10 Questions with Fred Episode Twenty-Six | Yizhou Chen VS Fred Wang: I have the courage to fight hard battles, but do not wish to if I was bound to die in it!

10 Questions with Fred Episode Twenty-Six | Yizhou Chen VS Fred Wang: I have the courage to fight hard battles, but do not wish to if I was bound to die in it!

Nov 22nd 2018| Investment By:Mars Finance
"To survive with enough bullets on your waist is more important than fighting to death."

"You can pursue success, but you can't demand success, even if you have succeeded in an instant."

Time: 9:00pm-11:30pm, November 16 

WeChat Group: 10 Questions with Fred Think Tank Group

Yizhou Chen: Chairman and CEO of Renren. Before founding Renren, he was the Co-founder, Chairman and CEO of China's first generation social media, ChinaRen.com, one of China's most visited websites in 1999. He holds a bachelor's degree in physics from the University of Delaware, a master's degree in engineering from Massachusetts Institute of Technology (MIT) and a master's degree in business administration from Stanford University.

Fred Wang: Founder of Mars Finance, Chairman of Linekong (HK. 8267), and founder of Consensus Lab, the founding partner of Geek Founders

Fred Wang: Hi, good evening, and welcome to the 26th issue of Mars Finance--"Friends".

This issue of "10 Questions with Fred Wang" has added new ideas, that is to invite my old friends to be guests and have a comfortable chat. Today's guest is Yizhou Chen, Chairman and CEO of Renren.

Let's take a look at Chen's experience first:

In 1987, he was admitted to the physics department of Wuhan University.

In 1993, he entered the department of mechanical engineering, MIT and got a master's degree in engineering.

In 1995, he worked for Altec (USA), in charge of North Asia regional affairs.

In 1997, he entered Stanford University to study for double master degrees of MBA and electrical engineering.

In 1999, he founded ChinaRen company together with Stanford alumni Yunfan Zhou and Ning Yang and acted as the Chairman and CEO.

In 2000, ChinaRen was bought by SOHU, and Yizhou Chen became Vice President of SOHU.

In 2002, he founded China InterActive Corp. and served as Chairman and CEO;

On May 5, 2011, Renren was officially listed on the New York Stock Exchange.

Let's talk about some anecdotes about Yizhou Chen. He was one of the first returnees to come back to China to start his own business. At that time, he rushed into the student dormitory of Tsinghua University to seek qualified employees. Xiaochuan Wang, CEO of Sogou, was one of these students. The earliest business of Xing Wang of Meituan was sold to Yizhou Chen. Renren raised nearly $800 million when it went public, which made a new record for a single funding. Once popular Alumni Records and Mop.com are under the ownership of Yihzou Chen historically.

As the saying goes, old friends meet, extremely happy. Yizhou Chen and I first met in 2000, nearly 20 years from now. He was very fat, and I do not know if he is still so fat, we haven't seen each other for a long time.

Just the day before yesterday, a news that Renren had been sold at a low price pushed Yizhou Chen into the spotlight again. Renren, which once had a market value of nearly $10 billion, was sold for $60 million, prompting the post-80s and post-90s to reminisce about their youth and the web 2.0 era. Some people say that in the past few years, he has been focusing on pursuing new opportunities, has forgotten the original intention of the SNS community, and also neglected Renren. As a long-time entrepreneur and an old friend of him, I understand various unutterable feelings in entrepreneurship.

Maybe he has a hidden scar in his heart or infinitive grievances, and why not say it out loud in today's "10 Questions of Fred Wang". After all, friendship multiplies joys and divides grief. Yizhou Chen is now on the other side of the ocean in the United States, it is six o'clock in the morning. Then, let's start this beautiful new day with "10 Questions with Fred Wang".


The hidden truth of selling Renren

Fred Wang: First question, three months ago you sent an open letter saying that the future of Renren is lying in young people. I don't understand. Three months later, you sold the business related assets of Renren social networking platform to Le Wang. Once upon a time, Renren used to be China's largest SNS, if you exclude Qzone. In 2011, Renren went public in the United States with a market value of over $7.9 billion. It was China's fourth-largest Internet company by market cap at the time

Some on the net says, for selling Renren, Yizhou Chen is probably doing a promotion on Double 11 (the largest online shopping festival created by Alibaba). Some others say, Yizhou Chen cannot move on, and now finally found someone to clean up the mess (laugh), haha, these are really badass. Many people are waiting to laugh at you, tartly and sarcastically.

Yizhou Chen: In fact, as far as I know, most of Renren users are full of gratitude. The CEOs of several companies we invest in are all loyal users of Renren. Even their wives are found by Renren.

