China’s Enduring Start-ups (w/ Rich Robinson)

Welcome back. I'm your host Steve Stein, and you're listening to Inside Asia. China features on the program this month as we return to take a look at how the country is faring in the wake of the coronavirus. Earlier this week, the city of Wuhan discharged from its hospitals the last of its patients infected with COVID-19, while nationwide only 3 new cases were reported. In the last official count, China reported 82,000 instances and 4,000 deaths. 1,633 deaths. Many countries in Europe and the US have blown well past that. Of course, no one knows if, when, and how a second wave of the virus will come. China, like other nations, is taking precautions. The bigger question, at least for the moment, is the economy. How hard was it hit and what long-term damage has been done? China's economic fundamentals were weak going into the crisis. Soon we'll see if banks, state-run enterprises, and manufacturers have been able to withstand the strain. At least one group, venture capitalists, appear unperturbed. Their enthusiasm for China tech startups knows no bounds. In late March alone, Chinese firms recorded 66 venture capital deals. That's the highest level of activity in 2020 and nearly the same level from the same time last year. Not surprisingly, robotics, edtech, supply chain, and healthcare companies received the lion's share of funding. Any solution that might serve the new operating realities of a post-COVID-19 world are hot prospects and getting hotter. Here to talk to me about the Chinese startup culture is Rich Robinson. He spent over 20 years in China tracking and participating in the rise of the China tech revolution. His awe for the Chinese entrepreneur is apparent, but he has some worries too. Rich Robinson, you're joining me by phone. You are in Bali and I am here in Singapore, but we are going to be talking about the nature of entrepreneurship in a Changing World. Thanks for joining.

My pleasure. Steve Stein, ladies and gentlemen. Thanks for having me on, Steve.

But before we go much further into that meaty subject, tell us about Rich and his time in China or in the broader Asia region.

Happy to. So, grew up in the city of Boston, University of Southern California in Los Angeles, Cambridge University, got my MBA in Europe, lived 5 years in Europe, and came to China in '93 by train. And the dragon swooped down, dug her talons into me, and basically hasn't let go ever since. I just fell in love with the energy of China. And after my MBA, I moved to China in '96. I was there right before the handover in Hong Kong, 4 years in Honkers, and my 20th year now in the mainland in Beijing. And I have been a serial entrepreneur. And I've been through 8 startups, 3 as an exec in private companies that went public, 5 as a founder, exited 3 of those to publicly listed companies. And I've been involved with probably 50 other startups in the war room as an angel or board member advisor, and another few hundred as a mentor, either at 500 Startups or Chinaccelerator or HAX or Stanford Ignite. And I just love the art of the start. I teach entrepreneurship at the leading university in China, Peking University. And I also teach innovation at Tsinghua. And I teach the spirit of entrepreneurship at Alibaba University. I have 3 kids, all made in China, and a lovely entrepreneurial wife. And I'm really focused on all of Asia Pacific, but from my lair in Beijing. But after having been I'm in Bali now for a few months, your home. I'm thinking of a switch to this lovely tropical isle.

Well, let me go back to something you just said, teaching entrepreneurship. Can it be taught?

That is a fantastic question. I've heard that one musician was asked about a music review and he said, well, Writing about music is like dancing about architecture. That was Frank Zappa. And, can you really teach entrepreneurship when it's so much like jazz? It's so improvisational and every journey is unique. And, I believe probably if you want to quantify it, let's say 20%, about a fifth of it, the foundation of ideation and team building and product development and fundraising and marketing and growth and potential exits, there's a lot of scabs and calluses and scar tissue that have been gained by other entrepreneurs, investors, and other observers in the past. So, you can sort of don that like armor and help you to go into battle. I think there are a lot of fundamental things that can be learned, but a lot of it has to do with Responding to the situation in the moment and also dealing with your right mental, you know, health and mindset.

What are the Chinese entrepreneurs or would-be entrepreneurs looking for?

