Episode 8: Miranda Qu of Xiaohongshu on Powering E-Commerce with Community

Miranda Qu is the co-founder of Xiaohongshu (“Little Red Book” in Chinese), the world’s the largest lifestyle platform that integrates community and content with e-commerce. Over 75 million users spend a total of over RMB 100 million per month on the app to buy fashion, cosmetics, and lifestyle products from both overseas and domestic brands. Xiaohongshu is a pioneer in integrating content, commerce, and community – the “3 Cs” that GGV managing partner Hans Tung thinks today’s e-commerce platforms must possess in order to stand out in “the age of Alibaba and Amazon.”

Miranda graduated from Beijing Foreign Studies University with a degree in journalism, and left her job in 2013 to start Xiaohongshu. In this episode, Miranda discusses how she met her cofounder Charlwin Mao in a shopping mall in Boston, Xiaohongshu’s journey from a “Lonely Planet for overseas shopping” to one of China’s most popular e-commerce platforms, and why young Chinese consumers increasingly prefer domestic brands over foreign ones.

Transcript

ZARA ZHANG: Hey 996 listeners this is Zara from GGV Capital. I have a special announcement this week. Hans I will be doing a live show in San Francisco on March 21st. We’ll be interviewing Airbnb’s co-founder, chief strategy officer, and chairman of China Nate Blecharczyk, at Airbnb’s headquarters in San Francisco. We’ll be discussing how Airbnb has expanded into China, one of its most important international markets, and the company’s China strategy going forward. The show will be at 7 p.m. on Wednesday, March 21st, at Airbnb’s headquarters at 999 Brannan Street, San Francisco. If you’re in the bay area we’d love to see you there. Tickets are required for attending and they’re selling fast. Grab yours today at 996.GGVC.com/live. Again, that’s 996.GGVC.com/live.

HANS TUNG: Hi there. Welcome to the 996 Podcast, brought to you by GGV Capital, and co-produced by the Sinica podcast. On this show we interview movers and shakers of China’s tech industry, as well as tech leaders who have a U.S. China cross-border perspective. My name is Hans Tung. I’m a managing partner at GGV Capital and I’ve been working on startups and investing in them, in both the U.S. and China, for the past 20 years.

ZARA ZHANG: My name is Zara Zhang. I’m an investment analyst at GGV Capital and a former journalist. Why is this show called 996? 996 is the work schedule that many Chinese founders have organically adopted. That is, 9:00 a.m. to 9 p.m., six days a week.

HANS TUNG: To us, 996 captures the intensity, drive and speed of Chinese internet companies, many of which are moving faster than even their American counterparts.

ZARA ZHANG: On today’s show we have the co-founder of Xiaohongshu, Miranda Wu. Xiaohongshu, which literally means ‘little red book’ in Chinese, is the world’s largest lifestyle platform that integrates community and content with e-commerce. Over 75 million users use the app to follow influencers create and consume interesting content, and buy everything from fashion to cosmetics, to lifestyle products, from both overseas and domestic Chinese brands. Xiaohongshu is a GGV portfolio company, and it is really one of the pioneers of the concept known as “daogou” or guided purchase. It’s also one of my personal favorite shopping platforms, because when I feel like shopping, but don’t know what to buy, Xiaohongshu’s content and influencers can always give me inspirations, and the numerous high quality reviews and tutorials posted by users can also help me with product selection.

HANS TUNG: Miranda is one of the two co-founders of Xiaohongshu. Miranda, would you like to share with us a bit of your background and why did you decide to start Xiaohongshu.

MIRANDA QU: Sure. Actually Charlwin and I started Xiaohongshu four years ago, and actually we were long time friends, we met for over ten years. Four years ago when we wanted to do something in the internet space we found it interesting that Chinese people are traveling overseas for shopping. This is something that we didn’t expect before. And at that time there wasn’t any application that tackled this market for Chinese shopping overseas, so this was the opportunity that we saw, and we quickly gathered information and put it on our platform to teach people how to shop overseas. Then it quickly turned to a social platform where people can share information about what they buy, how they make the decision to buy, and where to buy.

HANS TUNG: So in the beginning was it a travel company, or was it a social networking company sharing shopping tips?

