This is the first dialogue alumni event held by GCS since the start of the 2020 school year of Columbia Business School. This year has been a year full of turbulence and anxiety for everyone. Within a few months, the global outbreak of the epidemic has made the United States, especially New York, the center of the global epidemic. Under such an extraordinary time, countries, schools and individuals are facing unprecedented challenges. How to better prepare for the uncertainty and make informed choices is particularly important for MBA students. Through listening and thinking, we are able to be inspired and prepared for the challenges ahead. On the evening of September 13, GCS invited Yusheng Han (CBS'11) and Zhifeng Zhou (CBS'11), two alumni with outstanding achievements in entrepreneurship and venture capital, to have an open online dialogue. It has been 9 years since these 2 classmates graduated. They frankly shared the realization, judgment, experiences and lessons in their respective growth paths with fellow CBS students.
About the speakers:
Zhifeng (Alex) Zhou (CBS'11)
Partner of Qiming Venture with an emphasis in the TMT field. Zhifeng joined Qiming Venture Capital in 2014 and focused on cutting-edge technology (artificial intelligence, robotics, autonomous driving, etc.), enterprise software, semiconductors and other fields. As a director of the board of directors, he works closely with "unicorn" companies such as You bi xuan, Megvii Technology, Unisound, Stone Technology, Tongdun Technology, Biren Technology-and more than 10 other high-growth companies. He also worked in KPCB's Beijing and Silicon Valley offices for investment projects such as TiDAL Systems (acquired by Micron Technology). Prior to his investment career, he worked at HP Hewlett-Packard Company as the Director of Data Storage Products in China. Early in his career, he also co-founded Hanqin Information, a startup company focused on unstructured data management. He has more than 15 years of working experience in investment, entrepreneurship and high-tech companies.
Yusheng Han (CBS'11)
Founder and CEO of Burning Rock Medicine (Nasdaq: BNR) . Yusheng founded Burning Rock Medicine in 2014, focusing on the application of second-generation gene sequencing technology in tumor precision medicine and early cancer detection. By 2020, the company has quickly developed more than 800 members. In just 6 years, they have completed product research and development and quickly occupied the market. At the same time, they have been highly recognized by experts, serving as the frontier in the field of domestic oncology precision medicine. On June 12, 2020, Burning Rock Medical was listed on the Nasdaq Stock Exchange in the United States, becoming the first Chinese tumor NGS (Next Generation Sequencing) stock. Prior to this, Yusheng was engaged in medical field investment and corporate operations. He was the General Manager of BioTek Instrument China and Northern Light Venture Capital Investment. With over 16 years of experience in life sciences, he focused on the health and medical field and completed investments in companies such as Iraytechnology and BGI Gene.
This dialogue is hosted by Vivi Ouyang (CBS'21), GCS Co-president
Zhifeng (Alex) Zhou (CBS'11)
Partner of Qiming Venture with an emphasis in the TMT field. Zhifeng joined Qiming Venture Capital in 2014 and focused on cutting-edge technology (artificial intelligence, robotics, autonomous driving, etc.), enterprise software, semiconductors and other fields. As a director of the board of directors, he works closely with "unicorn" companies such as You bi xuan, Megvii Technology, Unisound, Stone Technology, Tongdun Technology, Biren Technology-and more than 10 other high-growth companies. He also worked in KPCB's Beijing and Silicon Valley offices for investment projects such as TiDAL Systems (acquired by Micron Technology). Prior to his investment career, he worked at HP Hewlett-Packard Company as the Director of Data Storage Products in China. Early in his career, he also co-founded Hanqin Information, a startup company focused on unstructured data management. He has more than 15 years of working experience in investment, entrepreneurship and high-tech companies.
Yusheng Han (CBS'11)
Founder and CEO of Burning Rock Medicine (Nasdaq: BNR) . Yusheng founded Burning Rock Medicine in 2014, focusing on the application of second-generation gene sequencing technology in tumor precision medicine and early cancer detection. By 2020, the company has quickly developed more than 800 members. In just 6 years, they have completed product research and development and quickly occupied the market. At the same time, they have been highly recognized by experts, serving as the frontier in the field of domestic oncology precision medicine. On June 12, 2020, Burning Rock Medical was listed on the Nasdaq Stock Exchange in the United States, becoming the first Chinese tumor NGS (Next Generation Sequencing) stock. Prior to this, Yusheng was engaged in medical field investment and corporate operations. He was the General Manager of BioTek Instrument China and Northern Light Venture Capital Investment. With over 16 years of experience in life sciences, he focused on the health and medical field and completed investments in companies such as Iraytechnology and BGI Gene.