Yeah, so I think a lot of people really want to understand some of the skills and some of the stories because not everybody wants to be an entrepreneur necessarily, but they know that. It's very valuable to learn. It's almost like a crucible in which it's like dog years where a year of entrepreneurship can sometimes be like 7 years in a corporate environment, depending on your role. So there's a lot of tips and tricks and lessons that can be learned. So I actually, I don't even spend 20% of the time on that 20% of the foundation because there are so many resources out there. What I really like to focus on is the FUD, the F-U-D, the fear, uncertainty, and doubt. And I bring in some of the top entrepreneurs in the world. The beautiful part is that Beijing, a lot of people don't know this, but there's only one other ecosystem that can truly rival and even exceed Silicon Valley, and that's Beijing. I mean, there are ecosystems all over the world in Berlin and Singapore and in Boston and Silicon Beach and Silicon Roundabout in London, et cetera, et cetera, et cetera. But the Beijing startup ecosystem is actually producing more unicorns and is as large and as dynamic as Silicon Valley in some ways. So, I can bring in some world-class entrepreneurs like the founder of Youku, the YouTube of China, or founder of Chunar, multibillion travel site, and have them come in and really talk about The trials and tribulations and mental challenges along the way, but while also talking about the fundamental skills.

Rich, there have been other markets that have attempted to create that Silicon Valley feel, Singapore being one. They've struggled because— and is that just the nature of the culture, or is it the receptivity of the government, or is it the scale of the market? Is China and is Beijing succeeding simply because China is such a massive market, and therefore, the economies of scale are right?

Indeed. So, I think Israel is one exception in that Israel has done well without having a captive local market. And I think also Sweden as well too, as a dynamic ecosystem. And that's a whole— that's a fascinating topic and something near and dear to my heart about why there's more unicorns per capita in Stockholm than any other place in the world, and why Israel has really had amazing success because of the investment around military, but Sweden's doing it for a totally different reason. And Boston has that historical university connection. And Singapore has really tried to kickstart it and force-start it through governmental subsidies. But I think fundamentally, Silicon Valley and China or Beijing have done really well because they have a captive audience. I mean, you really need users. That's really what is important. And I think to be able to have a captive local user base really helps to increase the speed and cycles in which to experiment and find some success, and then ultimately revenue and scale.

You've been doing this a long time, and you've been in that market a long time. What was the tipping point? When did you feel like momentum had built in the China market, and entrepreneurship and the startup culture was really taking hold?

Yeah, fantastic question. So I think, you know, just as if you look at an economy, when economy starts to actually move from export to consumption, then if it doesn't get caught in the middle-income trap, it can really do very well. And I think it's the same in China. When China went from sort of copycat culture to homegrown innovation, then you could really see incredible changes. So, I've been there 24 years now, and I would go to Stockholm or Tokyo or New York and go, wow, this place is in the future. I love China. I love its dynamism and its scale and its energy, but I go back and have to sacrifice things because it's not quite as advanced. And I think about 5 years ago, you saw some changes. And then around 4 years ago, you're like, wow, it's all caught up in some ways. And then about 3 years ago, You're like, wow, China is catapulted just completely, just like a slingshot into the future. And there's so many examples around that about mobile payments. China's become a completely cashless society over the last 2, 3 years. And it's a half decade ahead of any other place in the world when it comes to mobile payments. It's just so fluid and easy. And that pragmatism and speed. And scale of China has just enabled that. And there are so many other examples around medtech and edtech and smart retail and electric mobility. And there's a number of factors and reasons behind that. But in some ways, China's really just accelerated into the future.

So you're saying it's the sophistication of the market, the preparedness of the domestic market to accept and embrace what entrepreneurs are offering?

Yeah, I think there really is a sophistication now that's really come into the market, where there's any— China, I've kind of described as a tree with like 5,000 years of roots that go deep, deep, deep into the ground. And you have to really understand dynastic China and Chinese Confucian culture, I think, to really do well in China. But there's also the above ground with the tree kind of moving in real time to grab sunlight or deflect from the wind or grab rain. And it's pretty fascinating how quick and nimble and how rapidly Chinese consumers and entrepreneurs will move. And I think that's, for me, the number one theme that I think people don't truly understand about China is that it is so incredibly fast to change. The pace and pulse is incredibly rapid. And that's due— that's down to just the pragmatism and entrepreneurial drive and scale of China.

