Episode 23: David Li of YY on Pioneering Live Streaming in China

GGV Capital’s Hans Tung and Zara Zhang interview David Li (李学凌), the founder and CEO of YY, one of the first live streaming platforms in China. YY went public on the NASDAQ in 2012 and is now a multi-billion dollar company. YY also owns Huya, the leading game streaming platform in China which went public on the NYSE this May. David is also the co-founder and CEO of the Singapore-based BIGO, which is the leading live streaming platform in Southeast Asia. Before founding YY in 2005, David served as the editor in chief at NetEase. David received a bachelor’s degree in philosophy from Renmin University of China in 1997.

GGV is lucky to count YY as a portfolio company, and our managing partner Jenny Lee was on the board of YY for seven years.

David discussed his evolution from a philosophy major to a journalist to an Internet entrepreneur, what it’s like to take a Chinese company public in 2012, and how YY came to spearhead innovative features of modern live-streaming products such as in-app tipping and virtual gifts.


HANS TUNG: Hi there. Welcome to the 996 Podcast, brought to you by GGV Capital. On this show, we interview movers and shakers of China’s tech industry, as well as tech leaders who have a U.S.-China cross-border perspective. My name’s Hans Tung. I am the managing partner at GGV Capital, and have been working at startups and investing in them in both the U.S. and China for the past 20 years.

ZARA ZHANG: My name is Zara Zhang. I’m the investment analyst at GGV Capital and a former journalist. Why is this show called 996? 9-9-6 is the work schedule that many Chinese founders have organically adopted. That is, 9 a.m. to 9 p.m., six days a week.

HANS TUNG: To us, 996 captures the intensity, drive, and speed of Chinese Internet companies, many of which are moving faster than even their American counterparts.

ZARA ZHANG: On the show today, we have David Li, or Li Xueling in Chinese, who is the founder and CEO of YY, one of the first livestreaming platforms in China that went public on the Nasdaq in 2012 and is now a multi-billion dollar company. YY also owns Huya 虎牙, the leading game-streaming platform in China, which went public on NYSE this May. He’s also the co-founder and CEO of the Singapore-based BIGO, which is the leading livestream platform in Southeast Asia. Before founding YY in 2005, David served as editor in chief at NetEase 网易and, before that, founded a website providing a copyright trading platform for journalists and photographers. David received a BA in Philosophy from the Renmin University of China in 1997.

HANS TUNG: GGV is lucky to count YY as a portfolio company and our managing partner, Jenny Lee, was on the board of YY for seven years.

Hi, Xueling, David. Welcome to the show.

DAVID LI: Thank you.

HANS TUNG: You and I have known each other for more than 10 years. The first time I met you was in March 2008 when I came to visit to talk to you about Duowan 多玩 and, through you, actually met Lei Jun 雷军. I brought it up because of this past 10-year period, many things have changed in China and for you, personally. So, as you look back to the last 10 years, what are the things that stuck out to you as a turning point in your life and also in the evolution of Duowan多玩/YY as a company?

DAVID LI: Yeah, I think the most important turning point was when YY was established. Before YY, we were a web-based company.

HANS TUNG: Yes, a web-based and media company, gaming media.

DAVID LI: Yeah. Following the launch of YY, we have changed into a software-based company and we became a social platform and community business. It’s a totally different kind of business. I was thinking very few companies changed from a website company into a software company at that time.

HANS TUNG: As a media company there’s not much technology involved. You’re not a software technology company. As a media company, there’s more of a ceiling of how big you could be. Many journalists and media companies worldwide are trying to look for answers on how to grow. How did you decide to that you would become a technology-driven software platform and build social networking in the form of YY? How did you come to that decision and how did you make it work?

DAVID LI: Because I did not confine myself to a certain category. Before I established YY, I was a journalist, but after three years I abandoned being a journalist and never wrote articles since then, and I think I cannot write articles for the rest of my life. So I quit that job, but at that time I thought I could be a good editor. I do not write articles myself, but instead could rewrite other people’s articles and could live longer.

HANS TUNG: Right, live longer.

DAVID LI: Live longer, yes. But, after that, when I joined the internet company, I began to think I would never work as an editor again.

HANS TUNG: Sohu 搜狐 and NetEase 网易?

DAVID LI: And Sohu 搜狐. So I changed my job description, and after that I never edited any article again.

HANS TUNG: And you continued to evolve and grow.

DAVID LI: I continued to change myself, yes. Each time I abandoned a scene, I did so very professionally.

HANS TUNG: Yeah, you already did well, but you reinvent yourself.

DAVID LI: It was very difficult, yes. So, when I left NetEase 网易, I worked on launching Duowan 多玩. I think I will never touch the news business again, because at NetEase 网易 I was in charge of the portal, but the main part of the portal was news, but when we started the Duowan 多玩 business we would do nothing related to news. We’re related to entertainment.

When Duowan 多玩 grew and we hit a ceiling, and we thought of changing it to a different kind of company at that time. When we decided to step into the software area, we had no engineer. All my engineers at the company write Java and we have no one who understands C++, but even in this situation we decided to change the direction of our company to a brand-new area. At that time we separated our money. We dedicated about 10 percent of the money to the website business.

HANS TUNG: And 90 percent to the new business.

