On December 6, 2014, Source Code Capital held its first “Code Class Annual Meeting” and its “Code Class Mentors and Incoming Members Mixer” at the Great Wall in Beijing. A dozen of CEO LPs and all of Source Code’s portfolio companies gathered together to exchange and learn from each other.
The following is a transcript from Wang Xing’s sharing on Entrepreneurship:
There is a Chinese saying about “Self-Development, Family, Governance, and the World.” It alludes to the idea that only after one improves himself or herself, can one manage one’s family; only if family affairs are properly taken care of, can one govern the country, after when a country is properly governed, may one level with the World.”
Ten years ago, I came back from the U.S. to start a business. I have been an entrepreneur for the past ten years. I am still an entrepreneur today. I have three entrepreneurial experiences, and the first two are not so successful. This is the third time. Meituan’s development from 2010 to the present is not bad, but it is still very much fighting and struggling. I have a lot of lessons to share with you, but no single lesson can be applied to everything. Whether they are things that I have learned on my own, or advice that other people have given me, I can always find many counterexamples for almost every seemingly correct suggestion.
1. Counterexamples to “Start-up Advice”
One suggestion for everyone is that you must not say that there are many problems here, so much so that I have to stop and solve them. A start-up must not stop. There is no problem worthy of you stopping, or even slowing down for. Otherwise, the situation would get more serious and quickly break out of the scale of affecting the entire company.
However, there are also counterexamples. Everything in life has counterexamples. When you grow too fast, it is easy to lose control, hence more issues arise.
In my own experience, Meituan was among the first websites that provided group-buying services in China. In 2H 2010 to 1H 2011, the market was extremely hot. Countless money came in, and countless teams got rounds after rounds of financing. Companies were fighting over talents, and money was squandered everywhere. For a while, lashou.com and 55tuan.com were growing faster than Meituan. They were growing at a very high speed. Finally, in 2H 2011, near the end of the year, they went bankrupt unimaginably fast. It was not Meituan doing anything to them. It was that they ran too fast. It was said that when they started, they planned to go public after 1.5 years. That was very much exaggerated. When 55tuan recruited people, they’d say that the company had confirmed the specific date of the IPO in 2011 internally. They used this method to sway employees from other companies to join them, and all of their plans were based around this fictive IPO. When the capital markets went downhill, the company could not adapt well, and problems quickly accumulated. So this makes a counterexample to the idea that “only growth matters.”
On the other hand, many say that focus is important. Lei said that the utmost principles of running a start-up are focus, perfection, reputation, and speed. Focus is ranked as the number one priority. Start-ups compete on the levels of individuals, team, and resources. Just like a blade, the more focused your strengths are, the more powerful it is. This is easy to understand. Especially for start-ups, no matter how much help and support you can get, at the end of the day, your resources are limited. So focus is very necessary, but there are also counterexamples to it. “Focus” is concentrating on one thing first, and not doing too many things all at once. However, if you set your business to be too small and too narrow, perhaps you are hampering yourself. In the end, you will find that you have already lost the battle because of a narrow-minded vision. No matter how hard you try, you cannot win.
For example, in the early years of e-commerce, Taobao was doing really well, and their capital base was strong. They did many things right, but many things wrong. The only thing that mattered was their focus on developing into a large, all-inclusive e-Commerce platform. Looking back on the e-Commerce companies that started around 2003, if they had focused on a vertical industry, basically they would not have had any hope to survive. They would have lost the battle from a strategic standpoint early on.
2. “Only after one improves himself or herself, can one manage one’s family; only if family affairs are properly taken care of, can one govern the country, after when a country is properly governed, may one level with the World.”
After scrutinizing my thoughts, the real valuable lesson came from our ancestors. There is a saying in the Four Books and Five Classics that Confucian ideals should be done as a gentleman. This is about one’s relationship with Self, Family, Governance, and the World. Over the past year, I find this saying more and more interesting. I will explain to you why I now think this saying is actually excellent guidance for entrepreneurs to improve themselves.
In a way, Confucius was an entrepreneur 2,500 years ago. He started from the State of Lu, had his own set of ideas, and then had a business plan. He wanted to manage the country, but he needed support. He did not get support from his own country, so he started traveling around to fundraise and get more resources, hoping to turn his idea of changing the world into reality. This is the story of Confucius’ life in a nutshell.
