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Kathy Xu

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2022-03-28
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2022-03-28
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  1. “His and also our family. We made the first buckle of gold. And then I become an entrepreneur. See, the chain effect. And my kids most likely will become entrepreneur. So I think the entrepreneurship, if you ask me to give advice to young people, of course, if you loved the business, you have to find something you love. You love something, just try it. Become the boss of your own one day. Try become an entrepreneur. I think the best title in the whole world is The Founder. I like that title. The founder of something.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Would feel like I deal with entrepreneurs all the time. I feel like everybody deserved a chance to start your own company. Everybody deserved that chance. I remember when my husband wanted to quit his job during the internet bubble days, so we basically, so the bunch of inexperienced bankers funded the company, hired a professional guy, the company really going nowhere. And then my husband decided to jump in and become the CEO. I said, why don't you wait for your bonus paid? That's like $1 million paid. And then he said, if I get paid, the company already went bankrupt. So he decided to jump in and to save that company. And I was initially said, well, those companies getting nowhere, very small company, you create your job at Morgan Stanley to run a small company and the internet bubble already burst on the song my husband, he said to me, I want to become an entrepreneur. He's a philosophically. I deserve the chance to try it once. And that really touched me. I feel like, yes, that's it. And then in the hindsight, he made that decision and really changed the life.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “The biggest mistake is higher the professional above the founder. I kind of feel like in China, in this kind of dynamic competitive environment, you need a founder to run the company. If the founder is not running the company, if the founder has some shortcomings, it doesn't matter. If he has that instinct, that's fine. You can hire people not above him under him. So strengthen the founder by hiring people under him, not above him. And if you really feel this founder, oh, it's not very good because his lieutenant is not very good. Actually, it's not. You feel the lieutenant number two guy is not very good. That typical says the founder is not capable enough. In that case, you can almost decide to just pass.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “My father and my mother, I think the first principle is you want to be a trustworthy person. I think if you're a trustworthy person, you will live a happy life no matter how successful or not successful you are. You will be basically trustworthy, kind person you will live your life fine.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “I would say my dad, he's a competitive guy, he always wants to be number one. And I think he passed that gene to me. And secondly, I think he is a first principal person. He always thinks with first principle. My dad has very good killing instinct. I learned a lot from him. There's a lot of decisions, the first principle. Even at age of 86, he has debated with my brother and he asked the question, he said, oh, you said that China is going to change the world because of technology, a lot of investment.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Warren Buffet. I'm a very big believer in Warren Buffet. He's my hero. So I read his annual letter like a priest reading the Bible. When I get very, very old, I want to like him tap dance to work. And then he spent like five hours reading and two hours talking to the entrepreneurs he liked.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “I always tell the entrepreneurs, if you don't have a great idea, don't start a business. This world do not need another mediocre product and another mediocre service. You're wasting time of yourself, your colleagues.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Okay, we have this working sister group every Saturday we walk around like two hours and now we have lunch together That's a lot of fun for me. It's like four to five of us every week we take a very long walk we exchange idea compare notes and complain all the negative energy you can lead out so it's like when you share the happiness the happiness double when you share the pressure the pressure is halved That's a very good way”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “We have very long-term capital and we are very focused and disciplined. We have only one drive, which is invest in great company and build the number one brand for China.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “two hundred three hundred millimeter middle class consumers and these people's salary increasing double digit every single year so we will have maybe 600 million middle class consumer in the next five to ten years so we will have this era that we have advantage of manufacturing cheap neighbor but advantage of huge middle class consumer and we believe that when China becomes the largest country for both manufacturing and consumption and China's leader will become a global leader. And we see that happening in the world of electronics manufacturing, in the world of cell phone, and it will happen in the world of electronic vehicles. So we will still have some good years ahead of us, I think next 10, 20 years because of this post-Lewis era that we get into this episode, which is very good. For the country.