Episode 6: Learning from Liu Bang (Managing the dynamics between Founders and Professionals)

Interactive Transcript

spk_0 Dear founders and listeners, welcome to episode 6 of O Changchets, Chinese history and

spk_0 tech startups where we draw lessons from history to chart our own future.

spk_0 Today, before we continue to dive deeper into how founders manage our relationship with

spk_0 the professionals that they hire, I think it is important that we take some time to

spk_0 recap some of the concepts that we have shared previously in the past three episodes.

spk_0 We started our series talking about Liu Ban by identifying three kinds of talent, namely

spk_0 the Shui Tai, also known as the Zhu Gong, the leader or the commander.

spk_0 In a startup context, this person is typically the entrepreneur.

spk_0 The second person is the Jiang Tai, the general and the general are the individuals who execute

spk_0 and actualize on a particular vision in a startup.

spk_0 The last person is the Jiang Tai, the premier, the prime minister, the coordinator and the

spk_0 administrator in any given startup team.

spk_0 The founders are advised that they can maintain their team unity by ensuring two important elements.

spk_0 Firstly, team members must accept their place, visit videos above and around them.

spk_0 Secondly, team members must accept their reward as being fed, visit videos above them and around them.

spk_0 We also took some time to specifically look at what founders need to do in order to

spk_0 sufficiently engage professionals who are very highly qualified to join their founding team.

spk_0 Namely, founders must ensure that they are able to secure the professional's short-term financial

spk_0 interests. They must also secondly seek to maintain the foreseeability of the long-term

spk_0 paid-out interests. And lastly, founders must ensure that they can provide an environment

spk_0 where there is a possibility of helping the professionals attain personal achievement.

spk_0 We ended the previous episode by concluding that it is not easy to work with talented professionals

spk_0 because of various reasons. And it can lead to complicated team dynamic issues.

spk_0 Today, we continue to dive deeper into some of these issues by looking at Liu Baon as a historical

spk_0 reference. We will also look at startup examples from Wang Xiaochuan, the CEO of Soko, and Chu Shouji,

spk_0 the new CEO of TikTok. So let's begin.

spk_0 On team dynamic issues, we have spoken a lot about the difficulties of pursuing professionals

spk_0 to join a startup because of the intrinsic characteristics of general and administrators.

spk_0 The issues get more complicated when the founder and professional starts to work together.

spk_0 In my opinion, the founder and professional conflict happens because the foundational elements

spk_0 of unity mentioned previously are shaken. In that, the generals or administrators do not accept

spk_0 their reward as being fair, vis-a-vis those above them and around them. And this is essentially a

spk_0 problem of expectation. Secondly, unity is also shaken when generals or administrators

spk_0 do not accept their place vis-a-vis the commander. They may have lost respect for the founder

spk_0 and they cannot accept themselves being seen as subordinated to the founder. That is essentially

spk_0 an ego issue. Let's first touch on the expectation issue where generals and administrators

spk_0 do not accept their reward as being fair. This is a much more straightforward situation.

spk_0 It is again, the founders' duty to continue to keep the team anchored on their

spk_0 short-term financial interests and the foreseeability of their long-term payout interests.

spk_0 Professional sceptical risks to join a startup because they think it is an opportunity for them

spk_0 to create impact beyond their corporate trappings. If these rewards are not actualised within

spk_0 their expectation, this is a sure pathway to this unity. Our main protagonist, Liu Baom,

spk_0 started his team with his band of brothers from the same village. Many of them do not have a

spk_0 proper job nor do they have any professional skills. But they were loyal and united.

spk_0 Along the way, as the team and as the empire grew, Liu Baom attempted to recruit defeated warlords

spk_0 into the team. Liu Baom did so to increase his fear of influence by attracting generals

spk_0 who were under the command of his enemy Xiang Yu. In a startup context, we can understand this

spk_0 as a situation where the founder makes acquisitions into other startups and recruit other founders

spk_0 and their team into the bigger setup. In Liu Baom's instance, Liu Baom's game is Xiang Yu's loss,

spk_0 and one particular person was this rogue general called Yingpu. Liu Baom rewarded Yingpu

spk_0 handsomely when Yingpu decided to switch faction to support Liu Baom. Liu Baom's brothers were

spk_0 extremely unhappy about the arrangement, especially those who started up with him from day one.

spk_0 Many of them complained and that led to the eventual breaking up of the brotherhood when Liu Baom's

spk_0 see method is victory to be the first emperor of the Han dynasty. A lot of the brothers

spk_0 felt that they did not realize the expected long-term payout vis-a-vis those they did to

spk_0 have contributed lesser to the victory and one example is Yingpu. Some of the brothers even turned

spk_0 against Liu Baom because they felt that their payout was unfair. Expectation mismatch can definitely

spk_0 cause disappointment. It is human nature to judge one's payout by comparing it to those around them.

