Interviewed by Hans Tung and Zara Zhang.
GGV Capital’s Hans Tung and Zara Zhang interview George Yan (严治庆), the founder and CEO of Clobotics, (扩博智能). Founded in 2016, Clobotics is a computer vision startup that seeks to make traditional industries more intelligent. It is headquartered in Shanghai and Seattle with offices in Beijing, Dalian, and Singapore. It currently serves two industries: traditional retail and wind energy. Clobotics owns over 40 patents and has raised $21 million in VC funding. GGV was an early investor in Clobotics in 2017, and our managing partner Jenny Lee is on the board.
Prior to founding Clobotics, George spent 16 years at Microsoft in the US and in China. As the vice president and general manager of marketing and operations for Microsoft Greater China, he contributed to the double-digit growth for the region’s $3 billion business. He was also responsible for the inception of Microsoft Cloud business in China, and led a massive team in landing Microsoft Azure and Office365 in China within less than 10 months, making Microsoft the first world-wide cloud service provider to land its service in mainland China. Before Microsoft, George worked at Goldman Sachs and McKinsey in the US. He holds a master’s degree in financial engineering from Columbia.
George discussed how to find the “right timing” to leave big tech companies to become entrepreneurs, the lessons he drew from helping Microsoft land in China, and what it’s like to run a startup that is global from Day One.
Zara Zhang: Hi everyone. If you will be in Las Vegas for CES, the Consumer Electronics Show, on January 8th, we would like to invite you to the 996 CES meetup. Join GGV Capital, our co-host ZhenFund, global founders, and world class leaders for an evening of cross-border networking, insights, and fun. Our managing partner Hans Tung will have a fireside chat with exclusive VIP guests you won’t want to miss. For more details and to register for the event, please visit ces.ggvc.com. And this is a reminder that all of our events and meetups are announced in our WeChat groups and Slack community. I highly recommend joining these groups by visiting https://nextbn.ggvc.com/engage/
Hans Tung: Hi there. Welcome to the show, where 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 an investment analyst at GGV Capital and a former journalist.
Zara Zhang: On the show today we have George Yan, or Yan Zhiqing 严治庆 in Chinese, who is the founder and CEO of Clobotics, or KuoBo ZhiNeng 扩博智能 in Chinese. Founded in 2016, Clobotics is a computer vision startup that seeks to make traditional industries more intelligent. It’s headquartered in Shanghai and Seattle with offices in Beijing, Dalian, and Singapore. It currently serves two industries, traditional retail and wind energy. Clobotics owns over 40 patents and has raised $21 million in VC funding. GGV was an early investor in 2017, and our managing partner Jenny Lee is on the board.
Hans Tung: Prior to founding Clobotics, George spent 16 years at Microsoft in the US and China. As the Vice President and General Manager of Marketing and Operations for Microsoft Greater China, he contributed to the double-digit growth for the region’s $3 billion a year business. Jenny and I have known him for over 10 years. He has also been responsible for the inception of Microsoft cloud business in China and led a massive team in landing Microsoft Azure and Office 365 in China in less than 10 months, making Microsoft the first worldwide cloud service provider to land its service in mainland China. Before Microsoft, George worked at Goldman Sachs and McKinsey in the US. He holds a master’s degree in financial engineering from Columbia. Welcome to the show, George.
George Yan: Thank you. Thank you, guys.
Zara Zhang: The majority of your career was spent at Microsoft. What was it like to help a US company run its China operations? And what lessons did you learn about how US companies can go to China?
George Yan: It was a great experience running the Greater China team. Basically, I’m an engineer and I was born an engineer, so having that engineer discipline and attention to details and the logic to apply to a business world, I found myself able to transition into that role pretty naturally. But the business is so vast for Microsoft. The portfolio extends from the consumer business to hardware to services to cloud to licensing etc., and that gave me a great view of all aspects of the business, as well as how we would need to tweak different knobs to make each one of the businesses successful. So I found that that type of experience was super helpful to lay the ground for me to jump into the startup world.
Zara Zhang: I wanted to dive into the details. How did you manage to launch Microsoft Azure and Office 365 in China within such a short period of time? And how did you deal with the regulatory challenges?
