Interviewed by Rita Yang.
As a bonus episode, we also caught up with Jenny, who led GGV’s investment in Agora. We covered how she first met Tony Zhao, CEO of Agora.io, the future GGV was betting on and advice for technical founders.
Today on the show, we also have Jenny Lee, managing partner at GGV capital. Jenny led GGV’s investment in Agora back in 2015. Welcome to the show, Jenny.
Hi, everyone. Good to be here.
So first of all, tell us when and how did you meet Tony?
Well, I’ve known Tony for a long time. I think when Tony came back for working at WebEx, he came back to China and started his 1st company. He actually came to look for us for the financing of the startup. So I think that’s his first startup back in China, that’s around the 2007&2008 timeframe. If I record, it’s almost 10 plus years ago. I think it’s in the P2P technology area, still around voice, still around the voice P2P technology transfer area.
But back then I think there were a lot of startups trying to get into the space. So we had our first meeting, I thought this is a very good technical founder. But we were hesitant, because we weren’t sure that of all the startups that are out there, just offering from a technology perspective make sense. And so the very next time when I met with Tony again, that was after he joined YY. So GGV invested in YY around 2010 timeframe. And Tony, back then, with his first startup has already merged or joined with YY, so when I met him, he was CTO at YY. And so that was when YY was starting to really launch and push the YY Voice at that time. So it’s been, if I look back, close to almost over 10 years that I’ve seen the positive(3:17). And of course, with YY, YY went public in 2012, and Tony left around early 2014 to start Agora. So that’s his own baby.
What essentially was the future that we were betting on when we believed in his technology or the new Agora he was building back then?
For GGV, it was an easier path for us to see that online voice first and ultimately video would take off. We’ve had for five years through the YY platform looking at how the whole entertainment market has changed. How the consumer, you know, true gaming was using the application. And then over time, it wasn’t just gamers, it was the average users in China, who were using it to share, to sing, to have their own community. We’ve seen communities that goes up there to share tips on how to cook, how to do gardening. And so I think even back then, I think we saw the power of online casting simply described back then. And I think that if we look on a global basis, we’ve also seen, how the enterprise side that varies on the communication side at that time, and now during the virus period, everybody was using Zoom, Outlook and Skype and all that. But back then I think Skype was one of the more prevalent communication tool and so people also saw the power of leveraging Internet technology to kind of revamp this online video and voice communication.
And having seen how it’s work for YY, we believe that there is a need for it in the international market. The key is finding the right use case. And I think, fast forward to today, no one is disputing the fact that online real time communication would allow a much better integration of offline to online. And of course, the online environment bring it offline as well. So that integration, I think it’s a widely accepted in all the verticals that we’re seeing, from education to entertainment to telemedicine. I’m sure there will be a lot more as well, as more and more consumer get access to very good public internet.
Like you mentioned, I think a lot of the things that people were doing back on YY has now gone mainstream. So I heard like people are getting married on Zoom, a lot of the use case that we could never even imagine. So the live streaming as a technology, in fact, have grown quite explosively for the past few months because we have to, as an early investor in YY, China’s largest and earliest live streaming platform, what’s your view on the evolution of that technology? And what are the next vertical you see it disrupt or transform, as well as when the virus has passed, how sustainable the disruption will be?
I wouldn’t call it disruption anymore. I think the technology has really mature back when we invested YY back then it was still 2009, 2010 timeframe. And so the technology was pretty much on PC. You do need to have good stable internet, even it’s over the public Internet, relatively, good stable internet. Number two, in terms of computing power, a lot of users had to connect using the PC platform. I think the evolution, then that’s brought about by what Tony has done for Agora and a bunch of other startups is that technology has matured into mobile. I think with mobile phone, whether it’s iPhone or Android phone, I think the capability of the mobile platform has caught up and in fact has surpass PC in terms of computing, in terms of the simultaneous casting requirement as well.
So I think that’s the evolution that we’ve seen. A mobile platform industry when you started, it was always kind of the casting method where you’re using the camera phone to take a video, or to have a live streaming of someone else. Of course, today, no one can imagine not having a front-facing camera where you can take selfies. Over the proliferation of selfies that not just the front-facing, the back-facing camera, both cameras have now gotten much better in terms of resolution. In fact, the phone manufacturers have now allowed both front-facing and back-facing cameras to come up on the same screen. It may look simple, actually once this technology is integrated into the phone, it means that this new application that can come up. So today, you could look at yourself, have your selfie, have your own live streaming, and yet also take on the role of a reporter where you could have your face and get looking at the environment outside as well. So, I think that’s how the tech has evolved.
