Benjamin Joffe on the prototyping in China's tech startup industry

Hello and welcome to the Rich Robinson Show. I'm your host, Rich Robinson. Over the past 25 years, I've been an entrepreneur, investor, advisor, and professor here in Asia. After nearly a quarter of a century in China, I'm now based here in Bali, Indonesia, the island of the gods. Asia is my home now. 60% of the world's population also lives here, but I would contend 80% of the world's dynamism and opportunity is right here in the region. On the show, you'll hear candid and fun conversations with some of my friends and colleagues, people I've met along my journey, entrepreneurs, operators, experts, It will help you unlock actionable insights around the Asia region and the entrepreneurial agility that actually defines it. This first season, season one of the Rich Robinson Show, is titled At the Speed of China. Like, wait for it, at the speed of light. Things happen fast in China, and in this season one, we're gonna Take a deeper look at that. The rapid economic development over the past few decades, as well as the speed and cycles of innovation taking place all day, every day, right now.

Let's go, Jio! Bonjour, good morning, Selamat pagi, Zao Shan Hao. Benjamin, ladies and gentlemen. My old friend Benjamin, welcome to the pod, my friend.

My pleasure to be here, Rich.

That's great. You're in— I'm in Shenzhen, 我在巴厘岛, and you在巴黎. So Paris is Bali, but Bali is also Bali.

That's right.

Yeah. So you are in your home country of Paris, but I got to know you as Mr. Asia. There's a book about Mr. China, but I think there aren't many countries left in Asia that you haven't lived in, and I will peel back that later. But right now you've been back in France for how long?

So it's been back and forth and a lot of traveling, but more than 2 years now.

I mean, congratulations for being French in the startup space. That's like on fire now, right? There's so much happening in that swim lane. And I think Macron has been good for the space and there's been a lot of entrepreneurial activity.

Yeah. Like France has been on a really on the roll, like the unicorn count keeps going really really up very fast. And I think, I don't know the exact, like, latest counts. And of course, we're still way behind the US and China, but that's a given. But yeah, no, it's been good for the local tech scene. On my end, I'm actually mostly based here, but in fact, most of what I do has actually little to do with France. So it's more like a, like yourself, a location and a home base.

Interesting. So I was talking to a French friend the other day, and his words, not mine, But he was saying that like the US is full of like these ambitious immigrants, people that leave their home country and they're like, I want to go to the land of opportunity. And I have just met just an inordinate amount of smart, ambitious, capable, awesome French people in China. And he was saying like in France, like it's unless you maybe have like this elite education or, you know, unless you're really willing to kind of like work within the system. It could be kind of frustrating if you're like a super go-getter. And so it's not really that surprising that there's so many awesome French people. Is that like, what do you think about that? China?

Yeah, I think it's quite true. And I think China and the US are places where you can really make your own luck much more than in very established and let's say conservative markets. It has to do also with the job market and the things have changed quite a bit in France over the past 20 years. Like when with the first internet wave, you really looked like an alien if you're doing something in the tech space and they were like after crash, it got really a bad rap. But so the traditional route for the top students from business or engineering was generally to join large groups and have traditional career paths. But in the past few years, startups have become more and more popular, and the big companies have become also starved for talent. So they started to recruit people who had startup experience, who initially they really didn't like because they wanted to really mold everybody to their own style. So I think that helped a lot. And to me, when, you know, as you said, I've lived in like a number of ecosystems and a number of countries in Asia, and in some other places. And I've become kind of a student of startup ecosystems and trying to understand what makes them tick. And I think the key element that's generally not really commented about is the fluidity of the job. It's as stupid as that. And it's something just like in the David Foster Wallace story about the fish that doesn't know it's in water. And it's the same when you talk to Americans, like, yeah, we're risk takers, blah, blah, blah. But in fact, the downside of a failed startup, when you're in engineering or sales or business or something, the downside is that if it doesn't work, you'll find another job. And you'll find it pretty quickly. But in some other countries, it's a career-wrecking move to build a to build and fail a startup, and that's a huge difference. So I think that has changed in France, and definitely in China and U.S. I think if you're in the tech space, the job market is very very fluid, and that's very conducive to startups.

I think it has changed in France, like and that the same person made some parallels between France and Japan in some ways, and that like these really large companies and a little more hierarchical and a little bit more traditional. And I don't think Japan has changed all that much. You know that market far better than I when it comes to startups, but like in terms of like the sentiment, even though there's great startups that come out of there, but France seems to have really a renaissance, if I may use that language.

Yeah, I think so. And I think Japan also has changed in the software, software space. Definitely there's a very, very fluid job market and now like a lot of very established companies and a lot of startups. In some other spaces, like things that are more engineering driven and hard tech and automotive and On electronics, the job market remains a little bit less fluid. And I remember a conversation I had a few years back with the former CEO of Hitachi. And I asked him what could happen if somebody from, like an engineer from Hitachi would leave and, you know, try to build a company and would want, maybe the company doesn't work out. And after a couple of years would want to come back. And the former CEO said, well, I think we, we wouldn't forgive him.

So forgive him for just, even if he maybe did well, They wouldn't even forgive him for that.

Exactly. Because you have to keep in mind also that in Japan there's a huge investment when you join a large company into your training and they rotate people for years. So they really invest in you. What I find really surprising is that if they leave to try to do something else and then they come back, they can really bring something new and act as bridges also with the startup world. But with this conservative, like more conservative thinking, you say, well, you know, this idea of betrayal is pretty solid. I think some people said, well, maybe at Sony they would be okay, something like that. But so I think this is also evolving.

Those soft Sony guys.

Now it's because Sony is always a little bit more like, I mean, was today, I'm not exactly sure, but was kind of outward looking. Even their name, when they changed from like, I don't remember what was the name. Original name was like Tokyo Denryoku Shiki Gaisha, something like that. Tokyo Electric Electronics Company. When they changed to a kind of American name, Sony. That was really, really surprising. And actually all their partners and suppliers in Japan hated it.

