It's been quite eventful 4 months since I last updated this blog. We've hired new programmers and the development is picking up pace. Last time I talked about the facelift that was to happen - well now it's almost completely done!

We've been gradually implementing the new design across the entire site. One of the last steps was the introduction of the new logo on March 16. We are still fine-tuning the design and adding things like icons to mark hot topics and tabs to ease the navigation, but overall the major design push is now completed.

During the design face lift we also upgraded the server hardware so we're now able to handle a lot more traffic without slowdown. This caused various minor bugs and some downtime here and there, but fortunately things are now in a good working order.

The next phase, which is already on the way, will be implementing new features and polishing the existing ones. Our development team has grown rapidly since last year so we're a lot more capable of improving XIHA Life over the coming months.

Finding talented PHP programmers in Finland turned out to be a lot more difficult than we expected. I'm proud to say we kept the bar high and turned down all of the applications until we finally were able to find programmers who matched our exceptionally high expectations. It tooks time and obviously cost more than we thought but I am confident the push will be well worth it in the long run.

Now that we're finally in the process of hiring full time designer and artist, XIHA Life is about to get a face lift in the nearish future. The current design is minimalistic in the use of graphics but also quite plentiful in the use of colors. The current design has received praise from visitors in China and many other countries but also some amount of hate mainly from Finland.

Obviously the current look is temporary and has been the way it is mainly due to a lack of artist resources. We have no color slides, round corners, 3D look or overly large Arial fonts. When I look at the page I agree it looks like something is missing - it's almost as if the page didn't load correctly. The color balance most definitely isn't perfect as Wen and I have created everything from scratch, and we're not professional artists.

We've wanted to create a friendly community with a lot of nice features and based on the feedback we're doing well. We wanted to keep the graphics to the minimum so that there would be no overhead in maintaining the look, as we simply didn't have the resources for it. But all of that is about to change now. We have a lot of ideas on how to make the site better and we know there's a lot of things that need fixing, and that's why we're now hiring a team of developers!

On the right of this text you can see one possible way that our design is going to take. This is from a popular Chinese website QQ. They have various sub-sections on the site all of which have their own styles. Couple good examples are lady.qq.com and joke.qq.com. The design differs from typical western portal design in a few important ways. First of it's a lot more colorful than comparable western sites like Yahoo or MSN. Interestingly QQ also combines various different styles in the same page, perhaps even too much. They have square corners and round corners. They have boxes with thin borders and boxes with no borders... the text is sometimes on white background, sometimes on colorful. In comparison Yahoo looks quite boring.

When compared to XIHA, the QQ site has more subtle color tones but quite a bit more detail. If you look at the QQ site and disable graphical images, the two sites are fairly similar and the biggest difference is in the color tones. QQ represents a design that is quite typical in Asia. Very colorful and full of content. Often the Chinese websites are also full of animated flash banners but fortunately QQ is quite stylish and toned back so it is quite easy to accept.

When Myspace launched their site in Chinese, the reception was quite brutal; people felt the site was boring, dull. What is considered "too much" by many grown up people in the west, can still feel like "nothing" in the East. I guess these cultural differences are the reason why some social networks can be popular in one country and totally fail in another. What we're trying to do with XIHA is creating a design that would be univesally acceptable. The obvious risk is that rather than being accepted everywhere it might be alien to everyone.



When compared to many western and especially Finnish websites, XIHA is definitely colorful. My observation so far has been that Finnish girls are quite ok with the site but there's been a few guys who just totally and completely hate the way it looks. I mean, these people say that their head hurts and eyes are getting damaged when they look the site. And that's a toned down, mild version of the comments.

On the right you'll see a screen capture from a Finnish website called digitoday. This particular site is one of those whose readers generally seem to very much object XIHA's current look. It is true that the two sites are very different, DT is basically black and white with a little bit of purple to spice up the look. However it boggles my mind that there are people who find DT good looking and XIHA completely unacceptable. I don't feel digitoday is ugly, it's very plain and boring to me but it surely servers its purpose, which is basically to deliver news from the IT industry.

