Shenzhen is a crucible of innovations. One of the most industrious cities in China and the world, it never sleeps and more importantly, it never sleeps on opportunities. It is people like Eric Pan, the CEO of Seeed Studio, China’s first hardware enabler catering to makers, a vibrant community of tech-focused DIYers, who shape this sweltering southern metropolis into a destination spellbinding global tech minds.
The road from the stalls of Huaqiang Bei, the world’s biggest electronics market, to the headquarters of Seeed Studio is emblematic of the vast strides Shenzhen has made from the hotbed of shanzhai, or more broadly all Chinese counterfeit goods, to what is now known as the global challenger to the Silicon Valley. Massive Chinese corporations like Tencent choose Shenzhen as their base and smaller fish like makers also shoal within the limits of this rapidly growing city.
Eric meets us in the lobby with a smile of a veteran gatekeeper. Wearing shorts and a t-shirt that says “make”, he is not your old-school Chinese CEO. He chooses coffee over tea, comfort over looks and creativity over slaving. We walk through the adult Legoland of an office filled with all kinds of zany inventions and enter a spacious terrace, where Eric proudly introduces to us a tiny watermelon and a bulky device that helps it grow by analyzing weather conditions. “This is what our guys do, we want to find a more scientific approach to agriculture,” he announces matter-of-factly.
Having started Seeed Studio in 2008, Eric is not only one of the most respected entrepreneurs in Shenzhen, but also the founder of the oldest local maker space Chaihuo, and its subsidiary X.factory, both of which attract hordes of bright minds from all over the world. Naturally, given all these laurels, we couldn’t help but ask him a couple of questions.
Let’s start with what you were doing before Seeed and how that brought you to what you are doing now. I hear you stared out by selling stuff out of your apartment.
First, I became jobless. I used to work for Intel, but got tired after 13 months and came to Beijing to find something new. I joined a very small company doing international trade, but in a year, it went down so I had to find another job. While I was looking for jobs I tried to do something that could be more meaningful. I went to a new media interactive art exhibition in Beijing and encountered people who called themselves makers. I felt that I was a maker myself and I wanted to help those guys, I created a website and started sourcing parts from China and selling them to the global maker community.
You were reselling parts.
Actually, we started by asking people what they needed and what they couldn’t find.
So, you didn’t have a product list, people would text you asking for specific parts and you would find them?
Sort of, we started out by consulting in a way.
How many factories are you working with right now?
Over three hundred.
How long did it take you to build this supply chain?
I think our supply chain was set the first day we came to Huaqiang Bei. But it took us over 11 years to establish relations with the 300 suppliers that we have right now.
Do you consider Seeed your core business or do you have higher hopes for Chaihuo?
No, Seeed is the core business, and Chaihuo is just an interface between industries.
What motivated you to open a maker space in the first place? Is it part of a strategy to expand Seeed, or is it bigger than that?
It was just a side project. We were too lonely in Shenzhen, because there was no maker community here. There were so many good engineers but they did not communicate, so we wanted to create a space where people of different backgrounds could meet, share their thoughts and find common purposes. It was still a side project until prime minister Li Keqiang paid us a visit. Making started becoming a culture, it was becoming something we couldn’t control. So, we just let it go, let it grow.
What is your definition of a maker?
We can say that makers are the opposite of consumers. They don’t want to buy things so they create their own stuff. That’s the most general definition. But we are focusing on the smaller fraction of the maker community, who are more of technology integrators.
How different are the Chinese and the overseas makers?
China is more on the developing country side. When we do something, we think about the usefulness, or more frankly about the money that it can bring. Whereas in more developed countries like the US, Japan or in Europe, people approach making as a way of learning and recreation.
Is it correct to assume that a maker studio is a sort of co-working space for hardware-based start-ups?
It’s less than that.
In what way is it different from a co-working?
It is a co-working, but it’s not a co-working space. Because in a co-working space people are working together to share the cost of the office, that’s the main purpose. But a maker space is more of a community that helps each other to accomplish projects.
How does a maker studio become sustainable? What are your income streams?
The revenue, especially in developed countries, is supposed to be coming from memberships. But for us the majority of our revenue now comes from projects. We take a management fee. For instance, you might be a big company looking to outsource some jobs, we take it as a deal and invite some of our makers to work on that project.
Why do many promising teams fail to grow past the maker studio?
There are several reasons. First, their purpose is not big enough. There’s either not enough market or market is just emerging. The second reason is that some of them are just not competent enough to win in the game. No matter where you start, in a maker space or on your own, the failure rate for young companies is 99%. The third reason is that some of the teams don’t want to grow, they enjoy the laid-back pace. They have a small team, they do their job, they have enough profit, they are comfortable.
As far as I understand a lot of guys in maker studios develop smart hardware and IoT products, but there is an opinion that those are the fields of big companies and small producers have little chance there. Do you agree with that?
No. IoT is about many things. It’s too many things and too scattered of a market. Big companies can create the infrastructure, but for the rest, who should take care of the smaller stuff?
That’s the idea. Big companies have resources to build an ecosystem, but smaller producers are limited to being third-party agents.
I think no single company can build an isolated ecosystem now. It’s more like there are big challenges and everyone has to think about how to deal with them jointly. Big companies are becoming more open, they put their resources into the community to grow with it. They want to find killer apps and killer devices in the community.
In this respect, what is your opinion on Shanzhai culture?
I think that’s the best part of Shenzhen.
Do you think it will hold up in the new China in its old form, as in cheap copycats, or it will have to transform?
I think shanzhai is the root of Shenzhen, but in a positive way. Shanzhai doesn’t mean copycats, it’s more like duplicates both legal and illegal. When shanzhai mobile phones first appeared, Apple didn’t care about Africa, the companies didn’t care about the lower end of the market, shanzhai was doing that.
But China currently has tons of good and affordable smartphone brands and no one will really go to a market to buy a shanzhai phone. Is that bound to change the culture?
Shanzhai may change, but the spirit is still there. There was initially a lot of interest towards smart hardware, but ultimately it turned out to be not that important and most of the companies either died or sold to Xiaomi and other big players. Now the focus is on vertical markets. The same people that were making mobile phones and tablets now produce facial recognition devices selling them at a fraction of the price of the big companies.
Are you afraid that with everything changing so fast in China, your company won’t be able to keep up?
How do you go about keeping up? What is your advantage against huge players like Taobao, where you can buy virtually anything.
Actually, we have our own store on Taobao. But people are asking more than that. People need someone to digest the technology for them. And tech is evolving every day. We are not static either. As long as the maker community is strong, we will be delivering.
Do you think the maker movement is now at a low-tide?
It’s at very low tide, and I hope it’s the lowest of tides.
Why do you hope so?
Because it’s going to rise. We have a lot of doubts and worries. But I’m happy that we started to worry about these things two years ago, and now we have some routes figured out and lines connected.
You were on the cover of the Chinese Forbes several years ago. Are there any young Chinese entrepreneurs that you think deserve to be on the cover this year?
It’s hard to judge, since I cannot see all the startups, I only see some of them. But there are some very cool companies in Shenzhen. For instance, there is this guy who graduated from Nanjing, dropped out from Cambridge and spent the last 3-4 years in Shenzhen trying to build a smart glove. Sort of like and ultimate VR glove. It’s actually a robot hand gripping your hand. If you see it, you won’t forget it. The company is called Dexta Robotics. Companies like this, they are not superstars like DJI, but they are doing their job well.