Dialogue with Yan Yan, the "Godfather of Investment": When the economy is bad, it is often the moment to create a great company

Highlights:

• 1

  The economy has a cycle, and I think the situation is more serious now than it was back then (the dot-com bubble burst in 2000-2003) because it is not a cyclical problem, it may be a structural problem.

• 2

  In a large market, choose companies that can go through the cycle to meet the large demand of the market and thus have great growth potential. The essence of investment is that you have to have the vision to go through the cycle, and the companies you invest in can have the growth ability to go through the cycle.

• 3

  The company that survives must be the one that can support itself. If the cash flow of the company is not enough, it will die immediately. Many new energy vehicle companies, including some well-known ones, have big problems. Burn more than 10 billion yuan a year, how long can this burning method burn?

• 4

  Even in bad times, it is still possible to make money. When the macro economy is bad, it's often the moment when great companies are made. Most of the world's greatest companies, the greatest investments, were invested in bad times.

• 5

  We have not changed over the years, and about 60% of us are investing in IT technology, including big data, artificial intelligence, semiconductors, robots, etc., especially the application of artificial intelligence in the industrial field.

Tencent News "Changemaker" chief writer Xu Tan

Editor's brief: The Changemakers series focuses on those who create endless possibilities based on professionalism, courage and dreams. As China's investment industry enters a historical juncture, this issue talks to Yan Yan, the first generation of venture capital practitioners in China.

If there is a book "30 Years of Internet Turmoil" (1994 the first year of the Internet - 2023), standing in the foreground should be Internet figures Ma Huateng, Ma Yun, Liu Qiangdong, Zhang Yiming, etc., behind which are a group of venture capital bosses.

Among them, from the pioneering figures Xiong Xiaoge (IDG), Yan Yan (Saifu), Chen Liwu (Walden), to Xu Xin (Capital Today), Shen Nanpeng (Sequoia), Zhang Lei (Hillhouse), Zhang Ying (Jingwei), etc., as well as new forces Liu Qin (Wuyuan), Zhu Xiaohu (Jinshajiang), Cao Yi (source code) and so on.

For Chinese entrepreneurs, VC not only accompanies them all the way, but also has a sense of participation in the times; There is both possessiveness and a great sense of accomplishment.

"China's venture capital has grown with China's Internet companies, and it has been changing with ups and downs. I really want to make a TV series, I even thought of the name of the TV series - "Those People and Things on the Internet", and invite a big guy to play each episode, such as asking Ma Yun to play a role, you can play a chef, but you can't play yourself. Yan Yan, founding managing partner of SAIF Asia Investment Fund, said.

The past 30 years have been "years of burning hot money", and China's private equity (PE) and venture capital (VC) are the high-growth industries with a growth rate second only to the Internet. In 2000, the investment in China's PE/VC industry was only 2 billion yuan, but in 2020 it reached 1 trillion yuan.

Today's challenge and anxiety lies in the fact that China's total investment and financing scale (statistically) will drop to 640.543 billion in 2022 and may continue to decline in 2023. In the context of the US dollar interest rate hike, it is a question mark whether US dollar funds can continue to help China's capital market.

As China's first generation of VCs, Yan Yan, who entered the investment industry in 1994 and is known as the "godfather of investment", has gone through several cycles: the Asian financial crisis in 1997, the bursting of the Internet bubble from 2000 to 2003, and the subprime mortgage crisis in the United States in 2008.

In 2003, 70% of institutions closed and 90% of practitioners withdrew from the VC industry, but in that year, Yan Yan bet on Chen Tianqiao's grand game.

"When the macroeconomy is bad, it's often the moment when great companies are made." Yan Yan said. BAT (Baidu/Alibaba/Tencent), a company with a market value of 100 billion yuan, was discovered in the years of the Internet trough.

Yan Yan, who was born in Anqing, Anhui Province, did not go to a complete high school, cut the queue in the countryside when he was a teenager, and was admitted to Nanjing Institute of Aeronautics and Astronautics to learn to build an airplane by desperate self-study; In 1984, he was admitted to the Department of Sociology of Peking University to study for a master's degree in Mr. Fei Xiaotong. In 1986, he was admitted to Princeton University in the United States to study for a Ph.D. in international political economy, and in 2001, he became a partner in SoftBank Asia and Masayoshi Son, and in 2005, he created a landmark event in the history of China's VC development - "SAIF Asian independence".