MIRANDA QU: It’s very interesting, when we first launched on app store we were in the travel category for a long time, and after some time they said, “Why you are in travel when you are kind of like a shopping app?” We returned to the shopping category and the other apps were kind of commenting that we should be in the travel category. So I would say it’s a combination. We’ve actually tackled the shopping problem while traveling. But if you think about why people spend a lot of time shopping when they should enjoy the beautiful things overseas, it’s because it’s very difficult for them to buy those things and to get that information. That’s why we think that they need the social community to share the information and to get more knowledge about what to buy and where to buy.

MIRANDA QU: That’s why you’re called the Little Red Book, you’re like a guide book for people to know where to find things in the beginning.

MIRANDA QU: Yes. And you know red in China is a very Chinese color, it’s very easy to remember. And the book is not only meant as a travel book but it’s also the bridge between something you know and something you don’t know. We always considered ourselves as a platform to learn something that you don’t know, so you can discover more lifestyles that are out there.

HANS TUNG: I remember when I first met you guys about the startup, it was 2014, and you guys started just over a year, and there was nothing to buy at all on the platform. There was just a lot of interesting content, user generated. How did you guys think about focusing on content versus commerce early on? Why did you start to focus on content first and not touch commerce until later?

MIRANDA QU: We started with very light content, not because we think content is important, but because we think that it’s the first step for people to discover a new lifestyle. First, you should gather information and then come up with the problem of how to get those things. So it’s very natural for users that they have to discover things they like, and then think about how to get them. So that’s why we started as a content platform, it’s purely based on solving users’ problems. It’s not something that we wanted. And at the end of 2014 we received a lot of complaints about, “We see a lot of beautiful things every day”..

HANS TUNG: But we don’t know where to buy them.

MIRANDA QU: Exactly. And when we looked at the supply chain for those overseas items it was very hard to buy them in China. They’re either too expensive in a shopping mall or there are a lot of things that are not in China yet. The other thing is they’re sold by individual sellers, so you don’t know where they get them. You don’t know whether it’s fake, or whether it’s too expensive, so we thought, “Wow, there is a chance.” And at the end of that year there was a new policy issued by the Chinese government, it’s called cross-border e-commerce. And there was our chance, because at that time in China the e-commerce was already a very competitive industry, but when something new comes up, everybody starts at the same level. So we decided to jump in cross-border e-commerce and start as a commercial company.

HANS TUNG: I remember in 2013 I invested in Wish, thinking that Chinese goods and Chinese merchants should leverage a platform like Wish to sell overseas. So it’s a “chuhai” expanding beyond China via ocean. And then in 2014 I thought maybe the time has come for import into China, so I met about ten other companies that did cross-border e-commerce. All of them had commerce and no content. You were the only one that had content before commerce, and you were the team with the least amount of commerce experience.

MIRANDA QU: Yes.

HANS TUNG: But we started investing in you, Series B before you had commerce, thinking that it’s so hard to get good content, so in the long run that should be a strong competitive vantage. Did you worry at any point in time that people will come to your place to read the content and discover tips, and then go somewhere else to shop, and not complete the transaction on your platform? How do you overcome that fear or concern and make that work?

MIRANDA QU: Yes. I think we were very worried at first, but to worry is not something that we do. So we started our very least trial, and I still remember that when we first launched one product on our platform, it was sold out in ten seconds. And then we launched ten products, so it was very step-by-step. I still remember that on January of 2015 our monthly GMV was around ¥1,000,000 RMB, and 6 months ago, we reached ¥100,000,000 RMB. That was only in half a year. I think our confidence was built by users. People would pay more and more on our platform because they really wanted to do so.

HANS TUNG: These are in RMB, right?

MIRANDA QU: Yes. So I think we always worry, but to worry makes no sense, and we just tried.

HANS TUNG: Do you think that people would pay a higher price to shop on your platform, when if they spend an hour looking on Taobao or Tmall, they can find the same thing cheaper.

MIRANDA QU: I think generally we’re very reasonably priced, because on Taobao or Tmall it’s very difficult to identify whether this product is from a certified seller. But on Xiaohongshu, people can be lazy. So we’re trying to help our users by..

HANS TUNG: You offer convenience.

MIRANDA QU: Exactly. They don’t have to worry..

HANS TUNG: What is real or not, it will definitely be real.