This dialogue is hosted by Vivi Ouyang (CBS'21), GCS Co-president
Key takeaways for CBS students:
Z : Never let the top business school become the peak moment of your life. Going to school is actually just a stop for supplementing nutrients in the process of climbing, but many people turn this into the most successful thing in their lives.
H: Don't set limits for yourself, try your best to pursue what you want.
Z : Never let the top business school become the peak moment of your life. Going to school is actually just a stop for supplementing nutrients in the process of climbing, but many people turn this into the most successful thing in their lives.
H: Don't set limits for yourself, try your best to pursue what you want.
[The following is a translated transcript of the dialogue ] :
V: It has been 11 years since 2009. From meeting for the first time to becoming friends for 11 years, what has changed the most in your opinion? What is unchanged?
Z : Actually, I don't think much has changed, including everyone's mental and physical conditions. Ten years really passed in a flash. If we have to talk about changes, I think Yusheng has become more confident in the past ten years.
H: For my personal change I think now I know how to hide my attitude. I was more arrogant when I was studying. There’s an old saying that one shouldn't be too proud,while he shouldn't have no pride. I try my best to work in this direction. I think Alex has changed quite a bit. For example, in the direction of work. We actually talked about our respective directions when we were studying. When we first graduated, he wanted to try a new track in VC, and the track he chose was Clean Tech. I talked to him at that time actually and thought he should work in track he was familiar with. After he returned to TMT which he was good at and was a trending field, it became obvious that he was doing well. In fact, when we were at CBS, the two of us had a relatively clear positioning of ourselves. He felt that he was better at investing. I also felt that investing was one of the paths for me, but I definitely prefer entrepreneurship. After graduation, we were both on the track we chose, and were lucky in the choice we made.
V: During the MBA study, both of you were able to think clearly about your positioning. How were you able to think clearly? What did you figure out at that time?
Z : I didn't think that clearly during my two years at MBA. The core is to make a self-recognition and to understand who I am. CBS is an environment and comparing system that provides you with clear goals and references to benchmark yourself after working for a few years, allowing you to better understand yourself. Because the situation, age, and work experience of the surrounding classmates are relatively the same, they are all considered people similar to you. After having a good recognition of yourself, career direction and core competitiveness are relatively less important.
H: We went there during a special time, just in time for the financial crisis. There were more people with non-consulting and investment banking backgrounds. So many of this group of people came with pre-existing idea of what they wanted to do already. Everyone knew that there were rounds of recruitment activities in investment banking soon after school started. I personally went to one event and never went again, because the process was not attractive to me.
I thought about what I could do when I went to MBA at the age of 31. When you graduate, you will be 33 years old. Physically, you will definitely not be able to compete with other students who have just graduated from college. At that time, I thought that investment banking could only sleep for five or six hours a day, which was too hard and I would definitely not want to do that. For consulting, my feeling at that time was that it was very hard for them to really help the enterprises effectively given the expansion of various new technologies in the fields. So in general, I don't want to do things that make me look good, but in fact I have doubts about it.
I also don’t want to go to large companies anymore. The main reason is that I used to be the general manager of a relatively small company in China. If I go to a large company, I will have constraints in my position. During the summer I had two internships, one in Johnson & Johnson Medical Devices, and the other in Northern Lights. I could really feel the difference in these 2 jobs. As a big company, Johnson & Johnson actually provide quite some flexibilities for MBA students. I have done a lot during this period, but for my personality, there were still too many restrictions. Investment on the other hand was more flexible. By elimination, there were basically two ways left: to invest or to start a business. At that stage, I didn't have an idea yet for entrepreneurship, so I decided to choose investment first. It just happened that some domestic VCs were expanding their investment teams in the medical field, so I joined them.
The advantage of investing is that you can look at many projects and directions. At the same time, the investment itself is very interesting. You can meet many new friends, investigate many emerging fields, and witness the ups and downs of various companies. After that, I saw the opportunity of gene sequencing, which was also suitable for me, so I started a business.