And why is that? Is that because the nature of there's so much competition, people feel the urge and the need to move faster than they otherwise might? Is it the nature of the people or the entrepreneurs themselves, access to technology, platforms, money? Why is that acceleration so much more evident in China?

Yeah, it's really, it's a really great question. So, I think, you know, I usually frame China and Korea and Japan as, you know, it's like China, Planet China, Planet Korea, Planet Japan, and then ROW, rest of the world. And so, there's a lot of commonalities and threads, you know, despite their historical differences. And cultural, and you know there's a lot of differences as well too. But there's a lot of similarities, and in some ways Korea and Japan are you know they're you know Korea has really accelerated in a lot of ways, and you know winning the Academy Award, and you know BTS as a group, and car companies. And Japan in some ways has kind of had a burst in the '80s, but is is into the '90s a little bit, but has kind of become a little bit little bit more stagnant. But China's really Able to shed a lot of its cultural constraints to be able to just pursue what is pragmatic, and I you know who knows exactly why. But I think there's been over the last you know few hundred years, you know every decade some sort of you know really challenging upheaval for China. So China is incredibly resilient, incredibly anti fragile in a way, and as soon as they see something where there's an opportunity and ability to improve their condition, then you see the consumer just completely go, yep, money, see you later, cash, over the shoulder, I'm embracing the QR code. And there's so many other examples of that where it's 800, 900 million people online, and most of them are online through a mobile phone, and they're just doing everything through that paradigm. Doing it in a way that is just at scale, and there's an incredible acceptance to change.

Rich, tell us a little bit about the startup community. Has it become elitist? Is there now this clique that says, you've done it before, you're successful, and therefore we're prepared to fund you, and therefore are opportunities for the unknowns to get into the market more difficult now than they were before?

I mean, I think most ecosystems, one of the biggest advantages to that proximity is that there is a very fluid network where there's law firms and VC firms and large companies that then create all of these millionaires that become future entrepreneurs and investors and pools of employees. So, I think, of course, that's a lubricant those kind of relationships and reputations that really fuel any kind of ecosystem. But let me give you an example of the most valuable startup in the world right now is based in Beijing. And it was started as an artificial intelligence service to read the news. So this one entrepreneur who was, I think, 29 years old at the time, former Alibaba employee, he saw that people were reading the news, but it wasn't They weren't using recommendation systems like Spotify or Amazon to recommend follow-on articles. And he couldn't get funded. He was really— he couldn't get arrested. And he finally got a couple million bucks from SIG, Susquehanna Investment Group. And they had a very, very popular product called Jinroutiao, like daily kind of like headlines. And then from there, they bought Musical.ly and they launched TikTok. And now the company's worth $70, $80 billion. I was at their headquarters about 2 and a half years ago. They had about 3,500 employees. They had one foreigner who I knew in the group. I was over visiting her. And today, they have 100,000 employees in 2 and a half years, 100,000 employees in 200 offices around the world. And that's TikTok. They are incredibly profitable. And they are looking to potentially go public. But I think right now, they're just staying private. But that company was started only 7 years ago. And at the time, people thought, you know what, with Tencent, with Alibaba, with these other big players, it's really difficult to break free. Just like Facebook and Google dominate 80% of all advertising, you're really beholden. But that's not true. So they really broke that elitist, limited story.

So did TikTok get lucky because they knew the right people, or they were just tenacious, or there was a unique idea or application that somebody finally hit on? What was the breakthrough moment for them from the best of your understanding?

So the founder of ByteDance, as you know, Jin Ruotao, he's an introverted, hardcore engineer. and just excellent at creating product and experimenting. This is the thing about entrepreneurship is that nobody knows. Nobody has any idea. Everybody, oh, this movie's going to be a hit. This song is going to be a hit. This play in football is going to be a touchdown. It's all speculation. Nobody has any idea until after it launches and it goes— Uber, there's some investors that were like, that's a ridiculous idea, or— Airbnb or whatever. And you have to just get at bat and take more bets and move more quickly and experiment and reduce those cycles. And they bought Musical.ly, but then they were able to really vastly improve the product and find what people wanted. And now, they're rivaling Facebook in some ways. And I think it really— at its core, everything's really about the product. And the thing is, users don't even know what they want until they actually get it in front of them. So, it's really about those incredibly fast and smart product ideas and development cycles.

