(This is a translation of a self-profile of Jack Xu that first appeared in Entrepreneur Magazine. Jack Xu is now the founder and CEO of Diandian, a lite-blog that copies Tumblr and received the backing of InnovationWorks. Diandian recently claimed its millionth user since opening registation on April 7, 2011.)
“When God fills your left hand, he will secretly take from your right hand.”
Jack Xu’s background:
1996, enrolled as a computer science major at Tsinghua University
1999, joined ChinaRen as a tech engineer
2000, joined Sohu as tech director, and a member of Technical Community
2005, joined OPI as VP of Interactive Division, responsible for Xiaonei.com
2010, joined Shanda as COO of Online Division
2011, founded Diandian.com
Before I Knew What a Computer Looked Like…
My story starts back in 1996. That year I was just 16 and I made it into Tsinghua University to major in computer science, despite having not a clue what a computer looked like. I’m from the Hubei Xiantao (湖北仙桃)–in Hubei, students were particularly strong in maths, physics and chemistry, but computer science as a form of advanced education was non-existent back then. So because of the general backwardness of my high school education, I experienced two major blows at university that changed my life.
The first hit was that before attending Tsinghua I had no contact whatsoever with computers, but somehow I was enrolled in computer science department. And Tsinghua University offered the best computer science education in the country.
A couple days ago for Tsinghua’s centennial celebration I returned to the university and met my teachers from back then–they were all happy with my choice of founding a startup. I was told that a fellow graduate, Deng Feng, the founder of Northern Light Venture Capital, had set up a scholarship for computer majors, but our major has yet to produce a well known entrepreneur, which is what Deng is really hoping for. In a sense, founding a startup (Diandian) is now also motivated by making my computer science department proud.
Still, I once heavily doubted whether enrolling in computer science was the right choice. My classmates were mostly from top-tier cities, knew what a computer looked like, how it worked, and some even knew how to program. To me, those guys were amazing. They certainly all knew how to type, which was a huge blow to me, considering I didn’t even know what a keyboard looked like.
The next blow came with the English spoken exam that every freshman had to take. At my senior high school, spoken English provided only the basics. I was not up to the level at Tsinghua, so my result landed me in a bottom-level class, the second huge blow to me.
At the time, it felt like I was the tragedy of the Chinese education system. Across the country education levels are uneven, top tier cities such as Beijing and Shanghai had the best education. I felt that life was unfair, an unfairness that started right from my birth, or even before birth.
A Paper Keyboard
But maybe because I’m from Hubei, where people have a no-nonsense attitude, I was determined to resolve my shortcomings. I started with typing, drawing a keyboard on a piece of paper to practice everyday in my dorm room. I memorized the positions of different keys. And when I believed to have mastered typing I went to the computer room, and two hours later typing was not a problem anymore. That’s how I became the first person, out of those without prior skills, to master typing in my major.
There are two sides to everything. When I was feeling down for the imbalances in the Chinese education system, I also saw my advantages in my strength in maths and physics. At the time, my math skills were way ahead. A classmate from Shanghai asked how could I knew so much about maths, especially in the field of calculus which they struggled in. Right then I thought perhaps life is fair, because when God fills your left hand, he will secretly take from your right hand.
In my earlier years at Tsinghua, I also faced other problems. I was born in a simple farming family, used to herd cows when I was a kid, and my parents worked hard to make a living. They managed to send me RMB 500 ($80 today) of monthly allowance, though I could feel that their lives were hard. And that’s what drove me to make a living for myself in Beijing. I went to Z-Park (ZhongGuanCun Science Park, ‘China’s Silicon Valley’), and that was a life-changing choice.
In 1997, Z-Park was a tiny village. It had only two buildings, a bunch of entrepreneurs selling their programming skills and sometimes taking government contracts and hiring students like me to program. At times they might get RMB 100,000 for a contract, but only paid us only RMB 5000, thus retaining 95%. Back then I could only make RMB 2000 a month, 1000 for myself and 1000 for my parents, so they wouldn’t need to farm anymore (farming in China is almost pure manual labor, so you can imagine the hardships involved). To me, that was a responsibility, to survive on my own as early as possible. It was also because of my work at Z-Park that I became a well-known programmer in a small circle and later a real opportunity came along.
In 1998, I was still a student when I meet Joseph Chen (now the CEO of Renren Inc., China’s largest real-name SNS). That year he just came back from US with USD 4 million of funding and was planning to launch a startup. At that time websites were not common in China and sites with interactive functionalities were even rarer. But I could do it and so Joe offered RMB 15,000 a month. I was onboard (because he paid well, and I could give my parents RMB 5000).