In fact, embarking on the road of entrepreneurship may have a strong relationship with my personal shortcomings. I don't like social gatherings and interactions. For example, I rarely went to Columbia University activities after graduation. This is one of my biggest shortcomings, and I prefer to focus on the things I like. So when it comes to cognition of personal abilities, I think at that time I started to really think about what I wanted in the long run.
In fact, embarking on the road of entrepreneurship may have a strong relationship with my personal shortcomings. I don't like social gatherings and interactions. For example, I rarely went to Columbia University activities after graduation. This is one of my biggest shortcomings, and I prefer to focus on the things I like. So when it comes to cognition of personal abilities, I think at that time I started to really think about what I wanted in the long run.
V: Concentration is actually difficult, especially for MBAs. It’s easy to have FOMO ( FEAR OF MISSING OUT). Have you both had it before?
Z : I definitely had FOMO at that time. In fact, not only CBS, but also among the Chinese students in the top business schools in the United States, there has always been a kind of peer pressure that often causes unnecessary anxiety. Looking back now, the unhappiness in life always comes from comparison with others. If a person compares with himself or herself, such as whether he or she is better than 5 or 10 years ago, it will be more coherent.
I particularly like a book called The World Minute of Waterloo, and there is a sentence in it that I particularly like - "A person's greatest happiness is to discover the mission of his life midway upon the journey, at the prime of his life full of creativity." In fact, most MBAs, including myself, did not have a sense of mission at the time, so they were particularly vulnerable to panic and anxiety due to short-term influences from people around them. But in the future, such a short-term comparison is actually meaningless, because it is more important to walk further in the long term than walking a few steps faster than others in the short term or getting paid tens of thousands of dollars more. This is also my perception after observing the career and life paths of many alumni. The more short-term people are, the easier it is to sacrifice a lot of long-term things; and the more determined and calm people, the better.
H: Actually, I did not have too much pressure to recruit at the time. My idea was to see what happened to the top business schools and finally return to the original industry. But my biggest difficulty at the time actually came from academics, such as Accounting and Corporate Finance, which I had never touched before.
In terms of social interaction, although I am more nerdy, I am not completely anti-social. I just prefer social interactions where people can communicate more effectively and gain fresh knowledge - so more small-group gatherings. Back then, I hung out with a bunch of friends, played poker games, and traveled together. So now we still have a very good relationship.
V: Now is an era of accelerated change, which means we are faced with many new uncertainties and challenges when doing career positioning and career path planning. So in this context, how do you think that career planning should be done to better respond to changes?
H: Personally, I didn't actually make too much planning. Basically, I followed the trend. But taking advantage of the trend is actually the key. Basically, we still have to look at the big industry trends, so I think it is the best to consider some cyclical issues when considering career plans. This is what Mr. Lun Feng told us when I was at Hupan University.
First, we must consider the big political cycle, then the big economic cycle, and finally look back at the cycle of the sub-industry that we are concerned about. Once cyclical things are grasped correctly, it is easier for you to ride the wind and waves and get better nourishment along the way. If you choose a direction that is more contrarian, it will be very painful. For example, if you choose to go to a big company in an environment with particularly good entrepreneurial resources, it is easy to bury and miss opportunities; but if you are in an environment where entrepreneurship is more difficult and suitable for large companies to avoid storms, you must choose to start a business. It is easy to face greater challenges and resistance. In the middle and late stages of some sub-industries, such as when Fintech is good and when it is bad, there is a big difference.
Therefore, the key to career planning, on the one hand, the external environment actually needs to be considered; on the other hand, it needs to combine the characteristics and abilities of the person himself, as well as what he wants to pursue. Frankly speaking, I am definitely not among the smartest in CBS, but what I can do is combine the external environment and some of my own advantages, think clearly about what I want, and then unswervingly move in this direction.
Z : What Yusheng said is quite enlightening, I 100% agree. When making a career choice, you really need to look from a higher dimension, and take advantage of the trend to grasp the big things. For example, Yusheng is the first Chinese alumni of CBS we know to start their own business and go public on Nasdaq. This is also definitely due to the development of the entire macro-medical and life sciences, including the entire capital market ’s interest and investment in this field.