So, sharp engineering, tenacious attitude.

Indeed, yeah. And then being able to operate and scale. I think there's been a lot of failures of US companies coming into China. I often describe it as the cave in Indiana Jones where people are going after that gold idol, but they go in and there's corpses and skeletons and all kinds of booby traps and dangerous things along the way. And even if you get to the gold idol, you grab that, you get out, and then the giant rock, the market, tries to crush you. And then you finally get out of the cave, and then the locals just take it away from you, right? So, there's been very, very few examples of successful companies going into China. And the converse is true. There's not that many Chinese companies that have been that successful going outside of China. And I would contend that's because they haven't really tried as much yet, because the domestic market is so large. But TikTok has been crazily successful in an outsized way. And from what I understand is that they have very localized offices around the world. A lot of times, people will try to put their local staff and post them somewhere else and try to keep the culture the same as the mothership. It makes things smoother, but maybe less successful. They've basically localized in all these places around the world. Of course, it's a hot mess trying to deal with the cultures and languages, but you have to localize and operate and work well. That's what they've done. It seems to be working.

Yeah, I think that's a universal truth. I'd say even with US or European companies who try to create one model universal, let's do it the same way we do it in the US and then try to roll that out. I mean, we've seen examples with Uber in Southeast Asia. I mean, they failed basically, or even Netflix has struggled, come up against regulators because they don't want to play that game. But there are different media regulations or media requirements that are unique. And I'd say it's probably true we see with some of the Chinese companies coming to Southeast Asia as well. Like Lazada, you know, I mean, they've had their ups and downs and their bumps, and many times because I think initially there was an attempt to try to push the Chinese leaders into those roles where they weren't connected to the local community and didn't know how to manage appropriately. Would you argue, or would you say that this is probably true no matter where you are, where you originate? This is something that people should be mindful of as they scale.

Indeed. So it's so ridiculously difficult to take that lightning in a bottle and then replicate that in another another market, unless there's really pull from that market. And you think about it, who are you really putting in charge? You're putting in charge somebody who functions well in the mothership, or maybe has functioned well locally, but maybe in a more executive fashion than an entrepreneurial fashion. And they're just getting outpaced. That happened again and again and again in China, where eBay bought the number one Player in China, and then put tons of resources into it. And then Jack Ma famously said, "All right, eBay is a shark in the ocean, but we're not in the ocean. We're in China, and we're a crocodile in the Yangtze." So we're you know a shark swims into the Yangtze River. I'll put my money on a crocodile, and they crushed eBay and turned it you know Taobao. And that was like during SARS, the last you know epidemic in 0203 when they launched that. And you know the rest is history. It's become incredibly popular e-commerce platform in China. So I think, yeah, it's really notoriously difficult to execute well on a local level.

Rich, is that game over, that idea of foreign entities trying to penetrate the market with digital solutions? Have the Chinese players simply mastered that? And do they own it to such a degree where it's a fool's errand to attempt to break into the China market?

Yeah, I mean, that's just as we talk about startup ecosystems, this is something very near and dear to my heart and like a whole nother topic of conversation.

Yeah.

There's just really not that many examples of companies doing well in China. And there's a few, but the fact is that it's become a very, very insanely competitive red ocean. And unless you're really starting from a local perspective, it's almost impossible to really crack the China market as a large startup looking to enter there, I think. Perhaps smaller niche startups that really have some sort of defensible position. You need a moat, and you need an unfair advantage. And if you can't bring that to the table with some deep technology or something really defensible, then you're just going to get outcopied and outpaced, and then it's over.

I'd be remiss not to mention we're in the throes of the COVID-19 crisis. I'm just wondering to what degree that this situation is impacting the startup community in China, and if there's a possibility that it will create a rethink about how startups build, how they get funded, how they're supported, how they endure. Any things that you're noticing, even though you're not in China at this moment, any observations or thoughts?

