Wang Kaixin, an Internet entrepreneur, dropped out of high school at the age of 16. Less than a year later, she had secured a 10-million-yuan investment in her startup Shenqibuy.
In addition to the monetary awards, Wang was received by the vice-chairman of the Chinese People’s Political Consultative Conference as the delegate for mass entrepreneurship and innovation.
But Wang’s success is by far the exception.
Compared with school, entrepreneurship is a cruel battlefield. There are an estimated eight startups founded every minute in China, and more than 90 percent fail. But dreams of success and the stores of high-profile youths who struck it rich continue to tempt young people to test their luck and skill.
It’s no secret that most of China’s young entrepreneurs jump into business with the dream of forcing the masses to bear witness to their success. And with the Internet as a marketing tool, many entrepreneurs succeed at little more than projecting that image.
But securing a million-yuan investment is very different from being able to run a successful company.
Yu Jiawen, a man in his early 20s and the CEO of Super Schedule, said he received admission offers from five of China’s most prestigious schools. It was later revealed he graduated from a relatively unknown minor school.
His rapid rise to fame came more from news of a multi-million-yuan investment from the Ali Group than any actual success. Yu courted the media by announcing plans to use a large portion of that money to reward his staff, the highest-paid of whom received only 5,500 yuan per month.
When interviewers asked Yu about his profit model, he would only reply it was none of their business. That’s because his company had no profit model at all.
Wang Kaixin’s online shopping platform – a collection of sex toys – also performed far worse than she claimed on TV. She said there were 1,000 transactions on her platform per day. In reality, the average was only 700. In fact, Wang’s shop did not even have its own goods: they were purchased on demand from Taobao sellers.
Wang defended that decision as her company’s business model.
But for entrepreneurs who are eager to build a business instead of fleeting fame, successful financing means greater burdens, not relief.
Few startups acquire money as easily as Wang’s. The sudden appearance of money in the bank creates a need to work hard and provide investors with value.
It’s a similar gamble for the investors, because so few platforms release real financial information. Most boast of massive capital investments to misdirect new investors about what they can expect in return for their involvement.
The media’s focus on the stories of successful young entrepreneurs may be partly to blame for both the rise in bad business ideas and poor work ethic among young entrepreneurs. The stories of failed businesses and broken dreams might offer a sobering counterpoint in an overly energetic field.
Even rich young entrepreneurs have lost millions of yuan in a year, and many average people who depend on loans end up hundreds of thousands of yuan in debt.
Young entrepreneurs should not follow the trend of blindly risking everything on businesses. Hard work and business experience are the necessary foundations of any company built to last.
In the world of startups, success is the exception rather than the rule.