To be an entrepreneur in China, you need to have the basic psychological capacity to withstand failure. When you succeed, people will give you excessive credit, and when you fail, people will laugh at you.

If I didn't succeed in businesses like Renren or ChinaRen, the pressure will be even more than the general type of enterprise, because the product is a virtual spirit consumer products. Users' dependence is very strong in a certain period of time and will think it's great, then the total number of users will be much bigger than yourself by commercial value.

Let me make an analogy: A tribe of warriors found a kind of betel nut growing all over a stretch of magical land and chewed it for years. Over time, they discovered and fell in love with a new kind of tobacco and stopped chewing betel nut. "You haven't been coming to my place for a long time," said the betel nut vendor, "I'm going to pull out." The soldiers heard and responded that:"This not gonna happen, we come back."

As a result, they chewed the betel nut, which was once very delicious for them, but found it did not taste as that in their memory. They spit the residue out on the ground and walked away cursing, and continued to smoke their cigarettes.

These warriors are Internet users who used to be on Renren but now live on WeChat. Betel nuts are various Internet communities they used to be obsessed with, and I'm the poor vendor. It's not that the betel nut doesn't taste good, but that the customer's taste has changed.

Can betel nut stand become big tobacco dealer? The tobacco dealer has a very big tobacco factory, and the factory director is still very diligently urging to improve the product every day, in what ways you, a small plant of betel nut stand, surpass the big factory?

Fred Wang: As an entrepreneur of many years, I know various unutterable feeling in it. To be honest, do you feel unhappy that I use this way to start a conversation with you? Then again, seriously, why you made the decision? Based on what? Is there a hidden truth?

Yizhou Chen: Our consideration is very simple: Never do things by halves. The business of betel nut does not do well, which we cannot entirely blame the customer, we ourselves also have problems. But we found our new business, so we couldn't focus on growing betel nut any more. We'd better leave it to a better team. For us, the this move is an end. But, for Duoniu, it is a fresh start. Every business has different value to different companies. It's an interesting phenomenon that some companies are able to make a common business seem exciting. Duoniu is one of such interesting companies.

Fred Wang: Some people say that, as for selling social networking Renren, it seems that you are still playing behind the scenes. I heard that after the acquisition, you also indirectly took a stake in this asset. Does this asset still matter to you? Are you reluctant to give up social business? Why do you still care so much about Renren today? Ha ha, it seems that a lot of people from the post-95s or post-00s do not know Renren.

Yizhou Chen: One of the most painful things in life may be to learn a new life skills, very tired! After doing social business for 20 years, I really miss some colleagues and things in the past. The Internet community is actually a spiritual product, and like running a magazine, users contribute their own articles. This attribute leads to the users' emotional investment in this asset, especially the high expectation, which is also an important reason why I cannot take it easy. As a heavy bag always on my shoulder, I feel very tired. However, some users are not appreciative and scold you every day. Although I don't care about it, I am really tired after a long time.

I want people to understand that, it is very hard being a webmaster in a website with so many excellent users but scarcely making money.

When it comes to selling, you'll find that people who know about you are most likely to be the most positive and most likely to get this opportunity. Of course, I am close to Le Wang and have a good understanding of the product situation. I can help them better in the process of transformation, which is also what Le Wang and Diezi prefer. I will not actively intervene their business except they ask me to. I completely let it go. Only by doing so, you give other people spaces to change.


Did Tencent beat Renren, or did Renren beat itself?

Fred Wang: The second question is that there is a joke on zhihu.com, a man who seems to be an employee of Renren said in a post, "I was playing a crocodile bath game on my cell phone when I came across Joe(English name of Yizhou Chen) in the elevator. Jeo asked: 'What game are you playing?' While talking, the crocodile was burned by the acid in the game. Then Joe said: 'It will be more fun if replaces the crocodile with a penguin.' " Ha ha ha, do you hate the 'penguin' so much? Today, it is an indisputable fact that Renren lost to Tencent, you think it is Tencent beat Renren, or Renren beat itself?

Yizhou Chen: You are making fun of me again... I used to be very afraid of Tencent, but later I found it was impossible to run away. Now I'm very careful about the "huge species" in the business world, staying away from places where they like to drink or eat.

Fred Wang: The post mentioned before was published in 2012. At that time, Microblog had been in operation for five years and WeChat was launched too. At that time, what did you think of these two competitors?

I noticed that Renren launched the App in 2009, but Facebook, a leading social software in US, did not launch the App until 2011 (if I remember correctly). Do you think Renren is stronger or weaker in the age of mobile Internet? You entered into this industry so early, but now cannot even get a share of it. Why?