When I was in school, PE and Growth Capital were actually much more popular than VC, and the salary was also higher, so everyone rushed to go there especially to large international institutions. But who would have thought that the past 10 years were actually the big wave of technological innovation. VCs and a series of entrepreneurial investors have seized many big opportunities in the market. So catching up with the big wave in the market is really important to personal achievement. In addition , on a personal level, it is important to understand what your inner mission and calling are. Call of duty does not mean that everyone has to make a big ambition, but to understand what they want to accomplish in this life. Back when I wrote my CBS essay, the first thing was that I wanted to create my own, or to help as an influential investor, a technology company that the whole world to think highly of Chinese technology companies. In a certain segment, the leader mentioned by everyone is no longer Google, Facebook, or Amazon, but the Chinese companies. Looking back, I found that this is really my inner calling and sense of mission. The whole journey of life, sometimes the path is not so important, as long as the general situation is grasped correctly and you have a sense of direction. All roads lead to Rome. Finally you can achieve it. So don't be particularly entangled with the path problem, but really pay attention to the big trend and the final destination.
V: You both mentioned the need to adapt to the general trend. What do you think we should pay attention to or grasp in the past 10 years?
Z : From the perspective of VC, on the one hand, it is related to healthcare. Qiming Ventures has a very good Healthcare team, and the information I learned from them makes me truly feel that the healthcare opportunities in China in the next 10 years may be the biggest trend. And there are great prospects in many segments. The logic is simple, China's GDP is growing, people demand higher quality of life, but there is a huge gap in the medical segments between China and areas of the United States and other developed countries. For example, China’s per capita health care cost is 1/22 of that of the United States. Considering the China-US GDP ratio is Ôàö and China’s population is more than four times of the US, this 1/22 gap is certainly unreasonable, and yet means this market in the future has a huge room for growth.
The other one is cutting-edge technology. Because everyone understands, and the students in the US probably feel more deeply, that the uncertainty in the China-US relationship has at least caused China from top to bottom to realize that the rise of technology will play a decisive role in the development of China in the next 20 to 50 years. Technology power is the most correct way out, so there will be plenty of opportunities in technology related fields. In China this year, cutting-edge technology looks like a bubble, but I think there will be a bubble when any general trend comes. Bubbles are not important. The key is to identify whether there are some very core underlying driving forces behind the general trend. Therefore, I think healthcare and technology are the two trends I am most optimistic about.
H: I think from a general perspective, the investment perspective must be these two directions. But something I want to share with our alumni is that everyone should not think that because I am not in this field, I have missed opportunities in technology or healthcare, but whether I am capable of doing this. I think if you really want to do something , you have to seriously study whether you are suitable for it, or whether you like it or not. In fact, with the ingenuity of the CBS MBA students, it is not difficult for you to study and understand some industries. Take healthcare as an example. When I first went to the Northern Light, I felt that I had some industry background. But after doing it for about three months, I discovered that my knowledge and connections were all used up. Because this is really a vast industry, when we were in our prior companies, we basically only looked at the small sub-industries we were in. So when you run out, you can only slowly learn new industry knowledge and meet new people. So looking back on the curve of the entire network and knowledge, you should go down first, and when you are almost desperate, you can do a lot of new accumulations from the outside before you can rise again.
Another example is our CFO. He originally studied theoretical physics, not in the medical industry, but two months after he came to Burning Rock, he could read some very professional academic articles. So the key is whether you are willing to learn, don't set limits on yourself first, and define what you are suitable or unsuitable for. If you see the trend of interest and opportunity, you need to allow yourself to learn and adapt to the opportunity. In terms of ability and IQ, MBA students are certainly not lacking, but we have seen that many people have not found their main direction for a few years after graduation. Usually this situation is that many people want to join some industry, but they have not really spent a lot of time to understand and study this industry seriously. You can't expect others to instill in these studies. For example, I can’t talk to you for an hour to explain the matter to you. You have to talk to countless people and spend countless hours to figure out this industry.
So in summary, on the one hand, I hope you don’t set limits on yourself. On the other hand, if you really want to study some new fields, you need to really spend time learning. There is no such thing as a free lunch. If you just want to have a high-paying job after graduation and stay there comfortably, this is basically not feasible in the future. Even if you start to make tricks and get some of these offers, if you don't continue to work hard, you will eventually be eliminated.
V: Focusing on long-term trends and mission pursuits are indeed very important. But from reality, many people do have some short-term pressures and problems. For example, Yusheng said that if you don't have an industry background, you should not set limits on yourself. However, many students may not have the opportunity to prove themselves at the interview stage due to background reasons. So do you have any more specific suggestions for short-term employment and career choices?