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “We have brand power, we can go international. So we have the 1 to 10. But I think in the future, I feel like we may have more zero to one thing. Right now we got more very smart people, like the top student, everybody goes to the US to study. Now they're coming back. I see that trend very obviously. And I also believe that we have a lot of cheap neighbor, we have like 200 million farmers migrating to the city to become the delivery boy, they become the massage, they become the waiter waitress, the janitor, etc. So we still have that neighbor advantage. This is not just cheap labor, we also have skilled workers, the worker who know how to use robotics. So I think this advantage of chief neighbor we still have. And don't forget these farmer worker migrate to the city, they become consumers. China already have like”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “A lot of respect for the venture capitalists in the States because they really investing in disruptive technology. So these are the game changers. They're the ones who change the world. So there's a lot of zero to one type of technology innovation disruption. And I think most of them in the USA. And that's something we envy. In China, we have more like all we learn from the US, but we kind of have this improvement like, oh, we learn e-commerce, but we have JD learned from Amazon. I think the mobile internet thing, I think China is more advanced in terms of payment, in terms of short video. I think TikTok is take over the world. TikTok has 800 million DAU growing very fast. Mostly we have 1 to 10. We learn from the US, but we kind of China market is big enough. We have scale. We have network effect.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Secondly, they use AB test to find the right price. Zara, how does Zara come up with a new price? How do you know what is the right price for a new SKU? You have so many SKU every day. Zara uses test, like, every new piece come up, they give five different price tags, and then they sell it to five different store. After a while, they find whoever sell the best is the final price. And our engineer used APTS, they always find the best price. And then they use algorithm counter marketing the algorithm to find the acquisition channels. So all this is algorithm driven. I think they are going to change the supply chain with algorithm as well.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “If you ask me to use one keyword, I would say AI. I think AI is changing a lot of industry. When I see, don't think about the technology. So it's a kind of application in every single industry. For example, we like Auburn e-commerce. I think that's just purely AI driven business and we like electronic car and autonomous driving. That's an AI driven business. We like new brand, new retail, that's AI because AI is a new tool. For example, we have a company called Halara. They're doing online Luna Lemon. We have a company called PetPad. They're doing baby clothes. So what I mean is that why they have to do with AI because if you look at the fashion business, you work very hard. At the end of the year, all your profit is in the inventory because you don't know what the customer you have to guess forecast what customer need. You don't know what is the best price.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “For example, mister Zhong Wah, he went to Paris, he saw bottled water and he immediately feel oh this is it. He will bring us to China, so he found that category, that's his killing instinct. He is a category creator. He's the first one who saw it. William Ding of Ned East. He is the first one who saw the opportunity of online gaming. He is the first one who did. He spent three years come up with first product in the most difficult time with the share prices below $1, because actually all this kind of difficulty, he come up with this cool product. He's the first one who did it. So he becomes the richest man in China. We made so much money. So I think founders capability to see what others can also, we call it killing instinct.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “I think they're both very important. If you ask me to choose one among which is more important, I would say the business is more important than the founders. I have seen a lot of very smart founders struggling in a mediocre business. They will never get it. But if you have a very great business and a founder saw that business, their first mover, they will win. I think about founder, the question is about what kind of founders are we looking for. I think we don't, particularly for early stage deal, you can have like a 100 reason don't invest, but you just need one reason to invest if the founder have killed instinct. He can see what others cannot see. And that's enough. He may have a lot of shortcomings like, oh, he's not a very good people manager. He has very short temper. It doesn't matter. What matters is whether he has instinct, he can see what others cannot. And that's the most important quality I'm looking for.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Three times out of five times. Not because I'm better than Niu Shan, it's because I'm very hands-on. We don't do a lot of deals. We do like each year maybe five to ten deals each year, each found maybe 20, 30 dues. So we are very selective and I can be very hands-on each deal in pitching the deal to entrepreneur. I'm the one who's pitching. But in Sequoria, I maybe know it doesn't have time. He has so many sort of deals working on.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “First of all, I think venture capital is a very local business because you have to fill the market account not only in your entrepreneur, then the consumer, the competitor, it has to be local decision. Whoever has a global decision, you know, ICC in New York, London, they're going to fail, period. They're not going to be as competitive. Second thing is that the team has to be local. I think the good team was being off already because you are a very great investor. Why do you want to report to a boss, like take half of the carrier and then doesn't really contribute a lot? And then decision is very long and not very to this point. So I think local team wins for sure. So the question is how do we compete with Sequoia? Like they're very global brand, but they have a local team. The team is pretty good. We come across Sequoia quite often in dual sourcing. And I was saying so far we have win maybe.