A company that got famous on stickers can't live on stickers alone. So what business is it in?

Beyond WeChat sticker battles, cute, snarky, over-the-top stickers may yet find other ways into people's lives.

You've probably never heard of Shi'er Dong Culture, but there's a good chance you've used a sticker it made.

Take Sprout Dumpling, a round white blob with two leaves growing out of its head; Little Zombie, with a yellow paper talisman stuck to its forehead; Torn-Ear Rabbit, missing a chunk of its left ear; or Cooling Girl, dark-skinned and perpetually about to lose it. These soft, squishy characters turn up constantly in WeChat's sticker library. Good morning, good night, needling a friend, or just pulling a sour face at someone — there's a sticker for it, and it says exactly what you mean.

At the entrance to Shi'er Dong Culture's office, all these original soft, squishy characters are piled together, with the number "12" — the company's shorthand — wedged into every gap, and beside it the words "Hello Friends!!" In March this year the company closed a 25-million-yuan Series A round led by Legend Capital. Figures released at the time put total downloads of Shi'er Dong's stickers at more than 800 million, and sends at more than 22 billion.

Shi'er Dong got into the sticker business by accident. Its best-known stickers today are Sprout Dumpling and Cooling Girl — also the first two characters it ever released.

In 2012, with Weibo at its peak, Wang Biao — who was planning to start an internet business — began dabbling in self-run media accounts. By 2013 he was thick with a crowd of illustrators and joke writers who reposted each other's material to build followings.

The creator of Cooling Girl was in that circle. On nights when she had a comic strip to post, Wang and his friends would spend the afternoon helping her work out the script, then watch the numbers together once it went up on Weibo. A hundred reposts in the first few minutes and Wang would be elated.

Also in 2013, Wang came across another character on Weibo: a small white dumpling with grass sprouting from its head, showing only half its face. Simple lines, and adorable. The artist behind this "sprouting figure," Liu Jingjing, was still in high school, posting comics on Weibo to a following of just over 2,000. Wang sensed even then that characters like these had value in them. "But how to draw that value out, which direction to take it — that wasn't clear."

Not until 2014 did Wang decide that these entertaining characters answered a real market demand. He teamed up with several KOLs to found Shi'er Dong Studio in Taiyuan, Shanxi, and signed the creators of Cooling Girl and Sprout Dumpling. As he saw it, "On mobile, demand keeps growing for characters that work as symbols, that leave room for people to spread and build on them, and that carry a bit of cute or bratty personality." Cartoon characters with strong internet personalities were beginning to show up on Weibo then, but there weren't many, and they weren't very good.

At first Shi'er Dong wasn't making stickers at all. The original characters it drew became Weibo illustrations and profile pictures, distributed mainly through image platforms — Weibo, Baidu, Sogou, Huaban, Duitang — and drew little attention. The studio did try a handful of stickers on QQ and the Sogou Input Method, but the characters hadn't yet caught on the way they since have, and Shi'er Dong kept itself going mostly on Weibo reposts and online promotional advertising.

That changed in 2015, when WeChat opened its sticker store and invited 10 character groups from around the country to join. Sprout Dumpling and Cooling Girl were two of them. Between August 2015 and May 4, 2016, Shi'er Dong uploaded 17 sticker packs to WeChat; Sprout Dumpling, Cooling Girl, Torn-Ear Rabbit, Proper Person, Rui Xiaotu and Zhu Xiaoheng were all picked for WeChat's featured collection.

There are now 11 sticker packs built around Sprout Dumpling, sent more than 18 billion times — the first sticker on WeChat to pass 10 billion. And before the sticker store formally opened, Cooling Girl's kneeling "Thank you, boss" sticker was already circulating among users: 5 billion sends on its own, the most-sent single sticker of 2015.

Only about 30 of Shi'er Dong Culture's 130-odd employees work on stickers. "We're not a sticker company," founder Wang Biao told QDaily.

The revenue says he's right. Sticker money usually comes from paid downloads in the WeChat store and tips users leave voluntarily. Wang says Shi'er Dong takes in more tips than any other sticker producer on WeChat, and even so its total sticker revenue over all these years is only about 1 million yuan — less than one month of payroll. "Next to what we've put in, it's nothing."

Most of Shi'er Dong's annual revenue — in the tens of millions of yuan — comes instead from merchandise built on characters like Sprout Dumpling, and from licensing those characters to other brands.

In 2015 Shi'er Dong approached the contract manufacturers that make goods for Disney and Sanrio and began licensing its characters for merchandise. Four companies run the business between them: the Beijing entity creates and promotes the IP, the Shanghai entity negotiates licensing deals, the Guangzhou entity handles product development and design, and the Shanxi entity runs e-commerce.

Offline it still has no stores of its own and sells mostly at places like anime conventions. On Taobao it runs four official shops, stocking not just plush dolls but phone cases, stickers, cups and umbrellas. In the BUDDINGPOP flagship store on Tmall, the best sellers are a Little Zombie keychain and a Little Zombie air-conditioning blanket, moving roughly 3,400 and 1,800 units a month; most other merchandise moves around 300 a month, at prices from 5 to 398 yuan.

Shi'er Dong has also licensed its characters to China Guangfa Bank, Wanda Plaza, Chow Tai Fook and Want Want, putting them on bank cards and into shopping malls, and even onto gold and jewelry and product packaging. They have turned up on a few variety shows as well.

In principle, creating characters like these and making money from merchandise and licensing is a workable business. Sanrio, the Japanese company founded in 1960, does exactly that. On the strength of Hello Kitty, Cinnamoroll, Pompompurin and Gudetama, Sanrio booked 62.6 billion yen in revenue in fiscal 2016 — about 3.7 billion yuan.

