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iAsk x China Daily | Was it the best choice to leave Alibaba?

the first season of iAsk Entrepreneurial Investors program

iAsk
    Feb 20, 2019 11:11 AM  PT
iAsk x China Daily | Was it the best choice to leave Alibaba?

Wei Zhe (David Wei) was born in 1970 in Shanghai. In 1993, he graduated from Shanghai International Studies University with a degree in Translation. He was very interested in investment banking from watching the movie "Wall Street". Back then, the Shanghai and Shenzhen stock exchanges have been established for less than two years, and a lot of areas needed to use foreign theories and practice as references. 

And finally one day, Wei Zhe go tan internship opportunity at Wanguo Securities. After two months of his internship, he was appointed to work for Guan Jinsheng, the godfather of China's securities industry, because of his pleasant and outstanding working style.

Later, he was a senior manager of KPMG, the general manager of the investment banking division at Orient Securities. In 2002, he was appointed as the president of B&Q China. Under his leadership, B&Q became the biggest home-improvement retailer in China in 5 years. On November 2006, he joined Alibaba Group as the CEO of Alibaba.com.


Story No.1:

Before interviewing David, we searched "Wei Zhe" on the internet. The top stories are still reports about "The CEO Alibaba Wei Zhe took the blame and resigned". Alibaba is an inevitable topic for Wei Zhe.

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On November 2006, Jack Ma invited Wei Zhe to take the CEO position of Alibaba.com. Wei Zhe said, he did not found this company, but he wanted grow with it, and brought it out of China to the world. One year later, Wei Zhe brought Alibaba. com to be listed on the main board of the Hong Kong Exchange. In the subsequent years, Alibaba's revenue increased from 1.36 billion RMB in 2006 to 5.5 billion RMB in 2010.

For Jack Ma, Wei Zhe is the most diligent and hard-working person. No matter in the past or now, Jack Ma has never changed his mind about Wei Zhe and called him "a good brother, a good person". Jack is really fond of Wei Zhe.

However, being fond of someone does not mean tolerating one's mistake. In 2011, when it was released that the merchants on Alibaba's B2B platforms were selling fakes, Wei Zhe resigned the CEO position and chose to leave.

 Was it the best choice to leave Alibaba?

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Gloria Ai: Why did you leave Alibaba in 2011?

Wei Zhe: There were lots of articles about me leaving Alibaba seven years ago. People rarely believed what was reported was the truth, so I will restate it here once again. It was really to protect the value of Alibaba. Nowadays, many internet companies in China experience problems regarding product quality or service quality, or even problems affecting customers' life and safety. If the CEO does not resign, then maybe the society will never forgive this company.

The problems back then Alibaba faced regarding trust and other issues were not that severe, and the monetary amount affected was also quite insignificant. However, I believe, this was an important milestone for Alibaba's history. It still keeps reminding the people who are leading Alibaba today, Jing Xiandong and Zhang Yong, "Don't be evil." It is important to keep the bottom line, to be trust worthy and hold on to the fundamental values.

Gloria Ai: Then was the decision to resign the best choice for you?

Wei Zhe: Every step I made in my life was the best choice for me. I do not regret.Alibaba is very successful today, so I believe Jack Ma also made the right choice back then. Because after 2012, the whole Alibaba group, including Taobao started a round of internal inspection process and they found many problems. 

So I believe, only because of my departure that triggered this large-scale "Self-Cleaning" inside of Alibaba Group, the whole Alibaba Group was able to go public listed again, to have the whole platform and trillions Yuan worth of transactions. I cannot say that Alibaba is perfect right now, but firstly, it is still growing, and secondly, it has not caused any significant social problems. Maybe the decision back in 2011 was helpful in this regard. 


Story No. 2:

In 2011, Wei Zhe left Alibaba and founded Vision Knight Capital, entering the venture capital industry. Jack Ma and Richard Li Tzar Kai were both his investors.

As the commander of Vision Knight Capital, Wei Zhe has always been investing in the three areas he is familiar with – internet, E-commerce and retail. 


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Wei Zhe says: "We provide free consultations to break the ice, then we create investment opportunities, and we do not follow others. Before investing in a company, we are willing to provide services first, including strategies, operations, and human resources. Putting management consulting and strategy consulting before investment is what we have been insisting on doing, and is also something very unique on the market.

