxiu. Han said that this year the two apps will start charging for film and TV promotion.

Celebrities also took part in one of the most important marketing events in Miaopai’s history: the Ice Bucket Challenge. In August 2014, Miaopai’s team came across the Ice Bucket Challenge videos spreading abroad. Participants posted videos of themselves being drenched in ice water and named friends to go next; those named had 24 hours to take the challenge or donate US$100 to fight amyotrophic lateral sclerosis (ALS).

Inspired once again, the team recruited a number of big-name Weibo users and invited them to film and post their challenges with Miaopai. Miaopai also changed the rules to make it look more like a charity cause stars would be glad to join: for every person who took the challenge and posted the video with Miaopai, Miaopai would donate 300 yuan.

In the end, the celebrity-driven campaign brought in 20 million users and 5.1 billion plays, and Miaopai shot to No. 1 in the App Store’s Photo & Video downloads ranking. Until then its rival Meipai had been more popular. Meipai’s first-rate filters, effects and music made users keener to share, its video quality was the sharpest of any short-video app, and it was tuned for different network conditions.

Han believes the Ice Bucket Challenge taught another lesson: users in China don’t like anything too complicated to operate, and “watching” is what they mainly want. “If something is distinctive and catchy enough, users will use it. But once they get bored, they stop,” he said. The team began running themed campaigns on Miaopai, such as “Shoot on the Go,” “Flying Red Envelopes” and “Travel with Weibo.”

These campaigns worked well, but probably none as well as Xiaokaxiu, a hit app launched in May 2015. Xiaokaxiu was modeled on the German app Dubsmash. Users pick an audio clip from a sound library, follow the on-screen subtitles and lip-sync with exaggerated gestures to make a funny video.

On July 27, 2015, Han celebrated on Weibo: “Today is a historic day — Xiaokaxiu has reached No. 1 on the App Store!” In the same post he said Xiaokaxiu had reached 8 million downloads in two months. App Store data showed that in roughly 70 days after launch, Xiaokaxiu had collected more than 12,000 reviews and over 1 million daily active users.

Xiaokaxiu is still popular, but App Annie data show that since last September its download ranking has been sliding, with ups and downs along the way. The problem Han once worried about has come back: if something is distinctive and catchy enough, users will use it — but once they get bored, they stop.

“Innovation is a big part of what we do,” Han said. The answer may lie in a new product: livestreaming. Han plans to spend the Series D money developing it. Young people love real-time interaction, after all; besides Twitter, even Google is quietly building an app called YouTube Connect that adds livestreaming to its video service.

Han must know that Meerkat, the pioneer of mobile livestreaming, has already failed. No one has yet shown how to succeed in this market, probably because livestreaming asks more of the people making content, while what most people expect when they open these apps is “showroom-style streams — a lot of people open them just to look at pretty girls.”

To Han, that is nowhere near enough. “I want livestreaming of everyday life. I want everyone to be able to find something that interests them and to interact and talk with each other.” Like Periscope, the app he has been so taken with lately. Periscope, unfortunately, has not done especially well either.

Investors’ latest advice to Han is to give users incentives. “If a lot of people become famous on Xiaokaxiu and get signed by talent agencies, people will work hard at making videos,” Han said, passing the advice on. So he also plans to put some of the money into managing and marketing internet celebrities.

Sina is again among Yixia Technology’s investors in the new round. The big company also provides Han’s team with backup bandwidth, and when traffic outgrows what the team can handle, Weibo sends engineers over in the middle of the night to help.

For now, Han still spends most of his energy on the product. Yixia Technology keeps an internal ranking of how much each employee uses its apps. “I often see his name near the top,” Liu Xinzheng said. But in Liu’s view, at this stage Han ought to be paying more attention to outside partnerships.

Below, Q = QDaily, H = Han Kun

Q: The company has moved to a new office in Wangjing. What will change?

H: Two things. First, we have a little over 200 people now, and we’re going to hire — headcount will grow by 30 percent, mainly in technology and marketing. Second, we want to build innovative products. Right now we have Miaopai and Xiaokaxiu, and next we want to invest more heavily in livestreaming. Our revenue has had no trouble covering the company’s own costs. But now we want the people on Miaopai and Xiaokaxiu to grow faster, one by one, and to build up the whole influencer economy.

Q: Why livestreaming?

H: When we started on short video, everyone said it didn’t matter much. Then in 2014 and 2015 the short-video industry exploded. That was our read on where the industry was going. Livestreaming, we think, is another form of presenting content.

Q: What do you make of the livestreaming products on the market now?

H: Right now there are showroom-style streams — a lot of people open them just to see whether the girls are pretty. That’s not what we want. What we want is: say there’s a bicycle and other people can’t ride it, so I film a video teaching everyone how. How can I show other people the fun things I come across, and tell them about it.

Q: How do you see the business model for video companies?

H: When we did long-form video, we could never make a profit. Half our costs were licensing, 30 percent were servers and bandwidth, and the tech investment was large too. But we also saw how much revenue Youku and iQiyi bring in — more than US$1 billion a year. With short video, our licensing costs fell to zero. So we don’t need to say much to investors on that point. When we meet investors, what we need to tell them is how big the market is; as long as the outlook and the market are good, everything else can be worked out. Video, especially short video, has a natural advantage for advertising, but it will differ from traditional video sites. Overall, video, and short video in particular, can make money in a great many ways.

Q: What stages has Miaopai’s user growth gone through?

H: At the end of 2012, the media were using Miaopai. Journalists have opinions and influence; they draw attention. They used it because it did something they needed: what they shot went straight onto Sina’s homepage. In 2012 the big media outlets started building new-media sites, and we helped them post and review content. Lots of media outlets still use Miaopai.

In December 2013, ordinary users arrived in large numbers. Before then there was no length limit; that’s when we set it at 10 seconds. In May 2014, the Ice Bucket Challenge marketing campaign gave us users who stayed.

Q: How did you build user habits along the way?

H: We stressed that users could shoot great-looking videos. Plenty of people did use it, but we found they didn’t use it often. To get them to use it more, there first has to be a need. After studying it, we found users mostly want two things, shooting and watching, and watching matters most. So we brought in lots of skilled creators to shoot good-looking content, so users could see something different every day. That was how we changed from making a tool to running a media platform. If we had stuck with being a tool, I might not be here at all — we’d have died long ago.

Q: Why do you think short-video apps never really took off in China?

H: Our platform is the largest short-video platform in China. If you say short video never took off in China, are you saying we never took off?

We’re still growing our user base, and as a platform we’ll discover more people. For example, a lot of people have become famous on Xiaokaxiu and signed with talent agencies. Everyone will work toward that, and they’ll be more motivated to create. Besides running the product, we also manage our creators. We want to develop a whole lineup of internet celebrities. We want the people who make great content to make more of it — the 1% who create content serving the 99% who watch it.

Q: You got into the internet very early. How did your time at Sohu and Ku6 shape how you founded this company?

H: The early internet was very different from today. Back then everyone wanted to build a portal; they were adding things. With mobile internet now, most users were born in the 1990s, and everyone is trying to take things away. That takes some adjusting to.

Cover image and in-article images: Papi Jiang’s Weibo, Fast Company, Yixia Technology, Miaopai’s Weibo