Peter Winn on Upping the Game in the Education Space in China

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 that will help you unlock actionable insights around the Asia region and the entrepreneurial agility That actually defines it. This first season, season 1 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 1, 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! Live and action, showtime. Welcome to the pod, Mr. Peter Nguyen, ladies and gentlemen.

Rich, it's great to be here. Thanks for the invitation.

Yeah, you're calling in from the upper sea, I guess, or Shanghai or however it's literally translated. And you've been there for 2 decades now.

Pretty close, coming up on 2 decades.

We were reminiscing about how we first met in Honkers in the curiously fragrant harbor that is Hong Kong back in the late '90s. And I clearly remember that you had been doing some KTV karaoke in Cantonese. One of the few people I knew that can bust out the, you know, yao mo gao chou ah, and look forward to peeling back some of that, but I'd love to dive right deep into how you got bitten by a radioactive KTV spider back in the day and your origin story and then your path to China.

Sure, sure. KTV. Well, that brings back memories of a different era altogether.

I had a friend that had KTV PhD on his business card.

What a transformation we've seen across the board in everything. But so you asked about KTV. What's the story behind that? Well, I was a student of Chinese as a lot of us were coming over. This was starting, I think there were various waves of foreigners trying to make their way, whether it was directly in China or through Taiwan or through Hong Kong, or I should say, sorry, mainland China versus through other ways to get into mainland China. And there we would try to find every possible way we could to get more exposure to language. So what if someone had told me when I was in university, sitting there trying to memorize sets and memorize cards, if someone said, well, you can go to a new type of classroom. Where they play great music and you can get drinks and you can go with friends and have a good time and you can learn Chinese that way. I would say, well, the hell with class, sign me up. So KTV became a way to do that. I didn't realize at the beginning. So it was a good opportunity.

That's funny you say that because I just read a book about Genghis Khan and the New World Order. And they talked about how there would be these legions of soldiers on these low-riding horses, right? They were just so formidable, right? They could just, that one split second when they were in the air, they could just release their arrow with such accuracy. But they would be traversing thousands of kilometers and they would have these songs that they would sing. And the songs were all sort of protocols for battle or protocols for how to be a soldier and I'm like, that was their sort of like a school, um, one-room schoolhouse in a way. Right. And like singing is a, I remember a Cheers episode where he was trying to remember all the countries, Cliffy and the postman. And he's like, Albania, it borders on the Adriatic. And like, I can't ever unremember that. Right. So it's a really good tip. Like learning songs is a terrific way of doing it. Plus the extra bonus of like just blowing away your Chinese compatriots. when you're able to bust something out, right? And then the next level, which is like on the romantic level, then it's like, oh my God, right? Then you're like Elvis and, you know, Justin Bieber all in one.

Sure. Well, it's interesting that you bring up that Genghis Khan reference because song, music and songs in particular have this interwoven relationship with knowledge, with that education, with culture. And you think about it, there are many cultures that through, just like you were describing, the ritual, the songs, set up the framework for the other elements of the culture, whether it's faith and whether it's battle hymns. Yeah, exactly. Exactly. So this sort of falls into that category. But if you think about it, yes, you can sit there with a book and try rote memorization. Or you can affix a tune to it with video, with friends and the opportunity to do something fun and a party environment. And you can combine that all together and sit—

beer and duck tongue—

and make the excuse that you're learning something. Well, you actually are. And it's a great way. It's a great way to learn. So yes, I had some time doing the top 40. And then beyond that, after we met each other in Hong Kong and then I moved to Shanghai. Shanghai and got involved in business in Shanghai. Today, not as much, obviously, but it had been part of a lot of the culture of business.

Your mojo.

Yeah.

So, and you've really dug, speaking of the educational aspect of learning through song, like you've really become a true player in the educational space in China, especially as a foreigner. It's like really tough to crack the Middle Kingdom. And right now there's a lot of tumultuous sort of things happening in, in that space because of the government regulations, but let's go back a little bit more to your education? Like what, what turned you on to Chinese? Because that wasn't really, wasn't so sexy then in the '90s. Like what was that trigger?

It wasn't. I started studying Chinese, I think in 1987. Wow.

That was peak Japan. Like, how did you choose that?

Rich, I know people who, I know foreigners who came to China before 1987. And for me, they're really the ones who deserve respect. People say to—

there's always somebody there earlier.

Yeah. Sometimes I meet people, people say, when did you get to China? And I say, 1992, 1991. And they say, wow, you're amazing. And I say, no, I'm a neophyte. Guys who I talked to came in the early '80s. They really set the groundwork of what became a very vibrant foreign community. Now there are always foreigners going back years and years, but the modern structure, infrastructure, the modern society, societal elements of the foreign community were really laid during that period. So I respect those guys, but you asked— but what triggered it for me? What started? I grew up in South Florida. I grew up just north of Miami. Where I grew up, you're going to say, what's the connection to Chinese?

Oh, you don't have to say anything else. I get it now. North Miami, China, of course, in the '80s, '70s and '80s.

But everybody, all the kids, we all were studying Spanish. In Miami, as you probably know, there's almost more Spanish than English. There's certain sections of the city where the stores will put a sign outside that said, we speak English because they're the exception and they want to indicate that.

That's great.

So we all studied Spanish. I got to university and as many liberal arts universities in the Western world require, there was a language requirement.

