Sherpa’s founder Mark Secchia talks about starting a successful business in China.
Q: What made you come to China and start your career here?
A: My wife. In 1996 I went to Wuhan, where my then-girlfriend was teaching English. Wuhan wasn’t a very welcoming place for foreigners back then. On my way back I flew through Shanghai and I fell in love with the city. So I went home, I quit my job, I sold my car and I followed my girlfriend to China and she is now my wife and the mother of my daughter. At first I was an English teacher. After three months I took a job with That’s Shanghai, which was just launching in 1998. I worked there for about a year and then I decided to do an MBA as I always wanted to start my own company.
Q: How did the idea for Sherpa’s come about?
A: It was during my MBA studies at CEIBS. It was during that time when I went back home at night, my wife was working and neither of us cooked. We quickly got sick of eating pizza and Chinese food. We started calling a bunch of nicer Western restaurants and they all said the same thing – we don’t deliver but a lot of people ask for it. So there was clearly a lot of demand and at that time in Shanghai there were so many Western restaurants and they were all empty. So you had this extra capacity that was dying to get some revenue in it and you had demand and to actually start a company you don’t need that much money.
At school I had founded the Entrepreneur’s Club. For my internship I wrote a business plan, raised money and spent the investment on Sherpa’s. I had two of my Chinese classmates to help me at the beginning.
Q: What kind of challenges did you face in starting a business here?
A: Registering and launching a business in China was really difficult at that time. There are so many different ways to register a business here, whether you go to a foreign lawyer, a Hong Kong lawyer, a Chinese lawyer or you do it by yourself. I had help with my two Chinese classmates and we decided to do it all by ourselves. Overcoming these kinds of difficulties was one of the reasons I decided to team up with Chinese partners.
Apart from that, about a year and two months after we launched Sherpa’s, I ran out of money. My health suffered and I was having nightmares about not being able to pay our staff or the restaurant partners. That was the most difficult time for me, but around mid-2001 we hit the turning point, when more and more foreigners kept pouring into Shanghai and although we didn’t build the company to specifically serve foreigners, it kind of turned out that way.
Q: How did you expand your business?
A: Sherpa’s expansion probably started around 2003 when I hired a British lady to be our marketing manager. She was the one who moved our office to Pudong. At the beginning we were based in Hongqiao which was one of the worst decisions I made.
Later on we knew we had to expand to Beijing. In order to do that, we decided to move to Suzhou and Hangzhou first to give it a try and see if it worked. It did and six weeks ago we expanded to Beijing.
Q: Has your business strategy changed since the arrival of Sherpa’s competitors in Shanghai?
A: Not really. The problem with our business, and that’s a very good problem to have, is having to keep up with growth. We grew 60% a year when we were small and as we grew bigger, our growth slowed to 40% a year. The reason it slowed was because we were unable to keep growing, whether it was a problem with finding office space, training staff, ability to handle phone lines or hiring staff. A couple of years ago we had a problem with hiring call staff. Now we have a problem with hiring couriers. At the moment we have about 150 couriers in Shanghai and we still need more. Around 7pm we already have to tell our customers their orders will be delayed about half an hour. So I really can’t say that our competition is pushing us. We are actually pushing ourselves. I can’t imagine our market being different with or without competition. Our customers realize that they have a choice. If they are fed up with our delivery delays they can go to our competitors but probably that is a better thing because if everyone tried to come to us we just wouldn’t be able to do it.
Q: What would be your advice to people who want to set up their own business in China?
A: Two most important things are connections and language skills. Also, if you have no experience in what you want to do, you will have a really hard time succeeding. If you have a vision or plan to do something, the first thing to do is to get an internship or work in a company that’s in that industry. Once you get beyond that, you need either language skills or connections. These two things are the coloration to success. If you want to be a successful entrepreneur and build your business with more than two or three staff, you really need to speak the language or you need to know the right people.