SAIF Asia, led by Yan Yan, currently manages investment funds with a total scale of nearly 50 billion yuan and 4 billion US dollars, and has almost no change in its investment structure in IT, medical and health, new energy and new materials in the past 20 years, and has adhered to its own investment orientation. In the last 10 years, in the era of drastic changes in the field of 5G, cloud, AI and other driving technologies, many companies have constantly adjusted their strategies, emphasizing flexibility and adaptability, but ignoring what will not change in the next 10 or 20 years.

Yan Yan's Weibo profile is: I don't like mediocrity. It just so happened that he met the Great Era - giving ordinary people the opportunity to succeed, and they could reach the high point of history from the bottom of the micro-end.

The magnificent 30 years are like a curtain of drama, and personal labels are involuntarily defined by industry attributes and even historical events.

Because of the famous "NVC Lighting Equity Dispute", Yan Yan was labeled as a "barbarian" and snatched the national brand. It was not until Wu Changjiang was sentenced for the crimes of misappropriation of funds and embezzlement that people did not know the truth of the incident. Dramatically, Wang Donglei (the current chairman of NVC International), the key figure who sent Wu Changjiang to prison, was arrested by NVC International (02222. HK) demanded a recall. Although the recall resolution ultimately did not pass, the strange fate of the battle for control has always haunted the company.

Capital itself has a profit-seeking and ruthless side, but capital controllers can be values, rationality and human feelings.

Recently, Tencent News "Changemaker" and Yan Yan, the founding managing partner of SAIF Asia Investment Fund, had an in-depth dialogue on the changes in the venture capital circle and the search for those constant laws in investment.

In the process of talking with Yan Yan, he gave answers to many questions contrary to expectations, and even pointed out the shortcomings of their management to old acquaintances in the circle of entrepreneurs. Outspoken, sharp-tongued, not pandering, funny but not tactful, the real Yan Yan has more personality than the labeled Yan Yan.

The following is a deleted transcript:

What kind of business can survive?

Tencent News "Changemaker": At present, against the backdrop of US dollar interest rate hikes, global liquidity has shrunk sharply, and China's investment sector is also facing liquidity problems, and many institutions are facing transformation. This is reminiscent of the 2000-2003 period when the dot-com bubble burst, when the number of investment institutions fell by 70% overall. What is the current situation?

Yan Yan: At that time, it was cyclical, and the economy was cyclical, and I think the situation is more serious now than it was then, because it was not a cyclical problem, it could be a structural problem.

From 2000 to 2003, the Internet bubble burst, so many investors lost money, so there was a gap in investment. But this is normal because it is a cyclical change in an industry.

Tencent News "Changemaker": You have been in the investment industry for 30 years, and you have experienced the Asian financial crisis in 1997, the bursting of the Internet bubble in 2000-2003, and the subprime mortgage crisis in the United States in 2008. What is the experience that you have accumulated across the cycle after 30 years of cognitive span?

Yan Yan: There is nothing particularly complicated about this experience, which is to choose those companies that can go through the cycle to meet the large demand of the market and have great growth potential in a large market. The essence of investment is that you have to have the vision to go through the cycle, and the companies you invest in can have the growth ability to go through the cycle. Is there any difference between what we invested before the 1997 financial crisis and what we invested in 2014 and 2024? No. Sometimes people joke that there is nothing difficult about investing, it is "buy low, sell high" – go in when the price is low, sell when the price is high, it's as simple as that. But it's easier said than done, but it's very difficult to actually do.

Tencent News "Changemaker": What kind of enterprises will survive in the future?

Yan Yan: First of all, it must be able to grow, its cash flow can cover its costs and consumption, and the company that can survive must be the company that can support itself. If the cash flow of the company is not enough, it will die immediately. Those of us who study finance know that the most important course is cash is king.

From this point of view, I think many new energy vehicle companies, including some very well-known companies, have big problems. More than 10 billion dollars are burned a year. How long can this method be burned?

Tencent News "Changemaker": What are the important forces driving future growth?

Yan Yan: It's the investment now, especially the investment of private enterprises. Investing is investing in the future, not today, and not in the past. The most important thing in the development of a business and our investment is to have a stable expectation of the future.

