Dave Chong

Surrounding the Cities from the Countryside: The Bottom-Up Disruption Strategy

| Founder Insights | by Dave Chong

At DJC, we have made a deliberate strategic choice: we are targeting Small and Medium Enterprises (SMEs) first.

We offer accessible, lower-priced solutions to capture a wide user base, rather than chasing the “whales”—the large multinational corporations—right out of the gate. Why? Because frankly, we are not ready for them. We are still a “nobody” in the enterprise space, and we lack the infinite resources required to build the complex, custom behemoths that big businesses demand.

But this isn’t a weakness. It is a calculated strategy. It is the classic underdog approach, mirrored perfectly by one of history’s most famous strategic concepts: Mao Zedong’s “Using the Countryside to Surround the Cities.”

In the late 1920s, the Chinese Communist Party was nearly wiped out. The opposing Nationalist Party (KMT) held all the major cities, the centers of power, wealth, and military strength.

Mao Zedong realized that a head-on collision was suicide. The KMT was too strong in the cities. So, he flipped the board. He retreated to the “countryside”—the rural areas that the KMT largely ignored.

The Strategy:

  1. Build Base Areas: Establish a stronghold in the neglected rural areas.
  2. Mobilize the Masses: Win over the peasants (the “users”) who were underserved and ignored by the elite.
  3. Encircle: Grow this rural base until it was so large and powerful that it effectively “suffocated” and surrounded the cities.

Mao avoided the enemy’s strength (the cities) and attacked their weakness (the countryside). By the time he marched on the cities in 1949, they fell not because of a single battle, but because they had been structurally isolated and outnumbered.

This strategy is not just for warfare; it is the blueprint for almost every massive business disruption in history.

Case Study 1: Pinduoduo vs. Alibaba

In China’s e-commerce war, Alibaba (Taobao/Tmall) and JD.com owned the “cities”—the Tier 1 and Tier 2 urban elite. Everyone thought the market was saturated. Then came Pinduoduo. They didn’t fight for the Shanghai elite. They targeted the “rural countryside”—Tier 3 and Tier 4 cities, and actual farmers.

  • The Tactic: They used “Team Buying” (social commerce) to offer incredibly low prices on fruit and daily essentials.
  • The Result: They built a massive user base of price-sensitive users that Alibaba had ignored. By 2020, Pinduoduo had surpassed Alibaba in active annual buyers (788 million). They surrounded the city from the countryside.

Case Study 2: Salesforce vs. Siebel

In the late 90s, Siebel Systems was the “City”. They sold massive, multimillion-dollar on-premise CRM software to Fortune 500 companies. It cost $5 million just to start talking to them. Salesforce entered as the “countryside” guerrilla.

  • The Tactic: “No Software.” A cloud website. $50/month. Targeted at small sales teams and SMEs who couldn’t afford Siebel.
  • The Disruption: Siebel laughed at them. “It’s a toy,” they said. But Salesforce captured the mass market of SMEs. As those SMEs grew into big companies, they kept Salesforce. Today, Siebel is a relic, and Salesforce is the “City”.

Case Study 3: Toyota vs. The Big Three

In 1958, Toyota entered the US market. Ford and GM were building massive, expensive “land yachts” (The Cities). Toyota didn’t try to build a Cadillac. They introduced the Toyopet, and later the Corona—small, cheap, fuel-efficient cars for students and second-car buyers (The Countryside).

  • The Result: They perfected their quality on the low end. By the 1970s oil crisis, the market shifted to them. Now, Toyota sells Lexus and dominates the high end too. They disrupted from the bottom up.

This phenomenon was famously codified by Harvard professor Clayton Christensen as “Disruptive Innovation”.

The theory states that market leaders eventually “overshoot” the needs of the mass market. They add too many features, charge too much, and focus only on their most profitable (high-end) customers.

This creates an opening at the bottom of the market.

  1. Low-End Footstand: The disruptor enters with a “good enough” product at a lower price. The incumbent ignores them because “the margins are too low.”
  2. Move Upmarket: The disruptor improves their product. They capture the middle market. The incumbent retreats to the high end.
  3. Disruption: Eventually, the disruptor’s quality equals the incumbent’s, but at a lower cost structure. The incumbent has nowhere left to go.

For DJC, the SMEs are our Low-End Footstand. They are forgiving. They need “good enough” solutions. They allow us to iterate, gather data, and build our resources.

How do we execute this “Rural” strategy effectively? We cannot stay in the countryside forever; we must eventually take the city.

Phase 1: The Guerrilla (Current Stage)

  • Target: Underserved SMEs, solopreneurs, cost-conscious startups.
  • Product: Simple, standardized, focused on Use Value. “Good enough” to solve the immediate pain point.
  • Price: Aggressively accessible. We trade margin for volume (User Database growth).
  • Goal: Feed the AI. Gather data. Perfect the system.

Phase 2: The Encirclement

  • Target: Mid-sized companies.
  • Product: Introduce premium modules. Use the data from Phase 1 to build features that big competitors (who lack our agility) can’t match.
  • Strategy: Upsell the successful SMEs from Phase 1 who are now growing.

Phase 3: Taking the City

  • Target: Enterprises.
  • Product: Full-suite ecosystem.
  • Advantage: We enter not as a “newbie”, but as a battle-hardened veteran with thousands of active users and a robust, stress-tested platform. We win on cost structure and agility.

We are not “settling” for the low end. We are conquering ground to build the war chest needed for the final battle.

Starting small is not a sign of weakness; it is the only proven path to getting big.

Mao didn’t take Beijing by attacking Beijing first. Salesforce didn’t kill Siebel by selling to GE on day one. They won by respecting the “countryside”—by seeing value where others saw nothing.

For DJC, our “villages” are the SMEs. Our “peasants” are the everyday business owners. By serving them well, by empowering them with AI and automation at a price they can afford, we are building a movement. And eventually, that movement will surround the city.