Everyone Is Pointing Fingers at Acfun — What Did It Actually Do Wrong?

For a company, professionalization may be more urgent than commercialization, and the passionate Acfun is no exception.

Everyone involved is full of grievance and complaint. Every bystander now seems to have promoted themselves to investor, pointing fingers.

In a little over ten days, Acfun turns nine. On June 6, 2007, a user with the ID Acg_xilin put the site called Acfun in front of the world for the first time; it is one of the earliest bullet-comment video sites in China still alive today.

What Acfun is showing the world right now, though, looks more like a mess. Nothing about it suggests that this January the company closed a US$60 million funding round led by SoftBank.

An “Accident” Hit Acfun — Why Did It Crumble So Easily?

One of China’s best-known bullet-comment video sites appears to have been hit by an “accident.” That in itself is no surprise; the fragility it then revealed is the problem. The accident was a question posted on Zhihu on the night of May 18, which soon turned into a public topic. The question was clearly premeditated: Are the rumors of mass layoffs at Acfun and Bilibili true?

The news that Bilibili’s travel-project team had been cut quickly got an official explanation. Acfun was not so lucky. Complaints about the Acfun app’s user experience were dragged out one by one and picked over: black screens, crashes, failed video caching, data quietly draining in the background, terrible stability. After the most recent update, all of it seems to still be there.

The UI design that has been criticized since the site’s birth did not escape either. For years its interface was notorious for being unfriendly: at first, all text and no video thumbnails, so it hardly looked like a video site at all; in early 2012 it finally added some images, followed by a string of redesigns; and only from last year did it gradually fix the shortage of recommendation slots and the clutter on its secondary pages. Even now, the player’s bullet-comment settings and filters still lag behind Bilibili’s, never mind the bugs that keep surfacing on the site.

The critics’ answers spoke for experiences many users share. Criticism from insiders, though, exposed how badly the company is run. Once Wang Wei, the head of operations, stepped in to answer questions himself, more complaints and more inside detail followed: departments feuding, staff leaving in waves, a management team that listens to no one.

Insiders interviewed by QDaily confirmed that these problems exist. Before Acfun moved from Wuhan to Wangjing in Beijing in March 2015, the company had never had a clear division of labor: PR, operations, and finance were all jumbled together. Even after the move to Beijing, departments still worked badly with one another. “Xierruisi Lamy” (a pseudonym) spent three months at Acfun in the middle of last year and left somewhat disappointed. He was in charge of content operations and editing.

“I wanted to help an up (an uploader) get a video recommended, but the editorial-operations people said it couldn’t be done. They said they were under pressure to hit their KPIs.” The site also had too few recommendation slots to begin with, so ties with many uploaders eventually went cold and they left for other platforms. On top of that, a large amount of data from old videos vanished through several site overhauls, leaving videos that had once been hits with a few hundred or a few thousand views.

A moderately well-known up himself, “Xierruisi Lamy” knew exactly how much this mattered to Acfun: “For a video site to have viewers, it needs content. For it to have content, it needs uploaders.”

Acfun’s positioning is murkier still. Bilibili can at least say it is driven by new anime episodes and aimed at young people who love ACG — anime, comics, and games — even if some people would call those users elementary schoolers and wannabe otaku. Acfun, by putting its Entertainment section above its New Anime section on the homepage, shows that a site built on the strength of “Anime Comic Fun” has gradually surrendered the advantages it started with. On this month’s overall Acfun ranking, aside from SNH48’s self-produced show Girls Weekly (《周刊少女》) and one kuso remix video, nothing counts as ACG; Korean dramas and TVB series fill the rest. There isn’t even a separate chart for the New Anime section.

“Acfun now even looks a bit like some new site chasing the ACG trend,” says morizane. He has used Acfun since 2009 and watched that bare-bones site climb, step by step, to where it is today. Recently he happened to join a WeChat group of VPs who invest in ACG products, and there he found that Acfun increasingly looks no different from the startups that force an ACG angle onto whatever they are building.

So while the rest of us argue about whether Bilibili has over-commercialized, Acfun is still stuck at the question of whether it has professionalized at all: whether it has a product with reasonably complete features, whether it has a stable team with clear responsibilities, whether it has a clear position.

Is every startup this hard, or is Acfun a special case?

What Does Nine Years Mean for a Company?

How did nine years turn Acfun, which should have been the front-runner, into this?

Nine years ago, the iPhone Steve Jobs had announced was not yet on sale, and Google had only just launched Android. In China, Lei Jun had finally quit as CEO and president of Kingsoft and was starting his second company; today the question this industry talks about most is whether the smartphone business has really gone into decline. Nine years ago, too, Alibaba listed in Hong Kong, when it was still an internet company built on an unproven B2B e-commerce idea, nothing like what it is now.