Wow. Yeah, that's interesting. I guess it is, you know, compared to other Japanese names like Hitachi or, you know—

Mitsubishi, Toyota. Yeah, those are local names.

Mitsubishi, right. But Sony sounds very Japanese to me, but just because it's a Japanese company. It's not.

I think it's after a trip to US, the founder thought, oh, okay, I need to be more international and I need an English name. And I think at that time, maybe calling people Sonny, Was some single that was popular, and I think that's where it's come from. But I need to check, double check that.

That's funny. Yeah, yeah. There's I when I was doing stand-up comedy, I had a couple of bits about like Pokari's the naming around that. But also there was a snack; it's still around. You see it, and it's called Colon.

I don't know this one.

C-O-L-L-O. Ah yeah, yeah.

No, I think I saw it. I don't think I eat it.

It's a little. It's like a crunchy tube packed with chocolate, and it's called Colon, right? And you can just imagine. When they launched this thing, they were either like, what? We've been here for 2 weeks trying to name it. My kid's got soccer practice. It's tube-shaped. It's packed with a thick black material. I vote colon, right? It was either that or at the launch they were like, it means what in English?

Oh, it's funny.

Yeah.

It's funny that even though that gets the main topic will be China, we start with talking about Japan because In a way, China is carving a path that has some similarities, but also of course, huge differences with Japan. And Japan was very export-oriented, tried to kind of Westernize a bit more some of its brands and started with automotive, semiconductors. And China is having a very, very different path to that. And today you don't see yet a whole lot of very global Chinese companies that are well known under the Chinese brand. And so I think this is just, we're just at the beginning of that, of that happening.

Yes. Because made in Japan meant crap before too, right? And I think people kind of laughed at Toyota and other firms, right? And the same thing, you saw the same thing happen in the '90s in Korea, right? With like Lucky Gold, LG and Samsung and all these other car manufacturers as well too, right? Like it's fascinating. Like if, if you actually really just pinch China and kind of like pull it, you know, geographically, culturally, linguistically, it's like Korea, Japan, right? It's like, and it's like, you know, historically.

Yeah. It's very, very tightly connected.

All sort of came and, and it's so, so connected still now. Like you go to Korea and like people, it's much more like Japan in a lot of ways, but somebody will still maybe run a red light.

Yeah. A bit more, a bit more Latin. The Irish, the Irish of Asia, people say sometimes. Whatever that means.

Indeed. Indeed. But yeah, and it's usually like rest of world and then planet China, planet Korea, planet Japan. So if you, like, you've spent time in all 3 markets and others as well too, right? So let's talk about that. Let's talk about your hero's journey from Paris or France all the way to Asia.

What, what was that like? Well, to kind of make it, try to make it concise, essentially I studied engineering and as I was studying engineering, I thought, I was actually curious about foreign languages and I decided to pick up Japanese and did an internship in Japan during my studies. Quite liked it. I felt more curious, more energetic when I was there than when I was in France. And upon graduating, I was really having this option of joining like a large company or consultancy or moving to Japan. And I thought about it and as I was trying out my standard issue suit for interviews, I realized I don't really want to be like one of the many that is just looking like corporate drones. And I got this opportunity with a small consulting company that was basically researching innovation across Japan in different technology sectors, like from energy to automotive to internet. And so I decided to move there, and that was back in 2000. And at that time, the mobile sector in Japan was really ahead of the curve, and 3G was introduced there first. And I thought, okay, 2005.

What year is this now?

Yeah. And so I decided to, after a couple of years with this consultancy, to join a telco, French telco that had a branch there that was called Orange. And spent a couple of years there learning about the tech market. And then that got me exposed to the startup world, even though at that time Japan was still quite nascent. It was still a part of that first internet and mobile wave. And that also got me to visit Korea. So after about 4 years in Japan, I thought, okay, well, I think Japan is really interesting, but there's a bit of a— it's actually still a bit conservative, whereas I felt there was a lot of energy in Korea and a lot of entrepreneurial energy. And I also got curious about Korean language because it has some really interesting writing system that's like super logical. And the language also felt somewhat familiar but different because its structure, the grammar is the same as Japanese and many of the words are very similar.

Oh, really?

So when I was in Korea, I was like, I feel I should be understanding this, and I don't. A little bit like I'd say as a French, you would go to Spain or Italy, listen, and you're like, does the whole rhythm of this sound familiar? Many of the words sound familiar, but I don't get the phrase. So I decided to move there, did a training over there to learn the Korean language and a bit of Korean business. Spent about a year there, then probably got lucky enough of Korea after a year, realizing also that despite the whole startup scene, there was really a bit of a glass ceiling for startups because the big large companies in Korea were really dominating everything. Like you couldn't do business without talking to Samsung in mobile or LG, and it was really limiting. So today is quite different and you see some really cool companies and big, big, big, like pure players in mobile or web. But at that time that got, that was a bit limited. Yeah.

It's interesting if I may interject there, is that I find that like Korea is one of the tougher places for a foreigner to land and like really dig in and deep.

Yeah. I mean, you could say Korea functions a little bit like an island because of North Korea that cuts it from the mainland. So it's a little bit like Japan, but because it's a smaller country than Japan, there's less visits. Also, it developed later than Japan. So in terms of, at that time, I was like, we're talking about 15 years ago, in terms of sophistication, In terms of appeal, it just has probably less branding power. So after that, there was the whole Korean Korean wave around the pop culture on cinema and music and stuff, and it got a lot of appeal, particularly in Asia. But actually, if you look on iTunes, I think BTS, the Korean K-pop band, is the best-selling on iTunes.

Yeah, and like indeed, it's gone through an entire like you know true renaissance, right? There with cars and Samsung and yeah electronics yeah movies right.

