Case
Developing Yumcha Version 2.0 Tan decided to leverage the emerging social networking trend, as well as developments in social networking technology, as an advantage; there was still no dedicated Asian Australian community portal in Australia. She remembered that the Jewish community numbered 102,000 in Australia and had over 120 dedicated websites; the Asian community, which numbered over 1.5 million, had none. Having worked for a large Japanese company for a number of years, Tan wanted to return to Australia and live the entrepreneurial life of working from home, no longer having to answer to a boss. While in Japan, she was a member of mixi.co.jp, a Japanese language website which enabled networking amongst Japanese professionals. Australia was increasingly connected to the Asian region, with Sydney having hosted the Asia Pacific Economic Conference (APEC) in 2007, the largest ever gathering of political leaders in the nation. The country’s commercial interests were increasingly tied to Asia, displacing its traditional partners the United States and United Kingdom. Japan, China, the Republic of Korea and India were Australia’s top four export markets in 2008200912. In developing Yumcha 2.0, Tan wanted to keep her initial commitments and overhead expenses low — her office would be at her Sydney home, and the only immediate hardware requirements would be her desk top and laptop. She did not approach any external funders for capital, as she did not want to give up ownership or be constrained by any debt related covenants in running her business. She felt that all the key tasks for Yumcha could be performed at a minimal cost and funded by her existing income from being a teacher and jazz singer. Another important consideration was her choice of platform—or software—which would be used to run the entire website. Two options were available to Tan: phpFox and Social Engine. Both phpFox and Social Engine were social networking scripts designed for anyone to create their own social networks. They were written in PHP programming language and could be customized to suit the individual needs of the site. The caveat, however, was that while they appeared simple to configure, one needed programming experience or a budget to hire a programmer familiar with customizing the script language to a particular site. While both options offered the same business functionality in terms of features they could provide, phpFox was considered the standard social networking software for new startups in 2007. In looking for developers, Tan found that the significant majority of programmers were phpFox specialists, and that Social Engine, while considered to be a more stable program resulting in fewer site crashes on average, was too new to the market and therefore not widely adopted. PhpFox was more affordable, and Tan’s three potential developers had expressed a preference for phpFox; however, Tan knew that site stability would be an important consideration when finalizing her information system strategy.
The Product The new Yumcha website would provide relevant information, networking opportunities and ancillary services of interest to Asian Australian professionals. Revenue would be sourced from user membership fees and from advertisers targeting Asian Australian Internet users. The growth strategy would involve leveraging avenues such as Google AdWords, Facebook groups, LinkedIn and Twitter updates to recruit members. Tan was insistent that no high upfront promotion costs be incurred to minimize the personal financial burden; she felt that there had been enough developments in Internet technology over the last few years to build a technically sound website and see it shepherd its growth organically through resourceful use of existing online advertising mediums. The revenue for Yumcha would come from advertisers (see Exhibit 2). The aim was to keep advertising rates low, while ensuring strong value in exchange for the fee. While revenue was the bottom line, Tan was aware that the higher the number of members, the more advertising revenue she could generate; thus, Yumcha would operate with free membership in its early days.
The Experience Users would sign up for an account, granting them access to the site. After signing in, they had a dedicated profile page, as well as access to different sections of the site, including other member profiles, blogs, articles, job postings and discussion groups. Tan found that there was strong initial interest in joining the site; however, new user activity decreased over time, and most members returned infrequently. She needed to develop strategies to ensure that users remained active on the site after joining.
Strategic Objectives Yumcha would remain in a beta phase following its target launch date in June 2008. The beta phase of new software was its testing phase before an official release. An ‘open beta’ phase of a new software offering made it available to the general community, with the aim to identify prospective weaknesses or bugs in the program during its normal course of use. This gave Yumcha an opportunity to run as a business and iron out any unforeseen issues while improving existing business processes. After completing the beta phase, the objective was to have 15,000 paid members, with 5,000 by August 2010 and a further 10,000 joining by August 2011. Membership would be free initially, with the aim to attract more advertisers due to a larger membership base. All members would gain access to Yumcha’s offerings, which included the following: l Connecting with other members, l Browsing and posting job vacancies, l Accessing events advertised on Yumcha within Australia, l The ability to share links, blog, upload photos and video. Exhibit 3 provides sample screenshots of the Yumcha website.
Revenue Generation and GrowthTan’s most pressing concern was how to grow revenues from membership and advertising sales. To do so, she used a number of marketing avenues, both online and offline. Online, she used a suite of advertising tools including promotion through search engine optimization technology (ensuring that Internet searches for keywords relevant to Yumcha resulted in higher listings), Facebook user groups and a Twitter site dedicated to Yumcha. These required no marketing budget, and aligned with Tan’s objectives of running a startup site with minimal upfront costs. Offline, Tan tapped into her extensive business network, built up over years working with major Asian firms and government agencies, and her own extensive social network in Sydney, Australia. Given Australia’s proximity to nations such as Singapore, China and Japan, Tan was able to get support from government missions in Sydney for the initiative. The government of Singapore, for example, was known for proactively looking to engage with its neighbors, ideally through professional and academic networks to recruit top talent to its shores. Their Contact Singapore office in Sydney was well resourced, with the mission to encourage businesses and qualified professionals to consider moving to Singapore.
Yumcha Events Tan wondered if offsite events in real time could be organized to increase Yumcha revenues and exposure for its advertisers. Initial surveys showed many people in Sydney had signed up to be invited to these events, and perhaps there was value to be had in developing an online and offline presence for Yumcha.
Conclusion - As Tan thought through the issues facing this new venture, she knew she had to ensure that her business strategy was clearly defined, and that it drove her information and organizational strategy decisions. Many questions still ran through her mind: Who was the best developer to support Yumcha’s launch? Should she risk going with the international developers, or go with Australian options? What exactly was Yumcha’s optimal value proposition? Were there offline networks that she had not tapped? How could she differentiate Yumcha to ensure a unique value proposition, and then communicate this to her target market? What types of organizations should she approach to sponsor the entity? She was excited about the available opportunities and options, but knew she would have to use her limited resources wisely to successfully develop the project to its full potential.
Questions
1. What were some of the rationale of Ms. Tan’s decision to launch Yumcha? Do you think it was a wise decision given the existence of many other social networking websites such as Facebook etc?
2. What were some of the challenges Ms. Tan faced in finding developers from around the world? Do the behaviors of the developers reflect their national culture?