DAVID LI: Yes, 90 percent of the money into the new business. At the time we would tell anyone, a dying wish would not help him.

HANS TUNG: How did you find new engineers? How did you recruit new engineers?

DAVID LI: We recruit brand new engineers to start up the business. I was the only person who moved from the old business to the new business. I charted the new business and recruited people from there on and started the business, but I was very fortunate to find a very good partner.

HANS TUNG: Who was that?

DAVID LI: His name is Chen Zhou 陈洲 and, because at that time he had been working five years for NetEase 网易 and to write the software named Paopao 泡泡. Paopao 泡泡was the second-largest instant messenger in China.


DAVID LI: After QQ, yes, but the quantities for each are very different, but still the second-largest one, and their peak concurrent users was one million back then.

HANS TUNG: Back then in 2007, around then.

DAVID LI: It’s not a small member. The entire structure is working very well.

HANS TUNG: And Paopao 泡泡 was based in Guangzhou or Canton, the same city you are in. that’s also very fortunate.

DAVID LI: Yes. So, when I asked Chen Zhou 陈洲 to join us, at that time he had nothing to do, so I was lucky and we joined together to start up the business and we recruited highly talented people at the time. We was very lucky because we knew nothing about that area. After 10 years, this deal built the best people in that area.

ZARA ZHANG: How do you transform yourself from a writer or an editor – because you also did philosophy in college, so very much in the humanities side – into a successful internet entrepreneur and leading a tech company?

DAVID LI: I think because I studied philosophy in university – yes, the best thing in studying philosophy is that you cannot find a job and on my first day that I joined at university they told me, ‘You can’t find a job after graduation, so you must help yourself to find some way to survive.’

HANS TUNG: Right, now I know why you’re so argumentative and love to debate. My wife is like that, too – she knows I love her very much.

DAVID LI: You want to survive and living on a philosophy degree is impossible. Philosophy is what we study, but we work for a living. We should learn something very different.

ZARA ZHANG: So how did you land your first job?

DAVID LI: My first job was an accident.

HANS TUNG: Despite being a philosophy major.

DAVID LI: Yes, it was really an accident. At that time I interned at a newspaper and when I joined as an intern they told me they wouldn’t give me a job opportunity, but just an internship.

HANS TUNG: Giving you a chance, yes.

DAVID LI: But when I was working in that internship, I met some people from other newspapers. We talked a lot and she told me, “We need an article about Kingsoft 金山. Do you want to write an article about Kingsoft 金山?”

HANS TUNG: And that’s how you met Lei Jun 雷军?

DAVID LI: Yes, I started a catalogue. Yes, I wrote a 7,000-word article.

ZARA ZHANG: In-depth feature.

DAVID LI: Yeah, it was wholly published. As you know, it’s very difficult for a newspaper to have enough space for 7,000-word articles. So, I wrote an article and it got published. I got 300.


HANS TUNG: RMB. It was paid.

DAVID LI: Yes, they paid for that, but following that there was no job offer from that newspaper. We all graduated in July, as you know, in China, but it was already May and everybody would get job offers and I didn’t have one. One day, the editor of the newspaper called my friend, because I didn’t have a phone. I didn’t have a pager, yeah.


DAVID LI: One of my roommates had a pager. He got the message that this was a job opportunity for me because someone quit their job.

HANS TUNG: Right, that was The Computer Times? What was the name of the newspaper again?

DAVID LI: This newspaper is China News Daily.

HANS TUNG: China News Daily, got it.

DAVID LI: But I was very lucky. It’s a very famous newspaper and everybody in the university read that newspaper.

HANS TUNG: How did the chief editor there remember you?

DAVID LI: Because of that article.

HANS TUNG: The 7,000-word article that you got paid $40 U.S. for on Kingsoft 金山?


ZARA ZHANG: How long did that take you to write?

DAVID LI: So, I got the job.

HANS TUNG: How long did it take you to write the article?

DAVID LI: Maybe a week. I took a week to write that.

ZARA ZHANG: That’s fast.

HANS TUNG: Very fast.

ZARA ZHANG: So, what made you decide it was time to leave journalism and what specifically attracted you about the internet?

DAVID LI: Because I love technology very much. In university since I had no job offers, I needed to find some capability to live on it. When I was in university, I helped with computers. At that time all computers were very expensive, so all the computers had a special room. You had to buy a ticket, an hour’s ticket to use the computer.

HANS TUNG: Time share. What year was this?

DAVID LI: It was 1993, but at that time, as you know, there were no computers services like with today’s internet bars. You restarted it automatically when a student would leave it, but at that time there were no such functions and many students were trying to do things on the computer, so many of the computers crashed.

HANS TUNG: Too many documents. Too many files. Too many things.

DAVID LI: Yes. So found a chance in that. I fixed it for the teachers, so I got many, many free hours to use the computer and from that time I learned lots of computer technology.

HANS TUNG: What led you to join Sohu 搜狐, your first internet job?

DAVID LI: I joined Sohu 搜狐 for only four months.

HANS TUNG: Only four months? Okay, and then from there to NetEase 网易?



DAVID LI: Because when I joined Sohu 搜狐 , they gave me a job to be in charge of the IT channel.

HANS TUNG: IT channel for news.

