“Pay for knowledge” is being accepted by people in China, especially those who have needs on gaining knowledge via reading but have no time or habit for reading. In this case study you will expect:
- What is the problem the FanDeng DuShu App was/is trying to solve.
- How does the Business Model looks like.
- How did FanDeng and his team test their assumptions.
- What kinds of changes did this Audio Book Review App brought since launch.
I listen to one book review every week while doing cleaning. One of such an audio book review takes from 40 to 70 minutes. In this way I gain an overview of about 50 books per year. For a few really good books which are worth reading and studying in detail, I will purchase the ebook or the paper version.
I am talking about my experience with the App „FanDeng Dushu“ (樊登读书 in Chinese), the most famous and influential audio book review app currently in China.
For those who does not know the person Fan Deng: He used to be a lecturer in the university, a host of a few TV-shows in China. After founding FanDeng Book Club (FDBC for short as followed) in 2013, he is now the chief content officer, co-founder and co-owner of the „Spiritual Wealth Club“, which claims to have more than 40 million registered user in China with an annual turnover of 1 billion RMB (round about 125 million €).
By doing this case study I want to share my research about FDBC to show how a business could be build in China. This is part I of the whole case study with the focus on the early development phase of FDBC.
The Value Proposition
According to different surveys, a working chinese reads between 4 to 7 books per year in average. People are generally willing to grow via gaining more knowledge, but there is a lack of strong motivation and time.
In my personal case, besides the above mentioned pains I also have to avoid using my devices for reading, because my kids can’t differentiate if I am reading or playing with a device (I don’t want to give them the impression that their Papa is playing). My wife started with listening to the App while cooking and she recommended me to give a try. The offer of book overview in audio format also allows me to gain new knowledge while doing cleaning.
The Business Model Canvas
The start of FDBC can be tracked back to 2013. Before the launch of the App, Fan Deng — as also confirmed by himself — did not invest a lot in the early phase. What he did most of the time was reading books, writing mind-maps and making Powerpoints on weekly base.
One of his assumptions was, people would like to gain book reviews on weekly basis, which could be helpful to raising interest in purchasing and reading the full book later. The other assumption he made was people would accept the book reviews in PPT-format. They are willing to read these reviews by paying a small sum of money as the membership fee.
Testing Business Ideas
A short re-cap of how does “Testing Business Ideas” work:
- There are four key aspects behind every business model to be considered: adaptability, feasibly, desirability and viability.
- In the ideation phase you will gain an overview of different assumptions for your business idea according to your business model canvas.
- You map the different assumptions according to their grades of validation and importance.
- You start designing/doing experiments especially to the assumptions, which are of great importance but with low grade of validation.
- The purpose of testing business ideas is not about doing endless experiments but derisking before making (investment) decisions.
How did FDBC test Business Idea
As mentioned above, the important assumptions were:
- People would like to receive book reviews as a kind of recommendation before making their decisions for purchase and reading.
- People would like to read these reviews in PPT-format on weekly basis.
- People are willing to pay for this service with a small sum of money as membership fee (365 RMB, round about 46€ per year).
Two kinds of methods were mainly applied to validate the above mentioned assumptions:
- Social media campaign
Fan Deng explained in one of his videos about how FDBC started testing: I started a WeChat group for people who paid for their membership. Once a group reaches its limit (500 members), I will start another WeChat group to guarantee my members can enjoy their privilege.
This method is not exactly the same as described in the book for the very simple reason that the FDBC is a case from China, where WeChat with its different functions have been infiltrated in almost every corner of people’s lives. Using WeChat-groups is one of the most popular methods to communicate with (potential) customers and test business ideas.
2. Referral program
To lower the barrier to enter the service, Fan Deng applied referral program at the very beginning. A member pays for the full annual membership at the beginning, once he/she succeeds in inviting more friends to test the service, the fee will be refunded.
The referral program is relatively easy to be implemented. People share referral QR-code to invite a non-member to join a special WeChat group for a test period with full access to the contents. Once they decide to pay for the whole annual membership they will be moved to the WeChat group for members only.
To note that, at the beginning Fan Deng’s name was not well known enough to most people in China, nevertheless he gain his reputation through his previous jobs such as working as a lecturer and hosting certain TV-shows. He was NOT a nobody before starting the FDBC business.
Another important note is that Fan Deng used Email as the main channel to deliver his book reviews to the to his members. His assumption that people are willing to pay for this service got validated very quickly. He soon realised though, that book reviews in text format did not solve the problem because people were still not reading them at all. He quickly switched to audio format as the focus with mind-mapping as a substitution for the PPT-format.
As the FDBC App was introduced, no more WeChat groups were needed. Only the WeChat Public Channels were kept for those heave WeChat-users.
Questions for Discussion
- What other audio Apps do you know/use in your region?
- Do you know the stories behind these Apps? How do they test their ideas?
- What can you take away from the above story?
- What can you take away in general for the design of your business?
No success story could be easily copied. The purpose of the above case study is to apply the relevant tools to show one startup idea in a country/market you might not be familiar with. You can take good practice from it but it will never be a best practice. Concentrate on your own learnings, if there is any.
Give me your feedback to this case study by leaving your comments behind. Send me a message if you are interested in the second part of this case study, in which I will cover issues such as further development of Fan Deng’s Book Club from online to offline activities, developing from a single feature book review service to a larger ecosystem and more).
A. Xing Yi, China Daily, 2018, Book club founder gets innovative to promote reading.
B. Huaxia, Xinhua Net, 2020, Across China: Passion for reading gains momentum.
C. Unknown author, ProgrammerSought, Reading has never been easier! On Fan Deng’s Study.
D. Xiao Chen, Technode, 2019, How long does it take to read a book? Only 50 minutes.
E. Weicheng Tan, Businesstoday.com.tw, 2019, Make14 million people open their pockets to pay for listening to books.
F. Homepage FDBC: Spiritual wealth club.
G. Luyu Interview, Youtube, 2021, Fandeng: I am an entrepreneurial book-lover.
H. Deng Fan, 2020, Creating business in the low risk way.