H: Let me take Alex as an example. He knows many founders of the TMT industry. In fact, many times, for these founders, the background of an MBA from a top school is still very valuable to them. For example, if you go to be an assistant to a CEO, including the CEOs of some domestic listed companies, you may not necessarily have such talents by your side.
But therein lies a long-term and short-term contradiction . Take me as an example. I want to hire a CEO assistant, and maybe the annual salary is about five or six hundred thousand. In fact, most people are blocked by themselves at the first step and are unwilling to accept jobs with an annual salary of less than 1 million, for example. But for people who have no experience in an industry, you just come over and say you want to get a very high salary. This is possible in industries such as VC and PE, but if you want to go to other industries, it is actually not feasible.
But in fact, what is the advantage of entering the industry? Comparing VC and PE, people need to endure for years, only a few places can quickly recognize your ability, or fast-developing institutions have fast track opportunities. But in an innovative company, if you can find a good boss, the income may increase from 500,000 to 2 million in two or three years. But are you willing to take this risk and make this choice?
Perhaps many people are not willing to make this choice. As a MBA graduate, your capabilities are actually very competitive for management-level roles at most companies. As someone who passed through Columbia’s selective screening process and had two years of MBA education, you have to believe that as long as you are in a suitable environment, you can achieve some success in two or three years. But the vast majority of people are unwilling to make such a sacrifice. They want their career development and income to be a linear upward trajectory. My suggestion is that if you want to enter a new field, you can start with a lower rank or income, but you will have the opportunity to develop and grow faster in the future.
Another suggestion is to not choose the sub-sectors that seem extremely popular and hyped-up at the moment. That will be akin to entering the stock market at the peak of a bubble. It is important to figure out where the real opportunities lie in the future.
Z : I agree. In addition, my observation is that we are all too quick to label ourselves, which could also be because we all went to business school. When we introduce ourselves in business school, we want to highlight our strengths, so we always use a distinct “label” to brand ourselves. I think this is appropriate when we first meet people, but when you are making important career and life decisions, you risk being blinded by these labels and not understanding your true self.
Oftentimes, when you consider which industry you are suitable for, you’re already putting labels on yourself. Take myself as an example, many people thought that it was a reasonable path for me to go into VC as I worked in tech before MBA. However in reality, when I first started in VC, I analyzed Clean Tech companies. Yusheng mentioned his prior knowledge of the industry only helped him for the first three months on the job. But for me, I had absolutely no prior experiences at all. Even when I transitioned into the TMT sector, it was challenging despite my computer science background and experiences in enterprise tech. When I first started in VC, TMT investment was the hottest sector. I met a fellow interviewee during my job search who worked in Ad Sales at Tencent, and I think she has more relevant industry knowledge than I did given her understanding of internet trends. Therefore, my past experiences were not very helpful in light of these new sectors. I understood later on that we shouldn’t put too many labels and set restrictions for ourselves. What’s more important is to find and pursue something you’re truly passionate about. Just as Yusheng mentioned, there are many ways you can get yourself up to speed on a new industry.
V: My next question is about entrepreneurship. How do you judge whether a person is suitable as an entrepreneur?
H: I look at whether a person chooses entrepreneurship because he really wants to do it, or just because he thinks it’s a cool thing to do. There’s a large difference between these two attitudes.
When you choose to be an entrepreneur, you should first consider the role you want to take in the startup - whether you’re the founder who is the key decision maker or you want to play a supporting role. Entrepreneurship isn’t only about being the founder or being the CEO of a startup, there are many roles an entrepreneur can take on. Some people are more suited to play a supporting role to the founder or CEO in the early stages of the company, and you still get to reap the financial benefits as well as enjoy the process of growing a startup. The other thing to consider is what stage of a startup company is suitable for you. Some people have high risk tolerance and great skill sets for early stage startups. This type of people should join an early-stage startup or even start something on their own.
Whereas others might be more suitable for more mature startups with proven business models, especially if they are able to scale and grow a team. Therefore, you need to evaluate yourself to understand what type of startup you’re suitable for. The process is as such: first start by choosing an industry based on macro trends, then decide on the stage of startup you want to join based on your capabilities and future plans, and then choose your role carefully. If you’re not the top leader, you need to understand which role you’re most suited for, and this may take a while to consider after you join the company. The key thing here is to understand your key strengths. Sometimes you might surprise yourself.