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Pendoldo as well, and I was always asking them the question You burn so much money for what? JD burned so much money, but they built a warehouse, right? You burn so much money used for subsidy to the customer. Do you think the customer are going to be royal to you? Of course not. They will choose whoever is the cheaper, better. So at the end of the day, it's a competition of supply chain, competition of logistics. Why don't you use all that money burning unsubsidy and use that money to build the warehouse, cold chain warehouse, build the supply chain? And that's long-term sustainable. That means maybe our growth rate is not like 100% year on year, but it's going to be like a 50% year on year, but it's going to sustain for a very long period of time. I think it's good for everybody. I think the government is pretty smart, all this decision. Pretty smart, pretty long term, actually.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “And the government said, no, you cannot do negative gross profit margin. Because if you do negative gross profit margin, the offline retailer like Walmart, RTM, are not careful, they're going down, down, down. They're going to just go bankrupt. So there are a lot of complaints from these offline guys. So the government said, no, the three basic, no negative gross profit margin. You cannot force the supplier to take one among the two. You cannot do arbitrage on the customer using big data like charge a different price for the same product, different customer. So these are the three rules. I think when I called Mr. Yu, because when they had a big competition from Metro and Pinodo, Mr. Ye, he said, oh, thank government, now we can survive because all the other guys died. Now Mr. Yu still can survive because you cannot do negative money. So if you do negative margin, what happens is the big guy have all the cash, they will win, right? So it's good for select, they can survive. And I think it's good for May 21.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “During that period of time I have invested five more times my initial investment is seven million, it end up like 165 million with double down, triple down total five times. But bad news happens like one year ago they start fundraising, very high profile fundraising. Our business plan was seen by all these giants like Meg Tuan, Pin Doo and JD and they decided to come in. Our model is very very important. It's disruptive to traditional e-commerce. This is a new e-commerce. It's like you order tonight before 11 a.m. Tomorrow you go pick it up at 11 p.m. at the mom pop store. So it's a pre-order, very effective in terms of efficiency, logistic cost. It's very good model. That's why it's growing so fast. And then you have like Pin Dodder May 12 fighting like crazy.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “the government it's good to have two persons so i think it's good and also for like community e-commerce we invested in xin shen mr yu is the first innovator of this business model this is a wonderful model when i first met him he was having a monthly revenue of 50 million rmb i said wow he's growing 10 times when you see something growing 10 times still profitable that means the market's huge huge huge So I talked to him, I met him at 3 p.m. and we talked until 3 a.m. 12 hours. We signed the binding term she write on sport and I give Mr. Y two advice. Oh, this is very, very important thing. So get big fast, number one advice. Number two advice. Keep low profile. Don't tell other people. This is your secret weapon. This is a business model. You find the gold mine. Don't tell. So we keep low profile for two and a half.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Such a domineering position and they have this take one among the sideways one among the two. So these being years and then JD reported to the government, the government said, oh, okay, if you have complaint, show me the evidence. You need a merchant to testify for you and no one dared to testify. No one was like, it's a fact. Everybody knew it, but no one dared to testify. So this is really unequal competition. But after government imposes no monopoly, every sense was implemented JD has been growing very nicely. JD is a fashion is going. So it's bad for Baba. It's good for JD, right? There's always two sides of a coin. I think pretty it's good for a lot of small companies, for entrepreneurship. It's better to have a competitor so your team has respect for the customer. They have to keep on innovating to come up with good solution, good product because competitively chasing you behind you. Then also good for”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “You can see the anti-monopoly rule. I think there are always two sides of the coin. For example, the government said you cannot, this is an anti-monopoly, that means you cannot force the supplier to choose one among the two. This is not good news for Ali Baba. It's very good news for JD. I'm the first investor of JD. I witnessed the JD the whole growth episode. One of the big pain is that when this policy was not executed, Alibaba has this policy. Take side, choose one among the two. So when JD had this big promotion day on its birthday, June the 8th, JD couldn't supplier from these merchants because Baba will call them. If you dare to list on JD, I will delete you on Baba. You know, Baba's market share has always been 70%. JD is like 20%. So JD cannot grow its category like fashion because Baba has”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Important thing we look at one important data, that data is we look at the same customer different vantage year, are they increasing their purchase every single year? That's a very important thing.