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Built in China: Lucas Englehardt and Xixilabs.com

 

Art: Welcome everybody to another episode of Ganbei. And I'm your host Art Dicker. And todaywe have the absolute pleasure of being joined by Lucas Engelhart. 

Lucas has been in China for many years. I'm going to let him give a bit moreinformation about himself in a second, but suffice to say he's a serial entrepreneur and he's currently the founder and CEO of xixilab.com, which offers direct to consumer teeth straightening with invisible braces in China. 

Prior to that Lucas was at Waimaichaoren, a food delivery startup. Welcome Lucas.  

Lucas: Thank you Art, pleasure to be here.  

Art: Yeah, I haveheard you on other podcasts before, and so I know you've got a lot of good experience to share. Maybe you could start a bit just telling more about your overall China story, your background when you came here and what you've been up to up till today. 

Lucas:Sure. Sothat's a long story, but I'll try and give you the elevator pitch version. Istarted studying Chinese in university was interested in Asia, wanted to learn a new language and prove to myself that I could speak more than English. I thought I'd pick a hard one to prove it. And it turns out it was right. 

Chineseis pretty hard or at least slow. Going way back was originally going to studyabroad in Nanjing. And that's when SARS happened. So now with COVID, I feel like I've really come full circle. And I ended up studying in Shanghai went back, graduated did some intensive studies at Middlebury worked first job in Boston but wanted an adventure decided to move back. 

And without a job came here found originally I thought if I can't find anythingelse, I could always teach English. But luckily right before it got to that, I found a job doing M and a. So we were helping foreign companies acquire into China. Then we did I found it okay. Market research companies, we were doing online focus groups with Chinese bloggers. 

Back when KOL is, were still called bloggers shows how old I am and that worked as aservice business, but it was tough to scale it and we want to do something we'd we thought we could. Do a high growth so did food delivery and that ended up being pretty scalable. We went to 18 cities 30,000 restaurants for a 400 person team all local Chinese, other than myself and exited to the German from delivery hero. 

Andyeah, now doing a again, sticking in the online to offline space. People always sk why teeth. And I try to avoid making bad jokes about the connection between food delivery and brushing your teeth. But yeah, again it's bringing in customers to clinics offline now selling them invisible braces.   

Art:And whatabout your, because I think there's a, in China there's a definitely a very tangible kind of expat or foreign or returning Chinese startup community here. And I think. One of the things that over the years we've seen some success stories, but we've also seen that it's just very hard for a foreign entrepreneur to, to make it, or maybe fully tap into the full potential of the Chinese market, because there's a certain amount of localization and whatnot, but you've, I know you've said before many times that you, of course, you're a foreigner as a CEO of Xixilab. 

Andbefore that, why my children. But you've seen yourself always as a Chinesestartup at your market is here. And you maybe even if the leadership is a foreigner like yourself, you bet you view yourself as a Chinese startup. Can you explain a little bit more what you mean by that? 

Andwhat the thinking is that goes along with that.  

Lucas: Sure. I think the regardless, so whether it's, we're talking to startups or bigcompanies, obviously the graveyard is full of tech companies with foreign backing that have failed in China. And in my opinion the main reason for that is simply that they didn't become local enough. 

They tried to use the playbook which may work in many other countries, it might notjust be Silicon Valley. The same playbook might work in other developing countries. Try us different, right? It's not good or bad. It's different. If you're going to come here, the basics be, and that you're not going to do Facebook ads and Google marketing and everything else. 

AndI think that the only way to have a shot is to try to go local and while stillmaintaining the, our strengths as foreigners or with international experience. We will never be more local than the locals. I though, I think I have a pretty good idea of what Chinese consumers want. 

Of course, I don't know as much as if I was actually Chinese, Chinese and we have to leverage that and I was thinking about this earlier. To me I guess to be successful anywhere, but especially here, there's three main things. The first is timing the market. So although Warren Buffett says famously you can't time the market really that's what we're always doing, right with the startup riding a new wave. 

Of course, we're all riding the China wave. And then the timing of that I feel forexample, a little bit with our current business, the teeth straight, and then in some ways we're slightly ahead of the curve that it's harder.  