DAVID LI: Yes, the IT channel for news, but I found that I had a very talented assistant already in that channel, so I promoted him to chief editor.

HANS TUNG: For the IT channel.

DAVID LI: Yes, for the IT channel. Every month I would be the first.

HANS TUNG: The IT channel for Sohu News was the fastest growing among all the channels at Sohu News.

DAVID LI: Yes, among all the channels, so I was very lucky and I didn’t go to work every day.

HANS TUNG: Then NetEase 网易 realized you were very good, so they headhunted you from Sohu 搜狐.

DAVID LI: So I’d stay at home and play games every day, but doing very well at my job. My boss find that it’s very strange in that I didn’t go to office very often and we had SARS in the country.

HANS TUNG: SARS was in 2003?

DAVID LI: Yes, at that time. Because of SARS, I’d stay at home working at home and did not go to the office maybe for a month. So they asked me, “Well, what do you want to do? Because everybody is working hard at the office.” I said, “I found a very good person to do that.”

HANS TUNG: So, how did NetEase 网易 track you down?

DAVID LI: So, when my boss asked me, “What do you want to do?” I said, “Because I’m already the first one to make the channel grow, you have 12 channels. Fire me here or give me more jobs.”

HANS TUNG: Give more channels to manage.

DAVID LI: They said, “Okay, I will give you a new channel. This channel may be the gaming channel.”

HANS TUNG: Sohu 搜狐 gave you the gaming channel.


HANS TUNG: So it was before they bought 17173 or they already had 17173?

DAVID LI: Maybe at the same time. They wanted to give 17173 to me to manage. I wanted to diagnose the market and so I interviewed many gaming people.

HANS TUNG: Including NetEase 网易?

DAVID LI: The last one was Ding Lei 丁磊.

HANS TUNG: Ding Lei 丁磊, the CEO and founder of NetEase 网易.

DAVID LI: Because NetEase 网易 at the time was doing very well in the gaming industry. So I flew to Guangzhou to talk with Ding Lei 丁磊 about how they could give me business and how Sohu 搜狐 could provide better services for NetEase 网易, but after maybe three or four meetings, Ding Lei says, “Do you want to join NetEase 网易? I will give all the portal control to you.”

HANS TUNG: The entire portal, because he was focused on gaming.

DAVID LI: Everything.

HANS TUNG: He was following the gaming, so he wanted you to take over the whole channels.

DAVID LI: I said, “Of course. I have enough time.”

HANS TUNG: You went to college in Beijing and you worked as a journalist for probably five or six years as a journalist in Beijing. Then you went to Sohu 搜狐 for four months. You just picked up your bags and moved to Guangzhou just like that?

DAVID LI: Yes, and it was just a box, one box.

HANS TUNG: You liked Ding Lei 丁磊. You liked the challenge of managing all the channels.

DAVID LI: I liked the challenge.

HANS TUNG: You had never lived in Guangzhou before, but that didn’t stop you. You just got up and went there.

DAVID LI: Yes, at that time I had a car in Beijing, do you know?

HANS TUNG: That was rare.

DAVID LI: Yes, it’s very rare.

HANS TUNG: Yes, high status in Beijing.

DAVID LI: I have a Citroën.

HANS TUNG: The car, that’s right.

DAVID LI: So I took one box with me to fly to Guangzhou to get a new job.

HANS TUNG: In Beijing I remember there were four young chief editors who were all quite famous at that point in time, Jingcheng Sigongzi 京城四公子. Who are the other three of again? You were one of them.

DAVID LI: Journalists? Four journalists.

HANS TUNG: Okay, fine, four journalists. Who were the other three, again?

DAVID LI: Hu Yanping 胡延平, Liu Ren 刘韧, Zou Jianyu 邹剑宇 and me.

HANS TUNG: Got it. So you gave up quite a bit to leave Beijing, sort of the center of the universe in China in internet, certainly for news, going out to Guangzhou, and you’ve been there ever since.

DAVID LI: Because I had a very big opportunity there, so I even forgot to talk about the salary.

HANS TUNG: You just wanted the responsibility and a chance to do stuff.

DAVID LI: So after I joined NetEase 网易, I asked Ding Lei 丁磊 , “What’s my salary?” He says, “It’s too late, so this year you do not have the opportunity to get options, so you just get a cash salary only.” So I asked, “How much cash?” He said, “It’s the same as your old one.”

HANS TUNG: More responsibility, but the same pay. Got it.

DAVID LI: Actually at that time I had already founded a business on my own from 2000, so in 2003 I already had a total payment of about RMB 25,000 per month, but that has only given 15,000, so I’d lost 10,000.

HANS TUNG: When you started working at NetEase 网易, how long did you work there? What were your lessons and takeaways from that experience?

DAVID LI: I worked for NetEase 网易 for–?

HANS TUNG: Should be about three years, because you were at Sohu 搜狐 in 2003.

DAVID LI: One-and-a-half years.

HANS TUNG: Then you joined NetEase 网易 in the same year.

DAVID LI: I only worked at NetEase 网易 for one-and-a-half years.

HANS TUNG: So you left there in 2005.

DAVID LI: 2005, yes. In July 2003 I joined NetEase and left in May 2005.