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “About e-commerce, and it's very good, but you need to spend a lot of money acquiring the customer. You cannot rely on acquiring customer, new customer, because the media is going to be a monopoly. Media is monopoly and they use bidding system, so acquisition cost of new customers getting higher and higher and higher. So you need to rely on old customer repeat order. You have to check frequency. Basically, you have to check cohort. Coho is a very important thing. So do they repeat the customer? One thing we check at the JD every time I give JD five times bridge loan when nobody gives JD the money because when we start fundraising 2008 financial crisis come Richard met 30 investors nobody giving the money he was so worried that his hair turned white people so he died it because of stuff no he was just so scared and during that time we gave him five times wage loan of course we like Rachel we like the founder and another”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “First of all, we look at the traits of our big winners. They all have something in common. Number one is that the time, they have a very big time, total addressable market. If you look at our big home run, one is JD, it's an e-commerce, right? And second is Mateuan. It's also service e commerce and then e-phone pharmacy chain. And then we have boss direct recruiting. And then we have the VIP shop. So this company all have one thing in common is that they have a very large addressable market. And secondly, the product and solution, they're really much better, 10 times better. And thirdly, the kind of must have. It's not like it's a must-have or maybe have. I think it has to be a must have. And typically we look at a few key data. Number one, customer cohort. This is more important.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “That's exactly the power of company. I'm very lucky we got this evergreen structure that enables us to hold on to a winner. You don't need every company like that top five enough top five winner. The power company will make you a lot of money.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “has GP with roll over all our carry, which is worth eighty million US dollars into the new fund and hold it another ten year. I'm going to tell you how important this is. So it took me 10 years to create a value from 30 million to 400 million 10 years. Same company. In the past three years, we made the decision roll over like three years ago. And in that three years, we made 600 million return. So 10 years, 300 million return, three years 600 million same company. What is that? This is really powerful compounding. Another example is that we got the Tranchuan investor and Tranch2 investor and end up the tranche to investor has better return. And why is that? They come in the Navy, why they have better return is because the same portfolio of tranche one portfolio. They made a lot more return in T2 period. T one period, they made a return of 600 million, simple portfolio they made two point three billion in T2 period.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “Traditional business where the first investor, we invest in the company back to 2007, when they have like 70 stall, we hold this company for 10 years. We invested 30 million, it becomes 400 million. So 10 years, 11 times return, not bad. But guess what? I didn't want to sell this company. But the final one is expiring. So what I did is something very important. We set up a separate fund just to hold e-phone, I feel, oh, this is Walgreen of China. Even those companies IPU is worth like four billion US dollars. Look at a Walgreen. Look at CVS like sixty billion. If you're like me, believe this is a Walgreen of China, you believe in power compounding, you roll over to the new fund, continue to hold it. If you want cash, we'll give you cash. So I give my LP two options. Rollover or cash out. 70% people choose cash out and 30% choose rollover.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “And then number of years of holding. So these are the two elements big equity long term hold. So I think the biggest mistake if you ask me is that we are not able to hold on to the winner because the fund has limited life. And once and all solve this problem is just have this evergreen structure that enable us to hold on to a winner for a long, long time and really enjoy the power of compounding. Now I have lived the evergreen fund of Capital Today two tranches. I really feel the power one thing a power company when I talk about it don't have a few but when I show you this curve you will see the power company has a very deep curve at the end so when the size gets bigger everywhere it's compound it's much more impactful I just tell you two data for example we invest in a company called a pharmacy chain e-forn pharmacy chain this is very”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  32. “So for venture capital, I have a couple of the number one is that there are not many great companies in this world, so the key is to hit the home run. Home run is that you invest in those great company that's going to change the world. And home run, there are two things. One is frequency of the home run, i.e. each fund, how many home run can you have? That's frequency of the home run. The second essence is that the intensity of the home run. Each home run, how much money can you make? And I would say frequency of the home run, it depends on luck, whether you have catch this wave of technology. So far we've been very lucky we got a wave of internet, we got a mobile internet, now we got AI, maybe we'll have metaverse. So that's Lark. But I think intensity of a home run is more important because you can decide. Intensive home run is really affected by two things. Number one, how much equity own this company or how much amount of money you put in, either very big amount or very big equity.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  33. “But in China, like JD's founder Richard, he's doing e-commerce, but he's one step ahead than Amazon. Because when JD started the business, when we give him the money, he did two things. Number one, he expanded the category. Number two, he built the distribution center. Amazon didn't have distribution center because you guys have like UPS and FedEx. But in China, we didn't have UPS and FedEx back then. So there's a lot of small guys doing delivery and the service sucks. Like 80% of customers complain come from one thing and one thing only. So they didn't trade our puzzle nicely very late. So Rachel decided to build the distribution center himself. So I also call that innovation. JD is doing so well. We made a lot of money because it is the first mover in e-commerce direct model. He built the warehouse, built a distribution. He promised”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  34. “Think in China we still have a lot of category opportunity, i.e. you have really disruptive companies. If you look at the history, who really made money in the venture capital industry in China, it's basically internet, like online game, e-commerce, and then we have mobile internet, and you have all these kind of APP, like short video. So it's really around technology innovation. We call this a chance like 10 times better. Like e-commerce is 10 times better than offline retailer. Why? Because you have selection, unlimited selection, like baselo setting is 1997 annual letters. Retail is all about number one selection, number two, cheaper price, number three fast delivery. So 10 times better we call technology innovation. China, our portfolio may not be the first one who innovated. The US guy like Amazon, they are the innovator of e-commerce.