That was my first step in entrepreneurship, even though I had no idea what a startup was, and the values behind it. My first startup at Tsinghua was actually a simple business of selling Kingsoft (anti-virus) software on campus, but the real thing came when I joined Joe to start ChinaRen (an early generation of SNS). Later in 2000, riding the internet bubble after burning through USD 10 million, Joe sold it to Sohu (one of China’s top portals) and I myself landed at Sohu.
After graduation, I had many choices to launch my career: 1) Masters degree, 2) Study abroad, 3) Join IBM or Microsoft, and 4) Staying at Sohu. I went to Joe for advice and once again he offered me a job. Joe put it this way:
You can go abroad at 40 yrs old, or maybe even 30, but internet has probably only 2 to 3, or 3 to 5 years of life cycle, so you might not get an opportunity later. That’s why you need to stay and work with me. (at that time, ChinaRen had not yet sold to Sohu yet)
Joe told me stories of Yahoo and Cisco. Any company related to internet can drive its stock price up to USD 100-200 he said.
I did the math on the stock options from ChinaRen. If it were to IPO in a year or two, I would be 21 or 22 and a multi-millionaire. That was a huge attraction for me then, and so I stayed in China, and later at Sohu.
September 11th and Sohu’s Falling Stock
On September 11, 2001 I was working overtime with the team to launch a new product. It was late, in the early morning (different time zones) and we saw the Twin Towers bursting into flames on Sina News. That was the same day when an entourage from Microsoft, Oracle and IBM came to Sohu for a possible investment, but Sohu’s stock wasn’t doing so well. It had fallen from an initial offering price of USD $13 to barely $0.8. Many had left the company and in an attempt to retain those who were still around Charles Zhang (Sohu’s CEO) offered everyone more stock options. That day it went from 0.86 to 0.75, barely retaining any value.
Sohu’s valuation was so low that it risked be delisted in the US. At that time, I doubted my choice of picking Sohu instead studying abroad, and I was doubting the fairness of life again. I felt like a loser at the time, but Charles Zhang was insisting that with millions of active users Sohu could alway monetize even by selling water. I thought about it and stayed with Sohu.
From Failure to Redemption
By 2004, the Chinese internet industry was booming again via 3 main channels of monetization: 1) SMS ads and mobile VAS; 2) Online ads; and 3) Online games. To this day, those are still key channels. At that point, Sohu’s stock price rose back up to USD 40 a share (from 2001′s 0.86). This was what I expected in 2001, but it came only 3 years later. That’s the cycle of internet industry in China: many jumped ship in 2001, but those who held on made it. It was the belief in the good, persevering till the end, believing just as Charles Zhang did that Sohu would be profitable one day even though he didn’t yet know how back then.
So here are my lessons from 1996 – 2004: 1) Everything is fair; 2) Know where your responsibility lies; and 3) Have a belief, and believe it.
Six Degrees of Seperation
In 2005, I was surfing the net and the theory of six degrees of separation caught my attention. It was amazing to me.
Renren was an amazing realization of this theory of social networking. During one routine meeting at Sohu with Charles Zhang (every Wednesday afternoon), I raised the possibility of SNS becoming the next big thing. But Charles was indifferent–he missed the SNS tide–which he recently admitted to me. It might have been to some extent my fault that he missed SNS because I couldn’t comprehend it properly myself in 2005–all I knew was that it would become something big.
Later that year I had a chance to discuss the idea of SNS with Joe Chen. It became a common interest between us and I joined Joe’s team at OPI working on Xiaonei (which later became Renren). For those on the outside of OPI, it may seem like all was smooth sailing the whole way, but we actually hit countless reefs that resulted in product failures and even products that the market detested.
When Wang Xing founded Xiaonei, it wasn’t so different from us (ChinaRen). We were in competition for a long time, and in the end we managed to convince Wang Xing to sell Xiaonei to us. I told him at the time that if we continued to operate independently our chance of success was 30%, but if we become one we’d have a 99% chance to beat out the competition. We acquired Xiaonei, dominated the social networking market, and later changed the name from Xiaonei to Renren.
Note: Despite their early cooperation with Joesph Chen, Jack Xu has since had a falling out with Renren. Both Xu’s (Diandian) and Wang Xing’s (Meituan) are blocked on Renren.
Disclosure: TechRice blogger Leo Chen recently joined Diandian as a product manager.
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