You can still make money when the economy is bad

Tencent News "Changemaker": Your "famous work" is the Shanda game that you invested in Chen Tianqiao in 2003, and was named the "Best Investment Case of 2003" that year. In 2000, Jack Ma met Masayoshi Son and received an investment of $20 million; Tencent received investment from IDG and Yingke in 2000. China's $100 billion Internet companies were the result of the dot-com bubble. So are there huge opportunities in times of great change?

Yan Yan: In our judgment on the macro economy, we must not regard it as the same thing as making money by investing, and whether or not we make money by investing in a project has little to do with the macro situation. What does this mean? Even when the economy is down, when the economy is bad, it is still possible to make money.

A particularly important reason is that the cycle of macroeconomic operation is completely different from the operation cycle of an investment, for example, if our economy is cyclical, it is usually between 24 months and 36 months, and even now the economic cycle is shorter, between 18 months and 24 months. And if you invest in a project, according to our experience in China, the average from investment to exit, if it is not an Internet company, about 8 to 10 years, the early Internet is very fast, but after the US listing is blocked, it will take at least 5 to 6 years in China.

In addition, China is a market of 1.4 billion people, and such a huge economy of more than 100 trillion yuan is not the same thing as investing in a small business to make money. For every specific fund, there is always an opportunity to make money. Not just there are, but a lot. But there is a problem, it is one thing for you to see an opportunity, and it is another thing for you to dare to invest money.

So you see most of the world's greatest companies, the greatest investments, were invested in bad times when the economy was bad. For example, Microsoft, I remember very well that Microsoft went public in 1987, and many people were not optimistic about its stock, because in 1987 there was a "Black Monday" on Wall Street in the United States, and at that time, I had just been to the United States, and the first time I saw someone jumping from the building, but you see Microsoft became a great company later. It's the same with Apple, which went through hardships and was on the verge of death several times, and Jobs was kicked out of the company, and then came back to become a great company.

Tencent News "Changemaker": It stands to reason that investors should be like Warren Buffett said, "I am greedy when others are afraid", why do I feel that everyone's mentality is to lie dormant at the bottom of the cycle first, and then take action when the industry recovers?

Yan Yan: So most people are mediocre investors, including entrepreneurs, not all entrepreneurs are great, I think the real great, really excellent are very few, the vast majority are mediocre. This is true in every industry. There will be some people who really have vision (vision) who dare to make a move, and of course, it is possible that they will fail after making a shot. But probability-wise, many bad macroeconomic times are often the moments that make great companies.

Tencent News "Changemaker": Many companies are constantly adjusting their corporate strategies and tactics in the era of great changes, but ignoring the constant factors. What are the constant laws of constancy that companies should grasp in their operations?

Yan Yan: It is an eternal truth that an enterprise should be profitable and grow, and that it would be constant for an enterprise to have cash flow.

Masayoshi Son is not a good investor, but a great entrepreneur

Tencent News "Changemaker": There is a landmark event in the venture capital circle this year, SoftBank has a huge loss of 39.8 billion US dollars, a record high. SoftBank's investment logic is typical of investing in unicorns: find a start-up head company in a certain field, the company has not yet gone public, and the valuation has reached $1 billion. This may also be the investment logic of the venture capital circle in the past many years. Does SoftBank's huge loss also represent a change in investment logic?

Yan Yan: I may be the only one in the world who has been a real partner with Masayoshi Son, and I know him very well. In fact, Masayoshi Son is not a good investor, but he is a very great entrepreneur and entrepreneur. He is not a real financial investment, he is the logic of the industry. The logic of his investment is very simple: find the hottest industry at the moment, and then pay the highest price to buy the "head sheep" of this industry, he will always be like this. With this investment method, he will either make a lot of money or lose a lot.

This practice used to make a lot of money in the early days of the Internet, for example, on Alibaba. In fact, he was not the most optimistic about Ali at the earliest, and the company he invested the most in was called Sparkice, which invested more than $20 million and only invested $7 million in Ali.

Later, Goldman Sachs and they withdrew, and Son bought someone else's equity. The person he was most optimistic about at that time was Zeng Qiang, the founder of Shihuakai. Many of the stories with Ali were later publicized by the media.

Tencent News "Changemaker": It turns out that under the logic of unicorns, the principle of the venture capital circle is called taking the story of the day after tomorrow and financing the money of tomorrow. Why doesn't Son's unicorn's investment logic apply now?