George Yan: I think with a lot of luck to be honest. It’s understanding the Microsoft ecosystem, the business, the technology behind it. By spending a lot of time on the engineering team in the US, I vastly understood how an engineering product needs to shape itself to be here in China. And spending more than 10 years in China, I have a good feel for what the government and the regulators are looking at when a multinational like Microsoft wants to land a service in China. Also, that was the right timing for China getting a lot of weight behind the cloud, and the infrastructure of the internet booming, and wanting to have a multinational cloud provider here to be in the playing field. So I think we were lucky that we were at the right time, the right place, with the right people, and able to be very level-headed with the government about what it takes and how we would need to shape our technology and change our features and write our code differently in order for the product to be localized and able to operate here in China.
Zara Zhang: So could you talk about Clobotics? Just give our listeners an overview of how it’s helping to transform traditional industries.
George Yan: Sure. On the retail side, we’re focusing on digitized products. We think that offline retail today is unfairly challenged because it’s really hard to connect the people with a product in the retail store. And how would you connect those dots through the product in the middle? Recognizing the product is a very hard problem because, at any given time, there are hundreds of millions of different products out there in the market. So how can a person recognize their product so that they can have the interaction that you have so naturally online but don’t have offline? We believe that’s the problem that we want to solve. Digitizing the physical world starting with retail products. And once you do that and once you can build customer interaction building to business interaction with a product, then you have a very different model for how offline retail generates their revenues going forward.
Zara Zhang: So what does your product look like in the store and who uses it?
George Yan: If you were to go into a Walmart store or even a mom-and-pop store in Xi’an, likely when you open up a Coca-Cola fridge, you will see our IoT device stuck on the door. Basically, it’s two cameras looking in so they will understand what products have been taken out of the shelf. And we do local processing on the edge. So there’s a small on the edge chip that does deep learning algorithms to recognize what products been taken. Only the bits that change get sent back to the cloud, but at the headquarters, you’re able to see all the product movements in over a million or a million and a half coolers out in the market. So, basically, giving the headquarters that transparency and that view into how these point of sales devices are working at real time.
Hans Tung: Traditional retail and wind energy are two very different markets. What’s the commonality between the two that allows you to build a product that can service both? And at some point in the future, do you have to choose which one to focus on more?
George Yan: That’s a very good question. That’s the question that keeps me awake at night. Essentially, when we got into this business, we saw that the fundamental technology blocks are the same. It’s going to be hardware, it’s going to involve some type of software, it’s going to involve computer vision, it’s going to involve automation. And we fundamentally believe that these technologies should be applicable in very different industries. We went into wind energy first because we had backgrounds in drones, in hardware, and also in computer vision. So entry into that space gave us that natural barrier and the acceleration that we needed to be number one in the market.
So, after two years in this industry, we shipped our first product, and we’re already the China leader in doing autonomous inspection for the wind turbine industry. When we look at the second industry, we see that the retail industry is a trillion dollar industry with still very little technology. And we believe that if we can provide the technology for the offline retailers and the CPG companies, they will use that as tools and weapons to actually have a fair fight against the guys like Amazon, etc. So we want to see how this industry will get shaped in the future, but that takes a longer time. And in order for us to be there when that battle happens, we’ve got to make sure that we can survive on this revenue stream and be a leader in certain spaces that we are sure of. So we look at wind turbine as more of a defensive play. We look at the retail space as an offensive acceleration play for the long term.
Zara Zhang: So what kind of industries will you go into next?
George Yan: We have plenty of things on our plate for us to chew. Our goal is to be number one in those two fields, and I think it’s going to be a while before we can pat ourselves on the back and say we are. So we’re not looking at a third industry. Our strategy is to have a defensive play and an offensive play, and that’s already complete. And we just have to go super deep in these areas to see how we can help these enterprises to extrapolate better value and better productivity from it.
Hans Tung: Do the wind energy companies have more money to pay you?
