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Q&A: Weibo Chairman Charles Chao on IPO Day

Chao talks markets, competition, government control and potential commerce revenue sources.


On its first day of trading as a public company, Weibo recovered from lower-than-expected pricing and fewer-than-expected shares offered to close the day up 19 percent at $20.24. The Sina spinoff, widely known as “the Chinese Twitter,” raised $286 million.

It has 144 million users and had $67.5 million in first-quarter revenue, with a loss of $47.4 million.

Re/code spoke with Weibo chairman and Sina CEO Charles Chao midday Thursday about the public offering and Weibo’s prospects.

Re/code: I imagine this IPO process was less favorable than you had hoped.

Charles Chao: When we started the process of Weibo’s IPO it was a good market. That’s changed recently and that’s unfortunate, but for us it’s not most important to have the best pricing, or how much cash we received. It’s to establish an independent company here so people can see the value of this business separately.

Within Sina, if you look at our traditional business, it’s not growing that much, but with Weibo, it’s growing much faster. Also, Sina is a portal business and Weibo is a social media business, so it’s important to make sure this platform will grow based on its own strengths.

How similar is Weibo to other social media businesses?

Other social media companies are similar because they require a lot of users and user engagement — and the stickier, the more time spent, the more valuable the platform becomes. We are fortunate that we operate in the Chinese market, which has huge scale in terms of the population and in the number of Internet users, especially for mobile users. We are talking over a billion mobile users. Weibo fundamentally is a mobile social platform that allows people to access, to share, to create content very easily on the mobile phone.

How much concern did you hear from investors about the role of the Chinese government on Weibo?

It’s always a concern in this industry — with Sina for more than 14 years already. We get this question every time, every call, every meeting. And yet we are growing every year, every day, so why the concern?

I think it’s a concern particularly as we hear continuing news about arrests and jailing of Weibo users.
There’s content control and regulation in every country, just different forms. We just have to use our experience in China to make sure we comply with the laws and regulation in China, and that’s it. It does not impact the user experience very much.

What about competition with other social media platforms in China?

There are different types of social media companies in China — in the mobile space Weibo and then Tencent’s two platforms, WeChat and mobile QQ. I think the difference between us and their platform is theirs is more a private network based on communication, and our platform is a public network based on media-centered applications. We do have competition in terms of time spent, but not necessarily direct competition.

Do you expect the Weibo business model to parallel that of Twitter?

There are similarities in product features, although the user behavior has a lot of differentiations. Ours had a lot of multimedia content from the beginning, and it was very much mobile-centric from the beginning. And we have a lot more activity because we allow people to comment on a post or comment on a re-post and so there’s a lot of conversational behavior between users.

As for the model, it’s similar but also different. Since people spend a lot of time on Weibo, it’s only natural that we will generate revenue from native ads in the information feed. In Twitter’s case, they’re doing a lot of promoted tweets, and we’re doing our promoted feed, which is very similar. Ours is getting more into multimedia now.

What do you think are the most interesting expansion opportunities for Weibo?

It’s about usage in mobile and monetization in mobile. We believe that creating a mobile ecosystem for social commerce could be very interesting. We’re doing a lot of experiments with our partner Alibaba in establishing a mobile-social commerce platform. We have that closed loop, all the way from promotion to transaction confirmation. We already launched mobile payments on Weibo so that people can bundle their bank card or their Alipay account at the beginning of this year. Once they have that, all the transactions will be very easy.

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