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November 06, 2006

Wangyou Chinese YouTube?

posted by MR WAVETHEORY at 11/06/2006 11:30:00 PM
Scobleizer thinks YouTube/Google has Chinese Competition from Wangyou. I agree with Scoble that the Chinese home grown YouTubes will put up a good fight against YouTube but I have to add that the Chinese online video sharing space has seen alot of hype. An entrepreneur I met who recently sold a company mentioned to me that the source of Wangyou's traffic is - how shall we say - not completely transparent. In his words (not mine), "CEO Buddy Ye, is a sketchy fellow." Take for instance the Alexa traffic ranking chart. Notice anything peculiar about it? Well, there's a large spike in traffic right around April and May and the traffic dropped as fast as it rose. Why? According to my source, Buddy spiked the traffic right when he was closing his Series A investment from Charles River Ventures. Wangyou raised about $5 million. The traffic spiked quickly - it's easy to do that in China - and it fell back just as fast. To be honest, I don't know how much of the spike has to do with the fund raising, but I have seen enough to know that entrepreneurs (American or Chinese or for that matter all entrepreneurs) love to pull out all the stops and provide prospective investors the impression of exponential growth right when you're putting your money in. That's the tricky part about investing in startups. Whatever happens after you invest of course is another story. And it's infinitely harder to tell the difference between reality and hype when you invest in China.

Update: George Zachary from CRV wrote in and mentioned that they had closed their investment in Wangyou well before the spike in traffic in the February/March timeframe.
I am still wondering how traffic spiked that fast. I'm not just singling out Wangyou here. If you look at another site, BlogChina, fka/aka Bokee, which is one of the leading blog hosting companies in China, you see a similar spike last year. The company announced a seed round around August 2005. Traffic ramped right until August and then cratered. Then, the company announced financing from Bessemer Venture Partners on September 28, 2005 and you can see the traffic spike right afterwards and cratering.


To further refine my question: where are they getting these large spikes? What is the origin of the traffic? And perhaps, is it that easy to game Alexa?
Website traffic tracker Alexa reset its rankings and traffic statistics for Chinese blog service provider Bokee and financial website Hexun to zero on January 7. Bokee and Hexun's traffic ranks have dropped to 470,929 and 386,331 respectively from 33 and nine before the adjustment. According to an insider quoted by Sina, Alexa cleared the statistics of websites that cheated on their traffic rank. Bokee's statistics were also reset at the end of January 2005, Sina said.
Even more recently, Alexa recently removed dozens of Chinese websites from its index.
The sites include Chinese community website Mop, Linktone's (Nasdaq: LTON) linktone.com Chinese online advertising agency Allyes's allyes.com, MSN's Chinese portal msn.com.cn, Alibaba's online payment tool AliPay.com, Chinese BBS aggregator Daqi.com (formerly ChinaBBS.com), Online community website Xilu.com, Beijing Youth Daily's website Ynet.com, chinanews.com.cn, Shenzhen based download accelerator provider Thunder's Xunlei.com, Roxbeam Media's Rox.com.cn, Chinese website aggregator Hao123.com, Internet address directory 9991.com and Chinese online dating site Baihe.com.
The interesting take away from all this is that Chinese entrepreneurs know that foreign investors and VCs care about Alexa rankings and they are goosing their Alexa rankings for investors to try to raise financing.

Note to self: Excercise caution when investing by Alexa.

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1 Comments:

Blogger Jessica said...

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You can also drop me a message from there.
Chao!
Jessica.

9:27 AM  

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