So a lot of it in industry, a lot of it was intentional. Like of course due to the you know. Korean War and the ties with the US, you know, US was trying to help rebuild South Korea as kind of a buffer on the way to monitor the region. So as an advantage, sort of, Korea didn't have— Japan didn't have to spend so much on military. And when you don't spend military, you save quite a bit of money. And then if you get technology transfer, you also have the ability to develop things. So Korea decided to put money into construction, cars, shipbuilding, semiconductors. And most of it worked out pretty well. And after that, they tried to branch into more like soft things. And I think the Korean Wave was also a little bit of an accident, but worked really well in terms of soft power and influence on the appeal of the Korean culture. So that was kind of interesting. So after a year there and 4 years in Japan before that, I was basically in Seoul and thinking, okay, well, what do I do next? I don't really want to stay here. I didn't feel that going to the US was so appealing to me because I had a bunch of friends who had been there. was, or were living there. And it was interesting, but for me it wasn't very, it didn't feel that adventurous or original somehow.

Yeah. And I think around that time Asia wave was really, really growing.

Yeah. There was a lot of momentum in Asia and I thought I had been to China the first time was in 2001. And at that time I was really impressed. I went for just a few days around Shanghai and I remember seeing from my hotel window, looking around. And everywhere around you could see cranes building stuff. And you don't see that many cranes in Paris. You don't see that many cranes in Tokyo. And over there, like, you had panoramic view on the business floor. Everywhere were cranes. And I remember also visiting some factories in the outskirts of Shanghai and couldn't communicate. I didn't know a word of Chinese. So guys kept offering me cigarettes and I kept— because there was nothing else to communicate with aside from alcohol and cigarettes.

Yeah.

So I kept turning that down because I don't smoke. But then after a while, they were so insistent that I decided to take one. And then I basically had to chain smoke like 5 of those and they were like heavy tar. And they gave me a cartridge of those Double Happiness cigarettes at the end. And at that time, I was still living in Japan. I brought them back to my Japanese friends. They all coughed on them. Like, they just couldn't take it. It was too strong because the Japanese ones are much lighter. Anyway, so that was my impression. I remember meeting some people in China also. They were doing some trading with factories and stuff. And I was like, okay, well, some of them spoke English and I asked, okay, well, what are you interested in doing and what are you doing? So, well, I'm doing that at the moment, but really down the road I want to create my business. And it's not something that you hear a lot when you talk to French people or to Japanese people. I want to create my business. And over there, that was so frequent. I felt there was really something else. Eventually, after Korea, I thought, okay, well, I've lived in Japan, don't really want to go back there right then. Korea, don't really want to stay. Let's take a look at China. So I signed up for China and signed up for a university course. I thought, okay, I'll try to organize my own kind of business training there with taking lectures and meeting people. And actually you were one of the very, very first people I met. And I think— no, no, no. I think through a guy named John Spetter. And I also introduced Kaiser around the same time. So you guys were like the first people who knew something about China that I met, aside from the students who I was meeting at the university. And I remember, I think, I don't remember, that was 2005.

What year was that again? Yeah, okay, so pre-Olympics. So things definitely—

Yeah, when Sun Luton, I think it still had, did it still have the mug? I guess it had the mug. And there were a number of bars that are now long gone, but yeah, it was way before like everything became so fancy. And I remember discussing, and at that time you were with Linktone and you were like so pumped up about like the Chinese internet and you were saying like, there's Sina, there's Sohu, there's Linktone, there's Tencent. You can't lose with one of those guys. Like, you know, and yeah.

Well, Linktone you could lose, but those other ones you couldn't. I was right.

But yeah, so that's basically when I arrived was winter 2005. Remember it was really, really cold in Beijing and I was, I knew nobody and I had to sort out my housing and mobile. and banks and all stuff. And I sorted out everything in, I think, 48 hours. And I was like, okay, yeah. I was like, wow, it looks like— Easy like that. Yeah, there's a little bit of— so I think your theme is around speed. Well, never happened anywhere else to basically figure it out like that in a country where I didn't speak a word so quickly. But there were a lot of people ready to share information and things were actually fairly, fairly easy. I mean, there was always a bit of friction, but everything was doable.

That's great. Yeah. I still remember, yeah, first meeting you because you really had some, I think, really terrific like analytical chops. Like you're, I think you're one of your superpowers is being able to like take a whole bunch of data and just kind of filter it through those gills and then come out with how to do it.

Well, I guess either, I don't know, like it's the way I'm born and like I just followed that. Or it's maybe some training through engineering or others or consulting. But I think fundamentally it's also being like the exposure to different places pushes you to draw comparisons. And then if you're curious, you'll try to understand why things are the way they are. And then that's, that probably helped become a bit more savvy at distinguishing like the characteristics of businesses and markets.

Because I learned something about you. I didn't know that you were an engineer by training. Right. Because I can see that, but I actually like what, how you really show up to me is an analytical person, but an analytical person that's really great storytelling ability to be able to like really distill stuff into, into very, very digestible, delicious nuggets. And that's, that's, that's typically not like, so you're definitely not completely a left-brained person. Right.

Yeah. I mean, I guess I had also interest in literature and I guess that I'm probably expressing maybe some of that through consulting and reports and presentations, but, you know, I also learned from you as well.

Well, you know, it's interesting. And I'm going to say this not to embarrass you, but to really actually talk about your name. When you first started doing public speaking, like it wasn't something that terrific at, but the fact is Yeah. Yeah. But what it's like, it's not necessarily something that a lot of people are sort of like just naturally good at or have a propensity to do well. But the fact is that like right now I would put you against anybody on planet Earth on stage, right? Because you get up on stage and your comfort and your storytelling ability and the kind of like the meat that you deliver. And I think it's a fascinating lesson for anybody listening is that like you just continue to practice and you sort of just showed up again and again. Even if you look at Steve Jobs when he was doing his initial Apple presentations to when he launched the iPhone, like he became a maestro.

Mm-hmm.

And it's just because deliberate practice and he kept at it.

Right.