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  35. “The book called We have hunters, we have farmers, we have research analysts, each doing different things. I think it's very effective because these days the market is more competitive. So you don't have like three months to do due diligence. You have like three weeks. So during that three weeks, we want to see everything. So we have winter patenting to study the winter pattern. We have consumer specialists to do customer interview, call 30 of them, focus group study. And we have like a data analysis team to do operation and financial due diligence.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  36. “It's like six people doing nothing, just doing value add. These people are very experienced people. They are brand specialists, they are new retail specialists, they are data analysis specialists, they have countermarketing specialists, they have recruiting specialists. We found for the early stage company, like when they're just started, they need a lot of hand holding. So how do we build our value at team? It's that we study the best practice in China.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  37. “him much better the availability of the funder also a lot more but also a lot more money so you got more capital and more entrepreneur it's like almost every company fundraising they have a small financial advisor so it's very important for us to build a brand so these days we have a good brand so if the fa will find us entrepreneur will find us we still do cold call if we want to find a company we still do code so so we have a kind of strategies like top down we have investment theme and then we use top down we approach the entrepreneur and sometimes the fa will come to us so the very important thing is that you build a reputation build a brand i think capitalist reputation is good in a sense number one as an entrepreneur love us because we have this 28 year evergreen fund we are a very long-term capital that's number one number two we have three weapon value add capability we have value added”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  38. “Oh, that's a very good question. Time change. The dynamic is a little bit different. When we first started capital today, we had this code core strategy. A lot of you, like 40% of a deal are sourced by Code Call because at that time there's a lot of deal flow. And when we code call the entrepreneur, they didn't even know what was venture capitalist. So we've been able to source it by code code. We use this top-down strategy, decide what we like, and then we code call top 20 target, and then we compare the founder, compare the track record. So initially, there's a lot of cold call, and of course we have network. And nowadays, there's a lot of money. And of course, I think the entrepreneur also become a lot better in terms of quality because we have a lot of returnee, those well-educated, very smart people, they come back with creative idea, with technology. And I think the quality of funder.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  39. “At that time it's still quite early because, like I said, 1995 was like really the first batch of venture capital was emerged. I was lucky enough to be one of those. Most of the funds are like Asia Fund. That's our slogan.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  40. “Initially, I think the LP sparkled the idea on me. I think I went to some kind of conference and after the conference, one of the LPs sitting in the audience, he said, you're very good. If you want to start the company, start your own fun, I will be your investor. So he actually approached me. I got like LP. If you want to start own a firm, let me know. We'll fund you. Something like that.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  41. “cash in the bank so it was how desperate people is but I think the reason I voted no sell is because it's not because I can forecast it's worth so much money that is now the market cap is much bigger it's like we're in hell the good news about being in hell is that you could not get any worse the future is on track to heaven so I called every director because everybody is 20 years old very young I'm the oldest director 31 years old I called every other director said you have fiduciary duty you cannot sell this company cheap the company has like 70 million US dollar cash it can do a lot of things and William Dean he's a visionary but he has killer instinct he will find some way”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  42. “One is that the CEO has a lot of pros and cons, and if you want to help him hide a CEO under him, not a CEO above him, that's a lesson I learned, the first mistake. The second mistake we made is that the company went to IPO during Internet Bubble Day 2000, and when the company was actually not ready, and then, you know, we are the first investor, our share price is $5 per share. And then after IPO, it went up all the way to $30, and then the bubble burst, the company went through a lot of plane class action lawsuit, SEC investigation. They become a junk stock. And during the most difficult time, everybody vote to sell the company. And seven board members, five vote for sale, only two vote for not sell. That's the founder and me. And, you know, the selling price? The selling price is 80 million US dollars, and they have like 70 million net.