MIRANDA QU: Yes. So I think that’s why they started to shop on our platform. And another thing that we think is really important is the confidence, it is the trust. Because we started as a community and they already know us, and that we don’t do ads. Any content you find on Xiaohongshu is true, written by our own users, with no benefits to do so. So they really trust this platform, and that trust is transferred from the community to e-commerce. When we offer something they just start to buy. I think for a very long period of time 90% of our items were sold out within 24 hours. For the first half of the year we were just trying to find more items. That was the first stage of our e-commerce.

HANS TUNG: I remember during our due diligence process. We asked you to place a couple of products on your platform to see if people would buy, and I remember the conversion was as high as 15%, which I’ve never seen anywhere else. So as you build out the app and create the content, how did you get these users to want to come and share a lot of good content for free? You don’t pay them anything. Why would they do it? How do you get them to do it?

MIRANDA QU: I think, especially for women to share where to buy is a need. Previously they may have shared that knowledge on Weibo, and then people were saying, “Okay, you’re kind of like “xuanfu””, so the people would say negative words about it. So they actually needed some platform to show their lifestyle and to find..

HANS TUNG: And not be harassed.

MIRANDA QU: Yes, exactly, and to create a friendly atmosphere, and create a very friendly environment is very, very important. I would mention another example. Every day we take a lot of pictures and placed them on moments, and these days this is a trend. Every national holiday people are sharing their travel picks on moments. No one pays them anything to do so, and there isn’t an activity called ‘place your travel picks’, but it’s peer pressure, everyone is doing that. I think at Xiaohongshu we always put a lot of product effort to keep the community, to keep people feeling the need to share more. I think that’s what we did.

ZARA ZHANG: And for those who may not be as familiar with the product itself it actually has a very seamless integration between the social, the community and the commerce. You can follow influencers and see the pictures they share, and then you can see the clothes they’re wearing tagged by brand, and then you can click into those brands, or you can even click on the clothes they’re wearing and buy them straight from the app. I think is a very powerful way to convert social traffic into actual e-commerce transactions. And it’s a model that we’ve seen a lot in China and it’s only starting out in the U.S. So I guess we can shift the topic to talk more about your personal background. What made you want to start this venture with your co-founder, Charlwin, and how did you meet him?

MIRANDA QU: It was a very interesting story. I actually met him in Boston, and we actually met at a Macy’s mall. It’s a true story.

ZARA ZHANG: You were just shopping there?

MIRANDA QU: Yes, exactly, we met at a shopping place. At the time both of us were university students. We were on the same trip to a forum at Harvard. I didn’t meet him before because there were so many Chinese students. Because Charlwin and I are both from Wuhan, I heard someone saying the local dialect, calling his parents and saying something about shopping, and that’s my first impression of Charlwin.

ZARA ZHANG: It’s very appropriate that you met in the mall.

MIRANDA QU: Yes. I never imagined that one day we would do something about overseas shopping. When we first started we started with some shopping guides. Charlwin and I personally wrote how to shop in the U.S., and that was from our very first trip. So it’s very interesting that your life always come around.

ZARA ZHANG: And how did you come up with this idea in the first place?

MIRANDA QU: We actually didn’t come up with this idea at first. I still remember our first PowerPoint, it was called A Runaway China. We both love traveling, so we really wanted to do a travel app at the beginning.

HANS TUNG: Was it an app or was it a PDF file?

MIRANDA QU: We really wanted to do something with travel and we started with a PDF that was kind of a U.S. shopping guide written by Charlwin and me.

ZARA ZHANG: Kind of like Lonely Planet for shopping.

MIRANDA QU: Yes, exactly. And I still remember Richard Lim’s comment, “It’s not sexy at all. We gave you so much money and you made a PDF.” Because as you remember in 2013, Richard Lim was a board member of Qunar, and they have invested a lot of money in transferring into mobile, and we actually started as a PDF, and it was crazy. Then we quickly turned it to an app and then a social platform.

ZARA ZHANG: Are you a big fan of shopping yourself? And how much shopping do you do, both before and after you founded Xiaohongshu?

MIRANDA QU: I’m a big shopping fan and so is Charlwin. You can see that because we met at a shopping place. I think it’s really something that we both love. To open and to shop in Xiaohongshu is both work and a personal hobby, so I really shop a lot.

HANS TUNG: What prompted you to go to Harvard in the Chinese New Year?

MIRANDA QU: I think at that time we were both at the stage where we wanted to see the outside world. For both Charlwin and I, it was our first trip to the U.S. ever.