And what's, what was that?

That was Princeton.

I knew that, but I wanted to make you say it. You're being modest, but that's pretty tough. That was your safety school.

So I roll in Princeton freshman year and it was, you're signing up for classes. They make it clear that there's a language requirement. And back when I was there, there really wasn't a way to get out of it. Even if you were good at a language, you had to go through the first year, get the credential, get the stamp, and then you can move on. So I thought, well, I don't want to take Spanish. I had done like a semester abroad in Spain and I was just, so I said, well, what options are there? And at university there were tons of options beyond just the normal high school 1, 2, or 3.

And Princeton's very well known for Chinese too.

Yeah. There was a strong East Asian studies department. So I thought, well, okay, I want to try something. But in my youth, I was very adventurous. So I said, I want to try something that's totally different from any experience I've had so far. And I grew up in a fairly insular community. Everybody, it was sort of a usual American upper middle class community, doctors and lawyers, South Florida, not much exposure to the international world other than Latin America.

Wow.

And certainly not exposure to Asia. So I thought, all right, well, maybe I'll try. First I thought, well, maybe I'll try Russian. Maybe I'll try Arabic or maybe I'll try Chinese. I thought, I don't want to do Japanese. It has an alphabet in some ways. So too easy.

Wow.

Too easy.

Whoa. And I thought Russian kind of has an alphabet, the Cyrillic. And then I looked and I thought Arabic, well, it didn't seem as interesting at the time as a culture. So I thought, well, why not take, why not look into Chinese? I also was looking at the most popular language in terms of what people want to study, but the most number of people who speak that language. And I thought, oh, okay, Chinese, no alphabet. So. Check the box there. That's a challenge. I had no idea what I was getting into. It is not like Spanish or French.

35 years later, you're still working on it.

Absolutely.

And your Chinese is excellent.

Still working on it, but it's not like Spanish or French 101 where you sort of look at it and you say, oh, I get it. It sounds pretty close to English. Not at all. And so I was there memorizing the sounds in Princeton's 101 headed by a guy who's pretty well, who was very well known or still well known in the language training sector, a guy named Zhou Zhiping, is very rigid. He's the guy who set up the Middlebury program originally.

There's a lot of Princetonians in China and I've heard his name before.

Yeah. He's all about regimen and rote and really grinding it.

Which is how most Chinese people learn anyway. So you're getting the right Yeah.

So you don't get into application. It's not like he's breaking out the KTV, which probably was why the pendulum swung all the way to the extreme on the other side. But we can get into that in a few minutes. But it was rote. You're sitting there memorizing these sounds that have nothing to do with anything you've ever encountered.

Right.

Oh, also, I will tell you that what the natural reaction is, most kids in 101 in any of the language schools say, hey, or any of the Most liberal arts programs, when they're faced with a requirement of language, the common reaction is say, let me study something I'm familiar with to get it over with. So we had tons of Huaqiao, Huayi in our class.

And they had a leg up.

They had a leg up. They had 2 legs up and 2 arms up and were answering every question and propelling the class forward. And it was harder than brutal. So after 2 years, my grades were going down each semester. I thought, you know what? I better try to pass or I'm going to be kicked out. So I ran over to Spanish department and I pleaded them to let me—

Open the gates, open the gates.

Yeah. As a sophomore becoming a junior to let me into Spanish 101 so I could just get it passed. Did that. Was, was able to graduate.

You're the second person on the pod, Justin Mallon. I don't know if you know him over in Hangzhou. Yeah, you must know Justin, right? That also was saying like, and both of you guys, like, it's objectively true that like, of all the foreigners in China, like you two have, you know, you can go head to head against anybody, right? But both of you like openly admit in the podcast, like first 2 years I sucked. Like I was just not. Enjoying it so much and struggling and just not really crushing it. Right. Which is amazing to me because I mean, I know hundreds of foreigners, thousands, and you guys are like top 20 probably, right. In terms of like your Chinese abilities. And it's like, it just shows the Goya how much of a slog it is. It's such a brutal initiation.

I was thinking about this the other day. In fact, I said to my wife, I said, How are there so many Chinese characters?

56,000, right? Like—

I've been studying this for 30 years and I thought, you know, various points you get to this where you think you can see the peak, but yet it's just a false peak and you get to the plateau and it's not. So studying a language is lifelong endeavor.

Well, but even more though, I see Chinese people who are master's, PhDs, right? And they're talking to each other and they're like, oh, do what your boys at Zomashia. And they're trying to like draw it on their hand because they can't hold it all in their RAM. Right. They see the character and they're like, oh, Daron, that sure, you know, Ray. Right. But they're like, oh, but that's 13 strokes and I don't remember how to do that. Right. It's just crazy. They're drawing it on their hand and like, they're showing each other and they're like, it's tough. It's tough even for like the super insiders that are like absolute turbocharge under the hood. Right. And we're like, top students, top universities. Like it's the character thing is a whole nother dimension.

It's challenging. It's definitely challenging. And there are various levels along the journey, but it's a long journey. And I don't know that the journey ever ends.

It never ends, but that's kind of a beautiful—

You have to enjoy the journey. So let me tell you a little bit more about the journey. So I graduate, I was able to graduate with Spanish thanks to the Spanish department at Princeton. And then when I started working, when I first started working, I was in New York City. I was living outside the city. The first job I had was up in Connecticut, a place called Norwalk, Connecticut, which is about an hour and a bit drive north of New York City. But I was really frustrated that I had, in my view, let this challenge Defeat that I had to, with my tail between my legs.

