Name: The Evolution of Global Technology: Internet, AI, and Beyond
Uploaded: 2018-11-29
Duration: 14 min 39 s
Description: Neil Shen shares his accomplishments and regrets as well as his visions and concerns about the future of the global tech sector.

Everybody in this room, I think, is very familiar with Neil and his illustrious career, but there may be a handful of people who are watching on video, or sort of, that will, sort of, look in on the forum from other media, who may not be familiar with how remarkable Neil's trajectory has been as an investor You were born in [ INAUDIBLE ] province, the sort of cradle of Chinese entrepreneurs, I guess, we were mentioning just a moment ago that you came from the same home town as Jing- yong, a very, kind of well known martial arts wu Sha novelist And at one point actually lived in the same building with him in Hong Kong. [ FOREIGN ] A big fan of Jong un, went to Shanghai as a boy, studied at Shanghai Jiao Tong University, which is one of China's most prestigious institutions. A math protegy and then went to graduate in applied math and went to study math At Yale. And to try to figure out a way the PhD student, to take some of his math abilities and apply it to finance which is a remarkable thing. And then did something that has become kind of a signature for you. In the middle of that program made a decision that you wanted to Redirect your self and go different way. So you switch to Yell school of management? And ended up then coming out to China again to work as an investment banker of all things. You were head of Capital Market [ UNKNOWN ] Bank as I recall. And then at the height of that career when you were very succesful doing well Again, made a very bold decision to change course and decided to become an entrepeneur as many of you here will know launched CTRIP which is this wonderful online travel company which is so successful in China and globally now and now also Home Inns which is one of the largest hotel chains in China. So then having. succeeded spectacularly in that career as an entrepreneur. You decided to make yet another move in 2015. Correct. And this time become an investor, a venture investor and you did something that was very remarkable. You could have obviously set up your own fund and gone your own way, controlled everything yourself, but you Chose to team up with Sequoia in the United States and became the founding partner of Sequoia. Capital China which as we heard from Alan have gone on to be one of the most spectacular successes in investment history. This year tell us a little bit about the year that you've had. And what's been happening with your portfolio? Well, I think we have some very lucky years, I think in the last 13 years, since we were founded here. I think we have captured the rapid growth of the Chinese Internet, especially consumer Internet. And I see trend that show our public continued sort of follow what have been happened. As you probably noticed capital continued flow into China looking for great companies in this sectors. If you look at China versus US in the consumer internet space, I should say, China is probably a little bit ahead of the game. On enterprises application we're a little bit behind. That's probably how you so look at China and against US. And if you're really has been focus in the area for the last many years. And I've seen this is probably a time you can harvest. Indeed, I've seen the Chinese companies become bigger compared with some of those US counterparts. I think in many cases I would say the product their offering might be more sophisticated than their US counterparts. You know look a pindodo an emerging e- commerce leading player in China, right? Socio e- commerce is something people have been talk about but no one has practice as good as [ UNKNOWN ] do and I would wonder what are the [ UNKNOWN ] of the US? We haven't seen that player. So indeed, I mean the product is getting more sophisticated as Chinese companies getting more scalable And surely, I think if you look at China in a [ UNKNOWN ] space, one benefit we have is that we see great integration between online and offlines. Look at online payment space, initially it's, WePay, it's [ UNKNOWN ] but they're mostly online. They gradually move to offline Today you go the shopping malls, you go to convenience store, people use mobile phones to make those payments. So, I think China is consumer market in many areas you'll see integration of online and offlines. And online play is consolidation and actually making a lot of new changes. In a way people receiving services and from that perspective China is also ahead of the game. << yea .<< maybe partly ="" because ="" china ="" offline ="" is ="" less ="" developed << less ="" [ unknown ]<< compared ="" to ="" u. s ="" so ="" we ="" have ="" the ="" benefit ="" of ="" lead ="" flock ="" and ="" meaning ="" global ="" called ="" a ="" new ="" retail <="" div =""></ yea .<< maybe > So you mentioned this word, harvest which I think is an interesting one. This has been a big harvest year for you obviously if my Math is right. You've got 14 companies, is that right? That went public this year. And one way or another. Yeah. Exchanges. And some of those have been some of the most celebrated and highest valuation. IPOs of the year. Obviously, Pin [ UNKNOWN ] you mentioned there's been [ UNKNOWN ] Neo, another very successful one. That's really remarkable, and then on top of that, you've gone out and raised more money. You raised $ 8 billion, is that right? That's the largest fundraiser in your history, if I'm not wrong. That's really incredible. So, on the one hand you're kind of reaping the benefits of your long investments over the years with these IPOs and then on the other you're getting ready for the next phase. So, I want to ask you about both of those things. Many of these IPOs, especially the kind of more talked about ones Have had difficulties since listing share prices below the offering price. Tell us how you kind of view that. Is that something that's worrisome to you? Do you think that's a long term trend? Is that a temporary blip that you're not really worried about? What's your view? Sure, I actually would not view IPO as a so- called critical Moment or critical, sorta, time point. For me, I think, when we look at those great companies [ UNKNOWN ] have a very long term views. Take [ UNKNOWN ] as example, right? Right. We first invest in [ UNKNOWN ] back 13 years ago. Then we invest in May, 10 years ago. Later on, the two merger, right. Now, they become, you know, this holding company [ UNKNOWN ] which is the dominant player in the autoservices, online to offline services in China. You know, we obviously very happy, they did a very