Yizhou Chen: Let me answer this serious question seriously...

We're not the most sensitive in the mobile age, obviously not as sensitive as Tencent or MIUI. But the truth is, I came up with the idea of making mobile phones in 2009 and had met Zhengyi Sun several times (at that time, he was making a mobile phone himself). In 2010, I established a mobile team of nearly a thousand people and made products like WeChat called Sixin. and other social networking products from abroad, and then as you said, I got nothing from these for a lot of reasons.

First, we don't have much experience to develop client end. The team has little experience because we are historically doing website. After filling this gap, we again suffered a lack of network infrastructure accumulation. For instance, a lot of computer rooms were needed for the connectivity of several big operators. Communication products must have very short latency. Tencent has working on solving this problem for decades and has already worked it out. As for us, we are unable to provide short latency communications experience in a short time. This is one of the common causes of failure of many other communications companies at the same time. At that time several products failed on a variety of communication related issues, of course, Tencent has been doing communication products for more than a decade before making WeChat, both in web, and client end. Since China's network condition and the interconnection among several operators were not good at that time, to improve fast services, we must build our own computer rooms.

The main reason or an intrinsic reason, is network effect. This was put forward by Sanwen Fang of Snowball. He wrote a book, which was published in 2014, called "The No. 2 must die". Later, when invested in snowballs, I found that he was a wise man. Although the truth is harsh, you'd better pay attention to it, since it is a truth anyway.

Network effect is the biggest difference between Internet enterprises and companies from other industries. It is a unique competitive barrier that only exists on the Internet. After a long time competition and development, there will be only one big guy with the largest value, accounting for more than 90% of the whole industry. This is why there is only one Taobao, one Tencent, but several search engines besides Baidu. From the perspective of network effect, Tencent is the communication network of N x N which is the strongest. Taobao is a market network of M x N which is strong too. And the search is basically a 1 x N network, which is weaker than N x N, but compared to other searches, especially compared to traditional industries, Baidu is worth a lot. I used to say this a lot, but seldom people really understand it. Anyway, you can read Mr Fang's book.

Telephone networks are interconnected, but Internet communications are not. Think about it. If the numbers of China Telecom and China Mobile are unconnected, but the latter is five times larger than the former, will all the Telecom users switch to Mobile? A user will have more friends and opportunities on a larger network, and they must choose to join the larger network if they are in an either-or position.

So let's go back to the question. I was very anxious when WeChat came out in 2011. And then we have acted a lot, but for a year or two nothing came out. When I first saw the book of Sanwen Fang, I only took a glance at it, then I knew I couldn't win this war. When we were listed, the number of users was 1/10 of Tencent's QQ. After WeChat was launched, the address book was activated. The previous inactive old QQ users were also activated. QQ has cut off our future new users, and WeChat has cut off our fresh graduate college students. Think about it, next to the betel nut shop, there is a gum shop on the right side and a tobacco shop on the left. They provide free commodities with a shop face 200 times bigger than yours, and meet the same demand as you, what do you think of the next step of this betel nut business?


"It is a huge waste to struggle in the place where you are bound to die"

Fred Wang: The third question, in the early years of the rise of the mobile Internet, there was a theory called "ship ticket theory". Companies are wondering whether they have tickets, and how many. Mobile social hot spot tickets in succession were got by Microblog and WeChat, Renren was squeezed off the ship soon. In this respect, you have tried many hot industries to breakthrough, O2O (nuomi.com), games, (wan.renren.com), Internet finance (fenqi.renren.com, licai.renren.com), live (zhibo.renren.com), used car (kaixin.com), blockchain (RRCoin), to be honest, you've worked on many hot fields. So let's count, which of these seven or eight new fields do you think you have won?

Yizhou Chen: This is very easy to answer. Looking back, except for new businesses that had absolutely nothing to do with Renren's social business, such as Internet finance and used cars, other efforts were a waste of energy, time and money. It is a huge waste to struggle in the place where you are bound to die. It is better to leave the battlefield early and give it up to the more suitable troops. Let's go somewhere else to find a new battlefield. The question of winning or losing is less important than the question of whether or not to go to war and keep fighting.

Fred Wang: There are many voices saying that although Renren has a lot of money, there is no effective breakthrough in the process of development, which is related to your management style. I don't know what your management style is, but how do you feel about the criticism?