That's what Peter went.

I go to the Spanish department and pleaded at the gate, and I said, "I can't accept." I also had an intellectual curiosity. This was at the time that it was still Deng Xiaoping had been making a number of reforms. The SEZs were opening in the south part of China, and so there's a lot of activity going on. Very interesting. So I enrolled in classes in NYU and I used to drive down.

Wow.

2 or 3 nights a week to NYU, to the continuing education department at NYU and take Chinese classes. And in those classes, there were no huà chào and huà yì. Nobody takes continuing ed for that. There were, Secretaries at trading companies and some business people and a few lawyers, but everybody was new. And I found surprisingly in that environment that I was top of the class. It was very motivating. So I developed a good rapport with the teacher. He was a great guy. He was a cool guy. We got to know each other. I think he was from Nanjing. He said, if you're really serious about this, You should just go over. There's tons of opportunity. And I started to think about it and I said, you know something, you're right. So in 1990, it was the end of '91, early '92. I quit my job. I had a used car, sold my car. I broke my lease in my apartment, got a one-way ticket to—

One way.

One way.

Burn the bridges, burn the boats.

And well, I had the intention of buying the other leg.

Of course, but still, yeah, but mentally setting that tone.

Right. So went out, landed in Hong Kong with the intention of transferring up to mainland China and getting a job. Wow.

So good for you doing that. Like still so not sexy in '91, '92, right? Matter of fact, Tiananmen Hangover. And like Japan kind of on the decline then. So really still not much of an indication that China was going to be that interesting. Like it was still like Peter Hessler doing like his Peace Corps stuff, right?

Like around that time, Peter Hessler and I were on the track, Chris. He was years behind me.

Oh, of course. Of course. Oh, that's excellent. I got to get him on here. He's amazing guy. I played basketball with him with all the journalists, Dandong. In Beijing.

He may have a little more time that he's back in Colorado.

Indeed. Indeed. Yeah. Wow. Interesting. Yeah. So there you go. There's another Princetonian that really made a mark in the Middle Kingdom. So you land in Honkers. He's a good athlete. One of my favorite, I love the mechanism in the book where he talked about his running when he lived out in the west of China and he would pass this rock that was carved with some Chinese characters. And every time he went by the rock. A few of the characters turned into English so he could comprehend it. Yes. Yeah. And it was just like, it kept revealing itself every time he ran past it. Right. I thought that was one of my favorite sort of mechanisms for writing. And it just was so evocative. And of course now he's a world-class author for New Yorker and beyond. Right. But unsurprisingly so. It was actually Hong Kong that we first met in the '90s, but where were you during the '90s mainly? Tell us about that.

Where was I in the '90s? Well, so I went out to Hong Kong. Speaking of language, I thought, well, hey, I have 2 years of university language. I have continuing education where I was the star student in the class. Wasn't that impressive? I thought, how hard can it be? Right? So I first landed. I remember flying into Kai Tak Airport. Oh, just the buzz. And all the different cultures and it, it was just overwhelming. And looking up at the vertical element of Hong Kong, first going onto Hong Kong Island, seeing that—

That city is stunning.

It was overwhelming. And I remember the first place where I stayed, it was a youth hostel. It was so small. You could basically touch 3 walls of the room. How small it was.

You put your too far in the keyhole, you break the window, except there's no window.

Exactly. So there wasn't really, trying to think, there wasn't much on the internet at that point. Of course, no mobile phones. So I took out the phone book and I started to say, all right, what companies are here? And I started to try to figure it out, work through the network, meeting people, as many people as I could to try to figure it out. And I remember going to interview. Because I thought, well, I'll just talk to the companies that interview at college. I'll just look up their branches here and start interviewing. So I interviewed at all those companies, which were by nature multinational companies, and it had a lot of people wanted to work there. And so the first thing they'd say is, oh, okay, Peter, I see on your resume you say you can speak Chinese. Okay, so we're going to do this interview in Chinese and we're going to do some case studies and what's your Feeling about the political situation, the economic trends in China. I thought, well, 2 years of Chinese, I can tell you how to order some noodles.

That's what I think about the menu situation.

That was not going to fly. That was not going to fly. And several times I remember being shown very quickly the door and said, next time you put Chinese on your resume, you better mean it. And I remember taking the Star Ferry every, the companies are basically On Hong Kong Island, I was staying in Tsim Sha Tsui, and I remember taking the Star Ferry across and looking out the skyline every night, just after being rejected by 3 or 4 companies in a row, and just looking out and saying, you know something, I've got to find a way. I can't let this city or this situation defeat me. Just kept chipping at it, chipping away, and eventually through a school alumni association, I found some good contacts. I ended up working at one of those companies and that's how I started in Hong Kong. I was originally planning to try to get a job in mainland China, but at that point there really weren't jobs that foreigners could get in mainland China unless you were a correspondent or unless you wanted to work in, let's say you work for Motorola, you could go to the rep office and sit around, but they really weren't.

Interesting.

doing a lot.

Even in '96, when I moved out after grad school, I wanted to be an internet guy in China. And there were more people online in Hong Kong than there were in the whole mainland. So I ended up spending 4 years, '96 to 2000 there. So even most of the '90s, there were pretty limited opportunities, I think, in the mainland.