Yan Yan: I don't think Masayoshi Son has a complete set of investment theories. He is an entrepreneur, a very good entrepreneur and he has a very strong intellectual curiosity in his field. But a professional investor needs to have a very strong sense of self-discipline, he will never have a concept of time, and he will always be late. For example, I had a meeting with him in Tokyo, and I made an appointment for a meeting at 10 o'clock in the morning, and I couldn't see him until 2 o'clock in the afternoon. His office was a large cubicle, like a bazaar, with a tumbling crowd and a lot of traffic.

Tencent News "Changemaker": But he invested in such a great company as Alibaba.

Yan Yan: He made more money at Ali than all the other projects in his life combined.

Tencent News "Changemaker": What is the difference between you and Masayoshi Son?

Yan Yan: I think I'm more stable than him, and I'm a person who can separate my work and personal life from my personal hobbies. For example, I have been investing for so many years, and my family, relatives, and classmates have never invested a penny. I am a very calm person when it comes to investing and am not very emotional when it comes to investing. But in life, many people think that I am a maverick and resolute person. I am very calm in investment, so our fund has been very stable when the market is particularly good, or when the market is particularly bad, and there have never been big ups and downs, like those big pits in China - P2P, O2O, solar energy, these things, none of them have entered, we are still very clear when investing.

Investing is a battle against human nature

Tencent News Changemaker: Have you summarized some methodologies? As some common, constant laws in long-term investment.

Yan Yan: Yes, of course, there must be its own methodology for making investments, whether it is right or wrong. But there are a lot of things that are common to investment. We talk about investment is two aspects: one is to do things, and the other is to be a person. First of all, look at whether the thing is right, for example, it is a baked cake, you must know that no matter how much money you invest, it will not grow, there are many things in the world that are not suitable for institutional investors to invest, not anything that makes money is suitable for investors to invest.

The other is people, perhaps the simplest point, the person who does this, first of all, must be smart and capable, and it is impossible for a fool to make money from a smart person; Second, the character must be correct. Otherwise, like NVC Lighting Wu Changjiang, he stole the company's money out to gamble, and no matter how good the company was, he would be brought down.

In fact, the most important things in life are often very simple, but people often make mistakes in the simplest things.

Tencent News "Changemaker": What is the hardest thing about investing?

Yan Yan: I often tell my colleagues that investing is easy, why? Investment is spending money, and no one will not spend money, so you see that the vast majority of the Chinese people are now investing.

But real investment has to use money to make money, and it is a continuous generation of money, and it is necessary to use money to make money for a long time, day after day, year after year, which is actually the most difficult thing. Why? Investment is anti-human, for example, the current situation is not good, you see a company you want to invest, you naturally think that everyone is not investing, why do you invest? When stocks are good, it stands to reason that you should sell them when they are good, why are many people reluctant to sell? Because everyone thinks that my stock will rise tomorrow, why do ordinary people make ten investments in stocks and nine are trapped? Because this is an anti-human thing.

Tencent News "Changemaker": Because most people conform to the herd.

Yan Yan: Most mortals, laypeople, and mediocre people are very difficult to struggle with human nature. Being able to fight against human nature and being able to be self-disciplined are precisely the most important things to invest.

For example, we don't have to be affectionate when we make investments, but how many people can bear it? If your younger sibling comes to you and your mom calls you and says you can't watch your brother lose money. This is human nature, and it is human nature to shoot naturally. If you say it a little more powerfully, your child has started a business, do you give money? Therefore, the essence of investing is to fight against human nature. People who can do well have a very cold side in them.

Tencent News "Changemaker": The fastest-growing VC in the United States in the past 10 years is called A16Z. Its investment logic does not seem to be investing in unicorns, it not only invests in projects, but also has heavy post-investment services, and takes the initiative to help entrepreneurs connect with some resources. Will this become a pattern now?

Yan Yan: I don't think there is a particularly big breakthrough in investment theory, because the quality of a fund's investment is actually related to many factors, such as its size. If you look at some angel investments, its returns are higher than any of them, like that Xia Zuoquan's investment in Wang Chuanfu, with a return of more than 110,000 times (note: angel investment of 300,000 returns of 33.6 billion), you have to look at it, no one has a better return on investment than him.

If you look at Sequoia, it has to be an institution, and the only thing in an institution is to make money through money, which is the fund. And it's usually more than twenty years, and Sequoia is already seventy or eighty years old. Many funds in Silicon Valley are more than decades old, and the money under management is billions, or even tens of billions.

If you're $300 million, it's not the same as $30 billion.