Perhaps I think the timing was okay. There we had many other challenges, but at thetime I was okay. But for example, with the invisible braces, a lot of people are still at being educated as to why they would want straight teeth. And at first I didn't realize how much a barrier that could be. I think especially here in China, it's also good to, to tie into the government goals and their timing, the five-year plan, all that. For example, T straightening were. We're looking at tele dentistry and telemedicine and then connected to that. And then I think I look at a lot of a local entrepreneur friends. That's where they get a lot of their signals in terms of when is the time to do something. 

But of course it's a, we have to just go for it and sooner or later and improvisealong the way. The second thing I think is doing the things that. That don't scale. These very asset completely asset-light businesses that maybe work overseas, I think are quite hard here. 

Andthere's probably two reasons for that first is although it's becoming a more,more developed market, especially in the top tier cities it's still harder to just outsource big chunks of your business in order to rely on third parties. So often you have to do everything yourself. 

AndI think in an example of that is that for we have to work with the clinics because that's what's legally required to, to be medically compliant. But also that's, what's required from the customer experience perspective and keep building trust with them. We went from just being an online platform trying to drive people to a landing page to buy something on the internet to say, we have tomeet you face to face and do x-rays and 3d scans, and then convinced you to buy in person. I've talked about, we can talk about more or, doing the things that don't scale I think is the way to to be successful here. 

Andperhaps the only way to differentiate recently, someone told me the only way totruly differentiate is through service and that often comes down to the things that don't scale.  

Art: How do youtest for that? How do you take what's a typical kind of Silicon valley playbook of coming up with a minimum viable product and MVP and go from there, or do you is, does that work in China or do you need to build out a solution first? 

Andif you, because the idea is if you build something to basic, your, the userexperience will be so bad that no one will even give you any that second chance to perhaps.  

Lucas: Yeah,that's a good, that's a great point. I think that the consumer standards hereis very high. If the app kind of half works, then yeah, we're probably going to say, forget it. 

Also, the customer service expectations are extremely high, right? It is trained people that you should always have a live customer service rep, responding to our message within 10 seconds. And if not forget this company, they're in their garbage it is a bit tricky. Again I like the lean startup approach, which is trying to be as minimal as possible and testing the idea. 

Evenif it's just showing a PowerPoint to someone and asking them, would you buy this? But yeah, at some point you have to balance that with delivering. Something and if it's a service obviously it's harder sometimes, or maybe sometimes easier the idea being that you can get someone to pay and then you run around and build it. 

So that's good. But in reality it's not always that easy. Yeah. I think itdepends. Unfortunately, that's not a clear answer. I think it's a case by case thing.  

Art: No, that makes sense. Especially, I think Chinese consumers are sophisticated. They didthey, they want to they want products fast. They want it customized even a bit. 

And they wanted they want the user experience to be already pretty well thought out. And not a half-baked. And that's probably true for any company but even for startups there's not necessarily a benefit of the doubt or learning curve that, that customer school will bake. 

We'll allow them to have I'm really intrigued as well about the earlier dayshere, we're going to get back to shisha labs in a second, but the earlier days of at why my tower, and I know you have one or two really good stories in there from getting the word out about the service when this was still relatively new kind of service and getting, and having the choice I think to spend even there were different channels back then, right? 

Spendingmoney on marketing in some ways, but then I think you made a conscious effortto go a little more old school. Can you walk the audience through that story? Because it's a great one that I've heard before.  

Lucas:This mighta typical example of things that don't scale yeah, our number two channel was SEO, Baidu ads, but our number one channel was offline flyers. 

And we didn't invent this. Also there were competitors who are doing it. Basically we built an army of field sales were managing an even bigger army of. Part-time or intern or, paid hourly and we would stake it out because we were focused on lunch for white collar workers. 

Itwas trying to, figure out the local neighborhood. How do you position yourself between the main subway exit? Cause you can't be in the subway or you will get arrested for sure. And the main entrance to the big office buildings and do flyers on the street. And I don't know if you've ever given out flyers Art, but it's a good experience.  

