This article was originally written by Xinmang Daybreak, a Chinese WeChat public account. Translated and adapted by Ellen Tay.
Founded in 2015, MyDreamPlus is a co-working space provider with over 40 office spaces in six cities across China. Besides providing co-working space, MyDreamPlus also offers customized office solutions for major Chinese corporations such as courier service SF Express, real estate developer Longfor Properties, and digital entrepreneurs creative hub Tencent WeStart. The company last raised USD 120 million in Series C funding led by Hillhouse Capital Group and General Atlantic.
Back then, besides ride-sharing, co-working space was another hotly contested market. China Money Network estimates that there were a total of 2,530 co-working space locations in China in 2015. Now that the bubble has burst and venture capital has dried up, the companies left standing are those who can generate long-term value.
In this article, we spoke to co-founder and CEO Wang Xiaolu, on what it takes to go against the herd and build a valuable company.
Xinmang Daybreak (XD): What are some of the most valuable pieces of advice you have received?
Wang Xiaolu (WX): Entrepreneurship requires a considerable amount of energy to press on. The glory is fleeting, but the journey is arduous and full of ups and downs. It takes a tremendous amount of effort to push forward with both human resources and business matters. The consensus among investors and other entrepreneurs is that perseverance and tenacity are the keys to success.
XD: Which decision impacted your company the most?
WX: The venture capital market in China was at its peak between the end of 2017 and the beginning of 2018. Regardless of your performance, it was easy for companies in the shared office space industry to receive funding. With capital pouring in, the industry witnessed a period of radical growth where companies burnt through cash for growth. During that period, it seemed as if speed and scale are the only measurements for success.
In both our external and internal communications post-funding, we have constantly emphasized the importance of building a sustainable and profitable business model. Instead of blindly chasing after scale and growth, we focused on refining our product and operations. We believe that healthy growth can be achieved once we have a strong foundation in customer service and internal operations.
We stayed true to our business philosophy, which made us an outlier in a market where our competitors were relentlessly chasing after rapid scale. Our confidence was badly shaken at one stage when our competitors were outpacing us considerably.
In the latter half of 2018, our perseverance paid off. MyDreamPlus was the only company that could still secure funding. Even to date, we are continuously outperforming our competitors.
In hindsight, we made the right decision to press on. However, back in the end of 2017 when the venture market was not lacking in capital, it was a tough call. It goes against human nature to make a decision that is different from others. A logical choice would be to make decisions that follow the herd to avoid losing out.
All entrepreneurs understand the importance of independent thinking, but the difficulty lies in holding on to your conviction until it proves to be the right decision. For decision-makers, the waiting game is the most challenging part as it could take a long time before receiving any feedback. When you are making the same decision as everyone else, there is less urgency to seek validation for your decision.
In retrospect, we did not just overtake our competitors this year. It results from an accumulation of efforts over the years that consolidated our position in the industry. We soldiered on even when we were lagging behind our competitors and when the numbers were not looking good, but I believe time will tell. It takes extraordinary courage to bide your time and fight against human nature.
I have not been without self-doubt. It is natural to be influenced by your surrounding environment. Precisely because you are in the environment, it is unrealistic to be unaffected when you make a decision that goes against human nature. During periods of market volatility, which could last up to a year, it is very likely that you will constantly fret over your decision and you may even overturn your previous decision. In retrospect, we just made a relatively good decision with some perseverance.
We are fortunate that our investors did not pressure us and even encouraged us to do things our way. They prioritized long-term value over short-term profits. Therefore, I believe it is vital to work with top-tier venture firms. A venture firm’s understanding of the industry and business cycle and judgment of a company’s quality inadvertently affects their portfolio company’s decision-making process.
XD: How do you recruit top talents?
WX: My colleagues and I have benefited greatly from reading Powerful: Building a Culture of Freedom and Responsibility by Patty McCord. The book gives a detailed definition of top talent and provides a good framework for managing human resources.
In a start-up, top talents are usually placed in management positions. Personally, when I am recruiting for management positions, I am not just looking for a good manager. I am also looking for someone who has an entrepreneurial spirit and can think from the company’s or founder’s perspective.
“Managing” and “Executing” are two very different concepts. A person who “manages” focuses on completing tasks that are part of his job scope and may ignore additional tasks that are not part of his responsibilities. On the other hand, a person who “executes” accepts the uncertain nature of entrepreneurship, proactively seeks a solution to problems, and may even get involved in the creative work.
There is no right or wrong when it comes to business, only good or bad decisions. Therefore, when solving a problem, it is essential to weigh the pros and cons carefully. Team members can have different opinions on the best solution and debate behind closed doors. Having different views is a good thing as it shows that each team member is carefully considering the problem from their respective professional perspective. However, once a solution has been decided, the team must see it through till the end. This is a litmus test of the management skills of top talents in a start-up.
Top talents are not always motivated by money. To them, the vision, mission, and values of the company are more important. They prefer to join a company where everyone is willing to work together to accomplish a common goal. In our course of work, we will come into contact with many people. Those that leave a deep, favorable impression on us are talents who we can recruit to join our team one day. Indeed, top talents are all around us, and if we pay close attention to our surroundings, we will spot them.
XD: How do you multitask?
WX: There are too many mobile apps that are vying for our attention. The key is to stay focused and establish your rhythm to process information. My WeChat is on mute, so I am not distracted by pop-up notifications. Having said that, I do check my WeChat regularly to stay on top of matters.
As a CEO, my goal is to ensure that minimal problems in my company are escalated to my attention. A CEO should not be juggling several tasks at once; he should prevent such a situation from happening.
The most important thing is still to create uninterrupted time for yourself. For example, you can try waking up earlier to spend time alone thinking through important matters before your day gets interrupted by WeChat messages and other commitments.
XD: What are some of the challenges you have faced?
WX: I enjoy sharing memorable books and movies with my team. During an internal meeting last year, we watched a segment of Darkest Hour together. In the film, British Prime Minister Winston Churchill is faced with a tough choice as he must decide to declare war or not. At the crunch hour, he decided to listen to the voices of the civilians before making the courageous decision.
Entrepreneurship is incomparable with the crisis of World War 2, but the logic remains the same. Besides observing your competitor’s movements, it is equally crucial to listen to your end consumer’s opinions. And above all, at the critical moment, to have the courage, which is a precious character, to make the right decision.
The COVID-19 pandemic had an impact on our business. To boost the company morale, I have written two separate letters to all my staff. I acknowledged that it is easy during a crisis of uncertainty to experience extreme emotions. During these uncertain times, our ability to embrace change, remain clear-headed, and think critically will tide us through this crisis. As an entrepreneur, I am an eternal optimist, and I hope that my staff and I will be able to communicate our optimism to our partners and clients. A positive attitude solves 70% of the problem; the remaining 30% can be solved by being prepared for various scenarios, reducing costs, and refining operations.
Our core metrics, such as revenue, occupancy rate, and lease renewal rate, were all stable and even experienced a slight growth during one quarter. To achieve growth in such uncertain times is a test of our company’s product and service capabilities and the faith and the courage of our employees. Tiding over this period of crisis requires courage and optimism. If you are in a bad state of mind, no amount of hard work can remedy the situation. Like patients who are pessimistic about their condition, no matter how good the medicine is, it may not be effective.