As for bullet-comment sites, Niconico, the Japanese original, had gone online only a little more than half a year earlier. And Bilibili, the bullet-comment site that would later break away from Acfun, was nowhere to be found.

Nine years on, leaving the giants aside, Niconico has become a company with a complete business model: paid membership, advertising, point sales, and all kinds of merchandise retail and offline business. Bilibili passed Acfun in Alexa’s traffic rankings in early 2012 and is now the 29th most visited site in China. Last week it finally spun out its first related commercial project, Bilibiliyoo, as a separate company to raise money, and this July it will hold the biggest BML offline concert in its history.

Time matters enormously in building a company. Wasted time is a different problem altogether.

Wang Wei, the Acfun operations chief who answered questions on Zhihu himself, holds another title: executive deputy head of the “Project A team.” That group, headed by CEO Mo Ran, is defined as “comprehensively coordinating and leading the company’s product, operations, technology, marketing, and business.”

Mo Ran and Wang Wei: outsiders can barely work out which generation of management this pairing is meant to be.

In 2010, Xilin sold the Acfun he had built single-handedly for around 4 million yuan and washed his hands of it. That was Acfun’s best and most chaotic moment at once. In February it had made its name with the first Acfun Spring Festival Gala; by the second half of the year it was drowning in malicious spam from paid posters. At the same time, unstable servers, slow content review, and a chaotic homepage all peaked — and a great many users moved to Bilibili.

Chen Shaojie, who bought Acfun, went on to incubate what became China’s best-known game-streaming platform: Douyu. It began as Acfun Live, was renamed Douyu on January 1, 2014, and finally severed its ties with Acfun. This game-streaming service, built at first on Acfun’s traffic, ended up far bigger than Acfun itself.

In these years Acfun let slip opportunities it should have held onto. In 2012 it staged China’s first large offline themed event organized by a video site, Otaku Assembly, inviting the hugely popular voice actor Ge Ping and a number of popular uploaders for meet-and-greets and performances. Acfun started a year before Bilibili’s equivalent, BML, and on a larger scale.

Today BML is Bilibili’s signature business, growing from 800 people in 2013 to nearly ten thousand in 2015. This year it went all out on promotion and moved the show to the Mercedes-Benz Arena in Shanghai; main-venue tickets sold out four days after going on sale. In Japan, Niconico’s offline events have become a major part of its business and a direction for its future: more than 150,000 people attended its 2015 Chokaigi.

Acfun’s Otaku Assembly, meanwhile, stopped after the second edition in 2013. In early 2014 Chen Shaojie left, taking Douyu, the platform he had incubated inside Acfun, and sold the company to the legendary Yang Xinmiao. From then on you could not find a trace of Acfun anywhere on Douyu. That April, Saimen — the former site head (in fact the marketing manager), who handled everything front-facing — left Acfun, saying his views clashed with the investors’.

We can stop the account of Acfun’s management turnover there, because everything after that comes down to one sentence: a constant rotation of investors and managers never again gave Acfun a team that could both execute and understand the business. Not Yang Xinmiao, not Alpha Group, not Youku Tudou after them.

Nine years is plenty of time to build a stable management team.

The business journalist Adam Lashinsky, taking stock of Apple, pointed out something few people know: the company that looked as if it ran on Steve Jobs’s whims was extraordinarily stable. When Jobs stepped down as CEO, every member of the executive team except the general counsel and the CFO had been at Apple since at least 2000.

The constant churn in Acfun’s team has left its product improving more slowly than anyone would like. At the very least, the Zhihu argument about infighting handed everyone who complained about the stuttering app, the black-screen videos, and the steadily duller content a reason for it. morizane says that after he learned all this, opening Acfun left him cold, and his hopes of those bad experiences ever being fixed dropped too. It wasn’t only the product that had problems; the people behind it did too.

For a Company, Professionalization May Be More Urgent Than Commercialization — Acfun Is No Exception

“Acfun is a special case…” an Acfun executive said at the other end of the phone.

Whenever people talk about Acfun, they stress that one special quality: passion.

The subtext is that passion may have made Acfun’s rise possible, and has also blocked the company’s path to normal growth.

It really did begin as a site run on personal interest and volunteers. Unlike Niconico, founded from the start by the Japanese entertainment and media company Dwango, Acfun began as the personal website of its founder, Acg_Xilin. At first a few administrators reviewed videos in a QQ group, and the whole thing ran on fans’ enthusiasm and love for the site. You can imagine how slowly the product moved.

