Fritz Demopoulos, CEO and Co-Founder of Qunar

How did this Los Angeles native with a newly minted MBA find his stride in China, way back in 1997? Fritz Demopoulos may seem to be part fortune teller given his knack to pick the next big thing, but he’s really just a regular guy, with an incredible intelligent way of predicting which business ventures might be successful and which won’t. Certainly there were no crystal balls in sight when Sarah Bajc caught up with him to dig for predictions.

You were really on the front end of the internet explosion in China. What prompted you to come here, and stay?

I first came to China with News Corporation. After two years I was supposed to go back to New York, but decided to stick around. The first internet bubble was in full swing in the US, but not in China. I wanted to start a business here because it felt like the right place and the right time. I had two amazing partners, weunderstood the resources needed, and our incremental knowledge in the consumer internet space allowed us to quickly dominate in an emerging market. That first company, Shawei, which means brave shark, still exists within tom.com, although I hear they are trying to spin it off now. Then, a stint with Netease taught me another new set of skills, and soon the time was right. Again, together with two very talented and committed partners, we launched Qunar.

It is highly unusual to see an entrepreneur succeed in their first two start-ups? What is your secret?

There really isn’t any special sauce. When my partners and I first got together we looked at things in an analytical way.

“We are not travel guys, we are consumer internet people.”

In 2004 when we were brainstorming, we looked at where Google makes it money, and how we could use that information to make a competitive play. They have four key sectors: medical/health care, automotive, financial services and travel. We didn’t like the risks of the medical market, automotive was boring and financial services would take a long time to surface privately in China. So, we went with travel. We looked at wikis, blogs, and price comparison sites and found what was missing in the market. We first defined what the key value proposition was for consumers.

We knew the market wasn’t developed for travel, but that it was coming as Chinese had more disposable income, and we got in early.

“So I guess the secret is to get in early, so you can be the first player that everyone else has to compete against.”

We had almost two years before other large players got into the market. Besides the lead time, we also got to say that we were first, and we could say we are the biggest, and if you say it often enough consumers believe you and discount others. We watched carefully, and each time competitors would come up, we would clobber them. One key was that we didn’t just copy prevailing models in other markets because we knew it was only half the story for China. We maintained focused attention to consumer experience, what is important to users, what is valuable to partners.

What’s it like being a foreigner doing this business in a country where travel agents abound and there is tough local competition?

Well, I’m not sure it is all that relevant. The other two co-founders were Chinese, the entire company is Chinese. I just happen to be a foreigner. Qunar truly is a Chinese company. I look at it this way. We all have to make a contribution. As an entrepreneur you must be self-aware, know where can you contribute and where you cannot, what you do well, and what you should hire other people to do. Sure, I can give an opinion on a product decision like a new consumer facing design, but I’m not Chinese. I have ideas but I cannot make that decision. From a financial or strategy perspective, where it is all numbers, now that is different, I can make those decisions. Any good entrepreneur needs to think that way, regardless of whether you are a foreigner.

Now that Baidu has made such a sizable investment, even though Qunar will remain operating as an independent company, the contribution I can make has changed. One of the original co-founders left already, and another one is stepping into the CEO slot as I move into more of an advisory role. It is the best way for me to make a contribution at this point. I’m an entrepreneur, not a big company executive, and I’ll be happiest and make the most valuable contributions if I can focus on finding some new opportunity. It will take some time to mobilize resources and to do the next cool thing. The ideas are not formulated yet, but I do want to be the first in a market again.

Are there any plans to extend Qunar into other languages?

There are no plans for other languages or other markets. Our goal is to help Chinese consumers make better travel decisions, whether that is within China or traveling abroad. They need to understand key trends and options available. Sure, an English site might help the growing number of inbound travelers, but we have limited resources and we need to focus on our core market, which is the Chinese traveler. This is such an exploding market just by itself. The main reason Chinese companies have such massive multiples is because of the opportunities in this massive domestic economy. We want to capitalize on that.

Even from a design perspective, on the continuum from western style to Chinese style, we hover in the middle. Whereas some of the other China travel sites have copied western travel site designs, we still look more like we did at the beginning. But we don’t do that because of culture. It’s a matter of paying attention to what customers need. When the consumer internet first started in china, bandwidth was slow and expensive, so people wanted everything on the first page due to bandwidth issues. Today, you can have a more elegant site design because the connection speeds are so much better, but there are still huge players following that legacy design model of cramming everything on the first page. For new sites, the new trend is to have more design sensibility versus engineering sensibility. But for us, our customers know and trust us the way we are, so we won’t make any drastic changes there.

What five things do you never go on a trip without?

Beyond the normal stuff there isn’t anything special that I pack. For me it is more about the preparation I’ve done on my destination in advance. I’m pretty sensitive to where I stay. It is important tostay in a great hotel like the Rosewood in Silicon Valley or the Xing Guo (Radisson) in Shanghai. I was recently in Sri Lanka, and the best part of trip was staying at the colonial Amangalla hotel. The sites there were great, but that goes without saying, but the hotel was a masterpiece. The other thing is I always want to have a list of a few great restaurants, so I do my homework or get referrals in advance. I guess that how you travel says something about you. A few years ago, my two partners and I were in New York. On our one break day, my Chinese partner went into China town for Sichuan food. My Malaysian partner went camera equipment shopping. I went to MOMA (Museum of Modern Art).