King of Capital

Chapter 21 My Grandfather is a Tea Farmer
Art, cleanliness, and self.

The second Xie Jingxing sat in front of Mr. Chen, he labeled him. This is probably the habit of every professional venture capitalist.

Venture capital, including angel investment, often invests not in an early-stage company that has not run a successful business model and has not been validated by the market, but in the entrepreneurial ideas and the founders themselves.

Why you and not someone else?
When Lei Jun started Xiaomi, countless investors flocked to him waving checks without asking why, because he gave the answer with practical actions at Kingsoft.

There is no need to talk about industry prospects, market size, or entrepreneurial concepts. As long as you answer this most important question clearly, all venture capitalists will dare to invest with their eyes closed!
The core of Song Anli's routine questioning is also the same, but Mr. Chen is a self-deprecating person with a romantic temperament. She is obviously incapable of taking the lead in the conversation, and the latter becomes the host, unable to tell who is the father and who is the son.

If we let Mr. Chen take the lead and continue speaking, he will be completely immersed in the comfort zone of his own thinking. He will instinctively refute and argue with any question, and he will feel that no matter what others say, it is an attack on him.

There are more or less such people in the environment of ordinary people, but the proportion among entrepreneurs is particularly high.

How could a normal person who is not paranoid, selfish, or sick want to start a business? It would be difficult for him to run a good business.

Mr. Chen’s problem was that his condition had seriously deteriorated, and when faced with investors who were unconscious, he had to use strong treatments to restore his composure.

"Our entrepreneurial team includes visual algorithm engineers who have won prizes in the Penguin Image Algorithm Competition, and we have signed exclusive contracts with hundreds of domestic and foreign trendy artists to join 'Jihe'. In fact, we don't just want to be a simple photo social software, we want to be a picture and text sharing platform that leads the trend of life..."

Feeling the pain from Xie Jingxing's powerful punch that hit his lung tube, Mr. Chen seemed to have regained consciousness and explained why he could succeed.

However, Xie Jingxing shook his head the more he listened. Visual algorithm engineers are very valuable. Beauty cameras, mobile phone brands, short videos and the like all have a huge demand for visual algorithm engineers.

Exclusively signing trendy artists is quite interesting, and it’s a beggar’s version of the operation where Penguin Weibo and Weibo are fighting to attract celebrities to join.

Relying on the first-mover advantage to sign a large number of exclusive content creators, coupled with the background of a high-quality founding team, it seems that I am the only one who can do it.

However, Mr. Chen himself is still not up to the task and has made the common mistake of founders. Once he can no longer bear the pressure from investors and collapses, he will try too hard to show all the ideas in his mind, even ignoring the fact that some ideas have not yet been written into the business plan.

He wants to optimize the portrait filter based on the visual algorithm and his own art background, and when the user base is expanded, he will develop a cosmetic surgery auxiliary algorithm program based on a large amount of portrait data and enter the medical beauty industry...

To sum up: beauty camera + Xiaohongshu + Groupon (domestic Dianping) + medical beauty.

The idea was good, especially the vision of the cosmetic surgery algorithm that had been around for more than ten years, but it was too messy and complicated. Xie Jingxing really didn't think he could accomplish this job with the ability he showed today.

"The story is well told, but we have limited funds. If there are other institutions leading the investment, we will definitely follow." Xie Jingxing ended the meeting with a common excuse.

Mr. Chen was in low spirits and barely maintained his decency to say thank you. He had to meet with Zhao Mengche's group next, and he hoped that the other party would see that he was a piece of gold that was not appreciated for its talent...

Leaving the coffee shop, Song Anli sat in the passenger seat, typing away on the computer with her legs resting on it: "Take the initiative in the conversation and put the founder under pressure to test. The founder's paranoia is not necessarily a bad thing...Anything else to note?"

"Founders are absolutely not allowed to belittle their peers. It doesn't matter what they say in private, but it is absolutely not allowed in front of us investors." Xie Jingxing used two "absolutes" in a row to emphasize.

"Then Mr. Chen..."

Song Anli thought about how Mr. Chen had just jumped up and down and blasted Instagram, and couldn't help but smack her lips: "What's the logic behind this?"

"Competition in the same industry can kill people. Founders should be unable to sleep because of the existence of their peers. Denigrating their peers in front of investors is essentially irresponsible and difficult to control."

Xie Jing Xing glanced at her and said, "Devaluing peers, talking about long-term planning beyond the business plan, and putting the market, industry, and philosophy before the founding team are the three most common and unacceptable mistakes for founders. The others are all irrelevant."

"Okay, then what is the main point of my mistake?" Song Anli stopped recording and asked for advice humbly.

Xie Jingxing helped analyze, "Anxiety and guilt are common problems for many investors who have just entered the industry. On the one hand, they feel that they have to find a place to spend their money, and on the other hand, they don't understand the industry that the founder is in. They are also young and inexperienced, so they can't help but feel inferior to the founder who is rich in social experience and in his prime."