George Yan: They do have a pretty significant budget for the operations and maintenance area. This is actually a $25-billion market, and there’s 450,000 turbines worldwide. So if you do the math, that averages out to $65,000 that they spend on operations and maintenance alone per turbine per year. And today, we’re only scratching the surface. We’re only getting $300 out of that $65,000 that they’re spending. So there’s a lot of technology innovations that we can do to make sure that we get a larger pie. And also the pie itself will get bigger as the technology innovations happen in the wind turbine industry.
Hans Tung: So what’s preventing you from just focusing on that first?
George Yan: Again, it takes time for a commercial business to really accelerate. And for us to do that part well, we have already taken the right set of groups to be able to churn and move forward. This is not a game where if you have 10 people, you can go to 10 turbines, and if you have 100 people, it’s 100 turbines. It’s actually just that core set of people that’s churning at the customer sites and fixing bugs and improving products etc. So we’re not increasing the team. We’re just accelerating and making sure the product gets better. And that time is not going to go away by adding people. So for us, we know the trajectory is there and we will have to go deeper. By going in deeper, we’ll just have to take that time.
Zara Zhang: Could you talk a little bit about your technology and how it’s differentiated from other solutions?
George Yan: The requirement for our technology on the retail side is scale. Anybody today can take 10 or 20 pictures, do some labelling, put it into an auto ML engine from a large company, and turn out a fairly decent model that can get 90% or 95% accuracy. But that’s not interesting. It’s great for a demo, but it doesn’t work in a real environment. We’re talking about millions of products that we have to recognize. And on a weekly basis, there are hundreds and thousands of products that get updated, so new things that you have to recognize. So the platform that you provide to capture those images, label those images, find the SKUs that you’re looking for, then building the models and pushing the models in a very small form factor, into IoT and into your devices, that’s our bread and butter. And that’s something that’s really hard to chase or to leapfrog. I always use an example of the things that we previously did at Microsoft. During the search war, we always thought that with more money, with more hours, with more talent, we’d be able to catch up with Google. But we found that that was not the case because that was a data game. They were in the market first.
Hans Tung: They had a lot more data than you.
George Yan: Exactly. So it doesn’t matter how much talent and how many hours you add onto it.
Hans Tung: Right. You’ve got to have the data to train your algorithm.
George Yan: Exactly. So we believe for us today, we saw this big problem and we’re in there first. We’re capturing data. We’re building better algorithms around it. That gives a first mover advantage for us to scale many, many, many years later on.
Zara Zhang: Clobotics is only around two years old, but it already has offices in five cities across three countries. Why do you want your business to be global from day one?
George Yan: It’s all about talent. I think that talent from multiple different backgrounds coming together will come up with sparks, and these are the insights that I want when we build the team together. And by running global development teams for Microsoft for many, many years, that’s just part of our DNA. And that gives that “unfair advantage” of having the best people in the US and in Asia and in China etc. all coming together and working on the pieces that they’re good at. And today, machine learning, AI in general, is a super hot market, so being able to tap into other markets that haven’t been washed through multiple times gives us an advantage, from a resource and economic perspective, over some of the competitors as well.
Zara Zhang: Speaking of talent, you guys have a killer engineering team. Around a quarter of them hold a PhD degree, and over 80% of the team overall has a master’s degree or higher. Many team members come from prestigious Silicon Valley companies like Microsoft, Google, Amazon, Facebook etc. What tips do you have for recruiting technical talent in China? And when you pitch Clobotics to these talents, what do you use to convince them?
George Yan: I sell them our Clobotics dream but in Chinese, so they understand that we’re about staying here but we can also go global. And the dream has to resonate. I tell the person to close their eyes and imagine the offline retail industry five years from now. If a person walks into a store and the store is no longer aisles after aisles and racks after racks, it’s more of an experience play. When you put on your AR glasses or when you look through your mobile phone, that table in front of you with multiple products now suddenly starts talking to you, starts giving you more information, starts to tell you that there’s alternative products that you can get as well. And by clicking it, you’re getting more personalized information or personal discounts. That’s where I see the offline retail space going. Does that person want to be part of that journey? Does that person want to tell their son and daughter that their father or mother was part of that journey, was part of the mission that changed how the retail industry worked? We believe that if that resonates with a candidate, then more than likely I’m going to get that candidate to join us.