“Level with the World”
Let’s talk about it backwards and first look at “levelling with the World.” To entrepreneurs, the World means domination. You want market shares, and you have to monopolize it. The “World” is your targeted market. How do you define what you can do is crucial. You have to choose the right target market, and you have to have enough scale and provide enough value. Entrepreneurship is ultimately solving a problem. If the problem you are solving is not great enough, then the value you are creating is not big enough. So choosing the right market is choosing the World. The meaning of “level with” is that you must not only go in and do it but also completely occupy and monopolize it. Recently, there is a very informative book written by Peter Thiel, Zero to One. For internet companies, competition is especially bad. You have to end the competition quickly. You have to monopolize the market to create the greatest value. The meaning of “level” is a bit like this. It does not matter what you do, the sooner you end your competitions, the better it is for you. So this is your end goal. To run a successful company, you need to “level with the World.”
“Governing the Country”
So how do you “level the World”? You cannot do everything yourself. You need engineers, designers, and salespersons. You need to “govern the country.” Here, “country” means your whole business. I think it is really necessary to use the word enterprise instead of the word company, because the company is only one of the corporate forms, and enterprise may have many other forms. You can see that in the development of Alibaba, Xiaomi or BAT (Baidu, Alibaba, and Tencent), they are all very focused on building an ecosystem. A company is only a single business at the beginning. The company is departmentalized according to functions. After it has grown, it is necessary to departmentalize according to businesses, and then according to business groups. Perhaps it even has invested other companies, and there are business partners in the same ecological chain. The entirety of it makes up a “country.” So to “level the World,” you need to rely on your enterprise, with your entire team working behind it. Governing the country is to design and manage the entire enterprise and related ecosystems.
“Managing the Family”
How to “govern the country”? Taking a step back means “managing the family.” For entrepreneurs, the “family” is your direct subordinates. No matter how large the company is, a CEO can only manage a limited amount of people, which is about seven at most. Direct subordinates are like your family. No matter how large your company is, your personal energy is limited. The quality, commitment, and effectiveness of your team will have a crucial impact on your plan to govern the country.
Now how do you understand “manage”? There are several meanings: one is that you have to match the talents in building a team. For a start-up company, to execute an idea, you would need people performing different functions. It is difficult for one person to be a genius in all aspects, so it is necessary for the team members to cooperate and complement each other. This is very important. Otherwise, it will affect the progress of the entire company.
The second meaning is “to regulate.” It is interesting when you read the English version of Confucius’ book. Sometimes familiarity with a language brings blindness, and when traditional Chinese is translated into English, they need to pick the most accurate term. In an English version, the word “manage” is translated as “regulate,” that is, regular supervision. It sounds a bit strange, but it makes sense. There are dozens of people on the team, although the number is tiny, their mindsets may not be the same. How do you get everyone on the same boat? You see, a greater individual effort does not equal to a greater final synergy. Everyone has to be strong, yet the direction of his or her force must be unified in order to push things forward. You have to find ways to make them equal in terms of ability, attitude, or the standards in treating them. Be fair, arrange the whole thing to be fair and just. The standards have to be consistent. Then you can earn their trust, and they can be willing to devote to their work. They may apply these standards further to their subordinates. This is the how you “manage the family.”
So how can you “manage the family”? You need to “improve yourself.” As a CEO, you are the backbone as well as the ceiling of the company. If you cannot keep improving yourself, then the whole team and the whole company cannot be improved. Hence your entire business cannot grow further. I think that the CEO has to do many things, but one of the most important things is that you have to improve and develop yourself. It means that I have to keep on reflecting, keep on inquiring, keep on learning, and constantly try to improve.
There are many aspects to “improve yourself.” To run a business, you have to improve your mental strength, improve your cognitive strength, and improve your physical strength. After all, starting a business is very hard. Doing a good job requires fierce and lasting strength. Learn from all places, learn from books, learn from people around you, learn from older people, learn from younger people, learn from your past successes and failures, or even better, learn from other people’s success and failures.
Therefore, I feel that it is necessary to improve yourself first, then manage the family, then govern the country, and then you can level with the World. Of course, I say this in the context of running a start-up. This may sound a bit too abstract, but the more rapidly changing the environment, the more you have to grasp what is constant. If you believe in the theory of The Singularity is Near, which says that humanity will undergo a fundamental change from 2045 to 2048, then you will believe that before that, everything will only get faster and faster, and there will be no chance to ease.
This is my personal sharing, thank you.