Well, I think it may be less impactful on the actual fundamental approach of startup creation and growth. But it's going to have an outsized impact on just some industries. I think it's going to accelerate some industries by a half decade or even a decade. I mean, the obvious ones are edtech and work-from-home movement. And China was already eminently suited for a crisis like this, because the delivery is just so advanced in China for e-commerce. And payment is all completely cashless. So, the whole delivery ecosystem just worked to its advantage, but was also buttressed up and even supported by this. And then edtech, of course, just the numbers are phenomenal. And work from home. I mean, even in the West, Zoom was started by a Chinese founder. But they've gone from 10 million daily active users to 200 million.

Mm-hmm.

And 2,000% increase. And of course, they've had their challenges around security and privacy. But I think any entrepreneur will trade that off. There's always some sort of fire raging. And if you're going to— if that's the fire you're going to rage, that's going to rage, then that's OK to trade off for. 2,000% increase. Let's say it settles down at 500% increase. That's still incredible. So, I think we're going to just see the future accelerated by this whole crisis.

So, you're pointing to new opportunities that might arise by virtue of this crisis and the ability of the Chinese to move quickly and to toggle quickly means that they could get on to new ideas faster than others. Is that what you're suggesting?

Indeed, yeah. And I think also during a downturn, there's so many examples of great companies that are built during a downturn, because then you can really be kind of heads down. And if you've already gotten your funding rounds and you have some runway, then there's amazing access to talent. And you can really be maybe less distracted and really focus on just building out the best product. So, I'm sure we're going to be surprised and very pleased that some of the new ideas that are coming out of this from China and around the world.

Of course, even in the best of times, the mental stress and the angst of building a startup is tough enough. Tight cash flow, all kinds of hurdles, investor pressure. What must it be like for some of these organizations today who are sucking wind? They're now in a situation where timelines are changing. Things are on hold, opportunities to go to market have diminished. What would be your expectation and what do you know, what can you say about the Chinese entrepreneur in terms of their resiliency in a time like this?

Indeed, yeah. These companies in delivery or edtech or communications that are doing well notwithstanding, there's a lot of other companies that are just Going to go through down rounds, at best-case scenario, or just completely disappear. It's just going to decimate the startup community in a way that I don't think '08 did as much, but I think more back to the dot-com bust in '01. And yeah, it's already brutal. And I'm already on calls with people. And I really try to be a good egg in the ecosystem and see where I can be helpful. Where I can be helpful. I think, yeah, this has really accelerated it. I think the entire global mental health, perhaps that's even a startup opportunity of all the anxiety. And I saw this one tweet, it's like, why am I not learning a language or the ukulele while I'm stuck at home? It's because I'm riddled with anxiety and fear. That's why. So I think, That kind of fear and anxiety, that's the layer that is on top of all entrepreneurial pursuits. And I think there's a big sort of mixed message in that a lot of people are attracted to entrepreneurship because it seems so sexy because of the bias in the media and you see all these winners. But the truth about entrepreneurship is that the most likely outcome is failure.

Yeah.

The daily pursuit is so difficult and so unpredictable and so uncertain and so riddled with fear and doubt that it's a very, very bumpy and rocky road along the way. I often say, other than that, Mrs. Lincoln, how did you enjoy the play? When you talk about entrepreneurship. I think That's something that just doesn't get enough press. And it's not just about entrepreneurs that just crash and burn and go through their uncle's retirement savings and become enemies with their college roommate they started this with, et cetera, et cetera. I'm just talking about people that maybe are doing okay. Their business is sustainable, but it's actually in the process, they've—

Yeah.

Hurt their health and their relationships and their marriage as well too. Or, perhaps even other entrepreneurs who have done really well who are just drowning right now because they're thinking, wow, I sort of maxed out. Now, I'm actually expected to go to 1 or 2 levels up. And, can I really do this? Or, do I have the energy to do this? Or, do I really want to do this? And all those kinds of struggles, that's something that I'm spending more of my time focusing on and getting people to open up and talk vulnerably and openly about their struggles and how they've addressed those. Yeah. So, as we discussed, I'm working on a podcast that will turn into a book called Impostorpreneur. I think as I age, and now I'm on the wrong side of 50, I realize You know, just like Olaf from Frozen. It's like, wow, since you're older, you know everything. And actually, as I get older, I realize, wow, people are even more riddled with imposter syndrome. And in some ways, it's healthy. If you're not pursuing something where you don't feel like you maybe can't do it, then maybe you're not aiming high enough or trying hard enough. But it doesn't make it easy. And I think A lot of people fake it till they make it, and they're not really very open and vulnerable about the challenges they have. So, that means that early-stage entrepreneurs or even some other entrepreneurs are like, wow, what's the matter with me? Everybody else is up and to the right and crushing it and riding their unicorn to their cool, hip coworking space while it farts rainbows of glitter.