They understood anime, they understood otaku life, they understood ACG. They never worked out what it would take to make Acfun a successful company. Niconico and Bilibili, by contrast, were headed for commercialization from the beginning: Niconico introduced paid membership as early as 2007, and Bilibili was accused in its early days of doing whatever it took to win users — which, in its product and interface, meant iterating extremely fast toward being easier to use.

This small-clique thinking shaped Acfun’s atmosphere and gradually hardened, showing up to outsiders as exclusion. As the first generation of users grew older and few new ones arrived, the mainstream content on Acfun gradually shed the young ACG spirit it once had.

On a site run like a small clique, there were people resisting the company’s commercialization until very recently. A former Acfun employee who left this year said that among the veteran staff who came over from Wuhan last year, some still thought: “Why does Acfun need to get big? Why does Acfun need to run as a business?” He wanted his pseudonym to be “Acfun Yaowan” (“Acfun is doomed”), yet speaking about the site where he had worked for more than a year, he preferred to describe his feelings as “angry at its lack of fight, grieving its misfortune.”

That phrase probably captures how most of Acfun’s old fans feel about the site. On Zhihu, in Acfun’s own article section, and on various anime forums, you can find plenty of users who refuse to leave. They know Acfun’s sorry state better than anyone and can do nothing about it. Angry at its lack of fight, because they watch a group of people content with the small, insular thing Acfun used to be; grieving its misfortune, because the endlessly changing investors and managers behind it have left a place that never had much of a corporate gene even more stuck.

That special quality has made it hard for one generation of managers after another — and it must be said they were not short on passion for ACG themselves — to focus on turning the company into a professional one.

Managing this “passion,” the passion of the fans and of employees who work on passion alone, tests any manager. This time the loudest criticism again came from employees pushing back internally. They see themselves as the people who should be fixing Acfun’s problems: how to deal with the lack of new users, how to improve the experience, which projects the money should go to, and, most important, how content and operations at Acfun should be run.

The best answer, of course, would be for Acfun to hire someone who can both raise money and run a company, and who can bring the two camps together.

For Niconico, that person was Nobuo Kawakami. Having founded the entertainment and communications company Dwango single-handedly and led the development of Niconico, he naturally knew the rules of business. And he was not only the inventor of the bullet-comment site; he stuck with it. After Niconico was forced to stop hotlinking YouTube videos in 2007, he kept it running, set up his own bandwidth servers, and negotiated with rights holders. At the hardest moments, it never occurred to him to simply sell Niconico off. Nor is there any reason to doubt his love for the culture: he studied animation under Studio Ghibli’s Toshio Suzuki, and Evangelion director Hideaki Anno officiated at his wedding.

For Bilibili, that person may be Chen Rui. After he and the capital behind him moved forcefully into Bilibili in 2014, he quickly became the company’s most important window on the outside world. He knows how to explain Bilibili’s position, its view of its users, and its various moves: in the latest flap over why Bilibili ended up with pre-roll ads, his performance and crisis-management skills were excellent. As a veteran of the internet industry, he certainly knows where to put money and where to get it — he was one of Bilibili’s earliest investors.

Acfun has yet to find such a person, or rather, no one there has yet established that standing.

Interviewed by QDaily in late March 2016, CEO Mo Ran still admitted that bringing together the people at Acfun who understand capital and the people who understand the ACG industry remains an important and thorny problem.

He took the simplest and fastest way out. If everyone, investors included, agreed this was Acfun’s weak spot, then all they had to do was go and find someone who fit the picture.

That is when Wang Wei appeared.

Wang Wei has his own company, Banciyuan, also built around an ACG creator community, which gives him every label required to run an ACG site. Perhaps he really can solve that whole string of problems: pin down Acfun’s position, improve the product, bring in more users.

Even if he can’t, he can at least give investors something to hope for. In the end, success will be measured by whether he can land Acfun’s next round, or stable funding in the future.

But Mo Ran may have overlooked what users and employees fear. They all know how Douyu was incubated inside Acfun and then walked out, so Wang Wei’s Banciyuan background naturally makes him less credible.

This looks like a closed loop. Use funding to prove you can run the company, then run into a series of problems along the way: layoffs that fail to win people over, layoffs that breed distrust, distrust that makes it impossible to win people over; then the management is replaced; then a new round of funding is used to prove the company is running fine.

The problems that actually have to be solved to become a properly run company always come second.

A new round of funding starts in July.

They are picking their investors now. Acfun holds “ACG,” or “pan-ACG,” the buzzword this market’s capital is chasing, so this “accident” will be a small squall that soon blows over.

“Do you think all the bad news is priced in now?”

The executive at the other end of the phone thought the phrase fit Acfun’s situation perfectly.

That should be enough to shut up everyone outside who doubts Acfun.