"The fact is that clear-headed founders will not underestimate any investor, and it is the private equity manager who should be worried if the money cannot be spent."

He smiled and instructed: "Don't think you have to complete the assessment task. Take on the same attitude as you would when dating a dog. You are giving him a chance to test yourself."

"...I do think Mr. Chen has some great ideas. There is no picture and text community like Instagram in China, and the concept of sharing trendy lifestyles is also good." Song Anli looked shy like a newlywed bride.

As for me, I'm a bootlicker. I cleared out all my posts after graduation. Now I'm so busy that I haven't had time to replenish them. I don't want to replenish them for the time being.

Xie Jingxing did not comment. Xiaohongshu was initially launched a few months later in the form of a PDF outbound shopping guide. It was not until the end of the year that a shopping app was built, and the "welfare club" e-commerce function was launched the following year.

From this series of layouts, we can see that its original intention was to engage in overseas shopping and cross-border e-commerce. Through practice, it was found that it did not understand how to play it, so it went around and around and determined the model of picture and text community life sharing. Occasionally, it still had the urge to try its hand at e-commerce business.

On the other hand, Weibo and Penguin fought to a draw, and then they finally got the dividend of the popularization of mobile smart phones in China. They were dazzled by the rapid growth and focused on studying Twitter.

It wasn't until 18 that he turned around and created a picture and text community called "Oasis" due to anxiety about content production. However, when he opened his eyes, he saw Xiaohongshu in front and short videos behind. Oasis was more desolate than the Taklimakan Desert, and it failed without making any splash.

Mr. Chen’s ideas are one version ahead of Xiaohongshu and Weibo, but unfortunately he is not good enough.

Taihe Capital's senior investment managers have to read hundreds of business plans every year. Only one in ten is worth a detailed discussion. Then, seven or eight out of ten are screened out, leaving only one in a thousand that makes it to Taihe's internal project discussion meetings.

The entire assembly line process is to select a founder who has both ideas and abilities. There are too many people like Mr. Chen, and they are of no value at all.

"Is there any way I can improve?" Song Anli didn't want to leave the conversation awkward, so she took the initiative to find a topic.

Xie Jingxing considered for a moment and said, "Venture capital is very personal and there are no fixed standards. All I can teach you is to increase your curiosity and become a generalist. This applies to both companies and people."

Song Anli's idol Xu Xin is well-known for his heavy investments. If he doesn't invest, he will invest as much as he can; Sequoia Capital's Shen Nanpeng is even more ruthless. He will identify a field and make large bets, filling the entire track with investment to raise funds; Hillhouse Capital's Zhang Lei likes to look at value, the value of the company and the value of the founder. He has a famous saying: Be friends with time.

The radical conservative Zhu Xiaohu of Jinshajiang who likes to give orders to the founders, and the IDG Xiong Xiaoge who is meddlesome and ruthless...

These bigwigs who have become experts in the VC field all have very strong personal investment styles, which are all based on their own advantages.

Why can Shen Nanpeng raise Gu? Because he is Sequoia, he can invest in whoever he wants!

Why does Zhu Xiaohu have the right to tell the founder what to do? Because he has the ability to artificially create an "investment boom". Not to mention Xu Xin and Zhang Lei, the same goes for Xie Jingxing. In his previous life, he was more aggressive than Xu Xin in running Taihe, and he could outlast Zhang Lei.

This is his own advantage and investment style, which others cannot learn.

…………

At noon, Xie Jingxing planned to eat something to fill his stomach, but Song Anli treated him to a French meal.

Fortunately, they were able to finish the French meal quickly with Mr. Chen without wasting time. Shen Xin showed up on time to accompany them to meet the founder of the selected milk tea brand.

The location is also suitable. The restaurant is near Wujiaochang University Town, and the milk tea shop is on the first floor of Building B (office building) of Wujiaochang Wanda Plaza.

The store area appears to be over 100 square meters at first glance, and the overall decoration has some of the ancient flavor of the white walls and green tiles of traditional Bai folk houses, with a large number of wood carvings and hand-woven soft furnishings.

There were no flowers or birds painted on the wall, which should have been in line with the so-called "white wall and painted wall". Instead, two large characters were written in thick ink - "Don't Cross".

"Hello, I'm Cui A-Liu, the founder of the 'Bu Du' milk tea brand. You can just call me Liu Liu."

The founder is a tall girl in her twenties. She wears a loose casual suit jacket and a halter dress in the same color. Her long black hair flows over her shoulders and she wears a pair of flat square-toed loafers.

No matter how you look at it, it looks like he just randomly bought a men's suit to show respect when meeting an investor.

The two parties found a place to sit down and ordered four cups of milk tea. Cui Aliu apologized and explained: "I wanted to meet in a private and quiet place to chat, but in the end I felt that it would be more intuitive to showcase our brand through stores."