Hans Tung: In my almost 20-year career in VC, I’ve met many professionals with amazing backgrounds in multinational firms for a long time. Most of them who work in the US tend to stay in the US. And the ones working in China tend to stay in MNCs for a long time as well. So when you and your co-founders, who come from being in multinationals for such a long time, came to do a start up, what changed for you? What was the thing that switched for you to decide to take that risk after all these years? And then, as you start building a company — you’re no longer part of Microsoft, no longer part of a big company; now you have to sell yourself and build your own brand — what are the lessons, both on the positive and negative side, that you can share that will be helpful to our audience?
George Yan: I think the most important takeaway through my two and a half years in the startup world is I started to recognize that I know nothing. And that’s super, super key for a person to be able to face themselves and admit that you know nothing. If you’re a large fish in a small pond, you get into a position where you think that you know everything. You can execute, you can do anything with your eyes closed. And that’s no longer interesting. So get yourself out of that comfort zone into a newer space because there’s a bigger world out there.
Hans Tung: But a lot of people don’t want to do that. They enjoy being a cog in the machine at a multinational firm where they know exactly what to do and get paid well doing it. What changed for you and your co-founders?
George Yan: I think we’re just built differently. There’s going to be lots of these people that are built differently. If you look at the CEO, same thing, right? I think it just takes a special breed of people that become CEOs. Not everybody is fit for that role and we’re okay with that. We recruit a lot of people from multinationals and sometimes they say, “You know what? I like my comfort zone. I’m going to stay there.” That’s totally cool. But out of 10 people you talk to, you’re going to find one or two people that have that spark. All you’ve got to do is give them that nudge and they’re going to leave that comfort zone and join us. And the experience that they get in the next two or three years is going to be totally different. It’s an eye-opening experience for that person, I guarantee it.
Hans Tung: Any specific incident you can recall that changed for you personally?
George Yan: Yeah. It was actually at the GGV LP event four years ago. I was sitting at the back table looking up at the startup CEOs giving speeches. Some of those guys are great at articulating their mission. Others not so good. But you can feel the passion that they have in the way that they’re telling the story. And I looked deep down into myself and said, “Okay. Am I just going to be a person who has a fast track to the C-Suite in a large company? Or do I want to do something bigger?” And when I said that to myself, I felt like I also had a mission. I also had a vision where I could digitize the physical world. I’m willing to converge the two together. And I have the talent, I have the tools, I have the people, I have the support, I have the worldview to make that happen. So why not take the plunge and try it?
Hans Tung: That’s a good tip. For our next annual meeting, we’ll make sure we have the future George Yans and the Claire Chens of the world come to our event and be motivated.
Zara Zhang: What was your biggest challenge once you came out of a big company and started to pitch yourself? What kind of challenges did you face?
George Yan: I think it’s about being able to recognize that now without the big brand, without the reputation, people are going to look at you a little bit different. You have to be okay with that. The pride or the extra accessories that you had with a large company, all that stuff goes away. Today you have to build that reputation. You have to use both your hands, roll up your sleeves with your co-founder and do it from the ground up. And that realization was a shock to me. When you’re going to places where people roll out the red carpet for you, you have time scheduled for you etc., and everything now you have to do it on your own. That shock took five seconds. After that you know that you’re in a different place, the battlefield’s different, the things you do have to be different. The agility of adjusting yourself for the new environment, I think any startup CEO needs to have that and have it quickly.
Zara Zhang: You have so many offices across so many geographies. How do you divide up responsibilities across them and how do you minimize the communication costs?
George Yan: We try to build these themes, a group of folks that are deep in certain areas. And we try to hire around the leaders. For example, the head of our US office is a renowned computer vision scientist and has been in the startup world as a CTO. So we build computer vision capabilities around him. And you can see that, because he has gone down the path previously, the senior talents and the junior talents and also the fresh hires and the interns can all start to come together in that area. So we’ve become this pot of folks who are very deep in certain areas. If you look at our China infrastructure team, these guys are ex-startup or ex-Internet guys, so they know how to quickly roll out a platform and scale to millions and millions of services over a very short time. So we try to go where the talent is and try to hire around where that talent pool has the right DNA and build from there.