Yeah.

And, I'm here just looking at myself in the mirror Going from self-doubt to self-hatred and, you know, what's wrong with me?

Right.

And, the fact is if you're really doing entrepreneurship in an innovation-driven enterprise where you're doing something that hasn't been done before and can it even be done or maybe you're doing it but then you have to go to the next level after a round of funding or hires or product shipping, then you're really just riddled with that fear, uncertainty, and doubt. How can you best balance that and move forward? I think that's something that I know from very much a lot of personal experience and through my friends and networks. It's an important topic.

Are you suggesting that the imposter syndrome is something which has actually undermined the ability to succeed?

Certainly. feel that, am I enough? Am I good enough? Am I smart enough? Am I able to do this? As a CEO of a company, you have to continuously fire yourself. If you're not scaling your startup, then you're not growing, then you're not— that's really the core of what a startup is. You can be an entrepreneur, but you're not in a startup unless you're doing something that's really scaling. And every step along the way, you have to get rid of your hats that you're wearing and bring somebody else in. And I remember talking to somebody who said, wow, I just raised all this money and I know I have to hire people that are better than me, but now I have so much pressure and so much funding that I'm going to have to hire people that are so much better than me that they're going to realize that I'm really full of shit and I don't know what I'm doing.

There's this line between imposter syndrome and also founder syndrome. And founder syndrome is, it's my baby, I'm going to see this through, I want to achieve certain things, and then I'm not comfortable handing off because nobody understands it the way I do. That's one thing. But the other one, what you're referring to, is imposter syndrome, which is really around, I'm going to show the external community, whether they be customers or the marketplace or investors, that I'm fine, everything's good, it's all rosy, right? And therefore, what you're saying is that there— and in many ways, that's what the market and what investors want to hear. And therefore they're playing to their audience. Are you suggesting that for the mental health of an individual, obviously they need to have someone they can talk to and be a little more exposed and vulnerable? I get that. But from basically their ability to ultimately succeed, are you suggesting that imposter syndrome prevents them from getting real and therefore being able to address the most immediate problems?

I mean, potentially, sure. I mean, there are, there are some people that are riddled with imposter syndrome and still The pull from the market just brings their company to success.

Yeah.

I think it's not just about the mental side of it as well too, where you may be struggling so hard with something, you're just, you know what, I'm just going to lean into this and become a workaholic and completely abandon my exercise and sleep and diet and time for thinking and time with family and time with friends. And, in doing so, I'm going to address my fear, uncertainty, and doubt, but I'm also going to just completely crush my personal and physical and mental and relationship health. And, I think it's all interrelated. And, maybe the stats show 1 out of 20 startups, if you're really a venture-funded startup, you're going to—

Yeah.

Probably have some kind of liquidity event. And then maybe 1 out of those 20, so 400, you're going to have a liquidity event that's maybe going to move the needle. And then 1 out of those 20, say, 1 out of 8,000, is going to really get a lot of press. And that's what people read about. And people see that, and they think, wow. I could, you know, who is that superhero, right? And a lot of it has to do with timing and luck. The number one predictor of success with startups is timing. So, you could have the same kind of startup and, you know, maybe you're too early and it's like being wrong anyway or you're just too late. And so, you have to really look at, I think, entrepreneurship as a vocation and something that you're going to have Yeah. And, you know, really think about it as a way to become a better version of yourself. So, even if it's not going well or even if you're really struggling, you're really thinking about, okay, I can't control what happens to me, but I can control my response to that. And, how can I emerge from this as a stronger person that I can be a better leader, I Then, I can use those skills and my energy and my great relationships with my family and friends and my health to be able to go back in the arena again.