HANS TUNG: Oh, really? Wow. And what year were you guys in college? Were you the same year, or different year?

MIRANDA QU: No. I was in my last year of university, and Charlwin, although we were born in the same year, Charlwin is one year behind.

HANS TUNG: Exactly, just not as good. We’re teasing him, of course, because he did Jiaotong undergrad and then Stanford GSB, so he’s very talented. But still you’re a year ahead of him.

MIRANDA QU: Yes, I think that’s because my parents wanted me to start earlier.

HANS TUNG: Typical Chinese parents.

MIRANDA QU: In China there’s a saying, “benniaoxianfei” (笨鸟先飞).

ZARA ZHANG: You studied journalism in school, do you think that helped you at all with your entrepreneurship journey?

HANS TUNG: Or at least write the first draft of the book?

MIRANDA QU: I think that really helped a lot. You can say that a journalist is someone that collects information and distributes it. I think that’s kind of what Xiaohongshu is doing. Xiaohongshu is a social platform and you can say it’s like media, “meijie”, rather than “meiti”. So it helps people to get information more efficiently. I think journalism has the same logic behind.

ZARA ZHANG: What are the top countries that you source your products from?

MIRANDA QU: Nowadays, Japan and Korea are both very popular. For Korea, the Korean pop stars are very popular in China, the movies, the TV series, I think the Korean culture is very popular in China. That gives them a lot of opportunity to have more exposure of their brands. The second reason for that is that Korean people and Chinese people look alike. For the U.S. market, with dresses for example, there are very different sizes and a very different fit. So Korea might be the most popular and the second one is Japan. Japan is famous for their quality. They have a lot of smaller brands with a thousand years of history. I think that’s what people are buying right now in terms of quality.

ZARA ZHANG: I think you mentioned recently that the proportion of overseas products on Xiaohongshu is actually declining, and more and more people are willing to buy domestic Chinese brands. Why do you think that’s the case?

MIRANDA QU: I think in the last two or three years why the cross-border commerce is so popular, it’s because in China there aren’t that many interesting in new brands. I don’t think Chinese people want to buy that many overseas items, they just want to buy good items. But in China there aren’t many good brands as overseas.

ZARA ZHANG: They’re not like “chongyangmeiwai” like before, but they just want quality products.

MIRANDA QU: Yes, exactly. I think right now there are a lot of new emerging brands in China that people love. I know another GGV’s portfolio company called “gaogeng 73 xiaoshi”.

HANS TUNG: Yes, 73 Hours.

MIRANDA QU: Yes, they’re very popular on Red as well.

ZARA ZHANG: So it’s a shoe brand that also has its own cafe where you can have afternoon tea and shop for high heels at the same time.

MIRANDA QU: Yes.

ZARA ZHANG: Do you think it’s because both the consumers are becoming more receptive to local brands and also domestic brands rising at the same time?

MIRANDA QU: I think actually the younger generation have no bias about whether this brand is overseas or domestic, but I think the main reason is that the domestic brands now put more focus on brand building. I think previously they’ve put too much emphasis on the production rather than brand building. Now they know how to do it. They know how to do the design, how to tell the story, and it helps a lot.

HANS TUNG: Have you ever come up with the typical profile of your users? How old would they be and what part of the country would they be from? And what would be their average spending per year or per month on your platform?

MIRANDA QU: I would say that our users are very young. 80% are female. To further elaborate on what young is, the ages from 17 to around 40. I think some of them are very young, they’re still at college. And the other half I think they feel very young. They still look for good quality life. They spend a lot of time on discovering new things rather than to stick to what they know.

HANS TUNG: If I were to take 30 years of age as a midpoint, would you say more users are above 30 years of age, or under 30 years of age?

MIRANDA QU: I would say more users are under 30?

HANS TUNG: What would be the ratio if you had to guess, 2:1, 3:1?

MIRANDA QU: Let me give you an example. This year 70% of our new users were born after 1995. I think around half of our users were born after 1990.

HANS TUNG: So they’re young and have money. What sort of average spending do they do each time or per year?