Vision Knight Capital has successfully invested in dozens of projects following its unique strategy and successfully exited projects such as PPS or 91 assistant.

Does not like to compete with others for deals, does not like torescue the founders with "desperation funding" , likes to provide consulting services to founders, likes to convince well-founded entrepreneurs for additional "plus round" of financing, the entrepreneur turned investor, Wei Zhe always gives people an impression of an alternative investor.

 Does your investment thesis work?

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Gloria Ai: So when you invest in a company, you first provide free enterprise consultation, to see how much help you can provide, and then you invest in this company?

Wei Zhe: Yes, other people say I will first invest in you and then I will provide some additional services. What if one just invests and afterward does not provide any additional help? What if the additional help isn't useful? So our way is to ask you to try first, trying is for free. In the internet business, most things are free at first.

Gloria Ai: Does this work?

Wei Zhe: It works better and better. It works well when the economy is bad, and when there are many success cases. If there is one firm in the industry which you mentored turned out well, it helps to gain a good reputation among the whole industry. I could say that, for the past 6-7 years it is getting better and better.

We often say that one should date because they want to date, not because it is time for marriage. Similarly, you should not just focus on getting money from me, and I also do not necessarily have to invest in you. At this point, we just do some consult ation work together, both of us have no other motivations and just the same wishes.

 

Story No. 3:

Wei Zhe has his own understanding about the entrepreneur-turned-investor: "I often make an analogy that, the entrepreneur-turned-investor is a person who sits in the passenger seat. Neither should he try to control the wheel – that is the task of the entrepreneur, nor should he sit in the back – that is the seat for the investors. To be a good entrepreneur-turned-investor, just think about you are sitting in the passenger seat. A good front-seat passenger should give the driver (the entrepreneur) a lot of guidance, but he should also be clear that being in the passenger seat means he should not touch the wheel again.

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In the first two episode of "iAsk Entrepreneur-turned-investor", He Boquan divided his entrepreneur-turned-investor journey into two parts – 10 years as an entrepreneur with Robust, 10 years as an investor, he drew a clear roadmap of his life; Fu Sheng started his investing career after bringing Cheetahs Mobile to the stock market, with a rewarding career being an entrepreneur and an investor at the same time.

 

How to judge the best timing to become an entrepreneur-turned-investor?

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Gloria Ai: How do you understand the notion of entrepreneur-turned-investor?

Wei Zhe: I often make an analogy that, the entrepreneur-turned-investor is a person who sits in the passenger seat. Neither should he try to control the wheel – that is the task of the entrepreneur, nor should he sit in the back – that is the seat for the investors. 

To be a good entrepreneur-turned-investor, just think about you are sitting in the passenger seat. A good front-seat passenger should give the driver (the entrepreneur) a lot of guidance, but he should also be clear that being in the passenger seat means he should not touch the wheel again.

Gloria Ai: Are you an entrepreneur-turned-investor? Which kind?

Wei Zhe: I am. If we compare the growth stages of a firm to the stages of life, from kindergarten to primary school, high school, and college. We are good at the high school stage, this could be because my mum was a high school teacher. She was a very good high school teacher, but she could not help me with my primary school homework, just like an excellent kindergarten teacher cannot teach college. Every subject hasits own experts. We pick the firms who are at the high school stage to mentor, consult and invest in them.

Gloria Ai: It is hard to pick the right time to become an entrepreneur-turned-investor. As for an entrepreneur and a company, when would be a good timing to say, aside from running the main business, it is also time to invest in other companies?

Wei Zhe: I give advices to lots of companies, and tell them before they consider strategic investments, they should first ask themselves whether they are already the top 3 of their industry. Firstly, if you are not yet the top three of your segment, if you arenot confident about your own segment, why splitting your attention and get distracted? Secondly, often people say companies can do strategic investments to empower others, but if you are not at the top of your industry, how can you empower others? Or do you want to leverage others' power? Then why would the others let you?

Right now, people in business all want to make a "best-selling-product", and invest in some unicornfirms. However, you cannot remember which project or company made Warren Buffet famous. Maybe we have a similar style as him. So we do not want to position Vision Knight Capital to find the next Alibaba. The next Alibaba may bump into you by accident, but it cannot be found.

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