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  43. “Other than that, I become a very strong person internally very strong. I went through all kind of cycle. This is a company where the first investor when I called Netty's founder, it was a small company with a dozen employees owing a code of dormitory. When I called William the founder, he told me, he said, Cassie, I own 100% of the company. I said, I don't want to manage people. I want to be a happy CTO. Could you please hire a CEO for me? I said, well, it was like 28 years old. I was like 30 years old. Oh, yeah, I'm going to hire a CEO for it. So I hired a CEO for him. That was a big mistake. So he couldn't get along with the CEO. They had a big fight. And the CEO had to bring a bodyguard to work. So there's a lot of cultural difference. So the first mistake I made is hire a CEO above the founder.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  44. “Work for Peregrine for three years. I was very lucky I kind of see how Mr. Zong built a number one brand with Wahha. So after Peregrine went bankrupt, I joined Bering. At Baring, I worked there for seven years. And during that seven years, I invested a number of companies who become the richest man in China. So I kind of feel like I wanted to start my own business after working in the industry 10 years, three years peregrine, seven year at Bearing. I kind of want to start my own business. So at that time, I have already built a decent track record. I have invested three guys who become the richest man in China. We're early investor, like one of very kind of mind-changing investment is a company called NetEast. NetEase is a company I kind of made all the mistake I could make in one company. But luckily we still made so much money.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  45. “We work very, very late and secondly when the boss is waiting for you, you cannot walk to him. You have to run to him. So it's really trained me to be much more hardworking, very professional, and that was very, very good experience. I really grateful to my boss and my colleagues at Priceware.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  46. “Manager or partner to work on the audit project. And there's like two persons from mainland China, me and my co-worker Peter. We are the only two sitting in the room nobody book on us. And at that time we feel kind of embarrassed, hugely embarrassed. And later on, one thing really changed. It's like, oh, we have H-share listing. All these Chinese mainline companies are getting listed overseas. And then we got a lot of Audi people sent to mainland China staying the factory for two, three months to do the audit. And most of those people, they do not speak Mandarin very properly, but I'm like very fluent. So I become the coordinator. I started to shine. So that's the working experience in Pricewaterhouse. I would like to say that I work for Pricewaterhouse for three years. And during that period of time, I learned what is professional. Professional means that if you haven't finished your job, you cannot go to”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  47. “We would like to nominate you to try. This is a joint training program between the British government and Chinese government. We're going to train the CPA, UK CPA. It's called ACCA, but you need to sit in the exam. That exam is in English as well, really? Because among all the nominated candidates, I was the only one who studied English. So I memorized the whole book. I memorized the whole book. And then dur that entrance exam, I did pretty well. And that's another life-change event. I was selected by Pricewaterhouse to go to Hong Kong. And I kind of supposed to work there for three years in 1992. It was very early days. And everybody speak Cantonese, I'm the only one speak Mandarin. I don't even understand Cantonese. So nobody wants to book me. It has a junior staff. We normally live in this big room. Like it was like booked by the senior.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  48. “After graduation from Nanjing University and I actually joined the Bank of China headquarter, I was actually just a banking clerk doing bill collection, a very simple thing. But I kind of did it very well and then I, during my spare time, I was teaching my co-workers in English because it's a Bank of China that deal with a lot of foreign customers. I teach them English, but I just feel like, oh, I was not making a lot of progress after three years. I did all the things I could do as a banking clerk. And I become a leader in the youth league. I got all the rewards I could have, but I was not making a lot of progress. I just said to myself, I need change my life. I don't know what is a change. I wanted to go to study abroad, but my parents didn't have enough money. But you know, the lucky thing happened is that one day the general manager of Bank of China came to me Kathy, there's a great object.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  49. “So ever since I studied very, very hard, and luckily I got past to that entrance exam. That is a life-changing thing in hindsight. I think it is really very unfair for the young kids, like at that time where just the junior high school graduate, we don't know the world. It's very much depends on whether you have a good parent to tell you this important decision or whether you have that realization. But I just feel like that education systems, like they already decide your life to be a blue color or white color at the age of 13 or 14, and that's lifetime decision you made. I was very, very lucky at that time. I got my dad, who's kind of encouraged me to go to the major high school that I become eligible for university and look at my, I have like three other girls very similar background with me and their life is very very different. But I think they are as smart as I am. If they”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source

  50. “The vocational school, because if you become a student there, you can get paid 16.5 UN per month and you get a job guaranteed. All my friends choose that because that's where dad and mom become. But I kind of said, oh, I want to go to university. My mom said, why don't you want to register for the vocational school? You get paid and you got current job. I said, no, no, no, I just want to try.”

    2022-03-28 · Capital Allocators · Kathy Xu – Venture in China at Capital Today, Venture is Eating the Investment World 12 (Capital Allocators, EP.243) · IDENTIFIED FROM THE TRANSCRIPT · source