MIRANDA QU: I think it’s very difficult to say especially for us. First of all, we’re a social platform. As a social platform we actually don’t have their purchase record, but for those who shop on Xiaohongshu, I would not say they’re richer than the previous generation. I think their purchasing behavior and their concept have changed a lot. They may still be college students but they’re happy and they want to spend money. I think for very different age groups, their spending behaviors are still very, very different. There’s a kind of like one cosmetic brand which is really popular and it’s called “hold live. The average price for a “hold live” lipstick is around ¥40 RMB, and that’s really cheap. It’s really popular among young students. It’s their first trial of the cosmetic world. But for those who are over 30, the big brands like Estée Lauder and CPB are still their favorites. So I think it’s very different right now. The younger generation loves new brands. They don’t have that much to spend. But for those who are over 30 years they’re still looking for something they know. Maybe there were some new brands as well, but mostly the prices are higher.

ZARA ZHANG: What are the bestselling items on Xiaohongshu?

MIRANDA QU: I think we’re very strong in cosmetics, skincare and fashion.

HANS TUNG: Fashion meaning apparel and accessories?

MIRANDA QU: Yes, just anything that young women would like. I think the second tier would be mother and baby products and home. By home we mean home decoration. Furnishing is something we’re working at. And also we have other things as well.

ZARA ZHANG: Fitness?

MIRANDA QU: Fitness is similar to apparel. The other thing is our digital products. We still sell iPhone X, a lot of earphones.

ZARA ZHANG: Selfie sticks.

MIRANDA QU: Yes, exactly. I think nowadays, we have different categories, based on anything that our user would buy in their life, they would sell here. Because they have a very strong trust in our platform and they won’t search elsewhere.

HANS TUNG: On average, for those who shop on Xiaohongshu, how many times a month or a year do they buy on Xiaohongshu?

MIRANDA QU: We recently looked at statistics when we launched the membership, and for a single member they buy four to five times every year.

HANS TUNG: I’ve seen people who shop more frequently than that, even once a month.

MIRANDA QU: Yes, definitely. I think at the end of last year our user base was still just short of 30 million, and right now we’re close to 80 million. So the user base has really grown a lot.

HANS TUNG: So the new users they shop four to five times a year.

MIRANDA QU: Yes.

ZARA ZHANG: I think you guys have made a conscious decision not to use advertising as your main source of revenue. Could you talk about that decision, because I think in the U.S. a lot of internet companies, especially those that have community and content, still rely on advertising as their main monetization model?

MIRANDA QU: Once I discussed this with a friend and my friend has a very interesting conclusion that in the U.S., they can be very lazy. You don’t have to do all the heavy logistics things.

HANS TUNG: Logistics involved with every commerce and transactions.

MIRANDA QU: Exactly, because everyone only does their part, so it’s kind of the whole value chain. But in China most big companies do everything, if you take Tencent or Ali for example. So in the China market first of all it is a very good opportunity, because we have such a large population that it’s very easy for you to tackle the whole supply chain. But also we think that’s the best for the company to grow in terms of growth speed.

HANS TUNG: They also offer the best user experience.

MIRANDA QU: Exactly.

HANS TUNG: With a different market, they have to go to another site, they have to register or whatever, it is just more hassle. Here, boom, on Xiaohongshu everything is done.

MIRANDA QU: Yes, exactly and gradually it becomes the entry barrier, because people make shopping decisions here and they can directly buy here. They don’t have to jump to other e-commerce platforms to look for things they see on Xiaohongshu that they find interesting. Yesterday a friend showed me a stat that 14% of users who have seen on TaoBao they have a big category called “xiefudanmen”, which I think is mostly fashion, apparel, shoes, bags, 14% of the TaoBao users after they see items on TaoBao they will log on to Xiaohongshu to find more reviews. We don’t know where they buy them eventually, but I think finding the place to make the shopping decision becomes more and more important, and I believe that are a lot of them are turning to Xiaohongshu users.

HANS TUNG: That is very interesting. I remember when I first moved back to California in 2013, one of the first things I noticed was that companies like Pinterest that inspired this whole social sharing movement just don’t want to touch commerce at all. They just want to do ads. Yet everybody in China from our investment in Meilishuo which turned into Mogujie, and just every app we see I always think of commerce first, whether it’s a transaction around fiscal goods, or a transaction around virtual items. This is why when we met during due diligence, we highly encouraged you to do commerce, but we know that you always say, “Content company first”, commerce is the extension of the value you provide to your users.