Similar to digitoday but somewhat happier in the feeling is TechCrunch, which at times seems like the bibble of everything "web 2.0". The design is simple - it doesn't really get simpler than that. It's basically a blog, and surely easy to read. The flipside is that half of the page is filled with ads, which is something hopefully xihalife will never have. A few small ads here and there are ok, but the content should still be the king! (which is why we also sell games)

As much as "minimalistic" and "elegant" design might be trendy, it simply doesn't work for a design of a portal and it doesn't work too well for a site that wants to be fun, happy and entertaining. We're not going to remove the colors and we're not going for an overly simple design. We do want to put a lot of effort in creating a site that is both great to use and nice to look at. And as always, we welcome your feedback! Those who have been regular at XIHA know that we have implemented a lot of new features based on ideas from our users, so we do listen! It always makes sense to shout out your opinion.

EU and its member countries have excellent programs supporting the incubation of new businesses. The programs require the participating companies to follow certain procedures and overall the process is quite heavily supervised. The young companies are get a lot of guidance and holding of hands to make sure they are doing things right.

This makes sense. After all, it is the tax payers who pay the bill. The idea is to grow new businesses, which creates new jobs and in the end brings back the investment multiple times in taxes. However, such way of starting and creating businesses has the flipside that it tends to be quite conservative and slow. The gut feeling is that it is easier to get money from public than from the private sector, but the investments are smaller, require a lot more paperwork and business planning needs to be a lot more "realistic" than many entrepreneurs in the fast moving internet era would like.

Private investors are able to move faster if they want to, and they like to aim higher. The problem is that private money can be expensive, especially when you really need it. Private money often doesn't like to stay put, so it will want to exit sooner than you feel comfortable. However, private money can accept more ambitious growth plans and rely more on cutting edge technology. In real world things happen over night, phenomena like Facebook appear seemingly out of nowhere and it will take time for it to sink in with the government organizations, so sometimes you need to be working directly with the people who have the power to say yes without needing to consult a board of advisors or get a sign off from a higher level.

There are pros and cons on public and private funding. My ideal right now is to utilize all available public funding sources early on and avoid private investments for as long as possible. I can't claim to be an expert on this though so ask me again in two years. I might feel different. For now though my gut feeling is that it would be best to be in a position where investors will want to work with you, rather than having to hunt them down. Some people will say that's daydreaming, but I have a very good business plan, ability to execute it and sufficient funding for the foreseeable future.

I feel it is possible to get the business to a point where it is growing rapidly and the need for more funding will come from the fact that the explosive growth is getting out of hand. As opposed to running out of cash trying to implement an overly ambitious plan which was only possible because there was money on the table. I've seen it happen.

Finland is an expensive place to run a business, far away from everything. But there are three things that make it an ideal place to start a technology company!

1. While the costs of hiring an employee are fairly high compared to the rest of the world, salaries in the technology sector are relatively low. A programmer costs about 2500 EUR per month plus about 35% in fees and taxes.

2. The talent pool is excellent, if a little small. The local universities are producing a lot of technology talent, Nokia has a lot of influence young people's career choices and the long dark winters are a great brewing ground for outstanding programming gurus.

3. Perhaps the most important factor in the start up phase is the excellent funding system that the local and EU government provide.

The biggest support authority is Tekes (www.tekes.fi/eng/), which is a Finnish funding agency for technology and innovation. In the recent weeks I've been getting familiar with the different forms of support available. The selection is rich, and each type of funding has its own requirements so it can take a lot of effort to go through it all. For this purpose, a business of helping businesses has boomed. In the capital city area alone there are dozens of business incubators specialized in guiding new companies in business planning, getting funding and internationalization.

I'll write more about the different types of funding some other times as it deserves it's own blog entry. Having been through the jungle of options lately I recommend working with a business incubator as there's a lot of mistakes you can make. Seeking for one type of funding may disqualify you from another, filing the company paperwork at the wrong time may mean losing out on something, and so on. The laws and the available funding change all the time so only a professional who deals with these issues on a daily basis can really tell you to do.

During this process I also made a decision I am going to focus on the technology and developing the website and not get too involved with the business side of things. I'm still involved in business planning but I don't want to spend too much time with the paperwork or on the phone or meetings. I hired Juhani Polkko (juhani.xihalife.com) as a consultant to take care of the business and this is proving to be the right choice. Having seen what is involved in starting the company and seeking funding I'm happy I am not the one in the middle of it.

