One VC’s Dream Social App

China’s most successful social app investor outlines what he thinks could be the perfect dating app to fill a market gap.

China’s most successful social app investor outlines what he thinks could be the perfect dating app to fill a market gap.

Dong Zhanbin, Co-founder of Qing Song Fund

Dong Zhanbin is a co-founder of Qing Song Fund, an early stage venture capital (VC) firm focused on gaming, education, lifestyle and artificial intelligence(AI). The common underlying thread to all their investments — they like products that cater to basic consumption needs.

The fund also has a ‘10 thousand hours’ philosophy. Anyone in their team without at least 10 thousand hours devoted to research in a certain space isn’t allowed to have an opinion.

No one can deny that they are probably doing things right. With CNY 1.5 billion (USD 220 million) under management, 140 companies invested, and a 50% exit rate with 60x average return on investment, their track record for a VC is pretty impressive.

Dong has personally overseen a number of successful social app investments within their portfolio, and in an exclusive interview with PEdaily.cn, he discussed what he thinks is the ideal social app to fill a gap in the market.

Limited life cycles and low matching efficiency

“All social apps have life cycle issues. Users of typical social apps will become bored with it in a few years and prone to leaving if there are no major changes.”

Because of this, he thinks that traditional dating apps are falling out of fashion due to fake profiles, very low matching efficiency and narrow target audiences.

But because the appeal and positioning of a social app is often fixed from the outset, it is difficult to shift it too much subsequently. Hence users are prone to leaving to explore newer and more novel social apps.

Social apps are still a hot spot for VC investments despite 2018 being what many observed to be a lull for venture capital in China. According to PEdaily.cn, year till date there have been 70 VC deals in social apps, an average of one every four days (as at October 2018).

“The cost of investing in a social app is relatively low, especially at the seed stage. You can invest with just several million renminbi. But the potential returns are extremely attractive. This is like the ‘Antifragile’ effect describe in Nassim Taleb’s book — limited losses in failure, but huge returns in success.”

Dong classifies social apps into general social apps (broadest market), targeted group social apps (college communities, professional circles etc.), general dating apps (anyone seeking companionship), and specific group dating apps (senior citizens, gay community etc.).

In the China market, QQ and WeChat are the best examples of general social apps. But these two incumbents dominate instant messaging and to Dong the chances of toppling them are almost nil.

MOMO and Tantan (Tinder copycat), the most popular general dating apps, uses proximity and photos for matching strangers but are prone to fake profiles and bad reputations as ‘hook-up’ apps.

MOMO and TanTan, two of the most popular dating apps in China

New apps Soul and Uki uses psychology tests to categorize and match users but the methodology is too unrefined and inaccurate.

Bumble in the western market created a new model where the men can list their preferences and the women will choose who they want to initiate a conversation with. But that model did not work in China as the success rates were too low for men and most gave up pretty fast.

Discuss philosophy with a hot girl

Inspired by a friend who wished there was a dating app that could find him a hot girl to discuss philosophy with, Dong proposed the concept of an interest based social app, where matching will be highly efficient and accurate.

The product must have three criteria:

  1. Matching based on the user’s stipulated criteria

  2. Initiate conversations between matches based on common interest and sticky topics

  3. High matching success rates.

“Many products can match users, but what happens after that? Initiating conversations becomes a problem. This is a problem of common interests. For example, a professional badminton player may not be able to hit it off with an amateur player. How do we solve this problem?”

To solve the problem of low matching accuracy and success rates , he suggested defining the users’ needs and matching criteria to an even more granular level than most existing apps, so that conversations can be initiated and guided by a strong common interest.

Photo by Joshua Chun on Unsplash

Based on his observations, so far market attempts to improve the success rates of dating apps in China with profile authentication via video or ID proof didn’t work because the apps still couldn’t break out of the ‘hook-up app’ image. There was even an attempt by an app to authenticate car ownership. (Author’s note: This might have made the negative image even worse since it can be misconstrued as facilitating materialism…)

He considered ideas like these as “minor innovations and not enough to break out of the mold and achieve disruptive breakthroughs at a fundamental level.”

“In the past the user seek out matches; now can the matches come looking for me based on my criteria? The matches must be accurate but not so narrow that the choices are limited for the user.”

Know human nature

To invest successfully, Dong feels that one has to understand human nature and fulfill user needs, especially for social apps.

He groups the needs of social app users into six broad categories: hormonal needs, loneliness and companionship, emotional release, ego and boasting, ranting and venting, and self-improvement, in declining order of motivation level. The lower the motivation level, the smaller the potential market size.

His dream social app is one which can cater to all six and reach a broad audience of between 15–40 years old. However, it should not become exclusive to this age range either or favor real profiles over anonymous ones.

Ambitious as it may sound, he is definitely not one who is just all talk. His fund has invested in college community apps and has learned from failing that the user base is too small and turns over too frequently for it to work.

Nonetheless, his co-founders and him are highly respected in China’s VC scene for their impressive track record at spotting great lifestyle and entertainment startups at an early stage. If nothing else, the number of dating apps he has installed and tried on his phone is testament to his fund’s belief in doing thorough research into any space before voicing an opinion.

So far China has taken most of its social app ideas from the West. It will be interesting to see if Dong and his fund could inspire and create an original success story from the East.