E70 – The Impulso Podcast – Succession – successful tech founders’ dilemma

From Alibaba to Meta, and now Meituan, it seems like founders and co-founders can’t retire. 

Wang Huiwen’s recent return to Meituan, albeit as a part-time consultant, raises questions about why founders struggle to leave their companies. His departure and subsequent comeback highlight the complexities of succession planning and the unique role founders play in navigating turbulent times.

It’s true that leadership transitions in tech are complicated due to the fast-paced environment and constant need for innovation, but is this really the main issue for lack of/ poor succession planning? 

Tune into in this episode as we delve into the intricacies of organisational leadership, the search for suitable successors, and the importance of trust:

Also available on Apple Podcast. 

Featured materials:
Why did Meituan buy a generative AI company?, TheLowDown

Why Meituan CEO takes over overseas businesses?, The Impulso Podcast

 

[AI-generated transcript] 

[00:00:00] Sabrina: Hello everyone and welcome to episode 70 of the Impulso podcast by Momentum Works.

So on today’s episode, we’re going to be talking about Wang Huiwen, Meituan‘s co founder and his return to Meituan as well as why co founders, founders or CEOs can’t seem to leave a company. So, let’s start with talking about the return of Wang Huiwen.

So, Jianggan, maybe you want to set some context for our viewers. Who is Wang Huiwen? 

[00:00:26] Jianggan: So, Wang Huiwen was the guy who was long time number two , to the founder Wang Xing. And of course, these two are not related. There are like a hundred million Wangs in China, but he has been leading all the operations for Meituan for a long time and he was deemed crucial in fighting lots of battles that Meituan had with various tech and e commerce competitors and actually, I mean, built Meituan to what it is today.

So basically, I think he retired from active operations a while ago. And last year he tried to jump into the large language models and started this AI company. What’s the name of that? 

[00:01:03] Sabrina: Lightyear. 

[00:01:03] Jianggan: Lightyear. And of course, a few months after running that company, he went into according to media releases by Meituan, severe depression.

So Meituan had to buy over the company while he was undergoing treatment. So what happened yesterday on the 2nd of March of course, the first trading day of the second quarter in Hong Kong that Meituan make an internal announcement that Wang Huiwen is returning. As an advisor, 

[00:01:30] Sabrina: part time consultant, 

[00:01:31] Jianggan: part time consultant, and so participating in self management work of Meituan.

And I think the founder Wang Xing mentioned in the internal note, saying that old Wang, I think that refers to Wang Huiwen, will use his experience and wisdom to support me and everybody in the company in areas like strategy, culture talent, as well as technological innovation and new businesses. 

So obviously the past year, I think we talked about that in the previous episode, right? The past year has not been easy for me to the share price dropped a lot and Douyin or Tiktok sort of cousin in China has been competing with them for the advertising revenue of merchants in China. And internally, because of the share price drop, I mean, you can imagine how much dent in the confidence of some of the key employees they have.

 So I think they needed something to rally the crowd and I think having Wang back will make magic I’m not sure. And will he sort of participate more? I probably think so. So part time is just to test water without giving him too much pressure because he’s still recovering from severe depression.

[00:02:40] Sabrina: So I think they’re trying not to stress him out too much as well. I think the competition is very stressful. So if you guys want more information about Wang Huiwen’s AI company and Meituan’s acquisition of it, we do have an article. We wrote earlier last year, which will be linked in the show notes.

And of course, earlier this year, we also did an episode on Meituan’s organizational restructuring, right? So I’ll link the podcast in the podcast, 

[00:03:02] Jianggan: in the podcast, 

[00:03:04] Sabrina: I will link the podcast in the show notes as well. But essentially we talked about how Meituan was integrating a number of its businesses. In order to compete more with Douyin and Pingduoduo as well.

And of course we also discussed the potential of Meituan going overseas. 

So this return of Wang Huiwen, do you think it was initiated by him, or do you think it was initiated by those at Meituan who wanted him to come back?

[00:03:30] Jianggan: I think this is actually an interesting question, right? Because he built this company together with Wang Xin, right?