Hans Tung: You have had exposure to both B2B and B2C business models. When you guys were thinking about Clobotics, what made you decide to do this model that’s 2B in nature?
George Yan: I think in China, the previous internet or mobile internet etc. has been a rush of consumerization of online spaces. And, to be honest, that’s not something I’m very good at. It’s not in my DNA. I’ve been on the enterprise field for all of my career and I keep on watching and waiting. I believe the next wave of change is going to happen on the B2B side. And it’s going to happen with deep technology companies that can help push the business model, working with the traditional industries to help them transform. That’s where my bread and butter is at. You’ve got to do something that you’re good at in a place where all the cards are stacked against you, so we’ve got to find the things that we’re most comfortable with. It’s global, it’s deep technical, and it’s able to scale into services that other people can’t.
Hans Tung: Knowing what you know now, when you look back at your career in Microsoft, what things do you think you learned that help you do what you are doing today? And what skill sets do you wish you had learned, either on your own or through elsewhere, that would have better prepared you for the role you have now?
George Yan: That’s a very good question. We were just talking about that in the team yesterday. I spent 12 years on the Microsoft engineering team. I believe I spent a little bit too long of a time there. I would cut down to about eight years so that I learned how to build a product a couple of times and how to scale a product. And I would leave the last four years to go to a company like Alibaba. Because I believe in the earlier days of Alibaba, the agility for you to change, the ability for the pressure to be on a person to deliver, and then to be versatile enough to be in different roles, that type of pressure is what I’m experiencing today. And I’m learning from scratch. But if I had that company where everybody had similar values and everybody had a similar movement, I believe that I’d be more prepared, that I would have a better preparation for where I’m at today.
Hans Tung: That’s very good advice for our audience. Thank you.
Zara Zhang: What advice do you give to entrepreneurs who are debating whether they should train at a big company first or just jump straight into starting a company?
George Yan: Just from my personal experience, I think that training in large companies— I look at Microsoft as Huangpu Junxiao 黄埔军校. This is a place where you can move into multiple roles. I started as a engineer, then I was in product management, then I ran a large engineering team, then I came to China, then I ran the China business. So large organizations are able to give you these multiple roles and you can excel in these roles. And if you think about it, it’s actually very low risk. You really don’t have much to lose by trying new things in large companies. You don’t have to worry about these 70, 80 people that are with you. You don’t have to be worried about their paychecks. It’s basically a free trial that you try to get as much out of as you can while in these companies. And you’ve got to tell yourself that once you’re ready, jump. Even if you think that you’re almost ready, jump. Because you’re going to have great VCs like GGV and Hans that can back you and help you to really close the last mile, to get you out of that door. Everybody needs a kick-in. And my kick-in is sitting at the GGV event. And sometimes you just have to look straight into Hans’ eyes and Hans says, “Go.”
Hans Tung: Or Jenny’s.
Zara Zhang: How did you know it was the right moment for you after spending so many years?
George Yan: It’s actually an evolution. It’s not a revolution. I’ve been preparing this thing for the three years, as I was talking about. I believe that the market, the technology, and my experience is now at the place where I think I’m ready. So it just becomes a natural progression of where I want to take my career next with the people that I enjoy working with the most.
Zara Zhang: So when you left Microsoft, did a lot of people come with you to join your new venture?
George Yan: For the record, no. I think you’ve got to have your own road. Once I’m on that road, once I’m telling people my vision, there’s other people, whether it’s in Microsoft or other places, who knew my reputation in the industry and decided that they want to share that dream with me. So everybody has to take their own path and it’s going to be a different timeframe. We welcome anybody from multiple backgrounds who share the same dream to come in at any time during the journey to be with us.
Hans Tung: I think your advice to get people who are working at big companies to take risks is very important. A lot people think going to a big company is where they’re going to end up and stay. So they’re actually afraid of taking risk, of losing their job. But if you view it as a training ground, battlefield practice sessions, you can actually learn a lot if you approach it with a different mentality and mindset.
George Yan: Exactly.
Zara Zhang: You have served a variety of roles in your careers, first joining the engineering side, and then going to the operational side, and now CEO. Could you talk about your takeaways from these various roles?
