Kathy Xu, also known as Xu Xin, the founder of Capital Today, is one of China's most respected and successful venture capitalists. With a career spanning decades, she has a track record of identifying and backing some of the country's most iconic companies, including JD.com, NetEase, and Meituan. Known for her sharp intuition, long-term vision, and deep understanding of the Chinese consumer, her insights are a masterclass in investing and business building.
On Investment Philosophy
- "If you are in the traditional business, you must put all your attention in one thing. But if you are in the Internet business, you must be like an octopus to find opportunities wherever you can." A core belief explaining her support for Meituan's multi-faceted business model.[1]
- "Are there many great companies? No. Do I need a lot of money? No. Should I spread my money around? No. It's enough that you get these straight. Plus, you must have patience." This encapsulates her focused, long-term investment strategy.[2]
- "Investing in an enterprise is essentially investing in an entrepreneur." This highlights her founder-centric approach to venture capital.
- "We already hit rock bottom, and from now on, things will become a little better with every step we take." Her simple, resilient logic for holding onto her investment in NetEase when other investors wanted to sell at a loss during the dot-com bubble.[2][3]
- "I am a follower of Buffett, and I do think that you should invest in what makes sense to you." On sticking to her circle of competence and focusing on consumer trends she understands.[2]
- "When we were at odds, we held that the entrepreneur should have the final say." On empowering founders like JD.com's Richard Liu, believing that as long as the risks are quantified and not fatal, the CEO should be allowed to execute their vision.[3]
- Enterprises shall never stay too far from the wallets of consumers so as to maintain their pricing power. A key principle for identifying businesses with strong brand potential.
- Evaluate a company on three key points: market size, key problems it solves, and the timing of the breakthrough. Her framework for assessing a potential investment.[4]
- Her strategy is to focus on middle-class consumers and small and medium-sized enterprises. This has been a consistent theme from her early investment in Wahaha to her more recent ventures.[4]
- Intuition is crucial, especially when you meet a "dark horse" founder. Her decision to invest $10 million in JD.com overnight was driven by the strong feeling that she couldn't let Richard Liu meet other investors.[2][3]
On Founders and Entrepreneurs
- Successful entrepreneurs should have 'killer' instincts, quick learning ability, good executive ability, lofty ambition and strong will. These are the key traits she looks for in the founders she backs.[1]
- "A good founder always makes a good son-in-law." A memorable and insightful way of describing the reliability and trustworthiness she seeks in entrepreneurs.[2]
- "Entrepreneurs must be pushy, while investors must know when to yield." This captures the ideal dynamic between a driven founder and a supportive investor.[2]
- The key trait for founders is the ability to learn. She emphasizes that entrepreneurs must learn "everywhere, every day and be very open," possessing sharp eyes and keen ears.[2][3]
- Meituan's CEO Wang Xing is "like a deep learning machine." She admires his ability to enter fields late but learn quickly, execute strongly, and formulate forward-looking strategies.[1][2][3]
- Look for founders who are resilient and can endure hardship. Her backing of Richard Liu was influenced by his determination to build JD.com's own logistics network, even when it meant years of heavy losses.[3]
- A founder's ability to make correct, strategic decisions is paramount. She cites Richard Liu's moves to expand SKUs (by selling books) and build his own logistics as two of the most critical decisions in JD.com's history.[3]
- The appointment of personnel should be solely decided by the CEO. She believes in giving founders autonomy over their team-building decisions.[3]
- Great founders are often very smart, but luck is also important. She acknowledges that even brilliant entrepreneurs can fail if they are competing against titans like Tencent's Pony Ma.[2]
- Look for founders with a vision that others might not see. She supported Liu Qiangdong's push into capital-intensive logistics at a time when competitors like Alibaba's Jack Ma were avoiding it.[3]
On Business and Brand Building
- Focus on building a No. 1 brand. She believes in the power of brand strength and the importance of becoming a category leader.[4]
- Master the power of compound growth. This is a fundamental principle she applies to both her investments and the companies she advises.[4]
- Brand construction, team construction, and cultural construction are all crucial. She emphasizes these three pillars for sustainable business success.[4]
- Understand your customer's characteristics, behaviors, and the changes in sales channels. This deep consumer insight is a hallmark of her investment strategy.[4]
- Selling books was a "very shrewd move" for JD.com. It lowered the barrier for a customer's first purchase and built trust for larger ticket items later on.[3]
- Don't be afraid of cash-burning races if you are confident in your strategy. She was willing to continue funding Ganji.com in its fight with 58.com.[2]
- A painstaking strategy formulation process makes the execution process less so. A lesson she learned from observing Meituan's Wang Xing.[2][3]
- In the internet business, "fixating on one thing doesn't work." This challenges the traditional wisdom of singular focus, advocating for an adaptive, multi-pronged approach in the digital age.[1]
- Persistence is key, even through long periods of losses. It took a long time for JD.com's logistics to go from 20 orders a day in a city to the 2,000 needed to break even.[3]
- Building a strong brand creates pricing power. This is a core tenet of her focus on consumer-facing companies.