Yeah.Maybe that's how you develop a business yourself or not my primary where youare practing law, but it was really something about how you executing is very easy to just stand there with your arm stuck out and just waiting for someone to grab it. 

And if you do that, no one will ever take it. Yeah. I've tried that even as aforeigner, people are not going to say what's this foreigner, you take pity on the person that has to get out of the way. But it's interesting if you really go up and you smile and you have about, one sentence worth to, as you can say, one little key message as you just stuff it in their hand to the point where they feel bad to not just take it. 

Evenif they're going to throw it in the garbage or, throw it on the ground fivesteps later th that really matters. So it's about hustling and doing that. And so then again, things that don't scale, it's hard to manage people, that, and when you're paying someone 20 RMB an hour basically they're gonna wait until you turn around and then all their flyers in the garbage cause. 

Yeah.We had to build a management system, which was our full-time staff, we'retaking photos and messaging it to their managers and then up the chain of command, to say, yes, I am here in position at 7:30 AM and we are ready and I do actually have five part-timers. 

I'mnot lying about the extra two to just pocket their, salary. We had to go backand forth and how do we pay them? W this is certainly not something you can get floppy hours for easily. When you're doing it at a big scale, there's a lot of logistical challenges that come up. 

Butyeah, it was super, super targeted. Food delivery is all about, how many restaurants do you have within your neighborhood? Do you have enough variety? And so we could literally go neighborhood by neighborhood. And so I think you're talking about timing the market. I It's also about finding the niche of where can we. Log in. And if I can literally own this one office building and then get some orders and then I can go to the next building next door and slowly build it up. Because it's, building a, an older, old platform, it's a bit of a chicken and egg. You have to have enough restaurants and enough supply that you can get orders, but at the same time, if you don't have enough order, as soon as pretty soon, those restaurants are not going to just stay in the system. 

Yeah, exactly. Our solution was going really super local and district by district. And I think that's the lean startup approach, right? Trying to find a niche building going strong in one niche, and then you can build off of that. Okay.  

Art:The focus,I think of what we're going to try and get into in this episode is really about attracting and motivating talent. 

AndI can imagine that's one challenge, like you said, to motivate those people on the ground with the flyers and maybe no matter what. It's almost impossible to develop a perfect kind of incentive. You can't give them equity right. In the company. I imagine it just doesn't move the needle for them. It's too. 

Lucas:Yeah. Wetried to do more and we tried to do commission so we could get some sort of abonus, but it was all, she can't track it hard to track and they didn't really care.  

Art:Yeah. Andmaybe let's say for the next level up of employees cause I've heard back andforth different founders want to give their employees, let's say not just the top management, maybe the next level down shares in the company or options or whatever it is. 

Andthen I've also heard founders who say, don't waste your time. Just. You givethem certain kinds of incentives, but it's cash. So it's bonuses, KPIs. They have to hit. What's your take on what motivates people in those two kind of scenarios.  

Lucas: Yeah. Sothis is also something I think I've changed over time originally. 

I thought, yeah, let's give everybody a little piece of the pie. And I'verealized that yeah, for a lot of people that, that doesn't really move the needle and in terms of the paperwork it's intensive. We focus really only on giving the most senior management shares and the cost of living and the expectations and Chinese society that you have to have bought an apartment to get married, to have kids, to make your parents happy. 

Yeah, it does. It does take cash. So I think it's good to have a compensation. That'sbased a lot around a performance bonus. Not just a set salary but to really have a tangible impact on your salary, your total compensation based on how hard you work or how effective you are but yeah, usually we we don't focus on shares for anyone other than the kind of the senior management.  

Art: Could you compare the talent pool you're drawing from and still sticking with the motivations of the employees that you're hiring and then also throw in there the cause this cause my childhood was about a decade ago, or so maybe a little bit less than us, but still a decent time gap to where probably I'm imagining the person that you're recruiting and trying to motivate. 

Even if it's seven, eight, nine years ago is very different from the person thatyou're working with today on your team. Maybe that again, that mid-level person or junior person or even senior person how would you compare those two populations almost from what motivates them. 