That's right. Like today with a Starbucks on every corner business.

Yeah, it was tough. So the path from there, from the curiously fragrant harbor Up into— Yeah.

So I, very fortunately, I had a girl in my class, in my Chinese 101 class, whose name is Michelle Sohman. And she is the daughter of Helmut Sohman, who was an EdgeCo member in Hong Kong. And her grandfather is Y.K. Pow. But we At Princeton, didn't know anything really about Michelle's background. She was very humble, very down to earth, and just one of the gang of friends and classmates. And she said, well, my family has a company. Why don't you, you know, she gave me a contact of somebody to look up. And very fortunately, that led to an opportunity to work with Wharf Holdings or Wheelock. Ended up working with Wheelock in their retail division, looking at market expansion opportunities into mainland China.

Amazing. Wow. That's a great connect there. So I actually have heard of like the YK Pao School, like that name is like well known. So one of the like kind of magnates. Wow. That's great. And tell me about some of those early days bridging as a foreigner into Those situations?

Well, we were trying to figure out the parent company, Wheelocker Wharf, is one of the largest conglomerates in Hong Kong, right? Today it's run by a guy named Peter Wu, who's one of the large tycoon families in Hong Kong. And they've got operations in a variety of areas, construction, infrastructure. They own the tunnels, they own the ferries, Times Square. So a very broad, diverse business. And we were looking at ways we could bring their retail division, which was called Lane Crawford, into China and set up shopping malls in China and department stores in China. So I did research together with a team to look at what consumer profiles were in Beijing and Shanghai and try to figure out where we're going to open our first store. I remember we went out to Shanghai. I don't know if you're familiar with it, but there's Xuhui area. Xuhui, Xujiahui now is a booming, booming retail area. In some ways it looks a little bit like Shinjuku in Tokyo in terms of how booming and buzzing it is and how much retail there is. So it's a major intersection. And I remember looking at that together with our team and thinking, well, this is way too much. Out in the boonies. This is before the metro system was set up, well before Pudong Airport was there, before the elevated highway system was set up. And at night, a lot of the city was dark. So we went out to Xuzhouwei and we, there was still some construction going on, but we thought this is way too early. So we ended up choosing a location on Waihai Road. Waihai Road. And we opened the first retail store there. It was called Maison Mode. This is back in the '90s, mid-late '90s. There was one other mall, another Hong Kong company called Dixon Concepts that had opened a location, but we were larger. And we used to have people come in from all over the Hua Dong area, from Zhejiang Province, from Jiangsu Province to come see this first department. store, the first Western sort of interaction.

Yeah. Because there was like department store number 1 or department store number 2, right? Where it was like so old school where you had to give money somewhere and then they give you a receipt and you walk over there and it was like, you might as well have been in the '50s. Right.

Well, the common way to do it, Shanghai number 1 department store was everything is behind counters. There are staff who are there who can help you, but who a lot of times are taking their time and reading the newspaper or doing whatever. There isn't a lot of rapid commerce going on there usually, but that was just the way it was done. That was the common way. And so we thought, well, we're going to take a novel concept and try it in a national department store. But we didn't realize how challenging that would be.

And what were some of the biggest Things to overcome.

There's a reason that the traditional way was done the traditional way. Well, we had tons of people coming in from all over the area because we had free air conditioning.

Come on in and cool down.

Come on in, sit around, play some cards, cool down, bring your relatives, bring some food. You know what quads are? Yeah. And we had a lot of the clothes we ended up having to put in plastic containers. Because we didn't get much buying, but we got a lot of touching. So we ended up, so the whole concept was, it was very tough to make that work. But nonetheless, it was a good exercise. And eventually by tweaking it, we eventually got it to work. We opened what today is called Times Square on Waihai Road. We did a Times Square in Beijing. And this was part of Wharf's strategy in China in that early wave.

So, I mean, you can imagine the whole premise of my book, At the Speed of China, is that it's roughly a 4 to 1 ratio, 4 years in the West, a year in China, a generation in the West, half decade in China. So that was 25 years ago. So you can imagine 100 years ago, say in New York City or Chicago, there's some big fancy new department store that's opening up and all of these immigrants showing up there to just kind of marvel at. They don't have to just look at the Sears catalog, right? And a lot of touching and probably not a lot of great hygiene or sort of etiquette around that. And that's a century ago, right? But that's like 25 years ago. That was 25 years ago, right? That wasn't— I had already been out of grad school by then and I'm 54. So it's like. Not that long ago, but it's really a long time ago in China because things have changed so dramatically since then.

Yeah. From a time perspective, it's not that long, but from a lifestyle perspective, it's like another world. This is at the time that it's not exactly the time, a little bit later, but sort of in that same period that the first KFC opened, the first Starbucks opens in Beijing. McDonald's.

Pizza Hut was like a fancy place, right?

Well, people were saying that pizza will never work, that coffee will never work. And people would come to marvel at it because it was just so different. And of course, people would want to touch the items that were out in an open area. And of course, people want to try to go to McDonald's and try that one meal because it was so interesting. It was so unlike What had been here before. And now the pace of change has been absolutely phenomenal. It's mind-blowing.

Mind-blowing indeed. Yeah.