 And a few others. And of course, This company is probably very dear to him. And I’ve seen the company been through some difficult times. We’ll probably not feel nice for him. On the other hand, I think the company will need somebody to who has the ability to rally the entire workforce.

And, also send a signal confidence to its employees, its shareholders, as well as the market in general. In a way that you can draw some sort of parallel with what has been happening at Alibaba, right? So, is it initiated by him or is it initiated by the company? Probably doesn’t matter anymore.

As well as, I mean, you know that, okay, from both parties point of view, they have the best interest and have the strong desire to put upon a company out of the pan and actually put it back firmly on the growth trajectory. So, I think, last year, when Jack Ma was back, I remember around this time last year end of March, beginning of April.

There was also lots of speculation saying that, oh. Did Alibaba ask Jack Ma to come back or Jack Ma just sort of inserted himself into decision making because he probably thought that Alibaba was going in the wrong direction. But at the end of the day, I think I remember somebody who was close to decision making was telling me that it really doesn’t matter because this is what’s needed.

 And both parties will make sure that this actually happens. 

[00:05:02] Sabrina: Interesting that you mentioned Alibaba because I mean, we are seeing something similar Alibaba, right? As they’re going through one of their biggest transformation. 

More in our report on transforming Alibaba, we also see a lot of their co founders returning.

And of course this is not just exclusive to Meituan and Alibaba. We also see that Tencent founders are still at the company. I think JD’s founder also came back. 

[00:05:24] Jianggan: He 

[00:05:27] Sabrina: wanted, 

[00:05:28] Jianggan: he wanted to leave. And I, I remember, I mean, JD obviously. was the second largest e commerce company in China. I’m not sure whether they’re still the second largest, but of course there’s lots of pressure.

So he wanted to leave. I do remember when he went to the US to study, he said, Oh, I tried to sort of completely dissociate myself from the day to day of the company to see if the company can run without me. And then you will see him coming back and make some speeches, make some like drastic changes saying that, okay, some of you guys have lost your dream and we need to, you know, put company back on track.

So, yeah,

[00:06:00] Sabrina: we’ll come to that point in a bit, but first, so Pingduoduo and ByteDance also had, I mean, pretty nominal successions, their founders are still, 

[00:06:09] Jianggan: oh, they have announced that they were retired from the company day to day and the CEO has been taken over by somebody else. But if you look at the lineup, right, the CEO of the both companies are pretty much co founders, very trusted by the founder and the founders are still firmly in control of certain things, especially at the direction of the company. So yeah, so they have normally retired from the day to day, but they are still firmly in charge. 

[00:06:33] Sabrina: So that brings us to an interesting question of why can’t these founders or co founders seem to leave the company?

Is it on the founders and they’re unwilling to leave a company that they’ve dedicated so much time and effort into? Or is it because these companies or the culture and organization of these companies are built around the founders and co founders that they simply can’t seem to function without them? 

[00:06:56] Jianggan: I think if you leave this to a consultant, they will probably write a long article saying that why these companies have not built a proper succession plan and and how a proper succession plan would look like.

I’m asking if they had ever done any proper succession, but I do think that that I mean, the companies we just mentioned, they are tech companies, they have come to existence for barely like 20, 25 years. Alibaba is 27 years, they want to be around for 102 years. So it’s actually they’re fairly young companies that grew very fast.

I mean, they’re not like I don’t know, some established chemical company from central Europe, which have like hundreds of years of tradition, very, very solid client relationships, very solid R and D, very solid pipeline, et cetera. So these companies are from the date of their birth. being experiencing very fast changes in the market and constant battles against competitors, against the external environment.

And of course, for the last few years against some unpredictable policies. So I think navigating large company is for anybody, be it founder, be it a career manager is difficult enough. And when there are constant changes, which require both decisions. Which require the ability to carry out these decisions and rally the entire workforce.

Alibaba is like quarter a million people. So it is hard and usually on people who are not founder will not have enough clout to do this and they will not probably have enough sort of confidence in a workforce to carry that out. Also bear in mind sometimes we make a just decision and decision turns out to be wrong.

[00:08:36] Sabrina: you need to retreat. 