MIRANDA QU: I think first our e-commerce really provides our users a good experience and helps them to understand the platform. Right now we’re an open platform. We do e-commerce, but we’re not like an e-commerce platform, because we have so much content and users, so there are a lot of new brands that want to sell here. So they can operate the shops themselves, rather than we having to do a lot of heavy things. I think that’s going to be the future, but we will still build the value chain on logistics, to provide the right delivery and help smaller overseas brands to transport those items from overseas to China to individuals. And another thing is to provide the best customer experience, and that’s why we have the Wuhan offices.

HANS TUNG: When you first started doing commerce you were stockpiling inventory for the bestselling products in order to secure supply to sell to users, but over time you have evolved like you said into a marketplace. Walk us through how you guys made that transition, both organizationally and also operationally? How did you end up executing that strategy?

MIRANDA QU: First of all, I think when we started with e-commerce we knew that this day will come, because our strength is content. In our social platform every day there’s over 1 billion exposures to those notes and the content every day, but very few of the items we can take in inventory, so we’re gradually working to the marketplace. When we first started we really wanted to be the best bid, so that we sell to users rather than to the marketplace. Last year our marketplace was our main strategy point and we started to help more retailers to offer more items. We integrate the platform to provide more items, so that when people see content there are more things to buy. And then there are a lot of brands here as well, for example, Xuehuaxiu from Korea, and those brands now love us, because when they start to sell at Xiaohongshu they start getting even more traffic to their stores, because Xiaohongshu is the place people go and discover things. I think that’s the first stage. But this year we’re focusing to more open tours, so there can be more new brands on Xiaohongshu. Our strategy will be that if you think you fit our user profile you can open your store here, and we will have a lot of tools to help you. But of course we’ll have a lot of rules to make you provide the best customer experience. I think what we will see is there will be a lot of new emerging brands sooner or later.

HANS TUNG: That’s interesting. Originally we do think that Xiaohongshu is the place to discover new things, but over time it’s even more powerful when users can discover new things elsewhere, but come to Xiaohongshu for additional research, verification, knowledge and tips, and then eventually maybe even just stay at Xiaohongshu and buy from Xiaohongshu, because it’s more authentic.

MIRANDA QU: Yes, exactly. So nowadays we’re putting a lot of emphasize on the tours to organize the information. I think that’s very essential and that’s valuable.

ZARA ZHANG: How much do users use your search function, because they do a lot of discovery, right? Do they still search for things in a targeted way?

MIRANDA QU: Yes, just as Hans mentioned, nowadays there are more situations where people discover a lot of things maybe offline, or discover things on WeChat, but we’re more like, in Chinese we would call it “koubeiku”, we’re kind of a platform that has a lot of reviews and comments which are generated by users, and they’re very trustworthy. That’s why users will eventually come to the platform to discover more information. And actually most of them make shop decisions here, and that’s what matters most.

ZARA ZHANG: Do you use AI and other technologies and algorithms to recommend and personalize content for users based on their interests?

MIRANDA QU: Yes, definitely. I think that was the main focus for the last year, because when you use an added model you can only cater to one kind of users, but when we use AI and machine learning to start to learn about users, everybody sees things differently. So last year both our content and e-commerce launched the AI strategy, so now every day we see different things.

HANS TUNG: So as you incorporate more personalization, recommendation into your algorithm, how do you balance, for example a young user, and based on what she buys, you can tell that she’s a young user, and you can get a sense of her budget, how much she spends on each order. So how do you balance between pushing other stuff that she can afford for her to see, versus something she would aspire to, or want to be inspired by? How do you balance which are the products you let her see first?

MIRANDA QU: First of all, one very interesting thing about our data is the main data we use is not coming from the purchase behavior, but from the content. What they see and what they like, I may only buy a ¥40 RMB lipstick, but I want to see this ¥300 RMB one. So the data sources are different. And then another thing is the model is changing everyday. We always input a lot of new ways to best use leverage traffic. So right now we don’t have the best model, but it’s improving every day.

ZARA ZHANG: The one question we ask every one of our guests is their working schedule. This podcast is called 996, and for our listeners we are recording this at 10:00 p.m. on a Friday in Beijing, so I just wanted to ask what are your typical hours at Xiaohongshu as a startup, and how has it changed over the years?

MIRANDA QU: At first we worked six days. Now we’re just doing five working days. We start the day at the company at 10 a.m. Nowadays a lot of teams near the end of year they still have to work very hard from about 10, or 9, but for some teams I think they can get up earlier.