Yizhou Chen: Let me do a self-evaluation, I feel that my management ability and IQ compared to Internet peers is at medium level or lower, but many people do not know that the effort I put into work is among the first 10% I think. Well, Sanwen Fang said "The No. 2 must die", but he didn't mention that a hard-working and highly competent "No. 2" would die. Yes, he might mean this hardworking "No. 2" must die either, but slower. We didn't sell Renren until now, is this means we're working too hard? Will Renren die earlier if someone else running it? I'm not sure. What do you think? Logically, should be like this?

Fred Wang: I agree. In my opinion, among China's Internet giants, there are two who started their careers around the same time with you. Jack Ma is good at grasping corporate culture, and do the work of political commissar himself. Pony Ma is good at grasping products, and take charge of user experience himself. It seems that the success of a business has little to do with the CEO’s management ability. What do you think?

Yizhou Chen: In the Internet industry, for a product category with strong network effect, management is important but not the most important. The most important thing is being one of the members of the vanguard rushing into the war and quickly become the boss. For example, Taobao is the second to rush in the C2C e-commerce, and there is ebay in front. So it wasn't easy to beat ebay, and of course ebay made a big mistake.

Tencent is the first to rush into the instant messaging and sit firmly in the PC era. When mobile just came out, it made a very wise decision to arrange three in-house teams to develop WeChat. This is all about boldness and fighting ability, which are more important than management ability. Once the war is over, the rest of the time is to clean up the battlefield and count money. The management in peacetime is much easier than wartime.

When found out that we could not catch up WeChat in late 2011, we were planning to buy Talkbox, but SNDR invested in it first, so we hesitated and missed it. From 2012 to 2013, we were even going to invest in SnapChat and Whatsapp. Do you believe that? Each company has its own circle of competence, but the reason is network effects too. Don't forget about network effects. We considered mobile messaging opportunity very early and very clearly, just counld not catch it. It's surely not our thing, we're not experienced enough in this field.

Fred Wang: What do you think you are good at? What abilities do you think a good CEO should have?

Yizhou Chen: The most important task of the CEO is to find the thing best suited for the company and the team and to do things within the range of competence. If the CEO's goal is to build a long-live big company, he must be lucky enough to find it. Sometimes you find a great thing, but it's not your thing. Just like mobile communications is not our thing. The CEOs of mi, yixin, laiwang.com were all better than me, but they failed either. Communication is Tencent's thing, no one can touch it. When you want to find your thing, don't choose to beat the weakest, because you can't make a lot of money even you win. You should aim at those industries and competitors that are big but weak.

Then why is there no irresponsible remarks to other CEOs? Winner takes all. But they have successful main businesses, and just incidentally made a thing to add chaos to Tencent, and it is not important they may success or not. Communication is our main business and it's normal to get yelled at if you lose. However, if someone wants to scold, please think about the following first. As for communication, Jun Lei, William Ding and Jack Ma all considered it and tried it, but no one beat Pony Ma. Concluded from the result, the logical conclusion can only prove that Yizhou Chen is no better than Jack Ma, William Ding and Jun Lei in communication, you can't even prove I'm weaker, because they can't exceed the WeChat even they have more resources. Everybody lost to Tencent on communication, there is no meaning to sort the failures.

If someone tells me that I am not good at communication or business, and I do not know how to manage. Please ask this man to find a person who does not make investments, but only focuses on the business, and also has first-class management, and is better than Jun Lei, William Ding and Jack Ma, OK? If you finds this man out and people all agree, I will buy Renren back. You and the master you find sit together in the time machine that I rent with pots of money to go back to 2011, and let the master to be the CEO, you be the talent scout, to fight Tencent. Sanwen Fang might laugh out loud after hearing this science fiction: The future cannot be foretold, and the No. 2 must die.


My competitors hate me, if I was in their place, I’d hate myself as well.

Fred Wang: fourth, after you sold Renren this time, there are a lot of media that have dug up your stories to satisfy the peeping desire of the bystanders. Many people have just realized that you are a true veteran of the internet startup with stories that can be transferred to the big screen. Chaoyang Zhang was your former boss, left the business several times, but he is still jogging and doing broadcast as he fights in the frontline. What is your view of today's Chaoyang Zhang?

Yizhou Chen: There are many stories in a small town. Chaoyang Zhang’s current status is pretty good: he swims and jogs, accompanied by a beautiful fitness instructor. His physical health is even better than most of the young people I know, and I think he lives happily with an extremely high quality of life. I admire that. At this age, should the competitive heart be a little weaker? What constitutes a good life? There is only one ending for everyone, will the successful people’s successors hold up the family business? If so, for how many generations will the business last? My guess is that probably they won’t last three generations, one would be a miracle. So what if it succeeds to prolong? Are they necessarily happier than others? These are all realistic questions, good questions, and I've been working through them for the last couple of years.