Wang calls the strategy character IP development. Shi'er Dong is plainly a long way from being Sanrio. For sales it can only lean on Taobao, while Sanrio has its own chain of stores. China's licensing industry is loosely regulated, which makes licensing characters to other brands harder here than it is for Sanrio. And then there are the fakes: search Taobao and knockoff Sprout Dumpling and Little Zombie goods still come up by the handful, some selling thousands of units a month.

More urgent than any of that, though, is finding a way to keep turning out popular new characters and keep them hot. Look at how the company started: Wang found and signed both Sprout Dumpling and Cooling Girl on Weibo. That is a risky way to work. Shi'er Dong needs a steady mechanism for making new things.

Sanrio has been burned here before. In the late 1970s Hello Kitty cooled off and sales of related products fell. Sanrio responded by licensing her harder; for a while Hello Kitty appeared not only on the usual stationery but on telephones, watches, cameras and toasters. A Hello Kitty digital watch set a Japanese sales record in 1981 at a million units.

After that Sanrio put more into character design and development. Today its employees and designers are each required to design one character a month on their own; the designs go through rounds of internal elimination, then get tested on a small scale as stickers and stationery, and those results decide what happens to each character next.

There are also occasional internal design competitions. One year the theme was characters derived from food, and a designer named Amy, looking at an egg over breakfast one morning, came up with Gudetama. In a recent Sanrio Character Ranking, Gudetama finished fourth among the most popular characters.

Shi'er Dong runs something similar. It is careful from the start about which creators and which characters it takes on. Once new hires arrive, it holds all kinds of discussion sessions to pass along what the company means by "good," and lets people build their own goofy-cute or over-the-top styles on top of that.

Wang thinks a shared consensus is one way through the problem. "Style is really perception. If people's perceptions aren't on the same level, neither are the styles that come out. If everyone agrees that this much is good and this much falls a little short, then you can guarantee that everything clears a certain bar."

Before a creator starts on a new character, Shi'er Dong also lays out rough requirements. "Early on we set the direction and the creator produces the work," Wang said. "We give creators a lot of freedom — the creator is the soul of a character — but we give them a general direction, whether we want to fill out the lineup with a male or a female character, and a few rough ideas."

Most of those rough ideas come out of how Shi'er Dong divides up its audience and what each slice likes. Sprout Dumpling's job is to be cute; Wang believes everyone is drawn to cuteness by instinct. Little Zombie carries a lot of feeling about raising something, about brothers and friends. In short: "Every character has a cultural calculation behind it."

The character Wang most likes to talk about is Cooling Girl. To him she is a send-up of diaosi (loser) culture, built on the premise that everyone has a loser girl like this somewhere in their life. She loves eating, loves sleeping, pranks people, is a little bit bad, can't hide how much she worships money and good food — but she has a good heart, dotes on stray cats and dogs, and is a good kid underneath. "She's like the kids born after 1995 or 2000: they love games and good food, they'll get on their knees and call you daddy for money, and the moment something upsets them they blow up."

Cooling Girl's most popular sticker has her holding a red envelope, on her knees, kowtowing over and over and thanking the boss. Shi'er Dong built a spoof product line off it called Money Blinds the Eyes: sunglasses whose lenses are two coins; a phone case that looks like a stack of US dollars; a "Cooling Coin," a mock dollar bill with the portrait swapped for Cooling Girl's face; and notepads made to look like a brick of banknotes.

All of it seems to chime with the mood among young people now. Sweet and cute is out; lazy, dark, goofy-cute-and-snarky is in — Gudetama, Rilakkuma, BoJack Horseman, Kumamon.

Even after a character is fully formed, Shi'er Dong keeps adjusting it. Cooling Girl didn't start out looking the way she does; the little red flower on her head and her present darker skin tone were both later changes. Wang thinks the current tone looks "a bit better" than the brownish one it replaced.

Plenty of famous cartoon characters have gone through the same thing. Today's Pikachu is much slimmer than the Pikachu of twenty years ago, and the animated Detective Conan has grown paler. In 2003 Sanrio brought in the designer Shiro Nakano to redraw Hello Kitty: the black outlines came off, and the angle of the eyes was adjusted to give her more expression.

So cultivating new creators and new characters is another thing Shi'er Dong has to keep doing. It currently has dozens of exclusive creators and around 100 cartoon characters, each one designed and produced by a dedicated team, run through a standardized, assembly-line process.

Wang compares the setup to running a restaurant. "We care more about where the ingredients come from, how they become a dish, who carries it to the table, what the customer's experience is like, whether paying the bill is painless — not about selling one particular dish, where if people don't like it we just swap in another. It's the solo creator living off a single trick who goes stale faster. What kind of restaurant you build matters far more than getting one dish right."

This year's breakout at Shi'er Dong is Marmot, drawn by @Shanyaogon, who also created Proper Person. The new character has two enormous bulging cheeks, and it arrives not as stickers but as short video. In a one-minute video called "Going to the Bathroom," Marmot sits on the toilet reading the instructions on the back of a shampoo bottle — which struck a nerve with a lot of people online. "Haha, that's me!!! I've even read the toilet cleaner," one wrote. The video has close to 80,000 reposts on Weibo so far.

Wang is pleased with that. Having previously tried starting companies in social products, tea restaurants and medical devices, he believes he has finally found the right road. "IP is the wellspring of pan-entertainment; culture can cut straight through the boundaries between people. Folding culture into industry is one of the simpler ways to get something done in a time like this."

Cover image from Google; in-body images from Weibo.