ZARA ZHANG: But it’s busier during certain seasons, like Double 11 and other shopping festivals.

MIRANDA QU: Exactly. I think overall we’re still kind of a startup company with people that are crazy for the things they want to do, so they would not care about really the working hours and would rather focus on the accomplishments that they can achieve here.

ZARA ZHANG: Recently in the U.S. we had a Black Friday, and Xiaohongshu also had Red Friday. Could you talk about this year’s Red Friday and how did it go?

MIRANDA QU: It went very well, of course. Red Friday is kind of a festival that we created for those who love the overseas products. And I think this year is a bit different because this year we ventured into Double 11 for the first time, so our users now have two festivals in November. We see a lot of reviews and they are very happy and enjoying this whole month of celebrations by purchasing a lot of things..

ZARA ZHANG: “Duoshou” or hand-chopping month.

MIRANDA QU: Exactly.

ZARA ZHANG: So as both an e-commerce and social platform how do you define success for Xiaohongshu, because success can mean different things. I guess for social platform it’s usually measured by engagement and number of MA use, and for e-commerce it’s usually measured by GMV. So how would you balance those two?

MIRANDA QU: I think for this stage our main focus is on the social platform. The success I would define as when the young Chinese people want to discover more lifestyles, the first brand popping out in the search is Little Red Book. I think that’s the kind of success we want to achieve. Because I always think of ourselves as an online Disneyland. Disneyland would present fun, love, and a lot of traffic from the very rich, which in China we would call “baifumei”. To somebody who’s traveling to Shanghai for the first time, they all go to Disneyland offline. But actually the ticket is not their main business model. They have restaurants, they have shops, they have a lot of things inside.

HANS TUNG: Yes, for their consumers to buy.

MIRANDA QU: Yes, exactly. I think our community is the Disneyland, so our main focus is to build a Disneyland to attract more people. And then at the same time we can build the restaurants, the shops. Right now we do not have that many shops and restaurants, which means there is not many things you can do or consume on Xiaohongshu, we’re still building. Our main focus is to build a larger Disneyland so that more people can come here and really discover more things.

HANS TUNG: As you continue to expand your product selection, inevitably you’ve grown so fast that now you attract other people’s attention. So a couple of years ago Netease has introduced Kaola, and then last year started a business that is comparable to a cheaper version of Muji. How do you guys think about your competition? How do you plan to continue to be differentiated from them? And how do you guys think about private label in general?

MIRANDA QU: I think first of all they’re doing very well. We learned a lot of things from them as well, like how to do a scalable business in a very short time. I still think we’re very, very different. We’re social based and really not a purely e-commerce platform. For private label I would think that every company has a very different strategy. Because Xiaohongshu is the label itself. When you think of Xiaohongshu you think of quality life and you think of beautiful life. We tackle into this market and we want to do something about the brand, something about design, something of good quality, rather than doing a cheaper version, or something that is known in China as “xingjiabi”. We would really do some brands that are reasonably price but that young people love.

ZARA ZHANG: Let’s go into to the final part of the podcast which is a quick-fire round. The first question is what motivates you to wake up each morning and what keeps you up at night?

MIRANDA QU: Wow, I would say to really make the world a better place.

ZARA ZHANG: Through Xiaohongshu?

MIRANDA QU: Yes, through Xiaohongshu. Now we’re around 1,000 people and you feel a very big responsibility for the team.

HANS TUNG: What was the most inspiring story that a user has shared with you?

MIRANDA QU: I still remember in the very early days, one day we received some hongchang from Harbin. One of our users has written us a long letter, and the sentence I remember most was that, “I really want to thank you guys because you made us see more possibilities.” So she wants to better herself. I think that’s very touching. You have changed someone’s life and I believe there’s a lot of stories like this on Xiaohongshu, and that really gives us a lot of motivation to work harder.

ZARA ZHANG: To have women build their confidence.

MIRANDA QU: Exactly, to find their confidence and they gradually build on that.

ZARA ZHANG: What keeps you up at night? What do you worry about?

MIRANDA QU: I think sometimes I don’t know whether I’m growing fast enough to keep up with the pace of the company.

HANS TUNG: Personally or?

MIRANDA QU: I think first of all personally. If I stop growing there might be a chance that the company will grow slower. So I always wanted to know what I don’t know, and I think that really helped the company to grow faster.

