A Mutually Beneficial Win-Win Game: Insights and Inspirations from Mr. Feng Zhang

In this vibrant spring season, DKU Innovation and Entrepreneurship Initiative (InE)’s ESS on entrepreneurship and capital once again brings us a feast of ideas. On the evening of February 29, we had the honor of inviting Mr. Feng Zhang, the founder and Chief Investment Officer of Ginkgo Global Capital, who shared his insights and inspirations under the theme “Investment and Entrepreneurship: A Mutually Beneficial Game.” This article will take you through this exceptional lecture, exploring how investment and entrepreneurship can jointly drive social progress.

The Silicon Valley Innovation Model: In today’s rapidly changing business environment, innovation has become the key to survival and development for enterprises. Mr. Feng Zhang delved into the Silicon Valley innovation model, which not only shapes the global technology industry but also provides valuable insights for entrepreneurs worldwide. Here are the five core elements behind Silicon Valley’s success mentioned by Mr. Feng Zhang, which together form the cornerstone of sustained innovation and growth for businesses:

• Innovation is Key: Encouraging bold attempts, viewing failure as a catalyst for success.
• Team Collaboration: Find like-minded partners to build trust and effective communication.
• Venture Capital and Resources: Utilize venture capital and Silicon Valley’s abundant resources to accelerate entrepreneurial development.
• User Orientated: Listen to target users, provide solutions, and pursue user satisfaction.
• Perseverance: Continuous innovation and trials are critical for success.

Mutual Benefits of Investment and Entrepreneurship: In the mutually beneficial relationship between investment and entrepreneurship, Mr. Feng Zhang highlighted the close connection between investors and entrepreneurs. Investors not only provide funds but also are partners for entrepreneurs on their journey to realize dreams. This relationship, like a game, requires mutual understanding and support to achieve a win-win outcome.

Mr. Feng Zhang presented the practical wisdom of investment and entrepreneurship through the successful cases of Nanpeng Shen and Yongping Duan. Nanpeng Shen, the founder of Sequoia China, has shown a profound understanding of the market and accurate grasp of opportunities from Ctrip to Home Inn and then to Sequoia Capital China. Yongping Duan, the founder of BBK Electronics and Subor (XiaoBaWang), has offered us valuable lessons with his investment philosophy and commitment to value.

Measuring Entrepreneurial Success: The journey of entrepreneurship is full of challenges and opportunities. What are the criteria for success in this journey? Mr. Feng Zhang proposed a series of key indicators in his lecture, reflecting not only the current performance of a business but also its future development potential. To better assess and guide your entrepreneurial projects, here are five key factors for measuring entrepreneurial success, which will provide you with a comprehensive evaluation framework:

• Positive cash flow: Ensuring that a business can generate positive cash flow consistently is fundamental to its long-term survival and development.
• Continuous Innovation: A continuous investment in R&D to propel product and technology iteration, maintaining a lead position in the market competition.
• User Satisfaction: Understand and fulfill user needs, win trust and loyalty from users by providing high-quality products and services.
• Brand Building: Establishing powerful brand influence and market recognition through effective marketing and brand management.
• Expansion Strategies: Cautious expansion based on stable cash flow, achieving scale effects and growth potential through reasonable market expansion.

Entropy Increase and Counteraction in Enterprises: During a business’s development, entropy, or the increase in systemic disorder, is inevitable. However, the efforts to counter entropy shape the resilience and innovation ability of enterprises. Mr. Feng Zhang introduced a series of strategies to maintain clear objectives and efficient operations in the face of increasing entropy. Here are five key strategies that make up the framework for businesses to counteract entropy increase and achieve sustainable development:

• Customer-Centric: Always prioritize customer needs, drive product and service improvements through continuous market research and user feedback.
• Encourage Hard Work: Cultivate and motivate employees who are willing to strive for the realization of the company’s vision — they are the key forces driving continuous progress.
• Value-Oriented: Clearly define long-term values, ensuring that all strategic decisions and actions serve this core value.
• Long-Term Thinking: Build strategies on unchanging things, such as customer experience, product quality, and service, to ensure sustainable development.
• Flywheel Theory: Identify and cultivate growth engines to create a positive cycle through sustained efforts and optimization, maintaining a competitive advantage in the market.

Three success factors of startups from an Investment Perspective: In the world of investment, recognizing and evaluating the potential of startups is crucial. Mr. Feng Zhang explored this topic extensively, identifying several key elements. These not only affect a company’s current performance but also determine its future growth and profitability.

• Industry Ceiling: Assess the market potential and growth opportunities of the startup’s industry; a high ceiling offers more room for growth.
• Scalable Business Model: Startups need business models that can scale effectively, achieve economies of scale, reduce unit costs, and enhance market competitiveness.
• Management Team Traits: A strong management team is key to startup success, including faith in the endgame, long-term thinking, and the ability to continuously learn and adapt to market changes.

Building Moats with Branding and Economies of Scale: In today’s competitive business climate, establishing a strong brand and economies of scale is crucial for long-term competitive advantage. Mr. Feng Zhang demonstrated how the power of branding can become a company’s moat through the cases of See’s Candies and Nike. He also emphasized the importance of economies of scale in the tech manufacturing industry, using TSMC as an example to illustrate how companies can solidify their market position through technological innovation and capital investment.

• Brand Recognition: Create powerful brand influence to quickly gain consumer recognition and trust, thereby achieving a competitive edge.
• Brand Loyalty: Foster consumer loyalty by continually offering high-quality products and outstanding customer experiences, ensuring a stable customer base and repeat business.
• Economies of Scale: Utilize scale to lower unit costs, increase production efficiency, and maintain price competitiveness, while financing R&D and market expansion.
• R&D Investment: Continuous investment in R&D (Research and Development) is key to maintaining technological leadership and product innovation, helping to attract and retain customers in the market.

Concluding his lecture, Mr. Feng Zhang referred to Warren Buffett’s letters to shareholders, reminding us that both investment and entrepreneurship require a long-term vision and deep market understanding. He encouraged everyone to value personal reputation, work hard, treat others well, and keep promises, as these qualities will become our most precious assets.

Mr. Feng Zhang’s lecture was not only a sharing of knowledge but also a touching of the soul. His words were full of passion for investment and entrepreneurship, hope for the youth, and aspirations for the future. We believe that through such lectures, students at DKU will have a clearer understanding of the value of investment and entrepreneurship and will walk more firmly on their chosen paths.

In an era full of opportunities and challenges, let us take Mr. Feng Zhang’s wisdom as our guide, pursue our dreams bravely, and together create a better future.