Tencent News "Changemaker": Masayoshi Son once had an investment theory called the time machine theory. If you take what is from a developed country to a developing country, you will naturally make money. Does it still apply now, and what is the logic of investing to make money now?

Yan Yan: In the past 20 years, the logic of investment and money making money in China is similar to the "time machine theory", most VCs make money by seeing a project in the United States, and then bringing it to China, because China is a unified market of 1.4 billion people, we will invest in the project, just like raising pigs to fatten it, and after fattening, it will be listed in the United States after one or two years.

Today, the logic of investing to make money like in the past can no longer be used, or it is rarely possible to use it again, because it is already difficult to go public in the United States.

Today's investment logic may have to return to the essence of investment in a down-to-earth manner, you have to choose some excellent companies, and then make the cake bigger, and then go public in China. This is a very fundamental change. Gone are the days of making big and quick money, especially making quick money. Therefore, in the past, when it came to annual returns, everyone thought that 30 or 9 percent was normal, but now it may be normal to have an annual return of 8 or 9 percent. This is what I call a change in the logic of investment in China.

Do not advocate becoming friends with the invested company

Tencent News "Changemaker": The most important thing in investment is to judge people, and you have seen countless entrepreneurs and entrepreneurs in the past 30 years. What do you think makes a successful entrepreneur?

Yan Yan: I think Zhang Yiming is a very successful entrepreneur, Wang Xing is a very successful entrepreneur, Ma Yun is a very successful entrepreneur, Ma Huateng is a very successful entrepreneur...

Tencent News "Changemaker": What are the common traits in them?

Yan Yan: It is the focus on one thing, the employment of people, and the industry trend has its own judgment. Because in the end, these things are all talking about numbers. I think some people can be a good philosopher, a good thinker, or even a good scholar, but they don't have to be a good entrepreneur.

Tencent News "Changemaker": You have invested in many successful cases, such as Shanda, 58.com, Zhihu, Sinovac vaccine, etc. Take Chen Tianqiao as an example, he does games, and many people are not very optimistic about games, so they didn't vote, how do you judge him and the industry?

Yan Yan: Actually, in many cases, judgment is not entirely a rational thing. If I write down all the conditions that I meet and compare them one by one with a small notebook, I may be able to match all ten, but I still feel that there is something wrong with this person. Or the entrepreneur may end up with several things that don't match, but you think that this person may be able to do it. We don't make investments sometimes, it's not a completely rational process, but it's generally rational.

Chen Tianqiao is actually a very smart, very individual, very assertive person, he is very insightful about what he does, he has been a student cadre, which is also what I like, from the perspective of entrepreneurship, the probability of success as a student cadre is much higher than that of not doing it.

Tencent News "Changemakers": Is it because they have management skills?

Yan Yan: It's not exactly management. In fact, being a student cadre is a special training person, you have no money in school, and you have no power, so you have to rely entirely on your persuasion and organizational skills to get things done. So in China, I think the most tempering place for young people is not the government, but the student cadres in schools.

In addition, at that time (2003), there were few games in China, and his judgment of the industry, his self-confidence, and his leadership were all very impressive.

Have we ever been in a situation where we are very entangled? There are, but not much. In other words, generally our judgment of a thing is relatively firm, and the final basic proof that we look at is correct.

Tencent News "Changemaker": The judgment of people is actually a particularly complex project. I think the most profound time to judge people is when you and the other person become partners with interests. If you become friends, you can't see the person clearly.

Yan Yan: Yes, judging people is actually the most difficult, and it does not have a formula, which is related to your personal experience and your personal hobbies, likes and dislikes.

Under normal circumstances, after investing, I do not advocate becoming friends with the invested companies, or drinking with friends who drink and drink together every day. Like Xu Xiaoping of Zhen Fund, and Zhang Ying of Jingwei, they are more advocating becoming friends with entrepreneurs. It's definitely a personal love, and you can't say which way is necessarily good or bad. But I prefer to keep a certain distance from entrepreneurs, don't get too close, after people get too close, it is easy to replace reason with emotion, which will make you be disturbed by emotional factors in many judgments.

The most important quality of a business leader is empathy

Tencent News "Changemaker": Alibaba's recent change of leadership has attracted widespread attention. Tsai Chongxin belongs to the first batch of Internet entrepreneurs, and he is willing to come back to serve as the chairman of the board of directors of Ali after he has become famous, is it because he is still passionate at the age of 60? Passion is the catalyst for all qualities.

