ShenzhenWare.comTerry Cheng @ Terry & Friends

SHAN ZHAI

The Ecosystem of Makers and Startups

2.0

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I am TerryJoined HP Taiwan President, China HP President, TI Asia Executive VP, Foxconn Technology Group Foxconn International Holding Retired Mentoring young Makers on the startup journey

from Terry & Friends

Age 27 Age 40 Age 45 Age 56 Age 59 Age 60 Today

Cartoon, by Shining Hsiong, founder of ShenzhenWare, with Pencil Fifty-three on iPad.

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Maker Space Manufacturing Space

From Maker to Entrepreneur: Innovation comes from Long Tail, Entrepreneurship comes from Makers

From Idea to Prototype

moduleSmall batch Supply Chain

& CM

Accelerator Lacks supply

chain & Manufacturing

expertise

Scale production How to attract

attention of large companies

Sales Domestic &

Overseas

INNOVATE

REPLICATE

COMMERCIALIZE

MANUFACTURE

Crowdfunding Small batch manufacturing

Accelerator VC funding

Scale production Sales

Phases Challenges

Diagrams from Terry Cheng’s keynote speech at MDCC presented by CSDN in 2013.11

0

0.1

1K

1

100K+

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August 2014 Shining and Terry started the “Terry & Friends” group as a means of connecting and mentoring Makers on the Start Up journey. The group started with 40 members to over 6,000 today.

Enabling Hardware Entrepreneurship For makers in Chine through a series of public events

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IN THE FIRST

248 DAYS What did we accomplish?

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WECHAT WECHAT

WECHAT Reply every single message from members on WeChat

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WeChat as a social platform Managing relationships with 6,000 members

Endless replies on WeChat everyday through the iPad:

• All handwritten in traditional Chinese characters • Every new member receives a personalized message with

Terry’s bio • Personalized dialogue and discussion • Ensure all replies are prompt and completed before EOD • Encourage participation from new users of WeChat

Cartoon, by Shining Hsiong, founder of ShenzhenWare, with Pencil Fifty-three on iPad.

ShenzhenWare.comEnglish

turtle

Simplified Chinese Traditional Chinese

龟 龜

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Public events Over 20 events in 6 major Chinese cities

Every month Terry travels to China from Taiwan, hosting events in Shenzhen, Guangzhou, Shanghai, Beijing, Chengdu, Taipei, and Hangzhou to strengthen relationships through offline events.

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One-on-one mentorship Providing mentorship to local startups

218 90 327Teams

mentoredMinutes per team

Hours in total

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Mentored teams Product categories

12222

333

444

55

77

88

99

2428Smart Home

Smart WearablesRobots

Smart ToysSports & Lifestyles

Health CaresVideo & Entertainment

IoTSmart Office

Smart CarTablet

Wifi ChargerO2O

Overseas EcommerceSecurity & Protection

3D PrintingDrone

Smart BuildingSmart Store

Industrial EquipmentsMobile

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Mentored teams Service categories

0

0

3

3

4

4

5

8

10

13

15Maker Spaces / Incubator/ Accelerators

Supply Chain

ODM/OEM

Resource Channels

Industrial Design

System Integration

Open Hardware

Education

New Materials

Media

Investors

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Challenges in hardware startups On the product level

Product Definition‣No product

differentiation ‣ Lack of market

direction

Talents

Technology Realization

Equity Distribution

Supply Chain & Fabrication

Business Model

Sales Strategy

Funding

…

‣ Lack of feasibility ‣ Low technical

competence

‣ Low quantity ‣ Lack of manufacturing

vendors ‣Dependancy on supply

chain

‣ Lack of sales channels or wrong channels ‣Unclear online vs.

offline strategies

‣ Lack of specific talents ‣ Lack of attraction

‣Over distributed ‣Over centralized

‣ Long product iteration ‣No sustainable

business plan for growth

‣Not enough funding ‣Over reliant on

investors

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Lack of vision A common problem

Most teams have young members with little work experience. Most teams do not plan for the future and also lack the whole picture. They can’t see the forest for the trees.