successful appeal But we're not selling any shares in IPO. In fact, in the last 13 years I have not sold any single shares. And I'm not gonna [ LAUGH ] Any, is that right? Correct, yes, so I'm obviously, I think we have a great advantages instances, our LPs, our limited partners is they allow us To have a very long term use on the companies. And they're not anywhere close to pushing us to say let's monetize that profit. Because we see Matron as a long term champion Yeah. In the internet space in China. And I think the gross has killed on, Up and coming, so we'll be very patient, IPO is just a nice milestone before us, it's just another sort of day which they have, can achieve another round of financing, and we'll be sort of holding the stock for many years, as long as the company continue to grow And frankly I think you know they are just in the very early stage for some penetrating the [ UNKNOWN ] market in China. Which was huge, so I think the price you know coming down 10 % whatever it doesn't really bother us. So very bullish then on prospects for China's tech sector. Obviously, I mean, you're now the sort of global steward. So I'm interested also in your view about, say, for example, the United States. The the US market has going up quite as far as China. Are you as bullish about prospects for the US tech sector as you are for China, or do you have a differentiated view there? Sure. When we look at, sort of, global tech space, we look at what are the countries and the areas we should spend our time in, right? So that's obviously not a decision made now. It was a decision made back 10, 12 years ago. Apparently, US obviously is a very important market, and will continue to be important. China is up and coming, and we also look at some other regions. And we identify India and Southeast Asia as another great market. If you look at all those regions, there's a few characters. You need to have They're a large population, consumption [ UNKNOWN ] is one of the, sort of, things among many of those countries and regions. And secondly, internet penetration is high. People are using mobile phones more frequently, there are some others. And lastly, you need to have some great entrepreneurs. And coupled with a very important group of top engineers. You need engineers to make that happen so we do make investment in Europe we do make investment in Latin America but only these three countries and region we have a dedicated fund you know because these three. Have very much covered all the characteristics I mentioned. These are big market, some may not be great today. But you will be great in the years to come. And when we look at the global tech space, we look ourselves say, what's going to happen 5, 10, 15 years down the road. And let's get ourselves prepared to just that. So when I listened to, sort of articulate that envision, I hear kind of that you're saying you gotta think about these market center differentiated way. You've got an advance market in the US, you've got these emerging markets, India, Southeast Asia, you know that you're looking at. That we're trying as historical experience is maybe a good template that guide to [ UNKNOWN ] in this very interesting little transitional period where it's going from an emerging market where it was all about the grand vision for growth. It was a green field opportunity. It was driven by these very charismatic entrepreneurs who are able to attract Huge amounts of funding. And it strikes me that in the last year especially, we've seen a kind of shift from that era of the development of China's tax sector to a kind of, well, a tougher, more difficult At least a different type of challenge where instead of a grand visionary you really need some operating skills. You need to really have a ruthless focus on discipline execution. You have to pay attention to the regulatory framework. You got to make sure your product is safe above all not just move fast and break things. And we've seen some of the visionary founders actually step back a little bit and try to make way, as you say, for a new generation of leaders. Do you see it that way? I'd be very curious to hear your thought about what implications that has for your investment strategies, you think about where to put this next $ 8 billion that you've raised. A very good question. I think I'll propably answer that in two ways. One is if you look at a competition indeed, today the competition in the information technology space in China is morphious compared with 10 years ago, 15 years ago. And propably more so than US. Any viable business model might have multiple players. Right. Trying to compete with eachother and also the big you know internet companies are already and they have aslo expanded their business offerings you know to you know new areas. You know Tencent and Alibaba and Baidu and so on so forth. And the younger company will have more difficult time to break out in the whole competition. It's natural because the internet has developed more than 15 years now. So, I would not call it a mature industry, but it is an industry which is getting a lot more competitive, a lot more crowded But again, each year or each couple years at least, new business we came out, and disrupt the existing establishment, and taking market share. People still still enjoy the growth of our market, but you probably also have to have technology And the finished product to grab a market share from existing player, and sometime from existing large players, is that happening? Yeah of course, look at [ INAUDIBLE ] they all follow that kind of pattern, they have a very very unique product which people had not tried before. And they has expand themself into the so- called the big leagues. So that's happening. And at the same time, I think every company in the inter- space, whether it's US and Europe or where it's India or US had to be very, very mindful. About you know the so called social responsibilities each company is playing right? I think privacy and you know and security are the two top issues for any in this consumer facing mobile internet companies is happening at US as we speak. Yes. adn is also something that I think the Chinese company. Is, also should be very, very mindful and try to adjust that. In fact, in the last couple years, one of the areas we have been, sort of, increasing our investment is our security softwares, helping those mobile internet companies to address that need. So I think that definitely this is getting a very top of agenda on their to- do list. [ BLANK_AUDIO ]

The Evolution of Global Technology: Internet, AI, and Beyond

Leadership

Neil Shen shares his accomplishments and regrets as well as his visions and concerns about the future of the global tech sector.