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Victor Koo, Founder and CEO of YouKu.com

Anyone from China or has lived in China has heard of Youku. Victor Koo, Founder of Youku, shares with us the difference between Youku and Youtube. What has been the secret to success for this online video website’s rapid growth? What is in the future for Youku and video advertising? Plus, hear Victor’s advice on how to get started as an entrepreneur, and how he feels homegrown companies differ from those entering from overseas.

YouKu.com: Victor Koo is the creator of YouKu.com, he is also the former President of Sohu.com. The company has recently just received $25 million investment from various VCs. Ranked #1 in China in video sharing, YouKu’s future plans include collaborating with Myspace in China.

Interview Transcript:

• You’ve been in the tech sector for many years now; can you give us a brief background for those who aren’t familiar with you and what you’ve done here in China?

I was based in the U.S. between 1985 and 1994, coming off from Stanford business school I moved out here to Beijing. It’s my third startup company now, first which I was in an early stage venture capital firm where we invested in both media and entertainment companies as well as manufacturing companies. Around 1997/ 1998 is when Chinese internet started emerging, and I met the founder of Sohu.com Charles Dong in 1998 and went in as the CFO, then COO, then the president of the company over a six year period of time. And then in 2005, I decided to take a sabbatical and afterwards started my company, which is YouKu.com, now the leading online video site in China.

• Tell us a little more about YouKu.com, What is your business model? Who is your target audience? And what separates you from the other players in the market?

YouKu.com when people think about it from the U.S. immediately may relate us to YouTube, now in some ways that’s true, from a product standpoint, we are an online video platform, but I think the significant difference is we view YouKu as an online video platform not just for amateur video but as much for professional content as we do for amateurs. We are an online video platform for many television stations as well as T.V. film production companies. The reason being in the U.S. the media landscape is very concentrated, where as in China it’s fragmented as well as geographically focused, hundreds of television stations, thousands of film and T.V. production companies, so we’ve been able to syndicate a lot of this content with a whole variety of different partners.

Now in terms of differentiation, besides the traditional media corporation that we are very strong on, another area is the amateur side we push on is called PaiKe; the citizen video. We are very famous for having very fast response uploaded video from our users, To give you example, the recent earthquake, a very unfortunate incident of course, but within 10 minutes of the earthquake, there is already the first video uploaded on our website and now there’s 10’s and thousands of earthquake related videos from all around China that’s been submitted to YouKu.com.

I think in terms of another very important reason why YouKu.com grew so quickly is because of one word: speed, I think we have the fastest download speed both from a search, viewing, delivery, and upload standpoint that users find it user-friendly, and we have been consistently ranked #1 on all user kind of behavior indexes. In terms of scale, YouKu.com, as of the end of the last year, Nielssen ratings did a census on YouKu.com, and we are the first online website to break 100 million daily video views. Now if you think back, it also took YouTube a year to get 100 million daily video views, for them it was from 2005 to 2006, for us it’s from 2006 to 2007. So the tremendous growth YouTube observed in the U.S. is also something YouKu also achieved in China.

• Now in what stage are we catching you for YouKu? Where are you guys headed and where do you guys hope to be? Even for a few years?

For YouKu we beta launched in June of 2006, and officially launched in December 2006, and we’ve gone rapidly ever since. Now we are in 2008, really for us, and the entire industry, as well as YouKu, is the beginning of online monopolization. We have proven the success of our product model, and with our large user base, we are really talking about going forward to build a business model, which is what we hope to prove in the next 18 months. We have a lot of good traction with major business partners, for example: China Mobile, Samsung, Dell, HP, Nike. A lot of international as well as top local clients are now using YouKu to reach their consumers, and unlike traditional text and picture portals, we can offer very visually impactful as well as storytelling form of video advertising; which is some very strong results in brain recall as well as traditional click-through rates.

• Now let’s go back to Victor Koo the entrepreneur, a lot of our audience is based in the U.S. and are new to China business. For that person watching, who isn’t necessarily in the technology sector but is in China business in general, what advice would you offer them?

Sure, certainly I am an early bird in the Chinese internet industry, I think the field has changed a lot in the last 10 years, and if you really think about setting up an entrepreneur company, I think there are three essential elements: the team, capital, as well as viable concept, or business model, so those are 3 areas in the beginning. If you go back 10 years, those three areas are all areas besides opportunity; there were a lot of market opportunities, but in terms of team and capital, they were very hard to come by. Now over the last dozen years, the infrastructure or the value change of Chinese internet industry has developed tremendously, with tremendous amount of fusion of international venture capital as well as Chinese venture capital as well as a team with all these NASDAQ listed companies and a lot of the startups that have happened in the last twelve years, and basically it’s relatively easier to hire an experienced team, for example for YouKu.com, most of our team came from top notch internet as well as television companies such as baidu, cnet, sohu, focus media and so forth, also we attract talent from CCTV because we are really a convergence between internet and television.

• Even though you are from the U.S. and educated there, your company is a Chinese homegrown company, can you tell us what’s the main difference between the homegrown company and the foreign company?

If you look back at the last ten or dozen years in Chinese internet history, the dominant players in each segment of the market are all clearly very local. I think besides the obvious language and cultural differences, understanding the market, dealing with the government, key constituencies, whether it’s users, clients or agencies, and a local understanding are all critical to the success of a company. Also I think fast response and speed is much easier for a core team that’s based here and can make decisions very quickly because internet is such a fast moving industry, and for companies with international headquarters, across the pacific ocean is just too long for the internet area. I think that’s something that makes a significant difference between a local competitor and a globally very strong competitor.