The adoption of new models, the ability to move quickly, to transform, to change, to pivot, to modernize. It's just mind-blowing. Yeah.

And it was difficult even 25 years ago to really smell that, right? Because there was still Like in the mid-'90s, it was 25 years ago, but 20 years since Mao had died. Right. So it was closer to Mao than to now in many ways.

Right.

Still had that kind of pull of gravity from the Mao era and more Mao than now. And that's going in the book somewhere. But yeah, but since then that has just been like obliterated. Like, of course there are some Mao era practices that are now being reinstituted in a different way under Xi, but that's neither here nor there, right? With around like this specific commercial discussion other than some of the regulatory changes. But tell us out in podcast land about your hero's journey from setting up the first shopping malls to getting into the, you know, edtech space.

Sure. Yeah. Well, I actually had a hiatus in the middle where I went back to the U.S. and I went to business school. And worked on Wall Street for a couple years and then realized that my heart was really back in China and my interests were back in the Far East, or what we called then the Far East. And I wanted to get back as soon as possible to be part of the transformation, the miraculous developments that were going on that led to where we are today.

Right.

To be able to witness that kind of change. Was really a unique opportunity. So again, left a situation in New York. I found myself leaving New York again and flying back.

What year was that?

That was 19— it was 2000. It was right after the dot-com bust. This was in the early wave. I remember the early wave of the first, speaking of tech, the first tech companies doing their listings overseas. Sohu, Sina, NetEase.

Yes.

And I was working at one of the banks where we were involved in those listings. And those were really breakthrough changes that were happening. I was sitting there saying, well, all this change is taking place so fast. It's so exciting. I'm sitting here half a world away. I decided I, I just wanted to get back.

Want to be in the arena. Excellent.

Yeah.

And I think that's when we first met when you, the late '90s there. And when I was there in '96, 2000. Yeah.

Yeah. So I came back to, I again landed in Hong Kong. I met you. We have many mutual friends who we knew and spent time with during that period. And I joined a startup, a tech startup that was doing payment processing. Operated that for a while. We ended up operating it into the ground.

As one does.

As one does. And then I've done a variety of different things. I was helping a telecoms company with a sale to an investor. We set up with a couple colleagues, we set up an investment fund that we ran for about 2 years. And then along the way, socially. I met somebody who said, well, we are trying to get an education business started in mainland China. And we've run into a bit of challenge. Would you know somebody who might be able to help us? And this was the family that owns EF Business, English for All, Philip Hall. So I first tried to introduce him to a couple people. Lawyers, consultants—none of them really fit the bill for what they were looking for. And then we kept talking, and he said, "Well, would you like to help us?" And it wasn't really at the time what I was interested in, but I thought it was a very interesting opportunity. I thought here is a company that is bringing a product, bringing a service into a very high-growth market. It's a consumer-oriented branded type of service. And it would be very interesting to work with them to try to develop that opportunity.

And super successful family-run company in outside of China, right? In other markets and well-regarded, very like still nimble entrepreneurial, right? So how long had they been in China at that point? And like, where were they in terms of like revenue and size? Do you remember?

What EF did in China was very different. From what EF did in the rest of the world. EF is at that point, and to this day to a large degree, is primarily a language travel centered business. The majority of the volume that EF does globally is Europe and the US, outbound or even domestic tours in the US. So there's a lot of educational travel, educational tours. That was their main focus. They were not, as people know them in China, English language training company. That was a peripheral business.

Is that right? I never really even knew that, but they had a pretty good English. Maybe they then built up their English training business around the world after success in China or no?

Yeah. As simultaneous to, yes, after to some degree. We had an online English business that the company had developed. Called English Town that we were trying to sell. It was very early days for online education. So we were getting some traction, but not much. We launched that in China through agents. The company ran into some trouble with one of the agents. There was some impropriety. They stole a bunch of money. So at the same time we were trying to apply for, or they were trying to apply for the license. The education license, which wasn't a good time to have all that happen. So there were a lot of challenges when we first started. Uh, Phil and another guy who was there, Bill Fisher, were trying to figure it out. And so I joined the company to work with them to help them lay the groundwork for what we later opened as EF Professional English, which we launched in 2003.

And that was raging success. Like what was built there, I think the entire team is like a PayPal mafia, but there's like an EF mafia that's really gone on to do some amazing stuff in edtech. Like the whole sort of like flywheel and engine that was built behind that was extraordinarily well done. And for the most part, like you're like, yeah, we drove that startup into the ground. Like. Most companies that have far more resources and expertise and intention come into China and just crash that spaceship, right? But you guys were able to create something really from the ground up for that market, which is kind of unusual, right? It's like a larger, older company that was able to kind of come in and sniff around and go, okay, this is what the market needs. Let's build it. And I think it's a pretty proud legacy. Can you tell us some like stories about what you built there?