[00:08:37] Jianggan: Yeah. Yeah. You need to own your mistake and pull back or whatever this is. I mean, and especially in this fast changing environment you need to do everything extra fast. And yeah, I think funders would have a natural advantage compared to anybody else to actually make this happen.

[00:08:54] Sabrina: So I think it’s, a lot of it is because of the nature of the industry they’re in, right? Because they’re in an industry that’s so competitive and that keeps changing. You need somebody who is able to make bold decisions, but at the same time still able to pull back from these decisions without losing the support of the whole organization.

[00:09:10] Jianggan: Or the ability to tell the whole organization, saying that, I don’t know what is right, but I believe in this. Can you follow me? 

[00:09:16] Sabrina: A little bit like leading a cult. 

[00:09:19] Jianggan: I mean, making a company success to that scale. I mean, have to have such an trait as cult leader. 

[00:09:28] Sabrina: So why do you think these companies haven’t been able to find a successor that can do something similar?

They can lead the organization. And make bold decisions. Do you think they are still too young that they haven’t found the right pool of talent to help lead them? 

[00:09:45] Jianggan: I think that’s definitely a factor, right? So even in some large, digital organizations, it takes years and sometimes decades to groom a new leader and test the person differently.

I mean, Just think about how those family conglomerates have been calling their offsprings, their sons, their daughters. They rotate them through different departments, they give them different functions, they test them, sometimes to the limit, but without crippling them, at different challenges. I mean, it just takes time.

It just takes time. So I do know that some companies have had a succession plan in place. This probably functions well with the department case, right? But at the founder level in a fast changing environment, it’s naturally challenging. 

[00:10:31] Sabrina: And of course, I think this problem isn’t limited to just Chinese tech companies.

We also see it happening in the U S so. 

[00:10:38] Jianggan: Yeah. So NVIDIA’s founder is still there. 

[00:10:41] Sabrina: Meta’s founder is still there. 

[00:10:43] Jianggan: He defied investors to invest a lot of money into Metaverse. I know he’s pulling it back. I mean, I think a non founder will probably have been fired by now. 

[00:10:54] Sabrina: That’s true. And then, I mean, for Apple at the start, Steve Jobs also had to be called back.

[00:11:01] Jianggan: Yeah, to save the company. I mean, initially he was kicked out by shareholders, but he had to be called back to save the company. 

[00:11:07] Sabrina: And it’s not just tech companies, right? We’ve seen this happen with Disney as well. 

[00:11:11] Jianggan: Disney is a tech company? 

[00:11:12] Sabrina: Are they a tech company? They are half, maybe like 30 percent of tech company. 

[00:11:18] Jianggan: Are you watching Disney plus? 

[00:11:21] Sabrina: It’s only Disney plus, right? The rest is they’re more like entertainment. 

[00:11:25] Jianggan: Yeah. They have lots of IPs, their own theme parks, but Disney plus I think has been the. a point of contention, right? So Bob Iger or Iger wanted to retire passed over to, what’s the other person, Bob Chapek or something.

And then not long after he had to come back and put the other guy out and take personal charge. I mean, of course, now the company is of course Bob Iger is not the founder, the founder is Walt Disney. 

[00:11:50] Sabrina: Yes. I mean, Disney is kind of hard for their founder to come back.

That’s a different topic. And we’ve also seen the same happen for Starbucks. So Howard’s Schultz, he came back like three or four times. 

[00:12:06] Jianggan: Yeah, he had to be called back to take over multiple times and actually led this to a question, right? I mean these companies are not exactly tech companies, but they’re also in areas where it can be competitive, right?

I mean, Starbucks is a consumer company and you know that consumer, I mean, unlike like stable business relationships, like German chemical company will have, right? I mean, you buy something from your customer, buy from you. Unless something drastic changes, they will not cut this relationship.

[00:12:35] Sabrina: Consumers are more fickle minded. 

[00:12:37] Jianggan: Yeah. So if you have new concepts, I mean, if something was more exciting and a consumer would try, and if the exciting thing turns out to be good for the long term, consumers will desert you and to go for something else. So, Disney in a way is a consumer company as well.

 And they also have to deal with a complex ecosystem of of talents, like creators and stuff. So a lot of the times that having that sense and somebody who has been running the company for a long time, I mean, know enough nuances can make decisions and also as we mentioned, right, can rally the entire organization towards the decisions and it’s something which is a bit difficult for a career manager to build up very quickly.