But tech by itself is not just a software site, in fact that the hardware platforms from PC to mobile phone and the sensors have gotten better definitely help. And of course, I kept talking about internet for much things to happen. Especially if you go beyond voice, you do need to have good broadband. And I think with LTE, now the 5G in China, that’s gonna just allow more high quality fidelity video and voice to be transmitted, not just one screen, but multiple screens to be supported as well. And so I think that’s the future we’re seeing. There will be a lot more applications, but applications cannot exist without the right infrastructure in place, right now, we have to have the network infrastructure, and of course, the self attack to refine all this interchange, then I think the world is wide open. Can we imagine a scenario where doctors can stay at home and instruct a machine to do surgery because it is live streaming right now? And why? Because in the medical field, it’s all about position. And if you could get to a stage where there is really no latency, and that resolution is good enough, as good as you were physically in the room, then I think that’s the power of where this technology can get. I think today we’re still looking at applications as we mentioned, like gaming and education, sometimes medicine where in reality, you can see the doctor, and you don’t really have to see the doctor.
But I think when tech is that refined, then essentially you may not need to go visit the clinic anymore, because the doctors can see your situation very clearly through the live streaming application. And of course, the ultimate in my view is when you could actually do surgeries. That would be literally we do not have to leave our home. So I think it’s possible, with 5G are getting online in China first, but obviously hopefully for another countries soon, we would likely be surprised with the kind of innovation that entrepreneurs can come up with. Once the road is clear to be innovative.
Thank you, I can tell that you are very passionate about frontier tech as you are known for it. So where do you actually see that COVID-19 are accelerating the pace of technological breakthrough? What are something that you find exciting you’re looking forward to?
I think that COVID-19 maybe on the shorter-term basis in terms of acceleration definitely will be in the medical area. It is a huge and big reminder that there’s still a lot of work that needs to be done, whether it’s addressing and attacking viruses like Ebola, SARS, or today COVID-19 more needs to be done in terms of sequencing, finding out more about the viruses, and then quickly right now to wait a year or two to come up with vaccine. So I think in the shorter term, that’s what everybody’s waking up to saying, and with technology in place, better computation, better sequencing, better AI tech, we should be able to shorten those timeframe to get to the right outcome, if we have right resources put to it.
So I think on a shorter term basis, that’s where we see the highlights. On a longer-term basis, though, I think it’s not technology changes that COVID-19 will bring about, I think it’s actually more consumer habit changes. I’m actually in the US, during this period that we’re seeing eCommerce really take off in a very big way, because people are stuck at home and you can’t go out. But because supply chain has really come back online in China, it means that the consumer here was used to run to the nearby grocery store, now has to pick up a new habit of buying online. Elsewhere outside of China, eCommerce is not that common. The penetration has been less than 10%, but I think with COVID-19, the young and the old , they are learning how to buy online, how to buy food online, how to get medicine online, a lot of the clinical doctors are not having face to face meetings. So the habit change be as simple as eCommerce habit where people are now used to buying their food and groceries online to telemedicine.
And then of course, for those who say they would not have their kids go online because of the games. Today with the kids back from school. They have to get their kids on if they want to continue to attend the classes online. So I think that the tech is definitely there. But I think the application previously may have been adopted by the tech savvy parents, or consumers, or the younger generations who’s used to technology. But I think this period, it doesn’t discriminate. And so the younger and older generally would have the habit changes in terms of just getting used to all the things that I talked about earlier.
And I think those change are longer term, once you experienced and benefited from not having to spend time on transport, or sometimes you just want to be lazy, you just don’t want to go out. That’s a choice. And so I think that’s actually more kind of a bigger change, and that’s the consumer change. On the enterprise side as well, again, I think the heavy changes are that, in the past, even for us, we assume that we have to travel three hours from Shanghai to Guangzhou to have our board meetings going to see companies, and we do that. But I think, during this period, I find that I’m actually even more productive. You could now go from 7am to maybe midnight. Because now you don’t have that time, when you have to travel in the car from one office to the airport, the time that you have on the plane, all that time in the way we get rest a little bit while be on the road. you could see which is really quick. Now, with online video conferencing, honestly, if you want to, you could go kind of back to back.
And I think what that means is that there is more productivity increase, more efficiency. And so yes, we still want to have that person to person meeting for very important meetings, for things that you have to spark strategic discussion, but for regular updates, and now you could do more regular updates instead of a catch up once a quarter, you could do like once a week, once a day if you want to. So I think that’s also a heavy change in the way we do businesses. And I think it will result in a big change in terms of how we conduct businesses. On the good side, maybe we save more on expenses, on travel expense, on payroll expense and save on time. So then, of course, the efficiency, the communication. On the downside, you don’t get to empower the airline companies and hotels, so we don’t get to travel and stay in hotels. I used to wake up every few days and wonder, every morning when I got up, like which city am I in? And what hotel and why am I here? It’s just to orientate myself in the morning, before I kind of get started. So I think the good of it is that, perhaps that will contribute less to the hotel industry or to the airline industry, unfortunately, but those are the changes, I think that will happen.
Thank you. So as you mentioned, a lot of the behavior change actually also brought fast growth for a lot of the company that are in this space. Agora is an example, also EdTech company, some of your portfolios are also that. So what are some of the advice you have been giving to founders who are actually going through rapid growth during this special time?