Z : I can share my experiences as well. On the day Yusheng’s company went public, I posted a note on social media expressing my admiration and envy for him. My original goal was to be like Yusheng - be a founder, lead a startup, scale the startup, and finally IPO to prove our success. Therefore, I was genuinely happy the day Yusheng’s company IPOed, and at the same time I did a lot of self-reflection. My original plan was to be an investor for a few years, then go into entrepreneurship when I find the right opportunity. But after five years on the job, I have come to know myself much better. I realized that I’m more suitable as an advisor and strategist, like Zhuge Liang and Zhou Yu, whereas Yusheng is more like a General or Commander like Liu Bei or Sun Quan. As an analogy, if we’re in a soccer World Cup game and it’s the final penalty kick during a draw, Yusheng is the player who will make the decision quickly and kick the ball into the goal post, whereas I’m the person who will gather everyone and analyze which player is most suitable to make the kick. I’m more of a thinker and strategist but I’m not decisive enough to be a startup founder. However, I have great traits for someone in a more supportive role. This is what I have learned about myself over the last few years and I have realized the importance of finding the right role for myself. Being an investor is a suitable role for me as I act as a behind-the-scenes advisor for entrepreneurs.
If you ask me what are the traits of a person suitable for entrepreneurship, I actually think it changes every year. At this point in time, the first trait is to have vision. 99% of entrepreneurs have no long term vision, many of them are opportunists and only became an entrepreneur because they think it’s cool. To be a successful entrepreneur, you need to have passion and long-term vision for the industry. The second trait is the ability to learn. Because many things in the journey of entrepreneurship are unknown with no right answers, you will be eliminated quickly if you do not learn quickly and keep up with the times. The third trait is your ability to bring people together, motivate and lead a group to accomplish great things.
H: I agree with what Alex said about having vision. But it’s difficult to generalize entrepreneurs. I used to think that there is a formula for a good entrepreneur, but I have realized that there isn’t. Over the years I have seen many successful entrepreneurs, and it’s difficult to generalize common traits among them. I think it’s best not to restrict yourself based on this, it’s more important to ask yourself whether you’re passionate about it.
Additionally, entrepreneurship is a learning process. For example, most entrepreneurs who have vision got it through exploration and experience. Only as you grow and learn, you will see further. When you first start it’s difficult for you to see far into the future but entrepreneurs grow during the process. That’s why it’s most challenging to make early-stage investments. There are too many uncertainties in the early stages, and most of the time I judge an investment based on the general direction and the founding team. However, some people grow to become better while others whom we thought were superstars are actually not. It’s very difficult to predict.
Although entrepreneurship seems like a cool thing to do, it’s actually very risky. In most industries, you’re almost sure to fail if you’re not well prepared. For example, look at successful entrepreneurs such as Wang Xing and Zhang Yiming, they have actually been entrepreneurs for many years and have worked on multiple projects. So don’t think that you have the skill sets to be a successful entrepreneur right from the beginning, and don’t think that you have to be the boss from the start. There are many variables in the decision to become an entrepreneur, such as your personality and the financial situation of your family. There are some people who don’t have many material or financial needs and only want to spend their time and money on things they are passionate about, this type of people has more chances of success as entrepreneurs. If you have high requirements for your living standards and condition, such as going out to bars with friends or going on dates several times a week, then you’re best not being an entrepreneur. During the early stages of a startup, especially for the first two years, you almost need to give up on everything else and dedicate all your attention to the startup.
V: Entrepreneurship is indeed a difficult path. Yusheng, can you share with us some difficulties you have experienced in the initial stage of entrepreneurship, from financing to marketing? How did you adjust and respond?
H: I have indeed faced many problems, and the solution to each problem is different. When we were raising funds, I felt that the direction was quite clear, and I believed that NGS will most definitely become the mainstream in the future - the establishment of Foundation Medicine was a solid proofpoint. However, I found that there was a huge gap between the perception of investors and entrepreneurs. I have realized that many investors do not take time to truly understand and learn about the industry and its emerging trends. Therefore don’t just think that being a VC investor is a cool thing, most people don’t actually become successful investors.