Lucas: That's agood question. I haven't thought too much about that. I feel like I've changed a lot.  

Art: Exactly. Like example to help you one more, put that a bit. It used to be the case, forexample, that I wouldn't say that a good, let's say engineering talent here would still want to go work at yeah. 

IBMor go to Hanover work at blue chip company or or someone that let's say has avery more of a liberal arts background would be encouraged to go work for the ministry commerce or something like that, or something like that. The government and entrepreneurs was for those other guys who couldn't figure out what to do in their lives. 

Buthave you seen, even in that time period between those two businesses, the change in the way that, that how is it harder or difficult now? Let's say for example, to recruit people into a startup, is it easier now because maybe people are much more accustomed to explaining, oh, I work at a startup now to their parents or whoever in their social network. 

Lucas:I feellike I have a small sample size, but I guess it makes sense that it would bemore established, like you say to examine a startup that's a more mainstream pattern, but I also think there's really a need to train on the job. So we typically try to hire experienced managers to lead each department and then inside the department, usually to hire relatively junior and train them instead of trying to break all their habits, we rebuild the habits. 

Thecost of living has only gone up and as expectations have only gotten harder. SoI think the financial burden although everyone is as a higher standard of living is still very high. But it seems to me that the main thing Erin is to look for people who have this curiosity to want to do a startup and to want to. 

Workhard. And to understand that it's maybe lower pay and it's you're a lower salary in exchange for hopefully more opportunities to learn and grow. And I talk a lot with everyone we hire about, there's nothing wrong with working in a big company or a small company, but in a big company, it's a big machine and you're a very small part and you're going to go very deep in one specific area, but a small company, it's a very small machine. 

We'rebuilding the machine as we go. So no matter what you do, you're going to touchmany pieces, right? Yeah. Even me as the CEO, I'm fixing the wifi or sending a quiet and so I expect everyone to have that attitude to, to help out. So yeah, I think that skills can always be trained for it, but if the attitudes dude, isn't that I want to work hard and be proactive. 

Ifit's more traditional, I'll just wait for the boss to tell me what to do. Thenit's it. Usually it's not there people are not successful in our company. I'm not sure. Maybe somewhere else is a better fit know.  

Art: How about getting feedback from your team? Again, of course your management, I'm sureyour immediate management team regardless of which company we're talking about here is is used to giving you just honest feedback, that maybe for whatever reason that's what they're paid to do. 

Buthow about, in, in the west and in the US especially, we have this idea that a very flat structure, especially for startups and anyone can raise their and say, I think what we're doing sucks. And we need to totally think that. Do you find that is that kind of in a star Terri stereotypical startup environment exists here too? 

Or do you still think there's a sort of deference to hierarchy?

Lucas: I think there's definitely a still this hierarchal view getting people to be  honest, whether they're management or not. I think it's tough. We do every other week EMPS employer, employee, net promoter score, which is an anonymous little survey every week we ask a couple different questions. 

There'sone baseline question, which is the net promoter score. Like how likely are youto recommend this company, to your friends? And then we do other stuff, ask him about the product or, benefits, et cetera. It is hard to get people to go deeper. I think our, I always laugh every time we do a question about what else would you like for working? 

It'salways would like a higher salary and more vacation days, she, I was hoping youwould just ask for like a new beverage in the office. Yeah, it is tough. And in this idea of, we say, one to 10, how happy are you to work here? And people say 10, 10, 10, oh, I'm quitting tomorrow. 

Gettingpeople also, if they quit to say, first of all, I want you to be happy, but ifyou're not happy please let me know. I can try to change. And also if you're definitely gonna leave, that's also okay. But please let us know in advance so that we have time to kind of replacement. 

Ifwe're a 10 person team that has a big impact that's something we continue tostruggle with. That, that people would just say, you know what, I'm out of here. I was never happy, actually, even though I never told you, you should have known. Yeah. 

Art: Can you see those signs? Can you see someone who's just not, I'm just checking inevery day and checking out.

Lucas: Yeah. So Ithink I'm terrible at this in terms of natural ability slowly, I'm starting tosee some of the signs, but there also are still surprises. And managing people is hard. 