And it, it doesn't mean that everybody can do that. I think that you have to have that Like you have an ability to entertain with the powerful and very compelling and useful information. And I think that's, I, I really think it's very much an obligation, especially these days. If you are on stage or you are the one projecting through the pinhole, then you, you, you have this like—

Yeah, it's very difficult to, to, uh, keep people's attention on the Having something entertaining intertwined with information and insights is always good. And I think, I mean, to me, public speaking came a little bit by accident. Actually, if you remember when I started this event, Mobile Monday, you were my first speaker on the first Mobile Monday.

Oh, really?

And I wasn't planning to be the MC. Actually, Keizer was supposed to be the MC, but then I think the day before he calls me and says, oh, sorry, but I was I'm supposed to be emceeing for you, but I have this late call with my boss in the US and I can't make it, but you'll be great. And I was in the car and I was super stressed out on the way to the event venue. I was like, damn, I really don't feel comfortable with that. And then I started to breathe and I was like, okay, what am I actually supposed to do? I'm just supposed to introduce people and take questions. Everything else is up to the speakers who are on stage, who are actually going to do their thing and they're good. So I can't really mess this up that much. So I arrived and then probably objectively, I'm not sure whether I did a good job or not. And I probably looked very—

No, you didn't do a bad job. You, I mean, you were just doing the job. Yeah. I mean, a typical kind of, you know, early in their sort of like journey, you know, speaker. Right. But then every time that I saw you again and again, and then it got to the point where it was like, Wow. Like everything, the, the, the, the slides that you put together and your comfort on stage and your energy and your insights and your stories. And like, it just like you, you, you just continuously improved. And, and it's a beautiful lesson because no, nobody's naturally good at that. Nobody's naturally good at being a CEO. Nobody is, you know, like even if you're comfortable speaking in front of people, it doesn't mean that you've done the work of like, Putting all of the information together in a digestible way and then making it delicious and making it fun and memorable and, you know, taking your time with it and all of that. Right. So, so I think it's a, it's such a powerful skill to be a professional public speaker and like it's barely taught in schools. Like you showed up like super educated, super experienced, you know, worldly guy. And you were like, A baby lamb on that stage in some ways.

What I think is that I was lucky to enjoy the experience of that first accidental thing, and then I just kept at it. Because it was monthly and then that got me visibility, I got to be invited in the event circles, and gradually from small events to larger events. Then over the years, that actually built up. Probably what I focused on, because I was also running a consulting company, that I built up researching innovation across Asia, and initially it was Japan, Korea, and then eventually added China, of course. I had things to say that a lot of other people didn't have or couldn't or were not allowed to say. And I also had this unique perspective across the region. So that was— I also realized that if I wanted to drum up business and if I didn't want to do cold calls, I had to, you know, build up my visibility. And in terms of kind of the storytelling aspect was To be able to organize information, I was always paying attention to the flow of ideas. Like, what's the logic and how does it go from one to the other? And once you have something organized with a good flow, the logic is built in and you don't really need to be particularly good at public speaking because the flow is there, the logic is there, and that story carries you. And then if you throw in a couple of funny bits and to entertain. And then that's probably enough because the expectations of people in conferences are not like in standup. Like they don't need like 5 laughs a minute. They just need 2 in 10 minutes. And that's probably enough.

Yeah. But also the expectations in general of just, you know, how prepared, how good is the speaker going to be? That bar has been too low for too long. Like I've been doing a lot of remote teaching and people really lament. Yeah. I mean, in person is great, but the fact is that this rectangle of glass that we are communicating through right now. And if people are actually watching this video, then, you know, instead of just listening to it, but in any case, whether it's audio or video, there is so much emotion and so much connection through that, through either of those mediums. That media is so powerful and it works. And people are like, yeah, but those are professional actors. And those are, you know, they have professional producers and professional scriptwriters and professional Cinematography. And my point is spend $500 on some equipment and put some time into the script and the thought and the flow and, you know, practice and read your lines and put some energy into that little pinhole to the rest of the world. And that's how I've been able to really further my career is through a lot of public speaking. And being specifically is one of the biggest scams in the world because You get a speaker's pass, you show up as the MC of a big stage, and people are like, oh, I'm sorry, we're gonna change stuff at the last minute. I'm like, I don't care. And they give you a clipboard and you're able to just get out and throw some energy and give a joke and give an insight and then pass it over. And then the producers behind the stage are like, oh, I love working with this guy. But the secret sauce is people that show up to those big stages, like sometimes people that are billed as the marquee speakers. They show up 20 minutes before, go to the speaker's room, say hi, sit in the back, and then get in their helicopter and get out of there later. And then you get like a 10, 15-minute window where I'm talking to, I don't know, the founders of Qualtrics and, oh, hey, great to meet you guys. I'm in, I'm in China. And they're like, oh, one of our co-founders is moving to Beijing. And then, you know, I get to become friends with, with him. Right. And it's just like, and then also being keynote speaker and a moderator and fireside chat, like. That just opens up so many opportunities. And then also being able to teach as well too, right? So those sort of like soft skills of presentation, they have this compounding effect and then they help your personal brand and they help you sell. And it's something that I think people don't put enough time and energy into.

And it was just like beautiful because, you know, I'm, I'm, I'm early 40s, hit the floor.

You're in your 30s, right? Early 40s. Oh, but looking good. Looking good. But, but to really, you know, see you sort of evolve has been just delightful, right? And I love and learn from how you give presentations. So I just wanted to give that some sort of love right now because especially your niche around what you've been doing in hardware and then also deep tech and some of the other things that you're doing and just starting to teach.

