"Apple peel" brothers' entrepreneurship

Four months ago, in a residential complex near Dafen village in Shenzhen, the Pan brothers, who are from Henan province, rented a four-bedroom, two-bedroom apartment as a new office for the spin-off technology company they created.

The biggest room is the office of my brother, Pan Lei. On the coffee table is a brown tea set, the standard for Guangdong businessmen. Against the wall stood a desk two feet wide and a big chair lying on your back. On the two walls, two plaques - "Grand Vision" and "Hung Ye Take-off" - glinted.

The only thing that feels even remotely high-tech is that about 20 new hires are scattered around the living room, bedroom, and kitchen, each with a computer. They included friends, neighbors, and strangers. But they have one thing in common: they are all as young as the Pan brothers.

From "Apple Peel" to "Apple Plate"

More than a year ago, the Pan brothers came up with a product in a Shenzhen warehouse that turned the iPod Touch, which can't make calls or send text messages, into an iPhone, hence the nickname 'Apple Skin' brothers. After a year-long hiatus, the brothers are set to unveil a new product, the Apple Pan.

"Pan" is the surname of the brothers, Pan Yong, 23, and Pan Lei, 25. It is also the pinyin for Pan, which translates to "apple dish" in Chinese.

By plugging the square-shaped USB stick into the iPhone's charging port, users can read movies and music directly from the device, as well as copy and cut photos from the iPhone directly to the device -- without having to connect to a computer or Apple's App store. Like a traditional USB flash drive, the Apple Drive has a USB port that allows users to copy files from the drive to the computer. And it works not just on the iPhone, but also on the iPad and iPod Touch.

By this time, the Pan brothers had sold more than 20,000 "apple peels" and earned more than a million dollars. But their journey has been bumpy.

Twice been duped

A little more than a year ago, the Pan brothers were living in an abandoned warehouse belonging to their uncle's family in Shenzhen. When the brothers scrape together hundreds of thousands of yuan to produce their invention of "apple peel", but the market appeared with all kinds of fake products, they are immediately in trouble without financial sources.

But fortunately, they have a steady stream of people - from manufacturers to venture capitalists. One of the calls came from Henan Huanghuai University, Pan's Alma mater.

It was one day in September 2010, and the caller was the dean of international software at Huanghuai University. They said they were very excited to see Pan Yong's story. After praising him, he asked what was wrong with him and said the school was willing to help him and hoped he would come back to the school when he was free.

At almost the same time, a news release titled "Huanghuai University graduate Pan Yong has achieved remarkable results" was posted on the website of the little-known university in the hinterland of Central China. "Pan Yong's success is a review of the quality and level of our school, and a good inspiration and example for students," the article said. By this time, Pan Yong had graduated from school more than a year.

More than a month later, Pan Yong returned to his Alma mater and gave a "passionate" report to all the teachers and students. After the report, the school awarded him an unprecedented 100,000 yuan "start-up support fund" and selected three outstanding students to be his assistants.

A press release issued by the school later said it would be equipped with professional tutors. However, according to Pan, he never knew who the teacher was, and three students selected by the school to work as interns at his company left on their own after a few months.

The 100, 000 yuan funded by the school is undoubtedly a timely help. However, this is still a drop in the bucket compared to the three or four million dollars spent on production. At this point, some capable contract factory owners came to the door with a solution: they would put in the money, the Pan brothers would provide the technology, and the profits would be split 50-50. The brothers decided to accept.

After many contacts, they chose a manufacturer to launch "Apple Peel Generation". However, after several thousand units had been shipped, the partners suddenly stopped working together. At the same time, they discovered that an almost identical product had appeared on the market under a different name: C-skin. When they tracked it down, the brothers discovered that the producer was their partner.

The first war is defeated, but they are unwilling to give up and sought a cooperative factory anew. This time, Pan Yong deliberately encrypted the software. Soon, the "apple peel II" was born.

However, the brothers never dreamed that the same story would happen again - after nearly 10,000 units had been shipped, their second partner also stopped supplying them. The other side cracked Pan Yong's encryption technology and launched a nearly identical "apple peel enhanced version" on the market.

The second time was cheated so the brothers completely lost confidence in such a cooperative model. They decided to find a contract for manufacturing only do not do sales of the enterprise cooperation, by themselves to invest money, place orders for production.