Managing people across culture I think is very hard and yeah, I'm certainly not aofficial board leader in that regard. It's a daily struggle. I think the best I can do is to try to be as genuine and honest as I can. And the people who get it, my players a hundred percent get it and I think are hooked on. 

Andthen they value that to build a company of A-players is, the kind of the goldstandard we set for ourselves. But That is a standard I have yet to meet. I'll put it that way.

Art: And these kinds of folks who are highly motivated did they do you worry sometimes that you're not seeing the guys who are maybe because you're too busy over here, you're not seeing the guys who are maybe not pulling their weight and does that drag down the overall kind of morale of the team for those who are yeah That's possible.  

Lucas:I think also sometimes you have people who. Have a good ability with the wrong attitude and so that they fly under the radar because you see them producing. But that's really a cancer, I think you need away. Define those C players. If you look at the top grading with the methodology, then that's very important and it's tough to pull them out because again, they're the ones who are often driving results. 

ButI think that's really where our company demonstrates if they will stand up fortheir values. If this person even if they're producing results is, has a bad attitude and it has created a toxic environment. You have to get rid of them. But that's easier said than done.  

Art: And switching gears a bit over to investors. 

You've obviously through these various companies, you've had chances to deal with different investors. You've also our president of EO Shanghai. So I know you can tap into not just your experience, but the experience of all of fellow entrepreneurs out there. Especially in Shanghai, what is your, and their kind of collective experience? 

Some of the pitfalls perhaps, or some of the things, the good things that you lookfor in investors.  

Lucas:Yeah,investors, where do we start? Open ended question. So it's all the investorswho want to give me money. This is not applied to you, but I think a fellow EO member recently told me, the best investor is someone who just gives you money and then shuts up and goes away. 

I think there's some truth to that. When fundraising though, it's always thisgame of trying to put up the velvet rope. Right and say gee, I don't just want your money. What else can you bring me? Can you bring me other benefits? But sometimes that's a bit of a game, right? 

Of course what I do on is your money. Yeah.  

Art: And people want to feelwanted, so there's this bit around to that too.  

Lucas: And some people do provide a great value. I think we have some investors now like SOSV,that has actually been quite helpful for us, but yeah. Sometimes there's also I've heard investors who just waste your time asking many questions and then never pull the trigger or never really provide value. 

So I think that's, it's tough. It's it becomes very clear that life is not even right with investors being higher up on the pyramid and entrepreneurs having to beg them politely for resources. I see that especially in China, there's a very big difference between the local Chinese investors, VCs and kind of the international ones are the angels who are more international. 

I think that the local VC has really chased the trends a lot. We talked abouttiming the market. I think that maybe they're tracing the timing too much. Whereas foreign VCs I think are avoid that pitfall, but often make the mistake of just expecting everything in China to be huge or to be big and to be easy. 

Thatif it was so easy to build a billion dollar business with, without ever losingmoney with, to be profitable on day one then you know, Yeah, maybe just we'd all be doing it. That the Chinese startup way of course, is to burn money often for 10 years. 

Andthen with the hopes of becoming Alibaba and winning big. And obviously for some startups that works very well huge respects to Alibaba or bite dance. But I don't think that's the only reason. And personally, my style is not to just burn with hopes of becoming profitable. 

I think it's better to try to take a more stable route, even if that meansslightly slower growth. That just is my personal preference. 

Art: Yeah, no,there's no harm in that and invest in investors, I think should appreciate thattoo. That's, I would never claim to be an, a, an experienced investor, but I have made some angel investments before and I just. 

Before this was having lunch with somebody who was also interested in doing more ofthat. And he asked me what I'd learned in sort of the seven or eight and angel investments I've made. And at the beginning, I think I was a little bit, maybe more like what you described as the Chinese investor, chasing a trend, not caring as much about the founders themselves and the experience and the commitment they had to it. 

And I think since then, I've learned that's. By far more important to find someonewho is no matter how hard it's going to get. You've maybe even seen them personally down before with this business or another one. And you've seen them get back up and find a way to make things work because. 