spk_0 Unfairness is most strongly felt when there is a comparison. This unequal payout

spk_0 eventually paved the way for the eventual disintegration of Liu Baom's band of brothers.

spk_0 The second problem is the more complex but also the more common problem which found the space.

spk_0 It has got to do with the ego issue when generals and administrators do not accept their place

spk_0 vis-a-vis those above them and around them. And more often than that, they're not. This happens when

spk_0 the general Jiang Tai or the Xiang Tai thinks that he or she can be the Zhu Shuai, the main commander.

spk_0 As we explored the issue in episode 5, professionals are generally a relatively conservative lot

spk_0 and they typically will have a strong sense of self due to that academic or corporate achievement.

spk_0 And typically they will evaluate people based on factors they are familiar with, such as schools

spk_0 or the professional backgrounds of the founders. They're also likely to be impressed by people who

spk_0 can connect with them cognitively or they can speak the same lingo. A general Jiang Tai or a premier

spk_0 coordinator, Xiang Tai will start thinking whether or not he or she can actually step up to be the

spk_0 main commander. The Zhu Gong, when? Number one, they start to lose respect for the commander,

spk_0 thinking they are actually more capable than the commander than the founder. Or secondly,

spk_0 the story, this professional tell themselves, is one where they have overstated their contributions

spk_0 in the eventual success or achievement. And number three, a situation whereby the professional's

spk_0 sense of self is too strong and they actually forgotten their place in the whole team set up.

spk_0 All these above mentioned three points actually stem from one essential element in that the

spk_0 professional has forgotten that everything is made possible. Achievement is made possible only

spk_0 because the founder took a risk and kickstarted the startup mission, provided the ground for the

spk_0 professional to exhibit his or her talent. The process of stepping out to start a company is often

spk_0 forgotten. In fact, it is too easy to forget the humble beginnings when business picks up,

spk_0 when battles are being fought and profits are being made due to the good work done by the professional.

spk_0 People forgot or are unaware of the stage 1.0 back in the earliest days when there was nothing.

spk_0 No funds, no office space, no team, no employees. When it was a period of time, where it was just

spk_0 commander, the founder, with his or her grit and the early team of believers. Professionals eventually

spk_0 joined them when they can see signs and evidence of potential tremendous success. The early days

spk_0 are often forgotten when things start to pick up. That is something which professionals need to

spk_0 keep in mind to keep their ego in check. But in reality, this doesn't really happen and that's

spk_0 where the dynamics between the founder and the professional starts to crack. This was exactly what

spk_0 happened between Hansing and Billbunk. As mentioned in the previous episodes, Hansing was one of the

spk_0 three most important contributors for Billbunk's success. But it was also often mentioned that Hansing

spk_0 was actually a nobody before he joined Billbunk's camp. He escaped from the camp because the

spk_0 nothing highly of him. Eventually, Hansing got his platform and power to exhibit his military talent

spk_0 only after Xiao He persuaded Billbunk to make Hansing a general. It is not disputed that

spk_0 Hansing was responsible for many of the crucial and important military victories behind Billbunk's

spk_0 eventual triumph over Xiang Yu. So the crack between Hansing and Billbunk or Kurt after the one of

spk_0 one of the major battles where Hansing managed to conquer the Kingdom of Qi. Hansing requested Billbunk

spk_0 to confer him the title as the Duke of the Qi Empire in Chinese Qi Wang. This was before Billbunk

spk_0 cemented his victory and Billbunk was unwilling to give the reward. No one, absolutely no one has made

spk_0 such an audacious request and Hansing became aggressive in demanding for that recognition.

spk_0 From Hansing's point of view, he was the one responsible for winning the battles. He was the only

spk_0 one out in the field exposing himself to physical danger. Without his victories, Billbunk would never have

spk_0 been able to consolidate power and the territories to defeat Xiang Yu. Eventually,

spk_0 from Billbunk's point of view, Hansing's request was simply outrageous.

spk_0 Victory has not been confirmed and this is the first time a general is requesting for the title

spk_0 of the Duke. This revealed Hansing's arrogance and ambition. And this was particularly so in one

spk_0 of the conversations between Hansing and Billbunk. That conversation revealed Hansing's ambitions.

spk_0 Hansing started off by passing judgments about all the generals he had defeated in the fields

spk_0 and how they don't deserve to be leading the truth they had under their command.

spk_0 Billbunk then asked Hansing, how many soldiers does Hansing think Billbunk deserve to lead?