HANS TUNG: July 2003 and then May 2005, so almost 20 months, 22 months.

ZARA ZHANG: Were you a gamer yourself?

DAVID LI: Yes, I played very often, because I had enough time.

HANS TUNG: Starting at Sohu 搜狐 and actually even before that as a journalist. What made you leave NetEase 网易? Because you wanted your own startup?

DAVID LI: That was not why I left NetEase 网易. When I was working at NetEase 网易 my boss gave me a KPI, 30 percent growth per year. At that time I did not know what was meant by “KPI”, because I’d never worked for an English-based company. So my answer was “I do not know. I cannot complete that KPI, but I will work very hard to do that,” yes. After a year I completed a growth about 16 times, one-six times of the traffic growth.

HANS TUNG: 16 times traffic growth, not 30 percent times 16, but 16 times.


HANS TUNG: That’s impressive.

DAVID LI: I didn’t know the KPI.

HANS TUNG: How did you do it?

DAVID LI: At that time I think it was very simple. Because Sina 新浪 is the leading English news portal in China, but they are very serious news. So we repositioned ourselves into a news media more concerned with your daily life.

HANS TUNG: Daily life. Yeah. It fits your personality. You’re fun, outgoing, and you love to chat about things, so I can see that reflects your personality, yes.

DAVID LI: And at that I decided and made a decision that comments are a part of news.

HANS TUNG: Comments from the users.

DAVID LI: Online users’ comments is a part of news, not a different part of news, so we combined all the comments and the news together for the first one of the portal.


DAVID LI: Even today it’s still a very…

HANS TUNG: Yes, my wife would use the NetEase 网易 user app as well. People love reading the comments and the comments actually are very well-written, high quality, highest quality.

DAVID LI: That was begun at that time, yes.

ZARA ZHANG: When you start YY, it was called Duowan 多玩, right? And it was an online game web portal for gamers or a communication and community tool for gamers, sort of like Discord in the U.S. So why did you pick this particular market? Why the gamers?

DAVID LI: Because at that time I thought we could come up with Sina 新浪, but it’s very difficult to exceed Sina新浪. I thought that if we wanted to be a bigger media than Sina新浪 for the next five years, we had to do something different from Sina新浪. At that time, because Sina新浪 was already focused on media itself, I thought, “No, I will not focus on media itself. I will focus on the information business.”

So, I planned to invest in four channels for gaming, real estate, automobile and information technology. So I wanted to invest in four different channels and make this channel an independent brand, and we provided services for the readers, not just news for the readers only, but the company did not allow or I didn’t have the chance to persuade the company to do that.

I wanted to tell them I could do it with my own money, not only because the company had invested money in this business, but I wanted to control that business. Even if there was no money, I could use my own money to invest in that business. After that, I left the company to start up this business.

ZARA ZHANG: Why gamers? Why did you choose that market?

DAVID LI: Because that was one of the four choices. I didn’t have enough money to do all those four things at the same time, so I chose one.

HANS TUNG: What were the four choices?

DAVID LI: Gaming, real estate, auto and IT.

HANS TUNG: The other three, real estate, IT and auto, there are a lot of people doing it. Your personality fits gaming very well.

DAVID LI: Lei Jun 雷军 recommended to do gaming first.

HANS TUNG: He’s at Kingsoft 金山, so he knows his gaming well.

DAVID LI: Yes, so we would do gaming first.

HANS TUNG: Yeah, he was also your angel investor.


HANS TUNG: Did you guys meet each other at the Zhanzhang Dahui 站长大会?

DAVID LI: We knew Lei Jun 雷军 quite a while ago.

HANS TUNG: Because you interviewed him for Kingsoft, but it was after the Zhanzhang Dahui 站长大会 — the website master conference that you guys decided to work together to do this.


HANS TUNG: It was 2005.

DAVID LI: 2005, yes.

ZARA ZHANG: Why did you call the company YY? Because the Chinese name is Huanju Shidai 欢聚时代, which means “happy times.”

DAVID LI: YY is from the Chinese acronym as Yuyin 语音.

HANS TUNG: Okay, as in voice, messaging.

DAVID LI: We use voice, language, yes.

ZARA ZHANG: So it started out as a voice chat tool.

DAVID LI: Voice chat. We began with voice chat, yes.

ZARA ZHANG: And how did the product evolve over time?

DAVID LI: I think after that it was automatic, because at that time all the people in my office were playing games after work and we ended work at 9:00 p.m. and we began to play games together until midnight, so we’d talk to each other and playing games together. The whole company would be playing games together, so we found that some people were not in the office, it was very difficult to communicate with them.

HANS TUNG: Different locations.

DAVID LI: Yes, we found that it had a huge demand. It was also from the idea initially that we did not want to only provide information, but also wanted provide services, so we found that there was a very huge demand for that, so we changed it from the news media or media into a service provider company.

HANS TUNG: I remember there were other people trying to do this, including iSpeak, but you out-executed everyone else and you were not a first mover, but you ended up being the most dominant.

DAVID LI: We moved very, very early, but we did not have a technical, good engineer, so we found other people were growing very fast and we decided to move 90 percent of our money into that area.

HANS TUNG: Be serious about it.


ZARA ZHANG: So how did you think about monetization if you were a consumer-facing company in the beginning?

