Nick Yang Part 2

Alright, I did promised a second part to Nick Yang’s post, here it is but I kept it short and to the point. Some of the explanations are my own conception on how to explain his concepts.

Success = Effort/Expectation

Hence, success is measured by how much you work and people’s expectation for you. It’s still the same concept of under-promise and over-deliver.

Change your plan according to how much money you have. Do not simply follow the original plan without making amendments. Cash flow is the life substance of the company. With cash, the company can stay afloat, but without it, the company is dying. Put the bathtub into perspective, if there’s more water coming in than going out, invest more and grow for better returns in the future, ie, let more water out of the tub. If the water is flowing out of the tub faster than it can come in, cut down on spending because it is not sustainable. Sooner or later, all the water is going to flow out and you will have an empty bathtub.

Be persistent – 10000 hours for great musicians/athlete to be great. As time goes on, more and more people will have left. At the end, there are very few competitors as more drop out, so, be consistent. The most successful entrepreneurs out there are also some of the most tenacious people around.

The three golden rule for a startup.

1. Become profitable as quickly as you can.

The company is self sustaining only if it’s profitable. A company cannot live on other peoples’ money forever, so profit must always be an important issue for a startup.

2. Last as long as possible.

This coincides with the previous point, a company can last longer only if it is getting profits. Cash is the blood of the company. With profits, there’s cash for the company to continue to survive and outlast its competitors.

3. Ride up a rapidly accelerating market, be ahead of the curve.

Pigeons flap furiously, but eagles just glide. Yet, eagles fly higher most birds. So, the key is to find a great current and spread the wings and to glide with the curve. Success pushes you. Company is successful, good people is attracted. They worked hard to expand the company. The company become more successful and there’s more payoff. It’s an upwards spiral that lead to success.

4. Figure out the curve.

Mega trend, figure out the way people think. People’s behavior are constantly changing, subtle but changing, imagine the ocean currents. The current trend of the human online social bubble is shifting from open system to close system. Google (open) to Facebook (close), changing mega trend. Nick achieved success with his early ventures because he saw ahead of the curve. He was first exposed to the internet when he was studying in the United States. When he went back to China, there was no Internet over there, but he foresee the potential growth of the Internet usage by the Chinese people and he capitalized on that by creating a new company, recruiting the best talents from Tsinghua University by locating the company near the campus. The internet boom come into China and his company became wildly successful.

For his next successful venture, he also saw the rise of mobile internet because the usage of cellphones is rising in China, and with phones getting more sophisticated, it is only a matter of time before people surf the web using their mobiles. He focused on that and created another successful venture.

5. Have people work for you.

Never try to have first startup with more than 1 partner. 2 founder is ideal, but 3’s a crowd. Not everyone is in it because they want to see it to succeed, some just in it for the job. Treat people differently. Treat those who would fight with the company well; those who have passion by giving options to them. Doubt who you used, use who you doubt.

Entrepreneurship is not for everyone, very few go to great success. In US, 1/1000 makes it. In China 1/100. With VC money, the changes rise up (3-4%, 30-40%). Unless you’re committed, don’t try it. If you still want to do it, then don’t stop, be persistent.

Yiying’s Wall of Arts

I meet Yiying earlier this year as a fellow dragon and saw some of her work while sitting next to her on the flight to Shanghai. She is a one-of-a-kind memorable person that you won’t probably forget ever meeting with. She is fun, hyper with abundance of energy and creativity. It’s hard to feel tired around her.

And her arts, I believe, pour out the same energetic vibe that Yiying possessed. She showed me some samples of her work, arts that are designed as stickers and able to be pasted on any surface. She has an exhibition going on in San Fran right now, and I’m writing this just to show how awesome her artworks are. Yiying’s company is named Walls360, and it’s accessible at this website

Nick Yang

I attended a quick session with Nick Yang today. He shared some insightful gems, starting with his journey after graduating from UofM to his financial standing now. He graduated with EE degree from UofM in 1997. He was first exposed to the Internet when he came to the university. After graduating, he went back to China and feel the force of economic growth (the drastic change of environment) when he was there. He was sure China will be big one day and went on to study at Stanford for his graduate degree. At Stanford, Nick mentioned there’s a can-do attitude up in the air. He witnessed how the students harnessed dreams into reality.

Armed with this attitude, Nick went back to China and co-founded ChinaRen Inc in 1999. He mentioned how lucky he was because he was ahead of the curve at that time and managed to ride the wave of success. In 2000, became the fourth largest website in China and he was only almost 24 at that time. Goldman Sachs was his first angel investor who invested 15 million dollars over a period of time. In early 2000, Yahoo offered to buy ChinaRen for 100 million usd (before the tech bubble burst and Yahoo stock price was ranging around 300 usd). Confident of its growth prospect and some ill advice from GS, who projected a 400 million usd evaluation if ChinaRen has its own IPO, Nick rejected the offer. Then, the tech bubble burst a few months later. However, in the September 2000, ChinaRen was still sold to for 35 million usd, who offered it in cash. Back then, Sohu had its own IPO at 14 usd a share price. During the time of offer, the price dropped to 7 usd each. GS advised him again to negotiate the deal to become shares of Sohu since they were expecting the share to improve and bounce back to its previous level. Hence, the deal was changed Nick also got the position of CTO of Sohu. There, he witnessed how Sohu stock crashed from 7 usd each to around 1 usd each.

By this time, I was chuckling at his misfortune (or unfortunate advice), rejecting a 100 million usd deal to settle for a 35 million usd one that dwindle down to 5 million usd. Since he owned 10% of the original ChinaRen stock, his wealth now was valued at 500 thousand usd. Feeling that the company is going nowhere, he cashed in on the stock and reinvest 250 thousand usd with a partner to create a new company. He lamented how after he cashed in, the Sohu stock rise up to around 80 usd each (currently at 60 usd each). If he didn’t sell, he could have 30 million by now.

At that time, he felt there was a new wave coming to China and he was determined to ride this one as well. Back then, cellphones in China are still in their infancy, the black and white bits model (that I myself used for quite some time) are gaining ground around the street. However, he was looking further ahead, when the cellphones in China are capable of web surfing. Hence, he started KongZhong, China’s leading mobile Internet company and provider of mobile interactive entertainment, media and communities. He mentioned that it was very hard to get VC money back then because everyone suffered from the tech bubble burst. He met up with a lot of VC but each turned them down. In the end, only DFJ invested but 3 million usd for 33% stake despite his previous success with ChinaRen. His team worked very hard and after only one round of funding, they went public in just 2 years and 2 months from inception. This was very fast for any company (the only company that went public quicker was Ebay). A year or two later, KongZhong has an evaluation of around 350 million usd. Not a bad haul considering a few years of work.

In 2009, he quits his position as KongZhong President and start-up (Monkey King Search), a brand new start-up focused on conceptual search and intent on becoming Baidu’s No. 1. Competitor. Right now, he revealed that he is incubating another project in the energy field and give a lot of pointers on how to proceed with our life, searching opportunities and succeeding.

Those pointers will be here coming up soon.