Sure. Well, thanks for that, first of all, but we did not have that. We had no idea that the evolution was going to take place the way it was, the way it did. But we had a couple of things I'd say that were pretty unique that influenced that. One is that there was a, the company gave the China team a pretty high degree of autonomy. So we were able to drive decisions within China. We were able to take the product and adapt it to what the market needed. And we were on the ground to be able to see and sense what that was. We were to some degree of really a pioneer in the model at that time that worked. Today, that model doesn't probably, it isn't really as applicable, but the model that we used was to be in a retail location with a hybrid product where part of the learning took place face-to-face, part of the learning took place online. A bit of the concept of flipped classroom that became all the rage and in vogue. But we used that initially where the face-to-face portion was the social fun element. And then the self-study through videos and through exercises was more What you do as an individual and travel at your own pace through that. So we launched that, and at the beginning it wasn't glorious days from day one. There were tons of obstacles, tons of dead ends, roadblocks constantly. But we just kept pushing. We had the belief, and we had the backing from our parent company that we were in it for the long term. I think that's a core. Issue, or that's a core element of EF success. There are companies that have come into China that have tried for years and just have not been able to get traction. There are other companies that come in and are able to get their brand, get following to their brand, get traction, and be able to get above a critical mass and become successful. And I think. A lot of it comes down to a few key things, but one theme that you continue to see in the examples, both successful and not successful, and in the successful it's done well, and the successful it's not done well, but it's the same concept. And that is commitment and commitment to the long term. The EF family knew that China was where they wanted to be. They could not be in China. And they also embraced. That it wasn't going to be instant success, that it was going to be a long road. And if they continued to invest, continued to support the team and kept at it, that eventually they'd be able to develop a successful business. And for the first 5 years, it was not, it wasn't, it was pretty lousy. We were losing money, but we knew. We believe that we had to get above a certain critical mass to matter to the market. There was so much change. You said the speed of change in China is phenomenal. There's so much change. There's a lot of market distraction. And it's only if you can get to be a certain critical scale. Scale basically trumps everything. If you can get to a certain critical scale, your chances of success are a lot higher. But to get to that scale, you have to have the—

Thanks for sharing. Yeah. Lots of good lessons. Lots of dead bodies along the road to success in China, right?

Rich, the model that seems not to work, and you've spoken with hundreds, if not thousands of business people who are here looking at it from the outside, but the model that doesn't seem to work for foreign groups trying to come to the market is, well, approach of basically saying, well, let's do this incrementally. Let's build a small base, take it for 6 months. If 6 months succeeds, we'll invest a little bit more. We'll drip feed it. That does not work. The team on the ground cannot do long-term planning. They can't put in place the infrastructure they need. They can't hire the people they need. They can't do the partnerships they need because they don't have the long-term plan.

Indeed. Yeah. So there's this philosophy of fighter pilots, like you don't have to necessarily have the faster plane, but you need to have the faster pilot and these OODA loops, OODA, observe, orient, decide, act, and then rinse, repeat, rinse, repeat, right? So you can make a lot of different changes instead of just going, being more agile. And one of the things in China is that things do move so quickly that you need to be able to be so nimble and agile and responsive that if you have to dock with the mothership and go back and say, hey, can we get your permission to do this? And the decision cycle there, of course, is much slower than— you're just doomed to failure, right? And I think that's really the crux of the book is that there's been this like sweeping speed in China over the last few decades, but like now it's like really hit a sort of peak. And even if you don't want to be in China or you don't necessarily even think that you're going to be competing with Chinese companies, like to be able to learn from the whole ecosystem in China around being able to leverage speed as an advantage. There's so many, it's really multivariate, all the reasons why things move more quickly, both good and bad, right? I mean, and that's what I'm going to lay out in the book, but I think fundamentally, if you don't have that independence to be able to do those OODA loops quickly, then you're all like in the beginning of The Matrix where they're like, oh, My men are up there and he's like, your men are already dead. Right. So it's like, yeah, no, I have a team in China. It's like, your team's already dead. Right. There's just like, they have to do a 2 AM conference call from their apartment in their closet, like with mothership's sort of timeline and it's like, yeah, let us, let's get back to you. We'll get back to you in a few days. And it's like, oh man, like our good friend Jeff Knowles who introduced us, he was at eBay. And eBay was the number one player in China. They bought the number one player in China. And then they ended up driving that thing into the ground because they just tried to do everything based on, you know, the mothership.

Hard to be competitive, hard to be competitive without— so I think I agree with you. Absolutely. Speed is important. The market is very fickle. The market reacts fast right now. I know because it's a core area that you work on, it's KOL-driven, leads a lot of popularity of various consumer products and consumer services. And brand loyalty sometimes, a lot of times is very low because the fickle nature and the fast-moving capricious nature of the consumer market. So there are a few strategies that you definitely need to keep in mind and speed And nimbleness is absolutely one of them. Capturing market attention, but then retention is another because you can be fast, but you can also die fast and go down in flames. So it's really speed of attractiveness and speed to competitiveness, but then stamina, the ability to scale. If you can combine the nimble elements and speed on the front end with scale, ultimately, then those are truly the brands that have the staying power.

Indeed. That's great. And like, that's roughly like what I'm attempting to tackle over the next decade or so, number of books is around entrepreneurial agility. And I think speed is one area and nimbleness and mindset. And also if you can be nimble and agile at scale, like new players in the NFL who before were these lumbering beasts and now they can run the 40 and, you know, what a wide receiver used to do, right? I mean, like things that the game is being upped. So talk about upping the game. Tell us about your journey from taking EF to a really good position to then venturing out on your own in the educational space.

Sure. Well, we left off when EF was just starting, but we were lucky to be able to bring on a great team. We had a great senior management across the board. They were able to bring on great teams. The regions that we worked in primarily at that point, it was Beijing, Shanghai, Guangzhou. Eventually we expanded beyond that. We became through the process the number one English language brand, English language training brand in the country. We were an Olympic sponsor in 2008.

