Tarry Wang Liantao, Co-founder and chief operating officer
Xiaozhu is a Beijing-based short-term rental and management platform. Launched in 2012, the company recently established a second base in Chengdu. It has already expanded to Japan and Southeast Asia.
Tarry Wang Lintao launched Xiaozhu with co-founder Kelvin Chi Chen, achieving "unicorn" status in late-2017 with a $120 million round. This was followed by $300 million in funding in October 2018, and the company plans to develop IoT technology for hosts.
What made you decide to set up a home-sharing business?
It was first founded in 2012, and back then no one believed the Chinese people would be willing to share their houses with strangers because there was no foundation, no culture for sharing in China back then.
For Kelvin [Chen Chi] and I, we saw a trend and saw the mobile internet developing and the belief that saw it enabling the Chinese people for a more trustworthy social environment.
We believed we could solve the problem of safety and security and started the platform.
Chief operating officer
Is it good or bad to be called the Airbnb of China? Explain your answer...
We don’t mind being called the Chinese version of Airbnb. Essentially, we’re quite different from what Airbnb does globally. It is a platform for international users to share their houses.
Xiaozhu is more than that; we’re also a service provider. From the very beginning we have started to establish an industrial internet-based infrastructure that enable landlords to share their houses with users.
We also create a service team such as photography, cleaning services and reception to provide hosts with services that they themselves could not do.
Competition in the home-sharing space in China is fierce. What will it take to win?
We believe that our core competence lies in our industrial service chain, our internet-based infrastructure. We’re not only providing a platform; we’re the only company that provides users the full circle of services.
We’re creating our own IoT systems, providing users with facial recognition-enabled door locks to enable users/guests to enter a home with facial recognition.
We’re also providing users with smart devices such as gas detectors and burglar alarms; that’s what we think our core competence is.
Xiaozhu recently raised $300 million, and part of the investment will go towards developing IoT services for homes. Tell us more about the development and why it is an important part of the strategy.
First of all, Xiaozhu is trying to collect the scattered homes in China. There are millions of scattered homes and apartments across China in every city and that’s quite different from the U.S. or other cities in Europe.
We’re trying to provide this full-service chain that enables them to be shared.
Don’t just create a platform - make the industry better.
Tarry Wang Liantao - Xiaozhu
Also, with the full-circle IoT system and smart devices, the host does not have to be present to receive a guest during a stay.
With smart devices, the government and China organization and central government can also get access to data to ensure the safety and security of the market.
It’s obvious that home-sharing is quite a new industry in China and there are a lot of problems the industry needs to resolve.
That’s why our vision is to solve the problems the industry faces and that's why this is such an important part of our own strategy.
Earlier this year, it was mentioned that Xiaozhu was establishing a second base in Chengdu, do you have plans to expand outside China? If so, what direction will you go in?
The reason we chose it to be our second base is that Chengdu is a fast-developing market, and we want to go deep into the industry to enable more hosts in second- and third-tier cities in China.
Xiaozhu has already gone global - in 2017 it landed in Japan and Southeast Asia.
For example, Thailand and Vietnam are two of the fastest-growing outbound markets for Chinese tourists, and a lot of hosts in Japan and Southeast Asia recognize our brand and want to be hosts.
Some traditional hotel companies - Accor, Hyatt, Marriott - have made interesting investments in the private accommodation market to try to understand it better from a guest's point of view. Do you think this is a good strategy?
We have seen the trend and think it is a good strategy. We know a lot of hotel companies are taking chances outside of their traditional market.
We think it is a bigger challenge for them to do the operation themselves in terms of private accommodation; investing in the private accommodation market is a better strategy for them.
With the launch of your property management service earlier this year and now developments in IoT, it sounds as if you want to own all the pieces of the jigsaw - is this true?
You could interpret it that way. We’re entering the industry with a heavier operation model, and we do try to own all the pieces.
In Europe there is talk of regulating home-sharing and the pressure it puts on housing, particularly in cities. Do these same issues exist in China, and are there other challenges?
Of course there will be pressure from the government in China too but we think regulation can be a good thing for the industry. Good regulation governs the industry to develop in a healthy way.
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Xiaozhu has been in constant communication with local and central government.
A lot of the things we do now, e.g. the IoT system and property management, are a result of communication with the government. Together we’re trying to figure out a way to better govern this new model.
The biggest pressure from the government is around safety and security. We believe those are the most important problems the industry needs to solve. There are other problems such as taxes.
Others in the space have expanded by diversifying the product, whether to tours and activities, hotels or something else. Is that a strategy that makes sense for Xiaozhu?
No, it’s not a strategy that makes sense for Xiaozhu. We have a different decision to make, and we’re not relying just on the tourism industry.
Our core competence and value lies within the real estate industry, and that’s different from Airbnb and other companies.
When you attract investment from people like Jack Ma (Alibaba), does it put extra pressure on you?
Definitely not. All our investors are from the top tier in China, they’re all known for their investments.
From their resources, they are actually providing us with more help than pressure. We agreed to take the resources they gave us so that means we have the same visions of the industry and that’s why it’s not a pressure.
What's your best advice for anyone starting an online travel business in China?
Xiaozhu is not an online travel business; we don’t focus merely on online travel, and this relates to the advice I would give to newcomers.
If you’re only creating a platform, that will not work any more in China. If you want to do well you have to dive into the industry and resolve the problems that the industry has.
Don’t just create a platform - make the industry better.
What's the single biggest challenge Xiaozhu currently faces?
The biggest challenge is that as transaction volume grows in China we may encounter bigger problems in terms of the relationship with the local and central government.
It’s about how we coordinate our relationships with the government -it is a challenge and an opportunity for us.
And now a few questions about you. What's one destination you have always wanted to go to?
Argentina - I’m a big fan of the national football team and a big fan of South American culture but have not been there yet. I’m going to Cuba this month.
What would you be doing if you weren't running Xiaozhu?
Chances are I would still be an entrepreneur in the internet industry. For the past 20 years of my life I have been working hard and putting effort into helping other entrepreneurs to run their companies.
I think it was essential for me to start my own company.
Who do you admire most in the travel industry?
There’s no one particular person in the travel industry that I admire.
There are definitely people I have learned a lot from but they are not necessarily from the travel industry - for example, Zhou Hongyi, founder and CEO of internet security company Qihoo 360, who is another internet entrepreneur.
More from our In The Big Chair series
PhocusWire talks to leaders across travel technology and distribution.