"It's okay. I will discuss some issues with you and my colleague will be responsible for taking notes. Is that okay?" Song Anli imitated Xie Jingxing stiffly.

Cui A Liu openly and half-jokingly resisted: "Why does it sound like due diligence?"

"Just kidding, Ms. Cui graduated from Renmin University with a degree in finance. Don't be polite, let's just chat casually." Xie Jingxing nodded slightly.

Cui Aliu relaxed a little: "Come to think of it, I went to Juntai for an interview when I just graduated. When Ms. Shen came over this morning, I said I envied you guys very much."

Shen Xin, who was sitting aside pretending to type on the keyboard, smiled but said nothing. She was only responsible for ensuring that the interns did not affect Juntai's public image, and she did not interfere with anything else.

Song Anli then asked the first soul-searching question: "Why didn't Ms. Cui work in finance, but instead started a business?"

"Because of my grandfather."

Cui Aliu pursed her lips and said, "My grandfather was a tea farmer. He never left the tea mountain in his hometown all his life. But tea helped my father and his six brothers to get out of the mountain. My grandfather is very proud of this. He said that the value of his life is to grow and make tea."

"There is a small river on the only way in and out of the tea mountain. When my grandfather was critically ill and unable to move and was carried down the mountain, he kept repeating not to cross the river, and that we could go down the mountain after crossing the river."

“This is the origin of our brand name ‘Bu Du’ and the initial motivation for me to start my own business.”

Cui Aliu spoke calmly, but Song Anli was quite moved when she heard it. Then she thought of what Xie Jingxing said about starting a business cannot be based on emotion.

She calmed down and continued to ask: "So what is your motivation for starting a business now?"

"There are many people like my grandfather in my hometown. They rely on tea mountains for their livelihood and have never been able to leave since they were young. Due to transportation problems, tea production and sales have not been very smooth, or in other words, tea farmers' income is very limited after being in the hands of tea merchants, so I wonder if I can do something for my hometown."

Cui Aliu opened the topic and took the initiative to chat: "The current milk tea market has a very promising future. The specific relevant data are reflected in the business plan."

"Our brand has unique advantages in raw materials. Our founding team came together because of the same ideals. Currently, a PhD in biochemistry from Johns Hopkins University is in charge of the product research and development team."

Strong team + unique advantages, qualified.

Song Anli seemed to have been programmed by Xie Jingxing, automatically triggering the keyword "生照猫画虎": "The overall compound growth rate of the domestic catering industry this year has dropped to a new low since the millennium. How much impact do you think this will have on the prospects of the milk tea industry?"

pressure test?

Shen Xin couldn't help but stop recording and looked up at her. He realized that the excellent operation was stupid and the entry point was wrong.

Song Anli focused on the sluggish catering industry, which confirmed the analysis point of view of the head of the research institute in the first quiz question, "the impact of the decline in supply-side production capacity in the primary industry on the macro-economy." There is nothing wrong with taking it alone.

What’s stupid is whether milk tea should be considered as catering industry or should it be subdivided into tea beverage retail consumption industry?

If the average Chinese person drinks a certain number of cups of coffee per year - this is the sentence pattern that coffee brands like to use to tell investors stories and paint a rosy picture.

If we transfer this sentence structure to the tea retail industry, we can simply remove the word "if". The scale of the domestic tea beverage market will exceed 100 billion yuan, which will blow away the coffee market!

"At present, the per capita tea consumption in coastal areas and East China is more than 2 kilograms per year, which is far higher than the per capita tea consumption in the UK. I don't think tea drinking is a pure catering service industry."

Sure enough, Cui Aliu grasped the key point keenly, but did not dwell on it. He lightly skipped over it and returned to the topic to take the opportunity to explain the business model.

"You can see that the average customer spending on our offline stores is not low, ranging from 15 to 30 yuan. This is because compared with our peers on the market, we choose fresh fruit + freshly brewed tea + fresh milk, and the cost of raw materials and labor is very low."

She waved her hand to indicate the various soft and hard furnishings in the room: "We adopt the direct sales model. We currently have 9 stores in Shanghai, Shenzhen, Guangzhou, Jiangsu and Zhejiang. The rent and decoration costs of each store are no worse than this store. We are taking the high-end route. I personally prefer to use Starbucks as a benchmark for Budu. What we sell is a lifestyle and social space."

“So the peeled grapes in my tea are peeled by someone in your production room?” Xie Jingxing took a sip of the Bawang tea which contained various fresh fruits.

Cui A-Liu was stunned for a moment: "...Yes, it is possible that I peeled it."

　Reference: Chabaidao IPO prospectus 2013.8.15
　　Nayuki's Tea IPO prospectus 2021.6.6
　　What kind of business is Xinyin? Huachuang Securities
　　The data is collated from the official website of the Statistics Bureau and public information on the Internet.

　　
　
(End of this chapter)