Nick Yang Part 2

By Lu


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.