Huge.

And catapulted us into another level of awareness and we just continued to keep trying to optimize the model beyond that. But I remember talking with a number of people and sometimes it would come up in some interviews and they'd say, well, Peter, what's really the secret sauce that had made EF that successful at that point? And the answer isn't really other than what we talked about just now from a structure perspective, governance is autonomy, but from an operating perspective, It wasn't any one thing. It wasn't any one particular thing that we did that, that just—

Well, but I'm going to stop you right there though, because I disagree. I think the one thing that, that you did, and I'm going to, you know, you're a modest guy, is that you were able to set, like, this was a startup, right? You were the founder of this company, right? And you set the culture in the startup. That the incredible reputation of that team was like, it was like standout. Like everybody complains, oh my God, it's so tough to recruit good people. And it's so tough to retain good people. You were able to put together this, uh, Steve Jobs talks about it. He's like, you got to get A people because then A people will hire other A players and then they'll bring other A players on. Otherwise, if you hire a B player, then they hire a B minus, they hire a C plus, and then Steve Jobs calls it the bozo explosion. But you were able to get A players. And that's, I think, the one thing that you did because you can't do all of those things well, but the team can. So I think you made an incredible, you know, mark. You set the bar high for all other companies to bring in good people. So there, I said it, accept the compliment. You modest bastard.

Thank you. Yeah, we were able to bring on a great team. They inspired others below them. We continued to do— culture was very important to us. Yeah. We spent a lot of time thinking about how can we make people really excited about what they're doing and how can we give them the autonomy within the framework of where we were going on our roadmap of development, but give them the autonomy to feel like they really had buy-in to feel that they were really part of this success. And they were, absolutely. But it was the combination of thousands of little steps, little wins. We would just keep pushing on everything and everyone attitude would in aggregate lead to the value that we were able to create. We were just relentless. We would live and breathe What our vision of where we wanted to go. And we could not have had that drive and that excitement if we were, say, part of another organization, a different kind of organization where overly controlled or boxed in. This was our vision. This was our team. It was a new product and new business for EF. We were the pioneers. We were on a mission. So we were on a mission. It was very exciting. I was there for 12 years. We became The number one English language brand. And then in 2012, I had taken the business to where I thought I could take it within the family business structure. There was one of the sons who was going to come out to China and take over the China business. So I thought, all right, maybe it's time to consider some other opportunities.

Gotcha.

And I set up a company focused on children's education called Talent Academy. We, at the beginning, we said, let's look for an opportunity that is the shape and form of the English language sector when we first started India. What does that mean? That means where there's large and growing demand, but extremely fragmented supply. And so we said that doesn't exist in English language. English language has become very competitive and the barrier to entry has become very high, but it does exist. Children's education other than English language, which was in the extracurricular area. Extracurricular was dominated by moms and pops. There was very little structure. It was very unsophisticated. And so we thought, let's go in, try to apply sophistication in the models Um, what we had used in the English language space to this sleepy area that was just starting to grow. So we got some private equity backing or some VC backing from a fund called Baird Capital. It was actually funny because Baird had never done a startup. We were originally, we were originally looking at doing a buyout, which didn't work. We went back to the drawing board and Baird said, well, good luck. We don't do startups. But we pitched them again and again and they liked the concept and they liked the team. And they said, you know what, we're going to find a way to make an exception. So we were the only startup they had ever done.

Fascinating.

And we got some angel investment at the same time we brought in Baird and we did this first round and that got us started. We launched in 2013. I had a good partner who came also from EF, from It's, uh, we built that business over 6 years and we actually just sold that business in 2019.

Congrats. Nice. And who is the purchaser of the business?

Buyer of that business or the majority of that business is a US company called WorldStride.

Yeah. Huge. Yeah.

Which is a portfolio company of Primavera Capital out of Hong Kong and Eurazio, which is a big buyout fund out of Europe.

Terrific. And, you know, I visited you a few times along the way. I've been to your offices and met some of your terrific team members. Tell us some of the trials, tribulations, and triumphs along the way there, sort of your initial thesis and how that held up to the actual battles.

Yeah, well, it's a good question. Too many tribulations to go into, but it was never straight line growth. Tons of obstacles, whether it was regulatory obstacles, which interestingly, even today, actually, it's a very timely topic, but operational challenges, sales and marketing challenges, real estate expansion challenges, financing. We raised capital all in probably 6 different times with all the different Wow.

That's a lot of raises. Yeah.

And every time it does take a huge amount of bandwidth away from focusing on growth in the business. So that was a lot of time spent. We had some, fortunately we had good backers who stayed with us. Many stayed with us with each round, which was great. It's always tough to find good talent. That was always—

Yeah, I'm sure it became a lot more difficult, right? Because then The edtech market, like you basically helped to staff that. There were so many people from EF that then went out and started their own or took over a lot of leading roles. Right. And then it became so well-funded and such a feeding frenzy. Yeah. It was probably really tough to find good people.

Absolutely. Operationally getting the business model right. We experimented a lot and tried to change various elements, which Eventually we found what worked and we were able to scale and grow the business. We launched an early education business, which was preschool, which worked well, and summer programs. So at the end of that growth period, we were the largest English language summer program operator with summer programs across Shanghai, Hangzhou, Beijing.