Yeah, that's right. So I was asked to teach a course on deep tech ventures by the Zhejiang University. So I just actually finished the last class last week and gave the grades. And it's been quite interesting because I've been mostly— so we're probably going to jump ahead a bit in terms of what I've been doing. But after doing the consulting work, I joined a venture fund and the focus has been on hardware, on hard tech and deep tech. And that means anything. So the branch I was at called HAX, part of the fund called SOSV. I was mostly focused on anything with electronics, any smart device, robots, medical device, and based in Shenzhen. I will probably talk about that later in terms of speed and stuff. But I think there's growing interest in deep tech around the world because we realize that we can't do everything just with software. Very often we need biology or electronics or some form of acting on the world that's not just software. And particularly if you look at problems like, you know, food, energy, climate, Transport. I mean, you can't just solve it with software. You know? Yeah. Medical health, you need, you need to act on the world. And there's definitely additional barriers to doing that than, you know, when we whip out software and you don't need to talk to anybody because you can just do it on your own somehow. And so I've been teaching this course and the big difference for me was that when you, when I was doing presentations in conferences, and I think over the years I've done probably over 300, my last count of countries was like 35 countries. And it's a much shorter thing.

Wow.

It's quite rare that you would give an hour presentation. Generally it's more like 30 minutes, 20 minutes, 15 minutes, 10 minutes. And there I was asked to give a course that would last 15 hours. So that's a little bit longer. So fortunately you gave me some good tips with your own teaching experience. And I also realized that actually a lot of the curriculum that we deploy in our programs with our startups could also be turned partly into classes. And so eventually that went pretty well. And I think the class, the students were happy in the final survey I sent out.

Wonderful.

We'll see whether that continues. But yeah, no, the teaching part has been quite interesting. And I don't know what exactly is your experience with your students, but for me, the most motivating is when students participate and they ask questions or they have comments. And sometimes they also say things, particularly those that have already worked and some work experience. So about half the class had some work experience. They can contribute their own experience to the class and some ideas, and it's really beneficial. And I remember modifying Some of the presentations I give, I gave based on the feedback of the students and some comments on that. I don't give them credit even in the slides. So yeah, that's been really good. And the whole purpose of that is to make sure, at least reduce the risk for founders who create complex startups, reduce their risk and make sure that they understand what's ahead as much as possible.

Great. Love it. That's excellent. I think you have a—

looking forward to that—

many more decades of Teaching in the cards for you. So, hey, let's take our intrepid hero back to 2005 in Beijing. You do your studies and you have your consulting company.

I was a bit— there was a bit of a thing between because the consulting business started a little bit by accident as well. Essentially, I was asked— I was mostly there to study Chinese and figure out what was China about. Initially, I thought I would stay maybe 6 months to study and see what happens. And I got some requests from people I had worked with to do research and consulting about the Japanese market, the Korean market, and the Chinese market. And I started to kind of organize things because eventually got kind of too much work for just me. And I started to hire people. That basically became consulting business. And I used it to actually learn about the market, connect with people, get visibility. And that got me closer to the startup ecosystem. In 2007, I did my first angel investment in a company that was building some kind of virtual world. At that time, that was kind of the wave, the first wave of virtual worlds. That company turned into a gaming company and a bunch of things happened. But eventually that kind of got me into this whole angel investing thing. And in 2008, I got invited by an investor to give a talk in the US. That was my first talk in the US. I was a bit intimidated to have a native-speaking audience. But I remember giving a talk about how Asia, social networks managed to monetize with something else than advertising, which was absolutely unknown in the US. At that time, Facebook was still pretty young. MySpace was still around. And they were all basically advertising-driven. They had no gaming revenue, no, or very little, and no mobile revenue. And I was giving these talks saying like, look, those guys make money with mobile, with value-add services, and all sorts of things. And that was kind of my entry into the Silicon Valley ecosystem. Since then, I've been going a lot back and forth and doing some stays there. But in between the fund, the consulting on the fund, I actually also had some startup ideas of my own and I gave it a try. I spent some time in Silicon Valley to kind of work on the project. That was kind of a, yeah, you could say social network type of thing.

Okay.

for people to enable people to help each other. And so I explored the idea in the US. Then I realized that building a team in the US when I didn't have the network or the budget was going to be difficult. So I thought, okay, well, I didn't see myself managing a development team in China. So I moved to Singapore, explored around there, and eventually I decided to go to Malaysia where I got introduced to really good developers and started to work with them on that. And after a few months on the soft launch, I realized that my idea was more like a little bit more like an art project. Like it didn't really have a good user acquisition mechanism, didn't have a solid business model. And I guess you can survive and sometimes, you know, succeed for like, look at Twitter that probably didn't have that much of a business model when they started, but at least they had some usage. And when you have momentum, then you can figure things out later. But when you don't have momentum, then you have nothing. So after I spent Probably about a year and a half between Singapore and Malaysia. I called it quits, and that's when that's when SOSV called me up and said, "Hey, we have this thing going on in Shenzhen, South China. How about you come and help us?" And at that time, yeah, that was 2013.

Yeah, and that that year was that what year was that? Yeah, and I think I think like if I may just for some of our listeners who May not be inside baseball with China. You know, Beijing is for sure the Silicon Valley of China in terms of, you know, software, right? I mean, most valuable startup in the world, TikTok. Most billionaires in the world live in Beijing. You know, the, the only other ecosystem that can truly rival Silicon Valley in terms of, you know, the number of unicorns and the, you know, level, it's Beijing. But Shenzhen is the, you know, undisputed heavyweight champion of the world when it comes to Hardware, just because of that whole Greater Bay Area. So you go down there to Shenzhen, and back then it was yeah.