When you think of starting a business, even if it's an extension to the current business you already have, it's important to ask a lot of questions and try to come up with good answers. You need to be able to define your product as well as your business model. Keeping that in mind, one rather important question is what is XIHA Life? To give a generic answer, XIHA Life is an adaptive international social networking website. This is quite a broad definition but there are couple words which help narrow it down a little.

International is the most important keyword. XIHA Life has users from all over the world speaking dozens of languages. The user interface is currently available in 8 languages with 2 more almost finished and another 10 planned in the near future. What sets us apart from the other sites is that everyone is in the same "space", regardless of the language they speak.

Adaptive is another interesting property. This means that rather than being a photo sharing site, dating site, gaming site or anything else, XIHA Life adapts based on what the user is looking for. If you came to the site looking for games, it's a fantastic game site with huge game collection, active discussion forums and points system which helps you earn free games. If you were looking for friends, it's a site with people from around the world looking to make friends so all you need to do is polish your own profile and go browse other people's spaces. For example, we're one of the best places for Asian and western people to find each other.

The same goes for blogging, photo sharing, food recipes, you name it. The thing is, XIHA Life takes the concept of web 2.0 a step further - the content is created by the users and so is the purpose.

You could also describe XIHA Life as a social hub. Just as it adapts to your needs it also accepts you the wa you are. If you already store your photos in Flickr - that's fine. You can easily link them to your space in XIHA Life while still keeping the Flickr album. The same goes for your videos in YouTube and (soon) your blogs in Blogger. And the list will keep growing. Your life in the web is likely quite fragmented around the places and XIHA Life provides an excellent way to put it all back together.

The business model of XIHA Life builds around two main revenue sources; advertising and game sales. The idea is to keep the site free for all users and focus on building a large userbase. One of the challenges we have is to get the message through to our visitors that there really is no catch. The site really is free to use, there are no limits on how many photos you can upload and you really can earn free games but actively posting on the site. All user content actually helps us get even more users, which is our bottom line.

Naturally a large userbase means increased advertising income, but this tends to convert well to increased game sales too. We don't expect all of our members to be interested in games, but the types of casual games we have do have a broad appeal around the world and in all age groups. In fact, because of the casual nature of the games, the non-gaming population also supports the game sales, in a way. When they post content on the site about everyday life, they help us get more visitors.

Out of a random sample of people a certain percentage likes to play games but not all are actively looking for games. A site with purely gaming related content would certainly miss a large portion of the casual gamer audience. If you want a proof of that, go to MSN.com or Yahoo or any other lifestyle portal and witness the amount of casual game ads.

So, that is what XIHA Life is all about. The best proof of our business model is that we've managed to be profitable through most of our existence. The site is still very young and growing fast, so being able to post profit so early on is an achievement. What will happen next is that we will increase the investment in research and development and kick off marketing efforts (up until now we've never paid for advertising, it's all just "snowballed").

Dear friends - we have exciting times ahead! We've decided to open a new XIHA development studio in Finland. In this blog I will follow the process, from setting up the business to hiring employees and running projects. I'll do my best to keep you up to date on what is going on. We're still early on in the process, but the plan is to get going pretty quickly.

It may come as a little surprise I am starting a new business in Finland, especially if you've been reading my  popular Doing business in China blog. It's basically a starting of a new studio, just like in China but this time situated in Finland. Why would I move from the US to China, start a business there and then do the same in Finland?

Well, there are many reasons. First of all this doesn't mean I've given up on China, quite the contrary. I still believe China is the place to be and there will be period of strong growth in nearly all sectors for years to come. However, what China lacks today is world class talent in programming.

Another reason has to do with the global positioning - we already have business operations in the US and Asia, so once the Finland office is up and running we're very well positioned globally. For a web community with global userbase this is obviously quite an important factor!

XIHA Life keeps growing bigger and more popular. The need for top web 2.0 -talent is getting more urgent and programming talent is something Finland is known for. Our biggest need right now is for talented PHP / JavaScript / Flash programmers and later on even for we designers and artists.

I have started companies before but this time I am going to do it a little different way than before. The first person to hire will be a CEO. This is partly due to my past experience and partly it's because we already have a product under development and I am way too busy with the development efforts to spend time with the paperwork or business management.

Stay tuned for updates!