At the time, we spoke to thirty-something funds. Initially we wanted to raise capital in RMB as it’s a faster process, but most Chinese investors don’t understand our business. Even those who understood were skeptical and questioned my credibility. Although I studied biology, I’m not a researcher and do not have the technical skills and therefore it appeared to them that I started this business out of impulse. I understand where these criticisms are coming from, but at that time we were unable to raise funds for five months. We may miss the best opportunity window to raise funds if the fundraising delayed any longer. I was at my wits end and therefore decided to raise capital from USD funds. After reaching out to Deng Feng of Northern Light VC, he made the decision to make an investment very quickly and gave the deal to TS. This stage of fundraising was challenging. Although I had not paid myself any salary since quitting my job and starting this company, I was in a good mental state and didn’t have financial pressures from my family.
Another difficult stage is market acceptance. Early education in the market is much more difficult than we expected. At the time, I thought we were too early in entering the market. But now looking back, it forced us to build our own brand and has taught us how to educate the market. To be honest, the pain I felt during that period of time is a reward in retrospect. Fortunately, we had the money and resources to pull through. It took more than a year to complete the initial market education. Many industry veterans recognized our efforts. 2015 was a very painful year for us as I was anxious about sales. Sales were pretty low back then - we only got 8 million yuan in sales that year, and it was all from scientific research services.
V: Alex, as an investor, what will you do if the start-up you invest in is in trouble? Will you step in to help entrepreneurs?
Z : I generally only encourage them and have patience. To be honest, investors won’t be much help when there is an emergency, they can at best be the icing on the cake. Because a company is run by its founders and entrepreneurial teams, investors actually have no ability to turn the tide. Anyway, from this experience, the first thing I learned is patience, because sometimes the development path is not always going upward. Some setbacks and stagnation are normal. Whether it is life or business, be patient. As long as the company, such as the CEO, did not make any major mistakes. For example, I met a very young entrepreneur. After taking the money, the market changed a lot and the business outcome was very unsuccessful and negative, but the first thing he did was to buy himself a Porsche 911. We also had another CEO who bought a private jet as soon as he got the money. If the start-up does such a thing, we will definitely need to intervene. But the ups and downs of the everyday business, such as strategy, must be a challenge for the team to overcome, and no one else can help.
V : Do you think that VC's experience is helpful for entrepreneurship?
H: I think it is helpful to me. First, from a macro levels, you can see the ups and downs of many companies, life and death, which is helpful to help me avoid making certain mistakes. Second, there are so many sub-industries that you get to analyze. So if you analyze the various trends carefully, you can see which are emerging trends and which are declining. Third, experiences in the formation of strategies and the design of equity incentive structure are valuable things you can learn by being in VC.
For example, it is easy to make mistakes when starting a business. A stereotypical scenario is that three good buddies started working together, and the shares of the three were equally divided. There are actually many potential problems for this kind of company. As a VC, you learn that this type of company would inevitably fail. So technical aspects such as these can help to predict the future. But staying in VC for too long might not be helpful – I stayed for 1 year and 8 months which I think is just about right.
Z : I think whether an entrepreneur is successful has nothing to do with whether he has experience in making investments. It is more important to choose the right track and ensure it is in line with the individual's ability and the larger industry trend. Investing is definitely helpful for entrepreneurship at the technical level. For example, as Han said – formulating strategies, financing , and understanding which institutions' investment strategies are in line with what you want to do. Having these information is more efficient than trial and error.
H: Let me add one point. Actually, many people look at my background and think that I worked in investments and then started a business and ignored my work experience before the MBA. In fact, I worked at BioTeK for many years, and I establish an organizational system from scratch during that experience. This is even more helpful for entrepreneurship than working in investments. So don’t just think that VC experience is helpful, but operating experience is also very important.
Z : I have another observation. Many people with only financial background, including VC, go out to start a business. No matter how high the position, this type of people’s ability to build a team from scratch is relatively weak. In large institutions, most of the roles are project-based, and there is no real clear need to be a leader who pays attention to and be responsible for professional and personal development of the subordinates. Therefore, when I invest and see a person with a pure financial background, I will be more vigilant and will focus on whether he has the ability to build and lead a complete team, especially starting from scratch.
[ Alumni audience Q & A session: ]
Q: Han Yusheng, after Burning Stone was successfully listed in the US this year, what are your most concerned issues now? What do you think are the problems with burning rocks at this stage? How do you plan for the next company development?