As you said, if someone is investing just in trends, will the trends change. And if you're investing in a company that has a good founding team and is smart and disciplined and working the team may pivot a company may pivot. And actually one of the most successful investments I've made, they started out with one product and then that's, they're not even selling that anymore, along the way they develop software. 

To solve a problem that they were having, but that software became ended upbecoming the pro the product that they sold the others. 

Lucas: I thinkwe're lucky first of all, to play the entrepreneur game, there's it's aprivilege to get to do this. And I feel like It's like having a seat at the poker table we can control how we play and our strategy and, but we can't control everything. Also the cars that come out is beyond our control. Part of, I think it is just about yeah. 

Having enough goes at it. I agree. I think if you look at most successful startups,they never ended up where they started and that's fun to look back. But at the time, in the beginning, how do you find that path? That's the big question? For me, it's there's always moments of self doubt. It can be very hard. It can be lonely for me. EO has been very useful in terms of having other entrepreneurs around you to realize, I think I'm a pretty level person, but entrepreneurship can be such an emotional roller coaster with ups and downs. In the last 24 hours, I can say we had some ops, we closed some deals. 

Wefelt might have a big partnership coming through. Very excited about that. Also had a customer who complained and wrote a bad public review for a reason that was actually completely wrong. He paid was happy with his service and then saw an advertisement online for a different product, and then thought it was the same thing. 

And then thought, oh, you overcharged me. You're trying to rip me off and wrotethis angry. You don't comment publicly, which, affects us. And trying to say, that's a completely different product. It's, and by the way, we're not trying to rip you off. 

Andit's funny that you were happy with what you paid for yesterday, but todayyou're now threatening us that unless we give you a full refund, you won't remove that comment. Instead of saying, I got what I deserved and what I paid for it. It's ups and downs. And I think that it's just important to, to remember that's that's normal. 

It'salso good to have a close group of, whether it's friends or entrepreneurs orinvestors or somebody to help even mirror to say, Hey this is what you're going through. And if you've been hitting your head on the same wall for a while, maybe it's time to make a change, or if every day you're having different problems, maybe we're changing too much. 

Howto dial that in is very tricky. But yeah, I think it's, there's huge value inhaving a outside third party who can approach something and give advice. I feel a bit hypocritical actually here talking about hiring and, these are all my learnings, but when I actually go to apply it myself, I'm constantly making the same mistakes. 

Rocky. It's a tough game.  

Art: Let's goback. She labs a little bit because we talked about it a little bit before andwhat you're trying to do, but I think if you could give the audience a little bit more about not just the opportunity, which I think we've talked about a little bit, but what your specific value proposition is for customers, what you're trying to do. 

Lucas: Sure.We're selling invisible braces direct to consumer. And our idea was that inChina teeth straightening, whether you're talking about metal braces or invisible braces is twice as expensive as it is abroad in the U S Europe. And that's strange because medical services, obviously here are generally okay. 

Notso expensive, especially if you go to the local hospitals compared to the U Swhere medical services are usually very expensive. And so I think the reason for that is a there's multiple reasons, but a lot of it's supply and demand.  And so we're trying to cut out the middlemen to deliver more for less and deliver value and what it started as really an online Yeah, DTC approach has now become this hybrid of online, to offline and partnering with clinics and operating a clinic within a clinic where we have people in the clinic, meeting the customers to ensure they have a good experience. 

Wehave our own medical team overviewing, all our cases. And then also we'reworking with the doctors and nurses in the clinics. So it's a double-check. And yeah, again, riding this wave of people. Thinking more about their teeth, both from a, starting from a point where it was just like, I only go to the dentist when I have a tooth ache too. 

Okay.I should go for a cleaning once a year. I should, teach her about health. It'sabout beauty. We laugh that. In China cosmetic surgery is, has become so popular and people have adjusted so much of their face and body. But it seems like the mouth is maybe the only last piece they haven't touched. 

Sowe started really from them. I founded this company with my partner out of theeditor. We wanted to help people be healthier. But we quickly realized that telling people I know I can help you. Live a healthier life is something they don't want to hear. But if I can say, I can make you more beautiful or more handsome people then say, take my money. 