spk_0 Hansing responded very quickly and he said,

spk_0 your honour deserved to lead a hundred thousand soldiers. Then Billbunk continued to ask

spk_0 Hansing, how many soldiers Hansing think he himself ought to be leading? Hansing replied with zest

spk_0 and said a million. In fact, the more the merrier. This created the crack and unity between the

spk_0 father and the general, all of which stem from achievement and ego. Typically, from the farthest

spk_0 point of view, if a general is ambitious and restaking enough, he or she would have the ability

spk_0 to gather resources, have the courage to start a company, but Hansing did not show any of these

spk_0 capabilities. He did not have the ability to do so and had to be provided with power and resources

spk_0 in order for his military talents to be showcased. Such situations are often forgotten by

spk_0 professionals because of their corporate background. Resources are typically provided for them.

spk_0 The rules of engagement are clear and their achievements are seen in the form of successful

spk_0 execution of their business roles. However, starting up is a totally different story.

spk_0 The invisible but most important contribution is not only about getting the job done,

spk_0 it is also about paving your way forward to get done and that is primarily the invisible work

spk_0 of the founder by starting a company, by raising money and by forming a team. This is the

spk_0 foundational difference between a commander and a general. In Chinese, we say, Chu Gong Xiang Tai,

spk_0 Chu Gong Xiang Tai, Yu Jiang Xiang Liu Bian, there is a difference between the commander and his

spk_0 generals and administrators. On a side note, when Han Dynasty was eventually founded and victory

spk_0 cemented, Liu Bang started a campaign to kill off all the brothers and influential generous

spk_0 to consolidate his own power. The first person he targeted was Hansing. The problem between Liu Bang

spk_0 and Hansing was one of Hsing's ego. Hansing's ego got the better of him and he presented himself

spk_0 as a threat to Liu Bang. So now, dear founders, let us come back to the modern context and take a look at

spk_0 how two startup generals interacted with their respective founders. I will first talk about Wang

spk_0 Xiao Chuan from Soko and the other I will talk about Qiou Sozi from TikTok previously from Xiao Ming.

spk_0 Wang Xiao Chuan is actually the CEO from the CEO of Soko, which is actually a spin-off from Sohu.

spk_0 He has been known as China's startup space as a child prodigy and is the typical

spk_0 mathematics-oriented computer science student. He joined Sohu in 2004, after graduation,

spk_0 and he was given the space to start Soko in 2004. The founder of Sohu is Zhang Chaoyang,

spk_0 known to the Western world as Chao Zhang. He is the first generation Chinese internet entrepreneur.

spk_0 He graduated from Tsinghua and got his PhD from MIT in the early 1990s. He was extremely influenced

spk_0 by the book of the MIT Media Labs and returned to China to start Sohu in 1998.

spk_0 And the company was listed in the year 2000. He founded success much earlier than the second

spk_0 generation Chinese entrepreneurs such as Ponimah from Tencent, Jetmar from Alibaba and Robin Li from

spk_0 Baidu. Chao Zhang recruited Wang Xiao Chuan even before Wang Xiao Chuan graduated. And Chao

spk_0 Zhang promoted him to be the youngest vice president of Sohu when Wang was in his late 20s.

spk_0 Wang Xiao Chuan was given a lot of space and allowed to start an independent team to what was

spk_0 eventually known as Soko. However, there was also a period of time where disagreements between

spk_0 Chao and Wang Xiao Chuan led Chao to stonewall Wang Xiao Chuan. Wang Xiao Chuan was insistent to

spk_0 be a browser to support the growth of the Soko such engine. But Chao was not convinced.

spk_0 Wang Xiao Chuan was obstinate and defied management orders and direction. Both of them couldn't

spk_0 see eye to eye. And eventually, Wang Xiao Chuan was excluded from the whole business of Soko.

spk_0 Chao Zhang handed the whole business unit to someone else. Wang Xiao Chuan recorded that episode

spk_0 in an interview in 2018. He said it was humbling for him that everything was taken away from him.

spk_0 And he realized the real realities of the dynamics between the founder and he himself, the

spk_0 hired professional. Despite all that has happened, he never talked about leaving Sohu. Because to him,

spk_0 a resignation would mean a defeat. He wanted to take time to solid out within himself.

spk_0 He also admitted he had a full beat of choosing because there's a strong fear of making a wrong decision.

spk_0 And that was retargetical of professionals. Wang Xiao Chuan said he attended the best

spk_0 secondary school, attended the best university for computer science, and he won all the competitions.