Fred Wang: What about Xing Wang? He founded Xiaonei which you bought when it was closing down and again Fanfou by Wang closed down by the government. It was not until Meituan succeeded after years of painstaking efforts. Meituan was listed in September this year, issuance of the market value of more than $50 billion. Have you ever imagined Xing Wang’s achievement today?

Yizhou Chen: I knew very early on that Xing Wang is a formidable role. In 2005, when 5Q University Network was competing with Xiaonei, his business development team would compete with our campus site advertisement effort by tearing down our flyers. I could feel the pressure of his competition. Then I realized it was not going to be an easy win, so I decided to just buy it.

In recent years, I have been hanging out with Xing Wang and found that he enjoys reading and asking good questions, far more than many other CEOs I know. You see I'm surrounded by some amazing people, Jun Lei, Hongyi Zhou. We were at a CEO study session with Xing Wang, Yahui Zhou, and Xiaochuan Wang. The news of Sogou listing came out that day, and we were all congratulating Xiaochuan Wang, and then we discovered suddenly that I had a lot to do with these people: they all worked for me at different times, and now they're all in charge of bigger plates than me. And now we are all classmates talking about all sorts of fun things. I felt the opportunity was magical and am genuinely happy for them, also extremely honored to be one of them. Old soldiers need to hang out with the young ones more because once they are incapable being on their own, they at least will get some leftovers from the once-young soldiers.

Fred Wang: 5Q Campus Network, if you haven’t mentioned it, we would have forgotten about it. I don't know if you would like to mention the event with Binghao Cheng, the real or fake Kaixin network competition. Two years ago, Binghao Cheng has also left his own creation of Kaixin network which left many people feeling sorry for him. It was not an easy fight to take down your competitor Kaixin network at that time, and you even carried the “fake Kaixin” ill fame for a while. Years after the event, do you feel the process was worth it? In fact, you did win the fight for some time but ultimately what you did came to an end as well. I guess what I’d like to ask is that if Binghao Cheng was not struck down by you, would he have the opportunity to grow Kaixin into an industry giant?

Yizhou Chen: Way to bring up something I didn’t want to talk about. Actually, Kaixin network was defeated by QQ Farm. QQ Farm bought the original code of Kaixin Farm on Renren public platform, and transferred most of the users of Qzone to it. The Alexa curve at that time, after the launch of QQ farm, Qzone grew rapidly while the growth curve of Renren and Kaixin flattened out. Stealing harvest was an innovation of China's internet, and a big reason for the rise of social networks across the world. But you see, the company that invented stealing harvest, Shanghai Five-minute company seems to disappearing from sight as well. Business competition is brutal, it's certain that Byung-hao Cheng hates me. But an eye for an eye, if I was in his place, I would hate myself too.

If there is no QQ farm, Renren would have survived a little better, and Kaixin would have been listed. But if Tencent released WeChat, the second and the third ranking competitors will still have to “die”. The only possibility is that Renren and Kaixin would merge and penetrate the students and white-collars user groups (even now, these two groups are still very distinct), and then would have to miraculously created another WeChat-like product or released it earlier than Xiaolong Zhang's WeChat with desperate promotion.


To survive with enough bullets on your waist is more important than fighting to death.

Fred Wang: Now we are at the fifth question. It’s said that you are the real investment master in the secondary market, which you have achieved a lot. For example, you have invested in the stock to pay salary to employee, and I’ve heard that you have invested in a lot of good company in the FinTech, transportation, and logistics such as Xueqiu, SoFi, luoji Logistics. Others say you are not good at making products and running company, but good at investing. Kunlu’s Yahui Zhou used to be an employee of Renren and he calls you his mentor, is that true?

The best way to determine whether someone is good at investing or entrepreneurship is to make a computational comparison. Well, have you made more money on your investments than on your business in the 18 years since this century?

Yizhou Chen: It is a compliment. But I do like investing, including in the secondary market. My personal angel investment record is also very good, surpassing the investment I’ve done for Renren. I roughly calculated that we spent hundreds of millions of dollars at the war of Renren and Tencent, and buying 56 and later Nuomi. At the same time, we spent hundreds of millions of dollars buying back shares of Renren (remember, don't buy back your own shares easily, because when your shares are undervalued, there will always be more undervalued shares out there, so it's better to buy someone else's shares than to buy them). The spin-off a few months ago cost another $100 million in cash, as we spent a lot of cash and the company would be dead if there was no new funding. However, the company's net asset ratio, which includes the spin-off, has not changed much since it was first listed. Why? Investment, as we earned $200 million just by investing in 360.