Yan Yan: I think you have overlooked the most important thing, for men, power is an aphrodisiac, and power will make a man young.

He came back to be the chairman of the board of directors and a leader, he really has power, and he can change the fate of hundreds of thousands of people, or even more, involving thousands of households. Of course, Ali is like their own children, starting their own business, and he and Jack Ma are eternal partners.

Tsai Chongxin has the advantage of living abroad, so his vision is broader. In addition, frankly speaking, Ali has reached this point, and after such a big toss in the past few years, he can't continue to toss anymore. Joe Tsai is a very cautious and careful person, and he is very disciplined. In addition, he is in the United States, and he has a wide range of contacts and careers, so I think it is most appropriate for him to come back.

Tencent News "Changemaker": What kind of leadership qualities do you need to lead a large company of Alibaba's size?

Yan Yan: The most important thing for a leader is to have vision, personality charm, and courage. You must know that a start-up company breaks some rules and regulations and a company that is already a trillion yuan breaks rules and regulations, that is not the same.

Tencent News "Changemaker": For the most important qualities of the company's big boss, in fact, there are different opinions, such as grasping uncertainty, having strategic thinking, and having the ability to innovate. What do you think?

Yan Yan: As for leadership, Harvard Business School spent 10 years and $1 billion on this topic. Their research results are very interesting, he found that in the past, we Chinese believed in birth, blood type, horoscope, genus, and ethnicity, and the study found that leaders had almost nothing to do with these, and they were not related. But there's one thing that's particularly important about leadership, whether you're a political leader, a business leader, an arts leader, a sports leader, or a leader in sports, there's one thing in common, you know what that thing is?

Tencent News "Changemaker": Is it empathy?

Yan Yan: Yes, he found that one of the most important qualities of a leader is to have empathy. Whether you are yellow, white, or black, a leader who does not have empathy is certainly not a good leader.

Tencent News "Changemaker": Popularly understood, it is an empathetic ability to look at problems from the other party's point of view?

Yan Yan: Yes, from the other side's point of view, not only to understand, but also to make decisions. Jobs is a typical reverse thinking, everyone believes that to do marketing and sales, we should design products according to the public's consumption desire and consumption tendency. Jobs said No, he said that what we do is something that has not been done in human history, only we can lead the public, and the public needs to be led and educated, so he came out with the iPhone, and there is no such design in human history.

People say that Jobs has no empathy, wrong! It is precisely that Steve Jobs has a particularly strong sense of empathy, he is reverse empathy, against the mass consumption psychology to make products, and has achieved great success.

Chinese innovation is most likely to be in the biological and life sciences sectors

Tencent News "Changemaker": If you look at more than 1,000 projects every year, about less than 5% of the projects invested, or only 20 or 30 projects. What kind of projects are worth investing in now?

Yan Yan: Actually, we haven't changed over the years, about 60% of us are investing in IT technology, including big data, artificial intelligence, semiconductors, robots, etc., especially the application of artificial intelligence in the industrial field. In the past, China has always focused on the business model of to C, that is, for the consumer field, and not enough attention to the business model, so there are no large companies like Alibaba and Tencent in the field of to B in China. Especially when the tide of artificial intelligence comes, it is a huge market for enterprise users. Relatively speaking, at this time, we have done more in the area of to B.

The other 30% is invested in medical health, and the other 10% is invested in new energy, new materials, and battery materials. We have just invested in a company that uses cathode materials for batteries; There are also polymer companies, chemical materials, chemical materials, China is still a lot behind in terms of materials, and we need to invest a lot in this area. For example, environmental pollution, plastic bottles, we can't degrade this thing. Now we eat fast food boxes are made of biodegradable, degradable materials are relatively few in China, need to be improved, and its manufacturing cost is relatively high, it needs to be reduced.

We've basically been voting this way for 20 years, so basically nothing particularly big has changed.

Tencent News "Changemaker": The chip field has been really hot money in the past three years. Because this chain is relatively long, involving design, manufacturing, packaging, and testing, which link are you investing in?

Yan Yan: We mainly invest in second- and third-generation semiconductors, such as silicon carbide and gallium nitride. We have invested in packaging, we have also invested in chip design companies, and we have made chip materials. For example, the silicon carbide we are making now is a large number of silicon carbide chips to be used in our new energy vehicles, otherwise the instantaneous current of the power supply will break it down, so it must be made of silicon carbide materials, and we invest in it. So again, in these areas, we try not to invest in the kind of things that everybody is going to invest in.

