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Ex-Googler turns mum's money into a billion dollars on Amazon
AFTER Steven Yang left his coveted job at Google, he asked his mother whether he should take venture capital money to fund his business idea.
If his online consumer electronics enterprise was a risky bet, she told him, go with the venture capitalists. But if building the business into something great was his destiny, he instead should use her money from a pharmaceutical career in China.
So Mr Yang combined his Google money with his mum's, and with less than US$1 million in seed capital he moved from California to Shenzhen, a hub in southern China for technology companies. Seven years later, Anker Innovations Technology Co sells products ranging from smartphone chargers to portable power banks on Amazon.com. And it is getting even bigger after recently reaching a deal to put products in almost 4,000 Walmart and 900 Best Buy stores in the US.
Recent trades on China's over-the-counter New Third Board market valued Anker at about US$1.1 billion. Mr Yang, 36, and his wife have a combined stake of about 54 per cent, according to a Bloomberg analysis of the company's first-quarter report for 2018.
Anker offers chargers that are alternatives to those from companies such as Samsung Electronics Co or Apple Inc and come with proprietary PowerIQ technology, which detects each phone's maximum wattage to help minimise charging times. Mr Yang also has branched out into just about every other smartphone-related gadget, including cables, headphones and wireless charging pads.
He is also making household products such as robotic vacuums under the Eufy brand. "We really put a lot of love, and hate, into our products," he said, referencing the year-long tedium of shrinking the vacuum robot down to 7.2 cm in height so that it could fit under couches.
As smartphone maker Xiaomi Corp prepares for a Hong Kong initial public offering (IPO), Mr Yang figured that the timing may be right for him, too. He is studying the possibility of going public in China, Japan, Hong Kong or the US.
If he decides to proceed, he could have his work cut out for him. As at early May, two-thirds of the 21 China tech IPOs in the past year were below their issue price. Xiaomi had been targeting an eye-popping US$100 billion valuation for its debut, but now is eyeing US$60-70 billion, people familiar with the matter told Bloomberg earlier this month.
Mr Yang has taken on several funding rounds over the years, and investors are coming knocking again. Jumei International Holding Ltd, a US-listed Chinese beauty e-commerce firm, bought a 60 per cent stake in Anker's powerbank-rental unit last year for 300 million yuan (S$63.2 million).
Anker's revenue surged 56 per cent in 2017 to 3.9 billion yuan, and profit grew 9.9 per cent to 356 million yuan, according to its annual report. It has offices in Seattle, Dubai, Tokyo, Shenzhen and Changsha, China, according to its website. Almost half of its revenue comes from the US, but China sales doubled last year.
Like many China tech companies, Anker is also following President Xi Jinping's goal of making the nation a leader in developing artificial intelligence, and it has a lab for developing facial recognition for security purposes.
Its expansion has come as Mr Yang seized opportunities created by gaps in the technology industry. In the smartphone business, he targeted the opening between Apple's expensive chargers and low-quality, white-label replacements.
Anker occupies the space between five-star and three-star Amazon reviews (most Anker products have about four). That is Mr Yang's sweet spot, where he creates an accessory that is not the most expensive but still is of good-enough quality to win consumer trust.
This also means that his brands must contend with fierce competition online.
"Selling via Amazon is absolutely still a viable strategy for smaller brands," said Benjamin Cavender, analyst at China Market Research Group. "However, Amazon is increasingly selling its own brand products via its marketplace, which means that smaller companies need to be very aggressive about providing good products and service at attractive price points."
These days, Mr Yang is also hoping that tensions over a trade war between China and the US do not escalate. Nearby is the Shenzhen campus of telecommunications giant ZTE Corp, which had to shut major operations after a Trump administration ban on its ability to buy US technology. Mr Trump earlier this month tweeted that he was working on a way to get ZTE back into business.
One of Anker's great advantages is that it is embedded with the supply chain in Shenzhen. The city was a fishing village just four decades ago, until Communist Party Chairman Deng Xiaoping turned it into the country's first Special Economic Zone as part of China's economic opening.
It blossomed into the world's electronics manufacturing hub, with the vast majority of consumer electronics produced there. It is now evolving again as entrepreneurs like Mr Yang follow big names Tencent Holdings Ltd to Huawei Technologies Co in setting up shop.
Mr Yang recruits from a large talent pool in Shenzhen, and he has hired some fellow ex-Googlers: the former China sales head and two product developers. BLOOMBERG