HANS TUNG: Back then a lot of people were worried that there was not enough internet advertising dollars in China, as you know. At the West Lake Sword Summit (西湖论剑) that Alibaba started in 2005, everybody was crying that there’s not enough advertising dollars, but through e-commerce and then virtual items, things changed very quickly. What is your experience with virtual items, virtual goods?

DAVID LI: It’s because I’m a journalist and I write articles, I did articles and media, I hate advertisements because advertisements do two things. The first is it disturbs the user’s experience and the second is they want to change our editorial principles. I think those two things are too bad and I know in the U.S. it’s called the firewall between the admin department and editorial department.

HANS TUNG: In each department, there’s a firewall.

DAVID LI: But I think I didn’t want to do that kind of business. You must cut yourself into two parts and fight each other. I think it’s not a good business or business model. I wanted to change the media business model, so at that time I said I would never sell any advertisement.

HANS TUNG: So how did you make virtual good work for voice messaging? It’s hard for people in the West to imagen how that could work.

DAVID LI: I did not want to build a business model like that because we had a lot of traffic, so we operated gaming by ourselves. That was my plan. I think many media managers that repeat a very old business model like the newspaper with advertisements, and magazines with advertisements and portals with advertisements.

HANS TUNG: Advertising was out, but how did you make virtual goods work for you as a monetizing tool?

DAVID LI: At that time I didn’t know if it would work or not work. I didn’t even know that here was a business model with virtual gifts, but I knew exactly a business model gaming platform. I had a gaming platform and I could run gaming myself. So I got enough revenue from gaming. Actually, we got a huge revenue gaming at that time.

HANS TUNG: You just published new games and some of the games were time-based and you’d time fees for that or some of it within the games would have virtual items to supply weapons and so forth.

DAVID LI: Yes, we ran the gaming business ourselves, so we did not sell gaming advertisements to other companies. If you want to get money from our platform, you give your game to us.

HANS TUNG: To operate?

DAVID LI: We’ll operate the game. As you know, many media managers do not want to touch the real business.

HANS TUNG: The operations of the games.

DAVID LI: Yes, they think, “Oh, I’m a newspaper man. I should not do things, operations, such heavy operations,” but I wanted to do that.

HANS TUNG: You don’t care, yes.

DAVID LI: Yes, I wanted to do that, because I’ve seen the volume of traffic. If I do advertisements, I think maybe I can get $100, but if I run the gaming myself I will get 500 in revenues, five times.

HANS TUNG: Five times more.

DAVID LI: Actually, it’s five times.

HANS TUNG: So when you first start monetizing, you’re doing it from operating your own games or other people’s games. Then how did you decide that virtual goods like gifting could be monetized, too, and how big did I get?

DAVID LI: We were never thinking about that, because at that time many people would sing songs on the YY platform.

HANS TUNG: Yes, not just games anymore. They were singing songs, too.

DAVID LI: Yes, they would sing songs, too. So we thought, ‘Could we rank a singer? We do not know, because people always find the better singer.’

HANS TUNG: Right, they always hear from the other singers.

DAVID LI: We had maybe thousands of singers there. How could we rank those singers? So we provided free voting rights for every user.

HANS TUNG: To vote?

DAVID LI: Voting rights, one vote per month, so in one month you’d only get one vote, so you could just vote for a singer. It’s free, but you can only get one. After maybe two or three months, we found many people would sell those votes.

HANS TUNG: To someone else for money?

DAVID LI: No, in Taobao 淘宝.

HANS TUNG: In Taobao 淘宝? Okay.

DAVID LI: Yes, and the Taobao 淘宝price at that time was RMB 2.5.


DAVID LI: Per vote. And it was very bad for our platform because there were many viruses or hacking attempts to try and steal the user accounts. They were trying to use many ways to get to the user accounts.

HANS TUNG: To get the votes?

DAVID LI: To get the votes, yes, and so we wanted to compete with the hackers.

HANS TUNG: So the black market.

DAVID LI: So we decided to sell the vote.

HANS TUNG: On your own platform?

DAVID LI: On our own platform, yes, and we dropped the money to RMB 1, so while they were selling for RMB 2.5, we sold for RMB 1.

HANS TUNG: And it’s safe.

DAVID LI: And it was a safe way, yes. That year we had a budget for RMB 4 million in revenue from the sale of the votes.

HANS TUNG: This was in 2009 or 2010?

DAVID LI: 2010, yes, but actually we got 40 million.

HANS TUNG: 40 million, 10 times, from just selling votes.

DAVID LI: Just selling votes.

HANS TUNG: Was there a limit to how many votes people could buy per person?

DAVID LI: No limit, because if you limited it, they would’ve stolen others’ votes.

HANS TUNG: It would tempt them to steal. That’s true. Hack the accounts. What was the most amount of votes sold that year in 2010?

DAVID LI: It was 40 million.

HANS TUNG: That was the total, but per user, per buyer?

DAVID LI: We don’t have accounts for that.

HANS TUNG: If you had to guess, what do you remember?

DAVID LI: At that time we did not have an account for that because we just wanted to make the hackers leave our platform. We did not think it’s a very big revenue.

HANS TUNG: Big business, yes.