Tencent News "Changemaker": There is an urgent need for innovation in some areas in China. Are there any areas where you feel very innovative and can run out of unicorns or great companies?

Yan Yan: What exactly is innovation? Innovation can be roughly divided into two categories, one is innovation from scratch from 0 to 1, and the other is from 1 to N, the innovation and improvement of business models. Most of China's past innovations were 1 to N, and 0 to 1 innovation is very, very few. I think the promising area is probably the field of biology and life sciences.

You see why China's highest awards in the field of biology in the United States in recent years have been won by Chinese, Professor Chen Lieping of Yale University, Professor Zhuang Xiaowei of Harvard University, as well as Yan Ning and Shi Yigong, are all very young, they are all in the field of biology. So you see, among the biologists now, the world-class Chinese biologists are quite good. I think there is a possibility that the Chinese will have a world-class head in this field.

Tencent News "Changemaker": I remember a case: when Xu Xin first met Zhang Yiming, he asked for 7 billion US dollars. Xu Xin didn't understand the pattern of today's headlines, so he didn't vote. In fact, investors also "can't make money beyond their cognition". Many valuable companies are new, how can you tell if this company is a "potential stock"?

Yan Yan: I don't think an investor can understand everything, but he must have a relatively wide range of knowledge, and he must continue to learn. A good investor must have such ability, I don't understand this field, but if you give me three months, I must understand, and if you give me six months, I can even surpass most people. But more importantly, there must be a way to find experts in this field, just shop around.

At present, in China, the role of large models is exaggerated

Tencent News "Changemaker": Some time ago, investor Zhu Xiaohu and Fu Sheng of Cheetah had a dispute about AIGC's investment. The controversy is because of different positions, Zhu Xiaohu believes that the investment value of AIGC is exaggerated, and Fu Sheng believes that this is precisely the most valuable track. Although he weakened the problem of high thresholds such as computing power data. What is your judgment?

Yan Yan: They are not arguing about the same issue, there is no argument. One is the role of the large model, the other is its input, these two are different issues, what is there to fight for. They were both right.

Tencent News "Changemaker": How did you get to know the track of large models?

Yan Yan: Everyone is investing now, but I don't believe that the role of China's big model is so fast in China. I'll tell you why, a large model needs to be fed a lot of data and trained before it can form its own judgments. Large models are currently only partially useful in China, but the real fundamental ones are far less useful in China than they are in other places overseas. In addition, more than 90% or even 95% of scientific research works are published in English, and there are very few scientific research results published in Chinese. The lack of data makes it impossible for China to train the best large models.

At present, the role of large models in China is exaggerated, at least for the foreseeable future.

Is the investment enough? Definitely not enough. What if it's not enough? In light of local conditions, if the methods of the regular army do not work, they will follow the methods of the guerrillas, and the speed will certainly not be as fast as that of foreign countries.

The big model is a revolutionary thing, it will profoundly change many industries, such as stock trading, now China is all about people trading, but soon, especially in the profitable field, machines will replace people. In China, I think we need to understand where the most fundamental flaws of Chinese artificial intelligence are.

Tencent News "Changemaker": The flaw lies in the lack of big data? So you are still more rational and cautious about investing in large models?

Yan Yan: Large models are inherently flawed. We invest more in AI applications in China, and we don't have enough financial resources for the large models themselves, but we invest in a lot of AI vertical applications.

Tencent News "Changemaker": Zhang Yiming once said: "In China, all companies with a valuation of more than $30 billion were born before 2003 (Baidu, JD.com), and all companies with a value of more than $100 billion were born before 1998 (Alibaba, Tencent), and the same is true in the United States." "Now that the domestic large-scale model entrepreneurship is in full swing, is there any chance to recreate BAT?

Yan Yan: This sentence is wrong now. Xiaomi was valued at more than $50 billion in 2014, Pinduoduo is currently valued at $128.4 billion, and ByteDance is currently valued at about $1.6 billion. The market capitalization of a business is related to the market that can be applied. Generally speaking, the larger the market that can be applied, the larger the market capitalization.

As for whether there is a chance to recreate BAT. Yes, absolutely. If anyone comes up with a drug that makes people live to be 200 years old, there is an estimate of a trillion dollars. We must not underestimate that human progress depends on science and technology.