So at that time, the whole accelerator movement had started just a few years back, and Silicon Valley was really, of course, very software focused. And Cyril, who's the founder of Hacks and the founder of China Accelerator, had created this cross-border software accelerator in Dalian initially, and was trying to do like cross-border software things. And realized that for hardware, there was actually a huge competitive advantage. And you're mentioning my kind of analytical mind. One thing I really look at in terms of strategy on companies and business is positioning and competitive advantages. And I was like, okay, cross-border software, you have unique positioning, but it doesn't seem to be like huge, huge in terms of volume. And yeah, maybe not so defensible. And Dalian doesn't seem to be necessarily the most supportive. Supportive ecosystem for that. Whereas when I looked at Shenzhen, I saw, okay, you have huge, unique global resources right there that you can't find anywhere else in the world. You're the first ones to do this. So that's already 2 pretty nice advantages. And there was also some momentum around the whole like connected devices, Internet of Things. And I thought, okay, well, that sounds like an interesting gig. So I discussed with them. I said, look, I can't really help you on the tech side, but I guess On the business, maybe I could help. They said, "Well, don't worry about the tech. We have engineers and everything." And here we have what we need is actually help the founders who are super technical to bridge to the business world. They need to understand communication. They need to understand positioning. They need to understand strategy. And so I joined for basically bringing that. I helped build up the curriculum, and I started to go around the world because evangelizing and also at that time we were mostly we're investing. We're mostly a promise. Like you know until you have you can claim results, you mostly. Promote your promise and your method. So what I started to talk about how Shenzhen had huge advantages in terms of speed to build stuff. And the idea was that if you could go over there and had the right guidance, you could prototype basically almost at the speed of software by relying on the local supply chain that had everything you wanted from a simple 3D print to large-scale manufacturing. And for any type of material, any type of component.

So can I jump in on that one thing? Do you remember this company called Get Buzzed? These 2 Irish founders, like, as I— this is probably my, you know, false interpretation of how this happened, but SOSV stands for Sean O'Sullivan, not emergency, right? And he's an Irish-American plastic paddy like me with dual citizenship. So he's got, you know, headquarters in In Cork, in Ireland, and there were two young guys at China Accelerator. One of them was C-A-O-M-H-A-N, which is pronounced Quayvon, you know, an Irish name. And they said, "Hey, we get this idea. We want to do these loyalty programs, and we want to set up little stations at all these restaurants with a little kiosk there so that people can can check in." And you know, this was 2012 or so, and they were only like. They were still in college. They were like 18 or 19, and they had, you know, some Irish connection. And I was mentoring them in addition to other mentors at China Accelerator. And they went, you know, and people were like, you know, it's going to cost you $50,000 just to prototype one of these things, and I don't think it's going to work. And, you know, there's no software for stuff like this. And, you know, during their short, like, 90-day period, they went down to Shenzhen and they're like, I found somebody like $5,000 will do the prototype. And they've got like a Chinese friend and they're like, actually, I found somebody to do the prototype for 5,000 renminbi, which was like, you know, $600. And he'll like, you know, build something in the back there. And then, you know, NFC came out and, you know, it's not so used then, but that was coming around then. And then there was like Android for tablets and like all these 3 things came together In a really short order and they were able to make a working prototype. And I, and as I understand it, like, I believe that, yep. You know, that was one of the things that sparked hacks where they were like these, these young teenagers who are like Daffy Duck, you know, jumping on the electrical wires like, woo-hoo, woo-hoo. I'm so crazy. I don't even know this is impossible. Right. And everybody's discouraging them and they go down there and they, they unlock A secret because shit had changed so rapidly that you're like, oh, do hardware? Hardware?

Yeah, no, that's big boy. Absolutely. I think that also highlights something else, is that, you know, a lot of perception is generally lagging reality by a significant amount of time. And in terms of Shenzhen, it's probably perception of people is probably lagging reality about a decade. And a decade in China, as you know, There's a significant amount of time and transformation. Like a decade in Beijing is basically the difference between having a district with skyscrapers or not having a district with skyscrapers. Actually, it can be done in 2 years or even less sometimes.

Yes, you're right. So it's like a 4-to-1 ratio that I wasn't going to say it, but that's my thesis is that what happens in 4 years—

Actually, it's funny because we use the same metric when we talk about our program in Xinjiang. We say, well, initially the program was 3 months, now it's evolved and you can put Basically, you use it as, as long as you want. But the, the promise was that you come for like 3, 3 and a half months and you do about a year of development. So that's about the same ratio.

Wow.

Okay, great. Another, another, and I, I found a, a chart that Daniel Cheshu, you know, Daniel up in, up in Beijing, he helped put together and it shows from 1990 to present 30 years. And it's the same as the last 120 years. Yes. When it comes to in the US, when comes to GDP. So it's a 3.9 to 1 ratio, right?

Basically, as you said, like, basically the first program, the cross-border software, they ended up having a couple of hardware companies in them. And that basically made Cyril realize that, wow, okay, there's a unique competitive advantage with the supply chain. And I think it was— he made a very brave move, which is to pack up his— like, he recruited a person to take over the software program, and then he decided to just take his stuff and move to Shenzhen and figure out a hardware program.

Yeah.

At that time, to leave France and go somewhere else, that's probably why you find more of those elsewhere. Now there's probably more opportunities for people like that.

Yeah. Now they're all coming back home to move to China.

So I think you see the start of this and then there was, as I mentioned already, like the boom around IoT. But there was also the opening up of the supply chain, which, as you said, was kind of a walled garden for big boys that had like huge volumes of lots of capital. And the supply chain becomes so competitive that a number of factories and factory owners realize that, okay, if we want to survive, we can't survive only with the big guys. We need to take some risk with smaller guys first because we have extra capacity, but also because the smaller guys sometimes become big. And they had seen, you know, the GoPro, the Fitbits turn into, you know, something significant. And they thought, okay, we can't just stay isolated like that. Because, you know, it's when you're a startup, particularly a hardware startup, generally when you start, you have no resources. You have no volume, no money, no credibility, not even a product to show, and you don't even know what you're doing really. You know how to prototype in the lab, but you have no idea how to do that very, very difficult transition from lab to market. And that's something that software people don't necessarily think about too much. A lot of it, because a lot of it can happen behind the scenes and nobody dies, right? With software, you can redo The front end and everybody's like, oh, okay, they got new interface. That's nice. And then they can take a year to redo the backend when they have money. And people are like, okay, oh, it runs faster now. But all this happens behind the scene and nothing really, you know, is dangerous at this point. Whereas try to do that with a car, try to do that with a piece of domestic, you know, home appliance or something. It just doesn't work because hardware, in a way, hardware kills, right? So it's—

Yeah.

