It takes a dyed in the wool entrepreneur to spot an opportunity so good it woos him at twenty paces. Yes, there are a lot of clichés in my opening sentence, but I really feel I have to speak the obvious. Steven Lin joined Gojoy as CEO in February. The retail online shopping platform operating in China was the brainchild of his fellow co-founders Peter Wu, Juan Vargas, and James Zhang. The tagline of the platform is the ‘world’s most rewarding shopping community’ and it does indeed create a community that is rewarded for shopping. Not the platform, but the shoppers.
“It is a justice oriented project,” he says right at the beginning. “Our mission is to eradicate poverty.”
This is a big claim until you examine one critical difference between the poor and the rich and how that might be ameliorated. Steven points out that by and large poor people do not own assets. They typically only earn an income for their time, often badly paid, while their employer converts that labour into thousands of dollars. And once you are stuck in the poverty trap it is very hard to break out of it – or even to be aware that you are in it.
The founders of Gojoy wanted to create a platform that addressed this inequality. They had deep sectoral experience in e-commerce. They also understood the co-dependent connection between vendors and shoppers. “Neither can exist without the other.”
The result was a mission to create a more equitable e-commerce platform where vendors are paid fairly for their goods and shoppers are rewarded for their purchases in the form of both fractional ownership of the underlying asset and in real cash – hourly.
That mission would make your eyes water – at first – but when you break it down both the rationale and the practical application are very straight forward.
How Steven explains this revolution in online shopping is by comparing Gojoy with other online marketplaces such as Amazon, TMALL or Taobao: to compare the old way with the new.
Traditional online marketplaces hold the customers hostage
Traditional online marketplaces hold the customers' hostage. They are in the business of generating traffic which they then sell to vendors, typically to the highest bidder. They charge large fees which bulk up the prices of the goods.
Since these marketplaces are only in the business of selling traffic to the highest bidder, both vendors and consumers are squeezed. Like other intermediates, they don not add value but they do add fees.
Most marketplaces take up to 50% of the value in a typical transaction. That means the vendor has to charge more for his product with the extra money sucked up out of the shopping experience. Neither vendor nor shopper win – which is ironic since they are the real commercial partnership.
“Customers are taken advantage of – unwillingly, unwittingly and unknowingly.”
Gojoy offers a much fairer and transparent approach where all parties can win. Gojoy removed all fees on the platform – only marking up 25% of the vendor’s price – which equates to a final price reduction of up to 50% on the same exact product. The vendor is still getting the same margin but the shopper pays much less.
“We can still make good money – this is about being realistic but also fair.”
Gojoy has added another element to protect vendors. Gojoy is not in the business of selling traffic, but matching people to buy and sell products. With traditional online marketplaces, the vendors pay for the traffic, but may not achieve any sales. So the vendor still has to pay for the “platform” service even without any sales to cover this fee.
With Gojoy, once the vendor prices its product for $80 to Gojoy, they are guaranteed $80 once the product sells for $100 (final price after 25% Gojoy mark-up). In addition, the amount owing to the vendor, in this example $80, is transferred as soon as the following day. The vendor does not have to wait until the end of the month or longer.
“It is the vendor’s money – why should we profit from holding on to it when the vendor needs that cash flow to grow its business?”
Gojoy then operates a comprehensive loyalty programme for the shoppers – and this is where the platform is aptly named. This is joy.
Every time a shopper makes a purchase they save money and 30% of the value of the purchase is gifted to them in form of Joy coins. These are the underlying token of Gojoy’s blockchain platform. In essence, the shoppers are mining their tokens with each purchase and in return get to own a part of the network.
But it gets better. Every hour there is a cash payout pro-rated on the amount of Joy coins held by the shoppers. The cash payout is in the form of the Joy Dollar. The shoppers can hold it, they can use it to buy other product (or more Joy coins) or they can cash it out into fiat.
The shoppers are rewarded twice.
The shoppers are rewarded twice. They can hold the coins – which are a real asset currently worth around $3 each on the CBX exchange. And they get hourly cash rewards.
“This way the shoppers get to begin to own an asset.”
This is important because the profile of the users on the platform is what Steven describes as the Moms of China. There are 400,000 users and growing steadily each day. They are typically moms in tier 2 and tier 3 cities in China. They buy products – from regular household goods to more upmarket items – and earn cash rewards hourly.
At this point, I am jumping up and down with excitement. As a regular advocate for women in blockchain I often point out that by educating women in poorer countries and giving them a better income, everyone wins. Data shows that when women earn more income they invest some 70% of their income back into their families and the community. This is a game-changer. The moms of smaller cities in China can now earn assets and create better outcomes for their families – just by buying stuff they need anyway. And remember the goods are already discounted by up to 50%.