DAVID LI: Because we working very hard on the operation of games just like Tencent does today.

HANS TUNG: Then how did you move from votes to gifting virtual goods like – what am I talking about?

ZARA ZHANG: Flowers, race cars.

HANS TUNG: Flowers, race cars.

DAVID LI: It was a natural growth, yes. Because people would say, “It’s a vote. I vote. I want to see a thing where I see I’ve already voted,” so we made an icon. If you voted, that icon would appear. If you voted twice, the icon would appear twice. That was the beginning.

HANS TUNG: But what’s the most expensive icon that that user ever bought and gifted?

DAVID LI: I forgot.


DAVID LI: I don’t care.

HANS TUNG: It’s very interesting. I want people to know how big it is.

ZARA ZHANG: How much is the race car?

DAVID LI: I do not know.

HANS TUNG: I’ve heard a million RMB before.

DAVID LI: I do not design that business.

HANS TUNG: I’ve heard as much as a million RMB of virtual gifts bought and gifted. RMB 1 million is what I’ve heard.

DAVID LI: I don’t know. I don’t care about revenue.

ZARA ZHANG: In 2017, YY derived 92 percent of its revenue from livestreaming. Could you talk about your view on the livestreaming market both in China and in the U.S. is, and how it developed differently?

DAVID LI: I think the livestreaming business will be very huge in the future because, as you know, no TV can interact with a single person so that its audience, its viewers can get involved in a program or event. That’s very important. That’s the difference between the computer and TV.

ZARA ZHANG: Yes, engage.

DAVID LI: Still today it’s growing very fast, yes.

ZARA ZHANG: Why do you think the virtual goods model really took off in China before it did in the U.S.?

DAVID LI: I don’t know why that would take off. I just gave a free vote. I don’t know, but it’s a huge business revenue mode, yes.

ZARA ZHANG: So how did you first meet Jenny?

DAVID LI: Jun Lei 雷军 introduced Jenny to me.

ZARA ZHANG: And what did you talk about when you first met?

DAVID LI: At that time our revenue wasn’t growing fast enough. Our user base was growing very fast and we believed that if we operated the games and provide the games ourselves, we would get revenue finally, yes, very simple.

HANS TUNG: It’s a very interesting. Jenny invested in YY and UC Web; I invested in Xiaomi and Vancl 凡客, so together we have the entire portfolio of the best of Lei Jun’s companies and obviously Morningstar has all of them. It’s a very interesting time to see all businesses grow and expand.

ZARA ZHANG: As we all know, any content or media company in China has to adhere to Chinese government regulations and how much does YY spend on regulating its content?

DAVID LI: I think, in the early stage, we were very working very hard to try to manage the content, but till now I think it has been very simple, because we have technology growing very fast and we’re doing very few things manually and just leave the machine to do that for us, yes.

ZARA ZHANG: When YY went public in New York in 2012, there had been a decrease in Chinese IPOs in the U.S., so in 2010 there were 41 Chinese IPOs in the U.S. and in 2011 there were 12, and in 2012 before YY went public there has been only one, which was VIPshop. So why did you choose to go public at this particular time?

DAVID LI: I think as a good CEO you should not focus on revenue; you should not focus on the market price. I think when we built this company, we just wanted to provide information and services. We wanted to provide information and services. We did not want to make money too much. We did not focus on making big money. As you know, we did not want to make money from virtual gifts. We just wanted to provide a free vote. So I think the most important thing for me is to decide what we should be after maybe five or 10 years, and then come back to today and see what steps, the first steps I should take to get to that global target.

HANS TUNG: You’re one of the very few China that can start multiple companies and then have them be listed. You started YY and listed that. You spun off Huya 虎牙and listed that. Both of them are at about $8 billion in market cap, those two companies, and you also spun off BIGO for the Southeast Asian market. YY and then Huya 虎牙 were for China. Kind of explain your strategy of why these different business? Why not have all of them in just one company and what is your thoughts on geographic expansion beyond China?

DAVID LI: I think any good company should not spin off many businesses. It will crowd business into a very big company to get more advantage, but we spun off BIGO and Huya because we met some problems. As for Huya 虎牙, because we needed the coverage with Tencent 腾讯. As you know, YY has competed with Tencent for over 10 years, so it’s very difficult for us to cover it with Tencent, but Huya is different. So we found a way to spin off Huya and, like Huya, to have a coverage with Tencent 腾讯. It’s very important for the competition.

HANS TUNG: How is the Huya 虎牙 business different from the YY business?

DAVID LI: Huya’s business is highly dependent upon the gaming content. If the gaming company does not cover it with us, it becomes very difficult to do this with us.

HANS TUNG: For people who don’t know what Huya 虎牙 is, can you explain what Huya 虎牙 does?

DAVID LI: I think the initial idea of Huya 虎牙is gaming content of the livestreaming area, but after it grows again we found that Huya 虎牙 will be a total solution for esports, online esports. So when we founded this, we found that it’s a very huge market.

HANS TUNG: Esports are all game-related and Tencent, the largest game publisher in China, so you had to figure out all that.

DAVID LI: I had an idea that wasn’t sports-selected media. It was media-selected sports. That means if you have a newspaper, maybe you can support some kind of sports. If you have a television channel, you can maybe support sports.