George Yan: These roles are different, but your fundamental principles and how you approach and solve a problem are the same. Coming from a technical background, you’re always very logically trying to dissect a problem into multiple areas, and doing tradeoffs, and making sure the logic supplies the decision-making process. I think that’s just built into me. And I’ve been trying to apply the same skill sets whether I’m in an engineering role or running a product or coming to China. But I quickly found out that in a startup world, it’s not always the case. Therefore I actually have a circle of ex-CEOs, or even CEOs that are currently serving today in companies that are smaller than me or bigger than me, that I talk to on a daily basis. We bounce ideas off each other to make sure that I don’t get blindsided by things that I’ve been avoiding or overlooked. I think that’s critical. Again, recognizing that you don’t know anything and building a vast support system around you for those guys to give you ideas and advice and even just challenge your strategy and decision-making process. I found that to be very, very helpful.
Hans Tung: As you were assembling your co-founding team, how did you think about who to recruit and what role they should be playing on your team? And how do you complement each other?
George Yan: I actually didn’t do any recruiting. Most of us had worked together for the past eight to ten years, so we knew each other well. We knew that once this co-founding team came together, we’d have a good chance of achieving something great. So it was a natural progression. And once you took the first step, everybody said, “We want to take the same step.” So it was a very natural path to get there. I think that’s probably one of the benefits for an older person like us, that we have that experience in large companies. So you have a track record. And a track record means a lot. So the advice I would give to the younger guys is make sure that you really cherish your reputation and your track record, whatever you do. Because all that stuff is going to add up and build who you are going to be later on.
Zara Zhang: You run a cross-border company across the US and China. How do you deal with the cultural differences and the communication costs? And how do you make sure everyone stays on the same page when you have such a diverse team?
George Yan: Write it down. A lot of times, by talking, things get missed. A person who’s not there gets missed. By passing words back and forth, things get missed. But once you write it down, it’s on paper. And you quickly realize that when you write things down, you actually have even more structured thoughts. Even things that you thought made sense don’t make sense on paper. So you actually spend more time tweaking it and doing more to make sure the ideas are solid. So we have a writing culture. We use Microsoft OneNote so everybody can contribute to the same service and we can see how our ideas progress over time. Writing it down is the top tool that I would recommend for everybody to do.
Zara Zhang: Do you think people work the same hours across your different offices or do you see a difference?
George Yan: Wow, the questions are getting harder. I think the hours are different, but people are constantly thinking about the problem that we’re solving. We don’t have office hours and we don’t have punch cards. We don’t track how long or how short people work. But you can see through the activities, whether it’s on WeChat or it’s on WhatsApp or on email, you know that people are constantly trying to solve a problem. And the problem’s not going to go away. So whenever you feel like you’re rested, whenever you feel like you’re ready, whenever you feel like the timing’s right, people will jump in. Because a startup is a self-motivating and self-driven service. It’s not just a paycheck. The paycheck that we give them today, any of these guys can walk out of here and go to a com company and get 2X and 3X pay. They’re not here for that. They’re here for that vision. So the faster that we can achieve that, the better prepared we can get, the better it is.
Hans Tung: How many people do you have in the US now?
George Yan: We have 12 people in the US. A lot of those guys are pretty senior, very seasoned guys. And, to be honest, those guys also have less financial burdens as well. So these guys, if they believe in your vision and they want to spend time there, the amount of productivity that they come out with is just going to be enormous. It’s going to be super cool.
Hans Tung: And how many people do you have in China?
George Yan: We have over 60 people in China. It’s spread over sales, marketing, operations, and engineering. That’s the big piece of it.
Hans Tung: So what we have seen so far is that some of the engineers in China tend to want to just get going and start building stuff and then reset if it doesn’t work, get feedback from the users and iterate again. The architects in the US, in general, show some tendency to plan, get in sync, test the product before they roll out. It’s more deliberate. How do you reconcile their differences so they can be cohesive and productive for you?