Although they didn't make big money, the brothers are much better off than they were a year ago. As soon as the iPhone4 came out, the brothers, who had never had access to an iPhone, each bought one. They not only brought their father from Tianjin to Shenzhen for medical treatment but also brought their second brother Pan Yan from Beijing, who was doing the auto parts business. The brothers re-registered the company, Shenzhen Derivative Technology Co., and redistributed the shares - 50 percent for Pan Yong, who developed the Apple peel, and 25 percent each for Pan Lei and Pan Yan.

Now, the three brothers also have a preliminary division of labor. The eldest brother Pan Lei with the best eloquence is in charge of the whole situation, the 2 younger brother Pan Yan that has business experience is in charge of finance, and the 3 younger brothers Pan Yong that see long with technology continues to grasp technology. They were supposed to have an office for each other, but the introverted Pan refused, saying, I am not used to being alone in a room.

From the Apple Disc to the smartphone

On February 17, 2012, after showing the reporter around the new office, Pan Lei asked with some diffidence: "How was it? Have you got any shape?"

Having made some money off the apple peel, the Pan brothers began to recruit. In more than half a year, the company has moved twice, because of the increasing number of employees recruited, the originally rented space has been unable to accommodate.

In Pan's vision, this is far from the status quo he is content with. Originally in Jiangmen to do decoration business of him, everyday life may be: pull single, haggling, and access to a variety of building materials market. But his brother's inadvertent "apple peel" thrust him into a managerial position. He always smiled and said, "What can I do? I have to go ahead."

When the apple peel was made, he was thinking about how to make as much money as possible from it. But after being cheated twice in a row, and as the "Apple Peel" craze waned after its launch, he began to realize that this one product alone was not going to be a big deal.

For the company, almost all its hopes rest on its younger brother, Pan Yong, a technological genius. After the success of the Apple peel experiment, Pan wanted to design a wireless version of the apple peel, where users could make phone calls and send text messages by simply holding the device, which looks like a remote control car lock. A second card can also be inserted into the device, which, together with the iPhone, can be used for dual use.

But the feature proved difficult to implement, and for the first few months, nothing happened and the brothers were lost. At that point, Mr. Pan says, he was desperate and had no idea where the company was headed. Combined with poor management, morale throughout the company was very low.

At this point, Pan unexpectedly found that he had cracked the interface protocol of the iPhone. Then came a bold idea: why not make a portable hard drive just for the iPhone?

Anyone who has ever used an iPhone knows that to download movies and music, or to export photos from the phone, the iPhone needs to be connected to iTunes, Apple's app store. For many novices, the procedure is complicated. The iPhone also has a limited amount of memory for movies and music. The Apple Dish solves this problem.

"A new product that bypasses iTunes and solves the problem of importing and exporting data will do well." He said. After months of testing, the product, called the Apple Disc, was developed successfully.

However, the Pan brothers are not sure whether the "apple disc" will be as popular as the "apple peel". But this time, they have learned the lesson of how to encrypt the product before it goes into production to prevent it from being copied.

In addition to the new product, Pan plans to guide the company's transformation. Recently, he has been busy applying for a license to make mobile phones. In his judgment, the current period of feature phones and smartphones upgrading, and in his view, "this is the only opportunity to transform the company."

"Whether it works or not, try and see," says Pan, who now has an idea of the company's future -- a combination of hardware and software, with a focus on smart communications. Words like "raising money" and "going public" kept popping out of his mouth. He's already planning to turn Spin-off into a big company.

On its website, a new smartphone has been unveiled. The 5.3-inch smartphone with a 5-megapixel camera runs on Android and has a price tag of 798 yuan -- almost half the price of comparable smartphones on the market.

Mr. Pan said he planned to learn from Xiaomi's model of selling phones directly on its website, without any agents. The reason the price is so low is that it wants to make a name for itself in the smartphone market.

The biggest risk for the Pan brothers, though, is what Apple will do with their Apple discs.

Unlike a year ago, the brothers did not shy away from photos or media coverage, saying firmly that the "Apple Disk" only cracked the iPhone interface protocol, did not jailbreak, and did not harm Apple in any way. "We are not worried about any problems at all."