spk_0 He had not tasted defeat or failed in the particular way. So he admitted that professionals

spk_0 like himself are typically not wired, are wired to not do wrong, then to take a risk to attend a

spk_0 particular vision. Wang recounted that there were many opportunities for him to leave Sohu, but he chose

spk_0 to be conservative and stay on. His issue with Chao Sang was not only one of issues,

spk_0 one of ego, but also one of his professional expectations. However, Zhang Chao Yang,

spk_0 Chao Sang eventually got Wang Xiao Chuan back to lead Sohu and Wang Xiao Chuan eventually listed Sohu

spk_0 in 2017. In the 14 years that he was with Sohu, he was involved in several high profile M&A negotiations

spk_0 with the godfathers of China's South-Upsil, such as fundraising from Jack Ma,

spk_0 fighting off an acquisition offer from Si Hu, Sun Liu Ling, Zhou Hong Yi, and eventually raising money

spk_0 from Tencent's Ponima. When Sohu was listed in 2017 on Nasdaq, Wang Xiao Chuan expressly

spk_0 thank Chao Sang as said that he is thankful to the founder for being his mentor and teacher.

spk_0 Eventually, Sohu got his Sohu to Tencent for $3.5 billion in 2020.

spk_0 Another uprising general in the Chinese tax scene is Singaporean Chiu So Zhi.

spk_0 TikTok named Chiu So Zhi as his CEO earlier this year in 2021, after Chiu resigned from Xiaomi as his

spk_0 CFO. Chiu So Zhi had the typical CV of most generals and professionals. He was educated in UCL

spk_0 and Harvard Business School in Spent Time in Goldman Sachs and DST before joining Xiaomi.

spk_0 Chiu's story with Bikedance is similar to what happened between Jack Ma and Zhou Cai.

spk_0 Chiu befriended Bikedance's founder Zhang Yimin when he was still a partner in DST.

spk_0 Chiu So Zhi was an early believer in Bikedance's product, Jing Rui Tou Tiao, and he was one of the

spk_0 company's first investors. TikTok announced Chiu's new role as part of a strategic reorganisation

spk_0 which highlighted Chiu So Zhi's decade of experience in the global technology scene.

spk_0 What I wanted to bring to everyone's attention is how Chiu So Zhi was viewed by his previous boss,

spk_0 Lei Jun, the founder of Xiaomi. Many has credited Chiu So Zhi as one of the main drivers behind Xiaomi's

spk_0 successful IPO. Chiu once even tweeted that Xiaomi's CEO, Lei Jun, is a personal mentor of his

spk_0 and Lei Jun even caught Chiu So Zhi, his brother, who has been fighting along him for six years

spk_0 when Chiu left Xiaomi a few months ago. It was also reported that as a parting gift,

spk_0 Lei Jun gave Chiu's stock options in Xiaomi worth about $100 million USD.

spk_0 Although Chiu is new to his job in TikTok and Bikedance, his achievements in Xiaomi,

spk_0 especially the founder professional dynamic, which he managed to create between himself and Lei Jun,

spk_0 is something that found us to aspire to replicate with the managers that are higher in the

spk_0 following team. Before we end today, I hope to repeat some of the learnings from today's episode.

spk_0 Firstly, professional team dynamic issues, often happen because there is a difference in expectations

spk_0 or it is an individual ego issue. Both the founder and the professional need to know that success

spk_0 is about giving a chance to each other to make things successful. Both parties cannot achieve things

spk_0 on their own. Founders need to focus on maintaining unity in the team and to keep the

spk_0 generals of administrators engaged. These generals and administrators also need to remember that

spk_0 the founder is the individual who has provided the platform for their professional expertise

spk_0 to be displayed in showcase. Once they understand that it is about giving each other a chance to win,

spk_0 that it sets the ground that will definitely help correct the lands at which each individual

spk_0 viewed their own entrepreneurship journey. Before I end today's episode, I'd like to share a very

spk_0 short story of one of Liu Bao's brothers, Zhou Bo. As mentioned, when Liu Bao eventually became

spk_0 victorious and he went on to reward everybody that started our film, most of his original

spk_0 band of brothers complained that the division of rewards was not fair. Only Zhou Bo and Xiao

spk_0 her did not complain. Liu Bao noticed it and asked Zhou Bo how he felt about the distribution

spk_0 of rewards. And Zhou Bo stayed up for a while. He said, I was originally just a village drummer.

spk_0 Whatever I attained today is far beyond what I could achieve on my own. Everything has far

spk_0 exceeded my expectations. Those who are complaining now have forgotten about their starting point.

spk_0 Most of them were putters and snakes' layers, all uneducated villages. They will never have been

spk_0 able to attain what they have today without joining you in this particular mission. Our victory

spk_0 has led them to overstate themselves. So dear founders and listeners, these stories are actually

spk_0 worth us reflecting in our journey as we start to form a team of both professionals and

spk_0 enterprising individuals. And I hope you have much to take away. This is O-Chang Chets,

spk_0 where we learn from history to chart our own future. This is O-Chang, CEO in the next episode.

spk_0 Cheers.

Episode 6: Learning from Liu Bang (Managing the dynamics between Founders and Professionals)

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