ZARA ZHANG: What do you do to ensure that you’re growing constantly personally? Reading and talking with a lot of people?

MIRANDA QU: Yes. Did you know last year, I was in “Qingteng”, Qingteng is like a community created by Tencent, and it’s like 50 startup CEOs. We went to a lot of classes and a trip together. I think that really helped a lot. I made a lot of friends and I got a lot of new ideas. And another thing is that I read books. I think I read over 20 books last year.

ZARA ZHANG: Wow, that’s a lot.

MIRANDA QU: When you have a question nowadays there’s a lot of ways to learn. You can read a book. You can listen to a podcast. There’s a lot of ways to learn. Once you have a problem you can talk to a person and you can learn it yourself.

ZARA ZHANG: So out of those books which one was your favorite?

MIRANDA QU: Recently I read two books, the first one was called The Leadership Pipeline. That’s actually a very classic book about management. This year the team is growing very fast and we have the anxiety of not managing it good enough. So after reading this book I have more sense about the management, so I think that’s one book I liked. And another book that is very interesting is Sheryl Sandberg’s Lean In. It’s also an older book. This year I think in the coming months I will have the opportunity to do a Red Talk with Sheryl Sandberg, so I started to review this book again. I found a lot of similar things on the book relating to The Little Red Book, so I have a lot of personal feelings attached.

HANS TUNG: What is one example?

I remember Sheryl wrote that when she was thinking about joining Facebook she could be the COO of LinkedIn or the COO of Facebook, and Mark told her, “If you are offered a seat on a rocket ship, just take it.” A lot of people when they join Red, they have a lot of questions about the package, about titles, that’s a sentence that I would share with them.

ZARA ZHANG: What is something that you believe in that others may not?

MIRANDA QU: I think I’m just a very optimistic person. I always believe that tomorrow I’ll be better. Before, I thought that everyone thinks the same, but later I found out it’s not something that everyone believes in.

ZARA ZHANG: What is the lowest point that you’ve experienced throughout your journey and what motivated you at that time?

MIRANDA QU: I think mostly it’s the people I work with. Charlwin and I are long term friends, and also the management team as well, is made of people who have followed us through the journey. Every time I talk to them I really feel the strength. They have invested really a lot of time and made a lot of the sacrifice to make Red what it is now. So when I think of them every day I think I just have to keep up with the growth.

HANS TUNG: If you have any entrepreneur or executive that you admire besides Sheryl Sandberg?

MIRANDA QU: Pony Ma. The last time I met him was one month ago during a charity dinner. Pony has made a lot of personal effort on that dinner, for example, to sell Wechat moment ads to gather more money for kids. In public eyes, he is very successful and has a very high position, but he’s so humble, and he’s really made a real personal effort to try to shake people’s hands, see if they donate any money, and to promote a lot when they did the auctions. I think I really see every little effort he makes in every little thing. I think it’s really touching.

ZARA ZHANG: Well, thank you so much for joining us, and we wish you all the best with Xiaohongshu.

MIRANDA QU: Thank you.

HANS TUNG: We’re sure the best is yet to come.

MIRANDA QU: Sure, it will be.

HANS TUNG: Thanks for listening to this episode of 996. By the way, we also produce a weekly e-mail newsletter in English, also called 996, which has a roundup of the week’s most important happenings in tech in China. Subscribers have told us it is informative and fun to read. The newsletter also features original content and analysis from Zara and me. Subscribe at 996.ggvc.com

GGV Capital is a multi-stage venture capital firm based in Silicon Valley, Shanghai and Beijing. We have been partnering with leading technology entrepreneurs for the past 18 years, from seed to pre-IPO. With $3.8 billion in capital under management across eight funds, GGV invests in globally minded entrepreneurs in consumer, internet, e-commerce, frontier tech and enterprise. GGV has invested in over 280 companies with 29 IPOs and 22 unicorns. Portfolio companies include Airbnb, Alibaba, Ctrip, Didi Chuxing, Domo, HashiCorp, Hello-Bike, Houzz, Keep, Slack, Square, Toutiao, Wish, Xiaohongshu, YY and others. Find out more at ggvc.com.

HANS TUNG: If you have any feedback on this podcast or would like to recommend a guest please e-mail us at 996@ggvc.com. This podcast is co-produced by our friend and business partner, Kaiser Kuo, the host of the wonderful Sinica podcast. It covers China’s economic, political and cultural issues.