Since the early beginnings of China’s Venture Capital industry, it has taken only a little over ten years for it to morph into today’s hyper-competitive environment. How did the industry become so hot? How can one excel as a venture capitalist? Many young people are eager to find some answers.
Source Code Capital’s co-founder, Cao Yi, can share some insights to these questions. Even before graduating from college, Cao Yi had already entered the venture capitalist industry. He was part of China’s first wave of domestic venture capitalists and witnessed the industry’s entire journey from birth until now.
In the evening of November 3, 2016, over a hundred college students from numerous top schools crowded into a lecture hall at Tsinghua University’s School of Finance. Source Code Capital’s campus recruiting event was about to begin, and Cao Yi was there to share what he had learned from his 12 years as a venture capitalist.
Source Code Capital’s Founder Cao Yi
You have to do the right thing at the right time.
As Cao Yi shared, success in many ways depends on time and place. If an individual’s abilities and vision can resonate with the present time and place, they will find a huge increase in effectiveness. On the other hand, suppose someone finds themselves at a less opportune time and place, in that case, even with Herculean efforts, any success may be hard to come by.
Cao Yi speaking with students about Source Code Capital’s origins and development
When choosing a path in life, first pay attention to changes in the world and look for the main trend of the times. Then, only after that should you start thinking about what industry to work in and specifically with which company.
Find the main trend and listen for the loudest calling in the world around you. Then, you can look for the best place to collect information and receive feedback. Only there will you find the industries and companies that will be worth your selection. You must do the right thing at the right time, or else your influence will be very limited.
Going forward, for every choice and every step, how you spend every minute of every hour, you have to think about whether you are doing the right thing at the right time and in the right place.
Look for an industry where you can continuously add value.
Cao Yi used his own experience to remind the next generation that when they leave school to enter the working world, they must find the angle from which they will resonate with the development of the industry and find an industry where they will be able to keep up self-development, keep progressing, and keep adding value.
Cao Yi and Source Code Capital colleagues answering questions from students
Where does value come from? As Cao Yi shared, one type comes from the development of new resources and another comes from the allocation of resources. Finding a good allocation for available resources is in itself a way to add value. The incremental power and contribution that optimal resource allocation can add goes beyond what one can imagine. Investing in stocks, for instance, is essentially looking for better ways to better allocate and reallocate resources over time.
Cao Yi points out that in all of human history, very few factors have non-linear developmental effects.
The first is technology. With the help of tools and technology, we can qualitatively change objects. We can take something which was originally worthless and turn it into something valuable. The second is capital. Capital can make the impossible possible. If DiDi Taxi had just followed the traditional development method of a traditional company, the company might have disappeared a long time ago. It is just like an egg that will not cook even if left out under a blistering sun for ten hours, but will cook when put into boiling water for ten minutes. The point of capital is to concentrate huge amounts of power in a short space of time and utilize it appropriately at key moments to help overcome difficulties – like help a company step into the next phase of development.
Students at the Source Code event
When people combine these two non-linear forces, they become a double engine – technology magnified by capital.
A Venture Capitalist must never stop.
Cao Yi has a message for all those who are preparing to join or who have already entered into the venture capital industry: You must never stop. Never settle!
Perhaps once you have found a comfortable living environment and possess an advantageous position in society, you will be pleased with yourself and can freely indulge in luxury and comforts. If you stop, it will be like when you are climbing Mount Everest and set up camp at three miles up. The scenery and view is beautiful, but you still have not gotten the best angle to look at the entire world. The height, breadth, and depth of your little universe have all been set to just three miles.
So, you must never stop. You must always keep thinking about how to make your little universe a bit bigger, how to make the most of this life’s value. Never stop thinking, trying, and making breakthroughs!
A student poses a question to Source Code Capital executives
Now besides technology and capital, the most valuable and precious resource is people. In the future, we will not be lacking energy, land, or housing, but great technology, good capital allocation, and people who never stop seeking to create value. These are the three keys through which Source Code Capital believes can drive global change: capital, technology, and people.
If someone has no drive and does not keep learning and challenging themselves, then they are a waste of capital and technology. Some capital will sit idle. Some will be invested in trailing industries. Some will be invested into the wrong enterprises. According to Cao Yi, the misplacement of every cent of every investment is sort of “criminal.”
So, Cao Yi emphasizes that every self-driven venture capitalist must keep learning and maintain a strong sense of mission. The mission is to create lasting and real value for this society and this world, by using the compounded power of technology and capital to advance society and economy. Only this kind of mission and passion for study can allow capital to find the best allocation.