I ask if there are plans to extend this model outside China. I think we could do with it here in Ireland, but not yet says Steven.
In time, they will look to scale to Asia and Africa but not immediately. Steven also points out that there are 200 million moms in their target tier 2 and tier 3 cities – basically the population of Brazil – so they will be busy for a while.
There is a finite number of Joy coins – 1 billion in total. Half will be given to the community and half kept for the Gojoy Foundation. Of the latter, 200 million are allocated to investors looking to acquire a portion of the net cash flow. 200 million retained for the holding company in respect of IP and infrastructure. And 100 million reserved for founders and management.
This is a real business, not an MVP.
This is a real business, not an MVP. Since January Gojoy has enjoyed a turnover of $14 million with $3 million distributed as cash rewards to shoppers. The company had achieved a free cash flow of $2.4 million. This is a profitable real business.
At the beginning of July Gojoy launched a blind auction for their native coins. They did not price it. They let the market decide. They offered 3 million coins. In just 48 hours 46,000 bids were received with the top 433 successful – pricing the coin at $3 each.
Going back to the start of my conversation with Steven Lin, I discovered early on that the entrepreneurial spirit can be learnt as well as inherited. Growing up the eldest son of an immigrant Taiwanese family in Los Angeles, he was groomed to run the family business. His father ran a manufacturing business in China and Mexico, which imported and sold consumer products to big-box retailers such as Walmart and Carrefour. His father built the business up from scratch with hard work. Steven followed in his footsteps, living a divided life.
“Half the time I was a regular American, going to school, playing sports and enjoying my friends. The other half I was working, after school and during summer breaks, in the assembly plants and warehouses beginning with sweeping the floors and driving the forklifts.
“By the time I went to college and studied business I was able to apply the theory from the classrooms directly into the reality of the business. It was great learning for me. But I also knew that I wanted to do my own thing.”
His first startup was a web design business right at the start of the Internet in 1996-97. Other companies were charging exorbitant seven-figure sums to build these new-fangled websites. Steven and his team did the same but for six-figure sums. And at the age of 21, he successfully exited his first startup.
He has worked in a number of key sectors honing his skills in developing innovative products and services in cutting edge technologies.
He developed an interactive text message engine before the smartphone. To this day many industries including healthcare and restaurants use this technology to confirm appointments with their patients and patrons.
He tackled the gaming sector where he devised a random number generator that is truly random and prevents operators from cheating. Previous solutions were based on logarithmic algorithms, which could be and were often rigged. Here his sense of using technology to offer a fair solution was obvious.
“I’m not a gambler, but I would head to Las Vegas to conduct hands-on research – so I can better identify with my audience. But to be honest, I invest in startups and that is just as much as a gamble as placing a bet on a horse or on a lucky dip.”
Through an investment, Steven also turned his attention to student loans. It’s a huge problem in the states as he explains: “There is some $1.5 trillion of student debt accumulated by ordinary American families. And in many cases, they cannot pay it back. The problem is compounded by the fact that nearly all of the debt, some 99%, is guaranteed by the government, which renders the student helpless. They cannot go bankrupt to wipe out their student loans. In addition, each student often has many different kinds of loans from different lending institutions: sometimes as many as a dozen different loans. That can also pose complications as paying down one loan first can trigger another, unintended consequence with other loans demanding immediate payment. It is very messy.”
This startup created an elegant solution that helps struggling ex-students by first helping them understand the mess of loans and then assists in prioritising the repayments. Currently, there are over $750 million worth of loans on this platform.
When prompted about his social conscience, Steven agrees. “I see my own parents working so hard to put three kids through school and to achieve their American dream. I want that equal opportunity for everyone.”
It is the powerful combination of entrepreneur and social advocate that marks Steven’s character, which is why his leadership of Gojoy makes such sense. When I say that to him, he replies: “These are not just words. I am not giving lip service to these ideals. The entire team believes them and lives them.”
I am just amazed he can and has achieved so much. When we speak it is midnight in Hong Kong but he survives on five hours sleep a night. Like Margaret Thatcher I suggest tongue in cheek. The sleep requirement may be the same but the ethos is a million miles apart. We chuckle over the comparison, however. Steven is not precious – another endearing quality – as humour can soften the most ardent businessperson. Keeps him human as he works to eradicate poverty – one city, one mom at a time.
Shopping cart image via Shutterstock