George Yan: It’s a very good question. We have something called the prototype gurus. The prototype gurus basically help people to really put together that vision. People can see what that looks like six, ten months down the road. But also, we’re fortunate that our business is a scale business. It’s not something that you can just write and give it out and the customer gives you feedback. You can do that today. But how do you scale that service? It’s all about deep engineering, infrastructure work. And that part actually is going to take time. And this is where the US, the guys with a lot of experience, even our CTO who has done this for Bing search, comes in, so the infrastructure that we build today can scale to millions and millions of SKUs that we have to recognize. And our customers are multinational customers, so their expectation of our services, our SLAs, are super high. When customers are putting heat on you to say, “The stuff that you give us—”
Hans Tung: Better work.
George Yan: “Better work. You’d better make it work.” That pressure gets on and we want to do the right thing, so we don’t want to waste engineering resources to rebuild and re-architecture. So that culture, fortunately, is very fitting to our background and business.
Zara Zhang: What advice do you have for US tech companies who are thinking about entering the Chinese market?
George Yan: It’s going to be challenging, to be honest. And I can tell you the multinationals haven’t even figured that out yet. It does take a special breed of people who not only look Chinese but understand the China environment, understand the local culture here, know how the US operation works and are able to learn and quickly adapt to the local environment here. It takes a special person or a special group of people to deliver that here. So take your time entering China. It’s not a place where you stick a flag and say, “We’re in China.” You’re going to get slaughtered. So take your time, find the right talent, even groom the talent if you have to. But this is a three- to five-year journey. And, by the way, if somebody finds a secret formula, you should sell that to Microsoft or Amazon or anybody else because they haven’t really figured this out yet.
Hans Tung: You went through this with Microsoft. Knowing what you know now, what would you have recommended the management team do differently to be more successful in China, whether it’s on the enterprise side or on the consumer side with MSN Messaging?
George Yan: Ouch! I think on the consumer side, the timing wasn’t right. The team had a different agenda. It was a different DNA. So that part was not going to happen either way. But on the enterprise side, if a large corporation would truly carve out an engineering team dedicated for China and make that China leader responsible not only for sales and marketing, but for engineering, for research, for investment. You make that a true CEO for China, I believe the dynamics will be very different. And that’s still something that none of the multinational CEOs are willing to take a bet on.
Hans Tung: Maybe except KFC.
George Yan: Through a joint venture.
Hans Tung: What kind of person would have succeeded as a Microsoft China CEO in charge of the entire operation including engineering and product? If you were sitting in Redmond and you had to pick someone to be the first Microsoft China CEO, what would he or she look like in terms of background and temperament?
George Yan: I think I’m a very good choice.
Hans Tung: But what is it about you that Redmond should have seen?
George Yan: It’s the things I was saying previously. They need to understand the product, spend a lot of time in corporate, understand how business is run in China, understand the intricacies of government and also regulation policies. But I think when I left Microsoft, even if I was given the role, I wasn’t ready. But having gone through two or three years in the startup world, I feel I’ve learned so much and seen so many things on the ground level, I would say that I’m much better prepared than I was four years ago.
Hans Tung: Interesting. So you’ve got to have both.
George Yan: Exactly.
Zara Zhang: So now we’ll jump to the final part of the interview which is a round of rapid-fire questions. The first one is who is an entrepreneur you admire the most and why?
George Yan: I’ll give you two. Chairman Mao and George Washington.
Hans Tung: Be controversial. Okay, go for it.
George Yan: Look, I think Chairman Mao is a great entrepreneur. He had a great ideology. He had, I would say, mediocre people. He had very few tools. And he’s able to attack this area he believed in and turn it around and use whatever resources it took in the long game to create what China looks like today. I think that entrepreneur spirit, if you read his writing, it’s always a part of his DNA, his genes. So I respect a person for being able to take that plunge. We’re changing an industry. He changed the world. And similarly with George Washington. When he comes in and says, “Hey. We’re going to do something great.” Again, a great ideology, but very mediocre people, very few tools, all the cards stacked against him. But he took the long road and built what is the United States of America today. I’m a history buff, so when I read these things about how they were able to conquer these difficulties, it makes me think that the things I’m doing are not too difficult.
Zara Zhang: What’s a book or article that you read recently that you recommend?