Soyeah, we feel in a way that we're almost tricking people to do. What's good for themselves under the guise of vanity. So maybe that's a bit of a dark art, but in the end we're trying to do it for the right reason. And yes, we're still less than half the market price in terms of cost. 

And we save people monthly visits by doing a lot of the follow-up and stuff online. 

Art: Yeah, Iwas going to ask you about that. If you didn't bring it up the inclusive in thevalue proposition is how are you able to cut out some of the costs and offer a more affordable product and experience. 

Lucas: Kind of full stack from working with a third-party dental labs to produce theproduct. 

We import the medical grade plastic, which used to make the aligners and toworking with the clinics. Like I said we have our own doctors and also working with their doctors and we're marketing directly to the consumer to bring them in. Typically in China medical and beauty is very high commissioned to the channel to bring them in. 

Andit's very hard to attract the customers but by going direct and bringing themin we're able to save on the marketing cost for us to save on the costs of the brand of the aligners, and also able to squeeze the clinics on the profit margin on the teeth straightening. So the clinics are happy to work with us, even if they can't sell their own teeth straightening because they can get the customers and they probably want to do other things. 

Soteeth cleaning or filling teeth, removal, whitening, et cetera.  

Art: We were walking over to the studio here at we're at people squared with the Chinaaccelerator and others are based. And we were noticing someone doing a live broadcast at your boy. And you made the comment that everyone has a KOL these days. 

Do you work with K-12 or you've had a good or bad experience with that?  

Lucas: We do.  We've had some mixed experiences, I would say some good experiences for us.It's been better to go with smaller ones KOC, I believe as the the hip term now. And again, like the food delivery, we're focused very locally per city, cause you need to come into the clinic. 

Andthat's one thing. And then the second thing is I think that there's really alot of fake KOL is out there. Everyone, it's very easy to buy fans and views and likes and everything. So to find the people who have genuine fan base is, can be challenging, but when you find them their fans really, resonates with them. 

But yeah, it's tough to, you gotta look out for a lot of the The fake ones. Yeah, I know.

Art: I'm sure they're all over the place. Wrap it up with any other lessons out therefrom your entire time here in China, your experiences with these different startups and any anyone here or maybe coming here someday just to build a business some high-level lessons you might give them. 

Lucas:Yes. When we talked about timing the market and doing things that don't scale, they're going to find a niche and growing from that. I think the third thing I would add and the final piece is it's all about the people, right? It's we've mentioned hiring. Again, the only way to differentiate is probably through service. 

Atleast that's what I heard recently and it resonates with me. And in terms ofhiring paying more for staff I found does increase the quality. But not always. And that's where I mentioned, really we hire for attitude. And as a startup, we're paying below market rates, which in a way as a way to kind of screen I guess it's like, if you're dating if everyone knows your dad is a billionaire, then it's hard to know what people really love you. 

Butwhen we say we're going to pay you half of what you would make at a differentjob and you still come to it, that's a good sign. You're one of us. Yeah, I think that it's about doing that and about building the rhythm of the team. I originally wasn't a big believer in, vision and values, and now we actually have the value is written on the wall and we talk about them a lot. 

We do two standup meetings a day at the beginning of the end of the day, to try toincrease communication team building stuff, even if it's just going to dinner together. Yeah. So I think the here where you mixing the. Was traditionally maybe a more Silicon valley approach or a Western approach team building with some of the Chinese. 

Wealso go to karaoke or just go get drunk over spicy food. That also is a goodteam bonding experience. But yeah, I think that's the only way I know to build the business is to really start with that core team and go level by level. I can't remember who said it, if you're. 

Bottomline staff are customer face, facing staff are happy. They're gonna provide thebest service and that's how you're going to gonna win. And I think we have to do that and it's something that, that doesn't scale. But that's where we have to start.  

Art: Lucas,thanks so much for joining us. 

It's been a, it's been a real treat to have you on. And I know our audience is certainly going to get a lot out of this lots of good nuggets in there and wisdom to share. Thanks for coming on, Lucas.  

Lucas:My pleasure.Ganbei!  

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