Well, is good at investing a weakness? Is it more honorable for shareholders to burn their money out of an all-in competition? I think to survive with enough bullets on your waist is more important than fighting to death, especially to avoid a fight you know you’ll lose. It's not that I don't want to fight a difficult battle because I've fought and won difficult battles. I have the courage to fight hard battles, but do not wish to if I was bound to die in it! This is what a lot of people wouldn’t understand, to go to a huge market and be a definitely “dead” second place.

We had tens of millions of student users playing stealing harvest every day at Renren’s prime phase. Many of them, until now, still regard themselves as the population of the Internet in China. They did not know at the same time they are stealing harvest off class, there are elderly, uncles and aunts, younger brothers and sisters, migrant workers and civil servants, also connected onto QQ farm stealing harvest at the same time. QQ's network effect was 100 times that of Renren. The once-student users of Renren are the main work force of today’s society, using WeChat. Who wants to get a network ten times smaller fighting against a network that’s ten times larger, please get a hundred billion funding and get someone else to do it, because I am done. 


Renren and blockchain, it had triggered a thought for a moment.

Fred Wang: At the end of 2017, Renren intended to do a social project of blockchain to issue tokens, called "Renrenfang". It planned to issue 1 billion Renren tokens. Was there any expectations? Did someone else write the white paper for Renrenfang?

Yizhou Cheng: We were interested in blockchain at the time because our overseas business Trucker Path was considering it seriously. And the idea of Renren and blockchain, was merely a triggered thought for a moment. But at that time, blockchain was a craze, any decent Internet company comes up with an idea and it would relate to blockchain, then all kinds of magical things would just happen.

Fred Wang: Are you still bullish on blockchain? Recently, your startup partner from 20 years ago Ning Yang became a hot topic in blockchain space. He has entered blockchain with a very high profile beginning of the year, founded CDC and then left also at a high note at the end of the year. "Internet old timers entering in the token circle are no match to young people, I’ve been harvested," Ning Yang said. However people in the circle have risen up and attacked Yang together saying he’s made his money and trying to blame others for the bad deeds. Do you feel lucky that you’ve never did ICO?

Yizhou Chen: Haha, Ning Yang is my former business partner, so I have nothing bad to say about the guy. However, according to my limited observation of the token space, Chinese people have the spirit of innovation, second to Jews. Chinese will pursue any new trend in science and technology with great enthusiasm. In the process, there bound to be bubbles and probably the largest ones in the world: just like the tulips in Holland.

Fred Wang: Although you didn't join Yang in blockchain, I’ve seen you invest in several U.S. and Japanese blockchain companies which transform home rentals, transportation logistics with blockchain technology. Could you forecast the industry for us? Have you studied the recent rise in popularity of STO?

Yizhou Chen: Blockchain is something we've been looking at a long time but never really invested in. Six years ago we saw a chip company in Israel preparing to mine in Iceland. Last year, too many famous people boasted about how many bitcoins they had. I feel falling behind so I’ve invest the equivalence of a dozen bitcoins (a sweet little bet) on a stock of a Russian mining company. I even wrote a short piece of science fiction about blockchain, thinking it did not have enough creativity and haven’t published it yet.

Some blockchain applications make sense, such as a transport logistics platform where each order is huge, just like Trucker Path. Listed companies with strict regulation, as we lie behind of this race, might as well just wait till the rules are out.


“There won’t be new progress by clinging to old notions!" 

Fred Wang: Now let’s move onto question seven. A few years ago, Hongyi Zhou referring to the three internet advocates from Hubei as "you being the most intelligent of the three, Jun Lei being second, and him being third." Lei had also said at a private occasion that he admires you the most. What do you think of these two people, Hongyi Zhou and Jun Lei? If you were to describe Zhou and Lei each with one word or phrase, what would you say? Do you think integrity is the most important for someone wants to achieve major success? 

Yizhou Chen: Ideas from abroad are new, but for the past 20 years, the difference between China and the United States has shrunk to nearly nothing now. Hongyi Zhou said that maybe because I’ve invested in his secondary market when 360’s stock was the most depressing and made money as a result. He actually works harder than I do and smarter than I am. Jun Lei is my role model, as I have visited him when I first returned to China for internet business and he was way more successful than I was. I’ve entered the industry quite early when working on ChinaRen, and he used to discuss internet with me; after when I was working on zhuoyue, I’ve also found the same feeling of being on the right track. What I admire him the most is that after he had left Kingsoft he went into investment for two years until he found the right project and jumped right in, which he later made it into Xiaomi. The entire decision making was incredible. Beginning with leaving Kingsoft, because not every founder has the courage to make such decision. Begin from Kingsoft resolutely jumped out, not every founder has this kind of courage. This decision determined everything that comes later. Actually when you have left a listed company, were you also making it as if all-in? 