So it's a lot more complicated. And also you have, you cannot really change things on the fly because once you start manufacturing, you can't go back. Like things are happening and you have to have a spec freeze. And so there's like thresholds basically in hardware production. But anyway, back to what was happening. So opening up the supply chain, IoT boom, everything connected. And there were a number of startups that were starting to appear all around the world and they were really struggling because they didn't have really those resources to do things fast. So China, what we offered with our program there was that you could go faster, but on top of that, you could do it cheaper and better. So just in terms of time to market, if you go faster, it's already a competitive advantage. But if you end up with a product that's half the price and better quality, then you could crush anyone who's not using the same superpower you have, which is the ability to basically build— exactly, build your own supply chain. And we were inviting startups really from the prototyping.

Get it done.

Shenzhen had such a huge amount of resources and it's so well connected that at the time you're doing your prototyping, instead of, you know, you do a prototype in the lab, you 3D print it, you paint it, it looks pretty, and then you show it and people are like, oh, that's great, now go manufacture it. And then you go to a factory, you show your 3D printing, and they laugh at you. And they're like, you have no idea what you're doing. Where are you going to put the screws in that thing? How are you going to assemble it? How are you going to disassemble it? How are you going to pack it? And you're like, oh, I don't know. And so you need to go through that stage of design for manufacturing, which is something that most founders who've never done it have no familiarity about. And that's something you can start doing when you're in Shenzhen as you go through the prototyping stage. You learn from the suppliers, you learn from our experts, and you have a much smoother transition toward manufacturing, which is generally where— Yeah.

Indeed. Can you peel that back a little bit more? Because I became a lot more familiar with that stage of the kind of like QA, like the DFM, right? Like that's such like Elon Musk said something about like prototyping is fun. Manufacturing is really like painful and being cash flow positive is excruciating when you're doing hardware, right? But I think when he was like trying to get the factory really running, like actually like, you know, no, no, no. It's like this has to flow. Like he's sleeping on the floor of the factory, right? And I, I had somebody speak at my beta class, a woman who made these smart glasses and they were, they were almost sleeping. In the factory there, right? And to be right there.

Yeah, it's just the density of the resources makes a huge difference. Like if you don't need to travel that much, if your stuff doesn't need to travel that much, every if everybody communicates pretty smoothly because of proximity and habit, it's it's a lot it's a lot easier. There's so many Pax has invested in over 250 startups as of today, and all of them went through that process. Of discovering the supply chain, the prototyping phase, and what you describe as founders like sleeping in the factory or going in the outskirts where the factory is and renting a hotel, renting a hotel room and staying there for like weeks and sometimes more during the time where they have the factory run and they want to be able to interact with engineers. That happens so, so often. And I think it's also something to put in parallel with another story I heard from people who are trying to work with China, but from far away without being on site. And they had so many misunderstandings and miscommunications. It became so frustrating that I remember the guy expressing it to me. He said, you know, the problem is that we don't understand the problem. And I was like, okay, yeah, that says something. Like, it's like communication, because there's an amount of complexity you need to communicate. You know, you have this idea of what you want to do that's never been done. And those guys are professionals who know how to do stuff, but they've never done your thing. And if you want, like, let's say you do something with, I don't know, some soft material and you want it squishy in some way, how do you describe your squishy? You know, how do you describe the touch you want to have? How do you describe all of this? So some things are really hard to spec because you don't anticipate, because you feel that everybody should understand it the way you do. But until you can touch things and show things and compare things, You can't really convey it very effectively. When you have a spec and you show, okay, here's the hole for the screw, here's the tolerance, that's pretty straightforward. But there's a lot of other things that are not straightforward. And like the touch, the sound, the speed, the movement, like all sorts of things are not so easy to convey. And being on the factory floor with the production engineers makes a huge difference. So we've had— I'm trying to think of anecdotes of people around Like, I don't have firsthand knowledge of that, but we have a number of companies who are doing headphones. And one of them was doing a pair of headphones that they designed so that you'd be able to sleep with them on. So they wanted a really low profile, very breathable material, very fresh, very comfortable. And, you know, describing the firmness of the gel you want to have inside your headphones and describing the tightness of the headband. It's not necessarily so easy, right? So being on the floor, being able to talk with people— and the factory they worked with, those guys had done lots and lots of headphones because that's the beauty of China and the supply chain, that you can find people who've done everything. Whereas in France or in the US, try to find a headphones factory and try to find 2 or 3 to have competitive bids.

Right.

You might, I don't even know, like maybe there's some, but maybe you have to go like across the country to even communicate with them. And maybe they don't want to do business with you because you're no business in fact at this point. So, and anyway, you will have to ship all the components for the assembly and all of that from China anyway. So it's— So anyway, so that's kind of some examples, but I remember also discussing with some other people doing robots. And anybody doing robots in the US, generally they think, oh, that's going to cost millions. Robots are so expensive to make. Over there you can prototype plastic, you can get extruded aluminum, and there are all sorts of body structure for the robot you need for really cheap. And building a prototype that's convincing enough allows you to actually demonstrate the functionality, but also the looks. And that's something that a lot of startups get frustrated with when they're very technical. They're like, Okay, I showed you it works. Why don't you give me money? Because it's there. But for a lot of people, until you have the whole package, not just the work-like prototype but also the look-like prototype combined in a work-like, look-like, so they can't really picture it. They're like, this is not going to sell. You need to be able to show what the end thing looks like and works like.