H: At present, the first thing we are most concerned about is research and development. The second is in the regulatory environment, because many products we are currently making are actually considered by the drug inspection bureau to be very new and innovative, that makes communications more complicated. Thirdly, in terms of product direction, early cancer detection is definitely our next focus. This will be our next growth curve, and it is where we are ahead of our domestic counterparts.
Q: Alex, now that Sino-US relations are strained, how do you see the trend of importing technology and returning talents changing?
Z : Now is actually the most difficult time to judge because there are too many variables from the United States presidential election. It may be totally different in November. In terms of the overall situation, I think after the US election, it should not be as extreme as it has been in the past few months, and tensions may ease. From the point of view of talent, I’m optimistic. I've seen in the past a lot of great overseas talents more willing to return, especially those who have risen to the management level in large MNCs. In the past, many of them were unwilling to return to China because they have already become VPs, they’re older, their children had already gone to high school there, and their socio-economic status was high. In fact, 10 years ago, most overseas talents who returned to China to start their own businesses were mostly junior or middle-management. However, recently, a very large proportion of more experienced people at higher levels are willing to return to China. I think this may have something to do with the recent situation in China and the United States. All these have made many Chinese realize that if you want to achieve something big, you still have more opportunities in China. So we recently invested in some companies started by returning overseas Chinese who moved back with the entire family. On the other hand, the impact of Sino-US relations on the technology industry is indeed real. It has become very clear that China needs to master the core technology by itself. This is more urgent than it used to be.
Q: In the past ten years, what role did network and resources play in your careers? What insights do you have in terms of accumulating personal resources?
Z: Network and connections can still bring you a lot of information and new possibilities. I have always divided investing into several approaches. The first approach is one where it’s relatively slow to find a project. You need to know many FAs and wait for them to introduce projects to you. But these are projects that are completely transparent and everyone else can see them. The second approach is more advanced where you use your own in-depth research on an industry to actively find projects. The third approach is that you have a core circle of senior industry experts who can directly tell you the new information and who are the newcomers of the industry. The fourth approach, the most advanced approach, is that you not only have access to industry experts, but you have to talk to top organizations in some industries. You need to build sufficient communication and trust with major manufacturers, and have the ability to integrate and control resources. In fact, the two most advanced approaches are actually directly related or determined by network and contacts. Therefore, to invest, you need to accumulate contacts, or at least have more friends recommend projects to you and who are willing to share industry views with you.
Q: The listing location of Burning Stone was chosen in the United States instead of Hong Kong. Why was it then?
H : At first, we thought that Hong Kong and the United States were both viable options, but when we got to the pre-road show, it was obvious that American investors would have a deeper understanding of the frontier technology field than Hong Kong investors. In fact, many companies with NGS-related technologies have been listed in the United States, and they are very familiar with the entire industry. Some other factors, such as the United States has AB shares while Hong Kong cannot have AB shares for listings less than 40 billion Hong Kong dollars, were also taken into consideration. In addition, the process of listing in the US is relatively simple. All things considered, from the perspective of our industry segment, the US market is clearly better than Hong Kong.
Q: Alex, from your experience with investee companies, is the uncertainty of Sino-US relations a consideration when choosing a listing location?
Z : Each sub-industry actually has clear preferences for the capital market location. For example, the field of hardware technology, leading companies listed on the Science and Technology Innovation Board earns high premiums from the market. I think that before the middle of next year, there is obvious opportunities to profit from the market. Whether there will be any adjustments in the future, we need to see again as the market is inherently dynamic. Hong Kong market has always preferred large companies with good cash flows. Nasdaq and NYSE are more suitable for Internet companies, O2O companies, and SaaS companies. In the past ten years, the most popular Nasdaq companies are SaaS. After going public, these companies can grow by more than 4.5 times on average.
Q: Han Yusheng, how did you decide on pursuing this path, and what’s your competitive advantage? Why can your team stand out among competition?
H: I don't think everyone should think of me as a successful person, but as a person who’s still on the road to success. From the very beginning, there was actually no core competitive advantage. If we have to have core competitiveness, it is that I have spent a lot of effort and perseverance to find people who lead our sector all over the world. But now Burning Rock's competitive advantages are talent, capital, qualifications and market share. We started to deploy early cancer screening in 2016, so we have accumulated much more data and experience. So how did I get this far despite not having competitive advantage in the early days? This has something to do with the mission, vision and values ÔÇïÔÇïthat I adhere to in my heart.