HANS TUNG: Get rights to broadcast on the sports.

DAVID LI: Yes, you can support soccer. You can support basketball.

HANS TUNG: Basketball or football.

DAVID LI: But if you a newspaper, maybe you can support Go (the chess game). So the different media make a difference in popular sports.

HANS TUNG: Online gaming.

DAVID LI: I think in the internet era, online gaming or online broadcasting will make different kind of sports popular. So, after maybe five years, we will already see the live broadcasting of gaming become a part of gaming. You cannot separate the two things anymore. Gaming and gaming broadcasting will be combined together and become a huge business.

HANS TUNG: People don’t just play games themselves anymore. They want to watch other people who are very good at playing games to play games online and watch it from afar.

DAVID LI: We see this trend and Tencent 腾讯also sees this trend.

HANS TUNG: Right, so that’s the basis for guys to collaborate.

DAVID LI: If we don’t collaborate with Tencent 腾讯, we will fight with Tencent 腾讯, but we think we’ll only get the live gaming broadcasting. We don’t have the time to build up so many games. Tencent 腾讯 have games. They also need game broadcasting to combine with that business.

HANS TUNG: Yes, make it even bigger.

DAVID LI: Yes, so some people say that Tencent 腾讯 needs a gaming broadcasting company to combine with it – I don’t think so. They need all the gaming companies to combine together.

HANS TUNG: Right, so Tencent 腾讯 is an investor in Huya. It’s also an investor in Douyu as well. Douyu has a similar business model as Huya 虎牙. Both have attempted the Twitch model. Is the market big enough to have both Douyu 斗鱼 and Huya 虎牙 and others do well?

DAVID LI: No, I think the final situation is Tencent games will combine with Douyu 斗鱼and Huya 虎牙together and form one whole.

HANS TUNG: As one big company?

DAVID LI: One big company. This company will also make games and game broadcasting just like you own NBA teams and own ESPN. You make all those things together as a very powerful ecosystem.

HANS TUNG: You’ll all play across all Asia. Interesting.

DAVID LI: Yes, that’s the future.

HANS TUNG: Does Tencent know that that’s how you feel?

DAVID LI: They know that exactly.

HANS TUNG: Right, so interesting time I had.

ZARA ZHANG: And just to give some context, in Q4, 2017, Huya had 610,000 monthly active streamers, which was more than 550,000 that Twitch had, and China is, by far, the largest gaming and esports market in the world with approximately over 200 million gamers in 2017 and the market is expected to reach 537 million gamers by 2022, and the market brought in over $100 million in revenue last year. So, going forward, do you think the esports market will grow faster in China than elsewhere in the world and why?

DAVID LI: If you were to look at a single game company, it will ever exceed the skill of the gaming platform, just like a single game cannot be bigger than Steam, but I think after Steam, the gaming broadcasting platform is the exactly the next generation of Steam.

HANS TUNG: That’s Twitch and possibly even Discord.

DAVID LI: Yes, Twitch, Discord and the gaming, they will combine together, finally, to build a very compact and powerful entertainment company.

HANS TUNG: So internationalization or global expansion – what was the motivation behind spinning off BIGO?

DAVID LI: Yes, we spun off BIGO because at that time we wanted to provide a free internet call service, but this was free internet calls and we lost too much money.

HANS TUNG: Okay, I remember.

DAVID LI: I lost $50 million in 10 months.

HANS TUNG: It was a lot.

DAVID LI: It was huge, I remember. So before we began to burn money on that business, we already knew that that business is too heavily dependent upon money. So we’d spin it off and get money from an outside investor, and then try to bring money into that business.

HANS TUNG: Is it still burning a lot of money today?

DAVID LI: No, we stopped after we burned $50 million. We found maybe it’s endless burning.

HANS TUNG: So what is it doing now?

DAVID LI: We closed that business.

HANS TUNG: BIGO is closed?

DAVID LI: No. The free internet call business in BIGO is closed.

HANS TUNG: So what’s the core business in BIGO today?

DAVID LI: It’s growing very, very fast. As you know, in four months we grew from zero to 10 million users.

HANS TUNG: Okay, this is free internet call.

ZARA ZHANG: Livestreaming, right?

DAVID LI: Free internet calls.

HANS TUNG: So what is it doing today now that you don’t have free internet calls?

DAVID LI: Because we probably invite too fast. We needed two things. The first thing is we do not have too much money to spend on an item, because it’s a startup company and we do not have time to build a monetization method in that business, but we’re burning into it and accelerating, as you know, in four months from zero to 10 million daily active users.

HANS TUNG: It’s amazing.

DAVID LI: It’s a historical record.

HANS TUNG: Yes, it’s amazing. So what does BIGO do today if free internet calls is not offered anymore? What is it doing today?

DAVID LI: After that business we closed that project, yes, we began to wonder we should do, because we still have maybe 30 or 40 million in cash in hand. So we changed it into an overseas livestreaming business.

ZARA ZHANG: And it’s currently one of the top 10 apps in the social networking category on iOS, not just in Southeast Asian countries, but also Saudi Arabia, Pakistan and New Zealand.

DAVID LI: Yes, because we’re very familiar with that business, yes.

ZARA ZHANG: But were you familiar with those markets?