Mm-hmm.

in the US or in other places, it's generally super expensive and very slow. So I remember one company was doing a robot that's used in supermarkets to do inventory, and they had all the technology that was pretty much working. And those guys had fantastic backgrounds, and they were really, really experienced in robotics. And it was really hard for them to raise funding in the US at that time. And we took them in, and they're like, okay, well, we're not sure what's going to happen in China, but at least we got some money, so we'll see. And thanks to the supply chain, they managed to do this work-like, look-like robot and demonstrate it and do a great demo video. And from then on, basically the phone just kept ringing. They got investment really fast after that. They got pilots because everybody was like, okay, this is real. And what's actually maybe counterintuitive there is that their point was not to make 100 million robots. Their point was to make one robot. And they did just a few units to be able to do pilots. And that's all they needed. So that also shows that another kind of misconception about the Shenzhen supply chain in general is that it's not about volume and it's not really about cost. It's really about speed.

Speed. And I think also viability and success, 'cause I read so many, or I see so many crowdfunding campaigns on Facebook and, you know, LinkedIn, the socials.

Yeah. And you hear like typically what I describe as the challenge of going from lab prototype to a product, to go through the steps of DFM manufacturing. So our approach was to bring the startups up to a stage where they had a much clearer idea of how they would make things at scale, and the things were actually working, and they understood how to build a supply chain. And we've done over 100— I mean, our startups have done over 100 Kickstarter campaigns when we're doing a lot of consumer products. Now we're doing a lot of B2B and medtech and robots, but on industry things. But at that time, the early years, we're doing a lot of consumer and we had probably a dozen campaigns over $1 million. So that's, you know, significant number. And some, so I have to admit some of them did fail and didn't manage to deliver, but the vast majority delivered sometimes even on time. 'Cause even if, even when you're on site, I think a lot of companies tend to have a kind of optimistic timeline. So name of the game is still delivering something at some point. And if you can do it in the timeframe you anticipated, that's even better. But there's always a lot of unknowns. But yeah, I think a lot of those campaigns failed because they had no knowledge of the supply chain, no understanding how to build it. Sometimes they rely on middlemen and I've heard some horror stories of, you know, you raise some money with a campaign and then you go to some supply chain management company and they say, well, we're going to take care of it for you. Just give us the blueprints and we're going to do it. So not only do they generally give you a huge markup because you don't understand the real prices and some of those take advantage of that, but also they have really no idea what you want to do if you do something super new. And the image I like to use is that imagine you're trying to cook a new dish and you're like in the kitchen trying to invent a dish and you can taste at every stage how it tastes like and like more salt, more butter, more this or that, more cooking or less cooking. And now you're trying to do the same thing, but instead of being in the kitchen, you're on the phone somewhere else and someone else is in the kitchen. Now that person is, you know, not really a chef. It's just kind of a cook and, or not even a cook, just somebody who can describe what they see. You're like, is it salty? Is it salty enough? You know, what are you going to do? So that's a little bit of what happened. Yeah.

Good metaphor. Really good metaphor. Excellent. Yeah, that's great.

Yeah. So HAX started really as a kind of an experiment funded by, as you mentioned, Sean O'Sullivan, who's an entrepreneur who IPO'd his company and done some successful investments. And he was just curious as he was building other companies to fund this experiment. And eventually I think he was convinced enough of the quality of the startups that went through. And because we're gaining visibility, our deal flow also improved. We started to get like better and better teams from all around the world, like top teams from the US, top teams from Europe, top teams from China or Asia or wherever. And eventually Sean realized that actually this model is kind of interesting because we de-risk for fairly low cost the initial stages, and then we get to know really well the teams and the founders. That acts as extended due diligence, so that allows us to actually put more money to play Later on. And that basically decided him to shift most of his capital toward funding this model and eventually extending.

Yeah.

And that's, yeah, that's a sidecar fund. So eventually Sean put—

And you guys just raised $100 million.

Most of his personal assets and he had a couple hundred million to play with and fund startups. And he realized that, okay, it's good to fund the first stage, but if we want to keep meaningful equity, we need to maintain those shares to later stages. So we started to fund seed and Series A as well. And the latest fund we raised across SOSV was close to $300 million to fund the HAX IndyBio, which is the biology equivalent of HAX, based in San Francisco and New York, funding all sorts of things like from cellular agriculture to regenerative medicine, computational biology, and all sorts of things, biomaterials and And recently we just closed a sidecar fund that's just there to basically maintain shares at Series B and beyond in our top startups. That's a $100 million extra fund. So what's also interesting is the outcome. So because we're funding startups that were so early and so tech-heavy, it takes quite a while. You know, a typical startup exit takes 8 years and now startups stay private even longer. sometimes like 10, 12 years. So we knew that it would be kind of a long, a long, a long path. But we have the first— this year we're expecting the first IPO from Hax. We also have a couple of— can't say yet, no, but first IPO. Then we have another company that's funded called Formlabs doing 3D printing that's also reached multi-unicorn status with a new funding. And we have another— Now, number of companies also in the biospace that are doing super well. And another one in Hacks that's also potentially reaching unicorn status with a new funding that might be happening this summer. So it takes a while, but we're starting to see some really good results. And we also learned like a ton about everything around robotics, medtech, and all that stuff. So it's really good. Like recently we made a— started to make counts of a particular type of companies and we released a list. Of climate tech companies. So companies that have positive effect in reducing greenhouse gas emissions across the portfolio. And we counted about 140 companies that had a really big impact. And we made a list of the top 100. And there's some really, really, really interesting companies in that list. And we got some media coverage around it. And we're preparing now another list around health. And in the first count, we had about a couple of hundred companies. That had positive effects on the health. And that can be medtech things that do diagnostic or could be therapeutics, could be all sorts of things. And we're going to, we're going to narrow it down to 100 and publish that as well.

Love it. Fantastic. Hey, Benjamin, always a pleasure, my friend. Share your socials in the, in the show notes. Thank you for coming on. Always enjoy learning new stuff from you. Love your energy. And thanks very much. All the best. That's a wrap.

Thanks for listening to this episode of The Rich Robinson Show, Season 1, At the Speed of China. Visit therichrobinson.com/show to smash that subscribe button. Please also go to iTunes or whatever platform of choice, rate and comment. And until next time, thank you very much. Zaijian. Cheers, y'all.