On Career and Personal Growth
- With 10,000 hours of practice, anyone can turn from mediocrity to greatness. She is a firm believer in the "ten thousand hours" rule, noting that ten years of focus can make someone extraordinary.[4]
- "Work requires not only your efforts but all your energy and vigor. You can never sleep unless you finish what your boss has assigned to you." Recalling the intensity of her early career at Price Waterhouse, which she credits for her rapid progress.[5]
- Keep learning and making progress every day. This continuous improvement mindset is essential for finding your passion and achieving success.[5]
- Find a job that cheers you up. She advises students that if they don't know what they like, they must keep looking through reading, networking, and trying different jobs.[5]
- "You are unique. You are a marvel. In the past five hundred years, there has been no person like you; and in the next five hundred years, there will be no person like you." A powerful message of self-belief delivered in a commencement speech.[5]
- Our life consists of a series of crucial choices. What we choose determines our life. A reflection on the importance of making the right decisions at critical junctures.[5]
- Find your passion through the accumulation of quantitative changes that lead to a qualitative change. She believes that continuous effort will eventually lead to a breakthrough in finding one's favorite work.[5]
- Read voraciously, especially biographies. She recommends this as a way to find inspiration and learn from the experiences of others.[5]
- Make friends with smart and experienced people and chat with them frequently. A simple yet powerful piece of networking advice.[5]
- Embrace your future with burning passion and focus to create your own marvel. Her concluding advice to graduates at Nanjing University.[5]
Learnings from Her Legendary Investments
- Wahaha (1995): Bet on the rise of the Chinese consumer and the "consumption upgrade" towards bottled drinks, a novel concept at the time.[2][3]
- NetEase (1999): Showed immense conviction by refusing to sell during the dot-com bust, believing in the founder and the company's long-term value.[2][3]
- JD.com (2007): Made a bold, multi-million dollar investment after a single meeting, recognizing the founder's vision and determination. She even invested more than the founder initially asked for.[2][3][4]
- Three Squirrels: An example of her successful investments in new consumer brands that cater to the tastes of China's middle class.
- Meituan: Her investment demonstrates her belief in backing strong, learning-oriented founders and her "octopus" theory for internet platforms.[2]
- She is a hands-on investor. In the early days of JD.com, she attended the company's regular management meetings and was impressed by the team's high efficiency.[3]
- Four of the entrepreneurs she invested in have become Forbes' 100 richest people. A testament to her eye for talent and her ability to help founders build massive companies.[1]
- She has been engaged in Chinese venture capital for over 23 years. Her long and successful career provides a deep well of experience and pattern recognition.[1]
- She was named one of the 25 most influential people in Asia by BusinessWeek in 2004. This early recognition highlighted her rising influence in the Asian business world.[1]
- Her firm Capital Today's name reflects her philosophy. It suggests a focus on the present opportunities ("Today") while deploying capital for long-term growth.
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