Not what you originally had set out to do, right? But then that sort of like unfolded in front of you in some ways.

Was not part of the original business plan, but eventually that became a very fast growth area and a great opportunity for us.

Yeah. I like how you use the word relentless before with EF. Paul Graham, the guy who started Y Combinator, he made a Top 10 list of qualities of successful entrepreneurs. And someone said, what about this? Like one quality or one quality that sums them all up? And he's like, oh man, it crushed me to just get top 10 qualities. But he's like, okay, I'll tell you what, relentlessly resourceful. Like you just have to just jump in and then just every day, chew cool, eat bitter, just chew through barbed wire and then just be relentlessly resourceful. And then like these peaks open up where you're like, oh, wait a second. There's I thought I was going to that peak, but okay, I'm gonna have to go into this valley, but now I'm gonna go to that peak. But you would've never been able to see that peak had you not already been, had you not embarked on that journey. So pretty, I was pretty happy to see that.

I hadn't heard that, but that really resonates. I think in a short timeframe you can be smart, but that's not necessarily gonna get you success. You can be lucky and that can be Short-lived. You can be smart and lucky and that can work, but you can be resor— you can be relentless. And even if you're not lucky on the first 2, 3, 4 attempts, if you're relentless, the chances of having something work eventually are good, are high. You cannot give up. There are so many doors that get slammed in your face. The most common answer is no. The most common result outcome is frustration. And you just have to keep plugging away.

Fascinating. Yeah. I love hearing a happy ending at the end of an entrepreneurial journey since the most likely outcome is failure. Right. And then, and even though like you were like intrapreneurial, but you were really an entrepreneur inside EF, right. And like, that's not always a good, then you leave that environment, you don't have any air cover necessarily, right? Like you're really operating without a net, right? And you have to jump into it really on your own and raising money 6 different times, right? And it's like every time, even if you're an industry insider and even if you have skills, experience, network, it's still, it wants to not only just make you fail, but, you know, just completely defeat you internally and externally. And you were able to—

Yes. But as you go through the process, or as you're contemplating the process, you have to embrace the fact that failure is the default. And so to overcome that, you have to go in with the attitude and with your eyes open that it's gonna be a pitch battle. That of itself has to be stimulating. Mm-hmm. And if you can find a way to make that stimulating, The process of building with all the frustrations, at the same time being passionate about what you're doing as your product or your service, you can combine those and be relentless. Then your chances of success are, go up significantly. Indeed. Well put, Rich. I agree.

But tell me about what you're working on these days.

These days. Okay. These days I'm working with A few colleagues, old business contacts. We're looking at a bunch of different things, all of which are interesting. We're still exploring which one is the most interesting and is going to have traction, but we're looking at something in food and beverage. We're looking at something in domestic travel.

Like to invest in or to actually like start or take over and operate? Like what's the—

These are either buyout opportunities. or development opportunities or ground-up combinations. I also occasionally do some advisory work with some funds, particularly funds that have been active in the education investment space in China.

Yeah, which is an incredibly large and fast-moving, but very treacherous area these days, right? With the latest regulations, a lot of Market capitalization. Right.

With the new statutes that have come out, really spooked the market. Took a nosedive last week. Education stocks are down quite a bit, some 30% off their highs from a year ago. I just coordinated a seminar 2, 3 weeks ago with King& Wood, Dentons, and the head of the education practice for L.E.K. Where we focused on the new statute webinar, and we're going to be doing a follow-up in a month or so once more clarity comes out of the Ministry of Education.

That's beautiful. And just as a little callback, you talked about how you got to China 30 years ago and you were like, ah, I'm already late to the game. People have been here for since '79 or '80, right? And I once had breakfast with Dashaan. Mark Rosewell, who is this very well-known like luminary. Like if you spoke Chinese even passingly well, people would be like, oh wow, 你你你是你是大山？ Or like 你上大山？ Right?

They'd always say your Chinese is not nearly as good as大山. Yeah, I guess it does.

Yeah, that's true. It's true. So he was really amazing already in the late '80s, but I was talking to him about doing some kind of a mobile entertainment deal. This was 2000. 4 or whatever. But he said, yeah, when I showed up in '88 to go study in Beijing, I was already late. Right. And, but the fact is now you look at him, you're like, well, of course that guy was a pioneer 30, 33 years ago. And I've just recently gotten involved in blockchain and NFTs. And I basically think like on disk to online, 10x, and then online to on chain, another 10x in value. But I'm kind of reinventing myself and showing up to this game a little bit later. But you're kind of doing the same. You're like, I'm going to take my skills, experience, network, my scabs, calluses, scar tissue, like armor. And I'm gonna go back into battle. I'm going to pick a new sector or something really interesting and just get in there and jump in the driver's seat and see what we can do. Right. And like, it's really exhilarating in many ways. Right. And you have to be like, all right, I'm going to get back out there. And of course it's going to suck. Right. It's a— I mean, you sure cool. Right. But That's okay. If that's what I want to do, if I'm not eating bitter, if I'm not actually pushing myself and I'm not getting better, right. And really challenging myself. So I look forward to watching your future adventures, my friend.

Thank you, Rich. I'm excited.

Great. Thanks a lot. And to, to be continued.

That's a wrap. Thanks for listening to this episode of the Rich Robinson Show, season one 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.再见。 See ya.