Fred Wang: I am planning to purchase Linekong with Mars Finance. (I am just joking) Linekong is my life, where Mars Finance is my dream.

Yizhou Chen: Ha! That’s really something! The conclusion is if an old business is no longer exciting, then get out of it. There won’t be new progress by clinging to old notions!


"blockchain is the religion of a new era, it will worth a lot if succeeds"

Fred Wang: Question 8, this year, a batch of internet technology companies have been listed including Xiaomi, Meituan, Pinduoduo, Yingke and so on. The number of Internet companies listed this year may be more than past three years combined. Some people say that 2018 is the last harvest with everyone trying intensely hard to get listed, to harvest while they can. As an entrepreneur and investor for so many years, do you think the internet has entered bottleneck phase? Dividend are disappearing, startup chances are slim, and VCs are losing vigour. As a “internet veteran” who’s been through many ups and downs now, where do you think next growth point is for internet industry?

Let’s make that into a multiple choices question:

A. Artificial Intelligence

B. Blockchain

C. Cloud Computing

D. Big Data

Which one would you choose? Of course not to choose from the list is also fine. Which one from the list would you think your opportunity lies within? 

Yizhou Chen: I would choose artificial intelligence. The demographic dividend of the internet has come to an end, the future is negative. Depending on the annual emergence as young people's internet companies, sorry to say that, but now fewer “babies” are born each year. Artificial intelligence is the technology growth point in the future. Cloud computing, big data are all the tide of the past, they will continue, but is no longer the new trend. Friends from the token circle might not like what I say next but I think the overall blockchain value size is small, and cannot be considered at the same level with AI.

These are the reasons why I picked AI. There are three technical revolutions in human history: the first is agricultural revolution, which solved the problems of population growth with each square meter of crop feeding more stomachs. As born a natural labor, there are two main production tools built in for human: muscles and brain. Second is the industrial revolution hundreds years ago, which allowed fuel to drive internal combustion engine that replaced and significantly magnified the power of human muscle. Industrial revolution not only improved the health and living conditions, but also caused baby boom. Third is the AI revolution that’s happening now with machines and computers replacing human brain. This revolution will generate more value than industrial revolution because some kind of communism might take place that require individuals to own a hundred robots. AI is so powerful, to a point that makes me scared.

In a sense, blockchain is a kind of religion, as long as everyone believes in it then it contains value. Happy now? AI is not religion, it is a labor force. Blockchain is the religion of a new era, it will worth a lot if succeeds. Metaphorically, AI is equivalent to the smart phone years ago, and the international market is equivalent to the Chinese consumer Internet. So I want to mimic Jun Lei as he left Kingsoft, I handed over Renren to two trusting associates as I am seeking my Xiaomi now, is that clear now? 


"You can pursue success, but you can't demand success"

Fred Wang: Question 9. I’ve seen you speaking of your believes in the internet industry and have been cultivating for three years during media interviews. And that your main focus is communication and real estate, how are the development of these businesses of yours? Do you mind giving us an update on the progress? 

Are these the future paths for Renren after the social network service (SNS) business? The industry prospects for these two industries are both very broad with a huge market, as I understand. However these two industries have little to do with your past business, where did your confidence of entering a completely different direction come from? I mean, there is always “what ifs”. What if you missed the target? What if your bullets ran out? 

Yizhou Chen: The industry market has not developed as quickly as the consumer market, and winner-takes-all rule does not apply here. Late- comers will always have opportunities, but different from that of WeChat or Taobao. Just recently, a SaaS company in Uta was sold for $8 billion after 7 years of operation. Our US headquarter is just next door to the company, and we were step away from success if one would say.

So again, you can pursue success, but you can't demand success, even if you have succeeded in an instant. The world runs like this, one should not find excuses to defy it, or the chance of failure will increase and happiness would be lost forever. An entrepreneur works hard for good life, and if you are only pursuing fame or fortune but living in bitterness, then being happy would be very far to reach. It’d be silly to be unclear of some simple yet defying human’s true nature logic. 


Internet Effect!! It’s never enough stress to put on the most important things.

Fred Wang: We come to the last question. Just not long ago, Huateng Ma, CEO of Tencent, raised a question on Zhihu (socialized website of questions and answers): “What fundamental scientific breakthrough will affect internet industry in the next decade? What changes does the integration and innovation of industrial internet with consumer internet?” Many people answered the question and shared their thoughts. What would your answer be if you were to answer the question?