Hmm.

And that's something that I think is— people just think about, you know what? This is it. I have this fiduciary responsibility to my investors, therefore, I am going to put my heart and soul into this and I am going to sacrifice my health and my sleep and my relationships and my mental health to be able to just leap across the finish line. But statistically, it shows that that's not going to happen. You're going to end up not finishing the race and you're going to be broken.

Yeah.

So, I think you and I spoke about this one metaphor of this craftsman in Japan who is The number one craftsman for these vases and first one in the factory and the last one to leave. And, one night, he tries to move the vase into the kiln to get the perfect position. And, in doing so, he falls into the kiln and gets burned up into the kiln. And, the next morning, his team comes in and says, oh, where is he? He's always here early.

Look!

They look into the kiln, the fire's out, and there's a vase in there and it's perfect. It's the perfect vase. He got subsumed by the fire and in doing so put the perfect sort of lacquer and finish onto that vase. And, you know, don't be that person. Don't let yourself be completely consumed by what you're pursuing to the detriment of your mental, physical, and other health. And I think there's I think there's, number one, a really great need in the market to let people know that that's something that's universally felt. And then number two, about how that can be addressed and what's the right kind of balance. Yeah.

I heard don't play with fire.

That too. That too, kids. Put the matches right down.

That's right. That's the moral. But listen, let me ask you one other question. Rich, because, uh, you know, and this is more, uh, crystal ball, what are the dark spots on the startup environment in China? What's not working? And where could— where does there need to be some shift or change in order for it to go the next level?

Yeah, indeed. So there's, there's some pursuits in China like, uh, that's called 996— 9 AM, 9 PM, 6 days a week, uh, people just grinding it out. And they have these legions of engineers. They're called ma yi, like ants, just actually living in dorms and just legions of troops trying to bring these startups to success. So, that's a dark side. The other dark side is that China's really just thrown tons of money at things. And let's just scale at any cost. And there's a company called Ofo that just made millions of bicycles and burned through hundreds of millions in cash. And also, Luckin Coffee, which has just been shown to— they wanted to rival Starbucks and just scale 3x Starbucks locations and do everything virtually. You can't use cash. Everything's mostly delivery or pickup. And then they've been shown, in the pursuit of ultra-scale, to underreport their— overreport their revenues by as much as 50%. And so, I think these sort of intense funding and scaling pursuits, there's a lot of victims and some injuries along the way.

So, I think in the future, So, a bit of an inherent subversive recklessness, it sounds like.

Well, you're an investor, and you see that there are companies that have scaled. Like, one company, Mobike, was bought by Meituan, which is a publicly listed company, for $3.6 billion. And the other player, Ofo, died. And Ofo was the first to the market. Meituan got more funding and just executed better. So you're an investor, you're like, let's just scale it up because it worked. But it certainly doesn't always work.

So there's a mentality shift. Is that what you're saying, Rich, that there needs to be a shift in how people think about not just building a business, but scaling a business, and thinking about the health of their employees and their customers? That goes beyond just winning at all costs. Is that what you're saying?

Sure. And that's not just a China-only thing. I met Travis from Uber when he first came to sniff around into China. And he said to me, and he said it before, that one of his great skills is just fundraising. He was able to raise— outraise Lyft and outraise other players. I think— I don't know the answer to that, because the VCs or the other funds want to give cash. And they're looking for— it's the same thing with SoftBank. SoftBank's done the same thing. They just publicly said they regretted their $9 billion investment into WeWork. They're just looking for this incredible leverage and scale. And China's not the only place where that's happened. It certainly is something that is a challenge there. And I think another challenge, of course, are the storm clouds between the US and China, where now they're saying they want to regulate and maybe block TikTok and Huawei and others. There's challenges around this potential decoupling between the US and China, too. I mean, for me, I'm an apolitical guy who just really, wants to pursue innovation, and I believe that entrepreneurship, despite all its challenges, is a very worthy pursuit. But China has incredible competition and innovation there, and that's something that I really like to advocate. And there's a lot of things that could be learned from China in terms of specifically speed and pace. Like, I remember I ran the New York Marathon, and I saw Lance Armstrong. Over the fence in an elite group, and he had a pacer with him who carried all the waters and gels and had the watch and just kept him on a 2-hour and 30-minute pace. And I read later that he got to the end of the marathon and he was like, that was miserable. I hated it. I did a marathon in 2 and a half hours. I can ride a bike, but I don't really run. I'm not a runner. And I think, but in some ways, China as a kind of pacer, to kind of show what is possible in terms of speed and the kind of pace that things can be done, I think there's some lessons to be learned. Some lessons, just like Confucius says, I walk down the street with 2 men, from one I learn what I should do, from one I learn what I should not do. I think China's a great, market, just like most markets, on how to learn what to do and what not to do.