George Yan: I keep on recommending Principles. Principles is a great book because you basically distill all of these learnings, all of these things that you say, “I wish that I could write those things down.” He wrote it down. He was able to put it together in a book and share it with you. So this is not a book that you read once and put on a bookshelf. This is something that you should carry with you all the time and just flip through the chapters. And there’s going to be these aha moments in these chapters where you say, “If I took a different path, if I’d looked at a person differently, if I knew that person’s background, I might behave a little bit differently and talk to that person differently.” All these things are so resonating and so useful. It’s something that should be pocket book sized and carried by all CEOs all the time.
Hans Tung: So what do you think about when you get up in the morning? What motivates you to get up in the morning every day? And also, what are the things that keep you awake at night?
George Yan: The thing that motivates me is that today, 80-something people and some time later it will be hundreds or thousands of people that share the same vision and want to help traditional enterprises to digitize the physical world. And if that dream spreads around, I believe that not only will the world be very different than what we see today, but the wave of changes that we’re going to experience is going to be bigger than the internet wave. It’s going to be bigger than the mobile internet wave. It’s going to be bigger than the cloud wave that we have seen. Digitizing the physical world is the ultimate game where you bring all the talents and all the resources together to shape how we are going to see things differently five to ten years from now.
Hans Tung: And what keeps you up at night?
George Yan: It’s going to take a long time to get there. And I need to have the right talent, the right resource, the right customers, the right product to serve the customer. It all comes together to make that happen. It’s a long journey. So I need GGV and the likes to back me up and make sure that we all can achieve that dream together.
Hans Tung: We’re happy to.
Zara Zhang: What types of roles are you hiring for and how can people reach out if they’re interested?
George Yan: I think in a startup, people define their role. I actually don’t have very clear job descriptions. I have engineers. I’ve sales marketing guys. I’ve operations guys. And when a person comes in, they look at what we’re doing, and they tell me how the job description should be built. That’s how it should work. If you’re looking at a job description, I can get you on www.microsoft.com. There’s a whole bunch of jobs listed there. You can find one for your suiting.
Hans Tung: So last question: what you do for fun? I know you don’t have much time for fun these days, but I still ask the question.
George Yan: I’m a saltwater aquarium fanatic. I have a saltwater tank at home. It’s an ecosystem on its own. It has LPS, SPS, it has live corals, it has Nemo. All the things that you can imagine in the sea, I have in my tank. And it’s delicate because you’re basically shrinking the sea into your living room. And the right chemical balance and the right tweaks that you have, the right bells and whistles, alerts to make sure the potassium and calcium are all correct and the right levels, that’s my chemistry lab. That’s something that I can focus on to take my mind off what I do in the startup world. It calms me down. When you look at the fish swimming in the water, you see the starfish and you see the corals waving back and forth, that gets me into a different environment where I can distill, and think, and process, and be better prepared for tomorrow.
Hans Tung: What were your working hours at Microsoft and what are your working hours now?
George Yan: I would say the working hours are not different. Microsoft, for me at least, was my own entrepreneur experience. If you look at me coming into China as the first person working on MSN, if you look at me going from engineering to sales marketing, working on cloud which Microsoft or any other company hadn’t done before, jumping into the CEO role, no one had done it before. All these things, I’m taking that as an entrepreneur experience. Just trying it without a lot of risks. So the hours I put in were not your regular hours. I worked six days a week. Whenever there’s a customer call, I’m there. I spent all the time with the sellers going to a customer to see how we would close the deal, how we would structure a deal, how we would get government on our side etc. I looked at it as experience. So that experience continues into the startup world.
Hans Tung: Except now you work seven days a week.
George Yan: Exactly. And with more risk. And I need to be more careful because we’re playing with your money and our own money.
Zara Zhang: George, thank you so much for being on our show.
George Yan: Thank you. Thank you for inviting me. Thank you. Take care.
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 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. Portfolio companies include Airbnb, Alibaba, Ctrip, Didi Chuxing, Domo, Hashicorp, Hellobike, Houzz, Keep, Slack, Square, Toutiao, Wish, Xiaohongshu, YY, and others. Find out more at ggvc.com.
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