Yizhou Chen: Consumer internet lowered the cost of new technology, for example, the apple series products are quite pricy when first came out, and most companies can’t afford it. As consumers demand increase over time, the cost of apple products decreased, meanwhile consumer’s purchase habit is created which lead to apple’s unshakable status in the industry now. I think this is the most reliable relationship between consumer technology market and industrial technology market, which is a one directional cause and effect with two vertical components: price of products and user habits. Dingding would be a good example: WeChat had already cultivated user habits and set price to free and Alibaba created it. As for me, someone who enjoys thinking about future, these are never problems…

Fred Wang: You have said social products need to be handed over to the younger generations to create many occasions. My impression is that you’ve always been very confident. When your company prevailed, you were confident; and when your company wasn’t doing too well, you were still confident. My understanding of you is that you are a confident person from deep down. Have you ever thought that one day you will come back as a triumphant champion once again?

Yizhou Chen: There it is again, you are flattering me. Social products are hormonal products, which suits for young people with higher level or hormones. This is a rule that can’t be broken, unless I want to get estrogen shots every day. Put it this way, you know during the two years Jun Lei left Kingsoft, he has invested in two good projects, one is Ucweb and another is YY. Renren is working on several projects right now which I cannot promise every one of them will turn out to be like YY, but at least one or two will be similar.

At the same time, I have to honestly say that I have not found the Xiaomi for me yet. This takes time, opportunity and a trend-storm maybe. I can estimate where the storm is going to be and what direction it will be. If my luck is bad, then I would miss the chance and that’s normal. If in five years when my current company’s operation is matured, I will retire completely and hand over business to someone I trust, so I could focus in early stage investment and secondary market investment.

Then I would be able to work five hours a day, read three hours and chat with at least one interesting person every day. Work out like Chaoyang Zhang (starting from now), go visit places (I am doing that a lot now actually), and spend more time with my wife and kid (this is what I need to spend more time in) are what I need to do and it feels comparable to a “triumphant champion”in a traditional sense. I’ve personally involved myself in many businesses, very hands-on, and learned many lessons through failures. Benefit of that is my investment experience helped a lot in finding the next break point in the market. If I do not know investment, then it’s zero chance for me find Xiaomi for Yizhou Chen. If my investment ability is not bad, then the chance would be improved exponentially.

Fred Wang: Could you predict which internet companies will survive or die in five years? What are the top five internet companies after five years?

Yizhou Chen: Most of them will survive, with value concentrated more to the tip of the pyramid. Top five in five years would be tough to say. By physical laws, side market under higher internet effect won’t change much such as in telecommunication and e-commerce. They will continue to expand and affect other market such as in finance. Side market with little internet effect will generate many professional talents, but not to exceed Tencent and Alibaba because the walls are too difficult to get over. Internet Effect!! It’s never enough stress to put on the most important things.

Companies that do the dirty and tough work, for example Xiaomi and Meituan make these dirty works a wall. Their business models have somewhat a network effect, swallowing the gigantic traditional business industry they have risen from, thus their rankings are slowly climbing and will continue to climb. Of course, their competitors are also very remarkable, which push Xiaomi and Meituan to never rest from trying hard. 

On AI, my take is that Baidu has the best potential and they should be focusing on sim. Everyone knows how to make a sim, most companies that does cloud computing know how, and cloud computing has really made IT value chain flat. But AI is wide, new comers and development directions are countless. VC’s funding is abundant, as a chaotic battle will be observed with many players on the field. AI sim and design principles are not difficult, it’s just a graphic card, which low energy consumption and speed are the most important factors. Since we are on this topic, Renren has recently invested in a sim design software company with super calculation and electro-field calculation principle as foundations that can solve anything. As long as the bullets are there and the hunter there, the ducks are not going anywhere.

There is a planet called earth in the solar system, there is a snowball on planet earth, and an abbot lives on the snowball called Sanwen Fang or “blinded crowd from truth”. Years back, he published a book called “number two must die”. I have never read that book because it will make me upset. Anyone getting into social products or telecommunication should read the book before starting, and have a fortune telling by the abbot.

Fred Wang: Time flies, it’s never enough when I am having a conversation with Yizhou Chen. As a good friend, I am very glad Yizhou could talk about Renren’s past, now and future with a normal heart and a peace of mind. A phrase has always inspired me which I’d like to share with Yizhou at the end of the session today: If there is still a spark that can’t be put out in the heart, then there is still chance to create one dream after another.

Just as Yizhou’s release of “Renren’s future depends on you” few months ago: “reality is cruel, past is always sweet, youth is beautiful, but regret is inevitable… what we should be concerned is how to be the best self in the future.