A Chinese Start-up’s Midlife Crisis: 99Sushe.com Harvard Case Solution & Analysis

A Chinese Start-up's Midlife Crisis: 99Sushe.com

Introduction

99Sushe.com was established by Li and Pao in 2006. The company has currently 35 employees, which means it is a small company. The owners self-financed the first project beta with a very low advertising, but just after one month the company acquired a significant number of users. For the further expansion of the business, the founders encouraged their classmates, professors, former employers, and other major connections to invest in the company and it would help to generate 200,000 dollars.

In order to attain the local Chinese status, the company’s name changed to 99Sushe, which helped the company by maximizing its local presence among the local inhabitants. After changing the name of the company, Li and Pao changed the business model to online gaming in order to take advantage of the fastest growing online gaming network.

The online gaming market is very saturated and there are a lot of social and networking sites for online gaming, therefore Li and Pao followed the niche market segmentation policy by targeting the college market, as on the basis of their research it was clear that the college market hadsignificant potential to grow and there were significant number of users, which could easily fulfill the need of expected target consumers.

The company has grown significantly in a year and it generates significant revenue and it is expected that at the end of the year 2010, the revenue of the 99Sushe.com will be more than $3 billion, which shows that the Chinese market has a significant potential of growth.

Problem Identification

The company started its operations by operating in a social networking site. By looking at the need of the market, Li and Pao changed the business model of the company from social networking site to online gaming site. The basic source of revenue of this model is to increase the number of users as much as possible and it is expected that each new user will also suggest his friends to join the sight and it increase the revenue with the increase in users.

In order to increase the number of users, the founders partnered with eTang.com. ETang.com is a famous web portal in China and conducted national College English Test on behalf of the ministry of education. Therefore, every student who wants to clear the College English Test should be enrolled with eTang.com.

By partnering with ETang.com, Sushee99 is considering acquiring the larger number of users as each user of the eTang.com will expect to be registered with Sushe99 with just one click. Therefore, this partnership helps a lot in acquiring the greater number of users.

The ministry of education pushed downthe page of the company by claiming that the information, which the company is using,is very straight and of confidential use. Furthermore, they claimed that showing percentile is creating problem for the ministry regarding the parents, therefore partnering with eTang.com would be terminatedby the intervention of the government.

In order to deal with this problem, Li and Pao have not created any alternate plan, which creates serious concern for the founder of the company.

A Chinese Start-up’s Midlife Crisis 99Sushe.com Case Solution

 Case evaluation from Perspective of the Entrepreneur

SWOT

Strengths

The founders of the company, Li and Pao,have significant knowledge about the business and industry. Both worked together in Harvard Business School and have a very strong background instead of working in Harvard Business School and significant experience related to industry. Strong background of the founders could help the company in order to deal with uncertain conditions.

In addition to this, the company’s target market is college students. The number of students in college is increasing continuously, therefore it is expected that the increase in number of college students will increase the number of users. It is also expected that the users of online gaming are mostly students; therefore by targeting this segment, the company can acquire wider number of users of online gaming.........................

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