Cartoon, by Shining Hsiong, founder of ShenzhenWare, with Pencil Fifty-three on iPad.

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WHAT IS THE

FUTURE OF T&F ?I am also contemplating.

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You read a book from beginning to end. You run a business the opposite way. You start with the end, and then

you do everything you must to reach it.”“

Former ITT President：Harold Geneen

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T&F Future:

REDEFINE SHANZHAI

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Shanzhai Ecosystem in Shenzhen Is Shanzhai equals to

山寨Shan Zhai

= COPY Low Quality

IP InfringementLow Cost

Avoid Copyright Fee

?

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Shenzhen Shanzhai Phone EcosystemShanzhai 1.0

In fact, the Shanzhai Phone ecosystem in the past provided environment for innovation and creation. It continuously improved supply chain ecosystem that brings ideas to mass production efficiently. It also fully unleashed the technical advantage from tooling materials to industrial design replying on the diverse distribution channel across the country and the world fertilized hundreds of thoughts of small businesses…

Shanzhai plays a crucial role in Shenzhen becoming the global manufacturing center!

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Shenzhen Shanzhai Phone EcosystemShanzhai 1.0

Funding Platform(e-BOM)

4 Core Modules

Design House

IntegratorPhone Case

Foreign Brand

Domestic Brand

Mobile Brand

System Brand

Distribution Channels

Branding ChannelsOrder

Order

Order

Shipping

Consign

ConsignOrder

PCB Shipping

PCBA Assembling Factories

System Assembling Factories

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Shanzhai is dying Why is the ecosystem decaying

‣ Single mobile phone market has matured, profit margin gets smaller ‣ Higher technological barriers as smart phone enters 4G/5G ‣ Internet and e-commerce replace the advantage for physical distribution channels ‣ Government policy suppresses copying, infringement, low quality…

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Chance for Shan Zhai to be Reborn Rethinking about Shanzhai’s future

Internet IoT Maker Movement Modulation Open

SourceShanzhai will not be in Shenzhen only, but the entire country, even the world

Incubator, accelerator, foundation, media, government policy that encourages innovation and entrepreneurship...

Everything is connected, one product to product system

More creative and innovative talent

Accelerated product development

Open source hardware + software，shorten R&D time, lower development barriers

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#1Main Group #3#2 #4

WearableProduct Dev

GroupRobotsToys Drones

Health & FItness Audio

Smart Home Router

Industrial Design

Supply Chain

Marketing & Sales Investing Incubation Media

BeijingRegional

GroupSouthwe

stHangzhou TaipeiNorth

America

LeisureEntertainment

GroupFoodieSoccer English

Resource Group

…

…

…

…

…

Beauty Connected Automobile

Biking

Hangzhou

Shan Zhai 2.0 Ecosystem StructureT&F

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Leveraging by the InternetShanzhai 2.0

Congregation Consolidation Integration

of resources based on main

group

of expertise based on

specialty group

of information and value flow system, based on software

platform

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What else we need to do?Shanzhai 2.0

Integrity Open Source Innovation

Integrate Online and offline to establish Core Value System and to build The unique Shanghai 2.0 culture :

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WHY I AM

DOING THIS Many people ask me the question：why are you doing this? I can spend time doing things with more monetary return. Bill Gates earns millions per hour, but he still gotta pay movie tickets. This makes me HAPPY!

ShenzhenWare.comSeeed Studio | O'Reilly Media | Techshop | ShenzhenWare

David Cranor Dellaena Maliszewski

Jon Bruner for helping to make this happen.

Shining Hsiong Mengmeng Chen Zichuang Xiong

for helping me with the slides.

SPECIAL THANKS TO

ShenzhenWare.comTerry Cheng @ Terry & Friends

THANK YOU

The Ecosystem of Makers and Startups

Contact me via: terry@shenzhenware.com