ZARA ZHANG: So, how did you go about expanding this?

DAVID LI: I think for an internet company, if you make business too much about culture, you cannot expand it to the world very fast.

HANS TUNG: That’s right, yeah.

DAVID LI: So, we do not want to touch anything related to culture. We just do things related to tools, so we’re working very hard to provide tools.

HANS TUNG: What are the most popular forms of content or categories of content on BIGO, on BIGO LIVE right now?

DAVID LI: It’s also very much like YY, singing, talking, talk shows and etc.

HANS TUNG: Will you ever have YY acquire BIGO?

DAVID LI: YY already has an option to buy, a deal with BIGO, yes.

HANS TUNG: To buy 100 percent or just controlling stake?

DAVID LI: Controlling stake, yes.

HANS TUNG: And you will let BIGO IPO on its own?

DAVID LI: A month ago we invested $255 million.

HANS TUNG: $255 million invested already.

DAVID LI: Invested already in BIGO, yes. Our management team and I invested 70 million.


DAVID LI: Combined, we raised 320 million.

HANS TUNG: 320 million. Will BIGO eventually IPO on its own or will it be acquired by YY later do you think?

DAVID LI: I think based on the valuation maybe YY does not have the ability to acquire BIGO anymore.


DAVID LI: Maybe, because BIGO’s business is growing very fast.

HANS TUNG: And its monetization is also through virtual gifting.

DAVID LI: Yes, it’s from virtual gifts.

HANS TUNG: That’s impressive. Beyond Southeast Asia, will BIGO go to the rest of the world like Latin America, Europe and other places?

ZARA ZHANG: It’s already in the Middle East, very big in the Middle East.

DAVID LI: I think that you know that the China’s internet market invents many things. I think many Internet concepts invented in China will go overseas finally, so we were just one of them.

ZARA ZHANG: Now we’re going to move to the quick-fire round of questions. The first one is who’s the entrepreneur you admire the most and why?

DAVID LI: I don’t know the name of the entrepreneur I admire, but I know what he has done, the founder of Wikipedia, because he built a platform and this platform has in the end benefitted human beings.

ZARA ZHANG: And it’s self-sustained.

DAVID LI: Yes, he has a similar idea to mine. He also hates advertisements.

HANS TUNG: Yes, they get by on donations.

DAVID LI: Their business model is very simple. It gets donations and they open that donation link maybe for two weeks every year.

HANS TUNG: Every year, that’s right.

DAVID LI: A lot of the times the donations will close. If you want to donate to Wikipedia, you should wait.

HANS TUNG: I have to say BIGO is very well-designed. I have seen many livestreaming apps before. It has a lot more variety of things to do on BIGO. I can see why it is popular. Good job.

ZARA ZHANG: What’s something you read recently that you recommend?

DAVID LI: I read a lot of things about blockchain, books on blockchain. I think maybe blockchain will change the internet landscape. Even today blockchain has a bad reputation because of the encrypted currency, but we find that based on blockchain you can build a brand-new platform that belongs to nobody.

ZARA ZHANG: Decentralized, yes.

DAVID LI: It’s very important, just like Wikipedia. Wikipedia should belong to nobody. Yes, no one can control that. No one can own that. No one can themselves benefit. So I think blockchain gave the internet a new opportunity to build a totally different platform. We’re working very hard on it.

ZARA ZHANG: What do you do for fun?

DAVID LI: I think that everyone should have a long-term hobby, yeah, because if you can’t do nothing, you’ll have a hobby.

HANS TUNG: What’s your long-term hobby?

DAVID LI: I have many hobbies.

HANS TUNG: You love plenty of things.

DAVID LI: Yes, I love riding motorcycles.

HANS TUNG: Yes, you do.

DAVID LI: But I have broken my legs, yes, so I’ll change to another one.

ZARA ZHANG: So motorcycling. Do you like the outdoors, too?

DAVID LI: I like motorcycling and I like to drive a car to climb mountains. I like fishing.

HANS TUNG: Yeah, there’s a lot of your video and photos in that.

DAVID LI: I like ball shooting. Many things, yes.

HANS TUNG: Thank you very much for coming.

ZARA ZHANG: Thank you.

HANS TUNG: We had a lot of fun.

DAVID LI: Thank you, guys.

HANS TUNG: Thanks for listening to this episode of 996.

ZARA ZHANG: GGV Capital is a multi-stage venture capital firm based in Silicon Valley, Shanghai and Beijing. We have been partnering with leading technology entrepreneurs for the past 18 years, from seed to pre-IPO. With $6.2 billion in capital under management across 13 funds, GGV invests in globally minded entrepreneurs in consumer, new retail, social, internet, enterprise, cloud and frontier tech. GGV has invested in over 290 companies with more than 45 companies valued at over $1 billion. 29 IPOs and 22 unicorns. Portfolio companies include Airbnb, Alibaba, Ctrip, Didi Chuxing, Domo, HashiCorp, Hello-Bike, Houzz, Keep, Slack, Square, Toutiao, Wish, Xiaohongshu, YY and others. Find out more at ggvc.com.

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HANS TUNG: If you have any feedback on this podcast or would like to recommend a guest, please e-mail us at 996@ggvc.com.