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If you studied Mandarin anytime after the mid 2000s, there’s a good chance you’ve heard of ChinesePod. The popular podcast series, which features free conversational podcasts and the option to pay for extra learning resources, is a sensation within the sizable community of English speakers who are making their first forays into the world of learning Chinese.

Its founder Hank Horkoff launched the program in 2005. In the decade that followed, he grew ChinesePod from an obscure podcast to a popular learning resource, successfully exited the company, and is now at the helm of an exciting new startup.

That new venture is Magnet, a WeChat app and separate SDK that aims to bring ecommerce-like convenience and insights to brick and mortar shops. Think “you might like this” recommendations in clothing stores, or being able to skip a cafe line and order right from your seat.

But to understand how Magnet came to be, it helps to start back in 2005.

Learning the ropes

“In retrospect, we were fortunate to catch a couple of trends – podcasting and the growing interest in China and Chinese at the time – which we were able to ride,” says Hank.

In the mid-2000s, podcasting was novel to most people outside of the tech world. General interest podcasts were just starting to make an appearance, many of which consisted of a few people talking around a microphone about the topic du jour. Highly-produced podcasts with sponsored advertisements were still few and far between, meaning that most were run by hobbyists, or arms of existing media organizations. There was also the problem of piracy.

“With ChinesePod, we expected that all our lesson media files would be pirated,” says Hank. “So we decided to Creative Commons-license them and make money by selling subscriptions to complimentary services.”

A business decision made out of necessity turned out to be an accidental stroke of genius. ChinesePod’s podcasts went viral in a way that would have been unthinkable if users had to pay for each .mp3 download.

Less than a week after launching its first set of lessons, ChinesePod had its first paid subscriber. By the time Hank exited the company in the spring of 2014, the company had a staff of more than 80 people.

Bringing ecommerce convenience to the real world

The unexpected success of ChinesePod forced Hank to learn on his feet – how to turn an idea into a working business, how to incentivize paying membership, how to deal with the quirks of working in China.

About a year after exiting the podcasting company, Hank threw himself into a new startup venture called Magnet.

“I get pretty frustrated when I am at a retail location and can’t do things that I normally can do online,” says Hank. “If I am buying a shirt, why can’t I see the pants that other people who have purchased that shirt also bought? If I go to the same coffee shop every day, why do I need to wait in line just to tell the barista that I want to order the same thing I did the day before? I should be able to do these things with my phone.”

The company aims to bring real-world retail and commerce into the digital age, using location-aware apps and services. Within China, much of this is done via WeChat, the omnipresent messaging/everything app.

In its early stages, Magnet has been rolled out as a limited release in places like Shanghai’s Mercedes Benz Arena, where it is available to people in the VIP booths. Users can skip the lengthy concession lines, using a Magnet-fueled WeChat service to order and pay for food and drinks straight from their phones.

“We have thought of a wide-range of use cases – everything from delivering house manuals to people’s phones at Airbnb venues to warning people with allergies if they are about to order something that they shouldn’t,” says Hank. “But we are trying to be a little more focused right now.”

The Magnet team has started by aiming primarily at food and beverage spots throughout Shanghai. It is currently active at a bit more than 100 locations in the city. Hank has been leveraging his 15 years of Chinese business experience to rake in more leads, and says the company is currently in talks with several global brands interested in running concept trials of Magnet.

Building trust

The original idea for Magnet relied heavily on systems of bluetooth beacons deployed in each area where the service would be active. The beacons would allow for precise location tracking – which are of a store the customer is in, for example – but their problems quickly outweighed their potential.

To access the beacons, Magnet users had to download a dedicated app, and choose to each device via bluetooth. It doesn’t take very many steps before you’ve lost a user’s patience or, in the case of connecting to a random bluetooth emitter, their trust.

So the Magnet team shifted gears towards a focus on WeChat, an app that is already trusted by Chinese consumers.

“Over time as guests trust the location more, there is a higher likelihood they will download the dedicated app to get more value and convenience,” Hank says with hope. The Magnet team hasn’t given up on deploying beacons, but they are currently banking on most of their interactions coming through phones connected to a location’s wifi.

Most users, of course, will hardly know what Magnet is. Whether on WeChat or using Magnet’s SDK, it will be down to other companies – retail stores, sports stadiums, restaurants – to really make the service work. If Magnet were integrated into, say, a cafe’s ordering app, the user would simply see the name of the cafe and its available services. They would have to be particularly observant to spot the “Powered by Magnet” logo.

Planning for the future

Magnet was part of the latest batch of startups to come out of Chinaccelerator, the Shanghai-based startup accelerator. The company has currently raised about half of its planned US$500,000 seed round, and is eyeing strategic investors to round it out.

The company is focused mainly on deploying trial programs at a number of locations over the next months. Over the next year, the Magnet team is aiming to roll out the service in a variety of use cases, to hone the company’s skills and see what attracts the most users.

“We are fortunate to start in China because WeChat, with its 600 million users and 200 million already on WeChat Pay, provides a lot of infrastructure needed for guests to start engaging with Magnet services at offline retail locations,” Hank says. “We are able to explore use cases here now, that are currently impractical in the US.”

With any luck, Hank and his team have caught WeChat Pay and retail commerce at exactly the right time – just as he did with podcasting and Chinese a decade ago.

Without getting too ahead of himself, he mentions that Magnet’s ambitions may eventually take the company out of its home country.

“This is a global opportunity,” Hank says, “where we have just happened to have started in China.”

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