An Interview with Native Systems

Written By Daniel on August 27, 2007 at 5:03 am | In internet, Olympics, society, 3G, mapping, connecting, mobility, China

Overview

Navigating large cities is often troublesome, especially cities in foreign countries that use non-Roman characters. There are an estimated 300,000 expatriates living in Beijing, and over four million overseas tourists visit annually. Many expatriates have lived in the city for years and speak excellent Chinese, but still report having difficulty getting around and finding an adequate source of location information. Tourists, very few of whom speak or read Chinese, are often frustrated by the difficulties of navigating Beijing in the short time they spend in the city.

Help will soon be at hand, however, thanks to the efforts of Beijing-based mobile navigation start-up Native Systems. By developing and maintaining a database of tens of thousands of points-of-interest (POI), the Native Systems team are aiming to provide a comprehensive multi-lingual mobile guide that will provide citywide information based on user location. Using Native Systems’ highly accessible mobile and web interface, Beijing expats and vistors will soon know which shops are just around the corner, what restaurants they are missing one street over, what event is about to happen at the bar just up ahead, and where the closest ATM is located.

As the countdown to the 2008 Olympic begins in earnest, and the Shanghai Expo in 2010 looms on the horizon, the eyes of the world are focused intently on China. Increasing numbers of tourists are flocking to see the Middle Kingdom, and ever greater numbers of overseas citizens and businesses are settling in Chinese urban centers to take advantage of a booming economy. Now Native Systems are aiming to make holidaying, living and working for overseas citizens in China easier and more enjoyable.

Interview

Recently CScout talked to Andrew Schorr, co-founder of Native Systems, about his company, and his experience of starting up a small business in the Chinese capital. Andrew has a bachelor’s degree in politics and East Asian Studies from Washington & Lee University. He has lived in several different Asian cities, studying in Japan, interning with the US Embassy in the Philippines, teaching in rural central China, and sourcing manufacturing out of China and Vietnam.

Hi Andrew. Many thanks for talking to us. Firstly, what inspired you to start up a business in China?

I had the original idea for the venture while I was traveling in Kuala Lumpur. A couple friends and I were wandering around outside the Petronas Towers, flipping through our guide book trying to find the next thing to do. After we finally got the map orientated, we kept flipping back and forth between pages reading what each number on the map was, but either we couldn’t find anything appealing, or couldn’t figure out how far these things were from us. I couldn’t help thinking there must be a better way to provide a lot more information in a convenient, organized and systematic way.

Beijing is ideal for our venture for several reasons. Our initial target market is foreigners living and holidaying abroad, and Beijing has large numbers of both expats and tourists. Additionally, since we intended to do our own data collection, the model would really only work in a country with inexpensive labor to collect the data. The final advantage to starting the venture in Beijing is that there is a palpable excitement here. So much is going on right now, and that excitement affects everything. We surveyed a hundred Beijing expats, and after “the people”, respondents said their next favorite thing about living in Beijing was “being part of an exciting time” in the city.

What have been (or will be) the major challenges for Native Systems with regard to operating in the Chinese market?

While setting up a company in China isn’t particularly difficult, protecting a successful venture from threats can be daunting. Anything we make publicly available will be copied, so our business model reflects this. We’re able to keep some of our proprietary data that runs in the background from public view, and we emphasize aspects of our venture that can’t be easily copied, such as our database operating software and our ability as a foreign company to better target foreigners abroad than a wholly Chinese company.

How do you view the mobile mapping / location information market in Beijing and other Chinese urban centers right now?

We haven’t been able to find any resources offering a compelling solution to getting around Beijing. The big names are just starting to come out with products that are available in other parts of the world, but they aren’t as intuitive as one would hope. Applying the same big-box model they use for location-based services elsewhere just doesn’t translate to Beijing and other Chinese cities. For example, maps aren’t used nearly as much here. I’ve gotten into cabs a couple times and shown the driver a Chinese map, and after he turned it around a couple times, he asked in Chinese, “Is this a map?”

Directions in China tend to be more narrative, based on landmarks and major street names. There just isn’t a wealth of publicly available location data out there either, especially in other languages, so we started collecting our own data via an in-house data collection system. This is what Google recently announced they are trying in the States, but with a slightly different bend. There’s no dominant player here as there is in the US, where Mapquest makes more than 20% of the entire downloaded mobile application market.

How will the introduction of 3G/4G technologyand/ further penetration of smartphones into the Chinese market affect your business?

We are minimizing any barriers to adoption by offering our service over a variety of mediums/technologies: on the web, via SMS, over cellular internet, and in a Java J2ME application. Our customers will have initial contact with us in the medium that is most familiar to them. We hope they will later become users of some of our other products. Each different medium is better suited to certain tasks than others. While many in the industry have predicted the slow death of SMS VAS, it is still the fastest way to get a location listing if you know the name of the place. However, SMS is ill-suited for browsing locations near you and making complex queries, necessitating a web browser interface. The advent of 3G in China will benefit all mobile content providers as it will significantly enhance connection speeds, thereby making cellular internet usage more widespread and more enjoyable.

How are you planning to attract investors and monetize Native Systems?

We’ve had a lot of local people express interest in investing in our venture. We’ve been able to get our WAP site (and soon our website) started without outside investment. We are now looking forward to entering the market early and claiming market share. One of the most attractive aspects of our venture is that we have several different revenue streams that generate from owning a valuable database of location data and anonymized user statistics.

Most of Native’s online services will be provided free of charge on the web and over cellular internet. However, some premium features on the mobile site will be charged on a single-use or subscription basis. These services include enhanced customization, the ability to send POI records to friends via SMS, and cell tower location-based searches.

Native has very compelling advertising potential: we have our users’ attention as they make a purchasing decision from among a narrow field of businesses. Knowing where a user is and what they are looking for provides an excellent opportunity to influence that decision. Knowing what a user wants allows Native to suggest someone that provides it; knowing where a user is allows Native to suggest compelling businesses in the vicinity. Clicking on any ad gives the user directions to that nearest location of that business.

Additional revenue will be generated from all of the various applications that stem from owning a valuable database of locations and user-analytics. Our database will perform concierge tasks at hotels and in stand-alone kiosks. We will design an application to bring efficiencies to restaurants’ delivery services, printing delivery tickets with directions and addresses within their delivery zone. We can cooperate with real estate companies whose sites can then list exact distances to nearby amenities and businesses of any property a customer is browsing. We can also sell a wealth of anonymized user-statistics to interested parties, tracking where people make purchases, how far they travel and when, or what cuisines or events are most popular.

How close to public launch are you now, and what are your long-term plans?

We have finished developing the proprietary database software and begun data collection. While data collectors have been surveying the city, we have also been developing the client-side application. We will have a limited release of an alpha version in October 2007. Before the end of 2007 we will publicly release Native Beijing beta in English and Chinese with 12,000 POI records. We will then develop Native Concierge and Native Delivers for sale to hotels and restaurants, as well as offering Native Beijing in Korean, Japanese, Russian, French, German, and Spanish interfaces. In October 2008 we plan to open up offices in Shanghai, Guangzhou, and Hong Kong. These applications are scheduled to launch in March 2009. Following their launch our goal is to begin opening additional offices in other major Asian cities.

Image source: Native Systems
Contact: andrew@mobilenative.com