So other organizations should think about learning to pace against China, but may hate the process of doing so?

Sure. So I remember the chairman of Daimler, who's since stepped down, he said, yeah, sure, China is going to copy, and China is going to really be a tough pace to compete against. place to compete with, but therefore, we must be in China and we're going to have a localized team in China and we're going to innovate and we're going to move quickly in China. So, China can copy us, but they're going to be 6 to 9 or 12 months behind us.

Wow.

So, just completely decoupling and saying like, oh, I'm not going to be in there because of the rapid pace of change and because of maybe some challenges around them maybe copying us. There's going to be emulation and copying Anyway, so you might as well be in the arena and be the strongest and most resilient version of yourself so that you can stay apace with what's happening locally.

Yeah. Fascinating. Rich, thank you so much for spending time with us, for your insights. We wish you well, and we'll be in touch.

Right back at you, Steve. Thanks so much. All the best.

That was my conversation with Rich Robinson, longtime advisor to China tech startups and a lecturer in entrepreneurship. To listen to Rich talk about the Chinese startup landscape is to conjure images of a Spartan army amassing wealth and making engineering conquests one day at a time. The Chinese entrepreneur is resolute, perhaps no more so than your average Silicon Valley variety. But there's something more at play. A pace, perhaps, that suggests time is fleeting. For those living in a centralized economy, I suppose there's always the possibility that government might criticize or cut off development. There's the case of online gaming. In 2018, the government established a gaming regulator to monitor and ultimately curtail gamers, arguing that too much gaming was bad for the eyes. This despite the fact that China is home to some of the largest game manufacturers in the world. In other instances, privately developed technology has been co-opted by government agencies who want access to innovations but may not want to pay the full market price. These, I assume, are qualified risks for many Chinese startups. The fact remains, of the slightly more than 400 unicorns operating in the world today, more are based in China than anywhere else. Not too shabby. It's an extraordinary achievement for a country that just 20 years ago had a mere 2% internet penetration rate compared to 50% in the U.S. Like all good things, explosive growth has its downside. Rich points out that the Chinese entrepreneur is no different from any other when it comes to contending with those psychological demons: fear, uncertainty, and doubt. Add in a global pandemic and you have a recipe for some serious emotional and mental dismembering. Remaining blindly optimistic while market-facing, while contending with a series of personal health and organizational disasters is no easy task. It's what Rich calls the impostrepreneur syndrome. He wonders if maybe the time has come for entrepreneurs to get real. Is it possible? Could the COVID-19 episode usher in an era of greater empathy, attention to self, forgiveness even? Nah, probably not. Not unless the good men and women in the vulture capital world change their stripes. Not in my lifetime. That's it for this episode of Inside Asia. Still want to be an entrepreneur? Maybe that corporate job isn't looking so bad after all. What's your take on China and the thing that fuels entrepreneurial passion? Tell us what you think. Find us on Facebook, Twitter, or LinkedIn. Leave us a message or start a discussion. If you don't subscribe to the Inside Asia Podcast, please do by visiting us at www.insideasiapodcast.com. Or download any or all of our episodes on iTunes, Stitcher, or Google Play. And lastly, if you can't find time to listen, do subscribe to our weekly newsletter. Go to www.insideasiaadvisors.com, scroll to the bottom, enter your name and email address, and start receiving our updates. Until next time, this is Steve Stein saying, coming from the outside on Inside Asia.

Thank you.