The first advice we give to any company, whether they are benefiting or experiencing growth or extreme declining growth is really to be defensive first, because it’s always about making sure that your employees are safe, making sure that your business itself has enough cash runway to survive. Is it six months, 12 months, or 18 months? So, my first advice really is about stock taking. It’s about health checks of your people, your talent, your organization and the financial strength of the business. I think that if companies are satisfied with those check status, then let’s figure out, if you are indeed one of the companies that’s mostly online, as we mentioned, the EdTech companies, the online fitness companies, then I think it is also a good chance to be cautious and aggressive to figure out, how you can acquire new users, new consumers at a lower cost, and hopefully educate more new users to your platform. And I like to say it’s a traffic sandbox, so during this period when everybody’s staying at home, it’s almost like a microcosm where you could test out new products. Your alpha, your beta features, test it out and see, consumers or users at home probably have more time to give you feedback as well. So this traffic sandbox may last a month or two months, maybe longer, we’ll see. But I think that would be what I would propose, not to go aggressive in terms of saying let’s generate revenue, let’s get our users to pay. But look at this as a short term blip, in the company’s growth and that blip if you can use it and leverage it, to help the company to do better, to learn more about the users to experiment more with their products. Then I said go for it. But play defensive first before go on the offensive.
Then I think there are a lot of our companies who are in great health situation. There are companies that have over 20 months of cash runways, sometimes two, sometimes even three years. I think for companies like that, definitely, you want to not just be technically smart in terms of products and users, but also strategically smart. And that may mean leveraging the cash that you use, that you have, leveraging the position that you have to see if there are acquisitions, acquisitions of talent, acquisitions of new products or technology, those may be very important on the longer-term basis. So when there’s a lot of fear in the market, it means that the opportunity may also be right. For those who has means to be a bit more aggressive, to then further strengthen their leadership position. So if you are a leader in this category, or in your category, and you have the means to be offensive, or to take the offensive, then I would say not just tactically offensive, but also think strategic as well.
Thank you. I think that’s very practical advice. Last question, what are some common pitfalls that you have observed among founders who come from a technical or engineering background? And what would be your advice for them so they can be the next Tony?
Well, I think technical founders, they’re very strong in their particular area, so their appreciation, their knowledge of technology, their ability to recruit new people in those same vertical, because they know, and therefore, the access to the right talent is always a plus, because this is another CEO who may only know product and technology. I think the challenge that many of them have is that most technical founders tend to be also a bit more shy. They may prefer to interact with computer more, they prefer to be coding 24 hours versus going out there for business development, to talk to their clients, talk to their customers, more may not prefer to be out there for social context.
But I think as a CEO, it’s not just about understanding a technology, a product and the team, it’s also very important to understand the customer. we set this up to be a CEO and any CEO, because you are expected to be like a super person where you have to do sales, you have to take sales call, try to convert the sales. And then at the same time, once you come back, you’ll figure out the right product knowledge. And then on top of that, build a great organization.
So I think the strength of technical founders is very obvious, what they have to be very aware is that they would have to fill up the rest of those areas, whether it’s an organization building, whether it’s spending time with customers and people. So learn to love computers and technology, but also learn to love people. I’m a geek myself, so I prefer to spend time looking and hanging out with robots and technology. But I think, as a venture capitalist for the last 18 or 19 years now, I love people, I love entrepreneurs, I love spending time with them, I love just hanging out and listening to their issues, their problems. I spend time with a lot of very young founders. Over half of my portfolio companies, my CEOs are in their 20s. And I always enjoy just brainstorming on the right product, brainstorming on the right people.Sometimes they have issues and their concerns, They just want to have a person who has maybe gone through various cycles of business to just sit there and have them bounced questions with. And I found that it’s equally fun.
I think it’s a very different skill set that we have to pick up. I think for us to be successful in a business, whether it’s on the investment side, I think especially for CEOs, because the business is not built by one person, or run by one person. Even the simplest business that’s reached unicorn status, category leaders, they need to add people. And I’ve not seen a company that can be fully run with robots, a whole technology at one founder, I don’t think that’s ever going to happen. So I think the people, the teleport is a very integral part of business building, it is a very integral part of the joy of having a successful or building a successful company. You have people to share in that building and people to share in the joy.
I had 10 IPOs. And IPO is just the start of a very long journey, and it’s amazing when you’re standing up there, ringing the bell, in China, you have to hit the gong. Those are important milestone to mark the growth of the company. And it’s always a very, no matter they trade well, or they don’t trade well, if the environment is bad or great, I think those are all precious moments where you share the moment with the team, the shareholders, because they’ve all embarked on that path as a public company. And I think that’s the amazing experience of being in the startup. This is made up of all these little milestones that map to growth of a company from zero, from ideas to great companies.
Thank you so much. Are there anything you wanted to say about Agora that I didn’t ask?
No, I would encourage people to pay attention to this company. While it may not be to C, you don’t see them when they’re using all that cool live streaming apps, but without Agora’s technology, all of us will not be enjoying, all that live streaming, gaming sessions, or cool stuff that we’re seeing as well. So, thumbs up to the team.
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