[00:13:21] Sabrina: And I think, I mean, it’s also not impossible for big companies to have good successions, right? I mean, we see Microsoft has had a good leadership change. 

[00:13:30] Jianggan: Oh, they had a bad one, I mean.

[00:13:31] Sabrina: But now it’s okay. 

[00:13:33] Jianggan: Yeah, yeah, so basically they had Steve Ballmer who and typically , see that but maybe someone has done the studies, right?

I mean, if you change the role from founder to a career sort of, I mean, like finance person, or, I mean, that’s the case of Daniel or a career salesperson, a Steve Ballmer for Microsoft. And sometimes they get a bit too focused on the financial metrics.

 And of course when that gets cascaded down to the whole organization, it becomes difficult. And sometimes you say that the company loses soul, but I do think a more practical problem is that we’re too obsessed with financial metrics. It becomes a burden. It hinders your innovation because some innovation would hurt your KPI for like, I don’t know, five months , and unless you have the vision, unless you have the ability to resist this temptation for five months, otherwise we’ll not do it.

We just focus on like, you know, optimizing whatever you have. 

[00:14:25] Sabrina: I had a professor in university, he would show us like the top like CEOs, where are they normally from? And the results is that most of them are from the operations department because they know how to run things, you know, how to run the different departments or they know how to run the company.

So maybe that’s, 

[00:14:43] Jianggan: I think that brings something interesting because I mean, of course he mentioned the CEOs. Not founders. I don’t know, right? Because they came out of nowhere, but I think one important aspect here is that the funders need to know the business inside out and look at Boeing, right?

I mean, the whole suite of Frenchman has to be booted out. And of course, I mean, we haven’t done sort of researches about Boeing but judging from what the common commentators are saying that the bigger problem is that engineers are not running the show. So that many of the problems are overlooked for financial results.

So, and also do you remember the MCN we visited in Guangzhou, United Media during our live commerce immersion what the founder mentioned to me was really interesting. So he said, His background, he’s an operations person in live commerce and his wife’s background, which is very interesting.

His wife’s running a business with him is a live commerce host, live show host. So both of them know this business inside out that they constantly think about ways to optimize the organization. And if you do that in multiple iterations, you become far ahead of others who are run by people who are not familiar with operations.

They have to hire people. The people have to give them feedback. They have to make a decision based on that. So of course it will be different. 

[00:16:03] Sabrina: So maybe one last question to end off this podcast is whose responsibility do you think it is in a company to pick the successor or to train up a successor?

Do you think it’s the current leaders responsibility or the founders, co founders, or do you think it’s the organization’s responsibility to trust that whoever the board or whatever has chosen to lead them will make the right decision and to just trust that person? 

[00:16:28] Jianggan: When you say it’s the organization’s responsibility, who exactly is the organization?

[00:16:32] Sabrina: The employees? To trust that the person chosen to lead you would make the right decision and to have faith in them. 

[00:16:39] Jianggan: I mean, trust is earned, right? I mean, trust is not I mean, in it. It’s not something that is born naturally. Founders earn their trust because they have navigated through challenges to bring the company to where it is today.

 So actually, I mean, today we don’t have time, but if you dig this deeper, you can look at history, you can look at, I mean, because history is full of successions, like emperors, generals and stuff. And many, many mistakes are made. So I think this will offer like very interesting lessons.

Lessons to corporate leaders and at the end of the day, I think for founders, sometimes I think they need to be a little bit at ease in a way that they know that their role can’t be exactly replaced. So sometimes it’s looking for the best option out there. And provide tutelage to the best option.

And I think Sabrina, you’re from Singapore. You know, how exactly that works out in a government in Singapore, the top leadership. Okay we are not going into details here

[00:17:36] Sabrina: so thank you guys for tuning in to another episode of the Impulso podcast. We hope that you guys enjoyed today’s episode. And if you did do like our podcast and follow us on spotify, Apple podcast, or your preferred podcast platform to stay up to date on the latest happenings and trends in tech, new retail, and the broader digital economy.